MORRISVILLE, N.C., Feb. 8,
2018 /PRNewswire/ -- Alliance One International, Inc. (NYSE:
AOI) today announced results for its fiscal quarter ended
December 31, 2017.
Alliance One is transforming itself to realize its potential
as a purpose driven organization with a clear vision and focus on
achieving competitive distinction and building upon new
opportunities to increase shareholder value. We have moved
proactively on compelling opportunities to strengthen our company.
As we continue to take a well-measured approach to improving our
core business, we will build upon the strength of our
competencies and prioritize what matters most to our
customers. Now, when customers ask us why they should buy
our products and services – our answer is clear. Everything we do
is to transform people's lives so that together we can grow a
better world. Today, we are more confident than ever in our
collective strengths to build upon our legacy as a trusted business
partner.
Highlights
Third Quarter
- Total sales and other operating revenues increased 5.1% to
$477.8 million primarily due to the
larger South American crop and a 4.9% increase in average sales
prices due to product mix.
- Gross profit increased 12.8% to $73.5
million and gross profit as a percentage of sales improved
to 15.4% from 14.3% last year.
- Net income was $88.5 million,
including a net tax benefit of $73.3
million with $59.4 million
associated with estimated discrete net tax benefits related to the
new tax law enacted in December, and Adjusted EBITDA improved 12.1%
to $57.0 million.
Nine Months Year-to-Date
- Sales increased 8.8% to $1,202.1
million mainly driven by the larger South American crop and
a 7.5% increase in average sales price due to favorable product
mix.
- Gross profit increased 14.7% to $171.5
million and gross profit as a percentage of sales improved
to 14.3% from 13.5% last year.
- Selling, general and administrative expense ("SG&A")
increased 2.3% to $103.3 million
primarily due to higher legal and professional fees.
- Net income was $56.9 million,
including a net tax benefit of $66.2 million
with $59.4 million associated with
estimate discrete net tax benefits related to the new tax law
enacted in December, and Adjusted EBITDA improved 17.7% to
$115.9 million.
- In April 2017, as previously
reported, the Company purchased and cancelled $28.6 million of its senior secured second lien
notes. There are currently $662.9
million of such notes outstanding.
Pieter Sikkel, President and
Chief Executive Officer said, "Fiscal year 2018 continues to
progress in line with our expectations. We achieved solid sales
growth during the third quarter when compared to last year. Our
volume sold has increased, as crop sizes have returned to more
normal levels in many key markets despite reduced crop sizes in
Africa. We are pleased with this
quarter's results and with the continued progress against our key
initiatives and strategic objectives.
"I am excited to announce that Alliance One has embarked on an
ambitious transformation plan called 'One Tomorrow.' This
initiative will drive future growth opportunities and reshape our
brand as the trusted provider of responsibly produced,
independently verified, sustainable, and traceable agricultural
products and services. As part of our 'One Tomorrow' long-term
business strategy, we are actively developing new business lines
and building upon the strength of our core operations.
"As we move forward with our 'One Tomorrow' initiative, Alliance
One will do much more than just package and sell tobacco leaves. We
are pursuing a larger purpose-driven brand vision with the goal of
transforming people's lives so that together we can grow a better
world. We are an agricultural company where the farmer is at the
heart of everything we do. As we move to the future, we will build
upon our core competencies, take measured steps to expand into
promising new sectors that grow our lines of business, and add new
capabilities that fit cohesively into our value-added business
model.
"This quarter's financial performance highlights both the
successful launch of new product lines as well as our proactive
efforts to meet the needs of our leaf business.
Compelling Market Opportunities
"Most of our new business lines focus on products that are
value-added or require some degree of processing. These products
generally have higher margin potential than our core business and
play well to our strengths. In January, we successfully acquired
majority stakes in two new joint ventures. The extension into
growth segments, namely e-liquids, industrial hemp and cannabis,
expands Alliance One's presence in higher margin, fast-growing
categories. We intend to broaden our business portfolio over the
next three to four years by focusing on consumer-driven
agricultural products, with increased operating margins when
compared to our historical leaf processing business. Consistent
with our commitment to growth and incremental to our core leaf
earnings, our goal is to generate a significantly increasing
portion of our profit from new, higher-margin businesses by
2020.
E-Liquids
"In 2014 Alliance One saw an opportunity to
apply the institutional knowledge of our core business when we
started Purilum, LLC as a joint venture between IOTO E-Liquids
America LLC and our subsidiary, AOSP Investments, LLC ("AOSPI").
This investment in a new and growing industry line represented the
start of our journey into a new future.
"Purilum sets the standard for excellence in flavor development,
product quality and compliance – with current good manufacturing
practices. Each ingredient used in its e-liquids and flavors is
subjected to an extensive review in order to maintain Purilum's
position at the forefront of emerging trends. This includes the
testing and evaluation of ingredients for flavors and e-liquids.
Ingredients include traceability from raw materials to finished
product, with batch labeling and quality verification. These
industry-leading standards give Purilum the ability to consistently
meet the quality and capacity demands of its customers.
"In August 2017, AOSPI made a 40%
equity investment in Nicotine River, LLC. This new joint venture
has enhanced Purilum's revenue and profitability growth, and
Purilum's business is anticipated to further expand as it utilizes
its flavor expertise to support product offerings for our new hemp
and cannabis businesses.
Industrial Hemp
"In December
2017, our subsidiary Pure-Ag NC, LLC, acquired a 40% equity
position in North Carolina-based
Criticality, LLC ("Criticality"), with triggers that allow for
consolidation up to 50% on or after March
31, 2020. Criticality utilizes the strength of our farmer
network to grow industrial hemp in North
Carolina under the state's pilot program, which is then used
for cannabidiol hemp oil ("CBD") extraction in Criticality's
facility in North Carolina. Our
five year goal is to become a leader in CBD production and consumer
products.
Cannabis
"In January
2018, our wholly owned indirect subsidiary, Canadian
Cultivated Products, Ltd. acquired a 75% equity position in
Canada's Island Garden Inc.
("CIG") and an 80% stake in Goldleaf Pharm Inc. ("Goldleaf").
"CIG is one of only 35 companies fully licensed to produce and
sell medicinal cannabis under the Access to Cannabis for Medical
Purposes Regulations in Canada
("ACMPR"), and has a 20,000 square foot indoor growing facility in
Charlottetown, Prince Edward
Island. Plans are underway to expand the current facilities
by an additional 250,000 square feet of greenhouse capacity at
their current site. Currently CIG sells products direct to patients
and through distributors. In January, CIG signed a Memorandum of
Understanding with the Province of Prince
Edward Island to be one of three suppliers chosen to supply
the recreational cannabis market that is expected to open in the
summer 2018.
"Goldleaf is a late-stage applicant under the ACMPR for required
licensing to produce and sell medicinal cannabis in Ontario, Canada and is currently completing
construction of a 20,000 square foot indoor growing facility with
further expansion planned for an additional 710,000 square feet of
production over a three year period.
"The combined Canadian cannabis acquisitions are anticipated,
subject to regulatory approvals, to have approximately 1 million
square feet of production space within a three year period and with
the opportunity to become a truly international cannabis company -
expanding into international markets as anticipated legalization of
medicinal and recreational cannabis use progresses around the
world. These acquisitions will integrate and further advance
Purilum's flavor expertise as edibles and vaping products become
permitted under applicable law.
Continued Focus on the Core Business
"Included within our 'One Tomorrow' transformation initiative is
a continued focus on our core business. We recognize that building
upon our core business requires us to remain focused on delivering
high-quality products and services to our core tobacco customers.
Additionally, our contracted farmer base remains a priority for us,
often producing a significant volume of non-tobacco crops utilizing
the inputs and agronomic expertise that our team provides. Alliance
One is working to find markets for these crops as part of our
ongoing efforts to improve farmer livelihoods.
"Our fiscal year forecast is in line with our expectations.
Through the first nine months of the fiscal year, volume increased
1.7% driven mostly by South
America and Asia, and
partially offset by smaller, lower-quality African crops. Excluding
Africa, global market conditions
have been positive and weather patterns good, supporting better
growing conditions. The heavy North American hurricane season did
not materially affect our contracted flue-cured crop and qualities
are generally good. Additionally, we anticipate that, in the fourth
quarter, we will catch up with delayed shipments, which resulted
from a prolonged shortage of containers in South America and China.
"Compared to the prior year, total sales increased $97.0 million or 8.8% to $1,202.1 million attributable to a 7.5% increase
in average sales price due to product mix primarily in South America, North
America, Asia and
Europe. Current year revenues
increased by 8.8% with total costs of goods and services sold
increasing by 7.9% which improved gross profit by 14.7% to
$171.5 million, and gross profit as a
percentage of sales from 13.5% in the prior year to 14.3% in the
current year.
"Current year sales included a higher ratio of lamina to
byproducts than in the prior year. Average tobacco costs per kilo
increased 8.9% predominantly from product mix, although they were
offset favorably by lower conversion costs from the larger current
South America crop. The larger
South America crop size this year
was the primary driver of processing and other revenues increasing
2.1%, with processing costs decreasing 10.1% from lower conversion
costs.
"We are pleased to report that operating income increased by
50.7% to $78.1 million when compared
to the prior year. In addition to a stronger third quarter compared
to the prior year, our fiscal year 2018 forecast remains unchanged
with sales in a range of $1,900.0-$2,000.0
million and Adjusted EBITDA in a range of $165.0-$185.0
million. By fiscal year-end, we also expect good improvement
in our net leverage ratio, defined as total debt minus cash divided
by Adjusted EBITDA. Our goal remains to purchase $25.0-$50.0 million
per year of our more expensive debt.
"We will continue to enhance our sustainability and track and
trace capabilities. Sustainability is core to everything we do and
central to our value proposition with customers and suppliers. From
the field, to our factories, to our products, to our customers'
products, every action we take is centered on the future with
emphasis on continuous improvement. Our focus on sustainability
began many years ago, because it made sense for our business. Only
recently has regulation started to catch-up to standards we
established for ourselves, in labor and environmental impact, as
well as the ability to track and trace crops through the supply
chain."
Mr. Sikkel, concluded, "Future prospects for our business are
bright. We are taking measured steps to strengthen our preferred
supplier role with customers, further developing our position as a
key supplier for both traditional requirements as well as next
generation products. Looking forward, we have begun to transform
the company by diversifying our earnings stream through new
businesses that are complementary to and help support each other by
building on our core capabilities, institutional knowledge,
operational expertise and corporate values. By developing a team
for the future, creating an innovation-driven culture, and
strengthening the balance sheet – we plan to redeploy invested
capital with a goal of achieving net income growth over the next
four years. These actions reflect our ongoing commitment to
providing high-quality products while meeting evolving customer and
consumer preferences. Our transformation strategy is anticipated to
substantially improve the earnings potential and competitiveness of
our company. We are excited about developing and maximizing future
opportunities to drive enhanced shareholder value."
Performance Summary for the Fiscal Quarter Ended December 31, 2017
Volumes increased 0.9% to 102.5 million kilos primarily driven
by the large crop size in South
America normalizing after the smaller weather-related crop
size last year, and the timing of shipments in North America. Volume increases were slightly
offset by volume decreases in Africa due to short weather-related crops this
year, primarily in Malawi.
Total sales and other operating revenues increased 5.1% to
$477.8 million primarily attributable
to a 4.9% increase in average sales prices due to product mix in
Asia, where lamina as a percentage
of Asian sales was 32.6% higher this year compared to last
year.
Gross profit increased 12.8% to $73.5
million, and gross profit as a percentage of sales improved
to 15.4% from 14.3% in the prior year.
SG&A increased $5.9 million to
$34.6 million as a result of higher
professional fees associated with our business development
initiatives and the non-recurrence of a reversal of reserves for
customer receivables in the prior year.
Interest expense decreased 5.4% to $33.2
million from the prior year primarily due to lower average
borrowings on our long-term debt, and seasonal lines of credit
which were at lower average rates.
Cash taxes increased 11.1% to $2.7
million and the effective tax rate was (1,007.6)% this
quarter compared to 692.1% for the same period last year.
This quarter's rate includes a provisional discrete net tax benefit
of $59.4 million due to a
remeasurement of deferred tax assets and liabilities, release of
the valuation allowance, and a so-called transition tax on deemed
repatriation of deferred foreign income resulting from the U.S. Tax
Cuts and Jobs Act ("Tax Act"). For additional information please
refer our Form 10-Q filed with the Securities and Exchange
Commission today.
Performance Summary for the Nine Months Ended December 31, 2017
Volumes increased 1.7% to 255.8 million kilos this year versus
last year due to the larger crop size in South America normalizing after the smaller
weather-related crop size last year, and the timing of shipments in
North America were offset by
volume decreases in Africa due to
short weather-related crops this year primarily in Malawi.
Total sales and other operating revenues increased $97.0 million to $1,202.1
million attributable to a 7.5% increase in average sales
price due to product mix primarily in South America, North
America, Asia and
Europe, and an increase in
volume.
Average tobacco costs per kilo increased 7.9% from product mix
and the impact of European currency movement, which was partially
offset by lower conversion costs.
Gross profit increased 14.7% to $171.5
million and gross profit as a percentage of sales improved
to 14.3% from 13.5% last year. The increase in gross profit was
driven by revenues increasing by 8.8% with total costs of goods and
services sold increasing by 7.9%. The larger South America crop size this year
was the primary driver of processing and other revenues increasing
2.1%, with processing costs decreasing 10.1% from lower conversion
costs.
SG&A increased 2.3% primarily related to higher professional
fees associated with our business development initiatives and the
non-recurrence of a reversal of reserves for customer receivables
in the prior year partially offset by reduced incentive
compensation costs.
Other income increased $5.6
million to $9.9 million,
driven by sales of intrastate trade tax credits in South America and the receipt of South
American funds previously held in escrow that are now covered by
bond.
Operating income increased by 50.7% to $78.1 million when compared to the prior
year.
During the current year, we purchased $28.6 million of our existing senior secured
second lien notes due 2021 at a discount, resulting in debt
retirement income of $3.0
million.
Interest expense increased 2.5% to $100.1
million, mainly due to higher average rates and slightly
higher average balances on our seasonal lines of credit.
Cash taxes increased 78.0% to $12.7
million and the effective tax rate was 396.4% year-to-date
compared to (49.2)% for the same period last year. This period's
rate includes a provisional discrete net tax benefit of
$59.4 million due to a
remeasurement of deferred tax assets and liabilities, release of
the valuation allowance, and a so-called transition tax on deemed
repatriation of deferred foreign income resulting from the Tax Act.
For additional information please refer our Form 10-Q filed with
the Securities and Exchange Commission today.
Earnings Per Share
Third Quarter
For the third quarter ended December 31,
2017, the Company reported a net income of $88.5 million, or $9.83 per basic share, compared to a net loss for
the third fiscal quarter last year of $15.5
million, or $(1.73) per basic
share.
Nine Months
For the first nine months of the year ended December 31, 2017, the Company reported net
income of $56.9 million, or
$6.34 per basic share, compared to a
net loss for the nine months last year of $62.6 million, or $(7.02) per basic share.
Liquidity and Capital Resources
As of December 31, 2017, available
credit lines and cash were $543.8
million, comprised of $209.5
million in cash and $334.3
million of credit lines, consisting of $60.0 million available under the U.S. ABL
facility for general corporate purposes (subject to limitations on
borrowing if unrestricted cash and cash equivalents exceed
$180.0 million), $268.4 million of notes payable to banks and
$5.9 million of availability
exclusively for letters of credit. In the future, the Company may
elect to redeem, repay, make open market purchases, retire or
cancel indebtedness prior to stated maturity under its various
global bank facilities and outstanding public notes, as they may
permit.
Financial Results Investor Call
The Company will hold a conference call to report financial
results for the period ended December 31,
2017, on February 8, 2018 at
5:30 P.M. ET. The dial in number for
the call is (800) 281-7973 or outside the U.S. (323) 794-2093 and
conference ID 4877600. Those seeking to listen to the call may
access a live broadcast on the Alliance One website. Please visit
www.aointl.com 15 minutes in advance to register.
For those who are unable to listen to the live event, a replay
will be available by telephone from 8:30
P.M. ET, February
8th through 8:30 P.M.
ET February 13th.
To access the replay, dial (888) 203-1112 within the U.S., or (719)
457-0820 outside the U.S., and enter access code 4877600. Any
replay, rebroadcast, transcript or other reproduction of this
conference call, other than the replay accessible by calling the
number above, has not been authorized by Alliance One and is
strictly prohibited. Investors should be aware that any
unauthorized reproduction of this conference call may not be an
accurate reflection of its contents.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations of future
events. Such statements include, but are not limited to, statements
about future financial and operating results, plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based on the current beliefs
and expectations of management and are subject to significant risks
and uncertainties. If underlying assumptions prove inaccurate
or known or unknown risks or uncertainties materialize, actual
results may differ materially from those currently anticipated
expected or projected. The following factors, among others, could
cause actual results to differ from those expressed or implied by
the forward-looking statements: changes in the timing of
anticipated shipments, changes in anticipated geographic product
sourcing, political instability, currency and interest rate
fluctuations, shifts in the global supply and demand position for
tobacco products, changes in tax laws and regulations or the
interpretation of tax laws and regulations, resolution of tax
matters, adverse weather conditions, changes in costs incurred in
supplying tobacco and related services, the impact of regulation
and litigation and risks and uncertainties associated with our new
business lines, including the risk of obtaining anticipated
regulatory approvals in Canada, as
well as the anticipation of enactment of Canadian legislation
legalizing the production and sale of cannabis for recreational
use. Additional factors that could cause the Company's results to
differ materially from those expressed or implied by
forward-looking statements can be found in the Company's most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q
for the period ended December 31,
2017 and the other filings with the Securities and Exchange
Commission (the "SEC") which are available at the SEC's Internet
site (http://www.sec.gov).
Non-GAAP Financial Information
This press release contains financial measures that have not
been prepared in accordance with generally accepted accounting
principles in the United States
("U.S. GAAP" or "GAAP"). They include EBITDA, Adjusted EBITDA and
Adjusted Net Debt. Tables showing the reconciliation of these
non-GAAP financial measures are attached to the release. Adjusted
EBITDA anticipated for fiscal year 2018 is calculated in a manner
consistent with the presentation of Adjusted EBITDA in the attached
tables. Because of the forward-looking nature of this estimate of
Adjusted EBITDA, it is impractical to present a quantitative
reconciliation of such measure to a comparable GAAP measure, and
accordingly no such GAAP measure is being presented.
About Alliance One International, Inc.
Alliance One International is an agricultural company that
delivers value-added products and services to businesses and
customers, and is a trusted provider of responsibly sourced,
independently verified, sustainable and traceable products and
ingredients.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
December
31
|
|
December
31
|
(in thousands,
except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Sales and other
operating revenues
|
$
477,783
|
|
$
454,535
|
|
$
1,202,115
|
|
$
1,105,060
|
Cost of goods and
services sold
|
404,282
|
|
389,383
|
|
1,030,648
|
|
955,576
|
Gross
profit
|
73,501
|
|
65,152
|
|
171,467
|
|
149,484
|
Selling, general and
administrative expenses
|
34,625
|
|
28,736
|
|
103,274
|
|
100,904
|
Other
income
|
1,019
|
|
2,688
|
|
9,909
|
|
4,311
|
Restructuring and
asset impairment charges
|
-
|
|
450
|
|
-
|
|
1,068
|
Operating
income
|
39,895
|
|
38,654
|
|
78,102
|
|
51,823
|
Debt retirement
expense
|
-
|
|
2,339
|
|
(2,975)
|
|
2,339
|
Interest
expense
|
33,222
|
|
35,129
|
|
100,079
|
|
97,635
|
Interest
income
|
601
|
|
1,845
|
|
2,295
|
|
5,888
|
Income (loss) before
income taxes and other items
|
7,274
|
|
3,031
|
|
(16,707)
|
|
(42,263)
|
Income tax expense
(benefit)
|
(73,282)
|
|
20,977
|
|
(66,233)
|
|
20,774
|
Equity in net income
(loss) of investee companies
|
7,770
|
|
2,351
|
|
7,121
|
|
290
|
Net income
(loss)
|
88,326
|
|
(15,595)
|
|
56,647
|
|
(62,747)
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
(130)
|
|
(138)
|
|
(289)
|
|
(127)
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
88,456
|
|
$
(15,457)
|
|
$
56,936
|
|
$
(62,620)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
9.83
|
|
$
(1.73)
|
|
$
6.34
|
|
$
(7.02)
|
|
Diluted
|
$
9.80
|
|
$
(1.73)
|
|
$
6.32
|
|
$
(7.02)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
9,001
|
|
8,941
|
|
8,982
|
|
8,923
|
|
Diluted
|
9,029
|
|
8,941
|
|
9,009
|
|
8,923
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(in
thousands)
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
88,456
|
|
$
(15,457)
|
|
$
56,936
|
|
$
(62,620)
|
|
|
|
|
|
|
|
|
Plus: Interest
expense
|
33,222
|
|
35,129
|
|
100,079
|
|
97,635
|
Plus: Income tax
expense (benefit)
|
(73,282)
|
|
20,977
|
|
(66,233)
|
|
20,774
|
Plus: Depreciation
and amortization expense
|
8,174
|
|
8,506
|
|
24,845
|
|
25,859
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
56,570
|
|
49,155
|
|
115,627
|
|
81,648
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances (recoveries) to suppliers(2)
|
-
|
|
-
|
|
-
|
|
-
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
(59)
|
|
(2,943)
|
|
(122)
|
|
(2,801)
|
Plus: Non-cash
employee stock based compensation
|
271
|
|
335
|
|
815
|
|
1,180
|
Less: Other
income
|
1,019
|
|
2,688
|
|
9,909
|
|
4,311
|
Plus: Fully
reserved recovery of tax(3)
|
2,258
|
|
2,382
|
|
6,898
|
|
6,189
|
Plus: Restructuring
and asset impairment charges
|
-
|
|
449
|
|
-
|
|
1,068
|
Plus: Debt retirement
expense (income)
|
-
|
|
2,339
|
|
(2,975)
|
|
2,339
|
Plus: Amortization of
basis difference - CBT investment(4)
|
512
|
|
583
|
|
1,165
|
|
1,208
|
Plus: Kenyan
investigation legal & professional costs
|
161
|
|
436
|
|
1,931
|
|
5,565
|
Less: Kenyan green
leaf operation Adjusted EBITDA(5)
|
1,668
|
|
(840)
|
|
(2,436)
|
|
(6,388)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
57,027
|
|
$
50,888
|
|
$
115,867
|
|
$
98,473
|
|
|
|
|
|
|
|
|
(1) Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
(2) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
(3) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
(4) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
(5) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this
table. In fiscal year 2016 we decided to exit green leaf sourcing
in the Kenyan market as part of our restructuring program. As a
result of recent developments, we are evaluating continuing limited
processing operations in Kenya going forward.
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(in
thousands)
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
(15,457)
|
|
$
11,735
|
|
$
(62,620)
|
|
$
(35,280)
|
|
|
|
|
|
|
|
|
Plus: Interest
expense
|
35,129
|
|
30,356
|
|
97,635
|
|
86,911
|
Plus: Income tax
expense
|
20,977
|
|
1,930
|
|
20,774
|
|
21,617
|
Plus: Depreciation
and amortization expense
|
8,506
|
|
7,057
|
|
25,859
|
|
21,018
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
49,155
|
|
51,079
|
|
81,648
|
|
94,266
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances to suppliers(2)
|
-
|
|
8
|
|
-
|
|
439
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
(2,943)
|
|
(33)
|
|
(2,801)
|
|
(181)
|
Plus: Non-cash
employee stock based compensation
|
335
|
|
600
|
|
1,180
|
|
2,074
|
Less: Other
income
|
2,688
|
|
594
|
|
4,311
|
|
125
|
Plus: Fully
reserved recovery of tax(3)
|
2,382
|
|
1,092
|
|
6,189
|
|
2,251
|
Plus: Restructuring
and asset impairment charges
|
449
|
|
1,525
|
|
1,068
|
|
4,087
|
Plus: Debt retirement
expense
|
2,339
|
|
-
|
|
2,339
|
|
-
|
Plus: Amortization of
basis difference - CBT investment(4)
|
583
|
|
450
|
|
1,208
|
|
1,218
|
Plus: Kenyan
investigation legal & professional costs
|
436
|
|
1,771
|
|
5,565
|
|
1,771
|
Less: Kenyan green
leaf operation Adjusted EBITDA(5)
|
(840)
|
|
(317)
|
|
(6,388)
|
|
(12,193)
|
Plus: Reconsolidated
subsidiary incremental EBITDA after elimination of related party
transactions with AOI and its consolidated
subsidiaries(6)
|
-
|
|
2,864
|
|
-
|
|
8,855
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
50,888
|
|
$
59,080
|
|
$
98,473
|
|
$
126,848
|
|
|
|
|
|
|
|
|
(1) Earnings
before interest, taxes, depreciation and amortization ("EBITDA")
and adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
(2) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
(3) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
(4) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
(5) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is calculated
on the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program. As a
result of recent developments, we are evaluating continuing limited
processing operations in Kenya going forward.
|
|
(6) Adjusted EBITDA
of the subsidiary reconsolidated at the end of the fourth quarter
of fiscal year 2016 is calculated on the same basis as
Adjusted EBITDA as presented in this table, with eliminations for
related party transactions with AOI and its consolidated
subsidiaries, and is included in consolidated information
thereafter.
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
Fiscal Year
Ended
|
|
LTM(8)
|
|
Fiscal Year
Ended
|
|
LTM(8)
|
(in
thousands)
|
March 31,
2017
|
|
December 31,
2017
|
|
March 31,
2016
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
(62,928)
|
|
$
56,628
|
|
$
65,532
|
|
$
38,193
|
|
|
|
|
|
|
|
|
Plus: Interest
expense
|
132,667
|
|
135,110
|
|
117,190
|
|
127,914
|
Plus: Income tax
expense (benefit)
|
23,481
|
|
(63,526)
|
|
32,215
|
|
31,372
|
Plus: Depreciation
and amortization expense
|
34,476
|
|
33,462
|
|
28,361
|
|
33,202
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
127,696
|
|
161,674
|
|
243,298
|
|
230,681
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances (recoveries) to suppliers(2)
|
-
|
|
-
|
|
-
|
|
(439)
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
(5,545)
|
|
(2,866)
|
|
(169)
|
|
(2,788)
|
Plus: Non-cash
employee stock based compensation
|
1,551
|
|
1,186
|
|
2,425
|
|
1,531
|
Less: Other
income
|
4,896
|
|
10,493
|
|
105,427
|
|
109,613
|
Plus: Fully
reserved recovery of tax(3)
|
9,356
|
|
10,065
|
|
4,309
|
|
8,247
|
Plus: Restructuring
and asset impairment charges
|
1,375
|
|
307
|
|
5,888
|
|
2,869
|
Plus: Debt retirement
expense (income)
|
(300)
|
|
(5,614)
|
|
-
|
|
2,339
|
Plus: Amortization of
basis difference - CBT investment(4)
|
1,518
|
|
1,476
|
|
1,554
|
|
1,543
|
Plus: Kenyan
investigation legal & professional costs
|
7,171
|
|
3,538
|
|
8,579
|
|
12,373
|
Less: Kenyan green
leaf operation Adjusted EBITDA(5)
|
(8,013)
|
|
(4,061)
|
|
(16,666)
|
|
(10,861)
|
Plus: Reconsolidated
subsidiary incremental EBITDA after elimination of related party
transactions with AOI and its consolidated
subsidiaries(6)
|
-
|
|
-
|
|
16,800
|
|
7,945
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
145,938
|
|
$
163,333
|
|
$
193,923
|
|
$
165,550
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
$
1,455,132
|
|
|
|
$
1,537,704
|
Less: Debt of
reconsolidated subsidiary funded by affiliate(7)
|
|
|
-
|
|
|
|
77,897
|
Total adjusted
debt
|
|
|
$
1,455,132
|
|
|
|
$
1,459,807
|
Less:
Cash
|
|
|
209,490
|
|
|
|
296,490
|
Total adjusted debt
less cash
|
|
|
1,245,642
|
|
|
|
1,163,317
|
|
|
|
|
|
|
|
|
(Total adjusted debt
less cash) /Adjusted EBITDA(1)(7)
|
|
|
7.63x
|
|
|
|
7.03x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
(2) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
(3) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
(4) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
(5) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is calculated
on the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program. As a
result of recent developments, we are evaluating continuing limited
processing operations in Kenya going forward.
|
|
(6) Adjusted EBITDA
of the subsidiary reconsolidated at the end of the fourth quarter
of fiscal year 2016 is calculated on the same basis as Adjusted
EBITDA as presented in this table, with eliminations for related
party transactions with AOI and its consolidated subsidiaries, and
is included in consolidated information thereafter.
|
|
(7) Represents the
portion of outstanding debt of the subsidiary reconsolidated at the
end of the fourth quarter of the fiscal year ended March 31, 2016
under a credit facility attributable to the participation interest
of another AOI subsidiary funding that portion of the borrowing
under the facility. As a result of a direct assignment of the
interest in such facility to such other AOI subsidiary on March 2,
2017, the amount of the debt attributable to the interest of such
other AOI subsidiary is eliminated in the determination of
consolidated total debt on and after March 2, 2017.
|
|
(8) Items for the
twelve months ended December 31, 2017 are derived by adding the
items for the nine months ended December 31, 2017 and the fiscal
year ended March 31, 2017 and subtracting the items for the nine
months ended December 31, 2016. Items for the twelve months
ended December 31, 2016 are derived by adding the items for the
nine months ended December 31, 2016 and the fiscal year ended March
31, 2016 and subtracting the items for the nine months ended
December 31, 2015.
|
View original
content:http://www.prnewswire.com/news-releases/alliance-one-international-reports-improved-sales-and-gross-profit-for-the-third-quarter-and-nine-months-ended-december-31-2017-and-announces-new-investments-in-compelling-opportunities-300595929.html
SOURCE Alliance One International, Inc.