Interline Brands, Inc. ("Interline" or the "Company"), a leading
distributor and direct marketer of broad-line maintenance, repair
and operations ("MRO") products, reported sales and earnings for
the fiscal quarter ended September 28, 2012(1).
Third Quarter 2012 Highlights:
- Sales increased 5.7%, driven by growth in facilities
maintenance of 8.1%
- Adjusted EBITDA increased 9.9% to $37.5 million or 10.7% of
sales
- Net debt(2) totaled $722.4 million
- During the quarter, affiliates of Goldman Sachs Capital
Partners ("GS Capital Partners") and P2 Capital Partners, LLC ("P2
Capital Partners" or "P2") completed the acquisition of
Interline
"I am very pleased with our performance this quarter as we
realized additional traction in our growth initiatives and higher
yields from our strategic investments. We generated solid
top-line growth driven by continued strength in our core facilities
maintenance market, and we delivered an Adjusted EBITDA margin of
nearly 11% for the quarter. We believe these results further
underscore our value creation potential and strengthen our
confidence in our ability to continue driving operating leverage
over the long-term," commented Michael J. Grebe, Chairman and Chief
Executive Officer.
Mr. Grebe continued, "The third quarter also represented a very
important period for our Company, as we completed our transition to
a privately-held business. We remain excited to have entered
this new chapter in our Company's history. We look forward to
maintaining the momentum we've generated and to further enhancing
our long-term growth profile. I'd like to take this time to
recognize our dedicated associates for their hard work and
continued efforts to building a better business that is positioned
for long-term value creation."
Third Quarter 2012 Results
Sales for the quarter ended September 28, 2012 were $350.3
million, a 5.7% increase compared to sales of $331.3 million in the
comparable 2011 period. On an organic basis, sales increased
5.2% for the quarter. The facilities maintenance end-market,
which comprised 78% of sales, increased 8.1% for the quarter, and
7.5% on an organic basis. The professional contractor
end-market, which comprised 13% of sales, decreased 0.6% for the
quarter. The specialty distributor end-market, which comprised
9% of sales, decreased 4.5% for the quarter.
Gross profit increased $5.0 million, or 4.1%, to $127.4 million
for the third quarter of 2012, compared to $122.3 million for the
third quarter of 2011. As a percentage of sales, gross profit
decreased 50 basis points to 36.4% compared to 36.9% for the third
quarter of 2011.
Selling, general and administrative ("SG&A") expenses for
the third quarter of 2012 increased $1.9 million, or 2.1%, to $92.2
million from $90.3 million for the third quarter of 2011. As a
percentage of sales, SG&A expenses were 26.3% compared to 27.2%
for the third quarter of 2011, a decrease of 90 basis points.
Operating loss of $26.8 million for the third quarter of 2012,
compared to operating income of $26.2 million in the comparable
2011 period, was impacted by $54.6 million in merger-related
expenses associated with the previously disclosed acquisition of
Interline. Excluding these items, Adjusted Operating Income
increased 6.1% to $27.7 million.
Third quarter 2012 Adjusted EBITDA of $37.5 million, or 10.7% of
sales, increased 9.9% compared to $34.1 million, or 10.3% of sales,
in the third quarter of 2011.
Net loss for the third quarter of 2012 was $28.4 million
compared to net income of $12.4 million in the comparable 2011
period. Net loss for the third quarter of 2012 included a
$54.6 million impact due to merger-related expenses associated with
the previously disclosed acquisition of Interline and a related
$2.2 million loss on the extinguishment of debt.
Kenneth D. Sweder, President and Chief Operating Officer
commented, "During the third quarter, we maintained our focus on
key growth initiatives, including expanding our national accounts
program, offering larger product bundles to our institutional
customers and adding incremental revenue from recent personnel
investments. Additionally, we were pleased to generate
additional scale from our operating network at higher levels of
growth."
Operating Free Cash Flow and Leverage
Cash flow used in operating activities for the third quarter of
2012 was $12.9 million compared to cash flow provided by operating
activities of $15.1 million for the third quarter of
2011. Cash flow used in operating activities for the third
quarter of 2012 included a $34.3 million cash impact due to
merger-related expenses associated with the previously disclosed
acquisition of Interline. Third quarter 2012 Operating Free
Cash Flow increased $8.8 million, or 43.6%, to $28.9 million
compared to $20.1 million in the third quarter of 2011.
John A. Ebner, Chief Financial Officer, commented, "Our strong
cash flows during the quarter permitted us to repay $11 million in
debt and reduce our leverage. Additionally, our capital
structure and liquidity position remain strong, which allows us the
flexibility to continue to invest and grow our business."
Key capital structure highlights for the third quarter
include:
- Quarter-end net-debt to last twelve months Further Adjusted
EBITDA ratio of 5.8x
- Cash and cash equivalents of $12.5 million
- Excess availability under revolving credit facility of $156.1
million, net of $69.0 million in borrowings
Year-To-Date 2012 Results
Sales for the nine months ended September 28, 2012 were $998.7
million, a 5.5% increase over sales of $946.4 million in the
comparable 2011 period. On an organic basis, sales increased
5.0% for the nine months ended September 28, 2012.
Gross profit increased $14.6 million, or 4.2%, to $364.0 million
for the nine months ended September 28, 2012, compared to $349.4
million in the prior year period. As a percentage of sales,
gross profit decreased to 36.5% from 36.9% in the comparable 2011
period.
SG&A expenses for the nine months ended September 28, 2012
were $275.7 million, or 27.6% of sales, compared to $266.6 million,
or 28.2% of sales, for the nine months ended September 30, 2011.
Operating income of $11.5 million for the nine months ended
September 28, 2012, compared to $65.3 million in the comparable
2011 period, was impacted by $56.7 million in merger-related
expenses associated with the previously disclosed acquisition of
Interline. Excluding these items, Adjusted Operating Income
increased to $68.3 million.
Adjusted EBITDA of $94.5 million, or 9.5% of sales, for the nine
months ended September 28, 2012 increased 5.8% compared to $89.4
million, or 9.4% of sales, for the nine months ended September 30,
2011.
Net loss for the nine months ended September 28, 2012 was $11.9
million compared to net income of $29.1 million in the comparable
2011 period. Net loss during the nine months ended September
28, 2012 included a $56.7 million impact from merger-related
expenses associated with the previously disclosed acquisition of
Interline and a related $2.2 million loss on extinguishment of
debt.
Cash flow used in operating activities for the nine months ended
September 28, 2012 was $4.4 million compared to cash flow generated
of $43.1 million for the nine months ended September 30,
2011. Cash flow used in operating activities and free cash
flow for the nine months ended September 28, 2012 included a $36.5
million cash impact due to merger-related expenses associated with
the previously disclosed acquisition of Interline. Operating
Free Cash Flow in the nine months ended September 28, 2012 was
$47.8 million compared to Operating Free Cash Flow of $46.5 million
in the comparable 2011 period.
About Interline
Interline Brands, Inc. is a leading distributor and direct
marketer with headquarters in Jacksonville, Florida. Interline
provides broad-line MRO products to a diversified customer base of
facilities maintenance professionals, professional contractors, and
specialty distributors primarily throughout North America, Central
America and the Caribbean. For more information, visit the
Company's website at http://www.interlinebrands.com.
Recent releases and other news, reports and information about
the Company can be found on the "Investor Relations" page of the
Company's website at http://ir.interlinebrands.com/.
Non-GAAP Financial Information
This press release contains financial information determined by
methods other than in accordance with accounting principles
generally accepted in the United States of America ("US
GAAP"). Interline's management uses non-US GAAP measures in
its analysis of the Company's performance. Investors are
encouraged to review the reconciliation of non-US GAAP financial
measures to the comparable US GAAP results available in the
accompanying tables.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
The statements contained in this release which are not
historical facts are forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from those set forth in, or implied by, forward-looking
statements. The Company has tried, whenever possible, to
identify these forward-looking statements by using words such as
"projects," "anticipates," "believes," "estimates," "expects,"
"plans," "intends," and similar expressions. Similarly,
statements herein that describe the Company's business strategy,
outlook, objectives, plans, intentions or goals are also
forward-looking statements. The risks and uncertainties
involving forward-looking statements include, for example, economic
slowdowns, general market conditions, credit market contractions,
consumer spending and debt levels, adverse changes in trends in the
home improvement and remodeling and home building markets, the
failure to realize expected benefits from acquisitions, material
facilities systems disruptions and shutdowns, the failure to
locate, acquire and integrate acquisition candidates, commodity
price risk, foreign currency exchange risk, interest rate risk, the
dependence on key employees and other risks described in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 29, 2012 and in the Company's Annual Report on Form
10-K for the fiscal year ended December 30, 2011. These
statements reflect the Company's current beliefs and are based upon
information currently available to it. Be advised that
developments subsequent to this release are likely to cause these
statements to become outdated with the passage of time. The
Company does not currently intend to update the information
provided today prior to its next earnings release.
(1) To facilitate comparability with the prior year periods, the
attached financial statements present combined Successor (September
8, 2012 to September 28, 2012) and Predecessor (June 30, 2012 to
September 7, 2012) information for the three months ended September
28, 2012 and Successor (September 8, 2012 to September 28, 2012)
and Predecessor (December 31, 2011 to September 7, 2012)
information for the nine months ended September 28, 2012. We
present the combined information to assist readers in understanding
and assessing the trends and significant changes in our results of
operations on a comparable basis. The combined presentation
does not comply with accounting principles generally accepted in
the United States of America, but we believe this combined
presentation is appropriate because it provides a more meaningful
comparison and more relevant analysis of our results of operations
for the three- and nine-month periods ended September 28, 2012,
compared to the three and nine month periods ended September 30,
2011, than a presentation of separate historical results for the
Predecessor and Successor periods would provide. See our
Quarterly Report on Form 10-Q for a presentation of Predecessor and
Successor financial statements.
(2) Net debt is comprised of long-term debt of $756.3 million
plus $0.9 million of capital leases less cash and cash equivalents
of $12.5 million and $22.3 million of unamortized fair value
premium resulting from the acquisition of Interline.
|
INTERLINE BRANDS, INC.
AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
AS OF SEPTEMBER 28, 2012
AND DECEMBER 30, 2011 |
(in thousands, except
share and per share data) |
|
|
|
|
September 28, |
December 30, |
|
2012 |
2011 |
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ 12,509 |
$ 97,099 |
Accounts receivable - trade (net of
allowance for doubtful accounts of $22 and $6,457) |
155,496 |
128,383 |
Inventories |
218,905 |
221,225 |
Prepaid expenses and other current
assets |
27,048 |
26,285 |
Income taxes receivable |
23,886 |
1,123 |
Deferred income taxes |
15,094 |
16,738 |
Total current assets |
452,938 |
490,853 |
|
|
|
Property and equipment, net |
57,135 |
57,728 |
Goodwill |
492,445 |
344,478 |
Other intangible assets, net |
452,549 |
134,377 |
Other assets |
9,462 |
9,022 |
Total assets |
$ 1,464,529 |
$ 1,036,458 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 104,176 |
$ 109,438 |
Accrued expenses and other current
liabilities |
47,379 |
51,864 |
Accrued interest |
13,553 |
2,933 |
Current portion of capital leases |
554 |
669 |
Total current liabilities |
165,662 |
164,904 |
|
|
|
Long-Term Liabilities: |
|
|
Deferred income taxes |
181,425 |
51,776 |
Long-term debt, net of current portion |
756,311 |
300,000 |
Capital leases, net of current portion |
340 |
726 |
Other liabilities |
3,998 |
4,607 |
Total liabilities |
1,107,736 |
522,013 |
Commitments and contingencies |
|
|
Senior preferred stock; $0.01 par value,
20,000,000 authorized; none outstanding as of December 30, 2011
(Predecessor) |
-- |
-- |
|
|
|
Stockholders' Equity: |
|
|
Common stock; $0.01 par value, 2,500,000
authorized; 1,468,762.5373 issued and outstanding as of September
28, 2012 (Successor) |
15 |
-- |
Common stock; $0.01 par value,
100,000,000 authorized; 33,558,842 issued and 31,596,615
outstanding as of December 30, 2011 (Predecessor) |
-- |
335 |
Additional paid-in capital |
381,533 |
599,923 |
Accumulated deficit |
(24,714) |
(59,150) |
Accumulated other comprehensive (loss)
income |
(41) |
1,688 |
Treasury stock, at cost, 1,962,227 as of
December 30, 2011 (Predecessor) |
-- |
(28,351) |
Total stockholders' equity |
356,793 |
514,445 |
Total liabilities and stockholders'
equity |
$ 1,464,529 |
$ 1,036,458 |
|
|
|
|
|
INTERLINE BRANDS, INC. AND
SUBSIDIARIES |
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
THREE AND NINE MONTHS
ENDED SEPTEMBER 28, 2012 AND SEPTEMBER 30, 2011 |
|
|
(in thousands, except share and per
share data) |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 28, |
September 30, |
September 28, |
September 30, |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
Net sales |
$ 350,250 |
$ 331,349 |
$ 998,653 |
$ 946,445 |
Cost of sales |
222,895 |
209,008 |
634,634 |
597,029 |
Gross profit |
127,355 |
122,341 |
364,019 |
349,416 |
|
|
|
|
|
Operating Expenses: |
|
|
|
|
Selling, general and administrative
expenses |
92,191 |
90,253 |
275,680 |
266,592 |
Depreciation and amortization |
7,415 |
5,926 |
20,074 |
17,531 |
Merger-related expenses |
54,559 |
-- |
56,744 |
-- |
Total operating expenses |
154,165 |
96,179 |
352,498 |
284,123 |
Operating (loss) income |
(26,810) |
26,162 |
11,521 |
65,293 |
|
|
|
|
|
Loss on extinguishment of debt |
(2,214) |
-- |
(2,214) |
-- |
Interest expense |
(8,588) |
(6,138) |
(20,690) |
(18,327) |
Interest and other income |
639 |
399 |
1,651 |
1,188 |
(Loss) income before income
taxes |
(36,973) |
20,423 |
(9,732) |
48,154 |
Income tax (benefit) provision |
(8,597) |
8,041 |
2,158 |
19,033 |
Net (loss) income |
$ (28,376) |
$ 12,382 |
$ (11,890) |
$ 29,121 |
|
INTERLINE BRANDS, INC.
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
NINE MONTHS ENDED
SEPTEMBER 28, 2012 AND SEPTEMBER 30, 2011 |
(in
thousands) |
|
|
|
|
September 28, |
September 30, |
|
2012 |
2011 |
Cash Flows from Operating
Activities: |
|
|
Net (loss) income |
$ (11,890) |
$ 29,121 |
Adjustments to reconcile net (loss)
income to net cash (used in) provided by operating
activities: |
|
|
Depreciation and
amortization |
20,074 |
17,531 |
Amortization of deferred
lease incentive obligation |
(601) |
(596) |
Amortization of deferred
debt financing costs |
1,245 |
1,020 |
Amortization of OpCo
Notes fair value adjustment |
(189) |
-- |
Loss on extinguishment of
debt, net |
2,214 |
-- |
Share-based
compensation |
22,182 |
4,425 |
Excess tax benefits from
share-based compensation |
(1,083) |
(858) |
Deferred income
taxes |
12,221 |
6,571 |
Provision for doubtful
accounts |
1,344 |
2,256 |
(Gain) loss on disposal
of property and equipment |
(126) |
107 |
Other |
(500) |
(6) |
|
|
|
Changes in assets and liabilities
which provided (used) cash, net of businesses acquired: |
|
|
Accounts receivable -
trade |
(27,858) |
(25,690) |
Inventories |
(577) |
(2,751) |
Prepaid expenses and other current
assets |
(759) |
4,406 |
Other assets |
38 |
187 |
Accounts payable |
(5,068) |
614 |
Accrued expenses and other current
liabilities |
(772) |
(3,952) |
Accrued interest |
7,482 |
5,521 |
Income taxes |
(21,764) |
5,394 |
Other liabilities |
(35) |
(238) |
Net cash (used in) provided by
operating activities |
(4,422) |
43,062 |
Cash Flows from Investing
Activities: |
|
|
Acquisition of Interline Brands,
Inc. |
(825,717) |
-- |
Purchases of property and
equipment, net |
(13,260) |
(15,036) |
Proceeds from sales and maturities
of short-term investments |
-- |
100 |
Purchase of businesses, net of cash
acquired |
(3,278) |
(9,695) |
Net cash used in investing
activities |
(842,255) |
(24,631) |
Cash Flows from Financing
Activities: |
|
|
Proceeds from equity contributions,
net |
350,886 |
-- |
(Decrease) increase in purchase
card payable, net |
(1,021) |
3,341 |
Proceeds from issuance of senior
notes |
365,000 |
-- |
Repayment of 8⅛% senior
subordinated notes |
-- |
(13,358) |
Proceeds from ABL
Facility |
80,000 |
-- |
Payments on ABL Facility |
(11,000) |
-- |
Payment of debt financing
costs |
(26,701) |
(34) |
Payments on capital lease
obligations |
(502) |
(467) |
Proceeds from stock options
exercised |
5,678 |
641 |
Excess tax benefits from
share-based compensation |
1,083 |
858 |
Purchases of treasury
stock |
(1,450) |
(11,108) |
Net cash provided by (used in)
financing activities |
761,973 |
(20,127) |
Effect of exchange rate changes on cash
and cash equivalents |
114 |
(157) |
Net decrease in cash and cash
equivalents |
(84,590) |
(1,853) |
Cash and cash equivalents at beginning
of period |
97,099 |
86,981 |
Cash and cash equivalents at end of
period |
$ 12,509 |
$ 85,128 |
|
|
|
Supplemental Disclosure of Cash Flow
Information: |
|
|
Cash paid during the period
for: |
|
|
Interest |
$ 11,663 |
$ 11,469 |
Income taxes, net of
refunds |
$ 8,156 |
$ 8,111 |
|
|
|
Schedule of Non-Cash Investing and
Financing Activities: |
|
|
Non-cash equity contribution from
management and shareholders |
$ 23,648 |
$ -- |
Treasury stock acquired through
liabilities |
$ -- |
$ 957 |
Property acquired through lease
incentives |
$ -- |
$ 475 |
Adjustments to liabilities assumed
and goodwill on business acquired |
$ -- |
$ 163 |
Contingent consideration associated
with purchase of business |
$ 300 |
$ 250 |
|
|
|
|
|
INTERLINE BRANDS, INC.
AND SUBSIDIARIES |
|
|
|
|
RECONCILIATION OF
NON-GAAP INFORMATION |
|
|
|
|
THREE AND NINE MONTHS
ENDED SEPTEMBER 28, 2012 AND SEPTEMBER 30, 2011 |
|
|
(in thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daily Sales
Calculations |
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
|
September 28, |
September 30, |
|
September 28, |
September 30, |
|
|
|
2012 |
2011 |
% Variance |
2012 |
2011 |
% Variance |
|
|
|
|
|
|
|
|
Net sales |
|
$ 350,250 |
$ 331,349 |
5.7% |
$ 998,653 |
$ 946,445 |
5.5% |
Less acquisitions: |
(1,517) |
-- |
|
(4,986) |
-- |
|
Organic sales |
$ 348,733 |
$ 331,349 |
5.2% |
$ 993,667 |
$ 946,445 |
5.0% |
|
|
|
|
|
|
|
|
Daily sales: |
|
|
|
|
|
|
Shipping days |
63 |
63 |
|
192 |
192 |
|
Average daily sales
(1) |
$ 5,560 |
$ 5,260 |
5.7% |
$ 5,201 |
$ 4,929 |
5.5% |
Average organic daily
sales (2) |
$ 5,535 |
$ 5,260 |
5.2% |
$ 5,175 |
$ 4,929 |
5.0% |
|
|
|
|
|
|
|
|
(1) Average daily sales are
defined as sales for a period of time divided by the number of
shipping days in that period of time. |
(2) Average organic daily sales
are defined as sales for a period of time divided by the number of
shipping days in that period of time excluding any sales from
acquisitions made subsequent to the beginning of the prior year
period. |
|
Average organic daily sales is
presented herein because we believe it to be relevant and useful
information to our investors since it is used by management to
evaluate the operating performance of our business, as adjusted to
exclude the impact of acquisitions, and compare our organic
operating performance with that of our competitors. However,
average organic daily sales is not a measure of financial
performance under US GAAP and it should be considered in addition
to, but not as a substitute for, other measures of financial
performance reported in accordance with US GAAP, such
as net sales. Management utilizes average organic daily
sales as an operating performance measure in conjunction with US
GAAP measures such as net sales. |
|
|
|
|
|
|
|
|
Adjusted Operating
Income |
|
Three Months
Ended |
Nine Months
Ended |
|
|
|
|
September 28, |
September 30, |
September 28, |
September 30, |
|
|
|
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
|
|
|
|
Operating (loss) income
(GAAP) |
|
$ (26,810) |
$ 26,162 |
$ 11,521 |
$ 65,293 |
|
Merger-related expenses: |
|
|
|
|
|
|
Fees and expenses |
|
36,299 |
-- |
38,484 |
-- |
|
Share-based compensation |
|
18,260 |
-- |
18,260 |
-- |
|
Merger-related expenses |
|
54,559 |
-- |
56,744 |
-- |
|
Adjusted Operating Income |
|
$ 27,749 |
$ 26,162 |
$ 68,265 |
$ 65,293 |
|
|
|
|
|
|
|
|
|
Adjusted Operating Income differs
from US GAAP operating income. We define Adjusted Operating Income
as operating (loss) income plus the fees and expenses related to
the merger and the accelerated share-based compensation resulting
from the merger. Adjusted Operating Income is presented herein
because we believe it to be relevant and useful information to our
investors since it is consistently used by our management to
evaluate the overall operating performance of our business and to
compare our operating performance with prior periods. Adjusted
Operating Income excludes certain items, which we believe are not
indicative of our core operating results. We therefore utilize
Adjusted Operating Income as a useful alternative to net income as
indicators of our operating performance compared to the Company's
plan. However, Adjusted Operating Income is not a measure of
financial performance under US GAAP. Accordingly, Adjusted
Operating Income should not be used in isolation or as a substitute
for other measures of financial performance reported in accordance
with US GAAP, such as gross margin, operating (loss) income, net
(loss) income, cash flows (used in) provided by operating,
investing and financing activities or other income or cash flow
statement data prepared in accordance with US GAAP. While we
believe that some of the items excluded from Adjusted Operating
Icome are not indicative of our core operating results, these items
do impact our income statement, and management therefore utilizes
Adjusted Operating Income as an operating performance measure in
conjunction with US GAAP measures, such as gross margin, operating
(loss) income, net (loss) income, cash flows (used in) provided by
operating, investing and financing activities or other income or
cash flow statement data prepared in accordance with US
GAAP. |
EBITDA, Adjusted EBITDA,
and Further Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Last Twelve |
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
Months Ended |
|
|
|
|
September 28, |
September 30, |
September 28, |
September 30, |
September 28, |
|
|
|
|
2012 |
2011 |
2012 |
2011 |
2012 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
|
Net (loss) income (GAAP) |
|
|
|
$ (28,376) |
$ 12,382 |
$ (11,890) |
$ 29,121 |
$ (3,337) |
Interest expense, net |
|
|
|
8,577 |
6,130 |
20,668 |
18,308 |
26,687 |
Income tax (benefit) provision |
|
|
|
(8,597) |
8,041 |
2,158 |
19,033 |
6,962 |
Depreciation and amortization |
|
|
|
7,415 |
5,926 |
20,074 |
17,531 |
26,282 |
EBITDA |
|
|
|
(20,981) |
32,479 |
31,010 |
83,993 |
56,594 |
|
|
|
|
|
|
|
|
|
EBITDA Adjustments |
|
|
|
|
|
|
|
|
Merger related expenses |
|
|
|
54,559 |
-- |
56,744 |
-- |
56,744 |
Share-based compensation |
|
|
|
1,254 |
1,594 |
3,922 |
4,425 |
5,432 |
Loss on extinguishment of debt |
|
|
|
2,214 |
-- |
2,214 |
-- |
2,214 |
Distribution center closings
and restructuring costs |
|
|
288 |
63 |
396 |
769 |
981 |
Acquisition-related costs, net |
|
|
|
193 |
4 |
263 |
180 |
677 |
Adjusted EBITDA |
|
|
|
$ 37,527 |
$ 34,140 |
$ 94,549 |
$ 89,367 |
122,642 |
Adjusted EBITDA margin |
|
|
|
10.7% |
10.3% |
9.5% |
9.4% |
9.4% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Adjustments |
|
|
|
|
|
|
Public company costs |
|
|
|
|
|
|
|
994 |
Full-year impact of acquisitions |
|
|
|
|
|
|
|
819 |
Further Adjusted EBITDA |
|
|
|
|
|
|
$ 124,455 |
|
|
|
|
|
|
|
|
|
We define EBITDA as net income
adjusted to exclude interest expense, net of interest
income; provision for income taxes; and depreciation and |
amortization. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We define Adjusted EBITDA as
EBITDA adjusted to exclude merger-related expenses associated with
the acquisition of the Company by affiliates of GS Capital Partners
and P2 Capital Partners; share-based compensation, which is
comprised of non-cash compensation arising from the grant of equity
incentive awards; loss on extinguishment of debt, which is
comprised of gains and losses associated with specific significant
financing transactions such as writing off the deferred financing
costs associated with our previous asset-based credit facility;
distribution center closings and restructuring costs, which are
comprised of facility closing costs, such as lease termination
charges, property and equipment write-offs and headcount
reductions, incurred as part of the rationalization of our
distribution network, as well as employee separation costs, such as
severance charges, incurred as part of a restructuring; and
acquisition-related costs, which includes our direct
acquisition-related expenses, including legal, accounting and
incurred as part of a restructuring; and acquisition-related costs,
which includes our direct acquisition-related expenses, including
legal, accounting and other professional fees and expenses arising
from acquisitions, as well as severance charges, stay bonuses, and
fair market value adjustments to earn-outs. |
|
Further Adjusted EBITDA is
defined as Adjusted EBITDA further adjusted to exclude
equity-related public company costs, which are comprised of certain
board of director fees and travel expenses, filing, listing,
transfer agent, equity administration, proxy services and annual
meeting of certain board of director fees and travel expenses,
filing, listing, transfer agent, equity administration, proxy
services and annual meeting of stockholder fees and estimated
expenses associated with investor relations such as consultants and
travel that we believe we will not need to incur after the Merger;
and include the estimated Adjusted EBITDA impact of the acquisition
of Pyramid II Janitorial Supplies and Equipment, Inc. as if we had
acquired it on January 1, 2011, which is comprised of its estimated
EBITDA for the nine-month period ended June 30, 2012 and the actual
EBITDA for the three-months ended September 28, 2012 plus first
year synergies expected to be attained upon full integration. |
|
|
|
|
|
|
|
|
|
EBITDA, Adjusted EBITDA and
Further Adjusted EBITDA differ from Consolidated EBITDA per our
asset-based credit facility agreement for purposes of determining
our net leverage ratio and EBITDA as defined in our indentures. We
believe EBITDA, Adjusted EBITDA and Further Adjusted EBITDA allow
management and investors to evaluate our operating performance
without regard to the adjustments described above which can vary
from company to company depending upon the acquisition history,
capital intensity, financing options and the method by which its
assets were acquired. We continuously manage and monitor our
capital structure, tax position and capital spending to ensure that
they are appropriate. While adjusting for these items limits the
usefulness of these non-US GAAP measures as performance measures
because they do not reflect all the related expenses we incurred,
we believe adjusting for these items and monitoring our performance
with and without them helps management and investors more
meaningfully evaluate and compare the results of our operations
from period to period and to those of other companies. Actual
investors more meaningfully evaluate and compare the results of our
operations from period to period and to those of other companies.
Actual results could differ materially from those presented. We
believe these items for which we are adjusting are not indicative
of our core operating results could differ materially from those
presented. We believe these items for which we are adjusting are
not indicative of our core operating results. These items impacted
net income over the periods presented, which makes direct
comparisons between years less meaningful and more difficult
without adjusting for them. While we believe that some of the items
excluded in the calculation of EBITDA, Adjusted EBITDA and Further
Adjusted EBITDA are not indicative of our core operating results,
these items did impact our income statement during the relevant
periods, and management therefore utilizes EBITDA, Adjusted EBITDA
and Further Adjusted EBITDA as operating performance measures in
conjunction with other measures of financial performance under US
GAAP such as net income. |
|
Operating Free Cash
Flow |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
|
September 28, |
September 30, |
September 28, |
September 30, |
|
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
|
Adjusted EBITDA |
$ 35,527 |
$ 34,140 |
$ 94,549 |
$ 89,367 |
|
|
|
|
|
|
Change in net working capital
items: |
|
|
|
|
Accounts receivable |
(7,394) |
(3,474) |
(27,858) |
(25,690) |
Inventory |
1,676 |
2,026 |
(577) |
(2,751) |
Accounts payable |
2,697 |
(8,066) |
(5,068) |
614 |
(Increase) Decrease in net
working capital |
(3,021) |
(9,514) |
(33,503) |
(27,827) |
|
|
|
|
|
|
Less capital expenditures |
|
(5,590) |
(4,493) |
(13,260) |
(15,036) |
Operating free cash flow |
$ 28,916 |
$ 20,133 |
$ 47,786 |
$ 46,504 |
|
|
|
|
|
|
We define Operating Free Cash
Flow as Adjusted EBITDA adjusted to include the cash provided by
(used for) our core working capital accounts, which are comprised
of accounts receivable, inventory and accounts payable, less
capital expenditures. We believe Operating Free Cash Flow is an
important measure of our liquidity as well as our ability to meet
our financial commitments. We use operating free cash flow in the
evaluation of our business performance. A limitation of this
measure, however, is that it does not reflect payments made in
connection with investments and acquisitions. To compensate for
this limitation, management evaluates its investments and
acquisitions through other return on capital measures. |
CONTACT: Lev Cela
PHONE: 904-421-1441
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