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The "Street has WETF coming in at .15 for the quarter that should be reported on or about February 5, 2016! All post's welcome! The "Good Dr's In"!
Newell Rubbermaid Reports Strong Fourth Quarter Results
6.2% Core Sales Growth; 4.4% Core Sales Growth excluding Venezuela
Normalized EPS $0.56, a 14.3% Increase versus Prior Year
Net Sales Growth 2.3%; Reported EPS $0.05
Reaffirms 2016 Core Sales and Normalized EPS Outlook
Jarden Transaction on Track for Second Quarter Completion
Fourth Quarter Executive Summary
6.2 percent core sales growth, which excludes a 150 basis point net contribution from acquisitions and planned/completed divestitures and a 540 basis point negative impact from foreign currency; 2.3 percent net sales growth
4.4 percent core sales growth excluding contribution from operations in Venezuela
38.5 percent normalized gross margin, an 80 basis point improvement compared with the prior year; 38.3 percent reported gross margin
13.7 percent normalized operating margin, a 30 basis point improvement compared with the prior year; 6.5 percent reported operating margin
$0.56 normalized diluted earnings per share compared with $0.49 in the prior year, a 14.3 percent increase despite a $0.06 negative impact from foreign currency; $0.05 reported diluted earnings per share
Completed sale of Endicia for $209 million in net proceeds, resulting in an after tax gain of $96 million
Announced a definitive agreement to enter into a business combination with Jarden Corporation (“Jarden”) in a cash and equity transaction to create Newell Brands Inc., a $16 billion consumer goods company with a portfolio of powerful leading brands
Deconsolidated its Venezuelan operations as of December 31, 2015, resulting in an after tax charge of $165 million
Reaffirmed 2016 financial outlook for core sales growth of 4 to 5 percent and normalized EPS of $2.21 to $2.30
Business Wire Newell Rubbermaid Inc.
9 hours ago
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ATLANTA--(BUSINESS WIRE)--
Newell Rubbermaid Inc. ( NWL ) announced its fourth quarter 2015 financial results today.
We have delivered another set of strong results for the fourth quarter. Core sales grew 6.2 percent, driven by strengthened innovation, increased brand support and excellent commercial execution, said Michael Polk, President and Chief Executive Officer. All five segments grew core sales, led by Writing growth of 12.5 percent, Baby growth of 10.2 percent, and Commercial Products growth of 5.8 percent. This strong performance, along with continued progress on margins, resulted in normalized earnings per share growth of over 14 percent. Our operating model is working and we enter 2016 with a clear line of sight to another year of strong core sales and earnings growth.
In December, we announced a definitive agreement to combine with Jarden Corporation, creating a $16 billion consumer goods company of leading brands that compete in large, growing and unconsolidated global markets. The combination will substantially scale our presence in key geographies, customers and channels, and is expected to deliver at least $500 million in cost synergies. The transaction is expected to be accretive to normalized earnings per share in year one, with strong double-digit accretion by year three. We are in the process of seeking the necessary regulatory approvals and securing permanent financing, and expect to complete the transaction in the second quarter.
Fourth Quarter 2015 Operating Results
Net sales in the fourth quarter were $1.56 billion compared with $1.53 billion in the prior year. Core sales grew 6.2 percent. Net sales growth includes a 150 basis point net contribution from acquisitions and planned/completed divestitures, and a negative 540 basis point impact from foreign currency.
Normalized gross margin expanded by 80 basis points to 38.5 percent, as benefits from productivity, pricing and favorable input costs more than offset the negative impacts of foreign currency.
Reported gross margin was 38.3 percent, a 70 basis point improvement versus prior year.
Normalized operating margin was 13.7 percent, a 30 basis point improvement compared with the prior year, despite a 70 basis point increase in advertising and promotion. Normalized operating income was $214.2 million compared with $204.6 million in the prior year period.
Fourth quarter reported operating margin was 6.5 percent and operating income was $101.9 million, compared with 7.4 percent and $113.5 million, respectively, in the prior year. Reported operating margin was negatively impacted by higher restructuring and other Project Renewal costs and transaction costs associated with the acquisition of Elmers Products (Elmers) and the agreement to combine with Jarden.
The normalized tax rate was 23.2 percent compared with 26.5 percent in the prior year. On a reported basis, a tax benefit of $13.1 million was recorded in the quarter compared with tax expense of $10.4 million in the prior year.
Normalized net income was $151.1 million compared with $135.3 million in the prior year. Normalized diluted earnings per share were $0.56, an increase of 14.3 percent versus $0.49 in the prior year, with the improvement primarily attributable to the increase in core sales, gross margin expansion, the positive impact of fewer outstanding shares and a lower normalized tax rate, which more than offset negative foreign currency impacts and higher advertising and promotion spend.
Reported net income was $13.2 million compared with $52.0 million in the prior year. Reported diluted earnings per share were $0.05 compared with $0.19 in the prior year. In addition to the factors cited above in the explanation of normalized diluted earnings per share, reported diluted earnings per share benefited from a net gain from the sale of the Endicia on-line postage business and the absence of last years loss on extinguishment of debt, and were negatively impacted by the Venezuela deconsolidation charge and higher restructuring and other Project Renewal transformation costs.
Operating cash flow was $277.7 million compared with $290.8 million in the prior year period.
A reconciliation of the as reported results to normalized results is included in the appendix.
Fourth Quarter 2015 Operating Segment Results
Writing net sales were $466.3 million, an 11.5 percent increase compared with the prior year. Core sales increased 12.5 percent driven by strong innovation, broadened distribution, positive pricing and increased marketing support. Normalized operating income was $105.7 million versus $103.2 million in the prior year. Normalized operating margin was 22.7 percent, compared with 24.7 percent in the prior year, as increased gross margin and reduced overheads were more than offset by increased advertising and promotion spend and negative foreign currency impacts.
Home Solutions net sales were $441.8 million, a 3.7 percent decline compared with prior year. Core sales increased 0.1 percent driven by double-digit Food & Beverage growth largely offset by the planned contraction of the lower margin Rubbermaid Consumer Storage business and a timing shift on Calphalon caused by the transition to new product offerings. Normalized operating income was $57.2 million versus $60.7 million in the prior year. Normalized operating margin was 12.9 percent, compared with 13.2 percent in the prior year, as pricing, input cost deflation and productivity were offset by higher advertising and promotion spend in support of new product launches.
Tools net sales were $207.7 million, an 8.6 percent decline compared with the prior year. Core sales increased 1.4 percent, driven by innovation in North America and strong commercial execution in Europe, largely offset by core sales declines in Brazil. Normalized operating income was $19.5 million compared with $21.5 million in the prior year. Normalized operating margin was 9.4 percent of sales, compared with 9.5 percent of sales in the prior year, as pricing and productivity were offset by the impact of negative foreign currency.
Commercial Products net sales were $207.1 million, a 2.8 percent decline compared with the prior year. Core sales increased 5.8 percent, driven by innovation and pricing in North America and Latin America. Normalized operating income was $27.5 million compared with $24.2 million in the prior year. Normalized operating margin was 13.3 percent, compared with 11.4 percent in the prior year, as pricing, productivity and input cost deflation more than offset the impact of negative foreign currency.
Baby & Parenting net sales were $237.9 million, a 13.9 percent increase compared with the prior year. Core sales grew 10.2 percent driven by strong innovation and marketing in the U.S. Normalized operating income was $27.8 million, compared with $17.3 million in the prior year. Normalized operating margin was 11.7 percent, compared with 8.3 percent in the prior year, as a result of favorable product mix and lower advertising and promotion investment.
Full Year Results
Net sales for the full year ended December 31, 2015 were $5.92 billion, an increase of 3.3 percent compared with $5.73 billion in the prior year. Core sales increased 5.5 percent, or 3.9 percent excluding the contribution from operations in Venezuela. Net sales growth includes a positive 360 basis point net impact from acquisitions and planned/completed divestitures, and a negative 580 basis point impact from foreign currency.
Normalized gross margin was 39.2 percent, an increase of 40 basis points versus the prior year.
Reported gross margin was 39.0 percent, a 50 basis point improvement versus prior year.
Normalized operating margin increased 50 basis points to 14.3 percent compared with 13.8 percent in the prior year. Normalized operating income was $848.6 million compared with $792.6 million in the prior year.
Reported operating margin was 10.2 percent compared with 10.6 percent in the prior year. Full year 2015 reported operating income was $601.4 million compared with $604.7 million in the prior year.
Normalized net income was $590.7 million compared to $557.8 million in the prior year. Normalized diluted earnings per share were $2.18 compared with $2.00 in the prior year, an increase of 9.0 percent despite a negative foreign currency impact of approximately 39 cents.
Reported net income was $350.0 million compared with $377.8 million in the prior year. Reported diluted earnings per share were $1.29 compared with $1.35 in the prior year.
Operating cash flow was $565.8 million compared with $634.1 million in the prior year, reflecting increased cash used for restructuring and other Project Renewal initiatives and a voluntary $70.0 million pension contribution in 2015.
A reconciliation of the as reported results to normalized results is included in the appendix.
Venezuela Update
At the end of 2015, the company deconsolidated the assets and liabilities of its Venezuelan business from the company's balance sheet and moved to the cost method of accounting for its operations in Venezuela. This change reflects the continued deterioration of conditions in the country, including availability of foreign exchange, and resulted in an after tax charge of $165.1 million in the fourth quarter of 2015. This charge includes the $74.7 million of net assets of the companys Venezuela subsidiary along with $58.3 million of Venezuela related assets held by other subsidiaries, resulting in $133.0 million of total charges associated with the deconsolidation of Venezuelas net assets. In addition, in accordance with applicable accounting standards for foreign currency and the transition to the cost method for Venezuela operations, the company was required to write-off the currency translation adjustment that arose prior to the application of hyperinflationary accounting in 2010 that was included in other comprehensive income in equity. The write-off of the currency translation adjustment resulted in a pre-tax charge of $39.7 million, which had no effect on net assets or total equity. Beginning in the first quarter of 2016, the company will no longer include the results of its Venezuelan business in its consolidated financial statements. The company has operated in Venezuela for decades and plans to continue to manufacture and sell products in Venezuela.
2016 Full Year Outlook
Newell Rubbermaid reaffirmed its 2016 core sales growth and normalized EPS guidance metrics excluding Venezuelan operations:
2016 Outlook
Core sales growth 4.0% to 5.0%
Currency (1.0%) to (2.0%)
Acquisitions net of divestitures (0.5%) to 0.5%
Net sales growth 2.5% to 3.5%
Normalized EPS $2.21 to $2.30
The company now expects foreign currency to have a negative impact of about $0.26 to $0.28 per diluted share on 2016 normalized EPS driven by the stronger U.S. dollar to most currencies. In this context, the 2016 normalized EPS guidance represents strong double-digit earnings growth on a currency neutral basis.
The 2016 normalized EPS guidance range excludes between $140 and $160 million of Project Renewal restructuring and other Project Renewal transformation costs. The 2016 normalized EPS guidance range also excludes acquisition and integration costs, which the company is unable to estimate at this time. A reconciliation of expected reported results to normalized results is included in the appendix.
Cumulative costs of Project Renewal are expected to be $690 to $725 million pretax, with cash costs of $645 to $675 million. Annualized savings from Project Renewal through the end of 2015 are $360 million. Project Renewal is expected to generate annualized cost savings of approximately $620 to $675 million by the end of 2017. The majority of these savings will be reinvested in new capabilities and incremental brand building investment for accelerated growth in the companys home markets and the geographic deployment of its Win Bigger portfolio into the faster growing emerging markets.
The companys 2016 guidance includes the impact of the Elmers operations and assumes disposal of the Décor business in the second quarter, but excludes any impact from the Jarden transaction. The 2016 normalized EPS guidance also does not include the companys Venezuela operations, which contributed $0.15 of normalized EPS in 2015. Guidance will be updated for the Jarden transaction closer to the expected closing of the transaction.
Conference Call
The companys fourth quarter 2015 earnings conference call will be held today, January 29, 2016, at 8:30 a.m. ET. A link to the webcast is provided under Events & Presentations in the Investor Relations section of Newell Rubbermaids Web site at www.newellrubbermaid.com . A webcast replay and a supporting slide presentation will be made available in the Investor Relations section on the companys Web site under Quarterly Earnings.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission and includes a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. The company uses certain non-GAAP financial measures that are included in this press release and the additional financial information both in explaining its results to stockholders and the investment community and in its internal evaluation and management of its businesses. The companys management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the companys performance using the same tools that management uses to evaluate the companys past performance, reportable business segments and prospects for future performance and (b) determine certain elements of managements incentive compensation.
The companys management believes that core sales provides a more complete understanding of underlying sales trends by providing sales on a consistent basis as it excludes the impacts of acquisitions, planned and completed divestitures and changes in foreign currency from year-over-year comparisons. As reflected in the Currency Analysis, the effect of foreign currency on reported sales is determined by applying a fixed exchange rate, calculated as the 12-month average in the prior year, to the current and prior year local currency sales amounts (excluding acquisitions and planned and completed divestitures), with the difference in these two amounts being the increase or decrease in core sales, and the difference between the change in as reported sales and the change in core sales reported as the currency impact. The companys management believes that normalized gross margin, normalized SG&A expense, normalized operating income, normalized earnings per share and normalized tax rates, which exclude restructuring and other expenses and one-time and other events such as costs related to product recalls, the extinguishment of debt, certain tax benefits and charges, impairment charges, pension settlement charges, discontinued operations, costs related to the acquisition and integration of acquired businesses, advisory costs for process transformation and optimization initiatives, certain foreign currency impacts, charges associated with the deconsolidation of operations and dedicated personnel and other costs related to transformation initiatives under Project Renewal , are useful because they provide investors with a meaningful perspective on the current underlying performance of the companys core ongoing operations. The company also uses core sales, normalized gross margin and normalized earnings per share as the three performance criteria in its management cash bonus plan, and the company uses core sales and normalized earnings per share as two of the three performance criteria in its performance-based equity compensation arrangements.
The company determines the tax effect of the items excluded from normalized diluted earnings per share by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the company uses a with and without approach to determine normalized income tax expense.
While the company believes that these non-GAAP financial measures are useful in evaluating the companys performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2015 sales of $5.9 billion and a strong portfolio of leading brands, including Sharpie®, Paper Mate®, Elmers®, Irwin®, Lenox®, Rubbermaid Commercial Products®, Contigo®, Rubbermaid®, Calphalon®, Goody®, Graco®, Aprica®, Baby Jogger®, Dymo®, Parker® and Waterman®. As part of the companys Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the companys Web site, www.newellrubbermaid.com .
Caution Concerning Forward-Looking Statements
Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating margin or gross margin improvements or declines, Project Renewal, capital and other expenditures, cash flow, dividends, restructuring and other project costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, changes in exchange rates, product recalls, expected benefits, synergies and financial results from recently completed acquisitions and planned acquisitions and divestitures and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power and consolidation of our retail customers; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands, including the ability to realize anticipated benefits of increased advertising and promotion spend; product liability, product recalls or regulatory actions; our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; a failure of one of our key information technology systems or related controls; the potential inability to attract, retain and motivate key employees; future events that could adversely affect the value of our assets and require impairment charges; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations, including exchange controls and pricing restrictions; our ability to realize the expected benefits, synergies and financial results from our recently acquired businesses and pending acquisitions; our inability to obtain stockholder or domestic and foreign regulatory approvals required to complete planned acquisitions and divestitures; failure to satisfy a condition to closing of planned acquisitions and divestitures; our ability to complete planned acquisitions and divestitures; difficulties or high costs associated with securing financing necessary to pay the cash portion of the merger consideration contemplated by the pending Jarden transaction; risks related to the substantial indebtedness that Newell Rubbermaid will incur in connection with the pending Jarden transaction and our ability to maintain our investment grade credit ratings; difficulties integrating our business with Jarden and unexpected costs or expenses associated with the pending Jarden transaction; and those factors listed in our most recently filed Quarterly Report on Form 10-Q and Exhibit 99.1 thereto filed with the Securities and Exchange Commission. Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
Additional Information and Where to Find it
In connection with the pending Jarden transaction, Newell Rubbermaid and Jarden have filed a registration statement on Form S-4 that includes the Joint Proxy Statement of Newell Rubbermaid and Jarden and that also constitutes a prospectus of Newell Rubbermaid. Newell Rubbermaid and Jarden plan to mail to their respective shareholders the Joint Proxy Statement/Prospectus in connection with the pending Jarden transaction. WE URGE INVESTORS AND SHAREHOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT NEWELL RUBBERMAID, JARDEN, AND THE PENDING JARDEN TRANSACTION. Investors and shareholders are able to obtain copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Newell Rubbermaid and Jarden free of charge at the SECs website, www.sec.gov . In addition, investors and shareholders are able to obtain free copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Newell Rubbermaid by accessing Newell Rubbermaids website at www.newellrubbermaid.com by clicking on the Investor Relations link and then clicking on the SEC Filings link or by contacting Newell Rubbermaid Investor Relations at investor.relations@newellrubbermaid.com or by calling 1-800-424-1941. Shareholders may also read and copy any reports, statements and other information filed by Newell Rubbermaid or Jarden with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SECs website for further information on its public reference room.
Participants in the Merger Solicitation
Newell Rubbermaid, Jarden and certain of their respective directors, executive officers and other persons may be considered participants in the solicitation of proxies from the respective shareholders of Newell Rubbermaid and Jarden in respect of the proposed combination contemplated by the Joint Proxy Statement/Prospectus. Information regarding Newell Rubbermaids directors and executive officers is available in Newell Rubbermaids Form 10-K filed with the SEC on March 2, 2015, its proxy statement filed with the SEC on April 1, 2015 in connection with its 2015 annual meeting of stockholders and its Forms 8-K filed with the SEC on February 12, 2015, May 19, 2015, October 9, 2015, November 16, 2015, December 14, 2015 and December 29, 2015. Information regarding Jardens directors and executive officers is available in Jardens Form 10-K filed with the SEC on March 2, 2015, its proxy statement filed with the SEC on April 20, 2015 in connection with its 2015 annual meeting of stockholders and its Forms 8-K filed with the SEC on January 5, 2015, June 9, 2015, December 17, 2015 and January 7, 2016. Other information regarding persons who may be considered participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC.
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Three Months Ended December 31,
YOY
2015 2014 % Change
Net sales $ 1,560.8 $ 1,526.0 2.3 %
Cost of products sold 963.6 951.9
GROSS MARGIN 597.2 574.1 4.0 %
% of sales 38.3 % 37.6 %
Selling, general &
administrative expenses 427.6 385.6 10.9 %
% of sales 27.4 % 25.3 %
Pension settlement charge 52.1 65.4
Restructuring costs 15.6 9.6
OPERATING INCOME 101.9 113.5 (10.2 )%
% of sales 6.5 % 7.4 %
Nonoperating expenses:
Interest expense, net 25.1 16.7
Loss on extinguishment of debt - 33.2
Venezuela deconsolidation charge 172.7 -
Other (income) expense, net (3.1 ) 3.9
194.7 53.8
NMF
(LOSS) INCOME BEFORE INCOME TAXES (92.8 ) 59.7
NMF
% of sales (5.9 )% 3.9 %
Income taxes (13.1 ) 10.4
NMF
Effective rate 14.1 % 17.4 %
NET (LOSS) INCOME FROM CONTINUING OPERATIONS (79.7 ) 49.3
NMF
% of sales (5.1 )% 3.2 %
Income from discontinued operations, net of tax 92.9 2.7
NET INCOME $ 13.2 $ 52.0 (74.6 )%
0.8 % 3.4 %
EARNINGS PER SHARE:
Basic
(Loss) income from continuing operations $ (0.30 ) $ 0.18
Income from discontinued operations $ 0.35 $ 0.01
Net income $ 0.05 $ 0.19
Diluted
(Loss) income from continuing operations $ (0.30 ) $ 0.18
Income from discontinued operations $ 0.35 $ 0.01
Net income $ 0.05 $ 0.19
AVERAGE SHARES OUTSTANDING:
Basic 268.1 272.7
Diluted 268.1 275.6
NMF - Not meaningful
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Year Ended December 31,
YOY
2015 2014 % Change
Net sales $ 5,915.7 $ 5,727.0 3.3 %
Cost of products sold 3,611.1 3,523.6
GROSS MARGIN 2,304.6 2,203.4 4.6 %
% of sales 39.0 % 38.5 %
Selling, general &
administrative expenses 1,573.9 1,480.5 6.3 %
% of sales 26.6 % 25.9 %
Pension settlement charge 52.1 65.4
Restructuring costs 77.2 52.8
OPERATING INCOME 601.4 604.7 (0.5 )%
% of sales 10.2 % 10.6 %
Nonoperating expenses:
Interest expense, net 79.9 60.4
Loss on extinguishment of debt - 33.2
Venezuela deconsolidation charge 172.7 -
Other expense, net 11.3 49.0
263.9 142.6 85.1 %
INCOME BEFORE INCOME TAXES 337.5 462.1 (27.0 )%
% of sales 5.7 % 8.1 %
Income taxes 78.2 89.1 (12.2 )%
Effective rate 23.2 % 19.3 %
NET INCOME FROM CONTINUING OPERATIONS 259.3 373.0 (30.5 )%
% of sales 4.4 % 6.5 %
Income from discontinued operations, net of tax 90.7 4.8
NET INCOME $ 350.0 $ 377.8 (7.4 )%
5.9 % 6.6 %
EARNINGS PER SHARE:
Basic
Income from continuing operations $ 0.96 $ 1.35
Income from discontinued operations $ 0.34 $ 0.02
Net income $ 1.30 $ 1.37
Diluted
Income from continuing operations $ 0.96 $ 1.34
Income from discontinued operations $ 0.33 $ 0.02
Net income $ 1.29 $ 1.35
AVERAGE SHARES OUTSTANDING:
Basic 269.3 276.1
Diluted 271.5 278.9
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
December 31, December 31,
Assets: 2015 2014
Cash and cash equivalents $ 274.8 $ 199.4
Accounts receivable, net 1,250.7 1,248.2
Inventories, net 721.8 708.5
Prepaid expenses and other 147.8 136.1
Assets held for sale 98.4 -
Total Current Assets 2,493.5 2,292.2
Property, plant and equipment, net 599.2 559.1
Goodwill 2,791.2 2,546.0
Other intangible assets, net 1,063.7 887.2
Deferred income taxes 38.5 21.1
Other assets 291.9 240.7
Total Assets $ 7,278.0 $ 6,546.3
Liabilities and Stockholders' Equity:
Accounts payable $ 644.5 $ 674.1
Accrued compensation 185.2 159.9
Other accrued liabilities 730.1 657.2
Short-term debt 382.9 390.7
Current portion of long-term debt 5.9 6.7
Liabilities held for sale 40.0 -
Total Current Liabilities 1,988.6 1,888.6
Long-term debt 2,687.6 2,084.5
Deferred income taxes 226.6 87.7
Other noncurrent liabilities 548.8 630.6
Stockholders' Equity - Parent 1,822.9 1,851.4
Stockholders' Equity - Noncontrolling Interests 3.5 3.5
Total Stockholders' Equity 1,826.4 1,854.9
Total Liabilities and Stockholders' Equity $ 7,278.0 $ 6,546.3
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Year Ended December 31,
2015 2014
Operating Activities:
Net income $ 350.0 $ 377.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 171.6 156.1
Net gain from sale of discontinued operations, including impairments (154.2 ) (2.2 )
Loss on extinguishments of debt - 33.2
Non-cash restructuring costs 6.7 7.2
Deferred income taxes (12.8 ) 39.3
Stock-based compensation expense 29.2 29.9
Pension settlement charge 52.1 65.4
Venezuela deconsolidation charge 172.7 -
Other, net 32.5 69.1
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:
Accounts receivable (42.5 ) (140.9 )
Inventories (97.8 ) (28.2 )
Accounts payable 20.3 87.3
Accrued liabilities and other 38.0 (59.9 )
Net cash provided by operating activities $ 565.8 $ 634.1
Investing Activities:
Proceeds from sale of divested businesses and fixed assets $ 214.8 $ 19.0
Capital expenditures
(211.4
) (161.9 )
Acquisitions and acquisition-related activity
(573.7
) (602.3 )
Cash related to deconsolidated Venezuela operations (97.5 )
-
Other 17.9 (6.7 )
Net cash used in investing activities $ (649.9 ) $ (751.9 )
Financing Activities:
Net short-term borrowings and related issuance costs $ (57.0 ) $ 217.3
Proceeds from issuance of debt, net of debt issuance costs 594.6 841.8
Payments on debt - (465.2 )
Repurchase and retirement of shares of common stock (180.4 ) (363.2 )
Cash dividends (206.3 ) (182.5 )
Excess tax benefits related to stock-based compensation 27.1 10.6
Other stock-based compensation activity, net (5.7 ) 60.2
Net cash provided by financing activities $ 172.3 $ 119.0
Currency rate effect on cash and cash equivalents $ (12.8 ) $ (28.1 )
Increase (decrease) in cash and cash equivalents $ 75.4 $ (26.9 )
Cash and cash equivalents at beginning of year 199.4 226.3
Cash and cash equivalents at end of year $ 274.8 $ 199.4
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Newell Rubbermaid Inc.
Financial Worksheet- Segment Reporting
(In Millions)
2015 2014
Reconciliation (1,2,3,4) Reconciliation (1,2) Year-over-year changes
Reported
OI
Excluded
Items Normalized
OI Operating
Margin Reported
OI Excluded
Items Normalized
OI Operating
Margin Net Sales Normalized OI
Net Sales Net Sales $ % $ %
Q1:
Writing $ 341.8 $ 82.4 $ 0.6 $ 83.0 24.3 % $ 348.2 $ 76.1 $ - $ 76.1 21.9 % $ (6.4 ) (1.8 )% $ 6.9 9.1 %
Home Solutions 364.5 38.5 0.1 38.6 10.6 % 316.4 26.8 - 26.8 8.5 % 48.1 15.2 % 11.8 44.0 %
Tools 180.4 22.2 - 22.2 12.3 % 187.8 21.4 - 21.4 11.4 % (7.4 ) (3.9 )% 0.8 3.7 %
Commercial Products 185.2 17.0 0.6 17.6 9.5 % 182.6 13.8 - 13.8 7.6 % 2.6 1.4 % 3.8 27.5 %
Baby & Parenting 192.1 0.5 11.8 12.3 6.4 % 179.3 5.4 11.0 16.4 9.1 % 12.8 7.1 % (4.1 ) (25.0 )%
Restructuring Costs - (27.3 ) 27.3 - - (12.0 ) 12.0 - - -
Corporate - (35.1 ) 14.0 (21.1 ) - (26.8 ) 7.7 (19.1 ) - (2.0 ) (10.5 )%
Total $ 1,264.0 $ 98.2 $ 54.4 $ 152.6 12.1 % $ 1,214.3 $ 104.7 $ 30.7 $ 135.4 11.2 % $ 49.7 4.1 % $ 17.2 12.7 %
2015 2014
Reconciliation (1,3,4) Reconciliation (1,2,3) Year-over-year changes
Reported
OI Excluded
Items Normalized
OI Operating
Margin Reported
OI Excluded
Items Normalized
OI Operating
Margin Net Sales Normalized OI
Net Sales Net Sales $ % $ %
Q2:
Writing $ 495.9 $ 132.5 $ 0.5 $ 133.0 26.8 % $ 489.3 $ 129.1 $ 4.0 $ 133.1 27.2 % $ 6.6 1.3 % $ (0.1 ) (0.1 )%
Home Solutions 438.5 68.7 1.2 69.9 15.9 % 383.4 48.7 - 48.7 12.7 % 55.1 14.4 % 21.2 43.5 %
Tools 205.2 23.4 - 23.4 11.4 % 222.3 29.9 - 29.9 13.5 % (17.1 ) (7.7 )% (6.5 ) (21.7 )%
Commercial Products 210.6 28.9 0.1 29.0 13.8 % 223.5 36.2 - 36.2 16.2 % (12.9 ) (5.8 )% (7.2 ) (19.9 )%
Baby & Parenting 210.7 16.7 0.1 16.8 8.0 % 183.7 12.2 0.4 12.6 6.9 % 27.0 14.7 % 4.2 33.3 %
Restructuring Costs - (13.3 ) 13.3 - - (11.5 ) 11.5 - - -
Corporate - (42.2 ) 19.5 (22.7 ) - (31.3 ) 10.5 (20.8 ) - (1.9 ) (9.1 )%
Total $ 1,560.9 $ 214.7 $ 34.7 $ 249.4 16.0 % $ 1,502.2 $ 213.3 $ 26.4 $ 239.7 16.0 % $ 58.7 3.9 % $ 9.7 4.0 %
2015 2014
Reconciliation (1,3,4)
Reconciliation (1,2,3,4)
Year-over-year changes
Reported
OI Excluded
Items Normalized
OI Operating
Margin Reported
OI Excluded
Items Normalized
OI Operating
Margin Net Sales Normalized OI
Net Sales Net Sales $ % $ %
Q3:
Writing $ 459.5 $ 114.1 $ 2.3 $ 116.4 25.3 % $ 453.2 $ 108.3 $ 1.1 $ 109.4 24.1 % $ 6.3 1.4 % $ 7.0 6.4 %
Home Solutions 459.4 76.0 0.5 76.5 16.7 % 417.0 60.9 3.1 64.0 15.3 % 42.4 10.2 % 12.5 19.5 %
Tools 196.7 20.5 - 20.5 10.4 % 214.8 22.1 1.4 23.5 10.9 % (18.1 ) (8.4 )% (3.0 ) (12.8 )%
Commercial Products 206.8 29.5 1.9 31.4 15.2 % 218.0 27.5 - 27.5 12.6 % (11.2 ) (5.1 )% 3.9 14.2 %
Baby & Parenting 207.6 10.2 - 10.2 4.9 % 181.5 8.2 2.4 10.6 5.8 % 26.1 14.4 % (0.4 ) (3.8 )%
Restructuring Costs - (21.0 ) 21.0 - - (19.7 ) 19.7 - - -
Corporate - (42.7 ) 20.1 (22.6 ) - (34.1 ) 12.0 (22.1 ) - (0.5 ) (2.3 )%
Total $ 1,530.0 $ 186.6 $ 45.8 $ 232.4 15.2 % $ 1,484.5 $ 173.2 $ 39.7 $ 212.9 14.3 % $ 45.5 3.1 % $ 19.5 9.2 %
2015 2014
Reconciliation (1,3,4,5,6) Reconciliation (1,2,3,4,6) Year-over-year changes
Reported
OI Excluded
Items Normalized
OI Operating
Margin Reported
OI Excluded
Items Normalized
OI Operating
Margin Net Sales Normalized OI
Net Sales Net Sales $ % $ %
Q4:
Writing $ 466.3 $ 101.8 $ 3.9 $ 105.7 22.7 % $ 418.2 $ 103.1 $ 0.1 $ 103.2 24.7 % $ 48.1 11.5 % $ 2.5 2.4 %
Home Solutions 441.8 55.2 2.0 57.2 12.9 % 458.6 59.6 1.1 60.7 13.2 % (16.8 ) (3.7 )% (3.5 ) (5.8 )%
Tools 207.7 19.0 0.5 19.5 9.4 % 227.3 21.2 0.3 21.5 9.5 % (19.6 ) (8.6 )% (2.0 ) (9.3 )%
Commercial Products 207.1 25.4 2.1 27.5 13.3 % 213.0 23.8 0.4 24.2 11.4 % (5.9 ) (2.8 )% 3.3 13.6 %
Baby & Parenting 237.9 27.8 - 27.8 11.7 % 208.9 14.8 2.5 17.3 8.3 % 29.0 13.9 % 10.5 60.7 %
Restructuring Costs - (15.6 ) 15.6 - - (9.6 ) 9.6 - - -
Corporate - (111.7 ) 88.2 (23.5 ) - (99.4 ) 77.1 (22.3 ) - (1.2 ) (5.4 )%
Total $ 1,560.8 $ 101.9 $ 112.3 $ 214.2 13.7 % $ 1,526.0 $ 113.5 $ 91.1 $ 204.6 13.4 % $ 34.8 2.3 % $ 9.6 4.7 %
2015 2014
Reconciliation (1,2,3,4,5,6) Reconciliation (1,2,3,4,6) Year-over-year changes
Reported
OI Excluded
Items Normalized
OI Operating
Margin Reported
OI Excluded
Items Normalized
OI Operating
Margin Net Sales Normalized OI
Net Sales Net Sales $ % $ %
FY:
Writing $ 1,763.5 $ 430.8 $ 7.3 $ 438.1 24.8 % $ 1,708.9 $ 416.6 $ 5.2 $ 421.8 24.7 % $ 54.6 3.2 % $ 16.3 3.9 %
Home Solutions 1,704.2 238.4 3.8 242.2 14.2 % 1,575.4 196.0 4.2 200.2 12.7 % 128.8 8.2 % 42.0 21.0 %
Tools 790.0 85.1 0.5 85.6 10.8 % 852.2 94.6 1.7 96.3 11.3 % (62.2 ) (7.3 )% (10.7 ) (11.1 )%
Commercial Products 809.7 100.8 4.7 105.5 13.0 % 837.1 101.3 0.4 101.7 12.1 % (27.4 ) (3.3 )% 3.8 3.7 %
Baby & Parenting 848.3 55.2 11.9 67.1 7.9 % 753.4 40.6 16.3 56.9 7.6 % 94.9 12.6 % 10.2 17.9 %
Restructuring Costs - (77.2 ) 77.2 - - (52.8 ) 52.8 - - -
Corporate - (231.7 ) 141.8 (89.9 ) - (191.6 ) 107.3 (84.3 ) - (5.6 ) (6.6 )%
Total $ 5,915.7 $ 601.4 $ 247.2 $ 848.6 14.3 % $ 5,727.0 $ 604.7 $ 187.9 $ 792.6 13.8 % $ 188.7 3.3 % $ 56.0 7.1 %
(1) Excluded items include project-related costs and restructuring costs associated with Project Renewal. Project-related costs of $89.9 million and $74.0 million of restructuring costs incurred during 2015 relate to Project Renewal. For 2014, project-related costs of $33.8 million and restructuring costs of $52.8 million relate to Project Renewal. Excluded items for 2014 also include $10.2 million of advisory costs for process transformation and optimization.
(2) Baby & Parenting normalized operating income for 2015 and 2014 excludes charges of $10.2 million and $15.0 million, respectively, relating to the Graco product recall.
(3) Writing normalized operating income for 2015 and 2014 excludes charges of $2.6 million and $5.2 million, respectively, associated with Venezuelan inventory resulting from changes in the exchange rate for the Venezuelan Bolivar.
(4) Home Solutions normalized operating income for 2015 excludes $1.3 million of operating costs associated with the acquisition and integration of Ignite Holdings, LLC and bubba brands, and Baby & Parenting normalized operating income for 2015 excludes $1.7 million of operating costs associated with the acquisition and integration of Baby Jogger. Restructuring costs excluded from normalized earnings include $3.2 million of costs associated with the integration of Ignite, bubba and Baby Jogger. Writing normalized operating income for 2015 excludes $1.2 million of acquisition and integration costs related to Elmer's. In addition, normalized operating income for 2015 excludes $10.8 million of acquisition costs related to the pending Jarden transaction. For 2014, Home Solutions normalized operating income excludes $4.2 million of acquisition and integration costs associated with the acquisitions of Ignite Holdings, LLC and bubba brands, and Baby & Parenting normalized operating income excludes $1.3 million of costs associated with the acquisition of Baby Jogger.
(5) Home Solutions normalized operating income for 2015 excludes $0.2 million of costs associated with the planned divestiture of Décor.
(6) Normalized operating income for 2015 and 2014 excludes $52.1 million and $65.4 million, respectively, of settlement charges associated with the settlement of U.S. pension liabilities for certain participants with plan assets.
...
Newell Rubbermaid Inc.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
CERTAIN LINE ITEMS
(in millions, except per share data)
Three Months Ended December 31, 2015
GAAP Measure Project Renewal Costs (1)
Inventory charge from
the devaluation of the
Venezuelan Bolivar (2)
Acquisition
and integration
costs (3)
Pension
settlement
charge (5)
Net asset
charge-
Venezuela (7)
Currency
translation charge-
Venezuela (7)
Non-GAAP Measure
Advisory
Costs Personnel
Costs Other
Costs Restructuring
Costs Planned
divestiture (4)
Non-recurring
tax items (6)
Discontinued
operations (8) Percentage
of Sales
Reported Normalized*
Cost of products sold $ 963.6 $ - $ (1.5 ) $ (2.2 ) $ - $ (0.6 ) $ - $ - $ - $ - $ - $ - $ - $ 959.3 61.5 %
Gross margin $ 597.2 $ - $ 1.5 $ 2.2 $ - $ 0.6 $ - $ - $ - $ - $ - $ - $ - $ 601.5 38.5 %
Selling, general & administrative expenses $ 427.6 $ (10.3 ) $ (7.9 ) $ (10.2 ) $ - $ - $ (11.7 ) $ (0.2 ) $ - $ - $ - $ - $ - $ 387.3 24.8 %
Operating income $ 101.9 $ 10.3 $ 9.4 $ 12.4 $ 15.4 $ 0.6 $ 11.9 $ 0.2 $ 52.1 $ - $ - $ - $ - $ 214.2 13.7 %
Nonoperating expenses $ 194.7 $ - $ - $ - $ - $ - $ (4.5 ) $ - $ - $ - $ (133.0 ) $ (39.7 ) $ - $ 17.5
(Loss) income before income taxes $ (92.8 ) $ 10.3 $ 9.4 $ 12.4 $ 15.4 $ 0.6 $ 16.4 $ 0.2 $ 52.1 $ - $ 133.0 $ 39.7 $ - $ 196.7
Income taxes (12) $ (13.1 ) $ 4.4 $ 4.0 $ 5.4 $ 4.8 $ 0.4 $ 6.2 $ 0.1 $ 19.8 $ 6.0 $ (2.7 ) $ 10.3 $ - $ 45.6
Net (loss) income from continuing operations $ (79.7 ) $ 5.9 $ 5.4 $ 7.0 $ 10.6 $ 0.2 $ 10.2 $ 0.1 $ 32.3 $ (6.0 ) $ 135.7 $ 29.4 $ - $ 151.1
Net income $ 13.2 $ 5.9 $ 5.4 $ 7.0 $ 10.6 $ 0.2 $ 10.2 $ 0.1 $ 32.3 $ (6.0 ) $ 135.7 $ 29.4 $ (92.9 ) $ 151.1
Diluted earnings per share** $ 0.05 $ 0.02 $ 0.02 $ 0.03 $ 0.04 $ 0.00 $ 0.04 $ 0.00 $ 0.12 $ (0.02 ) $ 0.51 $ 0.11 $ (0.35 ) $ 0.56
Three Months Ended December 31, 2014
GAAP Measure
Restructuring and
restructuring-related
costs (1)
Inventory charge
from the devaluation of the
Venezuelan Bolivar (2)
Advisory costs for
process transformation
and optimization (10)
Acquisition
and integration
costs (3)
Pension
settlement
charge (5)
Loss on
extinguishment
of debt (11)
Non-GAAP Measure
Product
recall costs (9)
Discontinued
operations (8)
Percentage
of Sales
Reported Normalized*
Cost of products sold $ 951.9 $ (0.7 ) $ (0.5 ) $ (0.1 ) $ - $ - $ - $ - $ - $ 950.6 62.3 %
Gross margin $ 574.1 $ 0.7 $ 0.5 $ 0.1 $ - $ - $ - $ - $ - $ 575.4 37.7 %
Selling, general & administrative expenses $ 385.6 $ (0.5 ) $ (7.6 ) $ - $ (4.3 ) $ (2.4 ) $ - $ - $ - $ 370.8 24.3 %
Operating income $ 113.5 $ 1.2 $ 17.7 $ 0.1 $ 4.3 $ 2.4 $ 65.4 $ - $ - $ 204.6 13.4 %
Nonoperating expenses $ 53.8 $ - $ - $ - $ - $ - $ - $ (33.2 ) $ - $ 20.6
Income before income taxes $ 59.7 $ 1.2 $ 17.7 $ 0.1 $ 4.3 $ 2.4 $ 65.4 $ 33.2 $ - $ 184.0
Income taxes (12) $ 10.4 $ 0.4 $ 0.9 $ (0.9 ) $ 1.6 $ 0.9 $ 23.5 $ 11.9 $ - $ 48.7
Contact:
Newell Rubbermaid Inc.
Nancy O’Donnell, 770-418-7723
Vice President, Investor Relations
or
Racquel White, 770-418-7643
Vice President, Global Communications & Culture
Apple Reports Record First Quarter Results
iPhone, Apple Watch, Services & Apple TV Drive All-time Record Revenue
Results Produce Record Quarterly Profit of $18.4 Billion
Business Wire
Apple Inc.
January 26, 2016 4:30 PM
CUPERTINO, Calif.--(BUSINESS WIRE)--
Apple® today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.
“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”
“Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” said Luca Maestri, Apple’s CFO. “We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program.”
Apple is providing the following guidance for its fiscal 2016 second quarter:
• revenue between $50 billion and $53 billion
• gross margin between 39 percent and 39.5 percent
• operating expenses between $6 billion and $6.1 billion
• other income/(expense) of $325 million
• tax rate of 25.5 percent
Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016.
Apple will provide live streaming of its Q1 2016 financial results conference call beginning at 2:00 p.m. PST on January 26, 2016 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.
Q1’16 Earnings Supplemental Material
This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2015, and its Form 10-Q for the fiscal quarter ended December 26, 2015 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.
NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.
© 2016 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended
December 26,
2015
December 27,
2014
Net sales $ 75,872 $ 74,599
Cost of sales (1) 45,449 44,858
Gross margin 30,423 29,741
Operating expenses:
Research and development (1) 2,404 1,895
Selling, general and administrative (1) 3,848 3,600
Total operating expenses 6,252 5,495
Operating income 24,171 24,246
Other income/(expense), net 402 170
Income before provision for income taxes 24,573 24,416
Provision for income taxes 6,212 6,392
Net income $ 18,361 $ 18,024
Earnings per share:
Basic $ 3.30 $ 3.08
Diluted $ 3.28 $ 3.06
Shares used in computing earnings per share:
Basic 5,558,930 5,843,082
Diluted 5,594,127 5,881,803
Cash dividends declared per share $ 0.52 $ 0.47
(1) Includes share-based compensation expense as follows:
Cost of sales $ 204 $ 140
Research and development $ 466 $ 374
Selling, general and administrative $ 408 $ 374
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in thousands and par value)
December 26,
2015
September 26,
2015
ASSETS:
Current assets:
Cash and cash equivalents $ 16,689 $ 21,120
Short-term marketable securities 21,385 20,481
Accounts receivable, less allowances of $63 in each period 12,953 16,849
Inventories 2,451 2,349
Vendor non-trade receivables 11,668 13,494
Other current assets 11,073 15,085
Total current assets 76,219 89,378
Long-term marketable securities 177,665 164,065
Property, plant and equipment, net 22,300 22,471
Goodwill 5,202 5,116
Acquired intangible assets, net 3,924 3,893
Other non-current assets 7,974 5,556
Total assets $ 293,284 $ 290,479
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 33,312 $ 35,490
Accrued expenses 24,032 25,181
Deferred revenue 8,989 8,940
Commercial paper 7,259 8,499
Current portion of long-term debt 2,500 2,500
Total current liabilities 76,092 80,610
Deferred revenue, non-current 3,546 3,624
Long-term debt 53,204 53,463
Other non-current liabilities 32,175 33,427
Total liabilities 165,017 171,124
Commitments and contingencies
Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,544,487 and 5,578,753 shares issued and outstanding, respectively 28,253 27,416
Retained earnings 101,494 92,284
Accumulated other comprehensive income/(loss) (1,480) (345)
Total shareholders' equity 128,267 119,355
Total liabilities and shareholders' equity $ 293,284 $ 290,479
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended
December 26, 2015 December 27, 2014
Cash and cash equivalents, beginning of the period $ 21,120 $ 13,844
Operating activities:
Net income 18,361 18,024
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 2,954 2,575
Share-based compensation expense 1,078 888
Deferred income tax expense 1,592 2,197
Changes in operating assets and liabilities:
Accounts receivable, net 3,896 751
Inventories (102) (172)
Vendor non-trade receivables 1,826 (3,508)
Other current and non-current assets (893) (1,648)
Accounts payable (852) 9,003
Deferred revenue (29) 945
Other current and non-current liabilities (368) 4,667
Cash generated by operating activities 27,463 33,722
Investing activities:
Purchases of marketable securities (47,836) (44,915)
Proceeds from maturities of marketable securities 3,514 2,807
Proceeds from sales of marketable securities 28,262 24,166
Payments made in connection with business acquisitions, net (86) (23)
Payments for acquisition of property, plant and equipment (3,612) (3,217)
Payments for acquisition of intangible assets (394) (48)
Other (298) 65
Cash used in investing activities (20,450) (21,165)
Financing activities:
Proceeds from issuance of common stock 1 80
Excess tax benefits from equity awards 224 264
Payments for taxes related to net share settlement of equity awards (597) (512)
Payments for dividends and dividend equivalents (2,969) (2,801)
Repurchase of common stock (6,863) (5,030)
Proceeds from issuance of term debt, net 0 3,485
Change in commercial paper, net (1,240) (2,409)
Cash used in financing activities (11,444) (6,923)
Increase/(decrease) in cash and cash equivalents (4,431) 5,634
Cash and cash equivalents, end of the period $ 16,689 $ 19,478
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 3,398 $ 3,869
Cash paid for interest $ 396 $ 202
Apple Inc.
Q1 2016 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q1 2016 Q4 2015 Q1 2015 Sequential Change Year/Year Change
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $29,325 $21,773 $30,566 35% - 4%
Europe 17,932 10,577 17,214 70% 4%
Greater China 18,373 12,518 16,144 47% 14%
Japan 4,794 3,929 5,448 22% - 12%
Rest of Asia Pacific 5,448 2,704 5,227 101% 4%
Total Apple $75,872 $51,501 $74,599 47% 2%
Q1 2016 Q4 2015 Q1 2015 Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 74,779 $51,635 48,046 $32,209 74,468 $51,182 56% 60% 0% 1%
iPad (1) 16,122 7,084 9,883 4,276 21,419 8,985 63% 66% - 25% - 21%
Mac (1) 5,312 6,746 5,709 6,882 5,519 6,944
- 7%
- 2% - 4% - 3%
Services (2) 6,056 5,086 4,799 19% 26%
Other Products (1)(3) 4,351 3,048 2,689 43% 62%
Total Apple $75,872 $51,501 $74,599 47% 2%
(1)
Includes deferrals and amortization of related software upgrade rights and non-software services.
(2)
Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.
(3)
Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160126006616/en/
Contact:
Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com
Jewett-Cameron Announces 1st Quarter Financial Results
.
PR Newswire
Jewett-Cameron Trading Company Ltd.
January 14, 2016 4:20 PM
NORTH PLAINS, Ore., Jan. 14, 2016 /PRNewswire/ -- Jewett-Cameron Trading Company Ltd. (JCTCF) today reported financial results for the first quarter of fiscal 2016 ended November 30, 2015.
Sales were $11.94 million for the first quarter of fiscal 2016 compared to sales of $7.98 million for the first quarter of fiscal 2015. Income from operations for the quarter was $885,204 compared to $529,899 in the year-ago quarter. Net income was $532,245, or $0.21 per share, for the current quarter compared to net income of $327,787, or $0.12 per share, for the first quarter of fiscal 2015.
"The increase in sales for the quarter was due to our efforts to expand our customer base to new smaller and mid-sized customers, as well as the continued acceptance of our new products introduced during fiscal 2015," said CEO Don Boone. "The new products have been particularly well-received by our established customer base, which has led to sales increases with our largest customers."
As of November 30, the Company's cash position was $4.36 million, and currently there is no borrowing against its $3.0 million line of credit. The Company has historically utilized its cash position by implementing share repurchase programs as an effective method of enhancing shareholder value. The Company's most recent share repurchase plan was terminated on July 17, 2015. The Board of Directors will consider implementing new share repurchase plans in the future as an effective use of the Company's cash position.
About Jewett-Cameron Trading Company Ltd.
Jewett-Cameron Trading Company is a holding company that, through its subsidiaries, operates out of facilities located in North Plains, Oregon. Jewett-Cameron Company's business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States. Greenwood Products is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries in the United States. MSI-PRO is an importer and distributor of pneumatic air tools, industrial clamps, and the Avenger Products line of sawblades and other products. Jewett-Cameron Seed Company is a processor and distributor of agricultural seeds. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.
Forward-looking Statements
The information in this release contains certain forward-looking statements that anticipate future trends and events. These statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks, including but not limited to, the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry, and other factors detailed in the Company's SEC filings. Accordingly, actual results may differ, possibly materially, from predictions contained herein.
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
November 30,
2015
August 31,
2015
ASSETS
Current assets
Cash
$ 4,360,625
$ 4,416,297
Accounts receivable, net of allowance of $Nil (August 31, 2015 - $Nil)
4,319,826
3,688,247
Inventory, net of allowance of $72,730 (August 31, 2015 - $120,824)
8,162,241
8,351,575
Note receivable
360
1,310
Prepaid expenses
1,052,468
719,459
Prepaid income taxes
-
26,570
Total current assets
17,895,520
17,203,458
Property, plant and equipment, net
2,184,901
2,231,711
Intangible assets, net
205,073
223,250
Total assets
$ 20,285,494
$ 19,658,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$ 955,516
$ 984,955
Litigation reserve
84,010
90,671
Accrued liabilities
1,142,483
1,024,358
Total current liabilities
2,182,009
2,099,984
Deferred tax liability
47,105
34,300
Total liabilities
2,229,114
2,134,284
Contingent liabilities and commitments
Stockholders' equity
Capital stock
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,476,832 common shares (August 31, 2015 – 2,476,832)
1,168,712
1,168,712
Additional paid-in capital
600,804
600,804
Retained earnings
16,286,864
15,754,619
Total stockholders' equity
18,056,380
17,524,135
Total liabilities and stockholders' equity
$ 20,285,494
$ 19,658,419
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
Three Months Ended
November 30,
2015
2014
SALES
$ 11,941,508
$ 7,982,617
COST OF SALES
9,561,653
6,112,594
GROSS PROFIT
2,379,855
1,870,023
OPERATING EXPENSES
Selling, general and administrative expenses
542,793
461,448
Depreciation and amortization
75,513
69,083
Wages and employee benefits
876,345
809,593
1,494,651
1,340,124
Income from operations
885,204
529,899
OTHER ITEMS
Interest and other income
8,734
6,895
8,734
6,895
Income before income taxes
893,938
536,794
Income tax expense
(361,693)
(209,007)
Net income
$ 532,245
$ 327,787
Basic earnings per common share
$ 0.21
$ 0.12
Diluted earnings per common share
$ 0.21
$ 0.12
Weighted average number of common shares outstanding:
Basic
2,476,832
2,688,942
Diluted
2,476,832
2,688,942
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
Three Month Periods
Ended November 30,
2015
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$ 532,245
$ 327,787
Items not involving an outlay of cash:
Depreciation and amortization
75,513
69,083
Deferred income taxes
12,805
3,717
Interest income on litigation
(6,661)
(6,661)
Changes in non-cash working capital items:
Increase in accounts receivable
(631,579)
(277,686)
(Increase) decrease in inventory
189,334
(1,590,622)
Decrease in note receivable
950
15,000
Decrease in prepaid income taxes
26,570
205,171
(Increase) decrease in prepaid expenses
(333,009)
192,557
Increase in accounts payable and accrued liabilities
88,686
12,848
Net cash used by operating activities
(45,146)
(1,048,806)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(10,526)
(1,280)
Net cash used in investing activities
(10,526)
(1,280)
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock
-
(1,292,477)
Net cash used in financing activities
-
(1,292,477)
Net decrease in cash
(55,672)
(2,342,563)
Cash, beginning of period
4,416,297
4,327,540
Cash, end of period
$ 4,360,625
$ 1,984,977
Contact: Don Boone, President & CEO, (503) 647-0110
The "Street" has NFLX coming in at .04 for the quarter that should be reported on or about January 19, 2016! All post's welcome! The "Good Dr's In"!
The "Street" has NFLX coming in at .04 for the quarter that should be reported on or about January 19, 2016! All post's welcome! The "Good Dr's In"!
The "Street" has NFLX coming in at .04 for the quarter that should be reported on or about January 19, 2016! All post's welcome! The "Good Dr's In"!
AZZ Inc. Reports Financial Results for the Third Quarter of Fiscal Year 2016
Third Quarter Fiscal 2016 EPS of $0.91, up 18.2% compared to $0.77 in Fiscal 2015
Third Quarter Revenues of $242.4 million, up $17.6 million or 7.8% over Fiscal 2015
Third Quarter Operating Margin reported at 15.0% compared to 14.6% in Fiscal 2015
AZZ Narrows Previously Announced Fiscal Year 2016 Earnings and Revenue Guidance of EPS to $2.90 - $3.10 and Sales of $890 - $915 million
PR Newswire
AZZ Inc.
January 8, 2016 6:30 AM
FORT WORTH, Texas, Jan. 8, 2016 /PRNewswire/ -- AZZ Inc. (AZZ), a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution and industrial markets today announced financial results for the three month and nine month periods ended November 30, 2015.
Management Discussion
Tom Ferguson, president and chief executive officer of AZZ Inc., commented, "Financial results for the third quarter were solid, as we achieved double-digit net income and EPS growth. The strategic investment in our Energy Segment to improve our sales team and our technology to provide our customers innovative solutions continues to gain traction and drive profitability. Our WSI specialty welding business continues to penetrate and gain market share in the global markets that we serve. Quoting activity for the quarter was strong, and the current backlog in our Energy Segment remains solid."
Mr. Ferguson continued, "In the Galvanizing Service Segment, the market continued to present some challenges in the Gulf Coast region from lower oil prices, but we are gaining strength in other sectors to partially compensate, including bridge and highway and electric utilities. Internally, we continue to integrate the recently acquired U.S. Galvanizing operations, and are on track to meet our operational performance expectations for the acquired plants. During the third quarter we continued to improve processes and invested in various maintenance items and production equipment for a successful integration. We have completed the construction of our newest hot-dip galvanizing plant in Reno, Nevada and as of this week are fully operational."
Mr. Ferguson concluded, "I continue to believe that fiscal 2016 will finish well and we are narrowing our guidance for fiscal 2016 EPS to the range of $2.90 to $3.10 per diluted share and revenues in the range of $890 million to $915 million, compared to our previously issued guidance of EPS in the range of $2.85 to $3.30 per diluted share and revenues in the range of $900 million to $940 million. We remain confident in our global opportunities and look forward to a solid fiscal 2016 and beyond."
Third Quarter Results
Revenues for the third quarter of fiscal 2016 were $242.4 million compared to $224.8 million for the same quarter last year, an increase of 7.8%. Net income for the third quarter increased 17.9% to $23.5 million, or $0.91 per diluted share, compared to net income of $20.0 million, or $0.77 per diluted share, for the third fiscal quarter of last year.
Earnings for the third quarter of fiscal 2016 reflected a gross margin of 25.8% compared to 27.0% in the third quarter of fiscal 2015. This decrease is attributable to the acquisition of U.S. Galvanizing during the second quarter of fiscal 2016.
SG&A expense as a percentage of sales was 10.7%, a decrease from 12.4% in the prior fiscal year as a result of our continued entity wide focus on operating efficiencies and prior year realignment efforts. As a result, operating margins improved to 15.0% compared to 14.6% in the third quarter of fiscal 2015.
Additionally the effective tax rate was reduced to 28.0% in the current quarter compared to 30.4% in the third quarter of the prior year primarily as a result of capturing certain state tax benefits.
Incoming orders for the third quarter of fiscal 2016 were $228.7 million while shipments for the third quarter totaled $242.4 million, resulting in a book to ship ratio of 94%. In the third quarter of last year incoming orders were $196.1 million, resulting in a book to ship ratio of 87%. Our backlog at the end of the third quarter of fiscal 2016 was $324.4 million, an increase of 8.0% compared to backlog at the end of the prior year third quarter of $300.3 million. Approximately 33% of the backlog is scheduled to be delivered outside the U.S.
Energy Segment
Revenues for the Energy Segment for the third quarter of fiscal 2016 were $136.0 million as compared to $130.1 million for the same quarter last year, increasing 4.6%. Operating income for the Energy Segment increased by $2.4 million or 14.3% to $18.8 million compared $16.5 million in the same period last year. Operating margins for the third quarter were 13.9% as compared to 12.7% in the prior year period.
Galvanizing Services Segment
Revenues for the Galvanizing Services Segment for the third quarter were $106.4 million, compared to the $94.8 million in the same period last year, an increase of 12.3% primarily due to the positive impact of the acquisition of U.S. Galvanizing during the second quarter of fiscal 2016. Operating income increased 4.8% to $24.3 million as compared to $23.2 million in the third quarter of fiscal 2015. Operating margins for the third quarter were 22.8%, compared to 24.4% in the same period last year.
Conference Call
AZZ Inc. will conduct a conference call to review the financial results for the third quarter of fiscal year 2016 at 11:00 a.m. ET on Friday, January 8, 2016. Interested parties can access the conference call by dialing (844) 855-9499 or (412) 317-5497 (international). The call will be webcast via the Internet at http://www.azz.com/investor-relations. A replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088 (international), confirmation #10077749, or for 30 days at http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure. AZZ Galvanizing is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Energy is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in the energy markets worldwide.
Safe Harbor Statement
Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as, "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. This release may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand and response to products and services offered by AZZ, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, and the hot dip galvanizing markets; prices and raw material cost, including zinc and natural gas which are used in the hot dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic, customer requested delays of shipments, acquisition opportunities, currency exchange rates, adequacy of financing, and availability of experienced management and employees to implement AZZ's growth strategy. AZZ has provided additional information regarding risks associated with the business in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2015 and other filings with the SEC, available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact:
Paul Fehlman, Senior Vice President - Finance and CFO
AZZ Inc. 817-810-0095
Internet: www.azz.com
Lytham Partners 602-889-9700
Joe Dorame or Robert Blum
Internet: www.lythampartners.com
6:35 am AZZ beats by $0.02, misses on revs; narrows FY16 guidance (AZZ) :
•Reports Q3 (Nov) earnings of $0.91 per share, $0.02 better than the Capital IQ Consensus of $0.89; revenues rose 7.8% year/year to $242.4 mln vs the $249.87 mln Capital IQ Consensus.
•Co narrows guidance for FY16, sees EPS of $2.90-3.10 from $2.85-3.30, excluding non-recurring items, vs. $3.03 Capital IQ Consensus; sees FY16 revs $890-915 mln from $900-940 mln vs. $909.34 mln Capital IQ Consensus Estimate.
•"Our WSI specialty welding business continues to penetrate and gain market share in the global markets that we serve. Quoting activity for the quarter was strong, and the current backlog in our Energy Segment remains solid. In the Galvanizing Service Segment, the market continued to present some challenges in the Gulf Coast region from lower oil prices, but we are gaining strength in other sectors to partially compensate, including bridge and highway and electric utilities."
6:35 am AZZ beats by $0.02, misses on revs; narrows FY16 guidance (AZZ) :
•Reports Q3 (Nov) earnings of $0.91 per share, $0.02 better than the Capital IQ Consensus of $0.89; revenues rose 7.8% year/year to $242.4 mln vs the $249.87 mln Capital IQ Consensus.
•Co narrows guidance for FY16, sees EPS of $2.90-3.10 from $2.85-3.30, excluding non-recurring items, vs. $3.03 Capital IQ Consensus; sees FY16 revs $890-915 mln from $900-940 mln vs. $909.34 mln Capital IQ Consensus Estimate.
•"Our WSI specialty welding business continues to penetrate and gain market share in the global markets that we serve. Quoting activity for the quarter was strong, and the current backlog in our Energy Segment remains solid. In the Galvanizing Service Segment, the market continued to present some challenges in the Gulf Coast region from lower oil prices, but we are gaining strength in other sectors to partially compensate, including bridge and highway and electric utilities."
6:35 am AZZ beats by $0.02, misses on revs; narrows FY16 guidance (AZZ) :
•Reports Q3 (Nov) earnings of $0.91 per share, $0.02 better than the Capital IQ Consensus of $0.89; revenues rose 7.8% year/year to $242.4 mln vs the $249.87 mln Capital IQ Consensus.
•Co narrows guidance for FY16, sees EPS of $2.90-3.10 from $2.85-3.30, excluding non-recurring items, vs. $3.03 Capital IQ Consensus; sees FY16 revs $890-915 mln from $900-940 mln vs. $909.34 mln Capital IQ Consensus Estimate.
•"Our WSI specialty welding business continues to penetrate and gain market share in the global markets that we serve. Quoting activity for the quarter was strong, and the current backlog in our Energy Segment remains solid. In the Galvanizing Service Segment, the market continued to present some challenges in the Gulf Coast region from lower oil prices, but we are gaining strength in other sectors to partially compensate, including bridge and highway and electric utilities."
Associated Press
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Newell Rubbermaid and Jarden Corporation Announce Consumer Goods Combination with $16 Billion Revenue
- Strong portfolio of leading brands to be called Newell Brands
- Transaction expected to be immediately accretive to normalized EPS
- Substantial revenue synergies and $500 million cost synergies over four years
Executive Summary
• Jarden shareholders will receive, for each Jarden share, $21 in cash and 0.862 of a share in Newell Rubbermaid stock at closing; Newell Rubbermaid shareholders will own approximately 55 percent of the company after the transaction is complete
• Combination creates $16 billion consumer goods company with portfolio of power brands in large, growing and unconsolidated global markets
• Transaction expected to substantially scale presence in key retailers, channels, and geographies resulting in increased speed and impact of extended distribution, cross-sell, and market deployment
• Complementary portfolios expected to accelerate existing business plans and growth in Food & Beverage, Baby Products, Commercial Products, Kitchenware & Appliances
• Newell Brands expects to be a leader in innovation, brand building and best-in-class execution with an increased exposure to fast growing eCommerce channels and scaled presence in priority international markets
• $500 million in incremental cost synergies expected over the next four years; combination expected to be immediately accretive with strong double digit normalized earnings per share accretion post synergy realization
• Newell Brands expects to maintain investment grade rating due to the combined business’ strong cash generative profile and commitment to a target leverage ratio of 3.0 to 3.5 times following a temporary increase in leverage metrics
• Annualized dividend per share will be maintained at or above the current Newell Rubbermaid annualized level of $0.76 per share
• Annual adjusted EBITDA of over $3 billion post synergies creates long-term opportunity to strengthen the company further through active portfolio management
• Michael B. Polk, currently Chief Executive Officer of Newell Rubbermaid, to become Chief Executive Officer of Newell Brands. Mark S. Tarchetti, currently Chief Development Officer of Newell Rubbermaid, to become President of Newell Brands upon completion of the transaction
• Three Jarden Corporation Directors to join the Newell Brands Board of Directors, including Martin E. Franklin, Founder and Executive Chairman of Jarden, and Ian G. H. Ashken, Co-Founder, Vice Chairman and President of Jarden
• Michael T. Cowhig, currently non-executive Chairman of Newell Rubbermaid, to remain non-executive Chairman of thirteen member Newell Brands Board of Directors
• Investment community conference call to be held today at 8:00 a.m. ET
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Business Wire
Newell Rubbermaid
8 hours ago
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ATLANTA & MIAMI--(BUSINESS WIRE)--
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Newell Rubbermaid (NWL) and Jarden Corporation (JAH) today announced that they have entered into a definitive agreement to combine the two companies. The transaction creates a $16 billion consumer goods company to be named Newell Brands, with a portfolio of leading brands in large unconsolidated categories, including Paper Mate®, Sharpie®, EXPO®, Parker®, Elmer’s®, Calphalon®, Rubbermaid®, Graco®, Baby Jogger®, Aprica®, Goody®, Irwin®, Lenox®, Rubbermaid Commercial Products®, Coleman®, First Alert®, FoodSaver®, Jostens®, K2®, NUK®, Oster®, Rawlings®, Sunbeam® and Yankee Candle®. The scaled enterprise is expected to accelerate profitable growth with leading brands that compete in a global market that exceeds $100 billion, with business and capability development supported by the efficiencies of this transformational combination.
This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20151214005428/en/
“The combination of these two great companies creates a $16 billion consumer goods company with incredible potential to grow and create value,” said Michael B. Polk, Newell Rubbermaid President and Chief Executive Officer. “The scale of our combined businesses in key categories, channels and geographies creates a much broader canvas on which to leverage our advantaged set of brand development and commercial capabilities for accelerated growth and margin expansion. I have long respected the value creation track record and entrepreneurial vision of Jarden’s founder, Martin E. Franklin, co-founder Ian G.H. Ashken, and their team led by Chief Executive Officer James E. Lillie. I want to congratulate Jim on his strong leadership of Jarden over the last twelve years and his work positioning the business for the opportunity ahead, and I look forward to working with Martin and Ian as we drive the new Newell Brands towards its aspiration of becoming one of the preeminent consumer goods companies in the world.”
Martin E. Franklin, Executive Chairman and Founder of Jarden, said, “I am delighted that we are to play a part in bringing together these two winning companies. The combination offers significant value for our shareholders and the opportunity to participate in the combined company’s long-term value creation potential as shareholders in Newell Brands. I’m extremely proud of Jarden’s success over the past 14 years, which has been driven by an extraordinary culture designed to perform at a high level. We have spent significant time with Newell Rubbermaid’s senior management team and are convinced they have a similar ambition and drive. I’m excited by the opportunities for this new combined organization and I look forward to being part of this dynamic new chapter.”
James E. Lillie, Chief Executive Officer of Jarden, added, “This combination is focused on driving shareholder value and accelerating the growth and profitability of both businesses. Together, the business can move faster, globally leveraging the expertise and ability of the dedicated and talented employee base. The combined scale of both businesses will create opportunities for shareholders, customers and employees as the two businesses are very complementary in vision and in their ability to execute. I unequivocally support Mike and the combined teams in executing against the opportunity before us.”
Transaction Summary
Under the terms of the agreement, Jarden shareholders will receive, for each Jarden share, $21 in cash and 0.862 shares of Newell Rubbermaid stock at closing. Based on Newell Rubbermaid’s closing share price as of December 11, 2015, the implied total consideration would be $60 per share, which represents a 24 percent premium to Jarden’s 30-day volume weighted average share price as of December 11, 2015.
The transaction will be funded by cash on hand, debt and equity issued to Jarden shareholders; convertible bondholders will be entitled to convert in exchange for the merger consideration in conjunction with the transaction. Newell Rubbermaid has obtained a committed bridge facility, which it expects to replace with permanent financing prior to closing. Newell Brands intends to maintain its investment grade credit rating by using strong cash flow from the combined company to prioritize debt reduction in the short term towards a target leverage ratio of 3.0 to 3.5 times. Newell Brands expects to achieve the target ratio within two to three years, while simultaneously maintaining or increasing its dividend per share.
Newell Rubbermaid anticipates incremental annualized cost synergies of approximately $500 million over four years, driven by efficiencies of scale and new efficiencies in procurement, cost to serve and infrastructure that the combination unlocks. The company’s intent is to design a benchmarked, efficient set of structures that support long term business development. The transaction is projected to be immediately accretive with strong double-digit normalized earnings per share accretion post synergy realization.
The acquisition is subject to approval by shareholders of both Newell Rubbermaid and Jarden Corporation, receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the second quarter of 2016.
Management and Governance
Upon the closing of the transaction, Newell Brands will be led by Michael B. Polk as Chief Executive Officer.
The Newell Brands Board of Directors will be expanded to include three representatives of the Jarden Board, including Martin E. Franklin, Founder and Executive Chairman of Jarden and Ian G. H. Ashken, Co-Founder, Vice Chairman and President of Jarden. The new thirteen member Newell Brands Board will be chaired by current Newell Rubbermaid non-executive Chairman Michael Cowhig.
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Mark Tarchetti, currently Chief Development Officer, Newell Rubbermaid, will become the President of Newell Brands upon completion of the transaction, with an initial focus leading the integration of the companies, including synergy delivery, portfolio strategy and long-term business development plans such as accelerated market deployment of the brands at home and internationally. He will also be responsible for the creation of a number of enterprise-wide capabilities, including Design, Innovation, Insights, eCommerce, and Direct-to-Consumer commerce.
Bill Burke, currently Chief Operating Officer, Newell Rubbermaid, will lead the legacy Jarden business upon completion of the transaction, working closely with Richard Sansone, Jarden’s Executive Vice President of Operations and the senior leadership teams across the Jarden businesses to deliver the current business plans while working with Mark Tarchetti to insure the seamless transition of Jarden into Newell Brands.
“Given the magnitude of the opportunity ahead, I’m delighted that Bill and Mark will continue their partnership working with Rich and the great talent that Jarden brings to the combination. This is an important time, and the process of learning more about the brands, the people and the opportunities represented by the combined business is critical to realization of the full potential of the transformation,” said Polk.
As previously announced, Joe Arcuri will assume the role of Chief Commercial Officer, Newell Rubbermaid and Richard Davies will become Chief Development Officer, Newell Rubbermaid, both effective January 1, 2016. These leaders will ensure the development and full delivery of the existing Newell Rubbermaid business plan.
Additional executive roles will be announced at the completion of the proposed transaction.
Advisors
Goldman, Sachs & Co. served as lead financial advisor to Newell Rubbermaid and is providing committed financing for the transaction; Centerview Partners LLC acted as financial advisor to the Newell Rubbermaid Board of Directors. Jones Day and Simpson Thacher & Bartlett acted as legal counsel to Newell Rubbermaid.
Barclays acted as lead financial advisor with UBS Investment Bank also serving as financial advisor for Jarden; Greenberg Traurig LLP and Kane Kessler P.C. acted as legal counsel.
Investor Call Details
Newell Rubbermaid and Jarden will host a conference call with investors to discuss the announcement today, December 14, 2015, at 8:00 a.m. ET. A link to the listen-only webcast and a supporting slide presentation is provided under Events & Presentations in the Investor Relations section of Newell Rubbermaid’s Web site at www.newellrubbermaid.com and is similarly posted on Jarden’s Web site at www.jarden.com. A webcast replay will be made available in the Investor Relations section on both companies’ Web sites.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2014 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie®, Paper Mate®, Elmer’s®, Irwin®, Lenox®, Rubbermaid Commercial Products®, Contigo®, Rubbermaid®, Calphalon®, Goody®, Graco®, Aprica®, Baby Jogger®, Dymo®, Parker® and Waterman®. As part of the company’s Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company’s Web site, www.newellrubbermaid.com.
About Jarden Corporation
Jarden Corporation is a diversified, global consumer products company with a portfolio of over 120 trusted, authentic brands. Jarden's record of strong financial performance and organic growth is supported by a focused operating culture coupled with value enhancing acquisitions and shareholder focused capital allocation. Jarden operates in three primary business segments through a number of well recognized brands, including: Branded Consumables: Ball®, Bee®, Bernardin®, Bicycle®, Billy Boy®, Crawford®, Diamond®, Envirocooler®, Fiona®, First Alert®, First Essentials®, Hoyle®, Kerr®, Lehigh®, Lifoam®, Lillo®, Loew-Cornell®, Mapa®, Millefiori®, NUK®, Pine Mountain®, Quickie®, Spontex®, Tigex®, Waddington, Yankee Candle® and YOU®; Outdoor Solutions: Abu Garcia®, AeroBed®, Berkley®, Campingaz® and Coleman®, Dalbello®, ExOfficio®, Fenwick®, Greys®, Gulp!®, Hardy®, Invicta®, Jostens®, K2®, Marker®, Marmot®, Mitchell®, Neff®, PENN®, Rawlings®, Shakespeare®, Squadra®, Stearns®, Stren®, Trilene®, Volkl® and Zoot®; and Consumer Solutions: Bionaire®, Breville®, Cadence®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rainbow®, Rival®, Seal-a-Meal®, Sunbeam®, VillaWare® and White Mountain®. Headquartered in Florida, Jarden ranks #348 on the Fortune 500 and has over 35,000 employees worldwide. For further information about Jarden, please visit www.jarden.com.
Caution Concerning Forward-Looking Statements
Statements in this news release that are not historical in nature constitute forward looking statements. These forward-looking statements relate to information or assumptions about the timing of completion of the proposed acquisition, the expected benefits of the proposed acquisition, management's plans, projections and objectives for future operations, scale and performance, integration plans and expected synergies therefrom, and anticipated future financial and operating performance results, including operating margin or gross margin capital and other expenditures, cash flow, dividends, restructuring and other project costs, costs and cost savings, and debt ratings. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from those expressed or implied in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the risk that the necessary shareholder approvals may not be obtained; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the proposed acquisition will not be consummated in a timely manner; risks that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner; risks related to disruption of management time from ongoing business operations due to the proposed acquisition; the risk that Newell Rubbermaid is unable to retain its investment grade rating; failure to realize the benefits expected from the proposed acquisition; failure to promptly and effectively integrate the acquisition; and the effect of the announcement of the proposed acquisition on the ability of Newell Rubbermaid and Jarden to retain customers and retain and hire key personnel, maintain relationships with suppliers, on their operating results and businesses generally and those factors listed in Newell Rubbermaid’s most recently filed Quarterly Report on Form 10-Q and exhibit 99.1 thereto and Jarden’s most recent Annual Report on Form 10-K for the year ended December 31, 2014, in each case, filed with the Securities and Exchange Commission (“SEC”). Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. Neither Newell Rubbermaid nor Jarden assumes any obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
Additional Information and Where to Find it
In connection with the proposed acquisition, Newell Rubbermaid and Jarden will file a registration statement on Form S-4 that will include the Joint Proxy Statement of Newell Rubbermaid and Jarden that also constitutes a prospectus of Newell Rubbermaid. Newell Rubbermaid and Jarden plan to mail to their respective shareholders the Joint Proxy Statement/Prospectus in connection with the acquisition. WE URGE INVESTORS AND SHAREHOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NEWELL RUBBERMAID, JARDEN, AND THE PROPOSED ACQUISITION. Investors and shareholders will be able to obtain copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Newell Rubbermaid and Jarden free of charge at the SEC’s website, www.sec.gov. In addition, investors and shareholders will be able to obtain free copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Newell Rubbermaid by accessing Newell Rubbermaid’s website at www.newellrubbermaid.com by clicking on the “Investor Relations” link and then clicking on the “SEC Filings” link or by contacting Newell Rubbermaid Investor Relations at investor.relations@newellrubbermaid.com or by calling 1-800-424-1941, and will be able to obtain free copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Jarden by accessing Jarden’s website at www.jarden.com by clicking on the “For Investors” link and then clicking on the “SEC Filings” link or by contacting Jarden Investor Relations at rwilson@jarden.com or by calling 203-845-5300. Shareholders may also read and copy any reports, statements and other information filed by Newell Rubbermaid or Jarden with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.
Participants in the Merger Solicitation
Newell Rubbermaid, Jarden and certain of their respective directors, executive officers and other persons may be considered participants in the solicitation of proxies from the respective shareholders of Newell Rubbermaid and Jarden in respect of the proposed acquisition contemplated by the Joint Proxy Statement/Prospectus. Information regarding Newell Rubbermaid’s directors and executive officers is available in Newell Rubbermaid’s Form 10-K filed with the SEC on March 2, 2015, its proxy statement filed with the SEC on April 1, 2015 in connection with its 2015 annual meeting of stockholders and its Forms 8-K filed with the SEC on February 12, 2015, May 19, 2015, October 9, 2015 and November 16, 2015. Information regarding Jarden’s directors and executive officers is available in Jarden’s Form 10-K filed with the SEC on March 2, 2015, its proxy statement filed with the SEC on April 20, 2015 in connection with its 2015 annual meeting of stockholders and its Forms 8-K filed with the SEC on January 5, 2015 and June 9, 2015. Other information regarding persons who may be considered participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials to be filed with the SEC when they become available.
Non-Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151214005428/en/
Contact:
Newell Rubbermaid
Nancy O’Donnell, 770-418-7723
Vice President, Investor Relations
or
Racquel White, 770-418-7643
Vice President, Global Communications & Culture
or
Jarden Corporation
Rachel Wilson, 203-845-5300
Vice President, Investor and Financial Relations
or
ICR, Inc.
Allison Malkin, 203-682-8225
or
Weber Shandwick
Liz Cohen, 212-445-8044
Just in time to make it into the 2015 record books, a couple of big household-products makers may be on the verge of a deal.
Combined Market Value
$24 billion
Newell Rubbermaid and Jarden -- companies with a combined market value of $24 billion -- are in talks to combine, according to a Wall Street Journal report late Monday. The union would put products from Mr. Coffee machines to Rawlings baseballs, PaperMate pens and, of course, Rubbermaid containers all under the same roof.
Shares of Newell Rubbermaid and Jarden closed roughly 7 percent and 4 percent higher, respectively, and although the deal's structure is unclear, it makes sense for Newell Rubbermaid -- the slightly larger of the two, with a market value of almost $13 billion -- to be seeking out its biggest bet yet.
Newell Rubbermaid's shares had climbed 18 percent this year before news of the deal on Monday. Last week, it surpassed the $45 mark, a feat it hadn't achieved since the middle of 1999.
Divergent
So perhaps it's no surprise that, buoyed by the company's best price in more than 15 years, Newell Rubbermaid CEO Michael Polk is thinking big despite what he's previously guided.
At a Morgan Stanley conference three weeks ago, Polk said the company's priority was to make bolt-on M&A acquisitions, similar to those it had done in the past. He outlined about $5.5 billion of capacity over the next few years for deals, buybacks and an increased dividend.
For his own part, Jarden CEO James Lillie said in April that company "would consider selling all of Jarden" if the right bidder came along.
Jarden certainly wouldn't be a bolt-on acquisition: it'd be at least double the company's $6 billion acquisition of Rubbermaid in 1999, its biggest deal so far. But buying Jarden would give it a more diverse stable of brands, including Coleman coolers, Bicycle playing cards and the recently added Waddington food containers and Jostens class rings and yearbooks.
And even though Newell Rubbermaid is the bigger of the two companies, Jarden actually brings in more revenue. Helped by its biggest year for acquisitions yet and a projected 16 percent pop in revenue next year, Jarden is on track for more than $10 billion in sales in 2016 versus a projected $6.1 billion for Newell Rubbermaid.
All of that potential comes at a price. Back in August, investors pushed Jarden's enterprise value to a record 22 times trailing Ebitda. While foreign exchange headwinds and pressures on its Brazilian business have since driven the stock down, Jarden is still pricier than most big U.S. household products companies.
Going Up
Jarden's valualtion has been rising.
Source: Bloomberg
Even so, as long as Newell Rubbermaid pays at least 30 percent in cash, a deal should be accretive to 2016 earnings per share at a 30 percent premium to Jarden's unaffected stock price -- before accounting for synergies, according to data compiled by Bloomberg. That may be as good a reason as any for another record to fall.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the authors of this story:
Gillian Tan in New York at gtan129@bloomberg.net
Brooke Sutherland in New York at bsutherland7@bloomberg.net
To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net
The "Street" has NWL coming in at .58 for the quarter that should be reported on or about January 30, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has NWL coming in at .58 for the quarter that should be reported on or about January 30, 2016! All post's welcome! The "Good Dr's In"!
The "Street" has CL coming in at .74 for the quarter that should be reported on or about January 20, 2016! All post's welcome! The "Good Dr's In"!
The "Street" has CL coming in at .74 for the quarter that should be reported on or about January 20, 2016! All post's welcome! The "Good Dr's In"!
Golden Entertainment Announces Third Quarter 2015 Results
– Completed Lakes Entertainment/Sartini Gaming Merger in July 2015 –
– Reports Nine Month Combined Adjusted EBITDA of $31.0 million, up 12% –
.
Business Wire
Golden Entertainment, Inc.
November 4, 2015 4:01 PM
LAS VEGAS--(BUSINESS WIRE)--
Golden Entertainment, Inc. (formerly Lakes Entertainment, Inc.) (GDEN) today announced financial results for the third quarter ended September 30, 2015.
Highlights for the Third Quarter Ended September 30, 2015
• On July 31, 2015, Sartini Gaming, Inc. (“Sartini Gaming”) merged with a subsidiary of Lakes Entertainment (the “Merger”). In connection with the Merger, Lakes Entertainment was renamed Golden Entertainment (“Golden Entertainment” or the “Company”). With the completion of the Merger, the Company owns and operates approximately 9,300 gaming devices, as well as approximately 30 table games across four casino properties, 48 taverns and 670 route locations.
• Net revenues for the three months ended September 30, 2015 were $62.5 million, an increase of 292% compared to the prior year period. For the quarter ended September 30, 2015, net income was $3.0 million, or $0.16 per diluted share, compared to a net loss of $(23.1) million, or $(1.72) per diluted share in the prior year quarter. These results include the operations of Sartini Gaming for 61 days during the quarter.
• Combined Net Revenues and Combined Adjusted EBITDA for the quarter ended September 30, 2015 were $86.2 million and $9.9 million, respectively, presented as if the results of Sartini Gaming had been included for the entire 2015 third quarter. The combined results reflect a 6.1% increase in net revenues for the Distributed Gaming segment compared to the prior year quarter.
• On July 31, 2015, the Company completed the syndication of a new $160.0 million senior secured credit facility maturing in 2020, of which $145.0 million was drawn at closing.
• Announced plans to add four Las Vegas tavern locations in 2016, including the opening of the Company’s first brewery.
“This quarter was transformational for the Company and with the completion of the Merger, we have achieved an exceptional combination of assets and team members. Everyone is excited by the opportunities arising out of this transaction,” said Blake L. Sartini, Chief Executive Officer of Golden Entertainment. “Going forward, in addition to the current portfolio that is generating strong free cash flow, we are focused on executing on a broad slate of long-term growth opportunities, both organic as well as strategic, while continuing to deliver a quality experience to customers and generating returns for shareholders.”
Combined Results for the Three and Nine Month Periods Ended September 30, 2015
The following unaudited combined results illustrate the net revenues and Adjusted EBITDA for the Company and Sartini Gaming on a combined basis for the three and nine months ended September 30, 2015 and September 28, 2014, for each segment, presented as if the Merger had occurred on the first day of each period presented. These unaudited combined financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results that actually would have resulted had the Merger occurred on the first day of the periods presented, or of the future results of the Company. The unaudited combined results do not reflect any operating efficiencies and associated cost savings that may be achieved as a result of the Merger.
Unaudited Combined Results(1)(2)
(In thousands)
Three Months Ended (3) Nine Months Ended (4)
September 30, September 28, % September 30, September 28, %
2015 2014 Change 2015 2014 Change
Distributed Gaming $ 61,201 $ 57,673 6.1 % $ 186,008 $ 179,252 3.8 %
Casinos 24,973 25,614 -2.5 % 72,670 72,481 0.3 %
Corporate and other 48 45 6.7 % 324 109 197.2 %
Combined Net Revenues $ 86,222 $ 83,332 3.5 % $ 259,002 $ 251,842 2.8 %
Distributed Gaming $ 8,390 $ 7,182 16.8 % $ 27,739 $ 25,306 9.6 %
Casinos 5,737 5,491 4.5 % 15,257 15,181 0.5 %
Corporate and other (4,201 ) (3,896 ) 7.8 % (12,003 ) (12,890 ) -6.9 %
Combined Adjusted EBITDA $ 9,926 $ 8,777 13.1 % $ 30,993 $ 27,597 12.3 %
(1) Combined Net Revenues and Combined Adjusted EBITDA reflect the operations of Sartini Gaming for periods prior to the Merger combined with the operations of the Company. Such presentation does not conform with GAAP or the Securities and Exchange Commission rules for pro forma presentations; however, we have included the combined results because we believe they provide a meaningful comparison for the periods presented.
(2) The Company’s Distributed Gaming segment involves the installation and operation of gaming devices in certain strategic, high-traffic, non-casino locations (such as grocery stores, convenience stores, restaurants, bars and taverns) in Nevada, and the operation of traditional, branded taverns targeting local patrons, primarily in Clark County, Nevada. The Company’s Casinos segment consists of three casinos in Pahrump, Nevada and the Rocky Gap Casino Resort in Flintstone, Maryland.
(3) The unaudited combined financial information for the three months ended September 30, 2015 and September 28, 2014 is derived from the Company’s unaudited consolidated statements of operations for such periods and Sartini Gaming’s unaudited consolidated statements of operations for the three months ended September 30, 2014 and for the one month ended July 31, 2015.
(4) The unaudited combined financial information for the nine months ended September 30, 2015 and September 28, 2014 is derived from the Company’s unaudited consolidated statements of operations for such periods and Sartini Gaming’s unaudited consolidated statements of operations for the nine months ended September 30, 2014 and for the seven months ended July 31, 2015.
Results for the Three Months Ended September 30, 2015
Net revenues for the three months ended September 30, 2015 were $62.5 million, an increase of 292% compared to the prior year period. Adjusted EBITDA for the current year quarter was $7.1 million, compared to $1.6 million in the prior year quarter.
For the quarter ended September 30, 2015, net income was $3.0 million, or $0.16 per diluted share, compared to a net loss of $(23.1) million, or $(1.72) per diluted share in the prior year quarter. The current year results include the operations of Sartini Gaming for 61 days during the quarter. During the current year quarter, the Company incurred $9.3 million in Merger expenses, as well as an income tax benefit of $12.9 million. The results for the prior year quarter were impacted by impairments and other losses of $21.0 million related to an investment in Rock Ohio Ventures.
Results for the Nine Months Ended September 30, 2015
Net revenues for the nine months ended September 30, 2015 were $90.6 million, an increase of 114% from the prior year period. Adjusted EBITDA for the current year period was $8.9 million, compared to $1.2 million in the prior year.
For the nine months ended September 30, 2015, net income was $1.1 million, or $0.07 per diluted share, compared to a net loss of $(24.8) million, or $(1.85) per diluted share in the prior year period. The current year results include the operations of Sartini Gaming for 61 days during the nine months ended September 30, 2015. During the current year period, the Company incurred $10.6 million in Merger expenses, as well as an income tax benefit of $12.7 million. The results for the prior year period were impacted by impairments and other losses of $21.0 million related to an investment in Rock Ohio Ventures.
Balance Sheet, Liquidity and Capital Expenditures
As of September 30, 2015, the Company had cash and cash equivalents of $43.2 million and total outstanding debt of $146.4 million. Total debt outstanding included a fully drawn $120.0 million senior secured term loan and $25.0 million drawn under the Company’s $40.0 million senior secured revolving credit facility. The Company’s senior secured term loan and revolving credit facilities mature in July 2020. As of September 30, 2015, the weighted average effective interest rate on outstanding borrowings under these credit facilities was approximately 3.0%. Had Sartini Gaming operations been included in the Company’s results for the twelve months ended July 31, 2015, and had the new credit facilities been in place during that period, the Company estimates that it would have achieved combined annual interest expense savings of approximately $18 million as a result of a lower interest rate under the new credit facilities compared to actual rates applicable to the secured debt of the companies during that period.
For the third quarter ended September 30, 2015, capital expenditures were $1.3 million compared to $0.9 million in the prior year quarter.
Investor Conference Call and Webcast
The Company will host a webcast and conference call at 5:00 p.m. Eastern Time on November 4, 2015, to discuss third quarter 2015 results. The number to call is 1-888-438-5535 (domestic) or 1-719-325-2448 (international). A live webcast will be available in the Investors section of the Company’s website (www.goldenent.com). A replay of the conference call will be available through November 12, 2015, by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the passcode 1464875.
Forward-Looking Statements
This press release may be deemed to contain forward-looking statements that are subject to the safe harbors created under federal securities laws. Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “project,” “seek,” “should,” “think,” “will,” “would” and similar expressions. In addition, forward-looking statements include statements regarding the Company’s strategies, objectives, business opportunities and plans for future expansion, developments or acquisitions, anticipated future growth or trends in the Company’s business or key markets, projections of future financial condition or operating results, as well as other statements that are not statements of historical fact. Forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause actual results to differ include: the Company’s ability to realize the anticipated cost savings, synergies and other benefits from the Merger and integration risks, changes in national, regional and local economic and market conditions, legislative and regulatory matters, increases in gaming taxes and fees, litigation, increased competition, the Company’s ability to renew its distributed gaming contracts, reliance on key personnel, the level of the Company’s indebtedness and the Company’s ability to comply with covenants in its debt facilities, terrorist incidents, natural disasters, severe weather conditions, the effects of environmental and structural building conditions, the effects of disruptions to the Company’s information technology systems, and other factors affecting the gaming, entertainment and hospitality industries generally. In addition, please refer to the risk factors contained in the Company’s SEC filings available at www.sec.gov, including the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses Adjusted EBITDA, Combined Net Revenues and Combined Adjusted EBITDA, which measures the Company believes are appropriate to provide meaningful comparison with, and to enhance an overall understanding of, the Company’s past financial performance and prospects for the future. The Company believes Adjusted EBITDA and Combined Adjusted EBITDA provide useful information to both management and investors by excluding specific expenses that the Company believes are not indicative of its core operating results. Further, Adjusted EBITDA is a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of net Income (loss) to Adjusted EBITDA and Combined Adjusted EBITDA is provided in the financial information tables below. Additionally, a reconciliation of net revenues to Combined Net Revenues is provided in the financial information tables below.
The Company defines “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening expenses, merger expenses, share-based compensation expenses, impairments and other gains and losses. “Adjusted EBITDA” for a particular segment is Adjusted EBITDA before corporate overhead, which is not allocated to each segment.
About Golden Entertainment, Inc.
Golden Entertainment, Inc. owns and operates gaming properties across two divisions – distributed gaming and resort and casino operations. Golden Entertainment operates more than 9,300 gaming devices and 30 table games in Nevada and Maryland. The Company owns four casino properties, nearly 50 taverns and operates more than 670 distributed gaming locations in Nevada and Maryland. Golden Entertainment is focused on maximizing the value of its portfolio by leveraging its scale, leadership position, and proven management capabilities across its two divisions. For more information, visit www.goldenent.com.
Golden Entertainment, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited and in thousands)
Three Months Ended Nine Months Ended
September 30, September 28, September 30, September 28,
2015 2014 2015 2014
Revenues
Gaming $ 52,336 $ 12,072 $ 74,746 $ 33,460
Food and beverage 9,230 1,835 12,320 4,660
Rooms 2,141 1,940 5,010 4,884
Other operating 1,873 873 3,061 1,913
Gross Revenues 65,580 16,720 95,137 44,917
Less: Promotional allowances (3,068 ) (790 ) (4,530 ) (2,570 )
Net revenues 62,512 15,930 90,607 42,347
Expenses
Gaming 35,661 6,841 48,284 19,208
Food and beverage 6,824 1,366 9,143 3,589
Rooms 270 226 643 509
Other operating 813 470 1,555 1,131
Selling, general and administrative 12,134 5,455 22,542 16,918
Merger expenses 9,325 - 10,591 -
Gain on sale of cost method investment - - (750 ) (1,000 )
Charges related to arbitration award - 2,530 - 2,530
Impairments and other losses - 20,997 682 20,997
Preopening expenses 129 - 129 -
Gain on sale of land - (66 ) - (66 )
Loss on disposal of property and equipment 8 37 6 61
Depreciation and amortization 5,100 896 6,859 2,613
Total expenses 70,264 38,752 99,684 66,490
Loss from operations (7,752 ) (22,822 ) (9,077 ) (24,143 )
Other income (expense)
Interest expense, net (980 ) (258 ) (1,423 ) (813 )
Loss on extinguishment of debt (1,174 ) - (1,174 ) -
Other, net 50 4 86 169
Total other expense (2,104 ) (254 ) (2,511 ) (644 )
Loss before income taxes (9,856 ) (23,076 ) (11,588 ) (24,787 )
Benefit for income taxes 12,874 - 12,702 -
Net income (loss) 3,018 (23,076 ) 1,114 (24,787 )
Other comprehensive income (loss) 20 (3 ) 22 (2 )
Comprehensive income (loss) $ 3,038 $ (23,079 ) $ 1,136 $ (24,789 )
Weighted-average common shares outstanding
Basic 18,821 13,389 15,240 13,376
Dilutive impact of stock options 241 - 213 -
Diluted 19,062 13,389 15,453 13,376
Net income (loss) per share
Basic $ 0.16 $ (1.72 ) $ 0.07 $ (1.85 )
Diluted $ 0.16 $ (1.72 ) $ 0.07 $ (1.85 )
Golden Entertainment, Inc.
Consolidated Balance Sheets
(Unaudited and in thousands)
September 30, December 28,
2015 2014
ASSETS
Current assets
Cash and cash equivalents $ 43,156 $ 35,416
Short-term investments - 46,638
Accounts receivable, net of allowance for doubtful accounts of $0.6 million as of September 30, 2015
4,492 622
Income taxes receivable 2,299 -
Prepaid expenses 7,566 760
Other 2,716 425
Total current assets 60,229 83,861
Property and equipment 120,219 41,433
Accumulated depreciation (10,985 ) (8,694 )
Property and equipment, net 109,234 32,739
Other assets
Goodwill 90,639 -
Intangible assets, net 81,814 2,279
Land held for sale 960 -
Land held for development - 960
Income taxes receivable - 2,155
Other 2,502 35
Total other assets 175,915 5,429
Total assets $ 345,378 $ 122,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long term debt, net of discount $ 7,273 $ 1,368
Accounts payable 6,130 482
Accrued taxes, other than income taxes 645 439
Accrued payroll and related 3,614 1,573
Deposits 284 131
Other accrued expenses 3,454 1,479
Total current liabilities 21,400 5,472
Long-term debt, net of current portion and discount 139,100 8,941
Debt issuance costs, net (2,619 ) -
Other long-term obligations 2,996 -
Total liabilities 160,877 14,413
Commitments and contingencies
Shareholders' equity
Common stock, $0.01 par value; authorized 100,000 shares; 21,624 and 13,389 common shares issued and outstanding as of September 30, 2015 and December 28, 2014, respectively
350 268
Additional paid-in-capital 281,282 205,615
Retained earnings (accumulated deficit) (97,131 ) (98,245 )
Accumulated other comprehensive loss - (22 )
Total shareholders' equity 184,501 107,616
Total liabilities and shareholders' equity $ 345,378 $ 122,029
Golden Entertainment, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Unaudited and in thousands)
Three Months Ended Nine Months Ended
September 30, September 28, September 30, September 28,
2015 2014 2015 2014
Adjusted EBITDA $ 7,101 $ 1,639 $ 8,850 $ 1,202
Preopening expenses (129 ) - (129 ) -
Impairments and other losses - (20,997 ) (682 ) (20,997 )
Share-based compensation (291 ) (67 ) (410 ) (210 )
Merger expenses (9,325 ) - (10,591 ) -
Depreciation and amortization (5,100 ) (896 ) (6,859 ) (2,613 )
Other, net (8 ) (2,501 ) 744 (1,525 )
Loss from operations (7,752 ) (22,822 ) (9,077 ) (24,143 )
Other income (expense)
Interest expense, net (980 ) (258 ) (1,423 ) (813 )
Other, net (1,124 ) 4 (1,088 ) 169
Total other expense, net (2,104 ) (254 ) (2,511 ) (644 )
Loss before income taxes (9,856 ) (23,076 ) (11,588 ) (24,787 )
Benefit for income taxes 12,874 - 12,702 -
Net income (loss) $ 3,018 $ (23,076 ) $ 1,114 $ (24,787 )
Sartini Gaming, Inc.
Reconciliation of Net Loss to Adjusted EBITDA
(Unaudited and in thousands)
One Month
Ended
Three Months
Ended
Seven Months
Ended
Nine Months
Ended
July 31, September 30, July 31, September 30,
2015 2014 2015 2014
Adjusted EBITDA $ 2,825 $ 7,138 $ 22,143 $ 26,395
Preopening expenses (106 ) (962 ) (565 ) (1,472 )
Debt restructuring expense (2,408 ) - (2,408 ) -
Merger expenses (88 ) (17 ) (1,372 ) (21 )
Depreciation and amortization (1,256 ) (3,956 ) (8,272 ) (10,988 )
Other, net 149 (260 ) (2,093 ) (418 )
Income (loss) from operations (884 ) 1,943 7,433 13,496
Other income (expense)
Interest expense, net (1,878 ) (5,444 ) (12,795 ) (16,157 )
Total other expense, net (1,878 ) (5,444 ) (12,795 ) (16,157 )
Loss before income taxes (2,762 ) (3,501 ) (5,362 ) (2,661 )
Benefit for income taxes - - - -
Net loss $ (2,762 ) $ (3,501 ) $ (5,362 ) $ (2,661 )
Golden Entertainment, Inc.
Reconciliation of Net Revenues to Combined Net Revenues
(Unaudited and in thousands)
Combined Net Revenues
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Three Months Ended One Month Ended Three Months Ended
September 30, July 31, September 30,
2015 2015 2015
Distributed Gaming $ 40,331 $ 20,870 $ 61,201
Casinos 22,133 2,840 24,973
Corporate and other 48 - 48
Net Revenues $ 62,512 $ 23,710 $ 86,222
Combined Net Revenues
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Three Months Ended Three Months Ended Three Months Ended
September 28, September 30, September 28,
2014 2014 2014
Distributed Gaming $ - $ 57,673 $ 57,673
Casinos 15,887 9,727 25,614
Corporate and other 43 2 45
Net Revenues $ 15,930 $ 67,402 $ 83,332
Combined Net Revenues
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Nine Months Ended Seven Months Ended Nine Months Ended
September 30, July 31, September 30,
2015 2015 2015
Distributed Gaming $ 40,331 $ 145,677 $ 186,008
Casinos 50,138 22,532 72,670
Corporate and other 138 186 324
Net Revenues $ 90,607 $ 168,395 $ 259,002
Combined Net Revenues
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Nine Months Ended Nine Months Ended Nine Months Ended
September 28, September 30, September 28,
2014 2014 2014
Distributed Gaming $ - $ 179,252 $ 179,252
Casinos 42,241 30,240 72,481
Corporate and other 106 3 109
Net Revenues $ 42,347 $ 209,495 $ 251,842
Golden Entertainment, Inc.
Reconciliation of Adjusted EBITDA to Combined Adjusted EBITDA
(Unaudited and in thousands)
Combined Adjusted EBITDA
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Three Months Ended One Month Ended Three Months Ended
September 30, July 31, September 30,
2015 2015 2015
Distributed Gaming $ 5,283 $ 3,107 $ 8,390
Casinos 5,094 643 5,737
Corporate and other (3,276 ) (925 ) (4,201 )
Adjusted EBITDA $ 7,101 $ 2,825 $ 9,926
Combined Adjusted EBITDA
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Three Months Ended Three Months Ended Three Months Ended
September 28, September 30, September 28,
2014 2014 2014
Distributed Gaming $ - $ 7,182 $ 7,182
Casinos 3,077 2,414 5,491
Corporate and other (1,438 ) (2,458 ) (3,896 )
Adjusted EBITDA $ 1,639 $ 7,138 $ 8,777
Combined Adjusted EBITDA
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Nine Months Ended Seven Months Ended Nine Months Ended
September 30, July 31, September 30,
2015 2015 2015
Distributed Gaming $ 5,283 $ 22,456 $ 27,739
Casinos 9,603 5,654 15,257
Corporate and other (6,036 ) (5,967 ) (12,003 )
Adjusted EBITDA $ 8,850 $ 22,143 $ 30,993
Combined Adjusted EBITDA
Golden Entertainment, Inc. Sartini Gaming Golden Entertainment, Inc.
Nine Months Ended Nine Months Ended Nine Months Ended
September 28, September 30, September 28,
2014 2014 2014
Distributed Gaming $ - $ 25,306 $ 25,306
Casinos 6,432 8,749 15,181
Corporate and other (5,230 ) (7,660 ) (12,890 )
Adjusted EBITDA $ 1,202 $ 26,395 $ 27,597
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006743/en/
Contact:
Investor Relations contact:
ICR
Jacques Cornet, 702-891-4264
ir@goldenent.com
or
Media contact:
B&P Public Relations
Lenora Kaplan, 702-589-2791
lkaplan@bpadlv.com
Newell Rubbermaid Completes Sale of Endicia Online Shipping Business to Stamps.com
Newell Rubbermaid Inc. 4 hours ago
ATLANTA--(BUSINESS WIRE)
Newell Rubbermaid Inc. (NWL) today announced it has closed the sale of Endicia, a developer of global online shipping solutions, to Stamps.com, a leading provider of online postage solutions based in El Segundo, CA. The transaction was first announced on March 24.
Gross proceeds from the transaction were approximately $215 million. The company expects to receive after-tax cash proceeds of approximately $150 million.
“This transaction further simplifies our portfolio as we remain focused on strengthening our core business and investing behind our highest-potential global growth opportunities,” said Michael Polk, Newell Rubbermaid President and Chief Executive Officer. “We believe Endicia, while not core to our strategy, is a great strategic fit with an owner who shares its commitment to innovating and competing in the mailing and shipping industry.”
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2014 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie®, Paper Mate®, Elmer’s®, Irwin®, Lenox®, Rubbermaid Commercial Products®, Contigo®, Rubbermaid®, Calphalon®, Goody®, Graco®, Aprica®, Baby Jogger®, Dymo®, Parker® and Waterman®. As part of the company’s Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company’s Web site, www.newellrubbermaid.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151118006505/en/
Newell Rubbermaid
Contact:
Newell Rubbermaid Inc.
Nancy O’Donnell, 770-418-7723
Vice President, Investor Relations
or
Nicole Quinlan, 770-418-7251
Senior Manager, Global Communications
Nathan's Famous, Inc. Reports Second Quarter Results
PR Newswire
Nathan's Famous, Inc.
November 4, 2015 8:30 AM
JERICHO, N.Y., Nov. 4, 2015 /PRNewswire/ -- Nathan's Famous, Inc. (NATH) today reported results for the second quarter of its 2016 fiscal year that ended September 27, 2015.
For the fiscal quarter ended September 27, 2015:
•Income from operations increased by 30.7% to $8,426,000, as compared to $6,447,000 during the thirteen weeks ended September 28, 2014;
•Adjusted EBITDA, as subsequently defined, increased by 26.7 % to $9,006,000 as compared to $7,106,000 for the thirteen weeks ended September 28, 2014;
•Net income was $2,847,000, as compared to $3,854,000 for the thirteen weeks ended September 28, 2014;
•Earnings per diluted share were $0.64 per share, as compared to $0.84 per share for the thirteen weeks ended September 28, 2014; and
•Revenues increased by 6.1% to $30,619,000, as compared to $28,872,000 during the thirteen weeks ended September 28, 2014.
For the twenty-six weeks ended September 27, 2015:
•Income from operations increased by 21.3% to $16,042,000, as compared to $13,226,000 during the twenty-six weeks ended September 28, 2014;
•Adjusted EBITDA, as subsequently defined, increased by 18.6% to $17,257,000 as compared to $14,553,000 for the twenty-six weeks ended September 28, 2014;
•Net income was $5,157,000, as compared to $7,925,000 for the twenty-six weeks ended September 28, 2014;
•Earnings per diluted share were $1.14 per share, as compared to $1.73 per share for the twenty-six weeks ended September 28, 2014; and
•Revenues increased by 8.5% to $61,273,000, as compared to $56,457,000 during the twenty-six weeks ended September 28, 2014.
The Company reported the following:
•License royalties increased by 16.7% to $11,792,000 during the twenty-six weeks ended September 27, 2015, as compared to $10,106,000 during the twenty-six weeks ended September 28, 2014. During the twenty-six weeks ended September 27, 2015, total royalties earned under the John Morrell & Co., agreement increased by 18.6% to $10,932,000 as compared to $9,217,000 of royalties earned during the twenty-six weeks ended September 28, 2014. The increase is substantially attributable to significant organic growth in our consumer packaged hot dog business as a result of more effective sales, marketing and promotional strategies.
•Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 9.7% to $33,595,000 during the twenty-six weeks ended September 27, 2015, as compared to sales of $30,612,000 during the twenty-six weeks ended September 28, 2014.
•Sales from the Company-operated restaurants were $12,842,000 during the twenty-six weeks ended September 27, 2015 as compared to $12,349,000 during the twenty-six weeks ended September 28, 2014 driven primarily from higher sales at both Coney Island locations.
•Revenues from franchise operations were $2,617,000 during the twenty-six weeks ended September 27, 2015, as compared to $3,002,000 during the twenty-six weeks ended September 28, 2014. Total franchise fee income was $207,000 during the twenty-six weeks ended September 27, 2015 as compared to $477,000 during the twenty-six weeks ended September 28, 2014, primarily due to lower international development fees. Twenty-three new franchised units were opened during the twenty-six weeks ended September 27, 2015, including 11 Branded Menu Program outlets. Twenty new franchised units were opened during the twenty-six weeks ended September 28, 2014, including seven international locations, including our first location in Costa Rica and ten Branded Menu Program outlets.
•On March 10, 2015, Nathan's completed a financing of $135.0 million aggregate principal amount of Senior Secured Notes. Nathan's incurred interest expense, including amortized debt issuance costs, totaling $7,418,000 during the twenty-six weeks ended September 27, 2015 on the Notes.
Certain Non-GAAP Financial Information:
In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"), the Company has provided EBITDA excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company has also provided Adjusted EBITDA excluding (i) stock-based compensation and (ii) amortization of bond premium on the Company's available-for sale investments that the Company believes will impact the comparability of its results of operations.
The Company believes that EBITDA and Adjusted EBITDA are useful to investors to assist in assessing and understanding the Company's operating performance and underlying trends in the Company's business because EBITDA and Adjusted EBITDA are (i) among the measures used by management in evaluating performance and (ii) are frequently used by securities analysts, investors and other interested parties as a common performance measure.
EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be viewed as alternatives to net income (loss) or other measures of financial performance or liquidity in conformity with US GAAP. Additionally, our definitions of EBITDA and Adjusted EBITDA may differ from other companies. Analysis of results and outlook on a non-US GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with US GAAP.
About Nathan's Famous
Nathan's currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and nine foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 500 million Nathan's Famous hot dogs were sold. Nathan's was ranked #22 on the Forbes 2014 list of the Best Small Companies in America and was listed as the Best Small Company in New York State in October 2013. For additional information about Nathan's please visit our website at www.nathansfamous.com.
Except for historical information contained in this news release, the matters discussed are forward looking statements that involve risks and uncertainties. Words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions identify forward-looking statements, which are based on the current belief of the Company's management, as well as assumptions made by and information currently available to the Company's management. Among the factors that could cause actual results to differ materially include but are not limited to: the impact of our indebtedness, including the effect on our ability to fund working capital, operations and make new investments; economic; weather (including the three-year drought in the Midwest, along with freezing temperatures during the winter causing a reduced supply of cattle), and continued increases in the price of beef trimmings; our ability to pass on the cost of any price increases in beef and beef trimmings; legislative and business conditions; the collectibility of receivables; changes in consumer tastes; the status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co.; the ability to continue to attract franchisees; no material increases in the minimum wage or other changes in labor laws; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising agreements; the impact of changes in the economic relationship between the United States and Russia; and the future effects of any food borne illness; such as bovine spongiform encephalopathy, BSE; and the risk factors reported from time to time in the Company's SEC reports. The Company does not undertake any obligation to update such forward-looking statements.
COMPANY Ronald G. DeVos, Vice President - Finance and CFO
CONTACT: (516) 338-8500 ext. 229
Nathan's Famous, Inc.
Financial Highlights
Thirteen weeks ended
Twenty-six weeks ended
Sept. 27, 2015
Sept. 28, 2014
Sept. 27, 2015
Sept. 28, 2014
(unaudited)
(unaudited)
Total revenues
$ 30,619,000
$ 28,872,000
$ 61,273,000
$ 56,457,000
Income from operations (a)
$ 8,426,000
$ 6,447,000
$ 16,042,000
$ 13,226,000
Net income
$ 2,847,000
$ 3,854,000
$ 5,157,000
$ 7,925,000
Income per share:
Basic
$ 0.64
$ 0.86
$ 1.14
$ 1.77
Diluted
$ 0.64
$ 0.84
$ 1.14
$ 1.73
Weighted-average shares used in
computing income per share:
Basic
4,432,000
4,472,000
4,508,000
4,472,000
Diluted
4,449,000
4,593,000
4,535,000
4,593,000
(a) Excludes interest expense, interest income, and other income, net.
Nathan's Famous, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Thirteen weeks ended
Twenty-six weeks ended
Sept. 27, 2015
Sept. 28, 2014
Sept. 27, 2015
Sept. 28, 2014
(unaudited)
(unaudited)
EBITDA
Net Income
$ 2,847,000
$ 3,854,000
$ 5,157,000
$ 7,925,000
Interest Expense
3,709,000
0
7,418,000
0
Provision for income taxes
1,942,000
2,674,000
3,570,000
5,465,000
Depreciation and amortization
333,000
341,000
672,000
687,000
EBITDA
$ 8,831,000
$ 6,869,000
$ 16,817,000
$ 14,077,000
Adjusted EBITDA
EBITDA
$ 8,831,000
$ 6,869,000
$ 16,817,000
$ 14,077,000
Stock-based compensation
173,000
210,000
376,000
401,000
Amortization of bond premium (b)
2,000
27,000
64,000
75,000
Adjusted EBITDA
$ 9,006,000
$ 7,106,000
$ 17,257,000
$ 14,553,000
(b) Represents the premiums paid on our purchase of available-for-sale securities.
Jewett-Cameron Announces Fiscal 2015 Financial Results
.PR Newswire
Jewett-Cameron Trading Company Ltd.
November 6, 2015 4:20 PM
NORTH PLAINS, Ore., Nov. 6, 2015 /PRNewswire/ -- Jewett-Cameron Trading Company Ltd. (JCTCF) today reported financial results for its fourth quarter and fiscal year ended August 31, 2015.
For the fiscal year ended August 31, 2015 Jewett-Cameron reported net income of $1,773,971, or $0.69 per share, on sales of $42.24 million, compared to net income of $1,858,453, or $0.63 per diluted share, on sales of $42.34 million, reported for fiscal 2014.
Sales for the fourth quarter of fiscal 2015 totaled $11.5 million compared to sales of $9.3 million for the fourth quarter of fiscal 2014. Net income was $701,524, or $0.27 per diluted share, compared to net income of $352,147, or $0.12 per diluted share, in the fourth quarter of fiscal 2014.
"The extended winter weather across much of the US in 2015 slowed the buying of lawn and garden products and adversely affected our results. The West Coast port slowdowns also delayed the delivery of our products from manufacturers and resulted in sales order delays and higher freight costs" said CEO Don Boone. "However, we launched several new products beginning in the 3rd quarter which were well received by the marketplace, particularly by our established customer base".
As of August 31, 2015, the Company's cash position was $4.4 million, and currently there is no borrowing against its $3.0 million line of credit. During fiscal 2015, the Company repurchased and cancelled a total of 227,798 common shares at a total cost of $2,448,542, which represents an average price of $10.75. The Company's most recent share repurchase plan was terminated by the Board of Directors on July 17, 2015. The Board of Directors will consider implementing new share repurchase plans in the future as an effective use of the Company's cash position.
About Jewett-Cameron Trading Company Ltd.
Jewett-Cameron Trading Company is a holding company that, through its subsidiaries, operates out of facilities located in North Plains, Oregon. Jewett-Cameron Company's business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States. Greenwood Products is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries in the United States. MSI-PRO is an importer and distributor of pneumatic air tools, industrial clamps, and the Avenger Products line of sawblades and other products. Jewett-Cameron Seed Company is a processor and distributor of agricultural seeds. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.
Forward-looking Statements
The information in this release contains certain forward-looking statements that anticipate future trends and events. These statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks, including but not limited to, the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry, and other factors detailed in the Company's SEC filings. Accordingly, actual results may differ, possibly materially, from predictions contained herein.
JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
AS OF AUGUST 31
2015
2014
ASSETS
Current assets
Cash
$ 4,416,297
$ 4,327,540
Accounts receivable, net of allowance of $Nil (August 31, 2014 - $Nil)
3,688,247
2,442,928
Inventory, net of allowance of $120,824 (August 31, 2014 - $111,756)
8,351,575
9,154,129
Note receivable
1,310
15,000
Prepaid expenses
719,459
762,533
Prepaid income taxes
26,570
546,347
Total current assets
17,203,458
17,248,477
Property, plant and equipment, net
2,231,711
2,147,387
Intangible assets, net
223,250
295,956
Total assets
$ 19,658,419
$ 19,691,820
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$ 984,955
$ 240,825
Litigation reserve
90,671
117,387
Accrued liabilities
1,024,358
1,073,930
Total current liabilities
2,099,984
1,432,142
Deferred tax liability
34,300
60,972
Total liabilities
2,134,284
1,493,114
Contingent liabilities and commitments
Stockholders' equity
Capital stock
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,476,832 common shares (August 31, 2014 – 2,704,630)
1,168,712
1,276,201
Additional paid-in capital
600,804
600,804
Retained earnings
15,754,619
16,321,701
Total stockholders' equity
17,524,135
18,198,706
Total liabilities and stockholders' equity
$ 19,658,419
$ 19,691,820
JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
YEARS ENDED AUGUST 31
2015
2014
SALES
$ 42,238,151
$ 42,339,563
COST OF SALES
33,821,114
33,961,367
GROSS PROFIT
8,417,037
8,378,196
OPERATING EXPENSES
Selling, general and administrative
1,814,899
1,700,030
Depreciation and amortization
281,762
276,340
Wages and employee benefits
3,396,793
3,317,228
5,493,454
5,293,598
Income from operations
2,923,583
3,084,598
OTHER ITEMS
Gain on sale of property, plant and equipment
-
3,546
Interest and other income
31,993
27,086
31,993
30,632
Income before income taxes
2,955,576
3,115,230
Income taxes
Current
1,208,277
1,246,198
Deferred
(26,672)
10,579
Net income for the year
1,773,971
1,858,453
Basic earnings per common share
$ 0.69
$ 0.63
Diluted earnings per common share
$ 0.69
$ 0.63
Weighted average number of common shares outstanding:
Basic
2,581,850
2,968,220
Diluted
2,581,850
2,968,220
JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
YEARS ENDED AUGUST 31
2015
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the year
$ 1,773,971
$ 1,858,453
Items not affecting cash:
Depreciation and amortization
281,762
276,340
Gain on sale of property, plant and equipment
-
(3,546)
Deferred income taxes
(26,672)
10,579
Interest income on litigation
(26,716)
(26,716)
Changes in non-cash working capital items:
Decrease (increase) in accounts receivable
(1,245,319)
901,849
Decrease in note receivable
13,690
-
Decrease (increase) in inventory
802,554
(633,138)
Decrease (increase) in prepaid expenses
43,074
(174,924)
Decrease (increase) in prepaid income taxes
519,777
(275,924)
Increase (decrease) in accounts payable and accrued liabilities
694,558
(1,550,585)
Net cash provided by operating activities
2,830,679
382,388
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment
-
4,800
Purchase of property, plant and equipment
(293,380)
(110,325)
Net cash used in investing activities
(293,380)
(105,525)
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock
(2,448,542)
(4,257,768)
Net cash used in financing activities
(2,448,542)
(4,257,768)
Net increase (decrease) in cash
88,757
(3,980,905)
Cash, beginning of year
4,327,540
8,308,445
Cash, end of year
4,416,297
$ 4,327,540
Contact: Don Boone, President & CEO, (503) 647-0110
The "Street has NWL coming in at .57 for the quarter that should be reported on or about January 26, 2015! All post's welcome! The "Good Dr's In"!
The "Street has NWL coming in at .57 for the quarter that should be reported on or about January 26, 2015! All post's welcome! The "Good Dr's In"!
Lithia Reports Adjusted EPS of $2.03 for Third Quarter of 2015; Revenues Increase 61%
Declares $0.20 per Share Dividend for Third Quarter
.
Marketwired
Lithia Motors
October 21, 2015 6:55 AM
MEDFORD, OR--(Marketwired - Oct 21, 2015) - Lithia Motors, Inc. ( NYSE : LAD ) reported adjusted net income of $53.6 million for the third quarter of 2015, the highest quarterly net income in company history and a 54% increase over the prior year period.
2015 third quarter adjusted net income was $2.03 per diluted share. This compares to 2014 third quarter adjusted net income of $34.9 million, or $1.32 per diluted share.
Unadjusted net income for the third quarter of 2015 was $43.4 million, or $1.64 per diluted share, compared to $34.5 million, or $1.31 per diluted share, for the third quarter of 2014. As shown in the attached non-GAAP reconciliation tables, the 2015 third quarter adjusted results exclude a $0.39 non-core net charge related to a previously announced employee transition agreement partially offset by an equity investment. The 2014 third quarter adjusted results exclude a $0.01 non-core net charge related to acquisition expenses partially offset by a non-core benefit resulting from a tax attribute.
Third quarter 2015 revenue increased $788 million, or 61%, to $2.1 billion from $1.3 billion for the third quarter of 2014.
Third Quarter-over-Quarter Operating Highlights:
• Total same store sales increased 12%
• New vehicle same store sales increased 11%
• Used vehicle retail same store sales increased 13%
• Service, body and parts same store sales increased 10%
• Same store F&I per unit increased $71 to $1,274
• Adjusted SG&A expense as a percentage of gross profit was 66.0%
"Our third quarter earnings were the highest in company history," said Bryan DeBoer, President and CEO. "Same store sales in all four business lines grew by double digits, led by a 13% increase in used vehicle sales. Total revenues increased 61% and adjusted earnings per share increased 54% over the prior year period. A robust new vehicle sales environment, improving supply of late model used vehicles, and the continued growth in our service, body and parts business is allowing our store leaders to unlock new opportunities to improve performance across our company. We remain positive on the overall outlook for both organic and acquisition growth in 2016."
For the first nine months of 2015, revenue from continuing operations increased 63% to $5.9 billion from $3.6 billion in 2014.
For the first nine months of 2015, adjusted net income per diluted share increased 43% to $5.28 from $3.69 for the first nine months of 2014. Unadjusted net income from continuing operations was $5.10 per diluted share for the first nine months of 2015, compared to $3.58 per diluted share for the first nine months of 2014.
Chris Holzshu, SVP and CFO, said, "Adjusted SG&A as a percentage of gross profit was 66.0% in the third quarter of 2015, bringing the first nine months of the year down to 67.8%, thanks to strong performance from both Lithia and DCH. For the third quarter, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting incremental selling costs, was 49.3% We are targeting consolidated SG&A as a percentage of gross profit in the mid-60s on a full year basis. Additionally, same store F&I per unit was $1,274 per unit, an increase of $71 over the prior year. We still believe opportunity remains to improve this number given continued focus by our store personnel."
Corporate Development
As previously announced, in the third quarter of 2015 we acquired a Ford store in Missoula, Montana, an Acura store in Honolulu, Hawaii, and a Subaru Hyundai GMC store in Great Falls, Montana. Also as previously announced, in October, 2015 we acquired a Chrysler Jeep Dodge Ram Fiat store in Concord, California. We estimate these stores will contribute approximately $175 million in annual revenues.
Bryan DeBoer, President and CEO, stated, "We have purchased or opened six stores in 2015 which will add cumulative annual revenues of approximately $220 million. We are actively seeking stores in both our Lithia exclusive market strategy and in our DCH metropolitan market strategy. The acquisition market remains robust and we anticipate further transactions for both Lithia and DCH in the near term."
Balance Sheet Update
We ended the second quarter with $33 million in cash and $163 million in availability on our credit facilities. Additionally, approximately $144 million of our operating real estate is currently unfinanced, which could provide an estimated additional $108 million in available liquidity, for total potential liquidity of $304 million.
Dividend Payment
Our Board of Directors has approved a dividend of $0.20 per share related to third quarter 2015 financial results. We will pay the dividend November 20, 2015 to shareholders of record on November 6, 2015.
2015 Outlook
We project 2015 fourth quarter earnings of $1.61 to $1.65 per diluted share and 2015 full year earnings of $6.89 to $6.93 per diluted share. Both projections are based on the following annual assumptions:
Continuing Operations Projections
• Total revenues of $7.8 to $7.9 billion
• New vehicle sales increasing 48%
• New vehicle gross margin of 6.0% to 6.2%
• Used vehicle sales increasing 41%
• Used vehicle gross margin of 12.4% to 12.6%
• Service body and parts sales increasing 44%
• Service body and parts gross margin of 48.8% to 49.2%
• Finance and insurance gross profit of $1,190 per unit
• Tax rate of 39.0%
• Average diluted shares outstanding of 26.5 million
Same Store Projections
• Total revenues of $5.7 to $5.9 billion
• New vehicle same store sales increasing 9%
• Used vehicle same store sales increasing 12.5%
• Service body and parts same store sales increasing 10%
• Finance and insurance gross profit of $1,230 per unit
2016 Earnings Guidance
We project 2016 first quarter earnings of $1.46 to $1.50 per diluted share and 2016 full year earnings of $7.15 to $7.35 per diluted share. Both projections are based on the following annual assumptions:
• Total revenues of $8.3 to $8.4 billion
• New vehicle sales increasing 5.5%
• New vehicle gross margin of 5.9% to 6.1%
• Used vehicle sales increasing 6%
• Used vehicle gross margin of 12.4% to 12.6%
• Service body and parts sales increasing 5%
• Service body and parts gross margin of 49.0%to 49.4%
• Finance and insurance gross profit of $1,210 per unit
• Tax rate of 40.0%
• Average diluted shares outstanding of 26.6 million
These projections exclude the impact of future acquisitions, dispositions and non-core items. Actual results may be affected by items described under Forward-Looking Statements below.
Third Quarter Earnings Conference Call and Updated Presentation
The third quarter conference call may be accessed at 11:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the third quarter results has been added to www.lithiainvestorrelations.com .
To listen live on our website or for replay, visit www.lithiainvestorrelations.com and click on webcasts.
About Lithia
Lithia Motors, Inc. is one of the largest automotive retailers in the United States. Lithia sells 31 brands of new vehicles and all brands of used vehicles at 135 stores in 14 states. Lithia also arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.
Sites
www.lithia.com
www.lithiainvestorrelations.com
www.lithiacareers.com
Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors
Lithia Motors on Twitter
http://twitter.com/lithiamotors
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "project," "outlook," "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "seek," "would," "should," "likely," "goal," "strategy," "future," "maintain," "continue," "remain," "target" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements regarding:
• Future market conditions;
• Expected operating results, such as improved store performance; continued improvement of SG&A as a percentage of gross profit; generating 2015 fourth quarter earnings per share of $1.61 to $1.65 per diluted share and 2015 full year earnings of $6.89 to $6.93 per diluted share; generating 2016 first quarter earnings per share of $1.46 to $1.50 per diluted share and 2016 full year earnings of $7.15 to $7.35 per diluted share and all projections set forth under the headings "2015 Outlook", "Continuing Operations Projections", "Same Store Projections" and "2016 Earnings Guidance";
• Anticipated continued success and growth of DCH;
• Anticipated ability to improve store performance; ability to find accretive acquisitions; and additions of dealership locations to the company's portfolio in the future; and
• Anticipated availability of liquidity from our unfinanced operating real estate.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers, risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms), government regulations, legislation and others set forth throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk Factors of our most recent Annual Report on Form 10-K, and from time to time in our other filings with the SEC. We urge you to carefully consider this information and not place undue reliance on forward-looking statements. We undertake no duty to update our forward-looking statements, including our earnings outlook, which are made as of the date of this release.
Non-GAAP Financial Measures
This press release and the attached financial tables contain non-GAAP financial measures such as adjusted net income and diluted earnings per share from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.
Lithia Motors, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Three months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues:
New vehicle retail $ 1,227,080 $ 732,121 $ 494,959 67.6 %
Used vehicle retail 505,885 340,522 165,363 48.6
Used vehicle wholesale 69,472 48,853 20,619 42.2
Finance and insurance 76,633 46,855 29,778 63.6
Service, body and parts 189,796 120,772 69,024 57.2
Fleet and other 15,979 7,988 7,991 100.0
Total revenues 2,084,845 1,297,111 787,734 60.7
Cost of sales:
New vehicle retail 1,149,923 684,473 465,450 68.0
Used vehicle retail 443,598 296,624 146,974 49.5
Used vehicle wholesale 68,892 48,349 20,543 42.5
Service, body and parts 95,846 62,351 33,495 53.7
Fleet and other 15,399 7,474 7,925 106.0
Total cost of sales 1,773,658 1,099,271 674,387 61.3
Gross profit 311,187 197,840 113,347 57.3
Asset impairments 4,131 - 4,131 NM
SG&A expense 223,728 131,627 92,101 70.0
Depreciation and amortization 10,531 6,067 4,464 73.6
Income from operations 72,797 60,146 12,651 21.0
Floor plan interest expense (4,951 ) (3,127 ) 1,824 58.3
Other interest expense (4,900 ) (2,051 ) 2,849 138.9
Other (expense) income, net (307 ) 1,027 (1,334 ) NM
Income before income taxes 62,639 55,995 6,644 11.9
Income tax expense (19,248 ) (21,458 ) 2,210 10.3
Income tax rate 30.7 % 38.3 %
Net income $ 43,391 $ 34,537 $ 8,854 25.6 %
Diluted net income per share:
Net income per share $ 1.64 $ 1.31 $ 0.33 25.2 %
Diluted shares outstanding 26,480 26,359 121 0.5 %
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Gross margin
New vehicle retail 6.3 % 6.5 % (20) bps
Used vehicle retail 12.3 12.9 (60) bps
Used vehicle wholesale 0.8 1.0 (20) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.5 48.4 110 bps
Fleet and other 3.6 6.4 (280) bps
Gross profit margin 14.9 15.3 (40) bps
Unit sales
New vehicle retail 37,401 21,320 16,081 75.4 %
Used vehicle retail 26,206 17,710 8,496 48.0
Total retail units sold 63,607 39,030 24,577 63.0
Used vehicle wholesale 10,239 6,989 3,250 46.5
Average selling price
New vehicle retail $ 32,809 $ 34,340 $ (1,531 ) (4.5 )%
Used vehicle retail 19,304 19,228 76 0.4
Used vehicle wholesale 6,785 6,990 (205 ) (2.9 )
Average gross profit per unit
New vehicle retail $ 2,063 $ 2,235 $ (172 ) (7.7 )%
Used vehicle retail 2,377 2,479 (102 ) (4.1 )
Used vehicle wholesale 57 72 (15 ) (20.8 )
Finance and insurance 1,205 1,200 5 0.4
Total vehicle (1) 3,406 3,559 (153 ) (4.3 )
Revenue mix
New vehicle retail 58.8 % 56.4 %
Used vehicle retail 24.3 26.3
Used vehicle wholesale 3.3 3.8
Finance and insurance, net 3.7 3.6
Service, body and parts 9.1 9.3
Fleet and other 0.8 0.6
Adjusted As reported
Three months ended
September 30, Three months ended
September 30,
Other metrics 2015 2014 2015 2014
SG&A as a % of revenue 9.9 % 10.1 % 10.7 % 10.1 %
SG&A as a % of gross profit 66.0 66.1 71.9 66.5
Operating profit as a % of revenue 4.6 4.7 3.5 4.6
Operating profit as a % of gross profit 30.6 30.8 23.4 30.4
Pretax margin 4.2 4.4 3.0 4.3
Net profit margin 2.6 2.7 2.1 2.7
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
null
Lithia Motors, Inc.
Same Store Operating Highlights (Unaudited)
Three months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues
New vehicle retail $ 810,720 $ 727,924 $ 82,796 11.4 %
Used vehicle retail 381,773 338,400 43,373 12.8
Used vehicle wholesale 54,088 48,600 5,488 11.3
Finance and insurance 54,099 46,607 7,492 16.1
Service, body and parts 132,331 120,099 12,232 10.2
Fleet and other 8,137 7,990 147 1.8
Total revenues $ 1,441,148 $ 1,289,620 $ 151,528 11.7
Gross profit
New vehicle retail $ 50,730 $ 47,211 $ 3,519 7.5 %
Used vehicle retail 49,016 43,716 5,300 12.1
Used vehicle wholesale 690 544 146 26.8
Finance and insurance 54,099 46,607 7,492 16.1
Service, body and parts 64,822 58,100 6,722 11.6
Fleet and other 563 516 47 9.1
Total gross profit $ 219,920 $ 196,694 $ 23,226 11.8
Gross margin
New vehicle retail 6.3 % 6.5 % (20) bps
Used vehicle retail 12.8 12.9 (10) bps
Used vehicle wholesale 1.3 1.1 20 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.0 48.4 60 bps
Fleet and other 6.9 6.5 40 bps
Gross profit margin 15.3 15.3 - bps
Unit sales
New vehicle retail 23,219 21,163 2,056 9.7 %
Used vehicle retail 19,255 17,566 1,689 9.6
Total retail units sold 42,474 38,729 3,745 9.7
Used vehicle wholesale 7,226 6,916 310 4.5
Average selling price
New vehicle retail $ 34,916 $ 34,396 $ 520 1.5 %
Used vehicle retail 19,827 19,265 562 2.9
Used vehicle wholesale 7,485 7,027 458 6.5
Average gross profit per unit
New vehicle retail $ 2,185 $ 2,231 $ (46 ) (2.1 )%
Used vehicle retail 2,546 2,489 57 2.3
Used vehicle wholesale 96 79 17 21.5
Finance and insurance 1,274 1,203 71 5.9
Total vehicle(1) 3,638 3,565 73 2.0
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
Lithia Motors, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Nine months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues:
New vehicle retail $ 3,384,408 $ 2,006,127 $ 1,378,281 68.7 %
Used vehicle retail 1,457,617 952,890 504,727 53.0
Used vehicle wholesale 198,476 135,832 62,644 46.1
Finance and insurance 213,700 130,324 83,376 64.0
Service, body and parts 545,966 339,726 206,240 60.7
Fleet and other 70,803 32,120 38,683 120.4
Total revenues 5,870,970 3,597,019 2,273,951 63.2
Cost of sales:
New vehicle retail 3,176,135 1,873,461 1,302,674 69.5
Used vehicle retail 1,273,195 824,129 449,066 54.5
Used vehicle wholesale 194,329 132,493 61,836 46.7
Service, body and parts 276,828 174,291 102,537 58.8
Fleet and other 68,272 30,444 37,828 124.3
Total cost of sales 4,988,759 3,034,818 1,953,941 64.4
Gross profit 882,211 562,201 320,010 56.9
Asset impairments 14,391 - 14,391 NM
SG&A expense 610,956 378,919 232,037 61.2
Depreciation and amortization 30,544 17,399 13,145 75.6
Income from operations 226,320 165,883 60,437 36.4
Floor plan interest expense (14,255 ) (9,326 ) 4,929 52.9
Other interest expense (14,700 ) (5,894 ) 8,806 149.4
Other (expense) income, net (1,030 ) 3,110 (4,140 ) NM
Income from continuing operations before income taxes 196,334 153,773 42,561 27.7
Income tax expense (61,067 ) (59,372 ) 1,695 2.9
Income tax rate 31.1 % 38.6 %
Income from continuing operations $ 135,267 $ 94,401 $ 40,866 43.3 %
Income from discontinued operations, net of tax - 3,179 (3,179 ) NM
Net income $ 135,267 $ 97,580 $ 37,687 38.6 %
Diluted net income per share:
Continuing operations $ 5.10 $ 3.58 $ 1.52 42.5 %
Discontinued operations - 0.13 (0.13 ) NM
Net income per share $ 5.10 $ 3.71 $ 1.39 37.5 %
Diluted shares outstanding 26,500 26,337 163 0.6 %
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Nine months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Gross margin
New vehicle retail 6.2 % 6.6 % (40) bps
Used vehicle retail 12.7 13.5 (80) bps
Used vehicle wholesale 2.1 2.5 (40) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.3 48.7 60 bps
Fleet and other 3.6 5.2 (160) bps
Gross profit margin 15.0 15.6 (60) bps
Unit sales
New vehicle retail 103,136 59,040 44,096 74.7 %
Used vehicle retail 75,099 50,112 24,987 49.9
Total retail units sold 178,235 109,152 69,083 63.3
Used vehicle wholesale 28,822 18,889 9,933 52.6
Average selling price
New vehicle retail $ 32,815 $ 33,979 $ (1,164 ) (3.4) %
Used vehicle retail 19,409 19,015 394 2.1
Used vehicle wholesale 6,886 7,191 (305 ) (4.2 )
Average gross profit per unit
New vehicle retail $ 2,019 $ 2,247 $ (228 ) (10.1) %
Used vehicle retail 2,456 2,569 (113 ) (4.4 )
Used vehicle wholesale 144 177 (33 ) (18.6 )
Finance and insurance 1,199 1,194 5 0.4
Revenue mix
New vehicle retail 57.6 % 55.8 %
Used vehicle retail 24.8 26.5
Used vehicle wholesale 3.4 3.8
Finance and insurance, net 3.6 3.6
Service, body and parts 9.3 9.4
Fleet and other 1.3 0.9
Adjusted As reported
Nine months ended
September 30, Nine months ended
September 30,
Other metrics 2015 2014 2015 2014
SG&A as a % of revenue 10.2 % 10.4 % 10.4 % 10.5 %
SG&A as a % of gross profit 67.8 66.5 69.3 67.4
Operating profit as a % of revenue 4.3 4.8 3.9 4.6
Operating profit as a % of gross profit 28.7 30.4 25.7 29.5
Pretax margin 3.9 4.4 3.3 4.3
Net profit margin 2.4 2.7 2.3 2.6
...
Lithia Motors, Inc.
Same Store Operating Highlights (Unaudited)
Nine months ended %
September 30, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues
New vehicle retail $ 2,190,337 $ 1,988,665 $ 201,672 10.1 %
Used vehicle retail 1,071,691 943,360 128,331 13.6
Used vehicle wholesale 148,249 135,173 13,076 9.7
Finance and insurance 148,232 129,155 19,077 14.8
Service, body and parts 371,432 336,881 34,551
Contact:
John North
VP Finance and Chief Accounting Officer
(541) 618-5748
DENTSPLY International Reports Record Third Quarter 2015 Results
.
DENTSPLY International Inc.
3 hours ago
GlobeNewswire
· Adjusted earnings of $0.66 per diluted share, up 6.5% vs. $0.62 in prior year period
· Adjusted operating margin for the third quarter expanded 220 bps to 20.9%
· Revenue excluding precious metals up 1.4% in constant currency in the third quarter; Fx headwind 9.1%
· Operating cash flow growth of 8.3% in the third quarter
York, PA - October 28, 2015 - DENTSPLY International Inc. (XRAY) today announced sales and earnings for the three and nine months ended September 30, 2015.
Third Quarter Results
Net sales in the third quarter of 2015 of $648.9 million decreased 8.4% compared to $708.2 million in the third quarter of 2014. Net sales, excluding metals content, of $629.3 million decreased 7.7% compared to $681.6 million in the third quarter of 2014. Revenue for the three months, excluding precious metals, grew 1.4% on a constant currency basis, offset by a 9.1% headwind from foreign currency translation.
Net income attributable to DENTSPLY International for the third quarter of 2015 was $84.5 million, or $0.59 per diluted share, compared to $75.3 million, or $0.52 per diluted share in the second quarter of 2014. On an adjusted basis, excluding certain items, net earnings per diluted share grew 6.5% to $0.66 compared to $0.62 in the third quarter of 2014. A reconciliation of the adjusted earnings per share, a non-US GAAP measure, to earnings per share calculated on a US-GAAP basis is provided in the attached table.
Nine months 2015 Results
Net sales for the first nine months of 2015 of $2.0 billion decreased 9.1% compared to $2.2 billion for the first nine months of 2014. Net sales for the nine months, excluding precious metals content, of $1.9 billion decreased 7.9% compared to $2.1 billion in the first nine months of 2014. Revenue for the first nine months of 2015 grew 2.0% on a constant currency basis, offset by a 9.9% headwind from foreign currency translation.
Net income attributable to DENTSPLY International for the first nine months of 2015 was $192.6 million, or $1.35 per diluted share, compared to $238.1 million, or $1.65 per diluted share in the first nine months of 2014. On an adjusted basis, excluding certain items, net earnings per diluted share grew 3.7% to $1.97 compared to $1.90 in the first nine months of 2014.
Outlook
Bret Wise, DENTSPLY`s Chairman and Chief Executive Officer, stated "During the third quarter, the business continued to achieve strong earnings growth despite a significant headwind from currency. We have been executing our global efficiency program and have realized improved margins well ahead of plan. For the third quarter, adjusted operating margin of 20.9% improved 220 basis points and, over a two-year period, the cumulative improvement was 300 basis points. Looking ahead, we are now poised to increase investment in growth opportunities, while also improving margins further, both important elements in driving shareholder value. Based on the results through nine months and our outlook for the balance of the year, we are increasing full-year 2015 adjusted earnings guidance to the range of $2.58 to $2.64 per diluted share."
Merger Update
On September 15, 2015, the Company and Sirona Dental Systems, Inc. ("Sirona") entered into an Agreement and Plan of Merger and announced a merger of equals between the two companies. Mr. Wise commented, "We are excited about the possibilities that this merger brings to the dental market, our customers and shareholders. We are actively pursuing the regulatory and shareholder approvals required to complete the merger and expect the transaction to close in the first quarter of 2016."
Additional Information
A conference call is scheduled to begin today at 8:30 a.m. (Eastern Time) with a live webcast to discuss these financial results. Supplemental materials for reference during the call will be available for download in the investor relations section of DENTSPLY`s web site, at www.dentsply.com.
Investors can access the webcast via a link on DENTSPLY`s web site at www.dentsply.com. For those planning to participate on the call, please dial (877) 856-1969 for domestic calls, or (719) 325-4903 for international calls. The Conference ID # is 4311375. Members of management speaking on the call will include Bret Wise, DENTSPLY`s Chairman and Chief Executive Officer, Chris Clark, President and Chief Financial Officer, and Jim Mosch, Executive Vice President and Chief Operating Officer.
A rebroadcast of the conference call will be available online at the DENTSPLY web site, and a dial-in replay will be available for one week following the call at (888) 203-1112 (for domestic calls) or (719) 457-0820 (for international calls), Replay Passcode # 4311375.
DENTSPLY International Inc. is a leading manufacturer and distributor of dental and other consumable medical device products. The Company believes it is the world`s largest manufacturer of consumable dental products for the professional dental market. For over 115 years, DENTSPLY`s commitment to innovation and professional collaboration has enhanced its portfolio of branded consumables and small equipment. Headquartered in the United States, the Company has global operations with sales in more than 120 countries. Visit www.dentsply.com for more information about DENTSPLY and its products.
This press release contains forward-looking information (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding future events or the future financial performance of the Company that involve substantial risks and uncertainties. Actual events or results may differ materially from those in the projections or other forward-looking information set forth herein as a result of certain risk factors. These risk factors include, without limitation; uncertainties as to the timing of the merger with Sirona; uncertainties as to whether the Company`s and Sirona`s stockholders will approve the merger; the risk that competing offers will be made; the possibility that various closing conditions for the merger may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the merger, or the terms of such approval; the effects of disruption from the merger making it more difficult to maintain relationships with employees, customers, suppliers, and other business partners; the risk that stockholder litigation in connection with the merger may result in significant costs of defense, indemnification and liability; the failure to realize synergies from the merger or delay in realization thereof; the business of the Company and Sirona may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; operating costs and business disruption following completion of the merger, including adverse effects on employee retention and on the Company`s and Sirona`s respective business relationships with third parties; costs associated with the merger; the continued strength of dental and medical markets, the timing, success and market reception for our new and existing products, uncertainty with respect to governmental actions with respect to dental and medical products, outcome of litigation and/or governmental enforcement actions, volatility in the capital markets or changes in our credit ratings, continued support of our products by influential dental and medical professionals, our ability to successfully integrate acquisitions, risks associated with foreign currency exchange rates, risks associated with our competitors` introduction of generic or private label products, our ability to accurately predict dealer and customer inventory levels, our ability to successfully realize the benefits of any cost reduction or restructuring efforts, our ability to obtain a supply of certain finished goods and raw materials from third parties and changes in the general economic environment that could affect the business. Changes in such assumptions or factors could produce significantly different results.
For additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements, please refer to the Company`s most recent Form 10-K and its subsequent periodic reports on Forms 10-Q filed with the Securities and Exchange Commission.
Non-US GAAP Financial Measures
In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share ("adjusted EPS"). The Company discloses adjusted net income attributable to DENTSPLY International to allow investors to evaluate the performance of the Company`s operations exclusive of certain items that impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the Company and certain large non-cash charges related to purchased intangible assets. The Company believes that this information is helpful in understanding underlying operating trends and cash flow generation.
Adjusted net income and adjusted EPS are important internal measures for the Company. Senior management receives a monthly analysis of operating results that includes adjusted net income and adjusted EPS and the performance of the Company is measured on this basis along with other performance metrics.
The adjusted net income attributable to DENTSPLY International consists of net income attributable to DENTSPLY International adjusted to exclude the net of tax impact of the following:
(1) Business combination related costs. These adjustments include costs related to integrating and consummating recently acquired businesses and costs, gains and losses related to the disposal of businesses or product lines. These items are irregular in timing and as such may not be indicative of past and future performance of the Company and are therefore excluded to allow investors to better understand underlying operating trends.
(2) Restructuring, restructuring program related costs and other costs. These adjustments include costs related to the implementation of restructuring initiatives as well as certain other costs. These costs can include, but are not limited to, severance costs, facility closure costs, lease and contract terminations costs, related professional service costs, duplicate facility and labor costs associated with specific restructuring initiatives, as well as, legal settlements and impairments of assets. These items are irregular in timing, amount and impact to the Company`s financial performance. As such, these items may not be indicative of past and future performance of the Company and are therefore excluded for the purpose of understanding underlying operating trends.
(3) Amortization of purchased intangible assets. This adjustment excludes the periodic amortization expense related to purchased intangible assets. Beginning in 2011, the Company began recording large non-cash charges related to the values attributed to purchased intangible assets. As such, amortization expense has been excluded from adjusted net income attributed to DENTSPLY International to allow investors to evaluate and understand operating trends excluding these large non-cash charges.
(4) Credit risk and fair value adjustments. These adjustments include both the cost and income impacts of adjustments in certain assets and liabilities including the Company`s pension obligations, that are recorded through net income which are due solely to the changes in fair value and credit risk. These items can be variable and driven more by market conditions than the Company`s operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.
(5) Certain fair value adjustments related to an unconsolidated affiliated company. This adjustment represents the fair value adjustment of the unconsolidated affiliated company`s convertible debt instrument held by the Company. The affiliate is accounted for under the equity method of accounting. The fair value adjustment is driven by open market pricing of the affiliate`s equity instruments, which has a high degree of variability and may not be indicative of the operating performance of the affiliate or the Company.
(6) Income tax related adjustments. These adjustments include both income tax expenses and income tax benefits that are representative of income tax adjustments mostly related to prior periods, as well as the final settlement of income tax audits, and discrete tax items resulting from the implementation of restructuring initiatives. These adjustments are irregular in timing and amount and may significantly impact the Company`s operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.
Adjusted earnings per diluted common share is calculated by dividing adjusted net income attributable to DENTSPLY International by diluted weighted-average common shares outstanding. Adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share are considered measures not calculated in accordance with US GAAP, and therefore are non-US GAAP measures. These non-US GAAP measures may differ from other companies. Income tax related adjustments may include the impact to adjust the interim effective income tax rate to the expected annual effective tax rate. The non-US GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Net sales $ 648.9 $ 708.2 $ 2,003.2 $ 2,203.6
Net sales, excluding precious metal content 629.3 681.6 1,935.6 2,101.7
Cost of products sold 279.4 320.1 860.7 996.9
Gross profit 369.5 388.1 1,142.5 1,206.7
% of Net sales 56.9 % 54.8 % 57.0 % 54.8 %
% of Net sales, excluding precious metal content 58.7 % 56.9 % 59.0 % 57.4 %
Selling, general and administrative expenses 264.3 276.0 809.5 859.9
Restructuring and other costs 6.6 2.5 50.9 4.5
Operating income 98.6 109.6 282.1 342.3
% of Net sales 15.2 % 15.5 % 14.1 % 15.5 %
% of Net sales, excluding precious metal content 15.7 % 16.1 % 14.6 % 16.3 %
Net interest and other expense 5.4 12.1 24.7 32.6
Income before income taxes 93.2 97.5 257.4 309.7
Provision for income taxes 19.6 21.2 63.2 69.9
Equity in net income (loss) of
unconsolidated affiliated company 10.8 (1.0 ) (1.7 ) (1.6 )
Net income 84.4 75.3 192.5 238.2
% of Net sales 13.0 % 10.6 % 9.6 % 10.8 %
% of Net sales, excluding precious metal content 13.4 % 11.0 % 9.9 % 11.3 %
Less: Net (loss) income attributable to noncontrolling interests (0.1 ) - (0.1 ) 0.1
Net income attributable to DENTSPLY International $ 84.5 $ 75.3 $ 192.6 $ 238.1
% of Net sales 13.0 % 10.6 % 9.6 % 10.8 %
% of Net sales, excluding precious metal content 13.4 % 11.0 % 10.0 % 11.3 %
Earnings per common share:
Basic $ 0.60 $ 0.53 $ 1.38 $ 1.68
Dilutive $ 0.59 $ 0.52 $ 1.35 $ 1.65
Cash dividends declared per common share $ 0.07250 $ 0.06625 $ 0.21750 $ 0.19875
Weighted average common shares outstanding:
Basic 139.8 141.8 140.0 141.9
Dilutive 142.4 144.3 142.5 144.3
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
September 30, 2015 December 31, 2014
Assets
Current Assets:
Cash and cash equivalents $ 236.4 $ 151.7
Accounts and notes receivable-trade, net 429.8 426.6
Inventories, net 361.3 387.1
Prepaid expenses and other current assets 180.6 241.6
Total Current Assets 1,208.1 1,207.0
Property, plant and equipment, net 555.2 588.9
Identifiable intangible assets, net 600.4 670.8
Goodwill, net 1,984.3 2,089.3
Other noncurrent assets, net 54.2 90.5
Total Assets $ 4,402.2 $ 4,646.5
Liabilities and Equity
Current liabilities $ 933.4 $ 652.6
Long-term debt 701.9 1,150.1
Deferred income taxes 152.9 165.6
Other noncurrent liabilities 332.5 356.0
Total Liabilities 2,120.7 2,324.3
Total DENTSPLY International Equity 2,280.1 2,321.3
Noncontrolling interests 1.4 0.9
Total Equity 2,281.5 2,322.2
Total Liabilities and Equity $ 4,402.2 $ 4,646.5
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
SUPPLEMENTAL SUMMARY CASH FLOW INFORMATION
(In millions)
(unaudited)
Nine Months Ended September 30,
2015 2014
Net Cash Provided by Operating Activities $ 371.0 $ 367.7
Net Cash Provided by (Used in) Investing Activities $ 13.2 $ (76.4 )
Net Cash Used in Financing Activities $ 294.0 $ 264.3
Depreciation $ 61.6 $ 63.1
Amortization $ 32.8 $ 36.4
Capital Expenditures $ 51.7 $ 73.0
Cash Dividends Paid $ 29.9 $ 27.9
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except percentages)
(unaudited)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Three Months Ended September 30, 2015
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 98.6 15.7 %
Restructuring, Restructuring Program Related Costs and Other Costs 15.5 2.5 %
Amortization of Purchased Intangible Assets 10.9 1.7 %
Business Combination Related Costs 4.9 0.8 %
Credit Risk and Fair Value Adjustments 2.0 0.3 %
Adjusted Non-US GAAP Operating Income $ 131.9 21.0 %
Three Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 109.6 16.1 %
Amortization of Purchased Intangible Assets 11.9 1.8 %
Restructuring, Restructuring Program Related Costs and Other Costs 3.7 0.5 %
Business Combination Related Costs 2.0 0.3 %
Adjusted Non-US GAAP Operating Income $ 127.2 18.7 %
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except percentages)
(unaudited)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Nine Months Ended September 30, 2015
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 282.1 14.6 %
Restructuring, Restructuring Program Related Costs and Other Costs 65.7 3.4 %
Amortization of Purchased Intangible Assets 32.8 1.7 %
Credit Risk and Fair Value Adjustments 6.0 0.3 %
Business Combination Related Costs 5.7 0.3 %
Adjusted Non-US GAAP Operating Income $ 392.3 20.3 %
Nine Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 342.3 16.3 %
Amortization of Purchased Intangible Assets 36.4 1.7 %
Restructuring, Restructuring Program Related Costs and Other Costs 5.9 0.3 %
Business Combination Related Costs 5.6 0.3 %
Adjusted Non-US GAAP Operating Income $ 390.2 18.6 %
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except per share amounts)
(unaudited)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per diluted common share basis to the non-US GAAP financial measures.
Three Months Ended September 30, 2015
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 84.5 $ 0.59
Restructuring, Restructuring Program Related Costs and Other Costs, Net of Tax 12.6 0.09
Amortization of Purchased Intangible Assets, Net of Tax 7.6 0.05
Business Combination Related Costs, Net of Tax 4.9 0.03
Credit Risk and Fair Value Adjustments, Net of Tax 0.8 0.01
Income Tax Related Adjustments (2.3 ) (0.02 )
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company, Net of Tax (14.6 ) (0.10 )
Rounding - 0.01
Adjusted non-US GAAP earnings $ 93.5 $ 0.66
Three Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 75.3 $ 0.52
Amortization of Purchased Intangible Assets, Net of Tax 8.4 0.06
Restructuring, Restructuring Program Related Costs and Other Costs, Net of Tax 2.5 0.02
Business Combination Related Costs, Net of Tax 1.4 0.01
Credit Risk and Fair Value Adjustments, Net of Tax 0.8 0.01
Income Tax Related Adjustments 0.6 -
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company, Net of Tax 0.3 -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 89.3 $ 0.62
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except per share amounts)
(unaudited)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per diluted common share basis to the non-US GAAP financial measures.
Nine Months Ended September 30, 2015
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 192.6 $ 1.35
Restructuring, Restructuring Program Related Costs and Other Costs, Net of Tax 53.9 0.38
Amortization of Purchased Intangible Assets, Net of Tax 22.9 0.16
Business Combination Related Costs, Net of Tax 5.5 0.04
Credit Risk and Fair Value Adjustments, Net of Tax 4.1 0.03
Income Tax Related Adjustments 3.1 0.02
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company, Net of Tax (1.7 ) (0.01 )
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 280.4 $ 1.97
Nine Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 238.1 $ 1.65
Amortization of Purchased Intangible Assets, Net of Tax 25.7 0.18
Restructuring, Restructuring Program Related Costs and Other Costs, Net of Tax 4.1 0.03
Business Combination Related Costs, Net of Tax 3.8 0.02
Income Tax Related Adjustments 3.5 0.02
Credit Risk and Fair Value Adjustments, Net of Tax - -
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company, Net of Tax (0.8 ) -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 274.4 $ 1.90
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except percentages)
(unaudited)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Three Months Ended September 30, 2015
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 93.2 $ (19.6 ) 21.0 %
Restructuring, Restructuring Program Related Costs and Other Costs 15.5 (2.9 )
Amortization of Purchased Intangible Assets 10.9 (3.3 )
Business Combination Related Costs 4.9 -
Credit Risk and Fair Value Adjustments 1.0 (0.2 )
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company (5.1 ) 1.1
Income Tax Related Adjustments - (2.3 )
As Adjusted - Non-US GAAP Operating Results $ 120.4 $ (27.2 ) 22.6 %
Three Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 97.5 $ (21.2 ) 21.7 %
Amortization of Purchased Intangible Assets 11.9 (3.5 )
Restructuring, Restructuring Program Related Costs and Other Costs 3.7 (1.2 )
Business Combination Related Costs 2.0 (0.6 )
Credit Risk and Fair Value Adjustments 1.3 (0.5 )
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company - -
Income Tax Related Adjustments - 0.6
As Adjusted - Non-US GAAP Operating Results $ 116.4 $ (26.4 ) 22.7 %
DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except percentages)
(unaudited)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Nine Months Ended September 30, 2015
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 257.4 $ (63.2 ) 24.6 %
Restructuring, Restructuring Program Related Costs and Other Costs 65.7 (11.8 )
Amortization of Purchased Intangible Assets 32.8 (9.9 )
Credit Risk and Fair Value Adjustments 5.7 (1.6 )
Business Combination Related Costs 5.7 (0.2 )
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company (5.2 ) 1.1
Income Tax Related Adjustments - 3.1
As Adjusted - Non-US GAAP Operating Results $ 362.1 $ (82.5 ) 22.8 %
Nine Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 309.7 $ (69.9 ) 22.6 %
Amortization of Purchased Intangible Assets 36.4 (10.7 )
Restructuring, Restructuring Program Related Costs and Other Costs 5.9 (1.8 )
Business Combination Related Costs 5.6 (1.8 )
Certain Fair Value Adjustments Related to an Unconsolidated Affiliated Company 0.2 (0.1 )
Credit Risk and Fair Value Adjustments - -
Income Tax Related Adjustments - 3.5
As Adjusted - Non-US GAAP Operating Results $ 357.8 $ (80.8 ) 22.6 %
For further information contact:
Derek Leckow
Vice President
Investor Relations
(717) 849-7863
KKR & Co. L.P. Announces Third Quarter 2015 Results
KKR adopts a $500 million unit repurchase program
KKR to change distribution policy to fixed $0.16 per common unit per quarter beginning with the fourth quarter of 2015
GAAP net income (loss) attributable to KKR & Co. L.P. was $(190.6) million and $456.2 million for the quarter and nine months ended September 30, 2015, respectively, down from $89.9 million and $478.2 million in the comparable periods of 2014.
Total distributable earnings was $349.1 million and $1,357.1 million for the quarter and nine months ended September 30, 2015, respectively, down from $504.8 million and $1,652.6 million in the comparable periods of 2014.
Distribution per common unit was $0.35 and $1.23 for the quarter and nine months ended September 30, 2015, respectively, down from $0.45 and $1.55 in the comparable periods of 2014.
Economic net income (loss) (“ENI”) was $(286.0) million and $1,153.3 million for the quarter and nine months ended September 30, 2015, respectively, down from $508.7 million and $1,640.6 million in the comparable periods of 2014.
ENI after taxes per adjusted unit was $(0.37) and $1.13 for the quarter and nine months ended September 30, 2015, respectively, down from $0.50 and $1.81 in the comparable periods of 2014.
Book value was $10.2 billion on a total reportable segment basis as of September 30, 2015 or $12.01 per adjusted unit.
Return on equity and cash return on equity were 9.6% and 15.8%, respectively on a trailing twelve month basis.
Assets under management (“AUM”) and fee paying assets under management (“FPAUM”) totaled $98.7 billion and $82.9 billion, respectively, as of September 30, 2015.
Business Wire
KKR & Co. L.P.
9 minutes ago
NEW YORK--(BUSINESS WIRE)--
KKR & Co. L.P. (KKR) today reported its third quarter 2015 results.
KKR has adopted a repurchase program for up to $500 million in the aggregate of its outstanding common units. Under this program, units may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise.
In addition, KKR has amended its distribution policy effective beginning with the distribution anticipated to be declared in early 2016 with respect to the quarter ending December 31, 2015. Under the new distribution policy, KKR intends to make equal quarterly distributions to holders of its common units in an amount of $0.16 per common unit per quarter. The distribution declared for the quarter ended September 30, 2015 was calculated under the prior distribution policy.
On September 9, 2015, KKR announced a long-term strategic partnership with Marshall Wace LLP and its affiliates. Under the terms of the agreement and subject to customary closing conditions, KKR will acquire at closing a 24.9% interest in Marshall Wace through a combination of cash and common units. In addition, KKR and Marshall Wace have the option to grow KKR’s ownership interest over time to 39.9%.
"Our announcements today, including the introductions of a fixed distribution per quarter and a share buyback program, reflect important changes to our capital management strategy,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Our strong balance sheet, with approximately $14 billion in assets, allows us to support a meaningful fixed quarterly distribution. We will use incremental retained capital to invest behind our ideas and buy back our units. Over time, we think the market will value what we do with our balance sheet, including repurchasing our own units, more than the variable distributions we have been paying. These changes, coupled with continued investment performance, will allow us to create significant long-term equity value for our unitholders.”
Note: Certain financial measures, including total distributable earnings, FRE, ENI, ENI after taxes, fee and yield earnings, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits B and C for a reconciliation of such measures to financial results prepared in accordance with GAAP.
GAAP RESULTS
GAAP net income (loss) for the quarter and nine months ended September 30, 2015, included net income (loss) attributable to KKR & Co. L.P. of $(190.6) million and $456.2 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit of $(0.42) and $0.95, respectively, on a diluted basis. For the quarter and nine months ended September 30, 2014, net income (loss) attributable to KKR & Co. L.P. was $89.9 million and $478.2 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit was $0.20 and $1.21, respectively, on a diluted basis. The decrease in both comparable periods was primarily due to a decrease in investment income and to a lesser extent a decrease in transaction fees.
SEGMENT RESULTS
KEY METRICS (UNAUDITED)
(Amounts in millions, except per adjusted unit amounts)
Quarter Ended Nine Months Ended
September 30, 2015 September 30, 2014 % Change September 30, 2015 September 30, 2014 % Change
Total Distributable Earnings
Fees $ 246 $ 309 $ 817 $ 891
Realized Cash Carry 265 246 820 995
Net Realized Investment Income 110 245 593 720
Total Cash Revenues $ 621 $ 800 (22 )% $ 2,230 $ 2,606 (14 )%
Total Cash Expenses and Other 272 295 873 953
Total Distributable Earnings $ 349 $ 505 (31 )% $ 1,357 $ 1,653 (18 )%
Less: Estimated Current Corporate Income Taxes (18 ) (30 ) (73 ) (82 )
Distributable Earnings, net of taxes $ 331 $ 475 (30 )% $ 1,284 $ 1,571 (18 )%
Distributable Earnings, net of taxes per KKR & Co. L.P. common unit $ 0.40 $ 0.59 (32 )% $ 1.57 $ 2.03 (23 )%
Distribution per KKR & Co. L.P. common unit $ 0.35 $ 0.45 (22 )% $ 1.23 $ 1.55 (21 )%
Payout ratio 88 % 76 % 79 % 76 %
Economic Net Income
Management, Monitoring and Transaction Fees, Net $ 245 $ 301 $ 805 $ 854
Performance Income (162 ) 310 884 1,096
Investment Income (274 ) 207 330 648
Total Segment Revenues $ (191 ) $ 818 (123 )% $ 2,019 $ 2,598 (22 )%
Total Segment Expenses and Other 124 399 1,061 1,170
Economic Net Income, After-Taxes $ (315 ) $ 419 (175 )% $ 958 $ 1,428 (33 )%
Economic Net Income, After-Taxes per Adjusted Unit $ (0.37 ) $ 0.50 (174 )% $ 1.13 $ 1.81 (38 )%
Fee and Yield Earnings $ 139 $ 208 (33 )% $ 487 $ 525 (7 )%
Other
Book Value per Adjusted Unit $ 12.01 $ 12.51 (4 )%
Last Twelve Months Ended
September 30, 2015 September 30, 2014
Return on Equity 9.6% 24.7%
Cash Return on Equity 15.8% 23.3%
Private Markets
AUM was $60.8 billion as of September 30, 2015, a decrease of $2.3 billion, compared to AUM of $63.1 billion as of June 30, 2015. The decrease was primarily attributable to distributions to limited partners of our private equity funds arising from realizations and to a lesser extent, a decline in the fair value of our private equity portfolio. For the three months ended September 30, 2015, the fair value of our private equity portfolio decreased 1.4%. These decreases were offset by new capital raised primarily in European Fund IV and Global Infrastructure Investors II.
FPAUM was $46.2 billion as of September 30, 2015, a decrease of $0.6 billion, compared to FPAUM of $46.8 billion as of June 30, 2015. The decrease was primarily attributable to distributions to limited partners of our private equity funds arising from realizations which were partially offset by new capital raised in European Fund IV and Global Infrastructure Investors II.
Total segment revenues were $(74.6) million for the quarter ended September 30, 2015, a decrease of $706.2 million, compared to total segment revenues of $631.6 million for the quarter ended September 30, 2014. The decrease was principally attributable to net carried interest losses reflecting a decline in the value of our private equity portfolio and to a lesser extent, net investment losses reflecting overall decreases in the value of our energy and private equity portfolios.
Total segment revenues were $1,798.3 million for the nine months ended September 30, 2015, a decrease of $206.8 million, compared to total segment revenues of $2,005.1 million for the nine months ended September 30, 2014. The decrease was largely attributable to (i) a lower level of net carried interest primarily reflecting a lower level of investment gains at carry earning funds during the current period and (ii) a lower level of investment income primarily relating to investment losses in our energy portfolio during the nine months ended September 30, 2015. For the nine months ended September 30, 2015, the fair value of our private equity portfolio increased 10.5%.
ENI was $(133.7) million for the quarter ended September 30, 2015, a decrease of $532.7 million, compared to ENI of $399.0 million for the quarter ended September 30, 2014. The decrease was primarily attributable to lower total segment revenues as described above partially offset by lower allocations to the carry pool resulting from the lower levels of net carried interest.
Public Markets
AUM was $37.9 billion as of September 30, 2015, a decrease of $0.5 billion, compared to AUM of $38.4 billion as of June 30, 2015. FPAUM was $36.7 billion as of September 30, 2015, a decrease of $0.3 billion, compared to FPAUM of $37.0 billion as of June 30, 2015. For both AUM and FPAUM, the decreases were primarily attributable to distributions and redemptions across multiple strategies, offset by new capital either raised or invested, primarily in Special Situations Fund II and our CLOs.
Total segment revenues were $(163.6) million for the quarter ended September 30, 2015, a decrease of $257.2 million, compared to total segment revenues of $93.6 million for the quarter ended September 30, 2014. The decrease in revenues was principally attributable to (i) net investment losses in the third quarter of 2015 across multiple strategies, primarily in our Special Situations platform and our domestic CLOs, and (ii) net carried interest losses in the third quarter of 2015 primarily reflecting overall decreases in the value of our carry paying vehicles, the most significant of which was our Special Situations Fund.
Total segment revenues were $74.6 million for the nine months ended September 30, 2015, a decrease of $321.8 million, compared to total segment revenues of $396.4 million for the nine months ended September 30, 2014. The decrease was principally attributable to (i) net investment losses for the nine months ended September 30, 2015 due primarily to net unrealized losses in our CLOs and certain other Public Markets related investments and (ii) lower performance income for the period. These decreases were partially offset by an increase in net interest and dividends relating primarily to the yielding assets of KFN, which was acquired on April 30, 2014 but was not contributing to our investment income for the first four months of 2014.
ENI was $(183.3) million for the quarter ended September 30, 2015, a decrease of $231.4 million, compared to ENI of $48.1 million for the quarter ended September 30, 2014. The decrease was principally attributable to the decrease in total segment revenues as described above.
ENI was $(43.9) million for the nine months ended September 30, 2015, a decrease of $295.4 million, compared to ENI of $251.5 million for the nine months ended September 30, 2014. The decrease was principally attributable to the decrease in total segment revenues as described above.
Capital Markets
Total segment revenues were $46.4 million for the quarter ended September 30, 2015, a decrease of $47.0 million, compared to total segment revenues of $93.4 million for the quarter ended September 30, 2014. The decrease in revenues primarily reflects a lower level of overall capital markets transaction activity for the quarter ended September 30, 2015.
Total segment revenues were $145.5 million for the nine months ended September 30, 2015, a decrease of $51.0 million, compared to total segment revenues of $196.5 million for the nine months ended September 30, 2014. The decrease in revenues primarily reflects a lower level of overall capital markets transaction activity for the nine months ended September 30, 2015.
ENI was $30.9 million for the quarter ended September 30, 2015, a decrease of $30.7 million, compared to ENI of $61.6 million for the quarter ended September 30, 2014. The decrease primarily reflects the decrease in total segment revenues as described above.
ENI was $96.2 million for the nine months ended September 30, 2015, a decrease of $32.3 million, compared to ENI of $128.5 million for the nine months ended September 30, 2014. The decrease primarily reflects the decrease in total segment revenues as described above.
CAPITAL AND LIQUIDITY
As of September 30, 2015, KKR had $2.1 billion of cash and short-term investments and $3.0 billion of outstanding debt and preferred share obligations on a total reportable segment basis. This includes KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million, which are non-recourse to KKR beyond the assets of KFN. As of September 30, 2015, KKR had a $1.0 billion revolving credit facility, which was undrawn. In addition, KKR has a $500.0 million revolving credit facility for use in its capital markets business, which was undrawn as of September 30, 2015.
As of September 30, 2015, KKR’s portion of total uncalled commitments to its investment funds was $1.3 billion. See Exhibit A for details.
DISTRIBUTION
A distribution of $0.35 per common unit has been declared, comprised of (i) $0.08 per common unit from after-tax FRE, (ii) $0.19 per common unit from realized cash carry, (iii) $0.03 per common unit from KKR’s net realized investment income and (iv) $0.05 per common unit from KFN’s net realized investment income. The distribution will be paid on November 24, 2015 to unitholders of record as of the close of business on November 6, 2015. This distribution was calculated under KKR’s prior distribution policy.
The declaration and payment of any distributions including distributions made under KKR’s new policy are subject to the discretion of the board of directors of the general partner of KKR, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all, that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR or that any particular distribution policy will be maintained.
SUPPLEMENTAL INFORMATION
A slide presentation containing supplemental commentary about the Company's financial results for the fiscal quarter ended September 30, 2015 may be accessed through the KKR Investor Relations section of the KKR website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. The presentation will be referenced on the conference call discussed below.
CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Tuesday, October 27, 2015 at 5:00 p.m. EDT. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Center section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 33603948, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.
ABOUT KKR
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, including the statements with respect to the strategic partnership with Marshall Wace LLP, the declaration and payment of distributions on common units of KKR and the timing, manner and volume of repurchases of common units pursuant to a repurchase program. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, ENI after taxes, fee and yield earnings, fee and yield EBITDA, equity invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward looking statements speak only as of the date hereof. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on February 27, 2015, quarterly reports on Form 10-Q for subsequent quarters and other filings with the SEC, which are available at www.sec.gov.
KKR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
Quarter Ended Nine Months Ended
September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Revenues
Fees and Other $ 188,626 $ 344,768 $ 735,845 $ 897,064
Expenses
Compensation and Benefits 96,959 320,423 873,649 1,010,191
Occupancy and Related Charges 16,484 15,501 48,388 46,968
General, Administrative and Other 163,477 168,486 424,093 505,747
Total Expenses 276,920 504,410 1,346,130 1,562,906
Investment Income (Loss)
Net Gains (Losses) from Investment Activities (1,555,681 ) 298,259 3,474,748 4,242,289
Dividend Income 270,759 599,020 710,130 968,626
Interest Income 299,485 260,292 898,628 638,124
Interest Expense (151,554 ) (96,618 ) (402,944 ) (197,346 )
Total Investment Income (Loss) (1,136,991 ) 1,060,953 4,680,562 5,651,693
Income (Loss) Before Taxes (1,225,285 ) 901,311 4,070,277 4,985,851
Income Tax (Benefit) (7,390 ) 29,267 39,295 57,145
Net Income (Loss) (1,217,895 ) 872,044 4,030,982 4,928,706
Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests (12,925 ) (2,462 ) (11,883 ) 1,366
Net Income (Loss) Attributable to
Noncontrolling Interests and Appropriated Capital (1,014,382 ) 784,568 3,586,640 4,449,146
Net Income (Loss) Attributable to KKR & Co. L.P. $ (190,588 ) $ 89,938 $ 456,225 $ 478,194
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ (0.42 ) $ 0.21 $ 1.03 $ 1.31
Diluted (a) $ (0.42 ) $ 0.20 $ 0.95 $ 1.21
Weighted Average Common Units Outstanding
Basic 452,165,697 419,961,455 444,675,159 364,127,956
Diluted (a) 452,165,697 452,019,742 480,338,335 396,232,828
(a) KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships. For the three months ended September 30, 2015, unvested common units and other securities are excluded from the calculation of diluted earnings per common unit because inclusion of such unvested common units and other securities would be anti-dilutive (decrease the loss per common unit).
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
Quarter Ended Nine Months Ended
September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 181,780 $ 181,401 $ 173,912 $ 536,961 $ 547,979
Monitoring Fees 24,964 47,713 30,449 170,515 96,422
Transaction Fees 61,437 92,951 158,564 257,674 406,385
Fee Credits (23,293 ) (56,458 ) (61,811 ) (160,245 ) (196,309 )
Total Management, Monitoring and Transaction Fees, Net 244,888 265,607 301,114 804,905 854,477
Performance Income
Realized Carried Interest 265,291 252,227 246,026 819,943 995,064
Incentive Fees 880 5,893 8,009 12,438 36,506
Unrealized Carried Interest (428,493 ) 340,366 56,192 51,157 64,013
Total Performance Income (162,322 ) 598,486 310,227 883,538 1,095,583
Investment Income (Loss)
Net Realized Gains (Losses) 61,439 176,260 162,795 418,366 566,184
Net Unrealized Gains (Losses) (384,460 ) 131,984 (37,833 ) (263,197 ) (72,009 )
Total Realized and Unrealized (323,021 ) 308,244 124,962 155,169 494,175
Net Interest and Dividends 48,637 75,406 82,254 174,718 153,850
Total Investment Income (Loss) (274,384 ) 383,650 207,216 329,887 648,025
Total Segment Revenues (191,818 ) 1,247,743 818,557 2,018,330 2,598,085
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 88,033 98,871 108,790 293,931 309,149
Realized Allocation to Carry Pool 106,116 100,891 98,411 327,977 398,026
Unrealized Allocation to Carry Pool (170,621 ) 136,566 22,696 21,576 27,951
Total Compensation and Benefits 23,528 336,328 229,897 643,484 735,126
Occupancy and Related Charges 15,720 15,475 14,458 45,991 43,404
Other Operating Expenses 52,081 51,613 60,272 164,640 167,384
Total Segment Expenses 91,329 403,416 304,627 854,115 945,914
Income (Loss) attributable to noncontrolling interests 2,902 4,383 5,189 10,907 11,597
Economic Net Income (Loss) (a) $ (286,049 ) $ 839,944 $ 508,741 $ 1,153,308 $ 1,640,574
Provision for Income Tax (Benefit) (19,505 ) 44,836 47,361 46,566 90,272
Equity-based Charges 48,252 48,453 42,090 148,970 122,320
Economic Net Income (Loss), After Taxes (b) $ (314,796 ) $ 746,655 $ 419,290 $ 957,772 $ 1,427,982
Economic Net Income (Loss), After Taxes Per Adjusted Unit $ (0.37 ) $ 0.88 $ 0.50 $ 1.13 $ 1.81
Weighted Average Adjusted Units (Fully Diluted Basis) (a) 851,704,303 852,128,762 835,957,683 850,644,918 787,502,790
Assets Under Management $ 98,708,500 $ 101,569,600 $ 96,149,900 $ 98,708,500 $ 96,149,900
Fee Paying Assets Under Management $ 82,889,000 $ 83,732,800 $ 81,356,700 $ 82,889,000 $ 81,356,700
Equity Invested and Syndicated Capital $ 1,462,900 $ 2,011,100 $ 4,751,400 $ 6,419,400 $ 10,474,200
Uncalled Commitments $ 26,892,300 $ 25,906,300 $ 17,555,400 $ 26,892,300 $ 17,555,400
Other Information
Fee Related Earnings $ 89,934 $ 105,541 $ 125,603 $ 312,781 $ 371,046
Plus: Net Interest and Dividends 48,637 75,406 82,254 174,718 153,850
Fee and Yield Earnings (a) $ 138,571 $ 180,947 $ 207,857 $ 487,499 $ 524,896
Plus: Depreciation and Amortization 3,745 3,918 3,777 11,544 11,952
Plus: Core Interest Expense 30,429 30,750 23,347 86,511 60,952
Fee and Yield EBITDA (a) $ 172,745 $ 215,615 $ 234,981 $ 585,554 $ 597,800
Total Distributable Earnings (a) $ 349,115 $ 491,407 $ 504,817 $ 1,357,053 $ 1,652,598
GAAP interest expense $ 151,554 $ 139,427 $ 96,618 $ 402,944 $ 197,346
Less: interest expense related to debt obligations
from investment financing arrangements and KFN 121,125 108,677 73,271 316,433 136,394
Core Interest Expense (a) $ 30,429 $ 30,750 $ 23,347 $ 86,511 $ 60,952
(a) See definitions for economic net income (loss), adjusted units, fee and yield earnings, fee and yield EBITDA, total distributable earnings and core interest expense under “Notes to Reportable Segments.”
(b) Represents economic net income (loss) after reductions for income taxes and equity-based charges.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 118,250 $ 115,346 $ 107,443 $ 342,872 $ 342,024
Monitoring Fees 24,964 47,713 30,449 170,515 96,422
Transaction Fees 17,732 40,321 67,772 104,652 206,132
Fee Credits (20,266 ) (53,286 ) (58,810 ) (143,458 ) (182,626 )
Total Management, Monitoring and Transaction Fees, Net 140,680 150,094 146,854 474,581 461,952
Performance Income
Realized Carried Interest 265,291 243,274 236,126 810,990 960,414
Incentive Fees — — —
—
—
Unrealized Carried Interest (394,126 ) 312,379 53,776 45,190 35,988
Total Performance Income (128,835 ) 555,653 289,902 856,180 996,402
Investment Income (Loss)
Net Realized Gains (Losses) 59,880 145,817 165,047 388,961 549,137
Net Unrealized Gains (Losses) (149,865 ) 145,094 8,293 74,592 (43,763 )
Total Realized and Unrealized (89,985 ) 290,911 173,340 463,553 505,374
Net Interest and Dividends 3,538 8,234 21,463 3,941 41,415
Total Investment Income (Loss) (86,447 ) 299,145 194,803 467,494 546,789
Total Segment Revenues (74,602 ) 1,004,892 631,559 1,798,255 2,005,143
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 57,991 65,939 59,991 197,897 183,411
Realized Allocation to Carry Pool 106,116 97,310 94,451 324,396 384,166
Unrealized Allocation to Carry Pool (156,874 ) 125,371 21,729 19,190 16,742
Total Compensation and Benefits 7,233 288,620 176,171 541,483 584,319
Occupancy and Related Charges 11,937 11,832 11,460 34,785 34,784
Other Operating Expenses 39,674 38,125 44,619 119,915 124,267
Total Segment Expenses 58,844 338,577 232,250 696,183 743,370
Income (Loss) attributable to noncontrolling interests 250 143 342 1,112 1,192
Economic Net Income (Loss) $ (133,696 ) $ 666,172 $ 398,967 $ 1,100,960 $ 1,260,581
Assets Under Management $ 60,781,200 $ 63,129,200 $ 59,168,300 $ 60,781,200 $ 59,168,300
Fee Paying Assets Under Management $ 46,199,000 $ 46,758,800 $ 45,591,600 $ 46,199,000 $ 45,591,600
Equity Invested $ 867,000 $ 1,258,200 $ 2,389,200 $ 4,172,600 $ 6,395,400
Uncalled Commitments $ 21,610,400 $ 21,078,400 $ 14,907,300 $ 21,610,400 $ 14,907,300
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 63,530 $ 66,055 $ 66,469 $ 194,089 $ 205,955
Monitoring Fees — — — — —
Transaction Fees 3,386 3,873 3,262 20,689 16,634
Fee Credits (3,027 ) (3,172 ) (3,001 ) (16,787 ) (13,683 )
Total Management, Monitoring and Transaction Fees, Net 63,889 66,756 66,730 197,991 208,906
Performance Income
Realized Carried Interest — 8,953 9,900 8,953 34,650
Incentive Fees 880 5,893 8,009 12,438 36,506
Unrealized Carried Interest (34,367 ) 27,987 2,416 5,967 28,025
Total Performance Income (33,487 ) 42,833 20,325 27,358 99,181
Investment Income (Loss)
Net Realized Gains (Losses) 1,538 31,192 (630 ) 33,414 19,133
Net Unrealized Gains (Losses) (230,569 ) (11,988 ) (46,118 ) (330,434 ) (27,553 )
Total Realized and Unrealized (229,031 ) 19,204 (46,748 ) (297,020 ) (8,420 )
Net Interest and Dividends 34,995 59,390 53,335 146,257 96,734
Total Investment Income (Loss) (194,036 ) 78,594 6,587 (150,763 ) 88,314
Total Segment Revenues (163,634 ) 188,183 93,642 74,586 396,401
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 21,002 22,785 26,787 67,792 80,436
Realized Allocation to Carry Pool — 3,581 3,960 3,581 13,860
Unrealized Allocation to Carry Pool (13,747 ) 11,195 967 2,386 11,209
Total Compensation and Benefits 7,255 37,561 31,714 73,759 105,505
Occupancy and Related Charges 3,096 2,977 2,518 9,195 7,234
Other Operating Expenses 9,004 10,617 10,929 34,575 30,910
Total Segment Expenses 19,355 51,155 45,161 117,529 143,649
Income (Loss) attributable to noncontrolling interests 305 478 335 958 1,242
Economic Net Income (Loss) $ (183,294 ) $ 136,550 $ 48,146 $ (43,901 ) $ 251,510
Assets Under Management $ 37,927,300 $ 38,440,400 $ 36,981,600 $ 37,927,300 $ 36,981,600
Fee Paying Assets Under Management $ 36,690,000 $ 36,974,000 $ 35,765,100 $ 36,690,000 $ 35,765,100
Equity Invested $ 583,400 $ 320,800 $ 442,200 $ 1,553,500 $ 1,900,700
Uncalled Commitments $ 5,281,900 $ 4,827,900 $ 2,648,100 $ 5,281,900 $ 2,648,100
Gross Dollars Invested $ 1,181,400 $ 1,110,100 $ 1,122,100 $ 3,502,300 $ 2,880,000
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ — $ — $ — $ — $ —
Monitoring Fees — — — — —
Transaction Fees 40,319 48,757 87,530 132,333 183,619
Fee Credits — — — — —
Total Management, Monitoring and Transaction Fees, Net 40,319 48,757 87,530 132,333 183,619
Performance Income
Realized Carried Interest — — — — —
Incentive Fees — — — — —
Unrealized Carried Interest — — — — —
Total Performance Income — — — — —
Investment Income (Loss)
Net Realized Gains (Losses) 21 (749 ) (1,622 ) (4,009 ) (2,086 )
Net Unrealized Gains (Losses) (4,026 ) (1,122 ) (8 ) (7,355 ) (693 )
Total Realized and Unrealized (4,005 ) (1,871 ) (1,630 ) (11,364 ) (2,779 )
Net Interest and Dividends 10,104 7,782 7,456 24,520 15,701
Total Investment Income (Loss) 6,099 5,911 5,826 13,156 12,922
Total Segment Revenues 46,418 54,668 93,356 145,489 196,541
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 9,040 10,147 22,012 28,242 45,302
Realized Allocation to Carry Pool — — — — —
Unrealized Allocation to Carry Pool — — — — —
Total Compensation and Benefits 9,040 10,147 22,012 28,242 45,302
Occupancy and Related Charges 687 666 480 2,011 1,386
Other Operating Expenses 3,403 2,871 4,724 10,150 12,207
Total Segment Expenses 13,130 13,684 27,216 40,403 58,895
Income (Loss) attributable to noncontrolling interests 2,347 3,762 4,512 8,837 9,163
Economic Net Income (Loss) $ 30,941 $ 37,222 $ 61,628 $ 96,249 $ 128,483
Syndicated Capital $ 12,500 $ 432,100 $ 1,920,000 $ 693,300 $ 2,178,100
KKR
BALANCE SHEET
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
As of As of
September 30, 2015 December 31, 2014
Cash and short-term investments $ 2,062,633 $ 1,121,385
Investments 9,278,102 (a) 9,807,606
Unrealized carry (b) 1,341,473 (b) 1,283,022 (b)
Other assets 1,066,591 999,654
Total assets $ 13,748,799 $ 13,211,667
Debt obligations - KKR (ex-KFN) $ 2,000,000 $ 1,527,000
Debt obligations - KFN 657,310 657,310
Preferred shares - KFN 373,750 373,750
Other liabilities 361,557 413,808
Total liabilities 3,392,617 2,971,868
Noncontrolling interests 124,619 121,574
Book value $ 10,231,563 $ 10,118,225
Book value per adjusted unit $ 12.01 $ 12.07
(a) See schedule of investments that follows on the next page.
As of As of
(b) Unrealized Carry
September 30, 2015 December 31, 2014
Private Markets $ 1,251,503 $ 1,196,633
Public Markets 89,970 86,389
Total $ 1,341,473 $ 1,283,022
KKR
SCHEDULE OF INVESTMENTS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except percentage amounts)
As of September 30, 2015
Investments Cost Fair
Value
Fair Value as a
Percentage of
Total Investments
Private Equity Co-Investments $ 2,338,853 $ 2,930,212 31.6 %
Private Equity Funds 812,983 1,045,475 11.3 %
Private Equity Total 3,151,836 3,975,687 42.9 %
Energy 950,476 636,479 6.9 %
Real Estate 754,913 801,544 8.6 %
Infrastructure 176,814 188,440 2.0 %
Real Assets Total 1,882,203 1,626,463 17.5 %
Private Markets Total 5,034,039 5,602,150 60.4 %
Special Situations 799,103 791,583 8.5 %
Direct Lending 116,468 112,714 1.2 %
Mezzanine 89,991 95,173 1.0 %
Alternative Credit Total 1,005,562 999,470 10.7 %
CLOs (a) 1,415,896 1,137,612 12.3 %
Liquid Credit 203,706 203,084 2.2 %
Credit Total 2,625,164 2,340,166 25.2 %
Specialty Finance 277,421 236,753 2.6 %
Public Markets Total 2,902,585 2,576,919 27.8 %
Other 1,149,469 1,099,033 11.8 %
Total Investments $ 9,086,093 $ 9,278,102 100.0 %
Significant Aggregate Portfolio Company Investments: (b)
First Data Corporation $ 1,061,332 $ 1,310,542 14.1 %
Walgreens Boots Alliance 165,776 659,487 7.1 %
HCA Inc. 29,455 193,538 2.1 %
U.S. Foodservice, Inc. 80,000 96,000 1.0 %
Zimmer Biomet Holdings Inc. 68,572 86,755 0.9 %
1,405,135 2,346,322 25.2 %
Other Investments 7,680,958 6,931,780 74.8 %
Total Investments $ 9,086,093 $ 9,278,102 100.0 %
(a) Includes approximately $80.6 million of CLOs that are not held for investment purposes and are held at cost. For prior periods, all CLOs were held at fair value.
(b) The significant aggregate portfolio company investments include the top five private equity investments in portfolio companies (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair market value as of September 30, 2015. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying portfolio company.
KKR
ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
Private
Markets
Segment
Public
Markets
Segment
Total
Reportable
Segments
Quarter Ended September 30, 2015
June 30, 2015 $ 63,129,200 $ 38,440,400 $ 101,569,600
New Capital Raised 999,500 1,897,300 2,896,800
Distributions (2,697,400 ) (1,559,200 ) (b) (4,256,600
)
Change in Value (650,100 ) (851,200 ) (1,501,300
)
September 30, 2015 $ 60,781,200 $ 37,927,300 $ 98,708,500
Nine Months Ended September 30, 2015
December 31, 2014 $ 61,505,800 $ 37,106,700 $ 98,612,500
New Capital Raised 3,733,300 6,346,900 10,080,200
Distributions (9,111,400 ) (4,793,100 ) (c) (13,904,500
)
Net Changes in Fee Base of Certain Funds (a) — (238,600 ) (238,600
)
Change in Value 4,653,500 (494,600 ) 4,158,900
September 30, 2015 $ 60,781,200 $ 37,927,300 $ 98,708,500
Trailing Twelve Months Ended September 30, 2015
September 30, 2014 $ 59,168,300 $ 36,981,600 $ 96,149,900
New Capital Raised 7,340,300 8,577,900 15,918,200
Distributions (11,212,000 ) (6,775,700 ) (d) (17,987,700
)
Net Changes in Fee Base of Certain Funds (a) — (238,600 ) (238,600
)
Change in Value 5,484,600 (617,900 ) 4,866,700
September 30, 2015 $ 60,781,200 $ 37,927,300 $ 98,708,500
Supplemental AUM Information:
Private
Markets
Segment Public
Markets
Segment Total
Reportable
Segments
Net AUM of Strategic Partnerships (Pro-rata based on ownership interest) $ 200,800 $ 2,772,000 $ 2,972,800
Capital Commitments Excluded from AUM ("Shadow AUM") 5,794,600 4,938,600 10,733,200
AUM as Reported at September 30, 2015 60,781,200 37,927,300 98,708,500
Total at September 30, 2015 $ 66,776,600 $ 45,637,900 $ 112,414,500
*Except as shown under "Supplemental AUM Information," excludes those assets managed by strategic partnerships where KKR does not hold more than a 50% ownership interest and excludes capital commitments for which KKR is entitled to management fees or carried interest upon the satisfaction of certain conditions in the future.
(a) Represents the impact of certain funds entering the post-investment period
(b) Includes $394.2 million of redemptions by fund investors.
(c) Includes $1,511.1 million of redemptions by fund investors.
(d) Includes $2,647.2 million of redemptions by fund investors.
KKR
FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
Private
Markets
Segment
Public
Markets
Segment
Total
Reportable
Segments
Quarter Ended September 30, 2015
June 30, 2015 $ 46,758,800 $ 36,974,000 $ 83,732,800
New Capital Raised 1,028,800 1,804,900 2,833,700
Distributions (1,645,400 ) (1,474,000 ) (b) (3,119,400 )
Change in Value 56,800 (614,900 ) (558,100 )
September 30, 2015 $ 46,199,000 $ 36,690,000 $ 82,889,000
Nine Months Ended September 30, 2015
December 31, 2014 $ 47,262,500 $ 35,783,900 $ 83,046,400
New Capital Raised 3,472,900 6,021,900 9,494,800
Distributions (4,330,100 ) (4,254,200 ) (c) (8,584,300 )
Net Changes in Fee Base of Certain Funds (a) — (325,200 ) (325,200 )
Change in Value (206,300 ) (536,400 ) (742,700 )
September 30, 2015 $ 46,199,000 $ 36,690,000 $ 82,889,000
Trailing Twelve Months Ended September 30, 2015
September 30, 2014 $ 45,591,600 $ 35,765,100 $ 81,356,700
New Capital Raised 6,752,100 8,078,600 14,830,700
Distributions (5,775,800 ) (6,101,600 ) (d) (11,877,400 )
Net Changes in Fee Base of Certain Funds (a) — (325,200 ) (325,200 )
Change in Value (368,900 ) (726,900 ) (1,095,800 )
September 30, 2015 $ 46,199,000 $ 36,690,000 $ 82,889,000
* Excludes those assets managed by strategic partnerships where KKR does not hold more than a 50% ownership interest and excludes capital commitments for which KKR is entitled to management fees or carried interest upon the satisfaction of certain conditions in the future.
(a) Represents the impact of certain funds entering the post-investment period.
(b) Includes $394.2 million of redemptions by fund investors.
(c) Includes $1,511.1 million of redemptions by fund investors.
(d) Includes $2,647.2 million of redemptions by fund investors.
KKR
INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED)
As of September 30, 2015
(Amounts in millions, except percentages)
Investment Period Amount
Commencement
Date
End
Date
Commitment Uncalled
Commitments
Percentage
Committed
by General
Partner
Invested Realized Remaining
Cost
Remaining Fair
Value
Private Markets
Private Equity Funds
European Fund IV (b) 12/2014 12/2020 $ 3,418.6 $ 3,257.7 5.8% $ 160.9 $ — $ 160.9 $ 197.2
Asian Fund II (b) 4/2013 4/2019 5,825.0 3,839.1 1.3% 2,599.7 613.7 1,985.9 2,731.2
North America Fund XI (b) 9/2012 9/2018 8,718.4 3,981.2 2.9% 5,555.7 1,597.7 4,357.9 6,268.5
China Growth Fund 11/2010 11/2016 1,010.0 399.5 1.0% 610.5 166.6 535.0 686.9
E2 Investors (Annex Fund) 8/2009 11/2013 195.8 — 4.9% 195.8 195.7 18.1 48.2
European Fund III 3/2008 3/2014 6,138.5 828.8 4.6% 5,309.7 4,392.7 3,278.6 4,312.4
Asian Fund 7/2007 4/2013 3,983.3 129.5 2.5% 3,853.8 5,343.1 1,973.0 2,541.8
2006 Fund 9/2006 9/2012 17,642.2 525.7 2.1% 17,116.5 17,585.2 8,178.0 13,456.0
European Fund II 11/2005 10/2008 5,750.8 — 2.1% 5,750.8 6,574.3 841.1 1,859.3
Millennium Fund 12/2002 12/2008 6,000.0 — 2.5% 6,000.0 11,901.7 1,156.2 2,156.7
European Fund 12/1999 12/2005 3,085.4 — 3.2% 3,085.4 8,748.0 — 17.8
Total Private Equity Funds 61,768.0 12,961.5 50,238.8 57,118.7 22,484.7 34,276.0
Co-Investment Vehicles (b) Various Various 5,701.3 2,757.4 Various 3,038.5 1,801.7 2,183.5 3,177.9
Total Private Equity 67,469.3 15,718.9 53,277.3 58,920.4 24,668.2 37,453.9
Real Assets
Energy Income and Growth Fund 9/2013 9/2018 1,974.2 1,217.7 12.8% 756.5 127.1 673.8 518.2
Natural Resources Fund Various Various 887.4 2.9 Various 884.5 96.6 809.9 243.6
Global Energy Opportunities (b) Various Various 1,026.4 807.9 Various 252.7 53.8 220.9 139.8
Global Infrastructure Investors (b) 9/2011 10/2014 1,040.1 129.8 4.8% 938.2 128.0 910.3 1,014.3
Global Infrastructure Investors II 10/2014 10/2020 3,037.5 2,842.1 4.1% 195.4 — 195.4 215.8
Infrastructure Co-Investments Various Various 1,125.0 — Various 1,125.0 356.5 1,125.0 1,542.3
Real Estate Partners Americas (b) 5/2013 12/2016 1,229.1 614.1 16.3% 755.5 303.6 614.6 690.7
Real Estate Partners Europe (b) 9/2015 (d) 277.0 277.0 36.1% — — — —
Real Assets 10,596.7 5,891.5 4,907.8 1,065.6 4,549.9 4,364.7
Private Markets Total 78,066.0 21,610.4 58,185.1 59,986.0 29,218.1 41,818.6
Public Markets
Special Situations Fund 12/2012 12/2015 2,184.1 168.4 11.6% 2,015.7 184.2 2,015.7 2,230.1
Special Situations Fund II 12/2014 (c) 1,694.5 1,319.5 8.9% 375.0 — 375.0 268.1
Mezzanine Fund 3/2010 3/2015 1,022.8 150.6 4.4% 872.2 435.2 666.6 715.2
Lending Partners 12/2011 12/2014 460.2 91.7 15.2% 368.5 167.7 324.7 306.3
Lending Partners II 06/2014 06/2017 1,335.9 889.6 3.7% 446.3 13.0 446.3 466.7
Lending Partners Europe 03/2015 03/2018 556.6 543.2 7.3% 13.4 — 13.4 22.0
Other Alternative Credit Vehicles Various Various 4,430.9 2,118.9 Various 2,312.0 1,359.3 1,521.2 1,755.5
Public Markets Total 11,685.0 5,281.9 6,403.1 2,159.4 5,362.9 5,763.9
Grand Total $ 89,751.0 $ 26,892.3 $ 64,588.2 $ 62,145.4 $ 34,581.0 $ 47,582.5
(a) Reflects investment vehicles for which KKR has the ability to earn carried interest.
(b) The “Invested” and “Realized” columns include the amounts of any realized investments that restored the unused capital commitments of the fund investors.
(c) Three years from final close.
(d) Four years from final close.
KKR
DISTRIBUTION CALCULATION (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
Quarter Ended Nine Months Ended
September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Cash Revenues
Fees $ 245,768 $ 271,500 $ 309,123 $ 817,343 $ 890,983
Realized cash carry 265,291 252,227 246,026 819,943 995,064
Net realized investment income - KKR (ex-KFN) 67,942 195,408 192,146 454,827 630,749
Net realized investment income - KFN 42,134 56,258 52,903 138,257 89,285
Total Cash Revenues 621,135 775,393 800,198 2,230,370 2,606,081
Cash Expenses
Cash compensation and benefits 88,033 98,871 108,790 293,931 309,149
Realized cash carry allocated to carry pool 106,116 100,891 98,411 327,977 398,026
Occupancy and related charges 15,720 15,475 14,458 45,991 43,404
Other operating expenses 52,081 51,613 60,272 164,640 167,384
Total Cash Expenses 261,950 266,850 281,931 832,539 917,963
Cash income (loss) before noncontrolling interests and local taxes 359,185 508,543 518,267 1,397,831 1,688,118
Less: local income taxes (7,168 ) (12,753 ) (8,261 ) (29,871 ) (23,923 )
Less: noncontrolling interests (2,902 ) (4,383 ) (5,189 ) (10,907 ) (11,597 )
Total Distributable Earnings 349,115 491,407 504,817 1,357,053 1,652,598
Less: estimated current corporate income taxes (18,005 ) (26,155 ) (29,505 ) (73,015 ) (81,975 )
Distributable Earnings, net of taxes 331,110 465,252 475,312 1,284,038 1,570,623
Less: Undistributed net realized investment income - KKR (ex-KFN) (40,765 ) (117,245 ) (115,288 ) (272,896 ) (378,450 )
Distributed Earnings $ 290,345 $ 348,007 $ 360,024 $ 1,011,142 $ 1,192,173
Distributable Earnings, net of taxes per KKR & Co. L.P. common unit $ 0.40 $ 0.57 $ 0.59 $ 1.57 $ 2.03
Distribution per KKR & Co. L.P. common unit $ 0.35 $ 0.42 $ 0.45 $ 1.23 $ 1.55
Components of Distribution per KKR & Co. L.P. Common Unit
After-tax FRE $ 0.08 $ 0.07 $ 0.10 $ 0.25 $ 0.34
Realized Cash Carry $ 0.19 $ 0.18 $ 0.18 $ 0.59 $ 0.76
Distributed Net Realized Investment Income - KKR (ex-KFN) $ 0.03 $ 0.10 $ 0.10 $ 0.22 $ 0.33
Distributed Net Realized Investment Income - KFN $ 0.05 $ 0.07 $ 0.07 $ 0.17 $ 0.12
Fee and yield earnings distribution per KKR & Co. L.P. common unit $ 0.12 $ 0.15 $ 0.18 $ 0.42 $ 0.49
Adjusted Units Eligible For Distribution 820,963,035 820,963,434 808,698,012
Payout Ratio 87.7 % 74.8 % 75.7 % 78.7 % 75.9 %
KKR
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Fee related earnings (“FRE”) is comprised of (i) total management, monitoring and transaction fees, net, plus incentive fees, less (ii) cash compensation and benefits, occupancy and related charges and other operating expenses. It is a measure of the operating earnings of KKR and its business segments before carried interest and related carry pool allocations and investment income and comprises a portion of KKR's quarterly distribution under its prior distribution policy. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan (“Equity Incentive Plan”); (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items. After tax FRE represents FRE after deductions for current corporate and local income taxes and noncontrolling interests.
Economic net income (loss) (“ENI”) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of carried interest and related carry pool allocations and investment income. ENI is comprised of total segment revenues less total segment expenses and certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the Equity Incentive Plan and other securities that are exchangeable for common units of KKR & Co. L.P.; (v) the exclusion of certain non-recurring items; (vi) the exclusion of investment income (loss) relating to noncontrolling interests; and (vii) the exclusion of income taxes.
Fee and Yield Earnings is comprised of FRE and net interest and dividends from KKR’s business segments. This measure is used by management as a measure of the cash earnings of KKR and its business segments’ investment income. We believe this measure is useful to unitholders as it provides insight into the amount of KKR’s cash earnings, significant portions of which tend to be more recurring than realized carried interest and net realized gains from quarter to quarter.
Fee and Yield EBITDA is comprised of Fee and Yield Earnings before the impact of depreciation of fixed assets and core interest expense. This is used by management as another measure of the cash earnings of KKR and its business segments investment income. We believe this measure is also useful to unitholders as it provides insight into the amount of KKR’s cash earnings before the impact of interest expense, significant portions of which tend to be more recurring than realized carried interest and realized investment income from quarter to quarter.
Net realized investment income – KKR (ex-KFN) refers to net cash income from (i) realized investment gains and losses excluding certain realized investment losses to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009, (ii) dividend income, and (iii) interest income net of interest expense in each case generated by KKR (excluding KFN). This term describes a portion of KKR’s quarterly distribution under KKR's prior distribution policy and excludes net realized investment income of KFN.
Net realized investment income – KFN refers to net cash income from (i) realized investment gains and losses, (ii) dividend income and (iii) interest income net of interest expense less certain general and administrative expenses incurred in the generation of net realized investment income in each case generated by KFN. This term describes a portion of KKR’s quarterly distribution under KKR's prior distribution policy.
Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
Total distributable earnings is the sum of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, (iii) net realized investment income — KKR (ex-KFN) and (iv) net realized investment income — KFN; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and amounts available for distribution to KKR unitholders. However, total distributable earnings is not a measure that calculates actual distributions under KKR’s prior or current distribution policy.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR’s capital raising activities and the overall activity in its investment funds. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR’s fixed income products; (iv) the value of outstanding CLOs (excluding CLOs wholly-owned by KKR); and (v) the fair value of other assets managed by KKR. AUM excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest. KKR’s definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives management fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR’s capital raising activities and the overall activity in its investment funds or CLOs, for only those funds or CLOs where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Equity invested is the aggregate amount of equity capital that has been invested by KKR’s investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investments among its investment funds and carry-yielding co-investment vehicles and replaces committed dollars invested. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR’s investment funds, including investments made using investment financing arrangements.
Gross dollars invested is the aggregate amount of capital that has been invested by all of KKR’s Public Markets investment vehicles in our private credit non-liquid strategies and is used as a measure of investment activity for a portion of KKR’s Public Markets segment in a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of capital across private credit non-liquid strategies for all the investment vehicles in the Public Markets segment. Such amounts include capital invested by fund investors and co-investors with respect to which KKR’s Public Markets business is entitled to a fee or carried interest.
Syndicated capital is generally the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in equity invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR's Capital Markets segment and across its investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.
Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the Equity Incentive Plan), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for common units of KKR & Co. L.P.
Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s investment funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN are non-recourse to KKR beyond the assets of KFN. On a segment basis, interest expense is included in net interest and dividends within total investment income. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN.
Book value is a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of KKR’s investment portfolio, including carried interest, as well as KKR’s overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from KKR & Co. L.P. partners’ capital on a GAAP basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.
Return on equity measures the amount of net income generated as a percentage of capital invested in KKR’s business. Return on equity is calculated by dividing Economic Net Income (Loss), After Taxes on a trailing twelve-month basis by the average book value during the period.
Cash return on equity measures the amount of cash income generated as a percentage of capital invested in KKR’s business. Cash return on equity is calculated by dividing Distributable Earnings, net of taxes on a trailing twelve-month basis by the average book value during the period.
KKR
EXHIBIT A
KKR'S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS
(Amounts in thousands)
Uncalled
Commitments
Private Markets
European Fund IV $ 184,700
Energy Income and Growth Fund 157,300
North America Fund XI 129,700
Global Infrastructure Investors II 116,900
Real Estate Partners Europe 100,000
Real Estate Partners Americas 99,900
European Fund III 66,300
Asian Fund II 49,100
2006 Fund 22,700
Co-Investment Vehicles 69,500
Other Private Markets Funds 12,500
Total Private Markets Commitments 1,008,600
Public Markets
Special Situations Fund 19,600
Special Situations Fund II 117,200
Mezzanine Fund 6,500
Lending Partners 14,000
Lending Partners II 33,300
Lending Partners Europe 39,500
Other Alternative Credit Vehicles 78,800
Total Public Markets Commitments 308,900
Total Uncalled Commitments $ 1,317,500
KKR
EXHIBIT B
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT - BASIC (GAAP BASIS)
TO ENI AFTER TAXES PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
Quarter Ended
September 30, 2015 June 30, 2015 September 30, 2014
Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic $ (0.42 ) $ 0.84 $ 0.21
Weighted Average Common Units Outstanding - Basic 452,165,697 446,794,950 419,961,455
Net income (loss) attributable to KKR & Co. L.P. (190,588 ) 376,306 89,938
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
(166,078 ) 325,703 100,910
Plus: Non-cash equity-based charges 67,821 69,478 83,950
Plus: Amortization of intangibles and other, net 10,186 37,910 204,676
Plus: Income tax (benefit) (7,390 ) 30,547 29,267
Economic net income (loss) (286,049 ) 839,944 508,741
Less: Provision for income tax (benefit) (19,505 ) 44,836 47,361
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 48,252 48,453 42,090
Economic net income (loss) after taxes (314,796 ) 746,655 419,290
Weighted Average Adjusted Units 851,704,303 852,128,762 835,957,683
Economic net income (loss) after taxes per adjusted unit $ (0.37 ) $ 0.88 $ 0.50
Nine Months Ended
September 30, 2015 September 30, 2014
Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic $ 1.03 $ 1.31
Weighted Average Common Units Outstanding - Basic 444,675,159 364,127,956
Net income (loss) attributable to KKR & Co. L.P. 456,225 478,194
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
398,633 588,500
Plus: Non-cash equity-based charges 213,849 254,435
Plus: Amortization of intangibles and other, net 45,306 262,300
Plus: Income tax (benefit) 39,295 57,145
Economic net income (loss) 1,153,308 1,640,574
Less: Provision for income tax (benefit) 46,566 90,272
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 148,970 122,320
Economic net income (loss) after taxes 957,772 1,427,982
Weighted Average Adjusted Units 850,644,918 787,502,790
Economic net income (loss) after taxes per adjusted unit $ 1.13 $ 1.81
KKR
EXHIBIT B (CONTINUED)
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS)
TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE AND YIELD EARNINGS, FEE AND YIELD EBITDA, TOTAL DISTRIBUTABLE EARNINGS, AND TOTAL EBITDA (UNAUDITED)
(Amounts in thousands)
Quarter Ended
September 30, 2015 June 30, 2015 September 30, 2014
Net income (loss) attributable to KKR & Co. L.P. $ (190,588 ) $ 376,306 $ 89,938
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
(166,078 ) 325,703 100,910
Plus: Non-cash equity-based charges 67,821 69,478 83,950
Plus: Amortization of intangibles and other, net 10,186 37,910 204,676
Plus: Income tax (benefit) (7,390 ) 30,547 29,267
Economic net income (loss) (286,049 ) 839,944 508,741
Plus: Income attributable to segment noncontrolling interests 2,902 4,383 5,189
Less: Total investment income (loss) (274,384 ) 383,650 207,216
Less: Net carried interest (98,697 ) 355,136 181,111
Fee related earnings 89,934 105,541 125,603
Plus: Net interest and dividends 48,637 75,406 82,254
Fee and yield earnings 138,571 180,947 207,857
Plus: Depreciation and amortization 3,745 3,918 3,777
Plus: Core interest expense 30,429 30,750 23,347
Fee and yield EBITDA 172,745 215,615 234,981
Less: Depreciation and amortization 3,745 3,918 3,777
Less: Core interest expense 30,429 30,750 23,347
Less: Net interest and dividends 48,637 75,406 82,254
Plus: Realized cash carry, net of realized cash carry allocated to carry pool 159,175 151,336 147,615
Plus: Net realized investment income - KKR (ex-KFN) 67,942 195,408 192,146
Plus: Net realized investment income - KFN 42,134 56,258 52,903
Less: Local income taxes and noncontrolling interests 10,070 17,136 13,450
Total distributable earnings 349,115 491,407 504,817
Plus: Depreciation and amortization 3,745 3,918 3,777
Plus: Core interest expense 30,429 30,750 23,347
Plus: Local income taxes and noncontrolling interests 10,070 17,136 13,450
Total EBITDA $ 393,359 $ 543,211 $ 545,391
Nine Months Ended
September 30, 2015 September 30, 2014
Net income (loss) attributable to KKR & Co. L.P. $ 456,225 $ 478,194
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
398,633 588,500
Plus: Non-cash equity-based charges 213,849 254,435
Plus: Amortization of intangibles and other, net 45,306 262,300
Plus: Income tax (benefit) 39,295 57,145
Economic net income (loss) 1,153,308 1,640,574
Plus: Income attributable to segment noncontrolling interests 10,907 11,597
Less: Total investment income (loss) 329,887 648,025
Less: Net carried interest 521,547 633,100
Fee related earnings 312,781 371,046
Plus: Net interest and dividends 174,718 153,850
Fee and yield earnings 487,499 524,896
Plus: Depreciation and amortization 11,544 11,952
Plus: Core interest expense 86,511 60,952
Fee and yield EBITDA 585,554 597,800
Less: Depreciation and amortization 11,544 11,952
Less: Core interest expense 86,511 60,952
Less: Net interest and dividends 174,718 153,850
Plus: Realized cash carry, net of realized cash carry allocated to carry pool 491,966 597,038
Plus: Net realized investment income - KKR (ex-KFN) 454,827 630,749
Plus: Net realized investment income - KFN 138,257 89,285
Less: Local income taxes and noncontrolling interests 40,778 35,520
Total distributable earnings 1,357,053 1,652,598
Plus: Depreciation and amortization 11,544 11,952
Plus: Core interest expense 86,511 60,952
Plus: Local income taxes and noncontrolling interests 40,778 35,520
Total EBITDA $ 1,495,886 $ 1,761,022
KKR
EXHIBIT B (CONTINUED)
RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS)
TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
As of As of
September 30, 2015 December 31, 2014
KKR & Co. L.P. partners’ capital $ 5,658,646 $ 5,382,691
Noncontrolling interests held by KKR Holdings L.P. 4,482,900 4,661,679
Equity impact of KKR Management Holdings Corp. and other 90,017 73,855
Book value 10,231,563 10,118,225
Adjusted units 851,670,762 838,020,974
Book value per adjusted unit $ 12.01 $ 12.07
RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS)
TO CASH AND SHORT-TERM INVESTMENTS (UNAUDITED)
(Amounts in thousands)
As of As of
September 30, 2015 December 31, 2014
Cash and cash equivalents $ 1,756,918 $ 918,080
Liquid short-term investments 305,715 203,305
Cash and short-term investments $ 2,062,633 $ 1,121,385
KKR
EXHIBIT C
RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING - BASIC
TO WEIGHTED AVERAGE ADJUSTED UNITS (UNAUDITED)
The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.
Quarter Ended
September 30, 2015 June 30, 2015 September 30, 2014
Weighted Average GAAP Common Units Outstanding - Basic 452,165,697 446,794,950 419,961,455
Adjustments:
Weighted Average Unvested Common Units and Other Securities (a) — (c) 35,856,541 32,058,287
Weighted Average GAAP Common Units Outstanding - Diluted 452,165,697 482,651,491 452,019,742
Adjustments:
Weighted Average KKR Holdings Units (b) 365,717,358 369,477,271 383,937,941
Weighted Average Unvested Common Units and Other Securities (a) 33,821,248 (c) — —
Weighted Average Adjusted Units 851,704,303 852,128,762 835,957,683
Nine Months Ended
September 30, 2015 September 30, 2014
Weighted Average GAAP Common Units Outstanding - Basic 444,675,159 364,127,956
Adjustments:
Weighted Average Unvested Common Units and Other Securities (a) 35,663,176 32,104,872
Weighted Average GAAP Common Units Outstanding - Diluted 480,338,335 396,232,828
Adjustments:
Weighted Average KKR Holdings Units (b) 370,306,583 391,269,962
Weighted Average Adjusted Units 850,644,918 787,502,790
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING - BASIC TO ADJUSTED UNITS AND ADJUSTED UNITS ELIGIBLE FOR DISTRIBUTION (UNAUDITED)
The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units and Adjusted Units Eligible for Distribution.
As of As of
September 30, 2015 December 31, 2014
GAAP Common Units Outstanding - Basic 453,251,950 433,330,540
Unvested Common Units and Other Securities (a) 33,787,971 27,493,685
GAAP Common Units Outstanding - Diluted 487,039,921 460,824,225
Adjustments:
KKR Holdings Units (b) 364,630,841 377,196,749
Adjusted Units 851,670,762 838,020,974
Adjustments:
Unvested Common Units and Unvested Other Securities (a) (30,707,727 ) (24,373,441 )
Adjusted Units Eligible For Distribution 820,963,035 813,647,533
(a) Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan and other securities that are exchangeable into KKR & Co. L.P common units. The issuance of common units of KKR & Co. L.P. pursuant to such equity awards or other securities dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.
(b) Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.
(c) Unvested common units and other securities are excluded from the calculation of diluted earnings per common unit on a GAAP basis because inclusion of such unvested common units and other securities would be anti-dilutive (decrease the loss per common unit).
View source version on businesswire.com: http://www.businesswire.com/news/home/20151027005588/en/
Contact:
Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
Craig Larson, +1-877-610-4910 (U.S.) / +1-212-230-9410
investor-relations@kkr.com
or
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Northern Trust Corporation Reports Second Quarter Net Income of $269.2 Million, Earnings Per Common Share of $1.10
Increased Quarterly Cash Dividend 9% to $0.36 Per Common Share
Returned $182.0 Million in Capital to Common Stockholders
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Business Wire
Northern Trust Corporation
July 22, 2015 7:30 AM
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CHICAGO--(BUSINESS WIRE)--
Northern Trust Corporation today reported second quarter net income per diluted common share of $1.10, compared to $0.75 in the second quarter of 2014 and $0.94 in the first quarter of 2015. Net income was $269.2 million, compared to $181.9 million in the prior-year quarter and $230.7 million in the prior quarter. Return on average common equity was 12.8%, compared to 9.2% in the prior-year quarter and 11.3% in the prior quarter.
The current quarter includes a pre-tax gain on the sale of 1.0 million Visa Inc. Class B common shares totaling $99.9 million ($62.1 million after tax, or $0.26 per diluted common share); voluntary cash contributions to certain constant dollar net-asset-value (NAV) funds of $45.8 million ($28.6 million after tax, or $0.12 per diluted common share); and the impairment of the residual value of certain aircraft under leveraged lease agreements of $17.8 million ($11.1 million after tax, or $0.05 per diluted common share). Excluding these items, net income per diluted common share, net income, and return on average common equity were $1.01, $246.7 million and 11.8%, respectively.
The prior-year quarter included pre-tax charges of $32.8 million for severance and related costs and for the realignment of the Corporation’s real estate portfolio and $9.5 million of software write-offs. Excluding these charges and write-offs, net income per diluted common share, net income, and return on average common equity were $0.87, $209.8 million, and 10.6%, respectively.
“Northern Trust continues to perform well. In the second quarter, net income and earnings per share improved both year over year and sequentially. Trust, investment and other servicing fees, the largest component of our revenues, increased 7% year over year due to new business and higher equity markets, while expense growth of 5% reflected continued investments in our business as well as ongoing support of technology initiatives and regulatory requirements.
We increased our quarterly cash dividend by 9% to $0.36 per common share and returned $182.0 million to common stockholders through dividends and stock repurchases, demonstrating our commitment to returning capital to our common stockholders,” said Frederick H. Waddell, Chairman and Chief Executive Officer.
SECOND QUARTER 2015 PERFORMANCE VS. SECOND QUARTER 2014
Net income per diluted common share was $1.10 in the second quarter of 2015, up from $0.75 in the second quarter of 2014. Net income was $269.2 million, compared to $181.9 million in the prior-year quarter.
Revenue of $1.26 billion was up $174.2 million, or 16%, from $1.08 billion in the prior-year quarter, primarily reflecting higher other operating income, trust, investment and other servicing fees and foreign exchange trading income.
Trust, investment and other servicing fees were $756.8 million, up $49.9 million, or 7%, from $706.9 million in the prior-year quarter. The increase primarily reflected new business and higher equity markets, partially offset by the unfavorable impact of movements in foreign exchange rates.
Assets under custody and assets under management are the primary drivers of the Corporation’s trust, investment and other servicing fees. The following table presents the Corporation’s assets under custody and assets under management by reporting segment.
June 30, March 31, June 30, % Change % Change
($ In Billions) 2015 2015 2014 Q2-15/Q1-15 Q2-15/Q2-14
Assets Under Custody
Corporate & Institutional $ 5,652.6 $ 5,566.2 $ 5,488.0 2 % 3 %
Wealth Management 524.4 524.6 516.6 - 2
Total Assets Under Custody $ 6,177.0 $ 6,090.8 $ 6,004.6 1 % 3 %
Assets Under Management
Corporate & Institutional $ 713.6 $ 727.0 $ 701.5 (2) % 2 %
Wealth Management 232.0 233.1 222.9 - 4
Total Assets Under Management $ 945.6 $ 960.1 $ 924.4 (2) % 2 %
Corporate & Institutional Services (C&IS) trust, investment and other servicing fees increased $36.6 million, or 9%, to $432.0 million from the prior-year quarter’s $395.4 million.
Q2 Q2
Change Q2 2015
($ In Millions) 2015 2014
from Q2 2014
C&IS Trust, Investment and Other Servicing Fees
Custody and Fund Administration $ 293.6 $ 261.1 $ 32.5 12 %
Investment Management 80.6 77.7 2.9 4
Securities Lending 26.8 30.0 (3.2) (11)
Other 31.0 26.6 4.4 17
Total $ 432.0 $ 395.4 $ 36.6 9 %
Custody and fund administration fees, the largest component of C&IS fees, increased 12%, driven by new business and higher equity markets, partially offset by the unfavorable impact of movements in foreign exchange rates. Investment management fees increased 4% due to new business, lower money market mutual fund fee waivers and higher equity markets. Money market mutual fund fee waivers in C&IS totaled $13.6 million in the current quarter compared to $14.8 million in the prior-year quarter. Securities lending decreased 11% due to changes in fee arrangements.
Wealth Management trust, investment and other servicing fees totaled $324.8 million, increasing $13.3 million, or 4%, from $311.5 million in the prior-year quarter.
Q2 Q2
Change Q2 2015
($ In Millions) 2015 2014
from Q2 2014
Wealth Management Trust, Investment and
Other Servicing Fees
Central $ 128.2 $ 126.2 $ 2.0 2 %
East 85.9 83.0 2.9 3
West 68.5 65.0 3.5 5
Global Family Office 42.2 37.3 4.9 13
Total $ 324.8 $ 311.5 $ 13.3 4 %
The increased Wealth Management fees across regions and Global Family Office were primarily attributable to higher equity markets and new business. Money market mutual fund fee waivers in Wealth Management totaled $14.6 million in the current quarter compared to $15.9 million in the prior-year quarter.
Foreign exchange trading income totaled $74.8 million, up $21.9 million, or 41%, compared with $52.9 million in the prior-year quarter. The increase was primarily attributable to higher currency volatility and client volumes as compared to the prior-year quarter.
Security commissions and trading income totaled $20.0 million, up 12%, compared with $17.8 million in the prior-year quarter. The increase was attributable to higher referral fees and higher income from interest rate protection products sold to clients.
Other operating income totaled $137.4 million, up $96.9 million, compared to $40.5 million in the prior-year quarter. The current quarter includes a $99.9 million gain on the sale of a portion of the Visa Inc. Class B common shares issued to the Corporation in conjunction with the 2007 restructuring of Visa U.S.A. and its affiliates. Excluding the gain, other operating income totaled $37.5 million, down 7%, from the prior-year quarter, reflecting decreases in various miscellaneous income categories.
Net interest income on an FTE basis totaled $257.6 million, up 2%, compared to $253.4 million in the prior-year quarter. The increase was primarily the result of growth in earning assets, offset by a $17.8 million impairment of the residual value of certain aircraft under leveraged lease agreements and a lower net interest margin. Earning assets for the quarter averaged $103.8 billion, up $8.3 billion, or 9%, from $95.5 billion in the prior-year quarter, resulting from higher levels of securities, reflecting demand deposit growth, combined with increased loan volume. The net interest margin declined to 1.00% from 1.06% in the prior-year quarter. Excluding the impairment, the net interest margin was 1.06%, unchanged from the prior-year quarter, as higher securities yields and lower cost of interest-related funds were offset by lower loan and short-term interest-bearing deposit yields.
The provision for credit losses was a credit of $10.0 million in the current quarter, reflecting improved credit quality. There was no provision for credit losses recorded in the prior-year quarter. Net charge-offs in the current quarter were $2.6 million, resulting from charge-offs of $6.1 million and recoveries of $3.5 million. The prior-year quarter included $5.9 million of net charge-offs, resulting from $7.8 million of charge-offs and $1.9 million of recoveries. Nonperforming assets decreased 10% from the prior-year quarter. Residential real estate loans and commercial real estate loans accounted for 76% and 12%, respectively, of total nonperforming loans and leases at June 30, 2015.
The table below provides information regarding nonperforming assets, the allowance for credit losses, and associated ratios.
June 30, March 31, June 30,
($ In Millions) 2015 2015 2014
Nonperforming Assets
Nonperforming Loans and Leases $ 208.7 $ 219.6 $ 229.3
Other Real Estate Owned 10.1 8.5 12.6
Total Nonperforming Assets 218.8 228.1 241.9
Allowance for Credit Losses
Allowance for Credit Losses Assigned to:
Loans and Leases 257.3 259.0 275.2
Undrawn Loan Commitments and Standby Letters of Credit
16.9 27.7 28.3
Total Allowance for Credit Losses $ 274.2 $ 286.7 $ 303.5
Ratios
Nonperforming Loans and Leases to Total Loans
and Leases 0.63% 0.67% 0.75%
Allowance for Credit Losses Assigned to Loans
and Leases to Total Loans and Leases 0.78% 0.79% 0.90%
Allowance for Credit Losses Assigned to Loans and
Leases to Nonperforming Loans and Leases
1.2x
1.2x
1.2x
Noninterest expense totaled $854.5 million in the current quarter, up $43.5 million, or 5%, from $811.0 million in the prior-year quarter. The current quarter includes a $45.8 million charge related to voluntary cash contributions to certain constant dollar NAV funds. The prior-year quarter included charges of $32.8 million for severance and related costs and for the realignment of the Corporation’s real estate portfolio and $9.5 million of software write-offs. Excluding the current and prior-year quarter charges and write-offs, noninterest expense increased $40.0 million, or 5%, primarily attributable to higher compensation, equipment and software, other operating and employee benefits expense.
Compensation expense, the largest component of noninterest expense, equaled $361.9 million in the current quarter, down $10.5 million, or 3%, from $372.4 million in the prior-year quarter. The prior-year quarter included severance-related charges of $25.5 million. Excluding the severance-related charges, compensation expense increased $15.0 million, or 4%, reflecting higher performance-based compensation, staff levels and base pay adjustments, partially offset by the favorable impact in foreign exchange rates. Staff on a full-time equivalent basis at June 30, 2015, totaled approximately 15,800, up 4% from a year ago.
Employee benefit expense totaled $73.2 million in the current quarter, up 7%, from $68.5 million in the prior-year quarter. The prior-year quarter included $1.9 million of severance-related charges. Excluding these charges, employee benefit expense increased $6.6 million, or 10%, attributable to higher pension and employee medical expense.
Expense associated with outside services totaled $147.2 million in the current quarter, up 2%, from $144.6 million in the prior-year quarter. The prior-year quarter included $1.1 million of severance-related charges. Excluding these charges, outside services expense increased 3%, reflecting higher technical services.
Equipment and software expense totaled $114.4 million in the current quarter, down 2%, from $116.1 million in the prior-year quarter. The prior-year quarter included $9.5 million of write-offs of replaced or eliminated software. Excluding these write-offs, equipment and software expense increased $7.8 million, or 7%, reflecting higher software amortization.
Occupancy expense equaled $43.0 million, down 9%, from $47.2 million in the prior-year quarter. The prior-year quarter included charges totaling $4.3 million in connection with reductions in office space. Excluding these charges, occupancy expense was relatively unchanged from the prior-year quarter.
Other operating expense totaled $114.8 million in the current quarter, up $52.6 million, or 85%, from $62.2 million in the prior-year quarter. The current quarter includes a charge related to voluntary cash contributions to certain constant dollar NAV funds totaling $45.8 million. Excluding the current-quarter charge, other operating expense increased $6.8 million, or 11%, primarily reflecting higher charitable contributions and charges associated with account servicing activities.
The provision for income taxes was $142.2 million in the current quarter, representing an effective tax rate of 34.6%. The provision for income taxes in the prior-year quarter was $88.8 million, representing an effective tax rate of 32.8%.
SECOND QUARTER 2015 PERFORMANCE VS. FIRST QUARTER 2015
Net income per diluted common share was $1.10 in the current quarter, compared to $0.94 in the first quarter of 2015. Net income totaled $269.2 million, compared to $230.7 million in the prior quarter.
Revenue was $1.26 billion in the current quarter compared to $1.13 billion in the prior quarter. The current quarter includes a $99.9 million gain on the sale of a portion of the Visa Inc. Class B common shares held by the Corporation. Noninterest income totaled $1.00 billion in the current quarter, up $130.8 million, or 15%, from $873.9 million in the prior quarter, primarily reflecting higher trust, investment and other servicing fees and other operating income. Net interest income on an FTE basis of $257.6 million was down $9.2 million, or 3%, from $266.8 million.
Trust, investment and other servicing fees totaled $756.8 million in the current quarter, up $29.3 million, or 4%, from $727.5 million in the prior quarter, primarily attributable to new business, higher securities lending fees, favorable equity markets and lower money market mutual fund fee waivers.
C&IS trust, investment and other servicing fees totaled $432.0 million in the current quarter, up $24.7 million, or 6%, from $407.3 million in the prior quarter.
Q2 Q1
Change Q2 2015
($ In Millions) 2015 2015
from Q1 2015
C&IS Trust, Investment and Other Servicing Fees
Custody and Fund Administration $ 293.6 $ 277.1 $ 16.5 6 %
Investment Management 80.6 76.4 4.2 5
Securities Lending 26.8 21.6 5.2 24
Other 31.0 32.2 (1.2) (4)
Total $ 432.0 $ 407.3 $ 24.7 6 %
C&IS custody and fund administration fees increased 6%, driven by new business, higher equity markets and higher transaction volumes. Investment management fees increased 5% in the current quarter attributable to new business and lower money market mutual fund fee waivers. Money market mutual fund fee waivers in C&IS totaled $13.6 million in the current quarter compared with $15.2 million in the prior quarter. Securities lending increased 24%, reflecting higher spreads in the current quarter.
Wealth Management trust, investment and other servicing fees were $324.8 million, up slightly from $320.2 million in the prior quarter.
Q2 Q1
Change Q2 2015
($ In Millions) 2015 2015
from Q1 2015
Wealth Management Trust, Investment and
Other Servicing Fees
Central $ 128.2 $ 130.8 $ (2.6) (2) %
East 85.9 82.4 3.5 4
West 68.5 66.8 1.7 3
Global Family Office 42.2 40.2 2.0 5
Total $ 324.8 $ 320.2 $ 4.6 1 %
The slightly increased Wealth Management fees were primarily due to higher equity markets and lower waived fees in money market mutual funds. Money market mutual fund fee waivers in Wealth Management totaled $14.6 million, compared to $17.7 million in the prior quarter.
Foreign exchange trading income in the current quarter increased 5%, to $74.8 million compared to $71.6 million in the prior quarter.
Other operating income totaled $137.4 million, up $98.8 million from $38.6 million in the prior quarter. The current quarter includes a $99.9 million gain on the sale of a portion of the Visa Inc. Class B common shares held by the Corporation. Excluding the gain, other operating income totaled $37.5 million, down 3% from the prior quarter, reflecting decreases in various miscellaneous income categories.
Net interest income on an FTE basis totaled $257.6 million in the current quarter, down $9.2 million, or 3%, from $266.8 million in the prior quarter. The decrease was primarily driven by a $17.8 million impairment of the residual value of certain aircraft under leveraged lease agreements, offset by growth in earning assets. Earning assets averaged $103.8 billion, up $5.1 billion, or 5%, from $98.7 billion in the prior quarter. The net interest margin decreased to 1.00% from 1.10% in the prior quarter. Excluding the impairment, the net interest margin was 1.06% in the current quarter, primarily reflecting lower yields on loan portfolio, partially offset by lower cost of interest-related funds.
The provision for credit losses was a credit of $10.0 million in the current quarter, compared to a credit of $4.5 million in the prior quarter, reflecting improved credit quality. Net charge-offs in the current quarter totaled $2.6 million resulting from $6.1 million of charge-offs and $3.5 million of recoveries, compared to $4.6 million of net charge-offs in the prior quarter resulting from $7.5 million of charge-offs and $2.9 million of recoveries. Nonperforming assets decreased 4% as compared to the prior quarter.
Noninterest expense totaled $854.5 million in the current quarter, up $65.5 million, or 8%, from $789.0 million in the prior quarter. The current quarter includes a $45.8 million charge related to voluntary cash contributions to certain constant dollar NAV funds. Excluding this charge, noninterest expense increased $19.7 million, or 2%, primarily attributable to higher outside services, compensation and equipment and software expense, partially offset by lower other operating expense.
Compensation expense in the current quarter totaled $361.9 million, up $7.6 million, or 2%, from $354.3 million in the prior quarter, due to base pay adjustments and higher performance-based compensation.
Expense for outside services totaled $147.2 million in the current quarter, an increase of $12.1 million, or 9%, from $135.1 million in the prior quarter, primarily reflecting higher consulting, sub-custodian and legal expenses.
Equipment and software expense in the current quarter was $114.4 million, up 4%, from $110.3 million in the prior quarter, due to higher software amortization and related software support costs.
Other operating expense totaled $114.8 million for the current quarter, up $41.4 million or 57%, from $73.4 million in the prior quarter. The current quarter includes a charge of $45.8 million related to voluntary cash contributions to certain constant dollar NAV funds. Excluding this charge, other operating expense decreased $4.4 million, or 6%, due to the timing of Northern Trust Open related expenses, partially offset by higher charitable contributions and charges associated with account servicing activities.
The provision for income taxes in the current quarter totaled $142.2 million, representing an effective tax rate of 34.6%. The provision for income taxes in the prior quarter totaled $119.3 million, representing an effective tax rate of 34.1%.
STOCKHOLDERS’ EQUITY
Total stockholders’ equity averaged $8.6 billion, up $660.7 million, or 8% from the prior-year quarter’s average of $7.9 billion. The increase was primarily attributable to earnings and the issuance of preferred stock in August 2014, partially offset by dividend declarations and the repurchase of common stock pursuant to the Corporation’s share repurchase program. During the current quarter, the Corporation declared cash dividends totaling $5.8 million to preferred stockholders, and cash dividends totaling $85.3 million to common stockholders. During the three and six months ended June 30, 2015, the Corporation repurchased 1,295,263 shares of common stock at a cost of $96.7 million ($74.64 average price per share) and 2,851,133 shares of common stock at a cost of $203.9 million ($71.52 average price per share), respectively.
CAPITAL RATIOS
The capital ratios of Northern Trust and its principal subsidiary bank, The Northern Trust Company, remained strong at June 30, 2015, with all ratios applicable to classification as “well capitalized” under U.S. regulatory requirements having been exceeded.
The table below provides capital ratios for Northern Trust Corporation and The Northern Trust Company determined by Basel III phased in requirements.
Capital Ratios -
Northern Trust Corporation June 30, 2015 March 31, 2015 June 30, 2014
Advanced Standardized Advanced Standardized Advanced Standardized
Approach Approach Approach Approach Approach Approach
(a) (a) (a)
Common Equity Tier 1 12.0% 10.7% 11.8% 10.5% 12.7% 12.7%
Tier 1 12.6% 11.2% 12.4% 11.1% 12.9% 12.9%
Total 14.4% 13.2% 14.2% 13.1% 14.9% 15.4%
Tier 1 Leverage 7.6% 7.6% 7.8% 7.8% n/a 7.6%
Supplementary Leverage (b) 6.3% n/a 6.4% n/a n/a n/a
Capital Ratios -
The Northern Trust Company June 30, 2015 March 31, 2015 June 30, 2014
Advanced Standardized Advanced Standardized Advanced Standardized
Approach Approach Approach Approach Approach Approach
(a) (a) (a)
Common Equity Tier 1 11.6% 10.1% 11.3% 10.0% 11.7% 11.4%
Tier 1 11.6% 10.1% 11.3% 10.0% 11.6% 11.4%
Total 13.2% 11.9% 13.0% 11.8% 13.7% 14.0%
Tier 1 Leverage 6.8% 6.8% 6.9% 6.9% n/a 6.7%
Supplementary Leverage (b) 5.6% n/a 5.7% n/a n/a n/a
(a) In 2014, Standardized Approach risk-weighted assets were determined by Basel I requirements. Effective with the first quarter of 2015, risk-weighted assets are calculated in accordance with the Basel III Standardized Approach final rules.
(b) Effective January 1, 2018, advanced approaches institutions, such as the Corporation, will be subject to a minimum supplementary leverage ratio of 3 percent.
RECONCILIATION OF REPORTED NET INTEREST INCOME TO FULLY TAXABLE EQUIVALENT
Net interest income stated on an FTE basis is a non-GAAP financial measure that facilitates the analysis of asset yields. Management believes an FTE presentation provides a clearer indication of net interest margins for comparative purposes. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable; however, the adjustment to an FTE basis has no impact on net income. The table below presents a reconciliation of interest income and net interest income prepared in accordance with GAAP to interest income and net interest income on an FTE basis.
Three Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
($ In Millions) Reported FTE Adj. FTE Reported FTE Adj. FTE Reported FTE Adj. FTE
Net Interest Income
Interest Income $ 288.8 $ 6.4 $ 295.2 $ 298.8 $ 6.2 $ 305.0 $ 293.8 $ 6.8 $ 300.6
Interest Expense 37.6 – 37.6 38.2 – 38.2 47.2 – 47.2
Net Interest Income $ 251.2 $ 6.4 $ 257.6 $ 260.6 $ 6.2 $ 266.8 $ 246.6 $ 6.8 $ 253.4
Net Interest Margin 0.97% 1.00% 1.07% 1.10% 1.04% 1.06%
FORWARD-LOOKING STATEMENTS
This release may include forward-looking statements concerning Northern Trust’s financial results and outlook, capital adequacy, dividend policy, anticipated expense levels and technology spending, risk management policies, contingent liabilities, strategic initiatives, industry trends, and expectations regarding the impact of recent legislation. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “likely,” “plan,” “goal,” “target,” “strategy,” and similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are Northern Trust’s current estimates or expectations of future events or future results, and involve risks and uncertainties that are difficult to predict. These statements are based on assumptions about many important factors, including the factors discussed in Northern Trust’s most recent annual report on Form 10-K and other filings with the U.S. Securities and Exchange Commission, all of which are available on Northern Trust’s website. We caution you not to place undue reliance on any forward-looking statement as actual results may differ materially from those expressed or implied by forward-looking statements. Northern Trust assumes no obligation to update its forward-looking statements.
WEBCAST OF SECOND QUARTER EARNINGS CONFERENCE CALL
Northern Trust’s second quarter earnings conference call will be webcast on July 22, 2015. The live call will be conducted at 11:00 a.m. CT and is accessible on Northern Trust’s website at:
https://www.northerntrust.com/financialreleases
The rebroadcast of the live call will be available on Northern Trust’s website from 2:00 p.m. CT on July 22, 2015, for approximately four weeks. Participants will need Windows Mediatm or Adobe Flash software. This earnings release can also be accessed at Northern Trust’s website.
To download our investor relations mobile app, which offers access to SEC filings, press releases, stock quotes, and upcoming events, please visit Apple’s iTunes App Store for your iPad. You may find the app by searching Northern Trust Investor Relations or by clicking on https://appsto.re/us/MtHH3.i from your iPad.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME DATA
($ In Millions Except Per Share Data)
SECOND QUARTER
2015 2014 % Change (*)
Noninterest Income
Trust, Investment and Other Servicing Fees $ 756.8 $ 706.9 7 %
Foreign Exchange Trading Income 74.8 52.9 41
Treasury Management Fees 16.1 16.6 (3 )
Security Commissions and Trading Income 20.0 17.8 12
Other Operating Income 137.4 40.5 N/M
Investment Security Gains (Losses), net (0.4 ) 0.4 N/M
Total Noninterest Income 1,004.7 835.1 20
Net Interest Income
Interest Income 288.8 293.8 (2 )
Interest Expense 37.6 47.2 (20 )
Net Interest Income 251.2 246.6 2
Total Revenue 1,255.9 1,081.7 16
Provision for Credit Losses (10.0 ) - N/M
Noninterest Expense
Compensation 361.9 372.4 (3 )
Employee Benefits 73.2 68.5 7
Outside Services 147.2 144.6 2
Equipment and Software 114.4 116.1 (2 )
Occupancy 43.0 47.2 (9 )
Other Operating Expense 114.8 62.2 85
Total Noninterest Expense 854.5 811.0 5
Income before Income Taxes 411.4 270.7 52
Provision for Income Taxes 142.2 88.8 60
NET INCOME $ 269.2 $ 181.9 48 %
Dividends on Preferred Stock $ 5.8 $ - N/M %
Earnings Allocated to Participating Securities 4.1 3.1 32
Earnings Allocated to Common and Potential Common Shares 259.3 178.8 45
Per Common Share
Net Income
Basic $ 1.11 $ 0.76 46 %
Diluted 1.10 0.75 47
Average Common Equity $ 8,219.4 $ 7,947.2 3 %
Return on Average Common Equity 12.85 % 9.18 % 40
Return on Average Assets 0.97 % 0.71 % 36
Cash Dividends Declared per Common Share $ 0.36 $ 0.33 9 %
Average Common Shares Outstanding (000s)
Basic 233,149 236,013
Diluted 235,233 237,754
Common Shares Outstanding (EOP) (000s) 232,853 235,585
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME DATA
SECOND FIRST
($ In Millions Except Per Share Data)
QUARTER QUARTER
2015 2015 % Change (*)
Noninterest Income
Trust, Investment and Other Servicing Fees $ 756.8 $ 727.5 4 %
Foreign Exchange Trading Income 74.8 71.6 5
Treasury Management Fees 16.1 16.3 (2 )
Security Commissions and Trading Income 20.0 19.8 2
Other Operating Income 137.4 38.6 N/M
Investment Security Gains (Losses), net (0.4 ) 0.1 N/M
Total Noninterest Income 1,004.7 873.9 15
Net Interest Income
Interest Income 288.8 298.8 (3 )
Interest Expense 37.6 38.2 (2 )
Net Interest Income 251.2 260.6 (4 )
Total Revenue 1,255.9 1,134.5 11
Provision for Credit Losses (10.0 ) (4.5 ) 122
Noninterest Expense
Compensation 361.9 354.3 2
Employee Benefits 73.2 72.9 -
Outside Services 147.2 135.1 9
Equipment and Software 114.4 110.3 4
Occupancy 43.0 43.0 -
Other Operating Expense 114.8 73.4 57
Total Noninterest Expense 854.5 789.0 8
Income before Income Taxes 411.4 350.0 18
Provision for Income Taxes 142.2 119.3 19
NET INCOME $ 269.2 $ 230.7 17 %
Dividends on Preferred Stock $ 5.8 $ 5.9 (2 ) %
Earnings Allocated to Participating Securities 4.1 3.7 11
Earnings Allocated to Common and Potential Common Shares 259.3 221.1 17
Per Common Share
Net Income
Basic $ 1.11 $ 0.95 17 %
Diluted 1.10 0.94 17
Average Common Equity $ 8,219.4 $ 8,084.2 2 %
Return on Average Common Equity 12.85 % 11.28 % 14
Return on Average Assets 0.97 % 0.87 % 11
Cash Dividends Declared per Common Share $ 0.36 $ 0.33 9 %
Average Common Shares Outstanding (000s)
Basic 233,149 233,381
Diluted 235,233 235,289
Common Shares Outstanding (EOP) (000s) 232,853 233,369
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME DATA
($ In Millions Except Per Share Data)
SIX MONTHS
2015 2014 % Change (*)
Noninterest Income
Trust, Investment and Other Servicing Fees $ 1,484.3 $ 1,386.4 7 %
Foreign Exchange Trading Income 146.4 103.0 42
Treasury Management Fees 32.4 33.4 (3 )
Security Commissions and Trading Income 39.8 32.5 22
Other Operating Income 176.0 78.2 125
Investment Security Losses, net (0.3 ) (3.6 ) (92 )
Total Noninterest Income 1,878.6 1,629.9 15
Net Interest Income
Interest Income 587.6 589.2 -
Interest Expense 75.8 96.9 (22 )
Net Interest Income 511.8 492.3 4
Total Revenue 2,390.4 2,122.2 13
Provision for Credit Losses (14.5 ) 3.0 N/M
Noninterest Expense
Compensation 716.2 714.2 -
Employee Benefits 146.1 135.4 8
Outside Services 282.3 289.0 (2 )
Equipment and Software 224.7 217.4 3
Occupancy 86.0 91.4 (6 )
Other Operating Expense 188.2 131.6 43
Total Noninterest Expense 1,643.5 1,579.0 4
Income before Income Taxes 761.4 540.2 41
Provision for Income Taxes 261.5 176.9 48
NET INCOME $ 499.9 $ 363.3 38 %
Dividends on Preferred Stock $ 11.7 $ - N/M %
Earnings Allocated to Participating Securities 7.8 6.0 30
Earnings Allocated to Common and Potential Common Shares 480.4 357.3 34
Per Common Share
Net Income
Basic $ 2.06 $ 1.51 36 %
Diluted 2.04 1.50 36
Average Common Equity $ 8,152.2 $ 7,936.8 3 %
Return on Average Common Equity 12.08 % 9.23 % 31
Return on Average Assets 0.92 % 0.72 % 28
Cash Dividends Declared per Common Share $ 0.69 $ 0.64 8 %
Average Common Shares Outstanding (000s)
Basic 233,264 236,607
Diluted 235,260 238,399
Common Shares Outstanding (EOP) (000s) 232,853 235,585
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
BALANCE SHEET
($ In Millions) JUNE 30
2015 2014 % Change (*)
Assets
Federal Funds Sold and Securities Purchased under
Agreements to Resell $ 1,020.0 $ 579.5 76 %
Interest-Bearing Due from and Deposits with Banks (**) 18,909.6 17,059.8 11
Federal Reserve Deposits 17,488.7 13,338.5 31
Securities
U.S. Government 5,018.8 2,417.7 108
Obligations of States and Political Subdivisions 107.9 161.6 (33 )
Government Sponsored Agency 16,776.9 18,196.6 (8 )
Other (***) 17,289.6 13,599.6 27
Total Securities 39,193.2 34,375.5 14
Loans and Leases 32,953.8 30,697.6 7
Total Earning Assets 109,565.3 96,050.9 14
Allowance for Credit Losses Assigned to Loans and Leases (257.3 ) (275.2 ) (7 )
Cash and Due from Banks 3,893.6 3,945.2 (1 )
Buildings and Equipment 436.5 441.9 (1 )
Client Security Settlement Receivables 2,034.2 1,596.4 27
Goodwill 534.3 544.6 (2 )
Other Assets 3,736.3 3,457.4 8
Total Assets $ 119,942.9 $ 105,761.2 13 %
Liabilities and Stockholders' Equity
Interest-Bearing Deposits
Savings and Money Market $ 15,782.4 $ 14,394.6 10 %
Savings Certificates and Other Time 1,540.5 1,967.4 (22 )
Non-U.S. Offices - Interest-Bearing 52,909.9 49,457.7 7
Total Interest-Bearing Deposits 70,232.8 65,819.7 7
Short-Term Borrowings 3,704.0 2,039.8 82
Senior Notes 1,497.2 1,496.8 -
Long-Term Debt 1,362.3 1,653.4 (18 )
Floating Rate Capital Debt 277.3 277.2 -
Total Interest-Related Funds 77,073.6 71,286.9 8
Demand and Other Noninterest-Bearing Deposits 30,455.1 23,042.8 32
Other Liabilities 3,664.9 3,388.9 8
Total Liabilities 111,193.6 97,718.6 14
Common Equity 8,360.8 8,042.6 4
Preferred Equity 388.5 - N/M
Total Equity 8,749.3 8,042.6 9
Total Liabilities and Stockholders' Equity $ 119,942.9 $ 105,761.2 13 %
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
(**)
Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheet in our periodic filings with the SEC.
(***)
Other securities include Federal Reserve and Federal Home Loan Bank stock and certain community development investments for purposes of presenting earning assets; such securities are presented in other assets on the consolidated balance sheet in our periodic filings with the SEC.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
BALANCE SHEET
($ In Millions) JUNE 30 MARCH 31
2015 2015 % Change (*)
Assets
Federal Funds Sold and Securities Purchased under
Agreements to Resell $ 1,020.0 $ 1,113.9 (8 ) %
Interest-Bearing Due from and Deposits with Banks (**) 18,909.6 17,646.9 7
Federal Reserve Deposits 17,488.7 8,804.2 99
Securities
U.S. Government 5,018.8 4,627.4 8
Obligations of States and Political Subdivisions 107.9 117.1 (8 )
Government Sponsored Agency 16,776.9 16,649.7 1
Other (***) 17,289.6 15,614.5 11
Total Securities 39,193.2 37,008.7 6
Loans and Leases 32,953.8 32,630.2 1
Total Earning Assets 109,565.3 97,203.9 13
Allowance for Credit Losses Assigned to Loans and Leases (257.3 ) (259.0 ) (1 )
Cash and Due from Banks 3,893.6 1,860.2 109
Buildings and Equipment 436.5 442.4 (1 )
Client Security Settlement Receivables 2,034.2 2,219.3 (8 )
Goodwill 534.3 527.3 1
Other Assets 3,736.3 4,957.9 (25 )
Total Assets $ 119,942.9 $ 106,952.0 12 %
Liabilities and Stockholders' Equity
Interest-Bearing Deposits
Savings and Money Market $ 15,782.4 $ 15,892.2 (1 ) %
Savings Certificates and Other Time 1,540.5 1,777.9 (13 )
Non-U.S. Offices - Interest-Bearing 52,909.9 45,942.2 15
Total Interest-Bearing Deposits 70,232.8 63,612.3 10
Short-Term Borrowings 3,704.0 3,898.0 (5 )
Senior Notes 1,497.2 1,497.1 -
Long-Term Debt 1,362.3 1,399.1 (3 )
Floating Rate Capital Debt 277.3 277.2 -
Total Interest-Related Funds 77,073.6 70,683.7 9
Demand and Other Noninterest-Bearing Deposits 30,455.1 23,124.2 32
Other Liabilities 3,664.9 4,536.5 (19 )
Total Liabilities 111,193.6 98,344.4 13
Common Equity 8,360.8 8,219.1 2
Preferred Equity 388.5 388.5 -
Total Equity 8,749.3 8,607.6 2
Total Liabilities and Stockholders' Equity $ 119,942.9 $ 106,952.0 12 %
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
(**)
Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheet in our periodic filings with the SEC.
(***)
Other securities include Federal Reserve and Federal Home Loan Bank stock and certain community development investments for purposes of presenting earning assets; such securities are presented in other assets on the consolidated balance sheet in our periodic filings with the SEC.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
AVERAGE BALANCE SHEET
($ In Millions) SECOND QUARTER
2015 2014 % Change (*)
Assets
Federal Funds Sold and Securities Purchased under
Agreements to Resell $ 1,041.9 $ 554.1 88 %
Interest-Bearing Due from and Deposits with Banks (**) 16,920.6 17,294.6 (2 )
Federal Reserve Deposits 14,992.1 13,266.4 13
Securities
U.S. Government 4,789.1 2,368.7 102
Obligations of States and Political Subdivisions 112.2 168.4 (33 )
Government Sponsored Agency 16,821.7 18,359.8 (8 )
Other (***) 16,207.0 13,407.8 21
Total Securities 37,930.0 34,304.7 11
Loans and Leases 32,921.4 30,052.9 10
Total Earning Assets 103,806.0 95,472.7 9
Allowance for Credit Losses Assigned to Loans and Leases (260.0 ) (276.8 ) (6 )
Cash and Due from Banks 2,142.9 2,838.4 (25 )
Buildings and Equipment 446.5 450.7 (1 )
Client Security Settlement Receivables 945.0 781.0 21
Goodwill 531.1 543.0 (2 )
Other Assets 4,079.6 3,515.1 16
Total Assets $ 111,691.1 $ 103,324.1 8 %
Liabilities and Stockholders' Equity
Interest-Bearing Deposits
Savings and Money Market $ 15,705.4 $ 14,828.6 6 %
Savings Certificates and Other Time 1,779.5 1,996.2 (11 )
Non-U.S. Offices - Interest-Bearing 49,291.8 48,988.1 1
Total Interest-Bearing Deposits 66,776.7 65,812.9 1
Short-Term Borrowings 4,404.8 4,217.8 4
Senior Notes 1,497.1 1,661.6 (10 )
Long-Term Debt 1,380.2 1,642.4 (16 )
Floating Rate Capital Debt 277.3 277.2 -
Total Interest-Related Funds 74,336.1 73,611.9 1
Demand and Other Noninterest-Bearing Deposits 25,558.4 18,832.3 36
Other Liabilities 3,188.7 2,932.7 9
Total Liabilities 103,083.2 95,376.9 8
Common Equity 8,219.4 7,947.2 3
Preferred Equity 388.5 - N/M
Total Equity 8,607.9 7,947.2 8
Total Liabilities and Stockholders' Equity $ 111,691.1 $ 103,324.1 8 %
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
(**)
Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheet in our periodic filings with the SEC.
(***)
Other securities include Federal Reserve and Federal Home Loan Bank stock and certain community development investments for purposes of presenting earning assets; such securities are presented in other assets on the consolidated balance sheet in our periodic filings with the SEC.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
AVERAGE BALANCE SHEET
SECOND FIRST
($ In Millions) QUARTER QUARTER
2015 2015 % Change (*)
Assets
Federal Funds Sold and Securities Purchased under
Agreements to Resell $ 1,041.9 $ 1,033.7 1 %
Interest-Bearing Due from and Deposits with Banks (**) 16,920.6 15,263.1 11
Federal Reserve Deposits 14,992.1 14,504.0 3
Securities
U.S. Government 4,789.1 4,580.0 5
Obligations of States and Political Subdivisions 112.2 121.6 (8 )
Government Sponsored Agency 16,821.7 16,511.9 2
Other (***) 16,207.0 14,579.0 11
Total Securities 37,930.0 35,792.5 6
Loans and Leases 32,921.4 32,099.8 3
Total Earning Assets 103,806.0 98,693.1 5
Allowance for Credit Losses Assigned to Loans and Leases (260.0 ) (265.9 ) (2 )
Cash and Due from Banks 2,142.9 1,573.4 36
Buildings and Equipment 446.5 446.9 -
Client Security Settlement Receivables 945.0 959.7 (2 )
Goodwill 531.1 529.7 -
Other Assets 4,079.6 5,576.3 (27 )
Total Assets $ 111,691.1 $ 107,513.2 4 %
Liabilities and Stockholders' Equity
Interest-Bearing Deposits
Savings and Money Market $ 15,705.4 $ 15,361.0 2 %
Savings Certificates and Other Time 1,779.5 1,741.7 2
Non-U.S. Offices - Interest-Bearing 49,291.8 47,399.8 4
Total Interest-Bearing Deposits 66,776.7 64,502.5 4
Short-Term Borrowings 4,404.8 5,187.4 (15 )
Senior Notes 1,497.1 1,497.0 -
Long-Term Debt 1,380.2 1,571.9 (12 )
Floating Rate Capital Debt 277.3 277.2 -
Total Interest-Related Funds 74,336.1 73,036.0 2
Demand and Other Noninterest-Bearing Deposits 25,558.4 22,023.6 16
Other Liabilities 3,188.7 3,980.9 (20 )
Total Liabilities 103,083.2 99,040.5 4
Common Equity 8,219.4 8,084.2 2
Preferred Equity 388.5 388.5 -
Total Equity 8,607.9 8,472.7 2
Total Liabilities and Stockholders' Equity $ 111,691.1 $ 107,513.2 4 %
(*)
Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.
(**)
Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheet in our periodic filings with the SEC.
(***)
Other securities include Federal Reserve and Federal Home Loan Bank stock and certain community development investments for purposes of presenting earning assets; such securities are presented in other assets on the consolidated balance sheet in our periodic filings with the SEC.
NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
QUARTERLY TREND DATA
2015 2014
($ In Millions Except Per Share Data)
QUARTERS QUARTERS
SECOND FIRST FOURTH THIRD SECOND
Net Income Summary
Trust, Investment and Other Servicing Fees $ 756.8 $ 727.5 $ 728.2 $ 718.2 $ 706.9
Other Noninterest Income 247.9 146.4 138.0 111.4 128.2
Net Interest Income 251.2 260.6 263.9 249.3 246.6
Total Revenue 1,255.9 1,134.5 1,130.1 1,078.9 1,081.7
Provision for Credit Losses (10.0 ) (4.5 ) 3.0 - -
Noninterest Expense 854.5 789.0 781.3 774.7 811.0
Income before Income Taxes 411.4 350.0 345.8 304.2 270.7
Provision for Income Taxes 142.2 119.3 101.8 99.7 88.8
Net Income $ 269.2 $ 230.7 $ 244.0 $ 204.5 $ 181.9
Per Common Share
Net Income - Basic $ 1.11 $ 0.95 $ 0.98 $ 0.85 $ 0.76
- Diluted 1.10 0.94 0.98 0.84 0.75
Cash Dividends Declared per Common Share 0.36 0.33 0.33 0.33 0.33
Book Value (EOP) 35.91 35.22 34.54 34.62 34.14
Market Value (EOP) 76.46 69.65 67.40 68.03 64.21
Financial Ratios
Return on Average Common Equity 12.85 % 11.28 % 11.47 % 10.09 % 9.18 %
Return on Average Assets 0.97 0.87 0.90 0.77 0.71
Net Interest Margin (GAAP) 0.97 1.07 1.05 1.02 1.04
Net Interest Margin (FTE) 1.00 1.10 1.08 1.05 1.06
Capital Ratios
Standardized Approach
Common Equity Tier 1 10.7 % 10.5 % 12.5 % 12.8 % 12.7 %
Tier 1 11.2 11.1 13.3 13.6 12.9
Total 13.2 13.1 15.5 16.0 15.4
Tier 1 Leverage 7.6 7.8 7.8 7.9 7.6
Advanced Approach
Common Equity Tier 1 12.0 % 11.8 % 12.4 % 12.7 % 12.7
Tier 1 12.6 12.4 13.2 13.4 12.9
Total 14.4 14.2 15.0 15.3 14.9
Tier 1 Leverage 7.6 7.8 n/a n/a n/a
Supplementary Leverage 6.3 6.4 n/a n/a n/a
Assets Under Custody ($ In Billions) - EOP
Corporate & Institutional Services $ 5,652.6 $ 5,566.2 $ 5,453.1 $ 5,403.1 $ 5,488.0
Wealth Management 524.4 524.6 515.7 507.2 516.6
Total Assets Under Custody $ 6,177.0 $ 6,090.8 $ 5,968.8 $ 5,910.3 $ 6,004.6
Assets Under Management ($ In Billions) - EOP
Corporate & Institutional Services $ 713.6 $ 727.0 $ 709.6 $ 702.9 $ 701.5
Wealth Management 232.0 233.1 224.5 220.4 222.9
Total Assets Under Management $ 945.6 $ 960.1 $ 934.1 $ 923.3 $ 924.4
Asset Quality ($ In Millions) - EOP
Nonperforming Loans and Leases $ 208.7 $ 219.6 $ 215.7 $ 220.5 $ 229.3
Other Real Estate Owned (OREO) 10.1 8.5 16.6 10.7 12.6
Total Nonperforming Assets $ 218.8 $ 228.1 $ 232.3 $ 231.2 $ 241.9
Nonperforming Assets / Loans and Leases and OREO 0.66 % 0.70 % 0.73 % 0.75 % 0.79 %
Gross Charge-offs $ 6.1 $ 7.5 $ 8.2 $ 8.6 $ 7.8
Less: Gross Recoveries 3.5 2.9 2.8 3.4 1.9
Net Charge-offs $ 2.6 $ 4.6 $ 5.4 $ 5.2 $ 5.9
Net Charge-offs (Annualized) to Average Loans and Leases 0.03 % 0.06 % 0.07 % 0.07 % 0.08 %
Allowance for Credit Losses Assigned to Loans and Leases $ 257.3 $ 259.0 $ 267.0 $ 269.4 $ 275.2
Allowance to Nonperforming Loans and Leases 1.2x 1.2x 1.2x 1.2x 1.2x
Allowance for Other Credit-Related Exposures $ 16.9 $ 27.7 $ 28.9 $ 28.9 $ 28.3
View source version on businesswire.com: http://www.businesswire.com/news/home/20150722005658/en/
Contact:
Northern Trust Corporation
Investor Contact:
Bev Fleming
(312) 444-7811
Beverly_Fleming@ntrs.com
or
Media Contact:
Doug Holt
(312) 557-1571
Doug_Holt@ntrs.com
The "Street" has KKR coming in at - .28 for the quarter that should be reported on or about October 27, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has KKR coming in at - .28 for the quarter that should be reported on or about October 27, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has KKR coming in at - .28 for the quarter that should be reported on or about October 27, 2015! All post's welcome! The "Good Dr's In"!
RCI Hospitality Announces 4Q15 & FY15 Club & Restaurant Sales
- FY15 Sales of $142.1 Million - Up 11.6% vs. FY14
- 4Q15 Sales of $34.0 Million - Up 3.9% vs. 4Q14
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PR Newswire
RCI Hospitality Holdings, Inc.
October 8, 2015 9:00 AM
HOUSTON, Oct. 8, 2015 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (RICK) today announced total sales at adult clubs and bars/restaurants for the fiscal fourth quarter and year ended September 30, 2015. RCI expects to announce 4Q15 and FY15 results on December 14, 2015.
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.RCI HOSPITALITY HOLDINGS INC
FY15 vs. FY14
•Total club and restaurant sales reached $142.1 million compared to $127.4 million.
•Same store sales were $110.6 million compared to $111.3 million.
•Nightclubs segment sales totaled $123.0 million compared to $121.2 million.
•Bombshells segment sales totaled $19.1 million compared to $6.2 million.
4Q15 vs. 4Q14
•Total club and restaurant sales reached $34.0 million compared to $32.7 million.
•Same store sales were $29.9 million compared to $31.6 million.
•Nightclubs segment sales totaled $29.4 million compared to $30.1 million.
•Bombshells segment sales totaled $4.6 million compared to $2.5 million.
In 4Q15, there were 45 units (40 clubs and 5 Bombshells) versus 46 in 4Q14 (43 clubs and 3 Bombshells). During 4Q15, Union Square nightclub in Fort Worth was closed.
CEO Comment
Eric Langan, President and CEO, commented, "We're pleased to see a 3.9% year over year increase in quarterly sales and an 11.6% increase in annual sales.
"This continues to demonstrate the soundness of our bar/restaurant strategy, which saw Bombshells segment sales up 84% in 4Q15 and up more than 200% in FY15, and the success of our January acquisition of Down in Texas Saloon in Austin, TX, and the May acquisition of The Seville Club of Minneapolis.
"For FY15, same store sales were nearly level, but down 5.6% for 4Q15. During the quarter, selected units in Texas were soft, but larger clubs around the country did well, with Tootsie's Cabaret up 5.5%, Rick's Cabaret New York up 5.2%, Vivid Cabaret New York up 7.6%, and Jaguars Phoenix up 12.3%.
"Over the course of the year, while customer traffic was good, spending per customer eased, perhaps reflecting general economic uncertainty. We also saw more traditional patterns in our business, where we experience a stronger first half and a softer second half. In response, we're making major adjustments in promotions and other factors."
About RCI Hospitality Holdings, Inc. (RICK)
With 45 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult gentlemen clubs and sports bars/restaurants. Adult clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names, such as "Rick's Cabaret," "XTC," "Club Onyx," "Vivid Cabaret," "Jaguars" and "Tootsie's Cabaret." Sports bars/restaurants operate under the brand name "Bombshells." Please visit http://www.rcihospitality.com/
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company's businesses, risks and uncertainties related to the operational and financial results of our Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
All references to, the "company," "we," "our," and similar terms include RCI Hospitality Holdings, Inc. and its subsidiaries, unless the context indicates otherwise.
Stanley Black & Decker Reports 3Q 2015 Results
.
PR Newswire
Stanley Black & Decker
October 22, 2015 6:00 AM
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NEW BRITAIN, Conn., Oct. 22, 2015 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced third quarter 2015 financial results.
•3Q'15 Revenues Totaled $2.8 Billion, As Strong Organic Growth Of 6% Was More Than Offset By 8% Currency Impact
•3Q'15 Operating Margin Rate Expanded 70 Basis Points To A Post-Merger Record 14.8% Despite $70 Million Of Currency Headwinds
•3Q'15 Diluted GAAP EPS Was $1.55 Up 1% From 3Q'14 As Strong Operational Performance More Than Offset Tax And Restructuring Headwinds
•Raising 2015 Full Year GAAP EPS Guidance Range To $5.80 To $5.95, From $5.70 To $5.90, Up 8% To 11% Versus 2014
3Q'15 Key Points:
•Net sales for the period were $2.8 billion, down 2% versus prior year, as positive volume (+5%) and price (+1%) were more than offset by currency (-8%).
•Gross margin rate for the quarter was 36.3%, down slightly from the prior year rate of 36.4% as favorable volume leverage, price, productivity, cost actions and commodity deflation substantially offset unfavorable currency.
•SG&A expenses were 21.5% of sales compared to 22.3% in 3Q'14 reflecting volume leverage and cost control.
•Operating margin rate was 14.8% compared to 14.1% in 3Q'14, as actions to improve profitability and generate solid operating leverage more than offset significant unfavorable currency.
•Restructuring charges for the quarter were $14.0 million compared to a restructuring credit of $0.2 million in 3Q'14.
•Tax rate was 24.5% compared to the 3Q'14 rate of 19.1% as a result of higher U.S. vs. foreign earnings in the third quarter of 2015 compared to the prior year and the impact of statutory expirations on certain foreign tax positions in last year's third quarter.
•Average diluted shares outstanding for the quarter were 150.8 million versus 160.6 million a year ago, reflecting the cumulative impact of our recent share repurchase actions including approximately $200 million of opportunistic share repurchases during the quarter capitalizing on recent equity market declines.
•Working capital turns for the quarter were 6.4 compared to 6.5 for 3Q'14. Free cash flow for the quarter was $171 million versus $189 million for 3Q'14.
Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "We achieved continued share gains across much of the portfolio in the third quarter and remain on track to deliver strong organic growth for the year. This organic growth momentum, combined with a sharp focus on cost management and price realization, positions us to deliver meaningful margin expansion and 8-11% EPS growth in 2015 despite severe currency pressure and volatile economic conditions in a number of our markets.
"We continue to leverage our world-class franchises and brands to deliver substantial organic growth and margin expansion, while generating strong free cash flow and maintaining a shareholder friendly capital allocation approach. Although market conditions remain challenging in the near-term, we are confident that our agile leadership team, focus on execution and robust pipeline of innovative new products will enable us to continue our strong performance trend."
3Q'15 Segment Results
($ in M)
3Q'15 Segment Results
Sales
Profit
Profit
Rate
Tools & Storage
$1,838
$307.8
16.7%
Security
$512
$60.8
11.9%
Industrial
$479
$85.4
17.8%
•Tools & Storage net sales increased 2% versus 3Q'14 as volume (+8%) and price (+1%), more than offset unfavorable currency (-7%). Organic growth remained strong across all regions with North America +11%, Europe +7% and the emerging markets +6%. Share gains from innovative new products and brand extensions combined with a healthy underlying U.S. tool market continued to fuel growth in North America despite softness in Canada and industrial channels. Europe continued its above-market organic growth performance due to share gains from new products combined with leveraging an expanded retail footprint and solid commercial momentum in what remains a muted market. The continued roll out of our mid-price-point product offerings along with pricing actions fueled solid organic growth within the emerging markets, most notably in Latin America and portions of Asia, despite continuing pressure in Russia and China. Overall Tools & Storage segment profit rate was 16.7%, up from the 3Q'14 rate of 15.7%, as volume leverage, price, productivity, cost management and lower commodity prices more than offset significant currency pressures.
•Security net sales decreased 8% versus 3Q'14 as price (+1%) was more than offset by lower volumes (-2%) and currency (-7%). Positive momentum accelerated in Europe with organic growth of 4% led by higher installation revenues and broad-based growth throughout the region. Europe's order rates remained strong, up double-digits for the quarter, with recurring revenue attrition contained within the target range of 10-12%. Organic revenues within North America were flat as growth across the mechanical businesses was offset by lower volumes within the electronics business. Emerging markets organic revenues were lower due primarily to slowing market conditions in China. Overall Security segment profit rate was 11.9%, up 150 basis points from the 2Q'15 rate and 30 basis points lower than prior year. The sequential improvement in the rate reflects continued margin expansion within Europe and improved operating performance across the North America businesses.
•Industrial net sales decreased 7% versus 3Q'14 as price (+1%) was more than offset by lower volumes (-1%) and currency (-7%). Engineered Fastening achieved 3% organic growth as strong global automotive and electronics revenues more than offset weaker industrial volumes. As expected, Infrastructure organic revenues decreased 10% due to lower Oil & Gas volumes resulting from delayed or suspended onshore pipeline construction and reduced offshore activity, as well as lower Hydraulic Tools volume due to difficult scrap steel market conditions. Overall Industrial segment profit rate was 17.8%, up from the 3Q'14 rate of 17.7%, as favorable volume leverage from Engineered Fastening, productivity gains and cost control more than offset the impacts of currency and lower Infrastructure volumes.
President and Chief Operating Officer, James M. Loree, commented, "Our results for the quarter, in which we again generated organic growth at the high end of expectations, demonstrate that our commitment to delivering sustained, above-market organic growth is taking root. The Tools & Storage team delivered impressive organic growth of 9% overcoming tough comparables and a weaker industrial end market. Strength within Engineered Fastening's automotive and electronics markets was noteworthy as was our growth within the emerging markets where we are navigating through a volatile and challenging end market backdrop. The Company's operating margin performance for the quarter was also a highlight and another post-merger record.
"Security showed stable organic revenue with impressive strength in Europe, strong order rate trends, and sequential margin improvement – all encouraging signs that this business is on a solid improvement track. The commercial actions we have taken to drive growth in both North America and Europe are beginning to manifest themselves in order rates and backlog while efforts to improve Security's field efficiency and cost structure continue to progress."
Updated 2015 Outlook
Donald Allan Jr., Senior Vice President and CFO, commented, "We are raising the range of our 2015 EPS outlook to $5.80 to $5.95 from $5.70 to $5.90 on a GAAP basis and expect our free cash flow for 2015 to approach $1 billion reflecting the impact of strong organic growth on our working capital levels. Our revised 2015 EPS outlook reflects the impacts of a stronger operational performance combined with incremental commodity deflation which are expected to more than offset a slower growth outlook for the industrial portions of our businesses and slightly higher currency headwinds, now estimated to be closer to the high end of our prior range of $200 to $220 million.
"We continue to be encouraged by our operating results in 2015, most notably our organic growth and expanding margins despite dynamic market conditions in various geographies. We will maintain our operational agility in 2016 as we expect to face continued currency headwinds of approximately $100 million for the year. As always, we will seek to identify cost, commodity deflation and pricing opportunities to partially mitigate this impact and allow us to demonstrate reasonable earnings growth in 2016."
The Company will host a conference call with investors today, October 22, at 8:00 am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.
You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for "SWK Investor Relations".
The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 49376260. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 49376260. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.
Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.
Contact:
Greg Waybright
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
(860) 827-3833
These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's Spain and Italy operations as held for sale based on management's intention to sell these operations. In July 2015, the Company completed the sale of these operations. The operating results of Security Spain and Italy have been reported as discontinued operations for 3Q'15 through the date of the sale and 3Q'14. In 3Q'13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses; these businesses were sold during 2014. The operating results of these businesses have been reported as discontinued operations for 3Q'14. Total sales reported as discontinued operations were $3.9 million and $28.4 million for 3Q'15 and 3Q'14, respectively.
In the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY") business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The Company recast segment net sales and profit for 3Q'14 to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.
Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 3Q'15 and 3Q'14 is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of M&A-related payments and charges.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Statements in this press release that are not historical, including but not limited to those regarding the Company's ability to: (i) achieve full year 2015 EPS of $5.80 - $5.95 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow approaching $1.0 billion for 2015; (iii) achieve meaningful margin expansion and 8-11% EPS growth in 2015; and (iv) maintain its operational agility and demonstrate reasonable earnings growth in 2016 (collectively, the "Results"); are "forward looking statements" and subject to risk and uncertainty.
The Company's ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company's other filings with the Securities and Exchange Commission, and those set forth below.
The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to deliver sufficient working capital turns expansion to achieve free cash flow approaching $1 billion for 2015; (ii) the Company's ability to deliver organic growth of approximately 6% in 2015; (iii) the Company's ability to successfully execute upon indirect cost actions and to benefit from pricing opportunities and commodity deflation; (iv) foreign exchange headwinds being at the higher end of the $200-$220 million range at the end of 2015 and approximately $100 million in 2016; (v) the Company's ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vi) the Company's ability to limit restructuring charges to approximately $50 million in 2015: (vii) successful integration of existing businesses and formation of new business platforms; (viii) the continued acceptance of technologies used in the Company's products and services; (ix) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (x) the Company's ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xi) the proceeds realized with respect to any business or product line disposals; (xii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiii) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xiv) the Company's ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xv) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvi) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xvii) the Company's ability to obtain favorable settlement of tax audits; (xviii) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible, including realizing tax credit carry forward amounts within the allowable carry forward periods; (xix) the continued ability of the Company to access credit markets under satisfactory terms; (xx) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxi) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxii) the availability of cash to repurchase shares when conditions are right.
The Company's ability to deliver the Results is also dependent upon: (i) the success of the Company's marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company's manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company's ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company's efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Chinese Renminbi, Canadian Dollar, Euro, British Pound, Brazilian Real or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.
The Company's ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia, China and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company's customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company's debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company's supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
THIRD QUARTER
YEAR TO DATE
2015
2014
2015
2014
NET SALES
$ 2,829.5
$ 2,878.9
$ 8,326.4
$ 8,356.1
COSTS AND EXPENSES
Cost of sales
1,802.5
1,832.3
5,268.6
5,304.5
Gross margin
1,027.0
1,046.6
3,057.8
3,051.6
% of Net Sales
36.3%
36.4%
36.7%
36.5%
Selling, general and administrative
608.3
641.1
1,875.8
1,937.6
% of Net Sales
21.5%
22.3%
22.5%
23.2%
Operating margin
418.7
405.5
1,182.0
1,114.0
% of Net Sales
14.8%
14.1%
14.2%
13.3%
Other - net
54.0
60.9
168.2
179.1
Restructuring charges (credits)
14.0
(0.2)
43.9
(5.6)
Income from operations
350.7
344.8
969.9
940.5
Interest - net
41.6
40.4
125.5
121.4
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
309.1
304.4
844.4
819.1
Income taxes on continuing operations
75.7
58.3
209.5
180.4
NET EARNINGS FROM CONTINUING OPERATIONS
233.4
246.1
634.9
638.7
Less: net (loss) earnings attributable to non-controlling interests
(0.7)
(0.3)
(1.7)
0.8
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE
TO COMMON SHAREOWNERS
234.1
246.4
636.6
637.9
NET LOSS FROM DISCONTINUED OPERATIONS
(5.4)
(9.7)
(18.4)
(22.8)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$ 228.7
$ 236.7
$ 618.2
$ 615.1
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$ 1.60
$ 1.57
$ 4.28
$ 4.08
Discontinued operations
(0.04)
(0.06)
(0.12)
(0.15)
Total basic earnings per share of common stock
$ 1.57
$ 1.51
$ 4.15
$ 3.94
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$ 1.55
$ 1.53
$ 4.15
$ 3.99
Discontinued operations
(0.04)
(0.06)
(0.12)
(0.14)
Total diluted earnings per share of common stock
$ 1.52
$ 1.47
$ 4.03
$ 3.85
DIVIDENDS PER SHARE
$ 0.55
$ 0.52
$ 1.59
$ 1.52
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
145,911
156,628
148,796
156,278
Diluted
150,781
160,582
153,405
159,755
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
October 3,
January 3,
2015
2015
ASSETS
Cash and cash equivalents
$ 293.3
$ 496.6
Accounts and notes receivable, net
1,690.9
1,396.7
Inventories, net
1,867.0
1,562.7
Assets held for sale
-
29.5
Other current assets
422.1
463.3
Total current assets
4,273.3
3,948.8
Property, plant and equipment, net
1,407.6
1,454.1
Goodwill and other intangibles, net
9,739.6
10,027.2
Other assets
450.4
419.0
Total assets
$ 15,870.9
$ 15,849.1
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings
$ 457.0
$ 7.5
Accounts payable
1,718.9
1,579.2
Accrued expenses
1,246.4
1,221.9
Liabilities held for sale
-
23.4
Total current liabilities
3,422.3
2,832.0
Long-term debt
3,847.3
3,839.8
Other long-term liabilities
2,880.7
2,665.4
Stanley Black & Decker, Inc. shareowners' equity
5,639.0
6,429.1
Non-controlling interests' equity
81.6
82.8
Total liabilities and equity
$ 15,870.9
$ 15,849.1
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
THIRD QUARTER
YEAR TO DATE
2015
2014
2015
2014
OPERATING ACTIVITIES
Net earnings from continuing operations
$ 233.4
$ 246.1
$ 634.9
$ 638.7
Net loss from discontinued operations
(5.4)
(9.7)
(18.4)
(22.8)
Depreciation and amortization
103.9
112.6
308.4
337.4
Changes in working capital1
(173.1)
(168.6)
(601.5)
(443.0)
Other
80.2
68.7
30.7
24.0
Net cash provided by operating activities
239.0
249.1
354.1
534.3
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(68.5)
(60.2)
(180.1)
(179.4)
Proceeds from issuances of common stock
9.3
23.4
84.0
51.0
Net short-term borrowings (repayments)
32.1
(48.8)
450.8
33.8
Net investment hedge settlements
48.3
(29.2)
112.2
(65.0)
Cash dividends on common stock
(79.7)
(81.4)
(239.2)
(240.5)
Purchases of common stock for treasury
(192.1)
(1.3)
(640.1)
(20.7)
Effect of exchange rate changes on cash
(38.7)
(66.3)
(80.8)
(63.1)
Other
(48.3)
(14.2)
(64.2)
(59.8)
Net cash used in investing and financing activities
(337.6)
(278.0)
(557.4)
(543.7)
Decrease in Cash and Cash Equivalents
(98.6)
(28.9)
(203.3)
(9.4)
Cash and Cash Equivalents, Beginning of Period
391.9
515.7
496.6
496.2
Cash and Cash Equivalents, End of Period
$ 293.3
$ 486.8
$ 293.3
$ 486.8
Free Cash Flow Computation2
Operating cash inflow
$ 239.0
$ 249.1
$ 354.1
$ 534.3
Less: capital and software expenditures
(68.5)
(60.2)
(180.1)
(179.4)
Free cash inflow (before dividends)
$ 170.5
$ 188.9
$ 174.0
$ 354.9
Merger & Acquisition-related charges and payments4
20.4
29.5
68.7
116.1
Free cash inflow, normalized (before dividends)3
$ 190.9
$ 218.4
$ 242.7
$ 471.0
1
Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
2,3
Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.
4
Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
THIRD QUARTER
YEAR TO DATE
2015
2014
2015
2014
NET SALES
Tools & Storage
$ 1,838.2
$ 1,806.4
$ 5,309.8
$ 5,153.0
Security
512.0
554.8
1,554.9
1,671.3
Industrial
479.3
517.7
1,461.7
1,531.8
Total
$ 2,829.5
$ 2,878.9
$ 8,326.4
$ 8,356.1
SEGMENT PROFIT
Tools & Storage
$ 307.8
$ 284.1
$ 866.2
$ 773.8
Security
60.8
67.6
170.8
189.8
Industrial
85.4
91.5
254.4
269.7
Segment Profit
454.0
443.2
1,291.4
1,233.3
Corporate Overhead
(35.3)
(37.7)
(109.4)
(119.3)
Total
$ 418.7
$ 405.5
$ 1,182.0
$ 1,114.0
Segment Profit as a Percentage of Net Sales
Tools & Storage
16.7%
15.7%
16.3%
15.0%
Security
11.9%
12.2%
11.0%
11.4%
Industrial
17.8%
17.7%
17.4%
17.6%
Segment Profit
16.0%
15.4%
15.5%
14.8%
Corporate Overhead
(1.2%)
(1.3%)
(1.3%)
(1.4%)
Total
14.8%
14.1%
14.2%
13.3%
7:09 am Tupperware beats by $0.08, beats on revs; guides Q4 EPS below consensus, revs in-lineBriefing.com (Wed, Oct 21)
Q3 Results and Q4 Forecast Global membership grew 3.62 million to 69.17 million members compared to prior year growth of 3.02 million, and a forecast of 3.55 million. Operating income was $74 million, compared to prior year of $110 million and a forecast of $81 million. Seven quarters ago we moved to providing you our internal forecast for the quarter ahead. We strive for accuracy in this projection and, when it comes to global net additions, Q3 was our most accurate to date: we were within 2% (3.62 vs. 3.55) and within 10% on operating income ($74m vs. $81m).
While global growth was as we expected, our forecast was high for the US and low for international. We added 0.88 million new US members in the quarter compared to 0.98 million prior year and a forecast of 1.15 million. Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards. In terms of US net additions, through the first nine months of 2015, we are slightly ahead of prior year, and we expect to finish 2015 at about 2014 levels. This would mark the 4th consecutive year we’ve added about 6 million members in the US.
Our US contribution margin in Q3 expanded 375 basis points year over year to 32.4%. This was inclusive of an acceleration in the amortization of some of our licensed content, similar to how we already treat originals and reflecting more viewing in the first month. The effect of this change was a $13 million decrease in US streaming contribution profit in Q3. For Q4, we anticipate 1.65 million US net adds and US contribution margin of 34.0% vs. 28.0% in the year ago quarter. We continue to target a 40% US contribution margin by 2020.
International net add growth totaled 2.74 million compared to 2.04 million in the prior year and a 2.40 million forecast. Excluding the impact of foreign currency ($96 million on a year over year basis), international ASP improved 6% vs. Q3 ‘14, helped by plan mix. In August, we raised our high-definition 2-screen monthly price plan in Europe by one Euro without negatively impacting growth.
As we have indicated previously, international contribution losses will grow sequentially in Q4 as we launch Spain, Italy and Portugal. We have announced our expansion to South Korea, Hong Kong, Taiwan and Singapore in early 2016. Our plan remains to run around break-even through 2016 and to deliver material profits thereafter.
Last week we increased prices in several countries including the US, to improve our ability to acquire and offer high quality content, which is the number one member request. Our US pricing is now $7.99 for our standard-definition 1-screen-at-a-time plan (unchanged), $9.99 for our high-definition 2-screen plan (up $1), and $11.99 for ultra-high-definition 4-screen plan (unchanged). Members who were paying $8.99 for the high-definition plan are grandfathered at that price for one year.
2
The "Street" has SWK coming in at 1.56 for the quarter that should be reported on or about October 22, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has SWK coming in at 1.56 for the quarter that should be reported on or about October 22, 2015! All post's welcome! The "Good Dr's In"!
Newell Rubbermaid to Acquire Elmer’s for $600 Million
Announces Intention to Divest Window Coverings Business
Newell Rubbermaid
October 5, 2015 8:30 AM
Newell Rubbermaid (NWL) has entered into a definitive agreement to acquire Elmer’s Products, Inc. ("Elmer’s") from an affiliate of Berwind Corporation, a family-owned investment management company, for a purchase price of $600 million, subject to customary working capital adjustments. Elmer’s, whose brands include Elmer’s®, Krazy Glue®, and X-Acto®, is the leading provider of activity-based adhesive and cutting products that inspire creativity in the classroom, at home, in the office, in the workshop and at the craft table. Elmer’s distributes Krazy Glue, a leading instant adhesive brand in North America, through a joint venture with Toagosei Chemical Co. Ltd.1
“The acquisition of Elmer’s strengthens our market-leading Writing Segment with three outstanding arts and craft brands that will not only enhance our merchandising scale in the key Back to School drive period, but offer great cross-selling and distribution synergies given the strong overlap with Newell’s retailer and channel footprint,” said Michael Polk, President and Chief Executive Officer of Newell Rubbermaid. “We are delighted to welcome the Elmer’s team and their leading brands to our company. The addition of Elmer’s adds even more firepower and long term potential to our building growth acceleration and margin development story.”
Elmer’s net sales for calendar year 2015 are projected to be approximately $240 million. The acquisition is expected to be accretive to normalized earnings and operating margin in 2016. The acquired business will be reported as part of Newell Rubbermaid’s Writing segment with Elmer’s, X-Acto and Krazy Glue joining the company's Paper Mate®, Sharpie®, Expo® and Mr. Sketch® brands. The company will leverage its brand building, design and innovation capabilities to accelerate Elmer’s growth while simultaneously delivering synergies in distribution, cross-selling and merchandising. The acquisition is expected to be financed through a combination of available liquidity and debt financings. The company anticipates the transaction closing by year end, subject to customary conditions and regulatory approvals.
Coincident with the agreement to acquire Elmer’s, the company has initiated a process to divest its Levolor® and Kirsch® window coverings brands (“Décor”). The Décor business is expected to generate approximately $310 million in net sales in 2015. The business will continue to be reported as part of the Home Solutions Segment and will be managed as a stand-alone business through this process.
The company expects no material impact to 2015 full year results related to either the Elmer’s acquisition or the planned Décor divestiture given the timing of both transactions. Accordingly, 2015 full year guidance remains unchanged at 4 to 5 percent core sales growth and normalized EPS of $2.14 to $2.20 per share. As recently communicated in connection with second quarter earnings, the company continues to track towards the mid-point of both full year ranges. In 2016, Newell Rubbermaid expects the normalized EPS accretion from the acquisition of Elmer’s to be effectively offset by the dilution associated with the disposal of Décor, resulting in minimal impact to 2016 normalized EPS. The company plans to provide 2016 full year guidance along with its third quarter financial results later this month.
1 “Krazy Glue” is a registered trademark of Toagosei Co. Ltd., used with permission.
Reconciliation of Core Sales Guidance for Year Ending December 31, 2015
Core sales 4.0% to 5.0%
Currency (5.0)% to (6.0)%
Acquisitions, net of planned divestitures 4.0% to 5.0%
Net sales growth 3.0% to 4.0%
Reconciliation of Normalized EPS Guidance for Year Ending December 31, 2015
Diluted earnings per share $1.69 to $1.75
Graco product recall $0.03
Restructuring and other Project Renewal costs $0.35 to $0.45
Acquisition and integration costs $0.01
Devaluation of the Venezuelan Bolivar $0.01
Discontinued operations $(0.01) to $0.01
Normalized earnings per share $2.14 to $2.20
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission and includes a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
The company uses certain non-GAAP financial measures that are included in this press release and the additional financial information both in explaining its results to stockholders and the investment community and in its internal evaluation and management of its businesses. The company’s management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the company’s performance using the same tools that management uses to evaluate the company’s past performance, reportable business segments and prospects for future performance and (b) determine certain elements of management’s incentive compensation.
The company’s management believes that core sales provides a more complete understanding of underlying sales trends by providing sales on a consistent basis as it excludes the impacts of acquisitions, planned or completed divestitures and changes in foreign currency from year-over-year comparisons. The effect of foreign currency on reported sales is determined by applying a fixed exchange rate, calculated as the 12-month average in the prior year, to the current and prior year local currency sales amounts (excluding acquisitions and planned and completed divestitures), with the difference in these two amounts being the increase or decrease in core sales, and the difference between the change in as reported sales and the change in core sales reported as the currency impact. The company’s management believes that “normalized” earnings per share, which exclude restructuring and other expenses and one-time and other events such as costs related to product recalls, the extinguishment of debt, certain tax benefits and charges, impairment charges, pension settlement charges, discontinued operations, costs related to the acquisition and integration of acquired businesses, advisory costs for process transformation and optimization initiatives, dedicated personnel costs related to transformation initiatives under Project Renewal, asset devaluations resulting from the adoption and continued use of the SICAD Venezuelan Bolivar exchange rate and certain other items, is useful because it provides investors with a meaningful perspective on the current underlying performance of the company’s core ongoing operations. The company also uses core sales and normalized earnings per share as two of the three criteria in its management cash bonus plan and performance-based equity compensation arrangements.
The company determines the tax effect of the items excluded from normalized diluted earnings per share by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the company uses a “with” and “without” approach to determine normalized income tax expense.
While the company believes that these non-GAAP financial measures are useful in evaluating the company’s performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2014 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie®, Paper Mate®, Rubbermaid Commercial Products®, Irwin®, Lenox®, Parker®, Waterman®, Rubbermaid®, Contigo®, Levolor®, Calphalon®, Goody®, Graco®, Aprica®, Baby Jogger®, and Dymo®. As part of the company’s Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company’s Web site, www.newellrubbermaid.com.
Caution Concerning Forward-Looking Statements
Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating margin or gross margin improvements or declines, Project Renewal, capital and other expenditures, cash flow, dividends, restructuring and other project costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, changes in exchange rates, product recalls, expected benefits and financial results from recently completed acquisitions and planned acquisitions and divestitures (including the Elmer’s transaction and the proposed disposition of the Décor business) and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power and consolidation of our retail customers; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands, including the ability to realize anticipated benefits of increased advertising and promotion spend; product liability, product recalls or regulatory actions; our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; a failure of one of our key information technology systems or related controls; the potential inability to attract, retain and motivate key employees; future events that could adversely affect the value of our assets and require impairment charges; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations, including exchange controls and pricing restrictions; our ability to complete planned acquisitions and divestitures (including our ability to obtain contemplated debt financing, whether and when the required regulatory approvals will be obtained and the closing conditions will be satisfied); our ability to realize the expected benefits and financial results from our recently acquired businesses and planned acquisitions and divestitures; how customers, competitors, suppliers and employees will react to our recently acquired businesses and planned acquisitions and divestitures; and those factors listed in our most recently filed Quarterly Report on Form 10-Q and exhibit 99.1 thereto filed with the Securities and Exchange Commission. Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151005005477/en/
Contact:
Newell Rubbermaid
Nancy O’Donnell, 770-418-7723
Vice President, Investor Relations
or
Racquel White, 770-418-7643
Vice President, Global Communications
AZZ Inc. Reports Financial Results for the Second Quarter of Fiscal Year 2016
Second Quarter Fiscal 2016 EPS of $0.67, up 26.4% compared to $0.53 in Fiscal 2015
Second Quarter Revenues of $214.2 million, up $20.8 million or 10.8% over Fiscal 2015
Gross Margins Increased to 25.0% compared to 21.8% in Fiscal 2015
Announces incremental $0.4 million in Realignment Charges taken in Second Quarter
AZZ Reaffirms Previously Announced Fiscal Year 2016 Earnings and Revenue Guidance of EPS of $2.85 to $3.30 and Sales of $900 - $940 million
Announces Quarterly Cash Dividend of $0.15 per Share
PR Newswire
AZZ Inc.
September 29, 2015 8:00 AM
FORT WORTH, Texas, Sept. 29, 2015 /PRNewswire/ -- AZZ Inc. (AZZ), a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution and industrial markets today announced financial results for the three month and six month periods ended August 31, 2015.
Management Discussion
Tom Ferguson, president and chief executive officer of AZZ Inc., commented, "I am pleased with the solid operating performance and the top- and bottom-line results achieved during the second quarter. We continued to make progress improving the operational performance and profitability of the Energy Segment, particularly in our WSI specialty welding business. During the quarter, we shipped some long-anticipated project backlog out of NLI. As we had indicated many times in the past, we expected our second quarter to be seasonally weaker on the smaller number of outages and turnarounds that occur during the summer as is typical. We believe that the strong results of the first half of the year will continue into the second half of the year as we expect solid bookings for the fall outage season, along with the continued expansion of international orders."
"In the Galvanizing Service Segment, I am pleased with the progress our team has accomplished with the integration of the recently acquired U.S. Galvanizing operations," continued Mr. Ferguson. "In our initial quarter of operation, we are already seeing improved operational performance from the business, and we are on track to meet our operational expectations for the acquired plants. Despite challenges in the Gulf Coast region from lower oil prices, we are seeing an upturn in several other markets, including electric utility and bridge and highway infrastructure that are counteracting the regional effects of declining oil prices. We are also solidly on schedule for the opening of our 43rd hot-dip galvanizing plant currently being constructed in Reno, Nevada."
Mr. Ferguson, concluded, "I continue to believe that fiscal 2016 will be a solid year and we are maintaining our guidance for fiscal 2016 EPS in the range of $2.85 to $3.30 per diluted share and revenues in the range of $900 million to $940 million. We remain confident in our global opportunities and look forward to a solid 2016 and beyond."
Second Quarter Results
Revenues for the second quarter of fiscal 2016 were $214.2 million compared to $193.4 million for the same quarter last year, an increase of 10.8%. Net income for the second quarter increased 25.2% to $17.2 million, or $0.67 per diluted share, compared to net income of $13.8 million, or $0.53 per diluted share, for the second fiscal quarter of last year.
Earnings for the second quarter of fiscal 2016 reflected an improved gross margin of 25.0% compared to 21.8% in the second quarter of fiscal 2015, on favorable comparisons to charges taken in the prior year. In the second quarter of fiscal 2016 AZZ recorded $0.4 million in net realignment charges compared to operational charges of $5.2 million for certain cost overruns and $2.8 million of realignment charges reflected in gross margin in the second quarter of fiscal 2015.
SG&A expense as a percentage of sales increased to 12.6% from 9.9% in the prior fiscal year as a result of the second quarter of the prior year including the release of a $9.1 million reserve held for the potential payment of a purchase price earn-out, partially offset by $1.1 million of realignment charges taken to SG&A in the same period.
Additionally the effective tax rate was reduced to 21.2% in the current quarter compared to 27.2% in the second quarter of the prior year primarily as a result of capturing certain state tax benefits.
Incoming orders for the second quarter of fiscal 2016 were $233.5 million while shipments for the second quarter totaled $214.2 million, resulting in a book to ship ratio of 109%. In the second quarter of last year incoming orders were $213.4 million, resulting in a book to ship ratio of 110%. Our backlog at the end of the second quarter of fiscal 2016 was $338.1 million compared to backlog at the end of the prior year second quarter of $329.1 million. Approximately 23% of the backlog is scheduled to be delivered outside the U.S.
Energy Segment
Revenues for the Energy Segment for the second quarter of fiscal 2016 were $110.8 million as compared to $100.6 million for the same quarter last year, increasing 10.2%, and included the partial shipment of certain large delayed nuclear projects. Operating income for the Energy Segment increased by $10.2 million to $9.0 million compared to an operating loss of $(1.2) million in the same period last year. Operating margins for the second quarter were 8.1% as compared to a negative margin of (1.2)% in the prior year period. Energy Segment operating income during the second quarter included $0.7 million of net realignment charges, while the same quarter of the prior year included a charge of $5.2 for cost overruns and a $2.6 million realignment charge.
Galvanizing Services Segment
Revenues for the Galvanizing Services Segment for the second quarter were $103.5 million, compared to the $92.9 million in the same period last year, an increase of 11.4% primarily due to the positive impact of the acquisition of US Galvanizing during the quarter. Operating income increased 9.9% to $25.3 million as compared to $23.0 million in the second quarter of fiscal 2015. Operating margins for the second quarter were 24.5%, compared to 24.8% in the same period last year. Segment operating income during the second quarter of fiscal 2015 included a $0.8 million realignment charge.
Announces Dividend
AZZ also announced today that its Board of Directors has authorized a quarterly cash dividend in the amount of $0.15 per share on the company`s outstanding shares of common stock. The dividend is payable on October 26, 2015, to shareholders of record as of the close of business on October 12, 2015.
Conference Call
AZZ Inc.will conduct a conference call to review the financial results for the second quarter of fiscal year 2016 at 11:00 a.m. ET on Tuesday, September 29, 2015. Interested parties can access the conference call by dialing (877) 317-6789 or (412) 317-6789 (international). The call will be webcast via the Internet at http://www.azz.com/investor-relations. A replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088 (international), confirmation #10072707, or for 30 days at http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure. AZZ Galvanizing is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Energy is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in the energy markets worldwide.
Safe Harbor Statement
Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as, "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. This release may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand and response to products and services offered by AZZ, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, and the hot dip galvanizing markets; prices and raw material cost, including zinc and natural gas which are used in the hot dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic, customer requested delays of shipments, acquisition opportunities, currency exchange rates, adequacy of financing, and availability of experienced management and employees to implement AZZ's growth strategy. AZZ has provided additional information regarding risks associated with the business in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2015 and other filings with the SEC, available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact:
Paul Fehlman, Senior Vice President – Finance and CFO
AZZ Inc. 817-810-0095
Internet: www.azz.com
Lytham Partners 602-889-9700
Joe Dorame or Robert Blum
Internet: www.lythampartners.com
---Financial tables on the following page---
AZZ Inc.
Condensed Consolidated Statement of Income
(in thousands, except per share data)
Three Months Ended
Six Months Ended
August 31, 2015
August 31, 2014
August 31, 2015
August 31, 2014
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net sales
$
214,246
$
193,416
$
443,134
$
409,542
Costs of Sales
160,741
151,316
330,325
312,053
Gross Margin
53,505
42,100
112,809
97,489
Selling, General and Administrative
27,086
19,144
53,505
46,685
Operating Income
26,419
22,956
59,304
50,804
Interest Expense
4,023
4,224
7,869
8,432
Net (Gain) Loss on Sales or Insurance Settlement of Property, Plant and Equipment
(25)
3
(449)
(23)
Other (Income) expense, net
547
17
855
(14)
Income before income taxes
21,874
18,712
51,029
42,409
Income Tax Expense
4,631
4,943
13,862
13,715
Net income
$
17,243
$
13,769
$
37,167
$
28,694
Net income per share
Basic
$
0.67
$
0.54
$
1.44
$
1.12
Diluted
$
0.67
$
0.53
$
1.44
$
1.11
Diluted average shares outstanding
25,922
25,758
25,892
25,749
Segment Reporting
(in thousands)
Three Months Ended
Six Months Ended
August 31, 2015
August 31, 2014
August 31, 2015
August 31, 2014
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net Sales:
Energy
$
110,777
$
100,560
$
247,780
$
231,081
Galvanizing Services
103,469
92,856
195,354
178,461
$
214,246
$
193,416
$
443,134
$
409,542
Segment Operating Income :
Energy
$
9,005
$
(1,241)
$
26,961
$
12,416
Galvanizing Services
25,331
23,059
47,425
45,069
Corporate
(7,917)
1,138
(15,082)
(6,681)
Total Segment Operating Income
$
26,419
$
22,956
$
59,304
$
50,804
Condensed Consolidated Balance Sheet
(in thousands)
August 31, 2015
February 28, 2015
(unaudited)
Assets:
Current Assets
$
310,623
$
298,634
Net Property, Plant and Equipment
223,573
196,583
Other Assets, Net
449,851
441,697
Total Assets
$
984,047
$
936,914
Liabilities and Shareholders' Equity:
Current Liabilities
$
152,798
$
149,142
Long Term Debt Due After One Year
337,478
315,982
Other Liabilities
46,162
51,738
Shareholders' Equity
447,609
420,052
Total Liabilities and Shareholders' Equity
$
984,047
$
936,914
Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended
August 31, 2015
August 31, 2014
(unaudited)
(unaudited)
Net cash provided by operating activities
$
54,857
$
53,826
Net cash used in investing activities
(70,896)
(21,896)
Net cash provided by (used in) financing activities
14,589
(18,007)
Effect of exchange rate changes on cash
(851)
139
Net increase (decrease) in cash and cash equivalents
$
(2,301)
$
14,062
Cash and cash equivalents at beginning of period
22,527
27,565
Cash and cash equivalents at end of period
$
20,226
$
41,627
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