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Apple Reports Record Third Quarter Results
iPhone, Apple Watch, Mac & App Store Drive Revenue Growth of 33%
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Business Wire
Apple Inc.
July 21, 2015 4:30 PM
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CUPERTINO, Calif.--(BUSINESS WIRE)--
Apple® today announced financial results for its fiscal 2015 third quarter ended June 27, 2015. The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.
The growth was fueled by record third quarter sales of iPhone® and Mac®, all-time record revenue from services and the successful launch of Apple Watch™.
“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook, Apple’s CEO. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”
“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,” said Luca Maestri, Apple’s CFO. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”
Apple is providing the following guidance for its fiscal 2015 fourth quarter:
• revenue between $49 billion and $51 billion
• gross margin between 38.5 percent and 39.5 percent
• operating expenses between $5.85 billion and $5.95 billion
• other income/(expense) of $400 million
• tax rate of 26.3 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 August 13, 2015, to shareholders of record as of the close of business on August 10, 2015.
Apple will provide live streaming of its Q3 2015 financial results conference call beginning at 2:00 p.m. PDT on July 21, 2015 at www.apple.com/quicktime/qtv/earningsq315. This webcast will also be available for replay for approximately two weeks thereafter.
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 27, 2014, its Form 10-Q for the fiscal quarter ended December 27, 2014, its Form 10-Q for the fiscal quarter ended March 28, 2015, and its Form 10-Q for the fiscal quarter ended June 27, 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, the Mac and Apple Watch. Apple’s three software platforms — iOS, OS X and watchOS — 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.
© 2015 Apple Inc. All rights reserved. Apple, the Apple logo, iPhone, Mac and Apple Watch 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
Nine Months Ended
June 27,
2015
June 28,
2014
June 27,
2015
June 28,
2014
Net sales $ 49,605 $ 37,432 $ 182,214 $ 140,672
Cost of sales (1) 29,924 22,697 109,136 86,144
Gross margin 19,681 14,735 73,078 54,528
Operating expenses:
Research and development (1) 2,034 1,603 5,847 4,355
Selling, general and administrative (1) 3,564 2,850 10,624 8,835
Total operating expenses 5,598 4,453 16,471 13,190
Operating income 14,083 10,282 56,607 41,338
Other income/(expense), net 390 202 846 673
Income before provision for income taxes 14,473 10,484 57,453 42,011
Provision for income taxes 3,796 2,736 15,183 10,968
Net income $ 10,677 $ 7,748 $ 42,270 $ 31,043
Earnings per share:
Basic $ 1.86 $ 1.29 $ 7.30 $ 5.06
Diluted $ 1.85 $ 1.28 $ 7.25 $ 5.03
Shares used in computing earnings per share:
Basic 5,729,886 6,012,635 5,788,922 6,136,147
Diluted 5,773,099 6,051,711 5,829,920 6,172,857
Cash dividends declared per share $ 0.52 $ 0.47 $ 1.46 $ 1.35
(1) Includes share-based compensation expense as follows:
Cost of sales $ 148 $ 115 $ 430 $ 334
Research and development $ 388 $ 313 $ 1,146 $ 902
Selling, general and administrative $ 320 $ 296 $ 1,095 $ 865
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in thousands and par value)
June 27,
2015
September 27,
2014
ASSETS:
Current assets:
Cash and cash equivalents $ 15,319 $ 13,844
Short-term marketable securities 19,384 11,233
Accounts receivable, less allowances of $83 and $86, respectively 10,370 17,460
Inventories 2,042 2,111
Deferred tax assets 5,010 4,318
Vendor non-trade receivables 9,537 9,759
Other current assets 9,291 9,806
Total current assets 70,953 68,531
Long-term marketable securities 168,145 130,162
Property, plant and equipment, net 21,149 20,624
Goodwill 5,044 4,616
Acquired intangible assets, net 3,779 4,142
Other assets 4,081 3,764
Total assets $ 273,151 $ 231,839
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 26,474 $ 30,196
Accrued expenses 22,724 18,453
Deferred revenue 9,088 8,491
Commercial paper 4,499 6,308
Current portion of long-term debt 2,500 0
Total current liabilities 65,285 63,448
Deferred revenue, non-current 3,474 3,031
Long-term debt 47,419 28,987
Other non-current liabilities 31,296 24,826
Total liabilities 147,474 120,292
Commitments and contingencies
Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,705,400 and 5,866,161 shares issued and outstanding, respectively 26,327 23,313
Retained earnings 98,252 87,152
Accumulated other comprehensive income 1,098 1,082
Total shareholders' equity 125,677 111,547
Total liabilities and shareholders' equity $ 273,151 $ 231,839
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended
June 27, 2015 June 28, 2014
Cash and cash equivalents, beginning of the period $ 13,844 $ 14,259
Operating activities:
Net income 42,270 31,043
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 8,138 5,977
Share-based compensation expense 2,671 2,101
Deferred income tax expense 2,820 3,154
Changes in operating assets and liabilities:
Accounts receivable, net 7,090 2,314
Inventories 69 170
Vendor non-trade receivables 222 1,486
Other current and non-current assets 2,286 931
Accounts payable (3,263) (2,531)
Deferred revenue 1,040 1,394
Other current and non-current liabilities 4,448 424
Cash generated by operating activities 67,791 46,463
Investing activities:
Purchases of marketable securities (137,524) (160,662)
Proceeds from maturities of marketable securities 9,916 15,111
Proceeds from sales of marketable securities 80,635 126,827
Payments made in connection with business acquisitions, net (230) (898)
Payments for acquisition of property, plant and equipment (7,629) (5,745)
Payments for acquisition of intangible assets (201) (216)
Other 134 7
Cash used in investing activities (54,899) (25,576)
Financing activities:
Proceeds from issuance of common stock 324 435
Excess tax benefits from equity awards 684 562
Taxes paid related to net share settlement of equity awards (1,332) (839)
Dividends and dividend equivalents paid (8,597) (8,297)
Repurchase of common stock (22,000) (28,000)
Proceeds from issuance of long-term debt, net 21,312 11,960
Change in commercial paper, net (1,808) 2,010
Cash used in financing activities (11,417) (22,169)
Increase/(decrease) in cash and cash equivalents 1,475 (1,282)
Cash and cash equivalents, end of the period $ 15,319 $ 12,977
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 10,604 $ 8,013
Cash paid for interest $ 427 $ 322
Apple Inc.
Q3 2015 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q3 2015 Q2 2015 Q3 2014 Sequential Change Year/Year Change
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $20,209 $21,316 $17,574 - 5% 15%
Europe 10,342 12,204 8,659 - 15% 19%
Greater China 13,230 16,823 6,230 - 21% 112%
Japan 2,872 3,457 2,627 - 17% 9%
Rest of Asia Pacific 2,952 4,210 2,342 - 30% 26%
Total Apple $49,605 $58,010
$37,432
- 14% 33%
Q3 2015 Q2 2015 Q3 2014 Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 47,534 $31,368 61,170 $40,282 35,203 $19,751 - 22% - 22% 35% 59%
iPad (1) 10,931 4,538 12,623 5,428 13,276 5,889 - 13% - 16% - 18% - 23%
Mac (1) 4,796 6,030 4,563 5,615 4,413 5,540 5% 7% 9% 9%
Services (2) 5,028 4,996 4,485 1% 12%
Other Products (1)(3) 2,641 1,689 1,767 56% 49%
Total Apple $49,605 $58,010 $37,432 - 14% 33%
(1)
Includes deferrals and amortization of related non-software services and software upgrade rights.
(2)
Includes revenue from iTunes, AppleCare, Apple Pay, licensing and other services.
(3)
Includes sales of Apple TV, Apple Watch, Beats Electronics, iPod and Apple-branded and third-party accessories.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150721006563/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
The "Street" has WETF coming in at .17 for the quarter that should be reported on or about July 31, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has WETF coming in at .17 for the quarter that should be reported on or about July 31, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has AAPL coming in at 1.97 for the quarter that should be reported on or about July 21, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has AAPL coming in at 1.97 for the quarter that should be reported on or about July 21, 2015! All post's welcome! The "Good Dr's In"!
4:17 pm Netflix beats by $0.02, reports revs in-line (NFLX) : Reports Q2 (Jun) earnings of $0.06 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.04; revenues rose 22.8% year/year to $1.65 bln vs the $1.65 bln consensus.
4:17 pm Netflix beats by $0.02, reports revs in-line (NFLX) : Reports Q2 (Jun) earnings of $0.06 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.04; revenues rose 22.8% year/year to $1.65 bln vs the $1.65 bln consensus.
4:17 pm Netflix beats by $0.02, reports revs in-line (NFLX) : Reports Q2 (Jun) earnings of $0.06 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.04; revenues rose 22.8% year/year to $1.65 bln vs the $1.65 bln consensus.
Newell Rubbermaid to Webcast Second Quarter 2015 Earnings Results
Business Wire Newell Rubbermaid
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ATLANTA--(BUSINESS WIRE)--
Newell Rubbermaid (NWL) today announced its second quarter 2015 earnings results will be released Friday, July 31, prior to market open and will be followed by a live webcast at 8:30 a.m. ET. To listen to the webcast, please visit Events & Presentations in the Investor Relations section of Newell Rubbermaid’s Web site at www.newellrubbermaid.com. The live webcast will be recorded and made available for replay.
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®, Contigo®, Rubbermaid®, 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150709005097/en/
Contact:
Newell Rubbermaid
Nancy O’Donnell, 770-418-7723
Vice President, Investor Relations
or
Nicole Quinlan, 770-418-7251
Senior Manager, Global Communications
RCI Hospitality Announces 3Q15 Club & Restaurant Sales Up 6.9%
PR Newswire RCI Hospitality Holdings, Inc.
15 hours ago
????
HOUSTON, July 9, 2015 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (RICK) today announced total sales at adult clubs and bars/restaurants for the third fiscal quarter ended June 30, 2015. RCI expects to announce 3Q15 results on August 10, 2015.
View photo
.RCI HOSPITALITY HOLDINGS INC
Total club and restaurant sales reached $35.4 million compared to $33.1 million in the year ago quarter.
Same store sales were $30.2 million compared to $31.9 million in the year ago quarter.
There were 46 units in 3Q15 versus 43 in 3Q14.
Nightclub segment sales (includes adult clubs and nightclubs) totaled $30.6 million compared to $31.5 million in 3Q14.
Bombshells segment sales totaled $4.8 million compared to $1.6 million in 3Q14.
CEO Comment
Eric Langan, President and CEO, commented, "We're pleased at seeing a 6.9% year over year increase in total 3Q15 sales. This continues to demonstrate the soundness of our bar/restaurant strategy, which saw Bombshells segment sales up more than threefold year over year. On the other hand, the unusually severe rain and flooding in Texas contributed to a 5.3% decline in same store sales that affected our nightclub segment, in particular.
"Total club and restaurant sales benefitted from new adult clubs–Rick's Cabaret in Odessa, TX, the January acquisition of Down in Texas Saloon in Austin, TX, and the May acquisition of The Seville Club of Minneapolis—and from new Bombshells in Austin, Spring, and Houston, TX. In addition to weather, many units opened for more than a year faced tough comparisons against last year's strong line up of sporting events. While showing the Mayweather-Pacquiao fight at many locations helped 3Q15, it was difficult to overcome the benefit in 3Q14 of the New York Rangers in the Stanley Cup Finals and both the Miami Heat and the San Antonio Spurs in the NBA Finals."
About RCI Hospitality Holdings, Inc. (RICK)
With 46 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.
Sonic Announces 6.1% Same-Store Sales Growth for Third Fiscal Quarter of 2015
Business Wire Sonic Corp.
June 22, 2015 4:01 PM
????
OKLAHOMA CITY--(BUSINESS WIRE)--
Sonic Corp. (SONC), the nation’s largest chain of drive-in restaurants, today announced results for the third fiscal quarter ended May 31, 2015.
Key highlights of the company’s third quarter of fiscal year 2015 included:
Net income per diluted share was $0.38 compared with net income per diluted share of $0.30 in the prior-year period; excluding tax adjustments of $1.1 million, or $0.02 per share in the third fiscal quarter of 2015, earnings per share would have been $0.36, an increase of 20% from the prior-year same period;
System same-store sales increased 6.1%, consisting of a 6.1% same-store sales increase at franchise drive-ins and an increase of 5.5% at company drive-ins; and
Company drive-in margins improved by 100 basis points.
“We are very pleased with our strong sales and financial performance driven by a healthy mix of traffic and check,” said Cliff Hudson, Sonic Corp. CEO. “Our results are especially noteworthy given our strong results from the same quarter prior year. New product news in key categories, effective media and a layered promotional strategy are expected to continue to drive our sales in the near term. Technology initiatives designed to provide a more personalized and customized customer experience are also expected to complement our product and media initiatives and drive sales over the next several years.”
The strategies noted above will continue to drive Sonic’s multi-layered growth strategy which is comprised of initiatives to increase same-store sales, profits, royalty revenues and unit growth. Optimizing shareholder value by deploying free cash flow1 to invest in the brand, quarterly dividends and repurchase shares continues to be a key focus.
Same-Store Sales
For the third fiscal quarter ended May 31, 2015, system same-store sales increased 6.1%, which was comprised of a 6.1% same-store sales increase at franchise drive-ins and an increase of 5.5% at company drive-ins. Weather had a disproportionately adverse impact on company drive-in sales in the third fiscal quarter.
Financial Overview
For the third fiscal quarter of 2015, the company’s net income increased to $20.4 million or $0.38 per diluted share compared with net income of $16.8 million or $0.30 per diluted share in the same period in the prior year. Excluding tax adjustments of $1.1 million or $0.02 per share in the third fiscal quarter of 2015, net income and net income per diluted share increased 15% and 20%, respectively.
The following analysis of non-GAAP adjustments is intended to supplement the presentation of the company’s financial results in accordance with GAAP. The company believes that the presentation of this analysis provides useful information to investors and management regarding the underlying business trends and the performance of the company’s ongoing operations and is helpful for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the financial results of the company and predicting future performance.
Three months ended Three months ended
May 31, 2015 May 31, 2014
Net Diluted Net Diluted Net Income Diluted EPS
Income EPS Income EPS
$ Change
% Change
$ Change
% Change
Reported – GAAP $ 20,442 $ 0.38 $ 16,776 $ 0.30 $ 3,666 22 % $ 0.08 27 %
Recognition of prior-period federal tax benefit (1,722 ) (0.03 ) - -
Retroactive effect of federal tax law change 612 0.01 - -
Adjusted - Non-GAAP $ 19,332 $ 0.36 $ 16,776 $ 0.30 $ 2,556 15 % $ 0.06 20 %
For the first nine months of fiscal 2015, net income totaled $38.2 million or $0.70 per diluted share compared with net income of $29.1 million or $0.51 per diluted share for the same period in 2014. Excluding the items outlined below, net income and net income per diluted share increased 27% and 34%, respectively.
Nine months ended Nine months ended
May 31, 2015 May 31, 2014
Net Diluted Net Diluted Net Income Diluted EPS
Income EPS Income EPS
$ Change
% Change
$ Change
% Change
Reported – GAAP $ 38,189 $ 0.70 $ 29,091 $ 0.51 $ 9,098 31 % $ 0.19 37 %
Recognition of prior-period federal tax benefit (1,722 ) (0.03 ) - -
Retroactive effect of federal tax law change 612 0.01 - -
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters (666 ) (0.01 ) - -
Benefit from the IRS' acceptance of a federal tax method change - - (484 ) (0.01 )
Adjusted - Non-GAAP $ 36,413 $ 0.67 $ 28,607 $ 0.50 $ 7,806 27 % $ 0.17 34 %
Fiscal Year 2015 Outlook
The company expects its initiatives to drive 27% to 29% earnings per share growth, on an adjusted basis, in fiscal 2015 as compared to the adjusted non-GAAP earnings per share for fiscal 2014. The macroeconomic environment may impact results. The outlook for the fourth fiscal quarter of 2015 anticipates the following elements:
Positive same-store sales in the mid-single digit range for the system;
22 to 27 new franchise drive-in openings, resulting in net unit growth for the system;
Drive-in-level margin improvement of between 100 to 150 basis points, reflecting an improving outlook for commodity cost inflation and leverage from company drive-in same-store sales growth;
Selling, general and administrative expenses of $20.5 million to $21 million, reflecting increased investment in human resources to support the brand initiatives described above;
Depreciation and amortization expense of approximately $11.5 million to $12 million;
Net interest expense of approximately $6 million to $6.5 million; and
An income tax rate of between 36.5% and 37%, reflecting the benefit of various ongoing tax credit programs.
The company anticipates the following elements for fiscal 2015:
Capital expenditures of $35 million to $40 million;
Free cash flow of $70 million to $75 million;
The completion of the planned repurchase of $105 million of stock; and
A quarterly cash dividend of $0.09 per share resulting in an estimated payout of $19 million.
The declaration of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of the company's Board of Directors.
Earnings Conference Call
The company will host a conference call and online web simulcast this afternoon beginning at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (800) 946-0782 or (719) 325-2168 for international callers. A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 5977007. The replay will be available until Monday, June 29, 2015. An online replay of the conference call will be available approximately two hours after the conclusion of the live broadcast. A link to this event may be found on the company's investor relations website at http://ir.sonicdrivein.com/.
About Sonic
SONIC®, America’s Drive-In®, is the nation's largest drive-in restaurant chain serving more than 3 million customers every day. Nearly 90 percent of SONIC’s 3,500 drive-in locations are owned and operated by local business men and women. Over the past 60 years, SONIC has delighted guests with signature menu items, more than 1.3 million drink combinations and friendly service by iconic Carhops. To learn more about Sonic Corp. (NASDAQ/NM: SONC), please visit sonicdrivein.com or follow us on Facebook and Twitter.
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from those expressed in, or underlying, these forward-looking statements are detailed in the company’s annual and quarterly report filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.
The tables that follow provide information regarding the number of company drive-ins, franchise drive-ins and system drive-ins in operation as of the end of the periods indicated. In addition, these tables provide information regarding franchise sales, system growth in sales, and both franchise and system average drive-in sales and change in same-store sales. System information includes both company and franchise drive-in information, which we believe is useful in analyzing the growth of our brand. While we do not record franchise drive-in sales as revenues, we believe this information is important in understanding our financial performance since we calculate and record franchise royalties based on a percentage of franchise sales. This information also is indicative of the financial health of our franchisees.
SONC-F
SONIC CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three months ended Nine months ended
May 31, May 31,
2015 2014 2015 2014
Revenues:
Company Drive-In sales $ 118,369 $ 111,014 $ 310,816 $ 286,361
Franchise Drive-Ins:
Franchise royalties and fees 43,704 38,795 114,375 96,598
Lease revenue 1,569 1,081 3,613 2,682
Other 1,106 1,297 2,019 2,939
Total revenues 164,748 152,187 430,823 388,580
Costs and expenses:
Company Drive-Ins:
Food and packaging 32,727 32,175 87,128 81,454
Payroll and other employee benefits 40,898 37,737 110,049 101,108
Other operating expenses, exclusive of
depreciation and amortization included below 22,955 21,805 65,484 62,049
Total cost of Company Drive-In sales 96,580 91,717 262,661 244,611
Selling, general and administrative 20,699 17,639 57,625 50,530
Depreciation and amortization 11,435 11,022 34,634 31,087
Other operating (income) expense, net (336 ) 128 4 (37 )
Total costs and expenses 128,378 120,506 354,924 326,191
Income from operations 36,370 31,681 75,899 62,389
Interest expense 6,382 6,328 18,981 19,095
Interest income (91 ) (112 ) (290 ) (373 )
Net interest expense 6,291 6,216 18,691 18,722
Income before income taxes 30,079 25,465 57,208 43,667
Provision for income taxes 9,637 8,689 19,019 14,576
Net income $ 20,442 $ 16,776 $ 38,189 $ 29,091
Basic income per share $ 0.39 $ 0.31 $ 0.72 $ 0.52
Diluted income per share $ 0.38 $ 0.30 $ 0.70 $ 0.51
Weighted average basic shares 52,022 54,382 52,851 55,544
Weighted average diluted shares 53,391 55,753 54,293 57,020
SONIC CORP.
Unaudited Supplemental Information
Three months ended Nine months ended
May 31, May 31,
2015 2014 2015 2014
Drive-Ins in Operation
Company:
Total at beginning of period 392 388 391 396
Opened 2 1 3 1
Acquired from (sold to) franchisees - - 1 (7 )
Closed (net of re-openings) - - (1 ) (1 )
Total at end of period 394 389 394 389
Franchise:
Total at beginning of period 3,116 3,119 3,127 3,126
Opened 4 9 20 22
Acquired from (sold to) the company - - (1 ) 7
Closed (net of re-openings) (2 ) (7 ) (28 ) (34 )
Total at end of period 3,118 3,121 3,118 3,121
System-wide:
Total at beginning of period 3,508 3,507 3,518 3,522
Opened 6 10 23 23
Closed (net of re-openings) (2 ) (7 ) (29 ) (35 )
Total at end of period 3,512 3,510 3,512 3,510
Three months ended Nine months ended
May 31, May 31,
2015 2014 2015 2014
($ in thousands) ($ in thousands)
Sales Analysis
Company Drive-Ins:
Total sales $ 118,369 $ 111,014 $ 310,816 $ 286,361
Average drive-in sales 301 286 797 738
Change in same-store sales 5.5 % 5.2 % 8.0 % 3.0 %
Franchised Drive-Ins:
Total sales $ 1,065,109 $ 995,259 $ 2,803,391 $ 2,560,933
Average drive-in sales 346 324 906 828
Change in same-store sales 6.1 % 5.3 % 8.3 % 3.2 %
System-wide:
Change in total sales 7.0 % 5.8 % 9.4 % 3.4 %
Average drive-in sales $ 341 $ 320 $ 894 $ 819
Change in same-store sales 6.1 % 5.3 % 8.3 % 3.1 %
Note: Change in same-store sales based on restaurants open for a minimum of 15 months.
SONIC CORP.
Unaudited Supplemental Information
Three months ended Nine months ended
May 31, May 31,
2015 2014 2015 2014
(In thousands) (In thousands)
Revenues
Company Drive-In sales $ 118,369 $ 111,014 $ 310,816 $ 286,361
Franchise Drive-Ins:
Franchise royalties 43,541 38,519 112,553 95,807
Franchise fees 163 276 1,822 791
Lease revenue 1,569 1,081 3,613 2,682
Other 1,106 1,297 2,019 2,939
Total revenues $ 164,748 $ 152,187 $ 430,823 $ 388,580
Three months ended Nine months ended
May 31, May 31,
2015 2014 2015 2014
Margin Analysis (percentage of Company Drive-In sales)
Company Drive-Ins:
Food and packaging 27.6 % 29.0 % 28.0 % 28.4 %
Payroll and employee benefits 34.6 34.0 35.4 35.3
Other operating expenses 19.4 19.6 21.1 21.7
Cost of Company Drive-In sales 81.6 % 82.6 % 84.5 % 85.4 %
May 31, August 31,
2015 2014
(In thousands)
Selected Balance Sheet Data
Cash and cash equivalents $ 22,922 $ 35,694
Current assets 80,107 95,712
Property, equipment and capital leases, net 430,308 441,969
Total assets $ 622,985 $ 650,972
Current liabilities, including capital lease obligations and
long-term debt due within one year $ 81,713 $ 79,511
Obligations under capital leases due after one year 21,673 23,050
Long-term debt due after one year 431,182 427,527
Total liabilities 604,379 588,297
Stockholders' equity $ 18,606 $ 62,675
1 Free cash flow is defined as net income plus depreciation, amortization and stock compensation expenses, less capital expenditures.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150622006241/en/
Contact:
Sonic Corp.
Claudia San Pedro, (405) 225-4846
Senior Vice President, Chief Financial Officer and Treasurer
WD-40 Company Reports Third Quarter 2015 Financial Results
~ Foreign currency exchange headwinds obscure solid underlying business performance and results
~ ~ Management updates previously issued fiscal year 2015 guidance
PR Newswire WD-40 Company
8 hours ago
????
SAN DIEGO, July 8, 2015 /PRNewswire/ -- WD-40 Company (WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its third fiscal quarter ended May 31, 2015.
Financial Highlights and Summary
Total net sales for the third quarter were $92.5 million, a decrease of 3 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $286.2 million, a slight increase compared to the prior year fiscal period.
Translation of the Company's foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and year to date. On a constant currency basis total net sales would have been $96.5 million for the third quarter and $292.9 million year to date.
Net income for the third quarter was $11.0 million, an increase of 5 percent compared to the prior year fiscal quarter. Year-to-date net income was $33.1 million, an increase of 3 percent from the prior year fiscal period.
Diluted earnings per share were $0.75 in the third quarter, compared to $0.69 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.24 compared to $2.10 in the prior year fiscal period.
Gross margin was 53.3 percent in the third quarter compared to 51.4 percent in the prior year fiscal quarter. Year-to-date gross margin was 52.5 percent compared to 51.6 percent in the prior year fiscal period.
Selling, general and administrative expenses were down 1 percent in the third quarter to $26.6 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were up 1 percent to $81.4 million compared to the prior year fiscal period.
Advertising and sales promotion expenses were down 15 percent in the third quarter to $5.5 million compared to prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were down 6 percent to $16.9 million compared to the prior year fiscal period.
"Foreign currency exchange headwinds and political and economic instability in Eastern Europe continue to adversely impact and distort the true strength of our business," said Garry Ridge, WD-40 Company's president and chief executive officer. "Our net sales results in the third quarter were negatively impacted by foreign currency issues, particularly in our EMEA segment, as well as significantly reduced sales in our distributor markets in Ukraine and Russia. We experienced strong sales growth in the Americas segment during the third quarter due to increased distribution and promotional activities. Our Asia-Pacific segment is on track for a great year despite an isolated product quality issue linked to a defective aerosol can component contained in our WD-40 Multi-Use Product sold within our Asian distributor markets. This product quality issue caused sales levels to be lower during the third quarter."
"Although foreign currency exchange rate fluctuations across Europe as well as the political and economic instability in Eastern Europe negatively impacted our reported sales in EMEA, nearly all of our EMEA direct markets are seeing organic sales growth in their local currencies. While we expect we will continue to see fluctuations in the performance of certain markets quarter to quarter, our long-term growth plans remain unchanged," continued Ridge.
Net Sales by Product Group (in thousands):
Three Months Ended May 31,
Nine Months Ended May 31,
2015
2014
%
Change
2015
2014
%
Change
Multi-purpose maintenance products
$
81,512
$
84,817
(4)%
$
253,005
$
252,607
-
Homecare and cleaning products
10,973
10,833
1%
33,164
32,768
1%
Total
$
92,485
$
95,650
(3)%
$
286,169
$
285,375
-
Net sales of multi-purpose maintenance products, which are considered the primary growth focus for the Company, decreased 4 percent in the third fiscal quarter but remained relatively constant year to date when compared to the prior fiscal year periods. The decline in the third quarter was driven primarily by the unfavorable impact of foreign currency exchange rates in EMEA and an isolated product quality issue that was linked to a specific product sold within our Asian distributor markets.
Net sales of homecare and cleaning products increased 1 percent for both the current quarter and year to date when compared to the prior fiscal year periods. The homecare and cleaning products, particularly those in the U.S., are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as net sales of multi-purpose maintenance products grow per the execution of the Company's strategic initiatives.
Net Sales by Segment (in thousands):
Three Months Ended May 31,
Nine Months Ended May 31,
2015
2014
%
Change
2015
2014
%
Change
Americas
$
49,744
$
45,096
10%
$
139,219
$
134,366
4%
EMEA
30,335
36,678
(17)%
103,605
111,305
(7)%
Asia-Pacific
12,406
13,876
(11)%
43,345
39,704
9%
Total
$
92,485
$
95,650
(3)%
$
286,169
$
285,375
-
Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 54 percent; for EMEA, 33 percent; and for Asia-Pacific, 13 percent.
The increase in sales in the Americas in the third quarter was primarily driven by strong growth of both WD-40 Multi-Use Product and WD-40 Specialist sales throughout the segment including double digit growth of both categories in the United States.
The decrease in sales in EMEA in the third quarter was primarily driven by unfavorable impacts of foreign currency exchange rates, primarily in the Company's euro-based direct markets, as well as decreased sales in the Company's distributor markets in Eastern Europe due to political and economic instability in Ukraine and Russia. On a constant currency basis EMEA sales for the third quarter would have decreased by $3.3 million or 9% compared to the prior year fiscal year period.
The decrease in sales in Asia-Pacific in the third quarter was primarily due to a 28 percent decrease in sales of multi-purpose maintenance products in the Company's Asian distributor markets. This decrease was due to an isolated product quality issue linked to a defective aerosol can component that was contained in WD-40 Multi-Use Product sold to marketing distributors in various countries in Asia during the third quarter. The Company recorded allowances to reverse these sales in the amount of approximately $0.9 million. Although these markets were negatively impacted by this product quality issue in the third quarter, the issue was isolated and has been addressed.
Dividend and Share Repurchase
As previously announced, WD-40 Company's board of directors declared on Tuesday, June 23, 2015 a quarterly dividend of $0.38 per share payable July 31, 2015 to stockholders of record at the close of business on July 17, 2015.
On October 14, 2014 the board of directors approved a share repurchase plan. The plan became effective at the beginning of the third quarter of fiscal year 2015. Under the plan, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2016. The timing and the amount of any repurchases of common stock will be determined by management based on its evaluation of market conditions and other factors. During the period from March 1, 2015 through May 31, 2015, the Company repurchased $11.3 million in shares under this plan.
Updated Fiscal Year 2015 Guidance
The Company's updated guidance for fiscal year 2015 is as follows:
Net sales growth is projected to be flat to 2 percent with net sales expected to be between $383 million and $390 million.
Gross margin for the full fiscal year is expected to be better than 52 percent.
Projected advertising and promotion expenses to be 6.0 percent to 7.0 percent of net sales.
Net income is projected to be between $44.5 million and $45.4 million.
Expect diluted earnings per share to be between $3.03 and $3.09 based on an estimated 14.7 million weighted average shares outstanding.
This guidance does not include any future acquisitions or divestitures and is based on recent foreign currency exchange rates.
"We've adjusted our full year guidance and it reflects the continued impact of foreign currency exchange movements as well as the macroeconomic and political challenges in Eastern Europe," said Jay Rembolt, WD-40 Company's vice president and chief financial officer. "Although some level of foreign currency exchange volatility had been built into our previous guidance, it is difficult to project for how long and to what depth our fiscal year results will be impacted."
Webcast Information
As previously announced, WD-40 Company management will host a live webcast at approximately 5:00 p.m. ET / 2:00 p.m. PT today to discuss these results. Other forward-looking and material information may also be discussed during this call. Please visit http://investor.wd40company.com for more information and to view supporting materials.
About WD-40 Company
WD-40 Company is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world. The Company markets its multi-purpose maintenance products and its homecare and cleaning products under the following well-known brands: WD-40®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®.
Headquartered in San Diego, WD-40 Company recorded net sales of $383 million in fiscal year 2014 and its products are currently available in more than 176 countries and territories worldwide. WD-40 Company is traded on the NASDAQ Global Select market under the ticker symbol "WDFC." For additional information about WD-40 Company please visit http://www.wd40company.com.
Forward-Looking Statements
Except for the historical information contained herein, this press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect the Company's current expectations with respect to currently available operating, financial and economic information. These forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements.
Our forward-looking statements include, but are not limited to, discussions about future financial and operating results, including: growth expectations for multi-purpose maintenance products; expected levels of promotional and advertising spending; plans for and success of product innovation, the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; and forecasted foreign currency exchange rates and commodity prices. Our forward-looking statements are generally identified with words such as "believe," "expect," "intend," "plan," "could," "may," "aim," "anticipate," "estimate" and similar expressions.
The Company's expectations, beliefs and forecasts are expressed in good faith and are believed by the Company to have a reasonable basis, but there can be no assurance that the Company's expectations, beliefs or forecasts will be achieved or accomplished.
Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not limited to, those identified in Part I?Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2014, and in the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2015 which the Company expects to file with the SEC on July 9, 2015.
All forward-looking statements included in this press release should be considered in the context of these risks. All forward-looking statements speak only as of July 8, 2015, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on our forward-looking statements.
Table Notes and General Definitions
(1)
The Company markets multi-purpose maintenance products under the WD-40®, GT85® and 3-IN-ONE® brand names. Currently included in the WD-40 brand are the WD-40 Multi-Use Product and the WD-40 Specialist® and WD-40 BIKETM product lines.
(2)
The Company markets the following homecare and cleaning brands: X-14® mildew stain remover and automatic toilet bowl cleaners, 2000 Flushes® automatic toilet bowl cleaners, Carpet Fresh® and no vac® rug and room deodorizers, Spot Shot® aerosol and liquid carpet stain removers, 1001® household cleaners and rug and room deodorizers and Lava® and Solvol® heavy-duty hand cleaners.
(3)
The Americas segment consists of the U.S., Canada and Latin America.
(4)
The EMEA segment consists of countries in Europe, the Middle East, Africa and India.
(5)
The Asia-Pacific segment consists of Australia, China and other countries in the Asia region.
(6)
Constant currency represents the translation of the current quarter and year-to-date results from the functional currencies of the Company's subsidiaries to U.S. dollars using the exchange rate in effect for the corresponding periods of the prior fiscal year.
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share amounts)
May 31,
August 31,
2015
2014
Assets
Current assets:
Cash and cash equivalents
$
46,917
$
57,803
Short-term investments
48,261
45,050
Trade and other accounts receivable, less allowance for doubtful
accounts of $424 and $406 at May 31, 2015
and August 31, 2014, respectively
62,213
63,618
Inventories
33,203
34,989
Current deferred tax assets, net
5,709
5,855
Other current assets
4,066
8,339
Total current assets
200,369
215,654
Property and equipment, net
11,214
9,702
Goodwill
96,440
95,499
Other intangible assets, net
23,749
23,671
Other assets
3,262
3,154
Total assets
$
335,034
$
347,680
-
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$
18,502
$
18,031
Accrued liabilities
15,937
18,382
Revolving credit facility, current portion
-
98,000
Accrued payroll and related expenses
11,186
15,969
Income taxes payable
28
1,529
Total current liabilities
45,653
151,911
Revolving credit facility
108,000
-
Long-term deferred tax liabilities, net
23,142
24,253
Other long-term liabilities
2,250
2,101
Total liabilities
179,045
178,265
Commitments and Contingencies
Shareholders' equity:
Common stock ? authorized 36,000,000 shares, $0.001 par value;
19,527,923 and 19,464,310 shares issued at May 31, 2015 and
August 31, 2014, respectively; and 14,481,172 and 14,754,362 shares
outstanding at May 31, 2015 and August 31, 2014, respectively
20
19
Additional paid-in capital
140,147
136,212
Retained earnings
254,503
237,596
Accumulated other comprehensive income (loss)
(7,280)
1,103
Common stock held in treasury, at cost ? 5,046,751 and 4,709,948
shares at May 31, 2015 and August 31, 2014, respectively
(231,401)
(205,515)
Total shareholders' equity
155,989
169,415
Total liabilities and shareholders' equity
$
335,034
$
347,680
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share amounts)
Three Months Ended May 31,
Nine Months Ended May 31,
2015
2014
2015
2014
Net sales
$
92,485
$
95,650
$
286,169
$
285,375
Cost of products sold
43,213
46,511
135,963
138,005
Gross profit
49,272
49,139
150,206
147,370
Operating expenses:
Selling, general and administrative
26,640
26,887
81,424
80,237
Advertising and sales promotion
5,506
6,465
16,906
18,081
Amortization of definite-lived intangible assets
754
684
2,280
1,930
Total operating expenses
32,900
34,036
100,610
100,248
Income from operations
16,372
15,103
49,596
47,122
Other income (expense):
Interest income
113
136
425
425
Interest expense
(343)
(268)
(912)
(709)
Other expense
(444)
(11)
(1,785)
(454)
Income before income taxes
15,698
14,960
47,324
46,384
Provision for income taxes
4,733
4,554
14,240
14,179
Net income
$
10,965
$
10,406
$
33,084
$
32,205
Earnings per common share:
Basic
$
0.75
$
0.69
$
2.25
$
2.11
Diluted
$
0.75
$
0.69
$
2.24
$
2.10
Shares used in per share calculations:
Basic
14,546
14,977
14,616
15,152
Diluted
14,615
15,051
14,685
15,229
Dividends declared per common share
$
0.38
$
0.34
$
1.10
$
0.99
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Nine Months Ended May 31,
2015
2014
Operating activities:
Net income
$
33,084
$
32,205
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
4,824
4,337
Net gains on sales and disposals of property and equipment
(82)
(41)
Deferred income taxes
(1,229)
(330)
Excess tax benefits from settlements of stock-based equity awards
(906)
(824)
Stock-based compensation
2,205
1,942
Unrealized foreign currency exchange losses (gains), net
2,393
(159)
Provision for bad debts
214
174
Changes in assets and liabilities:
Trade and other accounts receivable
(3,787)
(3,681)
Inventories
1,078
(4,716)
Other assets
3,817
(1,616)
Accounts payable and accrued liabilities
(1,596)
21
Accrued payroll and related expenses
(5,003)
(6,924)
Income taxes payable
130
1,718
Other long-term liabilities
184
17
Net cash provided by operating activities
35,326
22,123
Investing activities:
Purchases of property and equipment
(4,068)
(3,023)
Proceeds from sales of property and equipment
420
250
Purchase of intangible assets
-
(1,789)
Acquisition of business
(3,705)
-
Purchases of short-term investments
(8,167)
(5,756)
Maturities of short-term investments
1,636
914
Net cash used in investing activities
(13,884)
(9,404)
Financing activities:
Treasury stock purchases
(25,886)
(30,482)
Dividends paid
(16,177)
(15,096)
Proceeds from issuance of common stock
1,483
1,265
Excess tax benefits from settlements of stock-based equity awards
906
824
Proceeds from revolving credit facility
10,000
20,000
Net cash used in financing activities
(29,674)
(23,489)
Effect of exchange rate changes on cash and cash equivalents
(2,654)
2,231
Net decrease in cash and cash equivalents
(10,886)
(8,539)
Cash and cash equivalents at beginning of period
57,803
53,434
Cash and cash equivalents at end of period
$
46,917
$
44,895
AZZ beats 1Q profit forecasts
AZZ posts 1Q profit of $19.9 million, result tops expectations
Associated Press
14 hours ago
????
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FORT WORTH, Texas (AP) _ AZZ Inc. (AZZ) on Wednesday reported fiscal first-quarter profit of $19.9 million.
The Fort Worth, Texas-based company said it had net income of 77 cents per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 69 cents per share.
The electrical equipment maker posted revenue of $228.9 million in the period.
AZZ expects full-year earnings to be $2.85 to $3.30 per share, with revenue in the range of $900 million to $940 million.
Related Quotes
AZZ
52.97
+2.26%
AZZ incorporated? Watchlist
52.97+1.17(2.26%)
NYSEWed, Jul 1, 2015 4:02 PM EDT
AZZ INC Files SEC form 8-K, Results of Operations and Financial Condition, Financial Statements and Exhibits EDGAR Online 14 hrs ago
AZZ beats 1Q profit forecasts AP 14 hrs ago
More
AZZ shares have risen 10 percent since the beginning of the year. The stock has increased 15 percent in the last 12 months.
_____
This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AZZ at http://www.zacks.com/ap/AZZ
_____
Keywords: AZZ, Earnings Report
AZZ incorporated Reports Financial Results for the First Quarter of Fiscal Year 2016
First Quarter Fiscal 2016 EPS of $0.77, up 32.8% compared to $0.58 in Fiscal 2015
First Quarter Revenues of $228.9 million, up $12.8 million or 5.9% over Fiscal 2015
Operating Margins Increases to 14.4% Compared to 12.9% in Fiscal 2015 on Improved Gross Margins and Lower SG&A Costs
AZZ Raises Previously Announced Fiscal Year 2016 Earnings and Revenue Guidance to EPS of $2.85 to $3.30 and Sales of $900 - $940 million
Anticipates Accretion from Recent Acquisition of $0.10 per Share for Balance of Fiscal 2016
Announces Quarterly Cash Dividend of $0.15 per Share
PR Newswire AZZ incorporated
3 hours ago
????
FORT WORTH, Texas, July 1, 2015 /PRNewswire/ -- AZZ incorporated (AZZ), a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services, today announced financial results for the three month period ended May 31, 2015.
First Quarter Results
Revenues for the first quarter of fiscal 2016 were $228.9 million compared to $216.1 million for the same quarter last year, an increase of 5.9%. Net income for the first quarter increased 33.5% to $19.9 million, or $0.77 per diluted share, compared to net income of $14.9 million, or $0.58 per diluted share, for the first quarter of fiscal 2015.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements. In the first quarter of fiscal 2015 these proceeds benefitted the Galvanizing Services Segment gross profit by $2.4 million, compared to $0.3 million in the first quarter of fiscal 2016.
Earnings were also positively impacted by a reduction in SG&A as a percentage of sales to 11.5% compared to 12.7% in the prior fiscal year. Additionally the effective tax rate fell to 31.7% in the current quarter compared to 37.0% in the first quarter of the prior year.
Incoming orders for the quarter were $215.2 million while shipments for the quarter totaled $228.9 million, resulting in a book to ship ratio of 94%. In the first quarter a year earlier, incoming orders were $200.2 million, resulting in a book to ship ratio of 93%. Our backlog at the end of the first quarter of fiscal 2016 was $318.9 million compared to backlog at the end of the prior year first quarter was $309.0 million. Approximately 33% of the backlog will be delivered outside the U.S.
Energy Segment
Revenues for the Energy Segment for the first quarter of fiscal 2016 were $137.0 million as compared to $130.5 million for the same quarter last year, increasing 5.0%. Operating income for the segment increased 31.5% to $18.0 million compared to $13.7 million in the same period last year. Operating margins for the first quarter were 13.1% as compared to 10.5% in the prior year period.
Galvanizing Services Segment
Revenues for the Galvanizing Services Segment for the first quarter were $91.9 million, compared to the $85.6 million in the same period last year, an increase of 7.3%. Operating income was $22.1 million as compared to $22.0 million in the prior period, an increase of 0.4%. Operating margins for the first quarter were 24.0%, compared to 25.7% in the same period last year. As mentioned earlier, segment operating income during the first quarter of last year included a $2.4 million gain from the insurance settlement related to the fire at our Joliet facility.
Management Discussion
Tom Ferguson, president and chief executive officer of AZZ incorporated, commented, "We are off to a good start in fiscal 2016. In addition to solid top- and bottom-line results we are particularly pleased with the opportunity to have acquired the six galvanizing facilities of U.S. Galvanizing from Trinity Industries at the start of our second quarter of fiscal 2016. With 42 galvanizing facilities, we continue to offer our customers a wide array of services and options tailored to their needs. We have also made the strategic decision to build a new galvanizing plant in Reno, Nevada. We believe this is an underserved geographical area that represents significant opportunity and we expect to be a leading provider of corrosion protection services in the near future. Our last "greenfield" facility was built more than 20 years ago in Goodyear, Arizona. We have every expectation that the Reno facility will be very successful in the coming years."
"In the Energy Segment, WSI is now gaining traction as we have fully implemented our strategic reconfiguration of the business," continued Mr. Ferguson. "Our business development efforts are paying off as we have gained new customers, and have renewed business with previous customers in the refinery sector. We also improved efficiencies as operating margins in our Energy Segment increased by 264 basis points during the first quarter compared to the same period last year. As we look ahead, in addition to the progress that we have made in the U.S., we believe that our industry leading products and services uniquely positions WSI to benefit from a number of outstanding international opportunities in the coming quarters. We still remain cautious, however, as we continue to experience a slight impact on a couple of our businesses due to lower oil prices and reduced rig count, and we will continue to monitor zinc prices and competition in Galvanizing. To counter potential headwinds, we remain focused on leveraging our sales teams across our Energy Segment in North America; continuing to expand internationally; driving operational excellence and continuing to grow the galvanizing business."
Mr. Ferguson, concluded, "I am confident that fiscal 2016 will be a solid year and we are adjusting our guidance upward 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, compared to our previously issued guidance of earnings of $2.75 to $3.25 per diluted share and revenues in the range of $875 million to $925 million. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of approximately $0.10 in EPS for fiscal year 2016. We look forward to a solid 2016."
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 July 27, 2015, to shareholders of record as of the close of business on July 13, 2015.
Conference Call
AZZ incorporated will conduct a conference call to discuss financial results for the first quarter of fiscal year 2016 at 11:00 A.M. ET on Wednesday, July 1, 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 #10067616, or for 30 days at http://www.azz.com/investor-relations.
About AZZ incorporated
AZZ incorporated 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 incorporated 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 incorporated
Condensed Consolidated Statement of Income
(in thousands except per share amounts)
Three Months Ended
May 31, 2015
May 31, 2014
(unaudited)
(unaudited)
Net sales
$228,888
$216,126
Costs of Sales
169,584
160,738
Operating Income
59,304
55,388
Selling, General and Administrative
26,419
27,541
Operating Income
32,885
27,847
Interest Expense
3,847
4,209
Net (Gain) Loss on Sales or
Insurance Settlement of Property,
Plant and Equipment
(424)
(27)
Other (Income), net
307
(31)
Income before income taxes
29,155
23,696
Income Tax Expense
9,231
8,771
Net income
$19,924
$14,925
Net income per share
Basic
$0.77
$0.58
Diluted
$0.77
$0.58
Diluted average shares outstanding
25,862
25,739
Segment Reporting
(in thousands)
Three Months Ended
May 31, 2015
May 31, 2014
(unaudited)
(unaudited)
Net Sales:
Energy
$137,003
$130,521
Galvanizing Services
91,885
85,605
$228,888
$216,126
Segment Operating Income :
Energy
$17,956
$13,657
Galvanizing Services
22,094
22,010
Corporate
(7,165)
(7,820)
Total Segment Operating Income
$32,885
$27,847
Condensed Consolidated Balance Sheet
(in thousands)
May 31, 2015
(unaudited)
February 28, 2015
Assets:
Current Assets
$357,934
$298,634
Net Property, Plant and Equipment
195,830
196,583
Other Assets, Net
437,396
441,697
Total Assets
$991,160
$936,914
Liabilities and Shareholders' Equity:
Current Liabilities
$161,639
$149,142
Long Term Debt Due After One Year
344,821
315,982
Other Liabilities
47,443
51,738
Shareholders' Equity
437,257
420,052
Total Liabilities and Shareholders' Equity
$991,160
$936,914
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
May 31, 2015
May 31, 2014
(unaudited)
(unaudited)
Net cash provided by operating activities
$4,722
$12,094
Net cash provided by (used in) investing activities
(6,208)
(5,820)
Net cash provided by (used in) financing activities
25,237
(8,447)
Effect of exchange rate changes on cash
(514)
256
Net increase (decrease) in cash and cash equivalents
$23,237
($1,917)
Cash and cash equivalents at beginning of period
22,527
27,565
Cash and cash equivalents at end of period
$45,764
$25,
8:06 am AZZ beats by $0.07, reports revs in-line; raises FY16 guidance on US Galvanizing acquisition (AZZ) :
Reports Q1 (May) earnings of $0.77 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.70; revenues rose 5.9% year/year to $228.9 mln vs the $228.59 mln consensus.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements.
Co issues guidance for FY16, raises EPS to $2.85-3.30 from $2.75-3.25 vs. $2.94 Capital IQ Consensus; raises FY16 revs to $900-940 mln from $875-925 mln vs. $910.90 mln Capital IQ Consensus. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of ~ $0.10 in EPS for fiscal year 2016."
8:06 am AZZ beats by $0.07, reports revs in-line; raises FY16 guidance on US Galvanizing acquisition (AZZ) :
Reports Q1 (May) earnings of $0.77 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.70; revenues rose 5.9% year/year to $228.9 mln vs the $228.59 mln consensus.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements.
Co issues guidance for FY16, raises EPS to $2.85-3.30 from $2.75-3.25 vs. $2.94 Capital IQ Consensus; raises FY16 revs to $900-940 mln from $875-925 mln vs. $910.90 mln Capital IQ Consensus. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of ~ $0.10 in EPS for fiscal year 2016."
8:06 am AZZ beats by $0.07, reports revs in-line; raises FY16 guidance on US Galvanizing acquisition (AZZ) :
Reports Q1 (May) earnings of $0.77 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.70; revenues rose 5.9% year/year to $228.9 mln vs the $228.59 mln consensus.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements.
Co issues guidance for FY16, raises EPS to $2.85-3.30 from $2.75-3.25 vs. $2.94 Capital IQ Consensus; raises FY16 revs to $900-940 mln from $875-925 mln vs. $910.90 mln Capital IQ Consensus. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of ~ $0.10 in EPS for fiscal year 2016."
Lionsgate Reports Strong Financial Results For Fiscal 2015
Adjusted Net Income Increases to $257.5 Million or $1.85 Adjusted Basic Net Income per Share; Net Income Grows to $181.8 Million or $1.31 Basic Net Income per Share
Adjusted EBITDA Increases to $384.9 Million on Revenue of $2.40 Billion
Television Production Revenue Grows to Record $579.5 Million
Free Cash Flow Increases to $261.6 Million
PR Newswire Lions Gate Entertainment Corp.
May 21, 2015 4:00 PM
????
SANTA MONICA, Calif. and VANCOUVER, British Columbia, May 21, 2015 /PRNewswire/ -- Lionsgate (LGF), a premier next generation global content leader, today reported revenue of $2.40 billion, adjusted EBITDA of $384.9 million, adjusted net income of $257.5 million or $1.85 adjusted basic net income per share and net income of $181.8 million or $1.31 basic net income per share for fiscal 2015 (fiscal year ended March 31, 2015).
Free cash flow in fiscal 2015 was $261.6 million, marking the third straight year in which the Company delivered over $250 million in free cash flow.
Strong domestic and international television performance, a film slate including The Hunger Games: Mockingjay -- Part 1, Insurgent and John Wick, increased earnings from the Company's investment in the EPIX channel, reduced interest expense and lower theatrical marketing costs all drove the Company's profitability in the fiscal year.
"We're pleased to report very strong financial results in fiscal 2015, bolstered by a stellar performance from our television business, complemented by a great year on the strategic front as well," said Lionsgate Chief Executive Officer Jon Feltheimer. "With the launch of new strategic initiatives ranging from location-based entertainment and OTT platforms to video games and virtual reality, exciting new partnerships in China, a robust portfolio of current and future film franchises and the strongest balance sheet in the Company's history, we're very well positioned to capitalize on opportunities throughout our global environment."
Adjusted EBITDA of $384.9 million in the fiscal year compared to adjusted EBITDA of $370.8 million in the prior year.
Adjusted net income of $257.5 million or $1.85 adjusted basic net income per share in the fiscal year increased 18% from adjusted net income of $217.9 million or $1.58 adjusted basic net income per share in the prior year.
Net income of $181.8 million or $1.31 basic net income per share on 139.0 million weighted average number of common shares outstanding increased 20% from $152.0 million or $1.11 basic net income per share on 137.5 million weighted average number of common shares outstanding in the prior year.
Free cash flow of $261.6 million in the fiscal year increased from $258.3 million in the prior year.
Revenue of $2.40 billion in the fiscal year declined 9% from $2.63 billion in the prior year due primarily to smaller theatrical and home entertainment slates of wide theatrical releases which offset gains in television production revenue. Lionsgate had 10 wide release theatrical films in the fiscal year compared to 13 wide release theatrical films in the prior year. The Company anticipates 14 wide release theatrical films in fiscal 2016.
The Company will pay its quarterly dividend of $0.07 per common share tomorrow, May 22, to shareholders of record as of March 31, 2015.
Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, was $1.1 billion at March 31, 2015.
Overall Motion Picture segment revenue in the fiscal year was $1.82 billion, a decline of 17% compared to the prior year. Within the Motion Picture segment, theatrical revenue in the fiscal year was $354.0 million compared to $524.7 million in the prior year due to the smaller slate of wide release films noted above.
Lionsgate's home entertainment revenue in the fiscal year was $707.5 million compared to $863.9 million in the prior year as the smaller slate of wide theatrical releases offset home entertainment gains from television production.
Television revenue included in the Motion Picture segment in the fiscal year was $270.2 million, an increase of 20% compared to $225.3 million in the prior year as a strong slate of theatrical wide releases reaching their pay television windows included The Hunger Games: Catching Fire, Divergent, Red 2 and Ender's Game and compared favorably to the prior year slate.
International Motion Picture segment revenue in the fiscal year was $495.0 million compared to $543.4 million in the prior year. Within international revenue, Lionsgate UK revenue increased 8% to $158.5 million on a diversified mix of Lionsgate, third-party and in-house produced Lionsgate U.K. releases.
Revenue for the Television Production segment rose to a record $579.5 million in the fiscal year, an increase of 30% from $447.4 million in the prior year reflecting strong gains in all categories -- domestic television licensing and syndication, international television revenue and home entertainment revenue from television production.
A record 238 episodes and 168 hours of domestic television series were delivered in the fiscal year, including episodes of Anger Management, Orange is the New Black, Nashville, Mad Men, Manhattan, The Royals and Nurse Jackie. The fiscal year also benefitted from significant domestic television revenue from the talk and game shows The Wendy Williams Show and Family Feud.
Record international television revenue included licensing of Anger Management, Orange is the New Black, Nashville and Mad Men.
In the quarter ended March 31, 2015, the Company reported revenue of $646.1 million compared to $721.9 million in the prior year quarter, and adjusted EBITDA of $90.4 million compared to $92.0 million in the prior year quarter. Adjusted basic net income of $57.8 million or $0.41 adjusted basic net income per share in the quarter compared to $63.5 million or $0.46 adjusted basic net income per share in the prior year quarter, and net income of $19.6 million or $0.14 basic net income per share in the quarter compared to $49.2 million or $0.35 basic net income per share in the prior year quarter.
Free cash flow in the quarter of $157.2 million increased 161% from the $60.3 million in free cash flow in the prior year quarter.
During the quarter, the Company continued to strengthen its balance sheet by locking in favorable long-term fixed interest rates for its term loan, reducing borrowing to zero under its $800 million revolving credit facility and more than doubling free cash flow from the prior-year quarter.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2015 financial results at 9:00 A.M. ET/6:00 A.M. PT tomorrow, Friday, May 22. Interested parties may participate live in the conference call by calling 1-800-230-1092 (612-234-9960 outside the U.S. and Canada). A full digital replay will be available from Friday morning, May 22, through Friday, May 29, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 359323.
ABOUT LIONSGATE
Lionsgate is a premier next generation global content leader with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution, new channel platforms, video games and international distribution and sales. Lionsgate currently has more than 30 television shows on over 20 different networks spanning its primetime production, distribution and syndication businesses, including such critically-acclaimed hits as the multiple Emmy Award-winning Mad Men and Nurse Jackie, the broadcast network series Nashville, the syndication success The Wendy Williams Show, the critically-acclaimed hit series Orange is the New Black and the breakout series The Royals.
Its feature film business has been fueled by such recent successes as the blockbuster first three installments of The Hunger Games franchise, the first two installments of the Divergent franchise, Age of Adaline, CBS/Lionsgate's The DUFF, John Wick, Now You See Me, Roadside Attractions' A Most Wanted Man, Lionsgate/Codeblack Films' Addicted and Pantelion Films' Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.
Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rates. Lionsgate handles a prestigious and prolific library of approximately 16,000 motion picture and television titles that is an important source of recurring revenue and serves as the foundation for the growth of the Company's core businesses. The Lionsgate and Summit brands remain synonymous with original, daring, quality entertainment in markets around the world. www.lionsgate.com
For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com
The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on May 21, 2015, which risk factors are incorporated herein by reference. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
March 31,
2015
March 31,
2014
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents
$
102,697
$
25,692
Restricted cash
2,508
8,925
Accounts receivable, net of reserves for returns and allowances of $64,362 (March 31, 2014 - $106,680) and provision for doubtful accounts of $4,120 (March 31, 2014 - $4,876)
891,880
885,571
Investment in films and television programs, net
1,381,829
1,274,573
Property and equipment, net
26,651
14,552
Investments
438,298
181,941
Goodwill
323,328
323,328
Other assets
74,784
71,067
Deferred tax assets
50,114
65,983
Total assets
$
3,292,089
$
2,851,632
LIABILITIES
Senior revolving credit facility
$
—
$
97,619
5.25% Senior Notes
225,000
225,000
Term Loans
375,000
222,753
Accounts payable and accrued liabilities
332,473
332,457
Participations and residuals
471,661
469,390
Film obligations and production loans
656,755
499,787
Convertible senior subordinated notes
114,126
131,788
Deferred revenue
274,787
288,300
Total liabilities
2,449,802
2,267,094
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares, no par value, 500,000,000 shares authorized, 145,532,978 shares issued (March 31, 2014 - 141,007,461 shares)
830,786
743,788
Retained earnings (accumulated deficit)
13,720
(157,875)
Accumulated other comprehensive loss
(2,219)
(1,375)
Total shareholders' equity
842,287
584,538
Total liabilities and shareholders' equity
$
3,292,089
$
2,851,632
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF INCOME
Year Ended March 31,
2015
2014
2013
(Amounts in thousands, except per share amounts)
Revenues
$
2,399,640
$
2,630,254
$
2,708,141
Expenses:
Direct operating
1,315,775
1,369,381
1,390,569
Distribution and marketing
591,491
739,461
817,862
General and administration
263,507
254,925
218,341
Depreciation and amortization
6,586
6,539
8,290
Total expenses
2,177,359
2,370,306
2,435,062
Operating income
222,281
259,948
273,079
Other expenses (income):
Interest expense
Cash interest
39,657
48,960
75,322
Amortization of debt discount and deferred financing costs
12,819
17,210
18,258
Total interest expense
52,476
66,170
93,580
Interest and other income
(2,790)
(6,030)
(4,036)
Loss on extinguishment of debt
11,664
39,572
24,089
Total other expenses, net
61,350
99,712
113,633
Income before equity interests and income taxes
160,931
160,236
159,446
Equity interests income (loss)
52,477
24,724
(3,075)
Income before income taxes
213,408
184,960
156,371
Income tax provision (benefit)
31,627
32,923
(75,756)
Net income
$
181,781
$
152,037
$
232,127
Basic net income per common share
$
1.31
$
1.11
$
1.73
Diluted net income per common share
$
1.23
$
1.04
$
1.61
Weighted average number of common shares outstanding:
Basic
139,048
137,468
134,514
Diluted
151,778
154,415
149,370
Dividends declared per common share
$
0.26
$
0.10
$
—
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
2015
2014
(Amounts in thousands,
except per share amounts)
Revenues
$
646,082
$
721,858
Expenses:
Direct operating
369,935
403,625
Distribution and marketing
169,854
188,964
General and administration
76,532
68,805
Depreciation and amortization
1,901
1,773
Total expenses
618,222
663,167
Operating income
27,860
58,691
Other expenses (income):
Interest expense
Cash interest
10,111
9,278
Amortization of debt discount and deferred financing costs
2,771
4,332
Total interest expense
12,882
13,610
Interest and other income
(602)
(1,280)
Loss on extinguishment of debt
10,388
2,919
Total other expenses, net
22,668
15,249
Income before equity interests and income taxes
5,192
43,442
Equity interests income
15,124
11,566
Income before income taxes
20,316
55,008
Income tax provision
762
5,856
Net income
$
19,554
$
49,152
Basic net income per common share
$
0.14
$
0.35
Diluted net income per common share
$
0.14
$
0.33
Weighted average number of common shares outstanding:
Basic
140,364
138,599
Diluted
145,649
155,081
Dividends declared per common share
$
0.07
$
0.05
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31,
2015
2014
2013
Operating Activities:
(Amounts in thousands)
Net income
$
181,781
$
152,037
$
232,127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
6,586
6,539
8,290
Amortization of films and television programs
899,951
921,289
966,027
Amortization of debt discount and deferred financing costs
12,819
17,210
18,258
Non-cash share-based compensation
79,938
60,492
35,838
Distribution from equity method investee
7,788
16,079
—
Loss on extinguishment of debt
11,664
39,572
24,089
Equity interests (income) loss
(52,477)
(24,724)
3,075
Deferred income taxes (benefit)
13,934
15,913
(87,899)
Changes in operating assets and liabilities:
Restricted cash
6,417
1,775
1,241
Accounts receivable, net
(13,968)
(93,503)
(4,948)
Investment in films and television programs
(1,012,294)
(948,082)
(890,276)
Other assets
(5,331)
(3,768)
(2,682)
Accounts payable and accrued liabilities
(5,086)
17,628
(50,154)
Participations and residuals
2,704
59,207
(6,875)
Film obligations
(24,977)
(19,187)
1,920
Deferred revenue
(12,940)
34,035
28,088
Net Cash Flows Provided By Operating Activities
96,509
252,512
276,119
Investing Activities:
Proceeds from the sale of equity method investees
14,575
9,000
—
Investment in equity method investees
(22,730)
(17,250)
(1,530)
Distributions from equity method investee in excess of earnings
—
4,169
—
Purchases of other investments
(30,000)
—
(2,022)
Proceeds from the sale of other investments
—
—
6,354
Repayment of loans receivable
—
4,275
4,274
Purchases of property and equipment
(17,013)
(8,799)
(2,581)
Net Cash Flows Provided By (Used In) Investing Activities
(55,168)
(8,605)
4,495
Financing Activities:
Senior revolving credit facility - borrowings, net of deferred financing costs of $15,804 for the year ended March 31, 2013
778,500
872,220
1,144,620
Senior revolving credit facility - repayments
(876,119)
(1,113,075)
(921,700)
Term Loans and 5.25% Senior Notes - borrowings, net of deferred financing costs of $4,315 and $6,860 for the years ended March 31, 2015 and 2014, respectively
370,685
440,640
—
Term Loans - repayments
(229,500)
—
(484,664)
10.25% Senior Notes - repurchases and redemptions in the year ended March 31, 2014 and consent fee in the year ended March 31, 2013
—
(470,584)
(3,270)
Convertible senior subordinated notes - borrowings
—
60,000
—
Convertible senior subordinated notes - repurchases
(16)
—
(7,639)
Production loans - borrowings
631,709
532,416
378,510
Production loans - repayments
(449,648)
(517,874)
(371,069)
Pennsylvania Regional Center credit facility - repayments
—
(65,000)
(500)
Repurchase of common shares
(144,840)
—
—
Dividends paid
(33,353)
(6,900)
—
Exercise of stock options
6,839
11,972
2,897
Tax withholding required on equity awards
(20,062)
(23,077)
(15,995)
Other financing obligations - repayments
—
—
(3,710)
Net Cash Flows Provided By (Used In) Financing Activities
34,195
(279,262)
(282,520)
Net Change In Cash And Cash Equivalents
75,536
(35,355)
(1,906)
Foreign Exchange Effects on Cash
1,469
(1,316)
(29)
Cash and Cash Equivalents - Beginning Of Period
25,692
62,363
64,298
Cash and Cash Equivalents - End Of Period
$
102,697
$
25,692
$
62,363
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2015
2014
Operating Activities:
(Amounts in thousands)
Net income
$
19,554
$
49,152
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,901
1,773
Amortization of films and television programs
260,479
284,471
Amortization of debt discount and deferred financing costs
2,771
4,332
Non-cash share-based compensation
31,247
19,448
Distribution from equity method investee
—
6,230
Loss on extinguishment of debt
10,388
2,919
Equity interests income
(15,124)
(11,566)
Deferred income taxes
2,691
2,641
Changes in operating assets and liabilities:
Restricted cash
5,000
31,529
Accounts receivable, net
80,835
(47,127)
Investment in films and television programs
(196,825)
(255,139)
Other assets
(3,915)
(2,072)
Accounts payable and accrued liabilities
47,614
13,423
Participations and residuals
8,774
20,971
Film obligations
8,976
(30,395)
Deferred revenue
(4,816)
16,088
Net Cash Flows Provided By Operating Activities
259,550
106,678
Investing Activities:
Investment in equity method investees
(7,980)
—
Purchases of other investments
(28,000)
—
Purchases of property and equipment
(5,720)
(2,683)
Net Cash Flows Used In Investing Activities
(41,700)
(2,683)
Financing Activities:
Senior revolving credit facility - borrowings
97,000
90,001
Senior revolving credit facility - repayments
(257,500)
(186,501)
Term Loans and 5.25% Senior Notes - borrowings, net of deferred financing costs of $4,315
370,685
—
Term Loans - repayments
(229,500)
—
Production loans - borrowings
97,928
172,834
Production loans - repayments
(187,780)
(216,489)
Repurchase of common shares
(14,981)
—
Dividends paid
(9,817)
(6,900)
Excess tax benefits on equity-based compensation awards
(6,767)
—
Exercise of stock options
2,435
1,103
Tax withholding required on equity awards
(5,123)
(8,701)
Net Cash Flows Used In Financing Activities
(143,420)
(154,653)
Net Change In Cash And Cash Equivalents
74,430
(50,658)
Foreign Exchange Effects on Cash
(619)
948
Cash and Cash Equivalents - Beginning Of Period
28,886
75,402
Cash and Cash Equivalents - End Of Period
$
102,697
$
25,692
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL NET INCOME TO EBITDA AND ADJUSTED EBITDA
Year Ended March 31,
2015(1)
2014
2013
(Amounts in thousands)
Net income
$
181,781
$
152,037
$
232,127
Depreciation and amortization
6,586
6,539
8,290
Cash interest
39,657
48,960
75,322
Noncash interest expense
12,819
17,210
18,258
Interest and other income
(2,790)
(6,030)
(4,036)
Income tax provision (benefit)
31,627
32,923
(75,756)
EBITDA
$
269,680
$
251,639
$
254,205
Stock-based compensation(2)
80,310
72,119
47,665
Restructuring and other items(3)
10,725
7,500
2,575
Loss on extinguishment of debt
11,664
39,572
24,089
Backstopped prints and advertising expense
12,509
—
1,155
Adjusted EBITDA(1)
$
384,888
$
370,830
$
329,689
_______________________________
(1)
The definition of Adjusted EBITDA now includes the gains or losses from the sale of equity method investments. Accordingly, Adjusted EBITDA for the fiscal year ended March 31, 2015 has been revised to include the $11.4 million gain on the sale of the Company's interest in FEARnet which occurred in the first quarter ended June 30, 2014. This change is consistent with the Company's increasing investment activity and practice of including equity interest income and losses from equity method investments in Adjusted EBITDA. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from its interest in FEARnet.
(2)
The years ended March 31, 2015, 2014 and 2013 include cash settled SARs expense of $1.9 million, $10.9 million, and $12.0 million, respectively.
(3)
Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable. Amounts in the year ended March 31, 2015 primarily represent severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom amounting to an aggregate of $9.1 million. Approximately $1.2 million of these costs are non-cash charges resulting from the acceleration of vesting of stock awards. In addition, the remaining amount for the year ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction. Amounts in the year ended March 31, 2014 represent the settlement of an administrative order. Amounts in the year ended March 31, 2013 represent severance and transaction costs related to the acquisition of Summit Entertainment.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER NET INCOME TO
EBITDA AND ADJUSTED EBITDA
Three Months Ended
March 31,
2015
2014
(Amounts in thousands)
Net income
$
19,554
$
49,152
Depreciation and amortization
1,901
1,773
Cash interest
10,111
9,278
Noncash interest expense
2,771
4,332
Interest and other income
(602)
(1,280)
Income tax provision
762
5,856
EBITDA
$
34,497
$
69,111
Stock-based compensation(1)
31,435
19,920
Restructuring and other items(2)
3,717
—
Loss on extinguishment of debt
10,388
2,919
Backstopped prints and advertising expense
10,409
—
Adjusted EBITDA
$
90,446
$
91,950
________________________________
(1)
The three months ended March 31, 2015 and 2014 include cash settled SARs expense of $0.3 million and $0.5 million, respectively.
(2)
Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable. Amounts in the three months ended March 31, 2015 primarily represent costs related to the move of our international sales and distribution organization to the United Kingdom amounting to an aggregate of $2.0 million. In addition, the three months ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction.
EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization. EBITDA is a non-GAAP financial measure.
Adjusted EBITDA represents EBITDA as defined above adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt, and backstopped prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash and equity settled stock appreciation rights ("SARs"). Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order (in fiscal 2014), when applicable. Backstopped prints and advertising expense ("P&A") represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the Company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure). Adjusted EBITDA is a non-GAAP financial measure.
We believe EBITDA and Adjusted EBITDA to be meaningful indicators of our performance that provide useful information to investors regarding our financial condition and results of operations. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. While we consider EBITDA and Adjusted EBITDA to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP. EBITDA and Adjusted EBITDA do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or Adjusted EBITDA in the same manner and the measures, as presented, may not be comparable to similarly-titled measures presented by other companies.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL FREE CASH FLOW
TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Year Ended March 31,
2015
2014
2013
(Amounts in thousands)
Net Cash Flows Provided By Operating Activities
$
96,509
$
252,512
$
276,119
Purchases of property and equipment
(17,013)
(8,799)
(2,581)
Net borrowings under and (repayment) of production loans
182,061
14,542
6,941
Free Cash Flow, as defined
$
261,557
$
258,255
$
280,479
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER FREE CASH FLOW
TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Three Months Ended
March 31,
2015
2014
(Amounts in thousands)
Net Cash Flows Provided By Operating Activities
$
259,550
$
106,678
Purchases of property and equipment
(5,720)
(2,683)
Net borrowings under and (repayment) of production loans
(89,852)
(43,655)
Excess tax benefits on equity-based compensation awards
(6,767)
—
Free Cash Flow, as defined
$
157,211
$
60,340
Free cash flow is defined as net cash flows provided by operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans, plus or minus excess tax benefits on equity-based compensation awards. The adjustment for the production loans is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films and television programs associated with production loans prior to the time the Company actually pays for the film or television program. The Company believes that it is more meaningful to reflect the impact of the payment for these films and television programs in its free cash flow when the payments are actually made.
Free cash flow is a non-GAAP financial measure as defined in Regulation G promulgated by the Securities and Exchange Commission. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
We believe this non-GAAP measure provides useful information to investors regarding cash that our operating businesses generate whether classified as operating or financing activity (related to the production of our films and television programs) within our GAAP based statement of cash flows, before taking into account cash movements that are non-operational. Free cash flow is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry. Not all companies calculate free cash flow in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL EBITDA TO FREE CASH FLOW
Year Ended March 31,
2015
2014
2013
(Amounts in thousands)
EBITDA
$
269,680
$
251,639
$
254,205
Plus: Amortization of film and television programs
899,951
921,289
966,027
Less: Cash paid for film and television programs(1)
(855,210)
(952,727)
(881,415)
Amortization of (cash paid for) film and television programs in excess of cash paid (amortization)
44,741
(31,438)
84,612
Plus: Non-cash stock-based compensation
79,938
60,492
35,838
Plus: Distributions from equity method investee
7,788
16,079
—
Less: Equity interests (income) loss
(52,477)
(24,724)
3,075
Plus: Loss on extinguishment of debt
11,664
39,572
24,089
EBITDA adjusted for items above
361,334
311,620
401,819
Changes in other operating assets and liabilities:
Restricted cash
6,417
1,775
1,241
Accounts receivable, net
(13,968)
(93,503)
(4,948)
Other assets
(5,331)
(3,768)
(2,682)
Accounts payable and accrued liabilities
(5,086)
17,628
(50,154)
Participations and residuals
2,704
59,207
(6,875)
Deferred revenue
(12,940)
34,035
28,088
(28,204)
15,374
(35,330)
Purchases of property and equipment
(17,013)
(8,799)
(2,581)
Interest, taxes and other(2)
(54,560)
(59,940)
(83,429)
Free Cash Flow, as defined
$
261,557
$
258,255
$
280,479
_________________________
(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows:
Change in investment in film and television programs
$
(1,012,294)
$
(948,082)
$
(890,276)
Change in film obligations
(24,977)
(19,187)
1,920
Production loans - borrowings
631,709
532,416
378,510
Production loans - repayments
(449,648)
(517,874)
(371,569)
Total cash paid for film and television programs
$
(855,210)
$
(952,727)
$
(881,415)
_________________________
(2) Interest, taxes and other consists of the following:
Cash interest
$
(39,657)
$
(48,960)
$
(75,322)
Interest and other income
2,790
6,030
4,036
Current income tax provision
(17,693)
(17,010)
(12,143)
Total interest, taxes and other
$
(54,560)
$
(59,940)
$
(83,429)
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER EBITDA TO FREE CASH FLOW
Three Months Ended
March 31,
2015
2014
(Amounts in thousands)
EBITDA
$
34,497
$
69,111
Plus: Amortization of film and television programs
260,479
284,471
Less: Cash paid for film and television programs(1)
(277,701)
(329,189)
Cash paid for film and television programs in excess of amortization
(17,222)
(44,718)
Plus: Non-cash stock-based compensation
31,247
19,448
Plus: Distributions from equity method investee
—
6,230
Less: Equity interests income
(15,124)
(11,566)
Plus: Loss on extinguishment of debt
10,388
2,919
EBITDA adjusted for items above
43,786
41,424
Changes in other operating assets and liabilities:
Restricted cash
5,000
31,529
Accounts receivable, net
80,835
(47,127)
Other assets
(3,915)
(2,072)
Accounts payable and accrued liabilities
47,614
13,423
Participations and residuals
8,774
20,971
Deferred revenue
(4,816)
16,088
133,492
32,812
Purchases of property and equipment
(5,720)
(2,683)
Interest, taxes and other(2)
(14,347)
(11,213)
Free Cash Flow, as defined
$
157,211
$
60,340
________________________
(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows:
Change in investment in film and television programs
$
(196,825)
$
(255,139)
Change in film obligations
8,976
(30,395)
Production loans - borrowings
97,928
172,834
Production loans - repayments
(187,780)
(216,489)
Total cash paid for film and television programs
$
(277,701)
$
(329,189)
_________________________
(2) Interest, taxes and other consists of the following:
Cash interest
$
(10,111)
$
(9,278)
Interest and other income
602
1,280
Current income tax benefit (provision)
1,929
(3,215)
Excess tax benefits on equity-based compensation awards
(6,767)
—
Total interest, taxes and other
$
(14,347)
$
(11,213)
This reconciliation is provided to illustrate the difference between our EBITDA and free cash flow which are both separately reconciled to their corresponding GAAP metrics.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL INCOME BEFORE INCOME TAXES, NET
INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE
INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS
Year Ended March 31, 2015*
Income before income taxes
Net income
Basic
EPS*
Diluted EPS*
(Amounts in thousands, except per share amounts)
As reported
$
213,408
$
181,781
$
1.31
$
1.23
Stock-based compensation(1)
80,310
51,398
0.37
0.34
Restructuring and other items(2)
10,725
7,437
0.05
0.05
Loss on extinguishment of debt(3)
11,664
8,889
0.06
0.06
Backstopped prints and advertising expense(4)
12,509
8,006
0.06
0.05
As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt, and backstopped prints and advertising expense *
$
328,616
$
257,511
$
1.85
$
1.73
_________________________
* The definition of adjusted income before income taxes, adjusted net income and adjusted earnings per share now includes the gains or losses from the sale of equity method investments. Accordingly, adjusted income before income taxes, and adjusted net income has been revised to now include the gain on the April 2014 sale of the Company's interest in FEARnet of $11.4 million ($7.2 million after income taxes) and representing adjusted basic and diluted earnings per share of $0.05 for the year ended March 31, 2015. This change is consistent with the Company's increasing investment activity and practice of including equity interest income and losses from equity method investments in adjusted income before income taxes, adjusted net income and adjusted earnings per share. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from the Company's interest in FEARnet.
Year Ended March 31, 2014
Income before income taxes
Net income
Basic
EPS*
Diluted EPS*
(Amounts in thousands, except per share amounts)
As reported
$
184,960
$
152,037
$
1.11
$
1.04
Stock-based compensation(1)
72,119
45,435
0.33
0.29
Restructuring and other items(2)
7,500
7,500
0.05
0.05
Loss on extinguishment of debt(3)
39,572
24,930
0.18
0.16
Tax valuation allowance(5)
—
(12,030)
(0.09)
(0.08)
As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt and valuation allowance
$
304,151
$
217,872
$
1.58
$
1.47
Year Ended March 31, 2013
Income before income taxes
Net income
Basic
EPS*
Diluted EPS*
(Amounts in thousands, except per share amounts)
As reported
$
156,371
$
232,127
$
1.73
$
1.61
Stock-based compensation(1)
47,665
30,186
0.22
0.20
Loss on extinguishment of debt(3)
24,089
15,255
0.11
0.10
Tax valuation allowance(5)
—
(141,087)
(1.05)
(0.94)
As adjusted for stock-based compensation, loss on extinguishment of debt and valuation allowance
$
228,125
$
136,481
$
1.01
$
0.96
_________________________
* Basic and Diluted EPS amounts may not add precisely due to rounding
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER INCOME BEFORE INCOME TAXES, NET
INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE
INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS
Three Months Ended March 31, 2015
Income before income taxes
Net income
Basic
EPS*
Diluted EPS*
(Amounts in thousands, except per share amounts)
As reported
$
20,316
$
19,554
$
0.14
$
0.14
Stock-based compensation(1)
31,435
20,441
0.15
0.14
Restructuring and other items(2)
3,717
2,998
0.02
0.02
Loss on extinguishment of debt(3)
10,388
8,081
0.06
0.05
Backstopped prints and advertising expense(4)
10,409
6,676
0.05
0.04
As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt and backstopped prints and advertising expense
$
76,265
$
57,750
$
0.41
$
0.39
Three Months Ended March 31, 2014
Income before income taxes
Net income
Basic
EPS*
Diluted EPS*
(Amounts in thousands, except per share amounts)
As reported
$
55,008
$
49,152
$
0.35
$
0.33
Stock-based compensation(1)
19,920
12,550
0.09
0.08
Loss on extinguishment of debt(3)
2,919
1,839
0.01
0.01
As adjusted for stock-based compensation and loss on extinguishment of debt
$
77,847
$
63,541
$
0.46
$
0.42
_________________________
* Basic and Diluted EPS amounts may not add precisely due to rounding
Adjusted income before income taxes, adjusted net income and adjusted basic and diluted EPS are adjusted for the following items (The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment):
(1)
Stock-based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash and equity settled SARs.
(2)
Restructuring and other items: Adjustments for certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable. Amounts in the year ended March 31, 2015 primarily represent severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. A portion of these costs are non-cash charges resulting from the acceleration of vesting of stock awards. In addition, the remaining amount for the year ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction. Amounts in the year ended March 31, 2014 represent the settlement of an administrative order. Amounts in the year ended March 31, 2013 represent severance and transaction costs related to the acquisition of Summit Entertainment.
(3)
Loss on extinguishment of debt: This adjusts income before income taxes and net income to eliminate the loss on extinguishment of debt.
(4)
Backstopped prints and advertising expense: This adjusts income before income taxes and net income to eliminate the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure).
(5)
Tax valuation allowance: This adjusts net income to eliminate the discrete tax benefit recognized for financial reporting purposes upon the reduction of the Company's valuation allowance on its net deferred tax assets in our various tax jurisdictions. A substantial portion of the Company's valuation allowance was reversed in the year ended March 31, 2013 due to the expectation of the realization of the related net deferred tax assets in future tax returns. A further reduction in the valuation allowance related to the Company's Canadian net deferred tax assets was reversed in the year ended March 31, 2014.
We believe that these non-GAAP measures provide useful information to investors regarding the Company's results as compared to historical periods. The Company uses these measures, among other measures, to evaluate the operating performance of the Company. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance and allow investors to review our operating performance in the same way as our management. Since these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered in isolation of, or as a substitute for income before income taxes, net income, basic and diluted EPS. Not all companies calculate adjusted income before income taxes, adjusted net income, and adjusted basic and diluted EPS in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.
Nathan's Famous, Inc. Reports Year-End And Fourth Quarter Results
PR Newswire Nathan's Famous, Inc.
June 8, 2015 5:00 PM
????
JERICHO, N.Y., June 8, 2015 /PRNewswire/ -- Nathan's Famous, Inc. (NATH) today reported results for its fiscal year and the fourth quarter that ended March 29, 2015.
For the fifty-two weeks ended March 29, 2015:
Net income increased by 40.5% to $11,703,000 as compared to $8,327,000 for the fifty-two weeks ended March 30, 2014;
Earnings per diluted share increased by 40.9% to $2.55 per share, as compared to $1.81 per share for the fifty-two weeks ended March 30, 2014;
Income from operations increased by 82.7% to $19,958,000, as compared to $10,921,000 during the fifty-two weeks ended March 30, 2014;
Adjusted EBITDA, as subsequently defined, increased by 68.5% to $22,497,000 as compared to $13,350,000 for the fifty-two weeks ended March 30, 2014; and
Revenues increased by 24.3% to $99,112,000, as compared to $79,752,000 during the fifty-two weeks ended March 30, 2014.
For the thirteen weeks ended March 29, 2015:
Net income increased by 26.2% to $1,537,000, as compared to $1,218,000 for the thirteen weeks ended March 30, 2014;
Earnings per diluted share increased by 25.9% to $0.34 per share, as compared to $0.27 per share for the thirteen weeks ended March 30, 2014;
Income from operations increased by 66.5% to $2,967,000, as compared to $1,782,000 during the thirteen weeks ended March 30, 2014;
Adjusted EBITDA, as subsequently defined, increased by 46.7% to $3,561,000 as compared to $2,427,000 for the thirteen weeks ended March 30, 2014; and
Revenues increased by 17.9% to $20,340,000, as compared to $17,259,000 during the thirteen weeks ended March 30, 2014.
On March 10, 2015, Nathan's completed its financing of $135.0 million aggregate principal amount of 10.000% Senior Secured Notes due 2020. Nathan's declared a special cash dividend of $25.00 per share, or approximately $116.1 million to shareholders of record on March 20, 2015. The remaining net proceeds are for general corporate purposes, including working capital.
The Company reported the following:
License royalties increased by 111.6% to $18,011,000 during the fifty-two weeks ended March 29, 2015, as compared to $8,513,000 during the fifty-two weeks ended March 30, 2014. On March 1, 2014, Nathan's commenced a new license agreement with John Morrell & Co. concerning the sale of consumer packages of Nathan's Famous hot dogs at supermarkets, mass merchandisers and club stores. During the fifty-two weeks ended March 29, 2015, representing the first full fiscal year of the new license agreement, royalties earned under the new agreement were $14,367,000, a 179.1% increase as compared to the $5,147,000 of royalties earned predominantly under the Company's old license agreement during prior fiscal year.
Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 13.6% to $58,948,000 during the fifty-two weeks ended March 29, 2015, as compared to sales of $51,877,000 during the fifty-two weeks ended March 30, 2014.
Sales from the Company-operated restaurants increased by 20.0% to $15,874,000 during the fifty-two weeks ended March 29, 2015 as compared to $13,231,000 during the fifty-two weeks ended March 30, 2014. The increase in sales was due to the following: (1) Our Yonkers restaurant, operated for fifty-two weeks this year and was closed for renovations for thirty-three weeks last year; (2) Our Flagship Coney Island restaurant, which was severely damaged by Superstorm Sandy, operated for fifty-two weeks during the current year as compared to operating for only forty-four weeks last year; (3) higher sales at both Coney Island locations during the comparative periods of operations; and (4) Our Oceanside restaurant was relocated and temporarily closed from January through March 2015.
Revenues from franchise operations decreased by 2.4% to $5,581,000 during the fifty-two weeks ended March 29, 2015, as compared to $5,718,000 during the fifty-two weeks ended March 30, 2014. Thirty-six new franchised units were opened during the fifty-two weeks ended March 29, 2015, including seventeen Branded Menu Program outlets and thirteen international locations, including our first locations in Costa Rica and Malaysia.
During the fifty-two weeks ended March 30, 2014, Nathan's realized a gain of $2,774,000 in connection with the settlement of its flood damage and contents loss insurance claims relating to Superstorm Sandy and recognized an impairment charge of $400,000 in connection with a long-term investment.
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; (ii) amortization of bond premium on the Company's available-for sale investments; (iii) insurance gain and (iv) impairment charge on long-term investment 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 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 is a Russell 2000 Company that currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands and ten 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. and any issues arising from or related to the transition from SMG Inc. to John Morrell & Co. as our primary hot dog supplier; the ability to continue to attract franchisees; no material increases in the minimum wage or other changes in labor laws or the impact of a new union contract; 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.
Nathan's Famous, Inc.
Financial Highlights
Thirteen weeks ended
Fifty-two weeks ended
Mar. 29, 2015
Mar. 30, 2014
Mar. 29, 2015
Mar. 30, 2014
(unaudited)
(unaudited)
Total revenues
$ 20,340,000
$ 17,259,000
$ 99,112,000
$ 79,752,000
Income from operations (a)
$ 2,967,000
$ 1,782,000
$ 19,958,000
$ 10,921,000
Net income
$ 1,537,000
$ 1,218,000
$ 11,703,000
$ 8,327,000
Income per share:
Basic
$ 0.34
$ 0.27
$ 2.61
$ 1.87
Diluted
$ 0.34
$ 0.27
$ 2.55
$ 1.81
Weighted-average shares used in
computing income per share:
Basic
4,521,000
4,459,000
4,486,000
4,450,000
Diluted
4,562,000
4,594,000
4,588,000
4,605,000
(a)
Excludes interest expense, interest income, the gain from insurance payments as a result of the damage and temporary closure of the Coney Island restaurant due to Superstorm Sandy in fiscal 2014, impairment charge based on management's evaluation of the fair value of its long-term investment in a privately owned corporation in fiscal 2014 and other income, net.
Nathan's Famous, Inc.
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
Thirteen weeks ended
Fifty-two weeks ended
Mar. 29, 2015
Mar. 30, 2014
Mar. 29, 2015
Mar. 30, 2014
(unaudited)
(unaudited)
EBITDA
Net income
$ 1,537,000
$ 1,218,000
$ 11,703,000
$ 8,327,000
Provision for income taxes
675,000
636,000
7,702,000
5,234,000
Depreciation and amortization
268,000
312,000
1,253,000
1,157,000
Interest expense
$ 816,000
-
816,000
135,000
EBITDA
$ 3,296,000
$ 2,166,000
$ 21,474,000
$ 14,853,000
Adjusted EBITDA
EBITDA
$ 3,296,000
$ 2,166,000
$ 21,474,000
$ 14,853,000
Insurance loss (gain) (b)
-
27,000
-
(2,774,000)
Impairment charge long-term
Investments (c)
-
-
-
400,000
Stock-based compensation
230,000
191,000
859,000
721,000
Amortization of bond premium (d)
35,000
43,000
164,000
150,000
Adjusted EBITDA
$ 3,561,000
$ 2,427,000
$ 22,497,000
$ 13,350,000
(b)
Represents the elimination of the loss (gain) from insurance payments as a result of the damage and temporary closure of the Coney Island restaurant due to Superstorm Sandy.
(c)
Represents impairment charge based on management's evaluation of the fair value of its long-term investment in a privately owned corporation.
(d)
Represents the premiums paid on our purchase of available-for-sale securities, consisting of municipal bonds.
COMPANY Ronald G. DeVos, Vice President - Finance and CFO
CONTACT: (516) 338-8500 ext. 229
The "Street" has AZZ coming in at .73 for the 1st quarter that should be reported on or about June 26, 2015!
All post's welcome!
The "Good Dr's In"!
Wireless Telecom Group Announces First Quarter 2015 Financial Results Including Revenue of $8.6 Million
Business Wire
Wireless Telecom Group, Inc.
May 13, 2015 8:00 AM
PARSIPPANY, N.J.--(BUSINESS WIRE)--
Wireless Telecom Group, Inc. (NYSE MKT:WTT) announced today results for the first quarter ended March 31, 2015.
For the quarter ended March 31, 2015, the Company reported net sales of $8,628,000, compared to $9,185,000 for the same period in 2014, a decrease of 6%. Net sales in the Network Solutions segment were $5,895,000, compared to $6,390,000 for the same period in 2014, a decrease of 8%. Net sales in the Test and Measurement segment were $2,733,000, compared to $2,795,000 for the same period in 2014, a decrease of 2%.
Non-GAAP normalized EBITDA for the quarter ended March 31, 2015 was $534,000, compared to $1,116,000 for the same period in 2014. Our non-GAAP normalized EBITDA results do not include the Company’s tax provision, depreciation and amortization and stock compensation expense, as well as certain other costs. A reconciliation of net income to non-GAAP normalized EBITDA results is included in an attachment to this press release.
The Company also reported net income of $194,000 or $0.01 per diluted share for the first quarter of 2015, compared to net income of $440,000, or $0.02 per diluted share, for the first quarter of 2014, a decrease of 56%.
Paul Genova, CEO of Wireless Telecom Group, Inc. commented, “The Network Solutions segment experienced softness in order flow for Q1 2015 due to a slow start in capital spending by the North American carriers. We expect this softness to continue in the near term; however, we continue to be encouraged by the need for global investment to satisfy the significant broadband coverage and capacity requirements for DAS systems. Despite a slow start in North American carrier spending in 2015, we continue to develop our product portfolio and position the Company to support the long term growth initiatives of the carrier network build out for LTE.”
Mr. Genova added, “We believe our Network Solutions segment is well-positioned to take advantage of this growth and expect our order flow to improve as carrier spending returns to higher levels.”
Continued Genova, “In Q1 2015, our Test and Measurement segment remained steady while recent order backlog has increased for our Boonton products.”
Mr. Genova further commented, “We will continue to execute our strategic plan while remaining focused on revenue growth through improvements to our product portfolio which may include additional investments in research and development as well as pursuit of other opportunities designed to increase long term shareholder value.”
Use of Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measures is included in an attachment to this press release.
Forward-Looking Statements
Except for historical information, the matters discussed in this news release may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results. Specifically, no assurances can be made with respect to: the duration of the softness experienced in the Company’s order flow; the continued need for global investment to satisfy the significant broadband coverage and capacity requirements for DAS systems; developments in the Company’s product portfolio; the Company’s ability to position itself to support the long term growth initiatives of the carrier network build out for LTE; the impact of the recent increase in order backlog in the Company’s Test and Measurement segment; the Company’s ability to execute on its strategic plan while remaining focused on revenue growth through improvements to its product portfolio; additional investments in research and development; and the Company’s pursuit of opportunities that are intended to increase long term shareholder value. Further information regarding risks and uncertainties that could affect the Company’s results are identified in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2014.
About Wireless Telecom Group, Inc.
Wireless Telecom Group designs and manufactures radio frequency (RF) and microwave-based products for wireless and advanced communications industries and markets its products and services worldwide under the Boonton, Microlab and Noisecom brands. Its complementary suite of high performance components and instruments includes RF combiners and broadband combiner boxes for in-building distributed antenna systems deployments (DAS), RF power splitters and diplexers, hybrid couplers, peak power meters, signal analyzers, noise modules, precision noise and generators. The Company serves both commercial and government markets with workflow-oriented, WiFi, WiMAX, satellite, cable, radar, avionics, medical, and computing applications. Wireless Telecom Group is headquartered in Parsippany, New Jersey, in the New York City metropolitan area, and maintains a global network of Sales and Service offices for excellent product service and support. Wireless Telecom Group’s website address is http://www.wtcom.com.
See following Selected Financial Results
SELECTED FINANCIAL RESULTS
(In thousands, except per share amounts)
Three months ended
March 31,
(unaudited)
2015
2014
Statement of Operations Data:
Net sales $8,628 $9,185
Gross profit 3,864 4,266
Operating expenses
Research and development 917 761
Sales and marketing 1,345 1,267
General and administrative
1,263
1,436
Total operating expenses 3,525 3,464
Operating income 339 802
Interest and other (income) expense
(3)
30
Income before income taxes 342 772
Net income
$194
$440
Net income per common share:
Basic $0.01 $0.02
Diluted $0.01 $0.02
Weighted average shares outstanding:
Basic 19,497 24,033
Diluted 20,677 25,407
Three months ended
March 31,
(unaudited)
2015
2014
Reconciliation of GAAP Net Income
to Non-GAAP Normalized EBITDA:
GAAP net income $194 $440
Tax expense 148 332
Depreciation 109 119
Stock compensation expense 86 58
Other non-operating costs (3) 30
Non-recurring costs (1)
-
137
Non-GAAP normalized EBITDA
$534
$1,116
(1) Includes professional fees related to our strategic business review
March 31,
2015
December 31,
2014
(unaudited)
Balance Sheet Data:
Cash & cash equivalents $10,705 $10,724
Working capital $24,383 $24,606
Total assets $36,959 $36,289
Total liabilities $3,049 $2,659
Shareholders’ equity $33,910 $33,630
Contact:
Wireless Telecom Group, Inc.
Robert Censullo, 973-386-9696
Stanley Black & Decker Reports 1Q 2015 Results
PR Newswire
Stanley Black & Decker
April 23, 2015 6:00 AM
NEW BRITAIN, Conn., April 23, 2015 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced first quarter 2015 financial results.
•1Q'15 Revenues Increased 1% To $2.6 Billion; Robust Organic Growth Of 8% Mostly Offset By 7% Currency Impact
•1Q'15 Operating Margin Expanded 120 Basis Points To 13.3% Despite $50 Million Of Currency Headwinds
•1Q'15 Diluted GAAP EPS Was $1.07 Consistent With 1Q'14 As Strong Operational Performance Was Offset By Higher Planned Restructuring Charges And A Higher Tax Rate
•Executed Actions That Reduced Share Count By Approximately 8 Million Shares During The Quarter
•Reiterating 2015 Full Year GAAP EPS Guidance Range Of $5.65 To $5.85, Up 5% To 9%, Despite $60 To $70 Million ($0.30 To $0.35 Per Share) In New, Incremental Foreign Currency OM Pressure
•Year Over Year Currency-Related EPS Headwinds Included In Full Year Guidance Now Total $1.00 To $1.10 (19% To 20% Of Prior Year EPS)
•2015 Free Cash Flow Still Expected To Be At Least $1.0 Billion
1Q'15 Key Points:
•Net sales for the period were $2.6 billion, up 1% versus prior year, as positive volume (+7%) and price (+1%) were substantially offset by currency (-7%).
•Gross margin rate for the quarter was 37.0%, up 50 basis points from the prior year rate of 36.5% as a result of favorable volume, price, productivity and cost actions which more than offset unfavorable currency.
•SG&A expenses were 23.7% of sales compared to 24.5% in 1Q'14 reflecting volume leverage and cost control.
•Operating margin rate was 13.3% up 120 basis points from 1Q'14, reflecting actions to improve profitability and generate operating leverage which more than offset unfavorable currency.
•Restructuring charges for the quarter were $24.9 million compared to a restructuring credit of $3.7 million in 1Q'14.
•Tax rate was 25.0%, slightly higher than anticipated and 300 basis points higher than last year's rate due to the timing of certain tax benefits and earnings mix.
•Average diluted shares outstanding for the quarter were 156.5 million versus 160.0 million in 4Q'14 and 159.0 million a year ago, reflecting the impact of our share repurchase program.
•Working capital turns for the quarter were 6.6, up 0.6 turns from 1Q'14. Free cash flow for the quarter, in line with normal seasonality, was an outflow of $243 million versus an outflow of $210 million for 1Q'14.
Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "As we entered 2015, our annual objectives remained focused on delivering solid organic growth, meaningful operating leverage and strong free cash flow coupled with capital allocation actions designed to drive sustainable value for shareholders. We posted strong organic growth and operating leverage in our Tools & Storage and Engineered Fastening businesses in the face of a challenging currency environment, and continued to execute on our plan to improve operating performance in Security. Our long-term strategy and financial objectives remain intact, and we are well-positioned to meet our commitments for the balance of the year despite intensified currency headwinds and a continued volatile macro environment."
1Q'15 Segment Results
($ in M)
1Q'15 Segment Results
Sales
Profit
Profit
Rate
Tools & Storage
$1,632
$256.8
15.7%
Security
$510
$54.8
10.8%
Industrial
$488
$74.7
15.3%
•Tools & Storage net sales increased 3% versus 1Q'14 as volume (+9%) and price (+1%), were partially offset by currency (-7%). Organic growth was particularly strong in North America (+15%) and Europe (+9%). North America continued to benefit from healthy underlying tool demand across the construction and industrial channels as well as share gains from new products and brand extensions aided by strong execution at the customer level. Europe's trend of strong organic growth continued as new products, an expanded retail footprint and solid commercial momentum continued to generate share gains in many markets, in spite of a challenged overall economic recovery. Emerging markets organic growth was relatively flat, as strong growth from mid-price point product launches and pricing actions, most notably in Latin America, offset steep declines in Russia and softness in China. Overall segment profit rate was 15.7%, up from the 1Q'14 rate of 13.5%, as volume leverage, price, productivity and cost management more than offset currency pressures.
•Security net sales decreased 6% versus 1Q'14 as organic growth of 2% driven by volume (+1%) and price (+1%), was significantly impacted by currency (-8%). Organic growth within North America and emerging markets ("NA & EM") of 2% resulted from strong automatic doors revenues and improved performance in the NA commercial locks business which returned to growth after five quarters of organic declines. Europe's organic growth rate was 1%, the second consecutive quarter of flat or positive organic growth, led by higher installation revenues. Europe order rates were up 3% for the quarter with attrition remaining within the target range of 10-12%.
Overall Security segment profit rate was 10.8%, a 110 basis point increase from the 1Q'14 rate of 9.7%. The year-over-year improvement in the rate was due primarily to improved performance within Europe.
•Industrial net sales decreased 2% versus 1Q'14 as volume (+6%) was more than offset by currency (-8%). Engineered Fastening achieved double digit organic growth (+12%) driven by strong global automotive and electronics revenues. Infrastructure organic revenues declined 15% due to decreasing Oil & Gas revenues from delayed or suspended pipeline construction activity offset by modest growth within Hydraulic Tools. Overall Industrial segment profit rate was 15.3%, consistent with the prior quarter but down from the 1Q'14 rate of 17.4%, as lower Oil & Gas volumes and currency more than offset favorable volume leverage from Engineered Fastening, productivity gains and cost control.
President and Chief Operating Officer, James M. Loree, commented, "The first quarter of 2015 represented another strong quarter of organic growth and margin expansion for Stanley Black & Decker. The formation of our new Tools & Storage platform is proceeding as planned, with the larger and stronger business poised for long-term profitable growth. Our Engineered Fastening business maintained its impressive performance during the quarter and while emerging markets remain challenging, we continue to be optimistic about our ability to generate above market growth in these regions due to our prior investments in support of our mid-price point product launches.
"Security continues to perform to expectations, delivering positive organic revenue growth and an expanded operating margin rate versus the prior year. Our plans to exit Europe's Spain and Italy operations are proceeding on track, and this action, as well as the other global organizational and operational enhancements we have made, give us confidence in our ability to show both top and bottom line improvement as planned within Security during 2015."
Updated 2015 Outlook
Donald Allan Jr., Senior Vice President and CFO, commented, "We are maintaining our 2015 EPS outlook of $5.65 - $5.85 on a GAAP basis (including $50 million or $0.25 EPS, in restructuring charges) and our free cash flow outlook of at least $1 billion. Our current 2015 EPS outlook reflects the strong first quarter performance and improved organic growth outlook, which combined with an acceleration of planned share repurchases, are expected to offset the impact of the significant weakening of various foreign currencies versus the U.S. dollar. Specific to shares, since the beginning of the fourth quarter of 2014 we have reduced our share count by the equivalent of ~$900 million of shares utilizing $326 million of cash as well as equity derivatives, putting us well on our way to completing our share repurchase plan announced in late 2013. We are clearly encouraged by our first quarter performance despite difficult currency conditions and remain confident that 2015 will be another step forward in achieving our long-term financial objectives."
The Company will host a conference call with investors today, April 23, at 8:00am 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 at 1 (800) 708-4540, from outside the U.S. at +1 (847) 619-6397, 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 3935-9357. A replay will also be available two hours after the call and can be accessed at 1 (888) 843-7419 or +1 (630) 652-3042 using the passcode 3935-9357#. 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
..
View photo
.Stanley Black & Decker
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. The operating results of Security Spain and Italy have been reported as discontinued operations for 1Q'15 and 1Q'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 1Q'14. Total sales reported as discontinued operations were $17.9 million and $31.4 million for 1Q'15 and 1Q'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 1Q'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 1Q'15 and 1Q'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 $5.65 - $5.85 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow of at least $1.0 billion for 2015 ; and (iii) continue to show both top and bottom line improvement within Security during 2015; (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 capitalize on operational improvements in both Security Europe and North America as well as execute on its divestiture of Security's operations in Spain and Italy; (ii) the Company's ability to invest in its business strategically and focus on operational excellence to deliver organic growth of approximately 5% during 2015; (iii) the Company's ability to successfully execute upon cost actions within Security and other businesses and to benefit from pricing and commodity deflation; (iv) the Company's ability to sufficiently lower its average share count in 2015; (v) foreign exchange headwinds being approximately $200-220 million in 2015; (vi) the Company's ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vii); the Company's ability to limit one-time restructuring charges to approximately $50 million in 2015; (viii) successful integration of acquisitions completed during the year, as well as integration of existing businesses and formation of new business platforms; (ix) the continued acceptance of technologies used in the Company's products and services; (x) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xi) 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; (xii) the proceeds realized with respect to any business or product line disposals; (xiii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiv) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xv) 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; (xvi) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvii) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xviii) the Company's ability to obtain favorable settlement of tax audits; (xix) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible; (xx) the continued ability of the Company to access credit markets under satisfactory terms; (xxi) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxii) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxiii) 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 Euro, Canadian Dollar, Chinese Renminbi 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 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)
FIRST QUARTER
2015
2014
NET SALES
$ 2,630.0
$ 2,617.1
COSTS AND EXPENSES
Cost of sales
1,656.4
1,660.7
Gross margin
973.6
956.4
% of Net Sales
37.0%
36.5%
Selling, general and administrative
623.0
640.6
% of Net Sales
23.7%
24.5%
Operating margin
350.6
315.8
% of Net Sales
13.3%
12.1%
Other - net
63.7
60.9
Restructuring charges (credits)
24.9
(3.7)
Income from operations
262.0
258.6
Interest - net
40.7
40.7
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
221.3
217.9
Income tax expense on continuing operations
55.3
48.0
NET EARNINGS FROM CONTINUING OPERATIONS
166.0
169.9
Less: net (loss) earnings attributable to non-controlling interests
(0.8)
0.2
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE
TO COMMON SHAREOWNERS
166.8
169.7
NET LOSS FROM DISCONTINUED OPERATIONS
(4.5)
(7.8)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$ 162.3
$ 161.9
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$ 1.10
$ 1.09
Discontinued operations
(0.03)
(0.05)
Total basic earnings per share of common stock
$ 1.07
$ 1.04
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$ 1.07
$ 1.07
Discontinued operations
(0.03)
(0.05)
Total diluted earnings per share of common stock
$ 1.04
$ 1.02
DIVIDENDS PER SHARE
$ 0.52
$ 0.50
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
152,172
155,905
Diluted
156,537
158,951
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
April 4,
January 3,
2015
2015
ASSETS
Cash and cash equivalents
$ 435.5
$ 496.6
Accounts and notes receivable, net
1,612.8
1,396.7
Inventories, net
1,742.2
1,562.7
Assets held for sale
24.9
29.5
Other current assets
509.3
463.3
Total current assets
4,324.7
3,948.8
Property, plant and equipment, net
1,411.5
1,454.1
Goodwill and other intangibles, net
9,788.6
10,027.2
Other assets
418.9
419.0
Total assets
$ 15,943.7
$ 15,849.1
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings
$ 606.2
$ 7.5
Accounts payable
1,674.8
1,579.2
Accrued expenses
1,144.2
1,221.9
Liabilities held for sale
21.6
23.4
Total current liabilities
3,446.8
2,832.0
Long-term debt
3,855.7
3,839.8
Other long-term liabilities
2,944.0
2,665.4
Stanley Black & Decker, Inc. shareowners' equity
5,615.2
6,429.1
Non-controlling interests' equity
82.0
82.8
Total liabilities and equity
$ 15,943.7
$ 15,849.1
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
FIRST QUARTER
2015
2014
OPERATING ACTIVITIES
Net earnings from continuing operations
$ 166.0
$ 169.9
Net loss from discontinued operations
(4.5)
(7.8)
Depreciation and amortization
102.5
110.4
Changes in working capital1
(377.9)
(330.3)
Other
(83.6)
(94.2)
Net cash used in operating activities
(197.5)
(152.0)
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(45.9)
(57.8)
Proceeds from issuances of common stock
43.0
13.2
Net short-term borrowings
598.9
282.3
Net investment hedge settlements
30.4
(6.3)
Cash dividends on common stock
(82.7)
(80.7)
Purchases of common stock for treasury
(348.0)
(19.4)
Effect of exchange rate changes on cash
(45.6)
(7.1)
Other
(13.7)
(35.8)
Net cash provided by investing and financing activities
136.4
88.4
Decrease in Cash and Cash Equivalents
(61.1)
(63.6)
Cash and Cash Equivalents, Beginning of Period
496.6
496.2
Cash and Cash Equivalents, End of Period
$ 435.5
$ 432.6
Free Cash Flow Computation2
Operating cash outflow
$ (197.5)
$ (152.0)
Less: Capital and software expenditures
(45.9)
(57.8)
Free cash outflow (before dividends)
$ (243.4)
$ (209.8)
Merger & Acquisition-related charges and payments4
19.8
51.8
Free cash outflow, normalized (before dividends)3
$ (223.6)
$ (158.0)
1
The change in 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)
FIRST QUARTER
2015
2014
NET SALES
Tools & Storage
$ 1,632.1
$ 1,574.8
Security
509.6
544.9
Industrial
488.3
497.4
Total
$ 2,630.0
$ 2,617.1
SEGMENT PROFIT
Tools & Storage
$ 256.8
$ 212.8
Security
54.8
52.8
Industrial
74.7
86.7
Segment Profit
386.3
352.3
Corporate Overhead
(35.7)
(36.5)
Total
$ 350.6
$ 315.8
Segment Profit as a Percentage of Net Sales
Tools & Storage
15.7%
13.5%
Security
10.8%
9.7%
Industrial
15.3%
17.4%
Segment Profit
14.7%
13.5%
Corporate Overhead
(1.4%)
(1.4%)
Total
13.3%
12.1%
Stanley Black & Decker Reports 4Q And Full Year 2014 Results
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Business Wire
Stanley Black & Decker
January 29, 2015 6:00 AM
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NEW BRITAIN, Conn.--(BUSINESS WIRE)--
Stanley Black & Decker (SWK) today announced fourth quarter and full year 2014 financial results.
• 4Q’14 Revenues Increased 3% To $3.0 Billion; Organic Growth Of 7%
• 4Q’14 Operating Margin Expanded 170 Basis Points To 13.2%; Excluding Charges, Operating Margin Expanded 50 Basis Points To 13.7%
• 4Q’14 Diluted GAAP EPS Was $1.37; Excluding Charges, 4Q’14 Diluted EPS Was $1.56
• Full Year Revenues Increased 4% to $11.3 Billion; Organic Growth Of 5%
• Full Year Operating Margin Expanded 220 Basis Points To 13.3%; Excluding Charges, Operating Margin Expanded 90 Basis Points To 13.6%
• Full Year Diluted GAAP EPS Was $5.37; Excluding Charges, Diluted EPS Was $5.67
• 2014 Free Cash Flow Record Of $1.0 Billion; Working Capital Turns Reached 9.2
• Expect 2015 Full Year EPS Of $5.65 To $5.85 On A GAAP Basis (Inclusive Of $0.25 In Restructuring Charges) And Free Cash Flow Of At Least $1.0 Billion
4Q’14 Key Points:
• Net sales for the period were $3.0 billion, up 3% versus the prior year, primarily attributable to volume (+6%) and price (+1%), partially offset by currency (-4%).
• The gross margin rate for the quarter was 35.2%. Excluding charges the gross margin rate was 35.3%, down 50 basis points from the prior year rate of 35.8%, as favorable volume, price, productivity and cost actions were more than offset by unfavorable currency and lower Security margins.
• SG&A expenses were 22.1% of sales. Excluding charges, SG&A expenses were 21.6% of sales, compared to 22.6% in 4Q’13.
• Operating margin rate was 13.2%. Excluding charges, operating margin rate was 13.7%, up 50 basis points from 4Q’13, as actions taken to improve profitability and generate operating leverage more than offset unfavorable currency.
• The tax rate was 17.6%. Excluding charges, the tax rate was 18.3%, 360 basis points lower than last year’s rate due primarily to the favorable shift of earnings to lower taxed jurisdictions, the passage of U.S. tax legislation and settlement of various income tax audits in the fourth quarter.
• Working capital turns for the quarter were 9.2, up 1.1 turns from 4Q’13. Free cash flow for the quarter was $636 million consistent with 4Q’13.
Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “We were very pleased with our performance in the fourth quarter and for the full year. Our commitment to well balanced capital allocation priorities combined with our focus on key operational levers produced favorable organic growth, operating leverage and free cash flow results despite adverse currency and volatile macro environments.
“As we look to 2015 we continue to enjoy strong operating momentum amidst similar operating conditions and, as a consequence, are well positioned to manage through another challenging environment. Our long-term strategy and financial objectives remain intact, and we are confident in our ability to continue to generate strong underlying organic revenue, earnings and cash flow growth while producing meaningful returns for shareholders.”
4Q’14 Segment Results
($ in M) 4Q' 14 Segment Results
Sales Profit Charges1 Profit
Ex-Charges1
Profit Rate Profit Rate
Ex-Charges1
CDIY $1,496 $244.5 $0.3 $244.8 16.3% 16.4%
Industrial $891 $136.7 $2.2 $138.9 15.3% 15.6%
Security $595 $69.7 $3.1 $72.8 11.7% 12.2%
1 See Merger And Acquisition (M&A) One-Time Charges On Page 5
• CDIY net sales increased 7% versus 4Q’13 as a result of volume (+10%) and price (+1%), partially offset by currency (-4%). Organic growth was strong in all regions led by North America (+14%). North America realized share gains and benefitted from continued brisk underlying tool demand across all channels driven primarily by new products and a robust holiday sell-in and sell-through season. Europe (+7%) maintained its trend of strong organic growth as new products and an expanded retail footprint continued to generate market share gains, in spite of a challenged economic backdrop. Organic growth accelerated within the emerging markets (+7%) led by Latin America, despite persistently volatile economic conditions across all emerging markets. Excluding charges, overall segment profit rate was 16.4%, up from the 4Q’13 rate of 14.8%, as volume leverage, price, productivity and cost management more than offset currency pressures.
• Industrial net sales increased 1% versus 4Q’13 as a result of volume (+5%) and modestly positive price, partially offset by currency (-4%). Engineered Fastening achieved 10% organic growth driven by both strong global automotive and electronic revenues. Organic sales for the Industrial and Automotive Repair (“IAR”) business were up 5% with solid performances in both the North American and European tools businesses. Infrastructure organic growth was down 10% as strong hydraulic tools growth was negated by lower oil & gas revenues due to the recent contraction in oil prices and resulting slowdown in pipeline construction. Overall Industrial segment profit rate excluding charges was 15.6%, relatively consistent with the 4Q’13 rate of 15.8%, reflecting favorable volume leverage, productivity gains and cost control, offset by currency.
• Security net sales decreased 1% versus 4Q’13 as organic growth of 3% driven by volume (+2%) and price (+1%), was offset by currency (-4%). Organic growth within North America and emerging markets (“NA & EM”) of 5% was primarily a result of strong performances within the commercial electronics and automatic doors businesses. Europe’s organic growth rate was flat, a significant improvement versus prior quarters. Europe order rates were up mid-single digits for the quarter with attrition rates for the year stabilized within the target range of 10-12%.
Overall Security segment profit rate excluding charges was 12.2%, a slight increase from the 3Q’14 rate of 12.1% and down 80 basis points from the 4Q’13 rate of 13.0%. The year-over-year decrease in Security’s segment rate for the quarter resulted primarily from the expected temporary project mix impact within North America which more than offset a 110 basis point improvement within Europe. The Security segment profit rate excluding charges for the full year of 11.7% was flat with the prior year.
President and Chief Operating Officer, James M. Loree, commented, “The fourth quarter represented another solid quarter of organic growth, margin expansion and cash flow generation for the Company. Our CDIY and Industrial segments maintained their impressive performance for the year from both an organic growth and operating leverage perspective, led by developed markets, while growth in the emerging markets continued to outpace the underlying volatile and slowing markets due in large part to the initial successes of our mid-price point product launches.
“We continued to see positive signs within the European Security business as its operating margin rate, which improved sequentially and increased 110 basis points above the prior year, and order growth met expectations for the quarter. Additionally, in the fourth quarter we announced our decision to divest Security’s operations in Spain and Italy, allowing us to focus our efforts on the regions with stronger structural characteristics and thus the highest growth and margin potential. The combination of this action and other operational improvements in both Europe and North America, give us confidence that we can continue to show both top and bottom line improvement within Security during 2015.”
2015 Outlook
Donald Allan Jr., Senior Vice President and CFO, commented, “In 2015 we expect to build off the momentum we generated during 2014 towards achieving our long-term financial objectives. Investing in our business strategically and focusing on operational excellence will position us to deliver organic growth of approximately 3-4% during 2015 in a continuously challenging global macroeconomic climate and drive operating leverage, resulting in 2015 EPS of $5.65 - $5.85 on a GAAP basis which includes $50 million or $0.25 EPS in restructuring charges.
“We have made the decision to provide our guidance for 2015 on a GAAP basis given the significant reduction in annual restructuring and other one-time charges, which were more pronounced in prior years due to sizable M&A activity during 2010 - 2013.”
The following summarizes the key 2015 planning assumptions:
• Organic growth of approximately 3-4% (approximately +$0.45 - $0.55)
• Cost actions within Security and other businesses, pricing and commodity deflation (approximately +$0.50)
• Lower average share count due to repurchases of shares weighted to the second half of 2015 (approximately +$0.09 - $0.12)
• Foreign exchange headwinds of approximately $140 million (approximately - $0.70 - $0.75)
• The tax rate will be relatively consistent with the 2014 rate
• Free cash flow is expected to be at least $1 billion
Mr. Allan added, “We also remain committed to our near-term capital allocation plan of modest debt deleveraging, completed at the end of 2014, reducing our share count by the equivalent of approximately $1 billion of shares and supporting a strong and growing dividend. These actions combined with our near-term operational improvements are expected to result in continued improvement to our cash flow return on investment during 2015.”
Merger And Acquisition (M&A) One-Time Charges
4Q’14: Total one-time charges in 4Q’14 of $39.9 million primarily relate to integration and consulting costs. Gross margin includes $0.3 million of these one-time charges while SG&A includes $14.1 million. $5.6 million of these costs that impact the Company’s operating margin are included in segment results, with the remainder in corporate overhead. Also included in one-time charges are $1.1 million in Other, net as well as $24.4 million in net Restructuring charges.
2014: Total one-time charges in 2014 of $53.9 million primarily relate to integration and consulting costs. Gross margin includes $1.8 million of these one-time charges while SG&A includes $31.6 million. $14.7 million of these costs that impact the Company’s operating margin are included in segment results, with the remainder in corporate overhead. Also included in one-time charges are $1.7 million in Other, net as well as $18.8 million in net Restructuring charges.
The Company will host a conference call with investors today, Thursday, January 29, at 8:00am 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 at 1 (800) 708-4540, from outside the U.S. at +1 (847) 619-6397, 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 3868-1018. A replay will also be available two hours after the call and can be accessed at 1 (888) 843-7419 or +1 (630) 652-3042 using the passcode 3868-1018#. 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.
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. The operating results of Security Spain and Italy have been reported as discontinued operations for 2014 and 2013. 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. The businesses within the Security and Industrial segments were sold during 2014. The operating results of these businesses, including the related losses on sale, have been reported as discontinued operations for 2013 and through the date of sale for 2014. Total sales reported as discontinued operations were $25.2 million and $34.8 million for 4Q’14 and 4Q’13, respectively, and $118.4 million and $150.1 million for 2014 and 2013, respectively.
The Company recast 2013 segment net sales and profit between the CDIY and Industrial segments to align reporting with the current management of the Company’s operations in the emerging markets to be comparable with the current year presentation. There is no impact to the consolidated financial statements of the Company as a result of this segment realignment.
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. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 13 to 16 for 2014 and 2013, are considered relevant to aid analysis of the Company’s operating performance and earnings results aside from the material impact of the one-time charges and payments associated with the Black & Decker merger, the Niscayah and Infastech acquisitions and other smaller acquisitions of the Company. Normalized free cash flow, as reconciled from the associated GAAP measures on page 11 for 2014 and 2013 is considered a meaningful pro forma metric to aid the understanding of the Company’s cash flow performance aside from the material impact of the 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 $5.65 - $5.85 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow of at least $1.0 billion for 2015 ; (iii) continue to show both top and bottom line improvement within Security during 2015; (iv) reduce its share count by the equivalent of approximately $1.0 billion of shares and support a strong and growing dividend; and (v) improve our cash flow return on investment through 2015 (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 capitalize on operational improvements in both Security Europe and North America as well as execute on its divestiture of Security’s operations in Spain and Italy; (ii) the Company’s ability to invest in its business strategically and focus on operational excellence to deliver organic growth of approximately 3-4% ( approximately $0.45 - $0.55) during 2015; (iii) the Company’s ability to execute upon cost actions within Security and other businesses and to benefit from pricing and commodity deflation (approximately +$0.50); (iv) the Company’s ability to lower average share count due to repurchases of shares mostly in the second half of 2015 (approximately +$0.09 - $0.12); (v) foreign exchange headwinds being approximately $140 million (approximately - $0.70 - $0.75) in 2015; (vi) the Company’s ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vii); the Company’s ability to limit one-time restructuring charges to approximately $50 million in 2015; (viii) successful integration of acquisitions completed during the year, as well as integration of existing businesses; (ix) the continued acceptance of technologies used in the Company’s products and services; (x) the Company’s ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xi) 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; (xii) the proceeds realized with respect to any business or product line disposals; (xiii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiv) the success of the Company’s efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xv) 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; (xvi) the Company’s ability to generate free cash flow and maintain a strong debt to capital ratio; (xvii) the Company’s ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xviii) the Company’s ability to obtain favorable settlement of tax audits; (xix) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible; (xx) the continued ability of the Company to access credit markets under satisfactory terms; (xxi) the Company’s ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxii) the Company’s ability to successfully develop, market and achieve sales from new products and services; and (xxiii) 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 Euro, Canadian Dollar, Chinese Renminbi 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 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)
FOURTH QUARTER YEAR TO DATE
2014 2013 2014 2013
NET SALES $ 2,982.5 $ 2,880.6 $ 11,338.6 $ 10,889.5
COSTS AND EXPENSES
Cost of sales 1,931.4 1,853.8 7,235.9 6,985.8
Gross margin 1,051.1 1,026.8 4,102.7 3,903.7
% of Net Sales 35.2 % 35.6 % 36.2 % 35.8 %
Selling, general and administrative 658.3 696.9 2,595.9 2,690.6
% of Net Sales 22.1 % 24.2 % 22.9 % 24.7 %
Operating margin 392.8 329.9 1,506.8 1,213.1
% of Net Sales 13.2 % 11.5 % 13.3 % 11.1 %
Other - net 60.5 98.2 239.6 304.5
Restructuring charges 24.4 133.2 18.8 173.7
Income from operations 307.9 98.5 1,248.4 734.9
Interest - net 42.2 38.3 163.6 147.3
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 265.7 60.2 1,084.8 587.6
Income tax expense (benefit) on continuing operations 46.7 (10.2 ) 227.1 68.6
NET EARNINGS FROM CONTINUING OPERATIONS 219.0 70.4 857.7 519.0
Less: net (loss) earnings attributable to non-controlling interests (0.3 ) (0.1 ) 0.5 (1.0 )
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE
TO COMMON SHAREOWNERS 219.3 70.5 857.2 520.0
NET LOSS FROM DISCONTINUED OPERATIONS (73.5 ) (14.4 ) (96.3 ) (29.7 )
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS $ 145.8 $ 56.1 $ 760.9 $ 490.3
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations $ 1.41 $ 0.45 $ 5.49 $ 3.35
Discontinued operations (0.47 ) (0.09 ) (0.62 ) (0.19 )
Total basic earnings per share of common stock $ 0.94 $ 0.36 $ 4.87 $ 3.16
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations $ 1.37 $ 0.44 $ 5.37 $ 3.28
Discontinued operations (0.46 ) (0.09 ) (0.60 ) (0.19 )
Total diluted earnings per share of common stock $ 0.91 $ 0.35 $ 4.76 $ 3.09
DIVIDENDS PER SHARE $ 0.52 $ 0.50 $ 2.04 $ 1.98
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 155,799 155,512 156,090 155,237
Diluted 160,013 159,200 159,737 158,776
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
January 3,
December 28,
2015 2013
ASSETS
Cash and cash equivalents $ 496.6 $ 496.2
Accounts and notes receivable, net 1,396.7 1,578.5
Inventories, net 1,562.7 1,473.3
Assets held for sale 29.5 136.9
Other current assets 463.3 331.7
Total current assets 3,948.8 4,016.6
Property, plant and equipment, net 1,454.1 1,478.6
Goodwill and other intangibles, net 10,027.2 10,600.0
Other assets 114.6 439.9
Total assets $ 15,544.7 $ 16,535.1
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings $ 7.5 $ 402.6
Accounts payable 1,579.2 1,552.9
Accrued expenses 1,221.9 1,219.5
Liabilities held for sale 23.4 61.0
Total current liabilities 2,832.0 3,236.0
Long-term debt 3,839.8 3,799.4
Other long-term liabilities 2,343.8 2,619.2
Stanley Black & Decker, Inc. shareowners' equity 6,446.3 6,799.2
Non-controlling interests' equity 82.8 81.3
Total liabilities and equity $ 15,544.7 $ 16,535.1
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
FOURTH QUARTER YEAR TO DATE
2014 2013 2014 2013
OPERATING ACTIVITIES
Net earnings from continuing operations $ 219.0 $ 70.4 $ 857.7 $ 519.0
Net loss from discontinued operations (73.5 ) (14.4 ) (96.3 ) (29.7 )
Depreciation and amortization 112.4 118.6 449.8 441.3
Changes in working capital1 433.2 384.9 (9.8 ) 13.3
Other 56.2 172.2 80.2 (75.9 )
Net cash provided by operating activities 747.3 731.7 1,281.6 868.0
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures (111.6 ) (95.0 ) (291.0 ) (340.3 )
(Payments) proceeds from sales of businesses / assets (1.3 ) 1.0 11.5 97.5
Acquisitions, net of cash acquired - (7.3 ) (3.2 ) (933.9 )
Premium paid on debt extinguishment - (42.8 ) - (42.8 )
Proceeds from long-term borrowings - 726.7 - 726.7
Proceeds from issuances of common stock 34.6 15.9 85.6 154.6
Net short-term (repayments) borrowings (424.8 ) (810.8 ) (391.0 ) 388.7
Net investment hedge settlements 3.6 (3.4 ) (61.4 ) 3.6
Cash dividends on common stock (80.8 ) (77.7 ) (321.3 ) (312.7 )
Purchases of common stock for treasury (7.5 ) (6.6 ) (28.2 ) (39.2 )
Premium paid for equity option - (83.2 ) - (83.2 )
Payment on long-term debt (45.7 ) (300.5 ) (46.6 ) (302.2 )
Payment on forward share purchase contract - - - (350.0 )
Effect of exchange rate changes on cash (84.0 ) (11.6 ) (147.1 ) (44.9 )
Other (20.0 ) (9.3 ) (88.5 ) (9.7 )
Net cash used in investing and financing activities (737.5 ) (704.6 ) (1,281.2 ) (1,087.8 )
Increase (Decrease) in Cash and Cash Equivalents 9.8 27.1 0.4 (219.8 )
Cash and Cash Equivalents, Beginning of Period 486.8 469.1 496.2 716.0
Cash and Cash Equivalents, End of Period $ 496.6 $ 496.2 $ 496.6 $ 496.2
Free Cash Flow Computation2
Operating cash inflow $ 747.3 $ 731.7 $ 1,281.6 $ 868.0
Less: capital and software expenditures (111.6 ) (95.0 ) (291.0 ) (340.3 )
Free cash inflow (before dividends) $ 635.7 $ 636.7 $ 990.6 $ 527.7
Merger & Acquisition-related charges and payments4 36.1 69.4 152.2 351.7
Free cash inflow, normalized (before dividends)3 $ 671.8 $ 706.1 $ 1,142.8 $ 879.4
1
The change in 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)
FOURTH QUARTER YEAR TO DATE
2014 2013 2014 2013
NET SALES
Construction & DIY $ 1,496.4 $ 1,397.4 $ 5,559.3 $ 5,271.4
Industrial 891.4 881.3 3,498.8 3,302.6
Security 594.7 601.9 2,280.5 2,315.5
Total $ 2,982.5 $ 2,880.6 $ 11,338.6 $ 10,889.5
SEGMENT PROFIT
Construction & DIY $ 244.5 $ 202.8 $ 871.5 $ 777.1
Industrial 136.7 135.1 553.5 456.7
Security 69.7 66.8 259.2 233.3
Segment Profit 450.9 404.7 1,684.2 1,467.1
Corporate Overhead (58.1 ) (74.8 ) (177.4 ) (254.0 )
Total $ 392.8 $ 329.9 $ 1,506.8 $ 1,213.1
Segment Profit as a Percentage of Net Sales
Construction & DIY 16.3 % 14.5 % 15.7 % 14.7 %
Industrial 15.3 % 15.3 % 15.8 % 13.8 %
Security 11.7 % 11.1 % 11.4 % 10.1 %
Segment Profit 15.1 % 14.0 % 14.9 % 13.5 %
Corporate Overhead (1.9 %) (2.6 %) (1.6 %) (2.3 %)
Total 13.2 % 11.5 % 13.3 % 11.1 %
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
FOURTH QUARTER 2014
Reported
Merger &
Acquisition-
Related
Charges1
Normalized3
Gross margin $ 1,051.1 $ 0.3 $ 1,051.4
% of Net Sales 35.2 % 35.3 %
Selling, general and administrative 658.3 (14.1 ) $ 644.2
% of Net Sales 22.1 % 21.6 %
Operating margin 392.8 14.4 407.2
% of Net Sales 13.2 % 13.7 %
Earnings from continuing operations before income taxes 265.7 39.9 305.6
Income taxes on continuing operations 46.7 9.1 55.8
Net earnings from continuing operations 219.3 30.8 250.1
Diluted earnings per share of common stock $ 1.37 $ 0.19 $ 1.56
1
Merger and acquisition-related charges relate primarily to integration and consulting costs.
FOURTH QUARTER 2013
Reported
Merger &
Acquisition-
Related
and Other
Charges2
Normalized3
Gross margin $ 1,026.8 $ 3.1 $ 1,029.9
% of Net Sales 35.6 % 35.8 %
Selling, general and administrative 696.9 (45.8 ) 651.1
% of Net Sales 24.2 % 22.6 %
Operating margin 329.9 48.9 378.8
% of Net Sales 11.5 % 13.2 %
Earnings from continuing operations before income taxes 60.2 212.2 272.4
Income tax (benefit) expense on continuing operations (10.2 ) 69.9 59.7
Net earnings from continuing operations 70.5 142.3 212.8
Diluted earnings per share of common stock $ 0.44 $ 0.89 $ 1.34
2
Merger and acquisition-related and other charges relate primarily to the Black & Decker merger and Niscayah and Infastech
acquisitions, including facility closure-related charges, employee-related charges and integration costs, as well as cost containment
charges. Other charges relate to the loss on extinguishment of debt.
3
The normalized 2014 and 2013 information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company’s
margin and earnings results aside from the material impact of the merger & acquisition-related and other charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
YEAR TO DATE 2014
Reported
Merger &
Acquisition-
Related
Charges1
Normalized3
Gross margin $ 4,102.7 $ 1.8 $ 4,104.5
% of Net Sales 36.2 % 36.2 %
Selling, general and administrative 2,595.9 (31.6 ) 2,564.3
% of Net Sales 22.9 % 22.6 %
Operating margin 1,506.8 33.4 1,540.2
% of Net Sales 13.3 % 13.6 %
Earnings from continuing operations before income taxes 1,084.8 53.9 1,138.7
Income taxes on continuing operations 227.1 5.2 232.3
Net earnings from continuing operations 857.2 48.7 905.9
Diluted earnings per share of common stock $ 5.37 $ 0.30 $ 5.67
1
Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
YEAR TO DATE 2013
Reported
Merger &
Acquisition-
Related and Other
Charges2
Normalized3
Gross margin $ 3,903.7 $ 29.5 $ 3,933.2
% of Net Sales 35.8 % 36.1 %
Selling, general and administrative 2,690.6 (135.7 ) 2,554.9
% of Net Sales 24.7 % 23.5 %
Operating margin 1,213.1 165.2 1,378.3
% of Net Sales 11.1 % 12.7 %
Earnings from continuing operations before income taxes 587.6 390.3 977.9
Income taxes on continuing operations 68.6 120.0 188.6
Net earnings from continuing operations 520.0 270.3 790.3
Diluted earnings per share of common stock $ 3.28 $ 1.70 $ 4.98
2
Merger and acquisition-related and other charges relate primarily to the Black & Decker merger and Niscayah and Infastech
acquisitions, including facility closure-related charges, employee-related charges and integration costs, as well as cost containment
charges. Other charges relate to the loss on extinguishment of debt.
3
The normalized 2014 and 2013 information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company’s
margin and earnings results aside from the material impact of the merger & acquisition-related and other charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
FOURTH QUARTER 2014
Reported
Merger &
Acquisition-
Related
Charges1
Normalized3
SEGMENT PROFIT
Construction & DIY $ 244.5 $ 0.3 $ 244.8
Industrial 136.7 2.2 138.9
Security 69.7 3.1 72.8
Segment Profit 450.9 5.6 456.5
Corporate Overhead (58.1 ) 8.8 (49.3 )
Total $ 392.8 $ 14.4 $ 407.2
Segment Profit as a Percentage of Net Sales
Construction & DIY 16.3 % 16.4 %
Industrial 15.3 % 15.6 %
Security 11.7 % 12.2 %
Segment Profit 15.1 % 15.3 %
Corporate Overhead (1.9 %) (1.7 %)
Total 13.2 % 13.7 %
1
Merger and acquisition-related charges relate primarily to integration and consulting costs.
FOURTH QUARTER 2013
Reported
Merger &
Acquisition-
Related
Charges2
Normalized3
SEGMENT PROFIT
Construction & DIY $ 202.8 $ 3.8 $ 206.6
Industrial 135.1 4.0 139.1
Security 66.8 11.4 78.2
Segment Profit 404.7 19.2 423.9
Corporate Overhead (74.8 ) 29.7 (45.1 )
Total $ 329.9 $ 48.9 $ 378.8
Segment Profit as a Percentage of Net Sales
Construction & DIY 14.5 % 14.8 %
Industrial 15.3 % 15.8 %
Security 11.1 % 13.0 %
Segment Profit 14.0 % 14.7 %
Corporate Overhead (2.6 %) (1.6 %)
Total 11.5 % 13.2 %
2
Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility
closure-related charges, employee-related charges and integration costs.
3
The normalized 2014 and 2013 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the
Company's segment profit results aside from the material impact of the merger and acquisition-related charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
YEAR TO DATE 2014
Reported
Merger &
Acquisition-
Related
Charges1
Normalized3
SEGMENT PROFIT
Construction & DIY $ 871.5 $ 1.0 $ 872.5
Industrial 553.5 6.8 560.3
Security 259.2 6.9 266.1
Segment Profit 1,684.2 14.7 1,698.9
Corporate Overhead (177.4 ) 18.7 (158.7 )
Total $ 1,506.8 $ 33.4 $ 1,540.2
Segment Profit as a Percentage of Net Sales
Construction & DIY 15.7 % 15.7 %
Industrial 15.8 % 16.0 %
Security 11.4 % 11.7 %
Segment Profit 14.9 % 15.0 %
Corporate Overhead (1.6 %) (1.4 %)
Total 13.3 % 13.6 %
1
Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
YEAR TO DATE 2013
Reported
Merger &
Acquisition-
Related
Charges2
Normalized3
SEGMENT PROFIT
Construction & DIY $ 777.1 $ 13.0 $ 790.1
Industrial 456.7 24.8 481.5
Security 233.3 38.0 271.3
Segment Profit 1,467.1 75.8 1,542.9
Corporate Overhead (254.0 ) 89.4 (164.6 )
Total $ 1,213.1 $ 165.2 $ 1,378.3
Segment Profit as a Percentage of Net Sales
Construction & DIY 14.7 % 15.0 %
Industrial 13.8 % 14.6 %
Security 10.1 % 11.7 %
Segment Profit 13.5 % 14.2 %
Corporate Overhead (2.3 %) (1.5 %)
Total 11.1 % 12.7 %
2
Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility
closure-related charges, employee-related charges and integration costs.
3
The normalized 2014 and 2013 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the
Company's segment profit results aside from the material impact of the merger and acquisition-related charges.
Contact:
Stanley Black & Decker
Greg Waybright, 860-827-3833
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
RCI Hospitality Holdings, Inc. Reports Fiscal 2Q15 Results
Non-GAAP EPS of $0.50 Up 11% Year over Year
PR Newswire
RCI Hospitality Holdings, Inc.
May 11, 2015 4:05 PM
HOUSTON, May 11, 2015 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (RICK) today announced results for the fiscal 2015 second quarter ended March 31, 2015.
.RCI HOSPITALITY HOLDINGS INC
2Q15 Highlights
•GAAP EPS of ($0.28) includes an accrual for the previously announced NY FLSA legal settlement.
•Non-GAAP EPS* diluted of $0.50 increased 11.1% from $0.45 in 2Q14. Non-GAAP EPS excludes the accrual as well as other items from both periods for comparability.
•Record total revenues of $37.4 million grew 13.8% year over year.
•$1.9 million spent buying back shares in the open market in the first half of Fiscal 2015.
•Company on track for a strong FY15.
Conference Call
A conference call to discuss these results, outlook and related matters will be held today, May 11, 2015, at 4:30 PM ET:
•Live Participant Dial In (Toll Free): 877-737-7051
•Live Participant Dial In (International): 201-689-8878
•Webcast URL: http://www.investorcalendar.com/IC/CEPage.asp?ID=173981
Meet Management
Eric Langan, President and CEO, invites investors for a "Due Diligence Ball" to meet, talk and tour one of RCI's top revenue generating clubs.
•When: Monday, May 11, 2015, 6:00 PM to 8:00 PM ET
•Where: Rick's Cabaret New York, at 50 W. 33rd Street, between Fifth Avenue and Broadway
•RSVP: With your contact information to gary.fishman@anreder.com
CEO Comment
"RCI performed well in 2Q15," said Mr. Langan. "We achieved record revenues and strong year over year growth in non-GAAP EPS and adjusted EBITDA, which reflects our cash generating power.
"Our performance was especially favorable since 2Q15 was affected by bad weather, especially in the Dallas-Fort Worth area, where we operate 11 clubs. We also had tough comparisons to 2Q14, when we benefitted from the big football championship in the New York City area, where we have two top clubs.
"Core profitability in nightclubs expanded due to higher revenues and margin improvement. With more units and increased revenues, our Bombshells restaurant/bar segment also added positively to results.
"We repurchased more stock in the open market, reflecting confidence in our favorable outlook, combined with the market's undervaluation of our shares. We will continue to focus cash flow on buying back shares. At current levels, our own assets represent a highly attractive return.
"We are on track for a strong Fiscal 2015. Year to date, total revenues are up 18.6%, adjusted EBITDA 22.7%, and non-GAAP EPS 23.1%.
"We look forward to a solid third quarter. Many units benefitted from our showing the recent Mayweather-Pacquiao 'Fight of the Century'. Warm weather in Texas should further enhance Bombshells' patio business."
2Q15 Analysis (all comparisons to 2Q14 unless otherwise noted)
Total Revenues
•Total revenues of $37.4 million compared to $32.9 million.
•45 units (40 adult clubs and nightclubs and 5 restaurants) versus 43 (41 adult clubs and nightclubs and 2 restaurants).
•Same store sales increased 2.1%.
•Units opened less than a year added $4.4 million. This included new adult clubs – Rick's Cabaret in Odessa, TX and the recently acquired Down in Texas Saloon in Austin, TX – and new Bombshells in Austin, Spring and Houston, TX.
Operating Margin & Costs (as % of revenues)
•GAAP operating margin was (7.0%), reflecting the previously mentioned accrual, compared to 22.7%.
•Non-GAAP operating margin, which excludes the accrual and certain other non-operating items from both periods for more meaningful analysis, was 24.9% compared to 26.9%.
•Non-GAAP operating margin reflects the growth of the Bombshells segment, whose margins, while growing, are less than that of the nightclub segment. This was partially offset by the elimination of under-performing adult clubs.
•The accrual of $10.3 million pre-tax, or ($0.65) per share net of tax, represents the company's best estimate at this time of the total cost of the settlement, announced April 1, 2015, in its New York federal wage and hour class action case.
Adjusted EBITDA
•RCI's cash generating power, as reflected by adjusted EBITDA*, amounted to $10.2 million, up 10.8% from $9.2 million in the year ago quarter.
Business Segments (all comparisons to 2Q14 unless otherwise noted)
Nightclubs
•Includes the company's 38 adult clubs and two bar/nightclubs, compared to a total of 41 in the year ago quarter.
•Sales increased 2.4%, to $31.9 million from $31.2 million.
•Operating income was $114,000 compared to $9.6 million.
•Excluding the previously mentioned accrual, operating income increased 8.0% to $10.4 million and operating margin expanded to 32.6% from 30.9%.
•In May, RCI subsidiaries acquired The Seville Club, a popular gentlemen's club in Minneapolis known for its famous downtown location, as previously announced. Total consideration of $8.5 million consisted of $4.5 million for the assets of the club business and $4.0 million for its historic building.
Bombshells
•Includes the company's five Bombshells, all in Texas, compared to two in the year ago quarter.
•Sales increased nearly 3.5 times, to $4.8 million from $1.4 million.
•Operating income was $571,000 compared to a loss of $12,000.
•Operating margin expanded to 11.9% of revenues from (0.9%) and is expected to increase as revenues continue to build and training costs subside.
•A sixth Bombshells is planned for the Willowbrook area of northwest Houston. Management is identifying additional locations.
Balance Sheet (March 31, 2015 compared to December 31, 2014)
•Assets increased 4.1% to $260.5 million and long term debt increased 2.4% to $71.5 million. The increases primarily reflected the acquisition of the Down in Texas Saloon of Austin and related real estate.
•Total permanent stockholders' equity declined 2.8% to $120.8 million, primarily reflecting the NY FLSA accrual partially offset by core profits.
Stock Buy Backs
•The Board of Directors increased its stock repurchase authorization to $10.0 million in May 2014.
•During 2Q15, RCI purchased 82,811 shares of common in the open market for an aggregate cost of $840,340, leaving $7.0 million of remaining authorization.
•During the six months ended March 31, 2015, RCI purchased 192,427 shares at a cost of $1.9 million.
*Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain "non-GAAP financial measures" within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the company and helps management and investors gauge our ability to generate cash flow, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
•Non-GAAP Operating Income and Non-GAAP Operating Margin. We exclude from non-GAAP operating income and non-GAAP operating margin amortization of intangibles, patron taxes, pre-opening costs, gains and losses from asset sales, stock-based compensation charges, litigation and other one-time legal settlements, gain on contractual debt reduction and acquisition costs. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.
•Non-GAAP Net Income and Non-GAAP Net Income per Basic Share and per Diluted Share. We exclude from non-GAAP net income and non-GAAP net income per diluted share and per basic share amortization of intangibles, patron taxes, pre-opening costs, income tax expense, impairment charges, gains and losses from asset sales, stock-based compensation, litigation and other one-time legal settlements, gain on contractual debt reduction and acquisition costs, and include the Non-GAAP provision for income taxes, calculated as the tax-effect at 35% effective tax rate of the pre-tax non-GAAP income before taxes less stock-based compensation, because we believe that excluding such measures helps management and investors better understand our operating activities.
•Adjusted EBITDA. We exclude from earnings before interest, taxes, depreciation and amortization (EBITDA) depreciation expense, amortization of intangibles, income tax, interest expense, interest income, gains and losses from asset sales, acquisition costs, litigation and other one-time legal settlements, gain on contractual debt reduction and impairment charges because we believe that adjusting for such items helps management and investors better understand operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes which have considerable variation between domestic jurisdictions. Also, we exclude interest cost in our calculation of Adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use Adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
Full Financial Tables
RCI's Form 10Q for the fiscal second quarter ended Mach 31, 2015 with full financial tables can be found on the company's corporate site at http://www.rcihospitality.com.
About RCI Hospitality Holdings, Inc. (RICK)
With 46 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult gentlemen clubs and restaurant/bars. 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." Restaurant/bars operate under the brand name "Bombshells." Please visit http://www.rcihospitality.com/
RCI Hospitality in 2015 is celebrating the 20th anniversary of its IPO – two decades of innovation in the adult club segment of the hospitality industry.
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.
RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS
FOR THE SIX MONTHS
ENDED MARCH 31,
ENDED MARCH 31,
2015
2014
2015
2014
(in thousands, except per share data)
(UNAUDITED)
(UNAUDITED)
Revenues:
Sales of alcoholic beverages
$
15,576
$
12,985
$
30,815
$
24,674
Sales of food and merchandise
5,241
3,979
10,466
7,402
Service revenues
14,559
14,347
28,783
27,077
Other
2,034
1,559
3,833
3,140
Total revenues
37,410
32,870
73,897
62,293
Operating expenses:
Cost of goods sold
5,381
4,041
10,492
7,788
Salaries and wages
8,115
6,854
16,147
13,431
Stock compensation
120
151
240
154
Other general and administrative:
Taxes and permits
5,709
5,142
11,102
9,557
Charge card fees
544
449
1,091
877
Rent
1,184
1,156
2,325
2,384
Legal and professional
1,064
426
2,023
1,214
Advertising and marketing
1,312
1,406
2,679
2,691
Insurance
801
972
1,621
1,771
Utilities
708
646
1,442
1,241
Depreciation and amortization
1,886
1,513
3,531
2,906
(Gain) loss on sale of property
(18)
(86)
(18)
(86)
Impairment of assets
-
-
1,358
-
Settlement of lawsuits and other one-time costs
10,303
150
10,550
270
Other
2,917
2,591
5,790
5,022
Total operating expenses
40,026
25,411
70,373
49,220
Operating income (loss)
(2,616)
7,459
3,524
13,073
Other income (expense):
Interest income
26
35
39
112
Interest expense
(1,783)
(1,924)
(3,402)
(3,936)
Gain from original investment in Drink Robust, Inc.
-
-
577
-
Income (loss) before income taxes
(4,373)
5,570
738
9,249
Income taxes (benefit)
(1,265)
1,922
581
3,245
Net income (loss)
(3,108)
3,648
157
6,004
Less: net (income) loss attributable to noncontrolling interests
267
74
362
121
Net income (loss) attributable to RCI Hospitality Holdings, Inc.
$
(2,841)
$
3,722
$
519
$
6,125
Basic earnings (loss) per share attributable to RCIHH shareholders:
Net income
$
(0.28)
$
0.39
$
0.05
$
0.64
Diluted earnings (loss) per share attributable to RCIHH shareholders:
Net income
$
(0.28)
$
0.37
$
0.05
$
0.62
Weighted average number of common shares outstanding:
Basic
10,275
9,661
10,269
9,604
Diluted
10,275
10,853
10,273
10,763
RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
For the Three Months
For the Six Months
Ended March 31,
Ended March 31,
(in thousands, except per share data)
2015
2014
2015
2014
Reconciliation of GAAP net income to
Adjusted EBITDA
GAAP net income (loss)
($2,841)
$3,722
$519
$6,125
Income tax expense
(1,265)
1,922
362
3,245
Interest expense and income and gain on Drink Robust investment
1,783
1,924
3,402
3,936
Litigation and other one-time legal settlements
10,303
150
10,550
270
Preopening costs
268
-
328
-
Acquisition costs
95
-
178
-
Impairment of assets
-
-
1,358
-
Depreciation and amortization
1,886
1,513
3,531
2,906
Adjusted EBITDA
$10,229
$9,231
$20,228
$16,482
Reconcilation of GAAP net income (loss) to
non-GAAP net income
GAAP net income (loss)
($2,841)
$3,722
$519
$6,125
Patron tax
805
866
1,567
1,605
Amortization of intangibles
336
82
579
171
Gain on Drink Robust investment
-
-
(577)
-
Stock-based compensation
120
151
240
154
Litigation and other one-time settlements
10,303
150
10,550
270
Pre-opening costs
268
122
328
416
Income tax expense
(1,265)
1,922
362
3,245
Acquisition costs
95
18
178
18
Impairment of assets
-
-
1,358
-
Non-GAAP provision for income taxes
(2,695)
(2,409)
(5,202)
(4,148)
Non-GAAP net income
$5,126
$4,624
$9,902
$7,857
Reconciliation of GAAP diluted net income
per share to non-GAAP diluted net income per share
Fully diluted shares
10,275
10,853
10,273
10,763
GAAP net income
($0.28)
$0.37
$0.05
$0.62
Patron tax
0.08
0.08
0.15
0.15
Amortization of intangibles
0.03
0.01
0.06
0.02
Gain on Drink Robust investment
-
-
(0.06)
-
Stock-based compensation
0.01
0.01
0.02
0.01
Litigation and other one-time settlements
1.00
0.01
1.03
0.03
Pre-opening costs
0.03
0.01
0.03
0.04
Income tax expense
(0.12)
0.18
0.04
0.30
Acquisition costs
0.01
0.00
0.02
0.00
Impairment of assets
-
-
0.13
-
Non-GAAP provision for income taxes
(0.26)
(0.22)
(0.51)
(0.39)
Non-GAAP diluted net income per share
$0.50
$0.45
$0.96
$0.78
RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
For the Three Months
For the Six Months
Ended March 31,
Ended March 31,
(in thousands, except per share data)
2015
2014
2015
2014
Reconciliation of GAAP operating income to
non-GAAP operating income
GAAP operating income (loss)
($2,616)
$7,459
$3,524
$13,073
Patron tax
805
866
1,567
1,605
Amortization of intangibles
336
82
579
171
Stock-based compensation
120
151
240
154
Impairment of assets
-
-
-
-
Litigation and other one-time settlements
10,303
150
10,550
270
Pre-opening costs
268
122
328
416
Acquisition costs
95
18
178
18
Non-GAAP operating income
$9,311
$8,848
$16,966
$15,707
Reconciliation of GAAP operating margin to
non-GAAP operating margin
GAAP operating income
-7.0%
22.7%
4.8%
21.0%
Patron tax
2.2%
2.6%
2.1%
2.6%
Amortization of intangibles
0.9%
0.2%
0.8%
0.3%
Stock-based compensation
0.3%
0.5%
0.3%
0.2%
Impairment of assets
0.0%
0.0%
0.0%
0.0%
Litigation and other one-time settlements
27.5%
0.5%
14.3%
0.4%
Pre-opening costs
0.7%
0.4%
0.4%
0.7%
Acquisition costs
0.3%
0.1%
0.2%
0.0%
Non-GAAP operating margin
24.9%
26.9%
23.0%
25.2%
RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
For the Three Months
For the Six Months
Ended March 31,
Ended March 31,
(in thousands)
2015
2014
2015
2014
Business segment sales:
Nightclubs
$
31,933
$
31,196
$
62,995
$
59,550
Bombshells
4,813
1,379
9,721
2,083
Other
664
295
1181
660
$
37,410
$
32,870
$
73,897
$
62,293
Business segment operating income (loss):
Nightclubs*
$
114
$
9,644
$
8,671
$
17,618
Bombshells
571
(12)
1,111
(317)
Other
(797)
(87)
(1,344)
(257)
General corporate
(2,504)
(2,086)
(4,914)
(3,971)
$
(2,616)
$
7,459
$
3,524
$
13,073
* Nightclubs operating income for the three and six months ended 3/31/15 includes accrual of $10,303 for the settlement of a lawsuit, and for the six months ended 3/31/15 also includes impairment of assets of $1,358. Excluding these items, nightclubs operating income for the three months ended 3/31/15 would have been $10,417 and for the six months ended 3/31/15 would have been $20,332.
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Lakes Entertainment Announces Results for First Quarter 2015
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Business Wire
Lakes Entertainment, Inc.
May 6, 2015 6:30 AM
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MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) today announced results for the three months ended March 29, 2015.
First Quarter Results
Lakes Entertainment reported first quarter 2015 net revenues of $12.8 million, compared to prior-year first quarter net revenues of $12.3 million. Net revenues were related to the operation of Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”). The increase in net revenues was primarily related to an increase in gaming revenues during the first quarter of 2015 compared to the first quarter of 2014.
Net losses for the first quarter of 2015 were approximately $1.7 million, compared to net losses of approximately $1.8 million for the first quarter of 2014. Losses from operations were $1.3 million for the first quarter of 2015 compared to losses from operations of $1.6 million for the first quarter of 2014. Basic and diluted losses per share were $0.13 for each of the first quarters of 2015 and 2014.
During the first quarter of 2015, property operating expenses for Rocky Gap were $7.5 million compared to $7.3 million during the first quarter of 2014 and were primarily related to gaming operations, rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from an increase in gaming-related expenses, most notably gaming taxes, due to the increase in gaming related revenue in the current year quarter.
For the first quarter of 2015, selling, general and administrative expenses were $6.1 million compared to $5.7 million during the first quarter of 2014. Included in these amounts were Lakes corporate selling, general and administrative expenses of $2.4 million and $2.0 million during the first quarters of 2015 and 2014, respectively. Lakes’ corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees. First quarter 2015 professional fees included $0.8 million associated with the previously announced merger agreement with Sartini Gaming, Inc. (“Golden Gaming”), which was executed in January of this year and is expected to close later this year. Rocky Gap selling, general and administrative expenses, which consist primarily of payroll and related expenses, marketing expense and facilities expense, were $3.7 million during the first quarters of 2015 and 2014.
Effective January 25, 2015, Lakes sold all of its 10% interest in Rock Ohio Ventures to DG Ohio Ventures, LLC for approximately $0.8 million. Because this investment had been written down to zero during 2014, Lakes recognized a gain on sale of cost method investment of approximately $0.8 million during the first quarter of 2015.
In connection with entering into the merger agreement with Golden Gaming during January 2015, Lakes implemented a plan to sell its corporate headquarters office building in Minnetonka, Minnesota. On March 26, 2015, Lakes entered into an agreement to sell its corporate headquarters office building at a price of approximately $4.7 million, less approximate fees and closing costs of $0.3 million. Lakes currently expects the sale of the corporate headquarters office building to close during the second quarter of 2015. The corporate headquarters office building was carried at $4.7 million, net of accumulated depreciation, on Lakes’ consolidated balance sheet as of the date of the agreement, resulting in the recognition of an impairment charge of $0.3 million during the first quarter of 2015.
Depreciation and amortization was $0.9 million for the first quarters of 2015 and 2014.
Lyle Berman, Chief Executive Officer of Lakes stated, ”During January 2015, we announced a merger agreement with Golden Gaming. We are currently working through the process of obtaining necessary approvals and we currently expect the closing of the merger transaction to occur later this year. The combination of Lakes’ strong balance sheet and our Rocky Gap property, with Golden Gaming’s casinos and distributed gaming platform and taverns, will make this combined company unique in the marketplace. We believe Lakes’ cash will facilitate refinancing as well as growth and that the company will be well positioned for expansion in Nevada and other jurisdictions. We look forward to closing this transaction and we continue to believe it will provide value to Lakes’ shareholders.”
Further commenting, Tim Cope, President and Chief Financial Officer of Lakes stated, "Rocky Gap maintained operating efficiencies during the first quarter of 2015 and exceeded results compared to the first quarter of 2014, despite inclement weather patterns affecting the property’s weekend traffic during the current year period. The gaming facility features 577 video lottery terminals, 16 table games, two poker tables and a casino bar along with a lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, event center, restaurants, spa, the only Jack Nicklaus signature golf course in Maryland as well as a wide variety of outdoor and water activities.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. For more information, please visit www.lakesentertainment.com. On January 25, 2015, Lakes entered into an agreement and plan of merger with Sartini Gaming, Inc. (“Golden Gaming”). Golden Gaming is a leading owner and operator of distributed gaming, taverns and casinos, all of which are focused on the Nevada local gaming market. The merger is subject to various closing conditions.
Forward-Looking Statements
Statements in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, the expected benefits of a potential combination of Lakes and Sartini Gaming, Inc. (“Golden Gaming”) pursuant to an agreement and plan of merger (the “Merger Agreement”) and expectations about future business plans, prospective performance and opportunities; the expected timing of the completion of the transaction; the ability and impact of refinancing Golden Gaming debt; the obtaining of required regulatory approvals and approval by Lakes’ shareholders. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. These forward-looking statements are based on current expectations and assumptions of management of Lakes and Golden Gaming and are subject to risks, uncertainty and changes in circumstances that could cause the actual events and results in future periods to differ materially from the expectations of Lakes and Golden Gaming and those expressed or implied by these forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These risks, uncertainties and changes in circumstances include (a) the possibility that the merger does not close when expected or at all; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and Lakes’ shareholder approval, and to satisfy or waive other closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or that the parties to the Merger Agreement may be required to modify aspects of the transaction to achieve regulatory approval; (c) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the merger to fail to close; (d) the ability of Lakes and Golden Gaming to promptly and effectively integrate their respective businesses; (e) the outcome of any legal proceedings that may be instituted in connection with the transaction; (f) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the proposed merger; (g) the ability to retain key employees of Lakes and Golden Gaming; (h) that there may be a material adverse change affecting Lakes or Golden Gaming, or that the respective businesses of Lakes or Golden Gaming may suffer as a result of uncertainty surrounding the transaction; and (i) the risk factors disclosed in Lakes’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. Forward-looking statements reflect Lakes’ and Golden Gaming’s management’s analysis and expectations only as of the date of this press release, and Lakes does not undertake to update or revise these statements, whether written or oral, to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 29, 2015 December 28, 2014
Assets
Current assets:
Cash and cash equivalents $ 33,967 $ 35,416
Short-term investments 46,145 46,638
Income taxes receivable - -
Other 2,301 1,807
Total current assets 82,413 83,861
Property and equipment, net 28,292 32,739
Other assets:
Property held for sale 4,407 -
Gaming license 1,840 1,875
Land held for development 960 960
Income taxes receivable 2,000 2,155
Other 437 439
Total other assets 9,644 5,429
Total assets $ 120,349 $ 122,029
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, net of discount $ 1,350 $ 1,368
Other 4,404 4,104
Total current liabilities 5,754 5,472
Long-term debt, net of current portion and discount 8,630 8,941
Total liabilities 14,384 14,413
Total shareholders' equity 105,965 107,616
Total liabilities and shareholders' equity $ 120,349 $ 122,029
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share data)
Three months ended
March 29, 2015
March 30, 2014
Revenues:
Gaming
$ 10,600 $ 10,320
Room
1,207 1,314
Food and beverage
1,348 1,259
Other operating
331 335
License fees and other
44 33
Gross revenues
13,530 13,261
Less promotional allowances
764 951
Net revenues
12,766 12,310
Costs and expenses:
Gaming
6,065 5,954
Room
158 110
Food and beverage
1,065 1,033
Other operating
226 242
Selling, general and administrative
6,135 5,740
Gain on sale of cost method investment
(750 ) -
Impairments and other losses
331 -
(Gain) loss on disposal of property and equipment
(2 ) 25
Depreciation and amortization
879 853
Total costs and expenses
14,107 13,957
Loss from operations
(1,341 )
(1,647
)
Other income (expense):
Interest income
45 33
Interest expense
(274 ) (318
)
Other
- 164
Total other income (expense), net
(229 ) (121
)
Loss before income taxes
(1,570 ) (1,768
)
Income tax provision
155
-
Net loss
$ (1,725 ) $ (1,768
)
Other comprehensive loss
(1 ) (14
)
Comprehensive loss
$ (1,726 ) $ (1,782
)
Weighted-average common shares outstanding
Basic and diluted
13,391 13,364
Loss per share
Basic and diluted
$ (0.13 ) $ (0.13
)
Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
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7:14 am Colgate-Palmolive reports EPS in-line, revs in-line; sees low-single-digit earnings per share decline on a dollar basis,
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Newell Rubbermaid Announces Strong First Quarter Results
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Newell Rubbermaid
39 minutes ago
GlobeNewswire
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. • 4.7% Core Sales Growth and Normalized EPS of $0.36
• 4.1% Net Sales Growth and Reported EPS of $0.20
• Affirms 2015 Full Year Guidance
• Expands Project Renewal to Capture Incremental $150 Million Savings by 2017
First Quarter Executive Summary
• 4.7 percent core sales growth, excluding foreign currency and the net impact of acquisitions and planned divestitures; 4.1 percent net sales growth including a 490 basis point net contribution from acquisitions and planned divestitures
• 38.8 percent normalized gross margin, a 50 basis point improvement compared to the prior year; 38.6 percent reported gross margin, a 100 basis point improvement compared to the prior year
• 12.1 percent normalized operating margin, a 90 basis point improvement compared to the prior year; 7.8 percent reported operating margin, an 80 basis point decline compared to prior year attributable to increased restructuring costs
• $0.36 normalized EPS compared to $0.34 in the prior year, a 5.9 percent increase despite an $0.08 negative impact from foreign exchange and a comparison with the prior year which included $0.04 in discrete tax rate benefits; $0.20 reported EPS compared to $0.19 in the prior year, a 5.3 percent increase
• Repurchased 1.9 million shares at a cost of $73.6 million
• Expanded Project Renewal by an incremental $150 million to capture an incremental $150 million in annualized overhead savings by the end of 2017; cumulative annualized savings over total Project Renewal now anticipated at $620 to $675 million
• Announced intention to divest Rubbermaid medical cart business (solutions for optimization of nurse work flow in hospitals)
ATLANTA, May 1, 2015 (GLOBE NEWSWIRE) -- Newell Rubbermaid (NWL) announced its first quarter 2015 financial results today.
"We've had a strong start to the year with first quarter core sales growth of 4.7 percent and normalized earnings per share growth of 5.9 percent," said Michael Polk, President and Chief Executive Officer. "Our Win Bigger businesses of Writing, Commercial Products and Tools grew over seven percent as a result of strong innovation, increased advertising investment and great sales execution. All five global business segments grew core sales, including North American core sales growth of five percent and net sales growth of over eleven percent, our best result in many years.
"The Growth Game Plan is accelerating," continued Polk. "We are creating advantaged brand development and innovation capabilities backed with category leading marketing investment that is transforming Newell Rubbermaid into a growth leader in our industry. These investments have been enabled by our drive to make Newell leaner and more efficient and when coupled with actions to strengthen our portfolio are yielding both growth acceleration and margin expansion. There is more opportunity ahead. Today we announced a new commitment to deliver incremental annualized overhead savings of $150 million by the end of 2017. A significant portion of these incremental savings will be invested back into the business for further growth acceleration with the balance flowing through to earnings. That is the Growth Game Plan into action."
First Quarter 2015 Operating Results
Net sales in the first quarter were $1.26 billion compared with $1.21 billion in the prior year. Core sales grew 4.7 percent, excluding a 490 basis point net contribution from acquisitions and planned divestitures and a 550 basis point negative impact from foreign currency.
Reported gross margin was 38.6 percent, a 100 basis point improvement versus prior year.
Normalized gross margin was 38.8 percent, a 50 basis point improvement versus prior year, as benefits from productivity, commodity deflation and pricing more than offset the negative impacts of foreign currency and mix from acquisitions.
First quarter reported operating margin was 7.8 percent and operating income was $98.2 million, compared with 8.6 percent and $104.7 million, respectively, in the prior year.
Normalized operating margin of 12.1 percent was a 90 basis point improvement compared with the prior year, despite a 50 basis point increase in advertising and promotion. Normalized operating income was $152.6 million compared with $135.4 million in the prior year.
The reported tax rate for the quarter was 27.9 percent compared with a 3.0 percent benefit in the prior year. The normalized tax rate was 27.2 percent compared with 18.3 percent in the prior year.
Normalized net income was $97.0 million, compared with $97.8 million in the prior year. Normalized diluted earnings per share were $0.36, an increase of 5.9 percent versus $0.34 in the prior year. The improvement in normalized diluted earnings per share was attributable to increased core sales, gross margin expansion, contribution from acquisitions and the positive impact of fewer outstanding shares, which more than offset a significant increase in advertising and promotion support, negative foreign currency impacts, a higher tax rate and increased interest expense related to borrowing in support of last year's acquisitions.
Reported diluted earnings per share were $0.20, compared with $0.19 per diluted share in the prior year. Reported net income was $54.1 million, compared with $52.9 million in the prior year. In addition to the factors cited in the explanation of normalized diluted earnings per share, reported diluted earnings per share were negatively impacted by higher incremental restructuring and other project costs of $22.5 million in 2015, and favorably impacted by the absence of a 2014 $38.7 million charge associated with the devaluation of the Venezuelan bolivar.
Operating cash flow was a use of $154.3 million compared with a use of $92.1 million in the prior year period, as the company made a voluntary $70.0 million contribution to its U.S. pension plan during the first quarter of 2015.
A reconciliation of the "as reported" results to "normalized" results is included in the appendix.
First Quarter 2015 Operating Segment Results
Writing net sales for the first quarter were $341.8 million, a 1.8 percent decline compared to prior year, driven by a negative foreign currency impact of 10.8 percent. Writing core sales increased 9.0 percent, reflecting very strong growth in North America and Latin America attributable to increased advertising and promotion support, excellent innovation and pricing. Normalized operating income was $83.0 million compared with $76.1 million in the prior year. Normalized operating margin was 24.3 percent compared with 21.9 percent in the prior year as a result of pricing, strong productivity and disciplined cost management which more than offset significant negative foreign currency impacts and increased advertising and promotion spending.
Home Solutions net sales were $364.5 million, a 15.2 percent increase compared to the prior year. Core sales increased 0.9 percent, attributable to strong growth in Rubbermaid Food Storage and Decor, partially offset by continued contraction of the lower margin Rubbermaid Consumer Storage business and the absence of prior year new customer pipeline fill on Calphalon. Normalized operating income was $38.6 million versus $26.8 million in the prior year. Normalized operating margin expanded by 210 basis points to 10.6 percent of sales as a result of the positive mix effect of Rubbermaid Food Storage and input cost deflation on resin, partially offset by the impact of negative foreign currency.
Tools net sales were $180.4 million, a 3.9 percent decline compared to the prior year driven by a negative foreign currency impact of 7.1 percent. Core sales grew 3.2 percent reflecting robust growth in North America, EMEA and Latin America attributable to strong innovation, distribution gains on the core portfolio and pricing. Normalized operating income was $22.2 million versus $21.4 million in the prior year. Normalized operating margin was 12.3 percent of sales compared with 11.4 percent of sales in the prior year. The improvement in operating margin was primarily driven by pricing and disciplined overhead management, partially offset by the impact of negative foreign currency.
Commercial Products net sales were $185.2 million, a 1.4 percent increase compared to the prior year. Core sales, which exclude the Rubbermaid medical cart business, increased 9.0 percent attributable to strong innovation, increased marketing support and pricing in North America and Asia. Normalized operating income was $17.6 million compared to $13.8 million in the prior year. Normalized operating margin was 9.5 percent of sales, compared with 7.6 percent of sales in the prior year. The increase in operating margin reflects the benefits of productivity, pricing and input cost deflation on resin, partially offset by an increase in marketing spending and the impact of negative foreign currency.
Baby & Parenting net sales were $192.1 million, a 7.1 percent increase compared to the prior year. Core sales grew 0.8 percent driven by high single digit growth in North America compared with the prior year period, which was impacted by the Graco recall, and the stabilization of the Japanese business, partially offset by softness in Europe. Normalized operating income was $12.3 million compared to $16.4 million in the prior year. Normalized operating margin was 6.4 percent of sales compared with 9.1 percent of sales in the prior year. The decrease in normalized operating margin was due to increased advertising and promotion spending in support of innovation and the impact of negative foreign currency.
Strategic Changes
The company announced its decision to pursue the sale of its Rubbermaid medical cart business. The planned divestiture of this business will further the company's progress toward creating a faster growing, higher margin and more focused portfolio, enabling accelerated performance.
2015 Full Year Outlook
Newell Rubbermaid reiterated its 2015 full year core sales growth and normalized EPS guidance metrics as follows:
Core sales growth 3.5% to 4.5%
Currency impact (4.5%) to (5.5%)
Impact of acquisitions, net of planned divestitures 4.0% to 5.0%
Net sales growth 3.0% to 4.0%
Normalized EPS $2.10 to $2.18
The company now expects foreign exchange to have a negative impact of about $0.35 to $0.37 per diluted share on normalized EPS in 2015, $0.04 worse than the previous outlook provided, driven by the stronger U.S. dollar to most currencies.
The 2015 normalized EPS guidance range excludes between $100 and $140 million of Project Renewal restructuring and other project costs, discontinued operations and costs associated with the Graco recall. (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. 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 company's home markets and the geographic deployment of its Win Bigger portfolio into the faster growing emerging markets. The company is currently on track to realize annualized cost savings from the first two phases of Project Renewal of approximately $270 to $325 million by the middle of 2015.
Conference Call
The company's first quarter 2015 earnings conference call will be held today, May 1, 2015, at 8:30 a.m. ET. A link to the webcast is provided under Events & Presentations in the Investor Relations section of Newell Rubbermaid's 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 company's 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 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. 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, with the difference in these two amounts being the impact on core sales related to foreign currency, and the difference between the change in as reported sales and the change in core sales related to foreign currency reported as the currency impact. The company's 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, dedicated personnel costs related to transformation initiatives under Project Renewal, asset devaluations resulting from the adoption and continued use of the SICAD I Venezuelan Bolivar exchange rate and certain other items, are useful because they provide investors with a meaningful perspective on the current underlying performance of the company's 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.
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(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Contigo(R), Rubbermaid(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R), Baby Jogger(R) and Dymo(R). 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 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 complete planned acquisitions and divestitures; our ability to realize the expected benefits and financial results from our recently acquired businesses and planned divestitures; and those factors listed in our most recently filed Annual Report on Form 10-K 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.
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Three Months Ended March 31,
YOY
2015 2014 % Change
Net sales $ 1,264.0 $ 1,214.3 4.1%
Cost of products sold 776.5 757.3
GROSS MARGIN 487.5 457.0 6.7%
% of sales 38.6% 37.6%
Selling, general & administrative expenses 362.0 340.3 6.4%
% of sales 28.6% 28.0%
Restructuring costs 27.3 12.0
OPERATING INCOME 98.2 104.7 (6.2)%
% of sales 7.8% 8.6%
Nonoperating expenses:
Interest expense, net 19.2 14.4
Other expense, net 0.1 40.0
19.3 54.4 (64.5)%
INCOME BEFORE INCOME TAXES 78.9 50.3 56.9%
% of sales 6.2% 4.1%
Income taxes 22.0 (1.5) NMF
Effective rate 27.9% NMF
NET INCOME FROM CONTINUING OPERATIONS 56.9 51.8 9.8%
% of sales 4.5% 4.3%
(Loss) income from discontinued operations, net of tax (2.8) 1.1
NET INCOME $ 54.1 $ 52.9 2.3%
4.3% 4.4%
EARNINGS PER SHARE:
Basic
Income from continuing operations $ 0.21 $ 0.18
(Loss) income from discontinued operations $ (0.01) $ --
Net income $ 0.20 $ 0.19
Diluted
Income from continuing operations $ 0.21 $ 0.18
(Loss) income from discontinued operations $ (0.01) $ --
Net income $ 0.20 $ 0.19
AVERAGE SHARES OUTSTANDING:
Basic 270.5 280.9
Diluted 272.7 283.8
NMF - Not meaningful
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
March 31, March 31,
Assets: 2015 2014
Cash and cash equivalents $ 215.4 $ 136.8
Accounts receivable, net 1,053.2 973.1
Inventories, net 852.3 801.3
Deferred income taxes 134.4 121.3
Prepaid expenses and other 179.2 198.8
Total Current Assets 2,434.5 2,231.3
Property, plant and equipment, net 563.3 541.3
Goodwill 2,474.6 2,362.0
Other intangible assets, net 877.2 606.5
Other assets 259.2 252.8
Total Assets $ 6,608.8 $ 5,993.9
Liabilities and Stockholders' Equity:
Accounts payable $ 615.6 $ 542.8
Accrued compensation 99.8 99.6
Other accrued liabilities 599.9 590.9
Short-term debt 733.9 318.7
Current portion of long-term debt 6.5 0.8
Total Current Liabilities 2,055.7 1,552.8
Long-term debt 2,094.1 1,666.7
Deferred income taxes 223.8 154.0
Other noncurrent liabilities 536.2 546.9
Stockholders' Equity - Parent 1,695.5 2,070.0
Stockholders' Equity - Noncontrolling Interests 3.5 3.5
Total Stockholders' Equity 1,699.0 2,073.5
Total Liabilities and Stockholders' Equity $ 6,608.8 $ 5,993.9
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three Months Ended March 31,
2015 2014
Operating Activities:
Net income $ 54.1 $ 52.9
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 42.2 38.1
Net (gain) loss from sale of discontinued operations, including impairments -- (2.2)
Non-cash restructuring costs -- 1.0
Deferred income taxes 17.9 14.6
Stock-based compensation expense 6.8 7.0
Other, net 5.5 45.0
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:
Accounts receivable 170.0 130.5
Inventories (164.8) (115.8)
Accounts payable (38.7) (16.1)
Accrued liabilities and other (247.3) (247.1)
Net cash used in operating activities $ (154.3) $ (92.1)
Investing Activities:
Proceeds from sale of discontinued operations and noncurrent assets $ 4.0 $ --
Acquisitions and acquisition-related activity (2.0) --
Capital expenditures (50.9) (31.9)
Other (0.2) (0.3)
Net cash used in investing activities $ (49.1) $ (32.2)
Financing Activities:
Net short-term borrowings $ 343.4 $ 144.9
Repurchase and retirement of shares of common stock (73.6) (44.4)
Cash dividends (53.2) (42.9)
Excess tax benefits related to stock-based compensation 15.2 5.6
Other stock-based compensation activity, net (13.6) 10.7
Net cash provided by financing activities $ 218.2 $ 73.9
Currency rate effect on cash and cash equivalents $ 1.2 $ (39.1)
Increase (decrease) in cash and cash equivalents $ 16.0 $ (89.5)
Cash and cash equivalents at beginning of period 199.4 226.3
Cash and cash equivalents at end of period $ 215.4 $ 136.8
Newell Rubbermaid Inc.
Financial Worksheet - Segment Reporting
(In Millions)
2015 2014
Reconciliation (1,2,3,4)
Reconciliation (1,2)
Year-over-year changes
Reported Excluded Normalized Operating
Reported Excluded Normalized Operating Net Sales Normalized OI
Net Sales OI Items OI Margin Net Sales OI Items OI Margin $ % $ %
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%
(1) Excluded items include project-related costs and restructuring costs associated with Project Renewal. Project-related costs of $14.9 million and restructuring costs of $27.3 million incurred during 2015 relate to Project Renewal. For 2014, project-related costs of $7.7 million and restructuring costs of $12.0 million relate to Project Renewal.
(2) Baby & Parenting normalized operating income for 2015 and 2014 excludes charges of $10.2 and $11.0 million, respectively, relating to the Graco product recall.
(3) Writing normalized operating income for 2015 excludes $0.3 million of cost of products sold resulting from increased costs of inventory due to changes in the exchange rate for the Venezuelan Bolivar.
(4) Home Solutions normalized operating income for 2015 excludes $0.1 million of acquisition and integration costs associated with the acquisitions of Ignite Holdings, LLC and bubba brands, and Baby & Parenting normalized operating income for 2015 excludes $1.6 million of costs associated with the acquisition of Baby Jogger.
Newell Rubbermaid Inc.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
CERTAIN LINE ITEMS
(in millions, except per share data)
Three Months Ended March 31, 2015
GAAP Measure
Project Renewal Costs (2)
Non-GAAP Measure
Reported
Product
recall costs (1)
Advisory
Costs
Personnel
Costs
Other
Costs
Restructuring
Costs
Inventory charge from
the devaluation of the
Venezuelan Bolivar (3)
Acquisition
and integration
cost (4)
Discontinued
operations (5)
Normalized*
Percentage
of Sales
Cost of products sold $ 776.5 $ -- $ -- $ (0.2) $ (1.0) $ -- $ (0.3) $ (1.5) $ -- $ 773.5 61.2%
Gross margin $ 487.5 $ -- $ -- $ 0.2 $ 1.0 $ -- $ 0.3 $ 1.5 $ -- $ 490.5 38.8%
Selling, general & administrative expenses $ 362.0 $ (10.2) $ (10.6) $ (2.3) $ (0.8) $ -- $ -- $ (0.2) $ -- $ 337.9 26.7%
Operating income $ 98.2 $ 10.2 $ 10.6 $ 2.5 $ 1.8 $ 27.3 $ 0.3 $ 1.7 $ -- $ 152.6 12.1%
Income before income taxes $ 78.9 $ 10.2 $ 10.6 $ 2.5 $ 1.8 $ 27.3 $ 0.3 $ 1.7 $ -- $ 133.3
Income taxes (6) $ 22.0 $ 3.3 $ 3.4 $ 0.8 $ 0.6 $ 5.5 $ 0.1 $ 0.6 $ -- $ 36.3
Net income from continuing operations $ 56.9 $ 6.9 $ 7.2 $ 1.7 $ 1.2 $ 21.8 $ 0.2 $ 1.1 $ -- $ 97.0
Net income $ 54.1 $ 6.9 $ 7.2 $ 1.7 $ 1.2 $ 21.8 $ 0.2 $ 1.1 $ 2.8 $ 97.0
Diluted earnings per share** $ 0.20 $ 0.03 $ 0.03 $ 0.01 $ 0.00 $ 0.08 $ 0.00 $ 0.00 $ 0.01 $ 0.36
Three Months Ended March 31, 2014
GAAP Measure
Non-GAAP Measure
Reported
Product
recall costs (1)
Restructuring and
restructuring-related
costs (2)
Charge resulting from
the devaluation of the
Venezuelan Bolivar (7)
Discontinued
operations (5)
Normalized*
Percentage
of Sales
Cost of products sold $ 757.3 $ (8.6) $ -- $ -- $ -- $ 748.7 61.7%
Gross margin $ 457.0 $ 8.6 $ -- $ -- $ -- $ 465.6 38.3%
Selling, general & administrative expenses $ 340.3 $ (2.4) $ (7.7) $ -- $ -- $ 330.2 27.2%
Operating income $ 104.7 $ 11.0 $ 19.7 $ -- $ -- $ 135.4 11.2%
Nonoperating expenses $ 54.4 $ -- $ -- $ (38.7) $ -- $ 15.7
Income before income taxes $ 50.3 $ 11.0 $ 19.7 $ 38.7 $ -- $ 119.7
Income taxes (6) $ (1.5) $ 4.0 $ 5.5 $ 13.9 $ -- $ 21.9
Net income from continuing operations $ 51.8 $ 7.0 $ 14.2 $ 24.8 $ -- $ 97.8
Net income $ 52.9 $ 7.0 $ 14.2 $ 24.8 $ (1.1) $ 97.8
Diluted earnings per share** $ 0.19 $ 0.02 $ 0.05 $ 0.09 $ (0.00) $ 0.34
.
* Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**Totals may not add due to rounding.
(1) During the three months ended March 31, 2015 and 2014, the Company recognized costs of $10.2 million and $11.0 million, respectively, associated with the Graco product recall.
(2) Costs associated with Project Renewal during the three months ended March 31, 2015 include $14.9 million of project-related costs and $27.3 million of restructuring costs. Project-related costs include advisory and consultancy costs, compensation and related costs of personnel dedicated to transformation projects, and other project-related costs. Restructuring and restructuring-related costs during the three months ended March 31, 2014 include $7.7 million of organizational change implementation and restructuring-related costs and $12.0 million of restructuring costs incurred in connection with Project Renewal.
(3) During the three months ended March 31, 2015, the Company recognized an increase of $0.3 million in cost of products sold resulting from increased costs of inventory due to changes in the exchange rate for the Venezuelan Bolivar.
(4) During the three months ended March 31, 2015, the Company incurred $1.7 million of acquisition and integration costs associated with the acquisitions of Ignite Holdings, bubba brands and Baby Jogger.
(5) During the three months ended March 31, 2015 and 2014, the Company recognized net losses of $2.8 million and net income of $1.1 million, respectively, in discontinued operations, which primarily relates to the results of operations of Endicia and certain Culinary businesses.
(6) The Company determined the tax effect of the items excluded from normalized results 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.
(7) During the three months ended March 31, 2014, the Company recognized foreign exchange losses of $38.7 million resulting from the devaluation of the Venezuelan Bolivar, which under hyperinflationary accounting is recorded in the Statement of Operations.
Newell Rubbermaid Inc.
Three Months Ended March 31, 2015
In Millions
Currency Analysis
By Segment
Net Sales, As Reported Core Sales (1)
Year-Over-Year
Increase (Decrease)
2015
2014
Increase(Decrease)
2015
Less
Planned
Divestitures
Less
Acquisitions
2015
Core Sales
2014
Less
Planned
Divestitures
2014
Core Sales
Constant
Currency
Inc. (Dec.) Inc. (Dec.)
Excl.
Planned
Divest. &
Acquisitions
Currency
Impact
Excluding
Currency
Including
Currency
Currency
Impact
Acquisitions
Planned
Divestitures
Core
Sales
Growth (1)
Writing $ 341.8 $ 348.2 $ (6.4) $ 369.4 $ -- $ -- $ 369.4 $ 339.0 $ -- $ 339.0 $ 30.4 $ 30.4 $ (36.8) 9.0% (1.8)% (10.8)% 0.0% 0.0% 9.0%
Home Solutions 364.5 316.4 48.1 367.6 -- 48.4 319.2 316.3 -- 316.3 51.3 2.9 (3.2) 16.2% 15.2% (1.0)% 15.3% (0.0)% 0.9%
Tools 180.4 187.8 (7.4) 192.8 -- -- 192.8 186.8 -- 186.8 6.0 6.0 (13.4) 3.2% (3.9)% (7.1)% 0.0% (0.0)% 3.2%
Commercial Products 185.2 182.6 2.6 189.5 9.8 -- 179.7 181.5 16.6 164.9 8.0 14.8 (5.4) 4.4% 1.4% (3.0)% 0.0% (4.6)% 9.0%
Baby & Parenting 192.1 179.3 12.8 197.5 -- 18.2 179.3 177.9 -- 177.9 19.6 1.4 (6.8) 11.0% 7.1% (3.9)% 10.2% (0.0)% 0.8%
Total Company $1,264.0 $1,214.3 $ 49.7 $ 1,316.8 $ 9.8 $ 66.6 $ 1,240.4 $ 1,201.5 $ 16.6 $ 1,184.9 $ 115.3 $ 55.5 $ (65.6) 9.6% 4.1% (5.5)% 5.5% (0.6)% 4.7%
Win Bigger Businesses Core Sales Growth (2) $ 707.4 $ 718.6 $ (11.2) $ 751.7 $ 9.8 $ -- $ 741.9 $ 707.3 $ 16.6 $ 690.7 $ 44.4 $ 51.2 $ (55.6) 6.3% (1.6)% (7.9)% 0.0% (1.1)% 7.4%
By Geography
United States $ 917.2 $ 813.5 $ 103.7 $ 917.2 $ 9.4 $ 66.6 $ 841.2 $ 813.5 $ 15.7 $ 797.8 $ 103.7 $ 43.4 $ -- 12.7% 12.7% 0.0% 8.2% (0.9)% 5.4%
Canada 46.2 53.1 (6.9) 51.6 0.4 -- 51.2 53.0 0.9 52.1 (1.4) (0.9) (5.5) (2.6)% (13.0)% (10.4)% 0.0% (0.9)% (1.7)%
Total North America 963.4 866.6 96.8 968.8 9.8 66.6 892.4 866.5 16.6 849.9 102.3 42.5 (5.5) 11.8% 11.2% (0.6)% 7.7% (0.9)% 5.0%
Europe, Middle East and Africa 127.6 163.9 (36.3) 150.5 -- -- 150.5 158.8 -- 158.8 (8.3) (8.3) (28.0) (5.2)% (22.1)% (16.9)% 0.0% 0.0% (5.2)%
Latin America 89.4 92.0 (2.6) 106.8 -- -- 106.8 85.1 -- 85.1 21.7 21.7 (24.3) 25.5% (2.8)% (28.3)% 0.0% 0.0% 25.5%
Asia Pacific 83.6 91.8 (8.2) 90.7 -- -- 90.7 91.1 -- 91.1 (0.4) (0.4) (7.8) (0.4)% (8.9)% (8.5)% 0.0% 0.0% (0.4)%
Total International 300.6 347.7 (47.1) 348.0 -- -- 348.0 335.0 -- 335.0 13.0 13.0 (60.1) 3.9% (13.5)% (17.4)% 0.0% 0.0% 3.9%
Total Company $1,264.0 $1,214.3 $ 49.7 $ 1,316.8 $ 9.8 $ 66.6 $ 1,240.4 $ 1,201.5 $ 16.6 $ 1,184.9 $ 115.3 $ 55.5 $ (65.6) 9.6% 4.1% (5.5)% 5.5% (0.6)% 4.7%
(1) "Core Sales" is determined by applying a fixed exchange rate, calculated as the 12-month average in 2014, to the current and prior year local currency sales amounts, with the difference between the change in "As Reported" sales and the change in "Core Sales" reported in the table as "Currency Impact". Core Sales Growth excludes the impact of currency, acquisitions and planned divestitures.
(2) Win Bigger businesses include Writing, Tools, and Commercial Products segments.
Newell Rubbermaid Inc.
Reconciliation of Normalized EPS Guidance
Year Ending December 31, 2015
Year Ending
December 31, 2015
Diluted earnings per share $ 1.63 to $ 1.81
Graco product recall
$ 0.03
Restructuring and other Project Renewal costs $ 0.26 to $ 0.40
Acquisition and integration costs
$ 0.01
Discontinued operations $ -- to $ (0.01)
Normalized earnings per share $ 2.00 to $ 2.18
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Global Communications
(770) 418-7251
WisdomTree Announces First Quarter 2015 Results
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WisdomTree Investments, Inc.
29 minutes ago
GlobeNewswire
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Net income of $12.1 million or diluted EPS $0.09
Record $13.5 billion in net inflows for the quarter with AUM reaching record $55.8 billion
Net inflow market share of 23.8% for the quarter
Declares $0.08 quarterly dividend
NEW YORK, May 1, 2015 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (WETF), an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager today reported net income of $12.1 million for the first quarter of 2015 or $0.09 per share on a fully diluted basis. This compares to $30.2 million in the first quarter of 2014 (which included a non-recurring tax benefit of $13.7 million) and $9.6 million in the fourth quarter of 2014. Included in the quarter was a loss of $1.8 million, or $0.01 per diluted EPS, associated with the Company`s European listed ETP business, which was acquired in April 2014.
WisdomTree CEO and President Jonathan Steinberg said, "We reported a record $13.5 billion in net inflows in the first quarter in the U.S., making WisdomTree one of the fastest-growing companies within the ETF and broader asset management industry in 2015 to date. WisdomTree`s industry-leading growth underscores our ability to identify and disseminate useful and differentiated investment solutions to an ever-growing ETF market. We also recorded record revenues and pre-tax earnings in the quarter."
"Now the sixth largest ETP sponsor in the world with $61.2 billion in AUM globally, we are continuing to experience strong organic growth in the second quarter, led by our currency hedged equity ETFs. Importantly, we are continuing to plant the seeds for future growth as we execute against the strategic growth initiatives we previously outlined for the year, including investments in people, products and technology."
Summary Operating and Financial Highlights
Three Months Ended Change From
Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
Operating Highlights 2015 2014 2014 2014 2014
US listed ETFs ($, in billions):
AUM $55.8 $39.3 $33.9 41.9% 64.6%
Net inflows $13.5 $4.5 ($0.5) 200.7% n/a
Average AUM $46.4 $37.7 $33.9 23.1% 37.0%
Average advisory fee 0.52% 0.52% 0.51% -- +.01
Market share of industry inflows 23.8% 3.8% -- +20.0 --
European listed ETPs ($, in millions):
AUM $334.6 $181.2 -- 84.7% --
Net inflows $174.2 $98.2 -- 77.4% --
Average advisory fee 0.75% 0.73% -- +.02 --
Financial Highlights ($, in millions, except per share amounts):
Consolidated Results:
Total revenues $60.1 $49.6 $42.9 21.3% 40.1%
Pre-tax income $21.0 $16.7 $16.5 26.0% 27.6%
Net income $12.1 $9.6 $30.2 25.4% (60.1%)
Diluted earnings per share $0.09 $0.07 $0.22 0.02 (0.13)
Pre-tax margin 35.0% 33.6% 38.4% +1.4 -3.4
US listed ETFs:
Gross margin1 (non-GAAP) 83.2% 82.5% 78.6% +0.7 +4.6
Pre-tax margin 38.3% 37.8% 38.4% +0.5 -0.1
1 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
Recent Business Developments
•On February 17, 2015, the WisdomTree Europe Hedged Equity Fund (HEDJ) surpassed $10 billion in assets
•On March 4, 2015, the Company launched the Europe Hedged SmallCap Equity Fund (EUSC)
•On March 9, 2015, the Company surpassed $50 billion in assets under management
•On March 20, 2015, the WisdomTree Europe Hedged Equity Fund (HEDJ) received ETF.com award for `ETF of the Year`
•On April 9, 2015, the Company launched the Japan Hedged Dividend Growth Fund (JHDG)
•On April 16, 2015, the Company announced it named David Yates Chief Information Officer
•On April 20, 2015, the Company announced it named Alisa Maute Head of U.S. Sales
•WisdomTree Europe: •Listed six WisdomTree UCITS ETFs in Germany on the Deutsche Börse on February 15, 2015; listed six WisdomTree UCITS ETFs in Switzerland on the SIX Swiss Exchange on March 15, 2015; listed the ISEQ 20® UCITS ETF (WTIE) in Ireland on the Irish Stock Exchange on April 20, 2015 and in London on the London Stock Exchange on April 21, 2015; and announced it named Nizam Hamid Head of European Sales on April 23, 2015
•Listed seven Boost ETP ETCs in Italy on the Borsa Italiana on April 9, 2015
Assets Under Management and Net Inflows
US listed ETF assets under management ("AUM") reached a record $55.8 billion at March 31, 2015, up 42% from December 31, 2014, primarily due to record inflows of $13.5 billion. US listed AUM was up 65% from March 31, 2014.
European listed AUM was $334.6 million, up 85% from $181.2 million at December 31, 2014 primarily due to $174.2 million of net inflows, primarily in the company`s Boost branded ETPs.
Performance
In evaluating the performance of our US listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 90.2% of the $49.5 billion invested in our ETFs and 60% (31 of 52) of our ETFs outperformed their comparable Morningstar average since inception as of March 31, 2015.
For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.
First Quarter Financial Discussion
Revenues
Total revenues increased 40.1% from the first quarter of 2014 and 21.3% compared to the fourth quarter of 2014 to a record $60.1 million primarily due to higher average AUM from strong inflows. Revenues from our European listed ETPs, which were acquired in April 2014, increased to $0.6 million from $0.4 million in the fourth quarter of 2014 primarily due to higher inflows for the Boost branded ETPs. The average advisory fee for our US listed ETFs increased to 0.52% as compared to 0.51% for the first quarter of 2014 due to the change in the mix of our AUM and remained the same at 0.52% as compared to the fourth quarter of 2014.
Margins
Gross margin for our US listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 83.2% in the first quarter of 2015 as compared to 78.6% in the first quarter of 2014 and 82.5% in the fourth quarter of 2014. The increase was primarily due to beneficial pricing changes for our fund accounting, administration and custody services, which took effect in April 2014, as well as higher average AUM.
Consolidated pre-tax margin was 35.0% in the first quarter of 2015. Pre-tax margin for our U.S. listed ETFs was 38.3% on average U.S. listed AUM of $46.4 billion. The Company`s margins were compressed in the first quarter due to the timing difference between when the Company recorded higher compensation costs from record inflows levels versus when it recognizes the full impact of the revenues from these inflows.
Expenses
Total expenses increased 48.0% from the first quarter of 2014 and 18.8% compared to the fourth quarter of 2014 to $39.1 million. Included in the quarter was $2.4 million of expenses associated with our European listed ETPs.
•Compensation and benefits expense increased 110% from the first quarter of 2014 to $19.6 million due to higher accrued incentive compensation due to our record setting inflow levels experienced in the quarter as well as higher headcount related expenses to support our growth. Included in the quarter was $1.1 million in compensation costs for employees associated with our European listed ETPs. Our headcount was 109 in the US and 136 globally at the end of the quarter.
•Fund management and administration expense increased 10.9% from the first quarter of 2014 to $10.2 million. Fees associated with higher inflow levels, average AUM and number of ETFs increased, and were partly offset by lower fees as a result of changing our fund accounting, administration and custody service provider in April 2014. We also incurred additional costs for our European listed ETPs which were acquired in April 2014. This expense increased 13.8% compared to the fourth quarter of 2014 due to expenses associated with higher inflow levels and additional costs for the WisdomTree branded ETFs which were launched in Europe in the fourth quarter. We had 70 US listed ETFs and 63 European listed ETPs at the end of the quarter.
•Marketing and advertising expense increased 19.3% from the first quarter of 2014 and 7.2% from the fourth quarter to $3.1 million primarily due to higher levels of advertising related activities to support our growth.
•Sales and business development expense increased 46.0% from the first quarter of 2014 to $1.9 million primarily due to higher spending for sales related activities. This expense was relatively unchanged compared to the fourth quarter of 2014.
•Professional and consulting fees decreased 18.5% from the first quarter of 2014 to $1.5 million. In the first quarter of last year, we incurred advisory fees in connection with our acquisition of Boost. This expense decreased 42.9% compared to the fourth quarter of 2014 primarily due to lower fees relating to strategic consulting services.
•Occupancy, communication and equipment expense was essentially unchanged at $0.9 million as compared to the first and fourth quarters of last year.
•Depreciation and amortization expense was also relatively unchanged at $0.2 million as compared to the first and fourth quarters of last year.
•Third-party sharing arrangements expense increased to $0.3 million in the first quarter of 2015 as compared to the first quarter of 2014 primarily due to higher fees for our marketing agents in Latin America and listing our ETFs on a third party platform.
•Acquisition contingent payment expense was $0.3 million in the first quarter. This represents the current expense accrual for expected payments due to the former Boost shareholders related to our acquisition in April 2014 and is primarily driven by increased AUM derived from our European business.
•Income tax expense was $9.0 million for the first quarter of 2015. The effective tax rate on our US listed ETF business increased to 39.4% from 38.3% in the fourth quarter of last year due to state taxes. The Company`s overall effective tax rate was 42.6% due to the non-deductibility of losses in our European ETP business. These losses may be recognized in the future after the European business is profitable. The Company recorded a tax benefit of $13.7 million in the first quarter of last year related to its deferred tax asset, which previously had been recorded with a full valuation allowance.
Balance Sheet
As of March 31, 2015, the Company had total assets of $217.9 million which consisted primarily of cash and cash equivalents and investments of $173.3 million. There were approximately 135.6 million shares of common stock outstanding as of March 31, 2015. Fully diluted weighted average shares outstanding were 137.3 million for the first quarter.
Quarterly Dividend and Stock Buyback
The Company`s Board of Directors declared a quarterly cash dividend of $0.08 per share of the Company`s common stock. The dividend will be paid on May 27, 2015 to stockholders of record as of the close of business on May 13, 2015. In addition, during the quarter, the Company purchased approximately 773,000 shares for $14.1 million.
Conference Call
WisdomTree will discuss its results and operational highlights during a conference call on Friday, May 1, 2015 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on our management`s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this press release may include statements about:
•anticipated trends, conditions and investor sentiment in the global markets and ETPs;
•anticipated levels of inflows into and outflows out of our ETPs;
•our ability to deliver favorable rates of return to investors;
•our ability to develop new products and services;
•our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;
•our ability to successfully expand our business into non-U.S. markets;
•timing of payment of our cash income taxes;
•competition in our business; and
•the effect of laws and regulations that apply to our business.
Our business is subject to many risks and uncertainties, including without limitation:
•Recent historical growth may not provide an accurate representation of the growth we may experience in the future, which may make it difficult to evaluate our future prospects.
•Challenging global market conditions associated with declining prices of securities can adversely affect our business by reducing the market value of the assets we manage or causing customers to sell their fund shares and trigger redemptions.
•Fluctuations in the amount and mix of our AUM may negatively impact revenue and operating margin.
•We derive a substantial portion of our revenue from a limited number of products - in particular two funds, the WisdomTree Europe Hedged Equity Fund and the WisdomTree Japan Hedged Equity Fund - and, as a result, our operating results are particularly exposed to the performance of those funds, investor sentiment toward the strategies pursued by those funds and our ability to maintain the AUM of those funds.
•Most of our AUM are held in our U.S. listed ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.
•We derive a substantial portion of our revenue from international hedged equity ETFs and are exposed to the market-specific political and economic risks, as well as general investor sentiment regarding monetary policy of those markets.
•We derive a substantial portion of our revenue from products invested in securities of Japanese and European companies and are exposed to the market-specific political and economic risks, as well as general investor sentiment regarding future growth of those markets and currency fluctuations.
•We derive a significant portion of our revenue from products invested in emerging markets and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets.
•Many of our ETPs and ETFs have a limited track record, and poor investment performance could cause our revenue to decline.
•We depend on third parties to provide many critical services to operate our business and our ETPs and ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm our customers.
Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, please see the section entitled "Risk Factors" in the Company`s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release.
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, "WisdomTree"), is an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately $61.2 billion in assets under management globally.
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended % Change From
Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
2015 2014 2014 2014 2014
Revenues
Advisory fees $ 59,869 $ 49,327 $ 42,609 21.4% 40.5%
Other income 272 273 311 -0.4% -12.5%
Total revenues 60,141 49,600 42,920 21.3% 40.1%
Expenses
Compensation and benefits 19,601 14,099 9,355 39.0% 109.5%
Fund management and administration 10,168 8,932 9,168 13.8% 10.9%
Marketing and advertising 3,076 2,869 2,578 7.2% 19.3%
Sales and business development 1,900 1,914 1,301 -0.7% 46.0%
Professional and consulting fees 1,463 2,560 1,795 -42.9% -18.5%
Occupancy, communication and equipment 918 943 900 -2.7% 2.0%
Depreciation and amortization 220 221 192 -0.5% 14.6%
Third party sharing arrangements 283 282 10 0.4% 2730.0%
Acquisition contingent payment 257 -- -- n/a n/a
Other 1,235 1,101 1,142 12.2% 8.1%
Total expenses 39,121 32,921 26,441 18.8% 48.0%
Income before taxes 21,020 16,679 16,479 26.0% 27.6%
Income tax expense/(benefit) 8,958 7,057 (13,725) -- --
Net income $ 12,062 $ 9,622 $ 30,204 25.4% -60.1%
Income before taxes per share - basic $ 0.16 $ 0.13 $ 0.13
Income before taxes per share - diluted $ 0.15 $ 0.12 $ 0.12
Net income per share - basic $ 0.09 $ 0.07 $ 0.23
Net income per share - diluted $ 0.09 $ 0.07 $ 0.22
Weighted average common shares - basic 134,075 132,816 130,934
Weighted average common shares - diluted 137,311 138,787 138,667
WISDOMTREE INVESTMENTS, INC.
NON-GAAP SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
US European
Listed Listed US Listed Business
Business Business Total % Change From
Q1/15 Q1/15 Q1/15 Q1/15 Q4/14 Q1/14 Q4/14 Q1/14
Revenues
Advisory fees $ 59,346 $ 523 $ 59,869 $ 59,346 $ 48,966 $ 42,609 21.2% 39.3%
Other income 234 38 272 234 243 311 -3.7% -24.8%
Total revenues 59,580 561 60,141 59,580 49,209 42,920 21.1% 38.8%
Expenses
Compensation and benefits 18,475 1,126 19,601 18,475 13,127 9,355 40.7% 97.5%
Fund management and administration 9,733 435 10,168 9,733 8,334 9,168 16.8% 6.2%
Marketing and advertising 2,952 124 3,076 2,952 2,696 2,578 9.5% 14.5%
Sales and business development 1,865 35 1,900 1,865 1,620 1,301 15.1% 43.4%
Professional and consulting fees 1,298 165 1,463 1,298 2,456 1,795 -47.1% -27.7%
Occupancy, communication and equipment 847 71 918 847 850 900 -0.4% -5.9%
Depreciation and amortization 219 1 220 219 219 192 0.0% 14.1%
Third party sharing arrangements 283 -- 283 283 282 10 0.4% 2730.0%
Acquisition contingent payment -- 257 257 -- -- -- n/a n/a
Other 1,091 144 1,235 1,091 1,007 1,142 8.3% -4.5%
Total expenses 36,763 2,358 39,121 36,763 30,591 26,441 20.2% 39.0%
Income/(loss) before taxes 22,817 (1,797) 21,020 22,817 18,618 16,479 22.6% 38.5%
Income tax expense/(benefit) 8,987 (30) 8,958 8,987 7,131 (13,725) 26.0% n/a
Net income/(loss) $ 13,830 $ (1,767) $ 12,062 $ 13,830 $ 11,487 $ 30,204 20.4% -54.2%
Pretax margin 38.3% 35.0%
Gross margin 83.2% 82.6%
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
March 31, December 31,
2015 2014
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 151,701 $ 165,284
Accounts receivable 24,600 18,176
Deferred tax asset, net 2,599 3,872
Other current assets 2,051 1,708
Total current assets 180,951 189,040
Fixed assets, net 10,153 10,356
Investments 21,629 13,990
Deferred tax asset, net 3,441 5,618
Goodwill 1,676 1,676
Other noncurrent assets 83 71
Total assets $ 217,933 $ 220,751
LIABILITIES AND STOCKHOLDERS` EQUITY
LIABILITIES
Current liabilities:
Fund management and administration payable $ 12,648 $ 9,983
Compensation and benefits payable 11,070 14,333
Accounts payable and other liabilities 5,920 5,115
Total current liabilities 29,638 29,431
Other noncurrent liabilities:
Acquisition payable 2,014 1,757
Deferred rent payable 5,230 5,278
Total liabilities 36,882 36,466
STOCKHOLDERS` EQUITY
Common stock, par value $0.01; 250,000 shares authorized:
issued: 136,971 and 134,959 1,370 1,350
outstanding: 135,553 and 133,445
Additional paid-in capital 204,752 209,216
Accumulated other comprehensive loss (106) (53)
Accumulated deficit (24,965) (26,228)
Total stockholders` equity 181,051 184,285
Total liabilities and stockholders` equity $ 217,933 $ 220,751
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended
March 31, March 31,
2015 2014
Cash flows from operating activities
Net income $ 12,062 $ 30,204
Non-cash items included in net income:
Income tax expense/(benefit) 8,608 (13,725)
Depreciation and amortization 220 192
Stock-based compensation 2,344 2,015
Deferred rent (48) 643
Deferred acquisition contingent payment 257 --
Accretion to interest income and other 3 (111)
Changes in operating assets and liabilities:
Accounts receivable (6,356) (224)
Other assets (359) 18
Fund management and administration payable 2,640 1,358
Compensation and benefits payable (3,230) (11,473)
Accounts payable and other liabilities 796 537
Net cash provided by operating activities 16,937 9,434
Cash flows from investing activities
Purchase of fixed assets (20) (3,527)
Purchase of investments (8,449) (154)
Proceeds from the redemption of investments 808 61
Net cash used in investing activities (7,661) (3,620)
Cash flows from financing activities
Shares repurchased (14,070) (5,426)
Dividends paid (10,799) --
Proceeds from exercise of stock options 2,125 76
Net cash used in financing activities (22,744) (5,350)
Decrease in cash flows due to changes in foreign exchange rate (115) --
Net (decrease)/ increase in cash and cash equivalents (13,583) 464
Cash and cash equivalents - beginning of period 165,284 104,316
Cash and cash equivalents - end of period $ 151,701 $ 104,780
Supplemental disclosure of cash flow information
Cash paid for taxes $ 356 $ 14
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
US LISTED ETFs
Total ETFs (in millions)
Beginning of period assets 39,281 35,823 34,884
Inflows/(outflows) 13,520 4,496 (502)
Market appreciation/(depreciation) 2,957 (1,038) (498)
End of period assets 55,758 39,281 33,884
Average assets during the period 46,391 37,680 33,859
Revenue Days 90 92 90
ETF Industry and Market Share (in billions)
ETF industry net inflows 56.7 119.7 14.5
WisdomTree market share of industry inflows 23.8% 3.8% 0.0%
International Hedged Equity ETFs (in millions)
Beginning of period assets 17,760 13,971 13,348
Inflows/(outflows) 13,440 4,580 (12)
Market appreciation/(depreciation) 2,725 (791) (724)
End of period assets 33,925 17,760 12,612
Average assets during the period 24,559 15,637 13,052
US Equity ETFs (in millions)
Beginning of period assets 9,390 7,939 7,181
Inflows 294 968 189
Market appreciation 64 483 135
End of period assets 9,748 9,390 7,505
Average assets during the period 9,770 8,833 7,176
Emerging Markets Equity ETFs (in millions)
Beginning of period assets 6,187 7,495 7,448
Outflows (165) (836) (632)
Market appreciation/(depreciation) 46 (472) (63)
End of period assets 6,068 6,187 6,753
Average assets during the period 6,147 7,092 6,775
International Developed Equity ETFs (in millions)
Beginning of period assets 3,988 4,494 3,864
Inflows/(outflows) 188 (305) 812
Market appreciation/(depreciation) 147 (201) 154
End of period assets 4,323 3,988 4,830
Average assets during the period 4,111 4,170 4,347
Fixed Income ETFs (in millions)
Beginning of period assets 1,152 1,379 1,906
Outflows (210) (164) (306)
Market appreciation/(depreciation) (38) (63) 10
End of period assets 904 1,152 1,610
Average assets during the period 1,018 1,294 1,747
Currency ETFs (in millions)
Beginning of period assets 599 362 979
Inflows/(outflows) (44) 232 (549)
Market appreciation/(depreciation) 10 5 (8)
End of period assets 565 599 422
Average assets during the period 571 456 611
Alternative Strategy ETFs (in millions)
Beginning of period assets 205 183 158
Inflows/(outflows) 17 21 (4)
Market appreciation/(depreciation) 3 1 (2)
End of period assets 225 205 152
Average assets during the period 215 198 151
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
Average ETF assets during the period
International hedged equity ETFs 53% 42% 39%
US equity ETFs 21% 23% 21%
Emerging markets equity ETFs 14% 19% 20%
International developed equity ETFs 9% 11% 13%
Fixed income ETFs 2% 3% 5%
Currency ETFs 1% 1% 2%
Alternative strategy ETFs 0% 1% 0%
Total 100% 100% 100%
Average ETF advisory fee during the period
Alternative strategy ETFs 0.95% 0.95% 0.94%
Emerging markets equity ETFs 0.71% 0.70% 0.66%
International developed equity ETFs 0.56% 0.56% 0.56%
International hedged equity ETFs 0.53% 0.51% 0.49%
Fixed income ETFs 0.52% 0.53% 0.55%
Currency ETFs 0.50% 0.49% 0.49%
US equity ETFs 0.35% 0.35% 0.35%
Blended total 0.52% 0.52% 0.51%
Number of ETFs - end of the period
International developed equity ETFs 17 17 16
US equity ETFs 13 13 13
International hedged equity ETFs 13 12 6
Fixed income ETFs 11 12 12
Emerging markets equity ETFs 8 8 7
Currency ETFs 6 6 6
Alternative strategy ETFs 2 2 2
Total 70 70 62
EUROPEAN LISTED ETPs
Total ETPs (in thousands)
Beginning of period assets 165,018 123,210
Inflows 145,381 82,175
Market depreciation (21,598) (40,367)
End of period assets 288,801 165,018
Average ETP advisory fee during the period 0.81% 0.78%
Number of ETPs - end of the period 57 50
Total UCITS ETFs (in thousands)
Beginning of period assets**** 16,179 --
Inflows 28,851 16,036
Market appreciation 816 143
End of period assets 45,846 16,179
Average ETP advisory fee during the period 0.40% 0.38%
Number of ETPs - end of the period 6 6
U.S. headcount 109 101 90
European headcount 27 23
Note: Previously issued statistics may be restated due to trade adjustments
Source: Investment Company Institute, Bloomberg, WisdomTree
****UCITS first launched October 24, 2014
Non-GAAP Financial Measurements
In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. The non-GAAP financial measurements included in this release include gross margin, gross margin percentage and our operating results for our US and European listed ETF businesses. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. We disclose gross margin as a non-GAAP financial measurement to allow investors to analyze our revenues less the direct costs paid to third parties attributable to those revenues. We disclose the results of our US listed ETF business to allow investors to better compare our results to the prior year as in April 2014, we acquired Boost ETP, a UK based ETP sponsor.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP to NON-GAAP RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2015 2014 2014
GAAP total revenue $ 60,141 $ 49,600 $ 42,920
Fund management and administration (10,168) (8,932) (9,168)
Third party sharing arrangements (283) (282) (10)
Gross margin $ 49,690 $ 40,386 $ 33,742
Gross margin percentage 82.6% 81.4% 78.6%
US listed ETFs:
GAAP total revenue $ 59,580 $ 49,209 $ 42,920
Fund management and administration (9,733) (8,334) (9,168)
Third party sharing arrangements (283) (282) (10)
Gross margin $ 49,564 $ 40,593 $ 33,742
Gross margin percentage 83.2% 82.5% 78.6%
CONTACT: WisdomTree Investments, Inc.
Stuart Bell / Jessica Zaloom
+1.917.267.3702 / +1.917.267.3735
sbell@wisdomtree.com / jzaloom@wisdomtree.com
6:50 am Newell Rubbermaid beats by $0.02, reports revs in-line; reaffirms FY15 EPS guidance, revs guidance (NWL) : Reports Q1 (Mar) earnings of $0.36 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.34; revenues rose 4.1% year/year to $1.26 bln vs the $1.27 bln consensus.
•Co reaffirms guidance for FY15, sees EPS of $2.10-2.18 vs. $2.15 Capital IQ Consensus Estimate; sees FY15 revs of +3.5-4.5% to ~$5.93-5.98 bln vs. $5.93 bln Capital IQ Consensus Estimate.
•Normalized gross margin was 38.8 percent, a 50 basis point improvement versus prior year, as benefits from productivity, commodity deflation and pricing more than offset the negative impacts of foreign currency and mix from acquisitions.
6:50 am Newell Rubbermaid beats by $0.02, reports revs in-line; reaffirms FY15 EPS guidance, revs guidance (NWL) : Reports Q1 (Mar) earnings of $0.36 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.34; revenues rose 4.1% year/year to $1.26 bln vs the $1.27 bln consensus.
•Co reaffirms guidance for FY15, sees EPS of $2.10-2.18 vs. $2.15 Capital IQ Consensus Estimate; sees FY15 revs of +3.5-4.5% to ~$5.93-5.98 bln vs. $5.93 bln Capital IQ Consensus Estimate.
•Normalized gross margin was 38.8 percent, a 50 basis point improvement versus prior year, as benefits from productivity, commodity deflation and pricing more than offset the negative impacts of foreign currency and mix from acquisitions.
6:50 am Newell Rubbermaid beats by $0.02, reports revs in-line; reaffirms FY15 EPS guidance, revs guidance (NWL) : Reports Q1 (Mar) earnings of $0.36 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.34; revenues rose 4.1% year/year to $1.26 bln vs the $1.27 bln consensus.
•Co reaffirms guidance for FY15, sees EPS of $2.10-2.18 vs. $2.15 Capital IQ Consensus Estimate; sees FY15 revs of +3.5-4.5% to ~$5.93-5.98 bln vs. $5.93 bln Capital IQ Consensus Estimate.
•Normalized gross margin was 38.8 percent, a 50 basis point improvement versus prior year, as benefits from productivity, commodity deflation and pricing more than offset the negative impacts of foreign currency and mix from acquisitions.
Apple beats Street 2Q forecasts
Apple tops 2Q net income and revenue expectations
CUPERTINO, Calif. (AP) _ Apple Inc. (AAPL) on Monday reported fiscal second-quarter profit of $13.57 billion.
The Cupertino, California-based company said it had profit of $2.33 per share.
The results exceeded Wall Street expectations. The average estimate of 19 analysts surveyed by Zacks Investment Research was for earnings of $2.19 per share.
The maker of iPhones, iPads and other products posted revenue of $58.01 billion in the period, which also topped Street forecasts. Fifteen analysts surveyed by Zacks expected $56.6 billion.
For the current quarter ending in June, Apple said it expects revenue in the range of $46 billion to $48 billion. Analysts surveyed by Zacks had expected revenue of $46.93 billion.
Apple shares have climbed 20 percent since the beginning of the year, while the Standard & Poor's 500 index has increased slightly more than 2 percent. In the final minutes of trading on Monday, shares hit $132.65, an increase of 62 percent in the last 12 months. Less
Sentiment: Strong Buy
Apple beats Street 2Q forecasts
Apple tops 2Q net income and revenue expectations
CUPERTINO, Calif. (AP) _ Apple Inc. (AAPL) on Monday reported fiscal second-quarter profit of $13.57 billion.
The Cupertino, California-based company said it had profit of $2.33 per share.
The results exceeded Wall Street expectations. The average estimate of 19 analysts surveyed by Zacks Investment Research was for earnings of $2.19 per share.
The maker of iPhones, iPads and other products posted revenue of $58.01 billion in the period, which also topped Street forecasts. Fifteen analysts surveyed by Zacks expected $56.6 billion.
For the current quarter ending in June, Apple said it expects revenue in the range of $46 billion to $48 billion. Analysts surveyed by Zacks had expected revenue of $46.93 billion.
Apple shares have climbed 20 percent since the beginning of the year, while the Standard & Poor's 500 index has increased slightly more than 2 percent. In the final minutes of trading on Monday, shares hit $132.65, an increase of 62 percent in the last 12 months. Less
Sentiment: Strong Buy
Apple beats Street 2Q forecasts
Apple tops 2Q net income and revenue expectations
CUPERTINO, Calif. (AP) _ Apple Inc. (AAPL) on Monday reported fiscal second-quarter profit of $13.57 billion.
The Cupertino, California-based company said it had profit of $2.33 per share.
The results exceeded Wall Street expectations. The average estimate of 19 analysts surveyed by Zacks Investment Research was for earnings of $2.19 per share.
The maker of iPhones, iPads and other products posted revenue of $58.01 billion in the period, which also topped Street forecasts. Fifteen analysts surveyed by Zacks expected $56.6 billion.
For the current quarter ending in June, Apple said it expects revenue in the range of $46 billion to $48 billion. Analysts surveyed by Zacks had expected revenue of $46.93 billion.
Apple shares have climbed 20 percent since the beginning of the year, while the Standard & Poor's 500 index has increased slightly more than 2 percent. In the final minutes of trading on Monday, shares hit $132.65, an increase of 62 percent in the last 12 months. Less
Sentiment: Strong Buy
Lithia Motors Reports Adjusted EPS of $1.39 for First Quarter 2015; Revenues Increase 66%
Lithia Increases Dividend to $0.20 per Share for First Quarter
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Marketwired
Lithia Motors
April 22, 2015 7:29 AM
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MEDFORD, OR--(Marketwired - Apr 22, 2015) - Lithia Motors, Inc. ( NYSE : LAD ) reported the highest first quarter adjusted net income in Company history and increased adjusted net income from continuing operations 36% for the first quarter of 2015 over the prior year period.
2015 first quarter adjusted net income from continuing operations was $36.9 million, or $1.39 per diluted share. This compares to 2014 first quarter adjusted net income from continuing operations of $27.1 million, or $1.03 per diluted share.
Unadjusted net income from continuing operations for the first quarter of 2015 was $40.7 million, or $1.53 per diluted share, compared to $24.7 million, or $0.94 per diluted share, for the first quarter of 2014. As shown in the attached non-GAAP reconciliation tables, the 2015 first quarter per share adjusted results from continuing operations exclude a $0.09 benefit related to the gain on the sale of a store and a $0.05 benefit related to an equity investment. The 2014 first quarter per share adjusted results from continuing operations exclude a $0.09 expense related to an adjustment to a reserve associated with a lawsuit filed in 2006 and settled in 2013, a loss for a hailstorm in Texas and a reserve for a contract assumed in an acquisition.
First quarter 2015 revenue from continuing operations increased $711 million, or 66%, to $1.8 billion from $1.1 billion for the first quarter of 2014.
First Quarter-over-Quarter Operating Highlights:
•Total same store sales increased 11%
•New vehicle same store sales increased 11%
•Used vehicle retail same store sales increased 11%
•Service, body and parts same store sales increased 11%
•Same store F&I per unit increased $52 to $1,233
•Adjusted SG&A expense as a percentage of gross profit was 71.3%
"We delivered the best first quarter earnings in our Company's history, and the second best quarterly earnings ever," said Bryan DeBoer, President and CEO. "For the fourth consecutive quarter, we achieved double digit growth in same store sales in all business lines. On a continuing operations basis, we grew revenue 66% and adjusted net income 36% over the first quarter of 2014. We remain focused on capturing additional market share, improving existing store results, the continued success, integration and growth of DCH and actively seeking accretive acquisitions."
Chris Holzshu, SVP and CFO, said, "SG&A as a percentage of gross profit was 71.3% in the first quarter of 2015, slightly higher than the prior year due to the effect of the DCH acquisition, but better than our projection. We target improving SG&A as a percentage of gross profit as we integrate the 36 stores added in 2014. In the first quarter, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting incremental selling costs, was 45.1%. Our stores remain focused on maintaining incremental throughput of 45% to 50%, which will continue to lever our SG&A expense going forward."
Corporate Development
As previously announced, in January 2015, we opened Subaru of Clearlake, Texas. The store is a new franchise we were awarded from Subaru, which we estimate will contribute approximately $45 million in annual revenues.
Bryan DeBoer, President and CEO, stated, "The acquisition market is robust and we anticipate continued activity as independent dealers seek attractive exit strategies. We remain focused on pursuing accretive acquisitions and will continue to add locations to our portfolio in the future."
Balance Sheet Update
We ended the first quarter with $21 million in cash and $50 million in available credit from our credit facilities. Additionally, approximately $155 million of our operating real estate is currently unfinanced, which could provide an estimated additional $116 million in available liquidity, for total potential liquidity of $187 million.
Dividend Payment
Our Board of Directors has approved a 25% increase in our quarterly dividend to $0.20 per share related to first quarter 2015 financial results. We will pay the dividend May 29, 2015 to shareholders of record on May 15, 2015.
2015 Outlook
We project 2015 second quarter earnings of $1.55 to $1.59 per diluted share and 2015 full year earnings of $6.20 to $6.30 per diluted share. Both projections are based on the following annual assumptions:
Continuing Operations Projections
•Total revenues of $7.5 to $7.7 billion
•New vehicle sales increasing 43.5%
•New vehicle gross margin of 5.9% to 6.1%
•Used vehicle sales increasing 36.5%
•Used vehicle gross margin of 12.6% to 12.8%
•Service body and parts sales increasing 40.5%
•Service body and parts gross margin of 48.8% to 49.0%
•Finance and insurance gross profit of $1,180 per unit
•Tax rate of 40.0%
•Average diluted shares outstanding of 26.5 million
•Full year capital expenditures are $100 million
Same Store Projections
•Total revenues of $5.2 to $5.4 billion
•New vehicle same store sales increasing 7.0%
•Used vehicle same store sales increasing 10.5%
•Service body and parts same store sales increasing 8.5%
•Finance and insurance gross profit of $1,200 per unit
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.
First Quarter Earnings Conference Call and Updated Presentation
The first quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the first 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 30 brands of new vehicles and all brands of used vehicles at 130 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; maintaining incremental throughput between 45% and 50%; continued improvement of SG&A as a percentage of gross profit; generating second quarter earnings per share of $1.58 to 1.62 per diluted share and 2015 full year earnings of $6.20 to $6.30 per diluted share; and all projections set forth under the headings "2015 Outlook," "Continuing Operations Projections" and "Same Store Projections";
•The increase in our annual revenues that we estimate will result from the dealership that we opened as set forth under the heading "Corporate Development";
•Anticipated continued success, integration and growth of DCH;
•Anticipated ability to capture additional market share; ability to find accretive acquisitions; and additions of dealership locations to the company's portfolio in the future;
•Anticipated availability of liquidity from our unfinanced operating real estate; and
•Anticipated levels of capital expenditures in the future.
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 %
March 31, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues:
New vehicle retail $ 1,007,816 $ 579,522 $ 428,294 74.0 %
Used vehicle retail 462,931 301,893 161,038 53.3
Used vehicle wholesale 62,208 42,693 19,515 45.7
Finance and insurance 64,604 39,631 24,973 63.0
Service, body and parts 173,475 104,617 68,858 65.8
Fleet and other 18,144 9,750 8,394 86.1
Total revenues 1,789,178 1,078,106 711,072 66.0
Cost of sales:
New vehicle retail 946,042 540,498 405,544 75.0
Used vehicle retail 403,489 261,097 142,392 54.5
Used vehicle wholesale 60,047 41,362 18,685 45.2
Service, body and parts 89,036 53,785 35,251 65.5
Fleet and other 17,189 9,303 7,886 84.8
Total cost of sales 1,515,803 906,045 609,758 67.3
Gross profit 273,375 172,061 101,314 58.9
Asset impairments 4,130 - - NM
SG&A expense 191,618 121,829 69,789 57.3
Depreciation and amortization 9,726 5,507 4,219 76.6
Income from operations 67,901 44,725 23,176 51.8
Floor plan interest expense (4,649 ) (2,984 ) 1665 55.8
Other interest expense (4,828 ) (1,974 ) (2,854 ) 144.6
Other income (expense), net (368 ) 937 (1,305 ) NM
Income from continuing operations before income taxes 58,056 40,704 17,352 42.6
Income tax expense (17,403 ) (16,010 ) 1,393 8.7
Income tax rate 30.0 % 39.3 %
Income from continuing operations $ 40,653 $ 24,694 $ 15,959 64.6 %
Income from discontinued operations, net of tax - 40 (40 ) NM
Net income $ 40,653 $ 24,734 $ 15,919 64.4 %
Diluted net income per share:
Continuing operations $ 1.53 $ 0.94 $ 0.59 62.8 %
Discontinued operations - - - -
Net income per share $ 1.53 $ 0.94 $ 0.59 62.8 %
Diluted shares outstanding 26,519 26,320 199 0.8 %
NM - Not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended %
March 31, Increase Increase
2015 2014 (Decrease) (Decrease)
Gross margin
New vehicle retail 6.1 % 6.7 % (60) bps
Used vehicle retail 12.8 13.5 (70) bps
Used vehicle wholesale 3.5 3.1 40 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.7 48.6 10 bps
Fleet and other 5.3 4.6 70 bps
Gross profit margin 15.3 16.0 (70) bps
Unit sales
New vehicle retail 30,623 17,274 13,349 77.3 %
Used vehicle retail 24,204 16,316 7,888 48.3
Total retail units sold 54,827 33,590 21,237 63.2
Used vehicle wholesale 9,144 5,853 3,291 56.2
Average selling price
New vehicle retail 32,910 33,549 (639 ) (1.9) %
Used vehicle retail 19,126 18,503 623 3.4
Used vehicle wholesale 6,803 7,294 (491 ) (6.7 )
Average gross profit per unit
New vehicle retail $ 2,017 $ 2,259 $ (242 ) (10.7) %
Used vehicle retail 2,456 2,500 (44 ) (1.8 )
Used vehicle wholesale 236 227 9 4.0
Finance and insurance 1,178 1,180 (2 ) (0.2 )
Total vehicle (1) 3,429 3,596 (167 ) (4.6 )
Revenue mix
New vehicle retail 56.3 % 53.8 %
Used vehicle retail 25.9 28.0
Used vehicle wholesale 3.5 3.9
Finance and insurance, net 3.6 3.7
Service, body and parts 9.7 9.7
Fleet and other 1.0 0.9
Adjusted
As reported
Three months ended
March 31, Three months ended
March 31,
Other metrics 2015 2014 2015 2014
SG&A as a % of revenue 10.9 % 10.9 % 10.7 % 11.3 %
SG&A as a % of gross profit 71.3 68.5 70.1 70.8
Operating profit as a % of revenue 3.8 4.5 3.8 4.1
Operating profit as a % of gross profit 25.1 28.3 24.8 26.0
Pretax margin 3.4 4.1 3.2 3.8
Net profit margin 2.1 2.5 2.3 2.3
(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 %
March 31, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues
New vehicle retail $ 639,501 $ 574,540 $ 64,961 11.3 %
Used vehicle retail 333,300 300,115 33,185 11.1
Used vehicle wholesale 45,055 42,649 2,406 5.6
Finance and insurance 44,136 39,355 4,781 12.1
Service, body and parts 115,325 104,000 11,325 10.9
Fleet and other 12,302 9,750 2,552 26.2
Total revenues $ 1,189,619 $ 1,070,409 $ 119,210 11.1
Gross profit
New vehicle retail $ 40,245 $ 38,638 $ 1,607 4.2 %
Used vehicle retail 44,847 40,583 4,264 10.5
Used vehicle wholesale 1,687 1,334 353 26.5
Finance and insurance 44,136 39,355 4,781 12.1
Service, body and parts 55,844 50,514 5,330 10.6
Fleet and other 777 447 330 73.8
Total gross profit $ 187,536 $ 170,871 $ 16,665 9.8
Gross margin
New vehicle retail 6.3 % 6.7 % (40) bps
Used vehicle retail 13.5 13.5 - bps
Used vehicle wholesale 3.7 3.1 60 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.4 48.6 (20) bps
Fleet and other 6.3 4.6 170 bps
Gross profit margin 15.8 16.0 (20) bps
Unit sales
New vehicle retail 18,567 17,109 1,458 8.5 %
Used vehicle retail 17,237 16,204 1,033 6.4
Total retail units sold 35,804 33,313 2,491 7.5
Used vehicle wholesale 5,986 5,848 138 2.4
Average selling price
New vehicle retail $ 34,443 $ 33,581 $ 862 2.6 %
Used vehicle retail 19,336 18,521 815 4.4
Used vehicle wholesale 7,549 7,293 256 3.5
Average gross profit per unit
New vehicle retail $ 2,168 $ 2,258 $ (90 ) (4.0) %
Used vehicle retail 2,602 2,505 97 3.9
Used vehicle wholesale 283 228 55 24.1
Finance and insurance 1,233 1,181 52 4.4
Total vehicle(1) 3,656 3,599 57 1.6
(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.
Segment Operating Highlights (Unaudited)
Three months ended %
March 31, Increase Increase
2015 2014 (Decrease) (Decrease)
Revenues
Domestic $ 691,404 $ 568,930 $ 122,474 21.5 %
Import 758,638 351,061 407,577 116.1
Luxury 336,922 158,611 178,311 112.4
Total segment revenues $ 1,786,964 $ 1,078,602 $ 708,362 65.7
Corporate and other 2,214 (496 ) 2,710 546.4
Total revenues $ 1,789,178 $ 1,078,106 $ 711,072 66.0
Segment Income(1)
Domestic $ 27,129 $ 22,421 $ 4,708 21.0 %
Import 16,100 9,265 6,835 73.8
Luxury 5,899 2,185 3,714 170.0
Total segment income $ 49,128 33,871 15,257 45.0
Corporate and other 8,928 6,833 2,095 30.7
Income from continuing operations before income taxes $ 58,056 $ 40,704 $ 17,352 42.6
(1) Segment income is defined as operating income less floor plan interest expense
Retail New Vehicle Unit Sales
Domestic 10,043 8,634 1,409 16.3 %
Import 16,774 7,139 9,635 135.0
Luxury 3,865 1,595 2,270 142.3
Total 30,682 17,368 13,314 76.7
Allocated to management (59 ) (94 ) (35 ) (37.2 )
Total retail new vehicle unit sales 30,623 17,274 13,349 77.3
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of
March 31, December 31, March 31,
2015 2014 2014
Days Supply(1)
New vehicle inventory 62 62 69
Used vehicle inventory 49 53 46
(1) Days supply calculated based on current inventory levels, excluding in-transit vehicles, and a 30-day historical cost of sales level.
Financial covenants
Requirement As of March 31, 2014
Current ratio Not less than 1.10 to 1 1.21 to 1
Fixed charge coverage ratio Not less than 1.20 to 1 3.15 to 1
Leverage ratio Not more than 5.00 to 1 2.19 to 1
Funded debt restriction Not more than $600 million $417.4 million
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended
March 31,
2015 2014
New vehicle unit sales brand mix
Honda, Acura 21.9 % 7.8 %
Chrysler 19.1 29.5
Toyota 18.9 13.7
General Motors 8.9 14.0
Subaru 7.2 9.8
BMW, MINI 5.8 6.0
Ford 4.6 6.0
Nissan 4.0 3.8
Volkswagen, Audi 2.8 2.3
Hyundai 2.1 3.1
Mercedes 1.6 2.3
Kia 1.3 0.9
Lexus 1.2 -
Other 0.6 0.8
Three months ended
March 31,
2015 2014
Revenue geographic mix
California 22.2 % 13.3 %
Oregon 16.8 22.2
Texas 15.7 23.9
New Jersey 13.7 -
Montana 5.8 8.3
Washington 5.1 7.3
Alaska 5.1 6.7
Nevada 3.2 4.8
Idaho 3.1 4.7
Iowa 2.8 4.3
New York 2.7 -
North Dakota 1.5 2.2
Hawaii 1.4 0.7
New Mexico 0.9 1.6
As of April 22, 2015
Current store count mix # of stores % of total
Chrysler, Fiat 25 19.2 %
Honda, Acura 21 16.2
Toyota, Lexus 19 14.6
General Motors 16 12.3
BMW, MINI 11 8.5
Volkswagen, Audi 8 6.2
Nissan 6 4.6
Ford 6 4.6
Subaru 6 4.6
Hyundai 5 3.8
Mercedes 3 2.3
Other 4 3.1
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
March 31, 2015 December 31, 2014
Cash and cash equivalents $ 21,023 $ 29,898
Trade receivables, net 290,638 295,379
Inventories, net 1,286,614 1,249,659
Other current assets 32,498 32,010
Assets held for sale 4,026 8,563
Total current assets $ 1,634,799 $ 1,615,509
Property and equipment, net 828,707 816,745
Goodwill 199,286 199,375
Franchise value 150,856 150,892
Other non-current assets 110,737 98,411
Total assets $ 2,924,385 $ 2,880,932
Floor plan notes payable $ 42,139 $ 41,047
Floor plan notes payable: non trade 1,113,428 1,137,632
Current maturities of long-term debt 40,543 31,912
Trade payables 76,517 70,853
Accrued liabilities 154,786 153,661
Deferred income taxes 3,140 2,603
Liabilities related to assets held for sale 2,688 4,892
Total current liabilities $ 1,433,241 $ 1,442,600
Long-term debt 621,890 609,066
Deferred revenue 56,849 54,403
Deferred income taxes 41,474 42,795
Other long-term liabilities 63,094 58,963
Total liabilities $ 2,216,548 $ 2,207,827
Class A common stock 272,625 276,058
Class B common stock 319 319
Additional paid-in capital 31,364 29,775
Accumulated other comprehensive loss (787 ) (926 )
Retained earnings 404,316 367,879
Total liabilities & stockholders' equity $ 2,924,385 $ 2,880,932
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Three months ended
March 31,
2015 2014
Net income $ 40,653 $ 24,734
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Asset impairment 4,130 -
Depreciation and amortization 9,726 5,507
Stock-based compensation 2,727 1,538
Loss on disposal of assets 8 20
Gain on sale of franchise (3,349 ) -
Deferred income taxes 3,863 1,866
Excess tax benefit from share-based payment arrangements (4,733 ) (5,846 )
(Increase) decrease:
Trade receivables, net 7,569 (12,259 )
Inventories (39,460 ) (56,748 )
Other assets (2,078 ) (2,290 )
Increase (decrease):
Floor plan notes payable, net 1,092 1,675
Trade payables 6,799 1,774
Accrued liabilities 4,444 12,521
Other long-term liabilities and deferred revenue 6,838 5,121
Net cash provided by (used in) operating activities $ 38,229 $ (22,387 )
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Three months ended
March 31,
Net cash provided by (used in) operating activities 2015 2014
As reported $ 38,229 $ (22,387 )
Floor plan notes payable, non-trade, net (21,984 ) 51,783
Borrowings on floor plan notes payable associated with acquired inventory - (19,525 )
Adjusted $ 16,245 $ 9,871
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended March 31, 2015
As reported Gain on sale of stores Equity Investment Adjusted
Asset impairments $ 4,130 $ - $ (4,130 ) $ -
Selling, general and administrative 191,618 3,349 - 194,967
Income from operations 67,901 (3,349 ) 4,130 68,682
Other income (expense) (368 ) - 1,732 1,364
Income from continuing operations before income taxes $ 58,056 $ (3,349 ) $ 5,862 $ 60,569
Income tax expense (17,403 ) 1,004 (7,250 ) (23,649 )
Net income from continuing operations $ 40,653 $ (2,345 ) $ (1,388 ) $ 36,920
Diluted earnings per share from continuing operations $ 1.53 $ (0.09 ) $ (0.05 ) $ 1.39
Diluted share count 26,519
Three Months Ended March 31, 2014
As reported Reserve adjustments Adjusted
Selling, general and administrative 121,829 (3,931 ) 117,898
Income from operations 44,725 3,931 48,656
Income from continuing operations before income taxes $ 40,704 $ 3,931 $ 44,635
Income tax expense (16,010 ) (1,546 ) (17,556 )
Net income from continuing operations $ 24,694 $ 2,385 $ 27,079
Diluted earnings per share from continuing operations $ 0.94 $ 0.09 $ 1.03
Diluted share count 26,320
Contact:
John North
VP Finance and Chief Accounting Officer
(541) 618-5748
8:06 am KKR beats by $0.09, beats on revs (KKR) : Reports Q1 (Mar) earnings of $0.62 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus Estimate of $0.53; revenues fell 5.2% year/year to $294.4 mln vs the $262.08 mln consensus.
•"We had a good start to the year with strong returns and cash flow generation, which translated into $599 mln of economic net income and $517 mln of total distributable earnings. Additionally, our balance sheet continues to perform, resulting in a 20% cash return on equity over the twelve months ending March 31st