DELAND, FL--(Marketwired - May 11, 2015) -
Highlights for the quarter ended March 29, 2015, compared sequentially to the quarter ended December 28, 2014:
- Sales of $27.9 Million, an Increase of 3.0% from $27.1 Million;
- Facility EBITDA of $5.0 Million, an Increase of 8.7% from $4.6 Million;
- EBITDA of $4.3 Million, an Increase of 13.2% from $3.8 Million; and
- EPS of $0.02, an Increase from $0.00.
ARC Group Worldwide, Inc. ("ARC") (
Third quarter revenue grew to $27.9 million, an increase of 33.5% and 3.0%, compared to the prior year and sequential periods, respectively. While year-over-year growth was largely related to acquisitions completed in late fiscal year 2014, the Company was still able to achieve sequential organic growth despite headwinds from a weak Euro, declining steel scrap prices, and order delays related to the west coast port dispute. The third quarter also saw little improvement in firearms business until the latter portion of March. Notably, revenue at our 3DMT Group grew 47.5% sequentially, to $4.7 million, during the quarter.
Third quarter Facility EBITDA grew to $5.0 million, an increase of 8.7% sequentially, with Facility EBITDA margins increasing to 18.1%, from 16.9%, in the prior sequential quarter. Overall, EBITDA grew to $4.3 million, an increase of 13.2% sequentially, with EBITDA margins increasing to 15.3%, from 14.0%, in the prior sequential quarter. 3DMT Group EBITDA was $0.52 million, an increase of 33.0% sequentially. ARC delivered quarterly EPS of $0.02, versus $0.00 EPS, in the prior sequential quarter.
Jason Young, Chairman and CEO, commented, "In the third quarter, despite significant pressure from the dramatic decrease in the Euro, a decline in steel scrap prices, depressed firearm orders, and order delays due to the west coast port dispute, we were able to grow revenue and increase margins. In particular, we have been encouraged by the momentum in our 3DMT Group, where we expect continued improvement. While the operating environment remains challenging, and we continue to invest in our sales and R&D efforts, we expect to continue to grow and expand Facility EBITDA and related margins over time. In April, we raised net cash proceeds of $15.6 million from our equity offering, which has lowered pro forma net senior debt to approximately $39.5 million1. Separately, we are considering a number of exciting acquisition opportunities which offer the potential for tremendous synergy and growth. We will evaluate these potential options, and any related financing, cognizant with the fact that our primary objective is to grow our existing businesses' sales and profitability, as well as to further develop and monetize our investments in metal 3D printing. Overall, having just expanded and strengthened our institutional shareholder base, we remain committed to creating value for our shareholders and liquidity in our stock. Further, we remain optimistic regarding the long term prospects of our approach to advanced manufacturing through the combination of additive and subtractive processes."
1Pro forma net debt consists of our senior secured debt and capital lease obligations at March 29, 2015 totaling $60.8 million, less cash on hand of $4.0 million at March 29, 2015, less prepayment of principal on senior debt of $15.6 million, and retirement of capital lease obligations of $1.7 million in April 2015.
GAAP to Non-GAAP Reconciliation
EBITDA, Facility EBITDA, EBITDA margin, and Facility EBITDA margin are non-GAAP financial measures. EBITDA margin and Facility EBITDA margin are calculated by dividing EBITDA and Facility EBITDA, respectively, by sales. We have provided this non-GAAP financial information to aid in better understanding the Company's performance absent these charges. Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
The reconciliation to GAAP is as follows (in thousands):
For the three months ended: | March 29, 2015 |
December 28, 2014 |
September 28, 2014 |
June 30, 2014 |
March 30, 2014 |
||||||||||||||||
Net Income (Loss) (GAAP) | $ | 434 | $ | (2 | ) | $ | 232 | $ | 209 | $ | 1,650 | ||||||||||
Plus: Interest Expense, Net | 1,466 | 1,213 | 921 | 618 | 282 | ||||||||||||||||
Plus: Income Tax (Benefit) Expense | (39 | ) | 237 | 153 | 7 | 1,342 | |||||||||||||||
Plus: Depreciation and Amortization | 2,395 | 2,355 | 2,311 | 1,681 | 914 | ||||||||||||||||
EBITDA (Non-GAAP) | $ | 4,256 | $ | 3,803 | $ | 3,617 | 2,515 | $ | 4,188 | ||||||||||||
EBITDA Margin (Non-GAAP) | 15.3 | % | 14.0 | % | 12.6 | % | 10.6 | % | 20.0 | % | |||||||||||
Plus: Corporate Expense | $ | 780 | $ | 783 | $ | 1,448 | $ | 2,101 | $ | 592 | |||||||||||
Facility EBITDA (Non-GAAP) | $ | 5,036 | $ | 4,586 | $ | 5,065 | $ | 4,616 | $ | 4,780 | |||||||||||
Facility EBITDA Margin (Non-GAAP) | 18.1 | % | 16.9 | % | 17.6 | % | 19.5 | % | 22.8 | % | |||||||||||
EBITDA excludes interest expense, net and income taxes as these items are associated with our capitalization and tax structures. EBITDA also excludes depreciation and amortization expense as these non-cash expenses reflect the impact of prior capital expenditure decisions which may not be indicative of future capital expenditure requirements. Facility EBITDA consists of EBITDA from our operating segments. We believe this is a meaningful measurement of the operating performance of our manufacturing facilities. Corporate expenses primarily consist of costs not allocated to our manufacturing facilities such as compensation related costs for employees assigned to corporate, board of directors fees and expenses, professional fees, insurance costs, and marketing costs. Corporate expenses were higher in the quarters ended September 28, 2014 and June 30, 2014 as a result of costs incurred in connection with our acquisitions and integration related costs, costs associated with entering into and amending our debt agreements, and higher compensation costs associated with bonuses in fiscal year 2014.
About ARC Group Worldwide, Inc.
ARC Group Worldwide, Inc. is a leading global advanced manufacturing and 3D printing service provider. Founded in 1987, the Company offers its customers a compelling portfolio of advanced manufacturing technologies and cutting-edge capabilities to improve the efficiency of traditional manufacturing processes and accelerate their time to market. In addition to being a world leader in metal injection molding ("MIM"), ARC has significant expertise in 3D printing and imaging, materials science, advanced tooling, automation, machining, stamping, plastic injection molding, lean manufacturing, and robotics. For more information about ARC Group Worldwide, Inc., please visit ARC Group Worldwide, Inc. or its operating subsidiaries at 3D Material Technologies, Advanced Forming Technology., Advanced Forming Technology - Hungary, ARCMIM, ARC Wireless, Advance Tooling Concepts, FloMet, General Flange & Forge, Injectamax, Kecy Metal Technologies, Tekna Seal, and Thixoforming.
Forward Looking Statements
This press release may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995, which are based on ARC's current expectations, estimates and projections about future events. These include, but are not limited to, statements, if any, regarding business plans, pro-forma statements and financial projections, ARC's ability to expand its services and realize growth. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties, and the general effects of financial, economic, and regulatory conditions affecting our industries. Accordingly, actual results may differ materially. ARC does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For additional factors that may affect future results, please see filings made by ARC with the Securities and Exchange Commission ("SEC"), including its registration statement on Form S-1, as amended, its Form 10-K for the fiscal year ended June 30, 2014 and Forms 10-Q for the periods ended December 28, 2014 and September 28, 2014, as well as current reports on Form 8-K filed from time-to-time with the SEC.
ARC Group Worldwide, Inc. | |||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
For the three months ended | For the nine months ended | ||||||||||||||||
(in thousands, except for share and per share amounts) | March 29, 2015 | March 30, 2014 | March 29, 2015 | March 30, 2014 | |||||||||||||
Sales | $ | 27,864 | $ | 20,930 | $ | 83,668 | $ | 59,272 | |||||||||
Cost of sales | 21,582 | 14,501 | 64,016 | 40,888 | |||||||||||||
Gross profit | 6,282 | 6,429 | 19,652 | 18,384 | |||||||||||||
Selling, general, and administrative | 4,549 | 2,963 | 14,967 | 10,465 | |||||||||||||
Merger expense | - | 194 | 187 | 194 | |||||||||||||
Income from operations | 1,733 | 3,272 | 4,498 | 7,725 | |||||||||||||
Other income, net | 128 | 2 | 117 | 9 | |||||||||||||
Interest expense, net | (1,466 | ) | (282 | ) | (3,600 | ) | (781 | ) | |||||||||
Income before income taxes | 395 | 2,992 | 1,015 | 6,953 | |||||||||||||
Income tax benefit (expense) | 39 | (1,342 | ) | (351 | ) | (2,418 | ) | ||||||||||
Net income | 434 | 1,650 | 664 | 4,535 | |||||||||||||
Less: Net income attributable to non-controlling interest | (51 | ) | (65 | ) | (165 | ) | (182 | ) | |||||||||
Net income attributable to ARC Group Worldwide, Inc. | $ | 383 | $ | 1,585 | $ | 499 | $ | 4,353 | |||||||||
Net income per common share: | |||||||||||||||||
Basic and diluted income per share | $ | 0.02 | $ | 0.11 | $ | 0.03 | $ | 0.30 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic and diluted | 14,673,205 | 14,673,205 | 14,673,205 | 14,561,872 | |||||||||||||
ARC Group Worldwide, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands, except for share and per share amounts) | March 29, 2015 | June 30, 2014 | |||||||
ASSETS | (unaudited) | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 4,043 | $ | 9,384 | |||||
Accounts receivable, net | 16,036 | 15,337 | |||||||
Inventories, net | 16,677 | 15,231 | |||||||
Prepaid and other current assets | 3,585 | 2,606 | |||||||
Total current assets | 40,341 | 42,558 | |||||||
Property and equipment, net | 45,024 | 45,268 | |||||||
Goodwill | 14,764 | 16,357 | |||||||
Intangible assets, net | 28,220 | 30,825 | |||||||
Other | 1,481 | 1,381 | |||||||
Total assets | $ | 129,830 | $ | 136,389 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 7,594 | $ | 9,430 | |||||
Accrued expenses | 3,118 | 5,905 | |||||||
Deferred revenue | 828 | 1,016 | |||||||
Bank borrowings, current portion | 16,430 | 14,419 | |||||||
Capital lease obligations, current portion | 1,151 | 1,124 | |||||||
Accrued escrow obligation | 4,291 | 2,400 | |||||||
Total current liabilities | 33,412 | 34,294 | |||||||
Long-term debt, net of current portion | 59,372 | 62,757 | |||||||
Capital lease obligations, net of current portion | 3,857 | 4,723 | |||||||
Accrued escrow obligation | - | 2,600 | |||||||
Other | 1,577 | 674 | |||||||
Total liabilities | 98,218 | 105,048 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Preferred stock, $0.001 par value, 2,000,000 authorized, no shares issued and outstanding | - | - | |||||||
Common stock, $0.0005 par value, 250,000,000 shares authorized; 15,088,522 shares issued and 15,080,121 shares outstanding at March 29, 2015 and June 30, 2014 | 3 | 3 | |||||||
Treasury stock, at cost; 8,401 shares at March 29, 2015 and June 30, 2014 | (94 | ) | (94 | ) | |||||
Additional paid-in capital | 13,900 | 14,293 | |||||||
Retained earnings | 16,642 | 16,143 | |||||||
ARC Group Worldwide, Inc. total stockholder equity | 30,451 | 30,345 | |||||||
Non-controlling interest | 1,161 | 996 | |||||||
Total stockholders' equity | 31,612 | 31,341 | |||||||
Total liabilities and stockholders' equity | $ | 129,830 | $ | 136,389 | |||||
ARC Group Worldwide, Inc. | |||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||
For the nine months ended | |||||||||
(in thousands) | March 29, 2015 | March 30, 2014 | |||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 664 | $ | 4,535 | |||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||
Depreciation and amortization | 7,061 | 2,704 | |||||||
Non-cash stock based compensation expense | - | 779 | |||||||
Amortization of debt discount | - | 316 | |||||||
Bad debt expense and other | (6 | ) | 51 | ||||||
Deferred income taxes | 313 | - | |||||||
Changes in working capital: | |||||||||
Accounts receivable | (670 | ) | (10 | ) | |||||
Inventory | (1,446 | ) | (1,577 | ) | |||||
Prepaid expenses and other assets | (490 | ) | (51 | ) | |||||
Accounts payable | (1,835 | ) | 130 | ||||||
Other accrued expenses | (1,901 | ) | 1,488 | ||||||
Deferred revenue | (188 | ) | (329 | ) | |||||
Net cash provided by operating activities | 1,502 | 8,036 | |||||||
Cash flows from investing activities: | |||||||||
Purchase of plant and equipment | (4,236 | ) | (2,623 | ) | |||||
Net cash used in investing activities | (4,236 | ) | (2,623 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from debt issuance | 24,500 | - | |||||||
Repayments of long-term debt and capital lease obligations | (26,714 | ) | (3,358 | ) | |||||
Stock issuance costs | (256 | ) | - | ||||||
Repurchase of shares | - | (93 | ) | ||||||
Net cash used in financing activities | (2,470 | ) | (3,451 | ) | |||||
Effect of exchange rates on cash and cash equivalents | (137 | ) | - | ||||||
Net (decrease) increase in cash and cash equivalents | (5,341 | ) | 1,962 | ||||||
Cash and cash equivalents, beginning of period | 9,384 | 3,601 | |||||||
Cash and cash equivalents, end of period | $ | 4,043 | $ | 5,563 | |||||
Supplemental disclosures of cash flow information: | |||||||||
Cash paid for interest | $ | 2,470 | $ | 465 | |||||
Cash paid for income taxes | $ | 1,075 | $ | 975 | |||||
Non-cash investing and financing activities: | |||||||||
Termination of note receivable from related party | $ | - | $ | 272 | |||||
Contact Information:
CONTACT:
Drew M. Kelley
PHONE: (303) 467-5236
Email: InvestorRelations@ArcGroupWorldwide.com