Norcraft Companies Cabinet Sales Rise 19 Percent

EAGAN, Minn. - Norcraft Companies, L.P. (Norcraft) today reports financial results for the second quarter ended June 30, 2013.

FINANCIAL RESULTS
Second Quarter of Fiscal 2013 Compared with Second Quarter of Fiscal 2012
Net sales increased $14.4 million, or 19.1%, from $75.8 million for the second quarter of 2012 to $90.2 million for the same quarter of 2013. Income from operations increased $2.4 million, or 34.2%, from $6.7 million for the second quarter of 2012 to $9.1 million for the same quarter of 2013. Net income (loss) increased $2.3 million from $0.5 million of loss for the second quarter of 2012 to $1.8 million of income for the same quarter of 2013.

EBITDA (a non-GAAP measure defined in the attached table) was $12.3 million for the second quarter of 2013 compared to $10.1 million for the same quarter of 2012.

"We are pleased with the Company's top and bottom line performance for the quarter," commented President and CEO, Mark Buller. "The economic and industry growth appears to be getting stronger as the year progresses, and we have begun seeing our margins improve as a result of increased operating leverage and strong product mix. As a result, EBITDA for the quarter was up nearly 22% versus the prior year. We continue to closely monitor commodity inflation and promotional activity and adjust our pricing and sales programs accordingly."

GENERAL
Norcraft Companies is a leading manufacturer of kitchen and bathroom cabinetry in the U.S. and Canada. We provide our customers with a single source for a broad range of high-quality cabinetry, including stock, semi-custom and custom cabinets manufactured in both framed and frameless, or full access construction. We market our products through seven main brands: Mid Continent Cabinetry, Norcraft Cabinetry, UltraCraft, StarMark Cabinetry, Fieldstone Cabinetry, Brookwood Cabinetry and Urban Effects.

 

-Selected Financial Data Tables Follow-

 

Norcraft Companies, L.P.

Consolidated Balance Sheets

(dollar amounts in thousands)

 


June 30,


December 31,


2013


2012


(unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

25,134



$

23,019


Trade accounts receivable, net

28,324



20,264


Inventories

23,266



19,760


Prepaid and other current assets

1,930



2,220


    Total current assets

78,654



65,263


Non-current assets:




Property, plant and equipment, net

25,620



25,961


Goodwill

88,470



88,484


Intangible assets, net

66,355



70,148


Display cabinets, net

5,823



6,019


Other assets

114



268


    Total non-current assets

186,382



190,880


    Total assets

$

265,036



$

256,143


LIABILITIES AND MEMBER'S EQUITY (DEFICIT)




Current liabilities:




Accounts payable

$

12,121



$

7,133


Accrued expenses

18,827



14,893


    Total current liabilities

30,948



22,026


Non-current liabilities:




Long-term debt

240,000



240,000


Unamortized premium on bonds payable

107



127


Other liabilities

54



48


    Total non-current liabilities

240,161



240,175


    Total liabilities

271,109



262,201


Commitments and contingencies




Member's equity (deficit):




Member's equity (deficit)

(7,194)



(7,686)


Accumulated other comprehensive income

1,121



1,628


    Total member's equity (deficit)

(6,073)



(6,058)


    Total liabilities and member's equity (deficit)

$

265,036



$

256,143














 

Norcraft Companies, L.P.

Consolidated Statements of Comprehensive Income (Loss)

(dollar amounts in thousands)

(unaudited)

 


Three Months Ended


Six Months Ended


June 30,


June 30,


2013


2012


2013


2013

Net sales

$

90,284



$

75,825



$

167,632



$

143,687


Cost of sales

66,054



55,377



123,632



105,319


Gross profit

24,230



20,448



44,000



38,368


Selling, general and administrative expenses

15,175



13,701



29,031



26,880


Income from operations

9,055



6,747



14,969



11,488


Other expense:








Interest expense, net

6,470



6,461



12,917



12,911


Amortization of deferred financing costs

780



780



1,560



1,560


Other expense, net

2



24



12



51


Total other expense

7,252



7,265



14,489



14,522


Net income (loss)

1,803



(518)



480



(3,034)










Other comprehensive loss:








Foreign currency translation adjustment

(316)



(283)



(507)



(60)


Total other comprehensive loss

(316)



(283)



(507)



(60)


Comprehensive income (loss)

$

1,487



$

(801)



$

(27)



$

(3,094)


















Norcraft Companies, L.P.

Consolidated Statement of Cash Flows

(dollar amounts in thousands)

(unaudited)

 



Six Months Ended


June 30,


2013


2012

Cash flows from operating activities:




Net income (loss)

$

480



$

(3,034)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization of property, plant and equipment

2,218



2,367


Amortization:




    Customer relationships

2,233



2,233


    Deferred financing costs

1,560



1,560


    Display cabinets

2,172



2,059


Discount amortization/accreted interest

(20)



(19)


Provision for uncollectible accounts receivable

83



149


Provision for obsolete and excess inventories

338



221


Provision for warranty claims

1,677



1,615


Stock compensation expense

9



91


Gain on disposal of assets

(2)



(3)


Change in operating assets and liabilities:




    Trade accounts receivable

(8,301)



(4,883)


    Inventories

(3,936)



(3,091)


    Prepaid expenses

287



91


    Other assets

150



155


    Accounts payable and accrued expenses

7,344



2,596


    Net cash provided by operating activities

6,292



2,107


Cash flows from investing activities:




Proceeds from sale of property, plant and equipment

3



5


Purchase of property, plant and equipment

(2,168)



(1,438)


Additions to display cabinets

(1,976)



(2,304)


    Net cash used in investing activities

(4,141)



(3,737)


Cash flows from financing activities:




Payment of financing costs



(2)


Proceeds from issuance of member interests

3




Distributions to member



(10)


    Net cash provided by (used in) financing activities

3



(12)


Effect of exchange rates on cash and cash equivalents

(39)



(27)


Net increase (decrease) in cash and cash equivalents

2,115



(1,669)


Cash and cash equivalents, beginning of the period

23,019



24,185


Cash and cash equivalents, end of period

$

25,134



$

22,516


Supplemental disclosure of cash flow information:




Cash paid during the period for interest

$

12,714



$

12,776










 

Norcraft Companies, L.P.

Reconciliation of Net Loss to EBITDA

(dollar amounts in thousands)

 

EBITDA is net loss before interest expense, income tax expense, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry, as its calculation eliminates the effects of financing, income taxes and the accounting effects of capital spending, as these items may vary for different companies for reasons unrelated to overall operating performance. We also believe this financial metric provides information relevant to investors regarding our ability to service and/or incur debt. EBITDA is not a presentation made in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net loss, cash flows from operating activities or other operation statement or cash flow statement data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to those of other similarly titled measures reported by other companies. The calculation of EBITDA is shown below:



Three Months Ended
June 30,


Six Months Ended
June 30,


Twelve Months Ended
June 30,


2013


2012


2013


2012


2013

Net income (loss)

$

1,803



$

(518)



$

480



$

(3,034)



$

(6,045)


Interest expense, net

6,470



6,461



12,917



12,911



25,825


Depreciation

1,106



1,210



2,218



2,367



4,574


Amortization of deferred financing costs

780



780



1,560



1,560



3,120


Amortization of customer relationships

1,117



1,116



2,233



2,233



4,467


Display cabinet amortization

1,036



1,040



2,172



2,059



4,226


State taxes

13



24



25



48



(49)


Non-GAAP EBITDA

$

12,325



$

10,113



$

21,605



$

18,144



$

36,118






















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