EAGAN, MN - 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-
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Norcraft Companies, L.P. Consolidated Balance Sheets (dollar amounts in thousands)
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June 30, |
December 31, |
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2013 |
2012 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
25,134 |
$ |
23,019 |
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Trade accounts receivable, net |
28,324 |
20,264 |
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Inventories |
23,266 |
19,760 |
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Prepaid and other current assets |
1,930 |
2,220 |
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Total current assets |
78,654 |
65,263 |
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Non-current assets: |
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Property, plant and equipment, net |
25,620 |
25,961 |
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Goodwill |
88,470 |
88,484 |
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Intangible assets, net |
66,355 |
70,148 |
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Display cabinets, net |
5,823 |
6,019 |
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Other assets |
114 |
268 |
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Total non-current assets |
186,382 |
190,880 |
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Total assets |
$ |
265,036 |
$ |
256,143 |
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LIABILITIES AND MEMBER'S EQUITY (DEFICIT) |
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Current liabilities: |
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Accounts payable |
$ |
12,121 |
$ |
7,133 |
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Accrued expenses |
18,827 |
14,893 |
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Total current liabilities |
30,948 |
22,026 |
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Non-current liabilities: |
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Long-term debt |
240,000 |
240,000 |
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Unamortized premium on bonds payable |
107 |
127 |
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Other liabilities |
54 |
48 |
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Total non-current liabilities |
240,161 |
240,175 |
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Total liabilities |
271,109 |
262,201 |
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Commitments and contingencies |
— |
— |
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Member's equity (deficit): |
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Member's equity (deficit) |
(7,194) |
(7,686) |
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Accumulated other comprehensive income |
1,121 |
1,628 |
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Total member's equity (deficit) |
(6,073) |
(6,058) |
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Total liabilities and member's equity (deficit) |
$ |
265,036 |
$ |
256,143 |
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Norcraft Companies, L.P. Consolidated Statements of Comprehensive Income (Loss) (dollar amounts in thousands) (unaudited)
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Three Months Ended |
Six Months Ended |
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June 30, |
June 30, |
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2013 |
2012 |
2013 |
2013 |
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Net sales |
$ |
90,284 |
$ |
75,825 |
$ |
167,632 |
$ |
143,687 |
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Cost of sales |
66,054 |
55,377 |
123,632 |
105,319 |
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Gross profit |
24,230 |
20,448 |
44,000 |
38,368 |
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Selling, general and administrative expenses |
15,175 |
13,701 |
29,031 |
26,880 |
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Income from operations |
9,055 |
6,747 |
14,969 |
11,488 |
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Other expense: |
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Interest expense, net |
6,470 |
6,461 |
12,917 |
12,911 |
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Amortization of deferred financing costs |
780 |
780 |
1,560 |
1,560 |
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Other expense, net |
2 |
24 |
12 |
51 |
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Total other expense |
7,252 |
7,265 |
14,489 |
14,522 |
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Net income (loss) |
1,803 |
(518) |
480 |
(3,034) |
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Other comprehensive loss: |
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Foreign currency translation adjustment |
(316) |
(283) |
(507) |
(60) |
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Total other comprehensive loss |
(316) |
(283) |
(507) |
(60) |
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Comprehensive income (loss) |
$ |
1,487 |
$ |
(801) |
$ |
(27) |
$ |
(3,094) |
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Norcraft Companies, L.P. Consolidated Statement of Cash Flows (dollar amounts in thousands) (unaudited)
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Six Months Ended |
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June 30, |
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2013 |
2012 |
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Cash flows from operating activities: |
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Net income (loss) |
$ |
480 |
$ |
(3,034) |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization of property, plant and equipment |
2,218 |
2,367 |
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Amortization: |
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Customer relationships |
2,233 |
2,233 |
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Deferred financing costs |
1,560 |
1,560 |
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Display cabinets |
2,172 |
2,059 |
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Discount amortization/accreted interest |
(20) |
(19) |
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Provision for uncollectible accounts receivable |
83 |
149 |
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Provision for obsolete and excess inventories |
338 |
221 |
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Provision for warranty claims |
1,677 |
1,615 |
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Stock compensation expense |
9 |
91 |
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Gain on disposal of assets |
(2) |
(3) |
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Change in operating assets and liabilities: |
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Trade accounts receivable |
(8,301) |
(4,883) |
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Inventories |
(3,936) |
(3,091) |
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Prepaid expenses |
287 |
91 |
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Other assets |
150 |
155 |
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Accounts payable and accrued expenses |
7,344 |
2,596 |
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Net cash provided by operating activities |
6,292 |
2,107 |
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Cash flows from investing activities: |
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Proceeds from sale of property, plant and equipment |
3 |
5 |
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Purchase of property, plant and equipment |
(2,168) |
(1,438) |
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Additions to display cabinets |
(1,976) |
(2,304) |
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Net cash used in investing activities |
(4,141) |
(3,737) |
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Cash flows from financing activities: |
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Payment of financing costs |
— |
(2) |
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Proceeds from issuance of member interests |
3 |
— |
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Distributions to member |
— |
(10) |
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Net cash provided by (used in) financing activities |
3 |
(12) |
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Effect of exchange rates on cash and cash equivalents |
(39) |
(27) |
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Net increase (decrease) in cash and cash equivalents |
2,115 |
(1,669) |
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Cash and cash equivalents, beginning of the period |
23,019 |
24,185 |
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Cash and cash equivalents, end of period |
$ |
25,134 |
$ |
22,516 |
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest |
$ |
12,714 |
$ |
12,776 |
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Norcraft Companies, L.P. Reconciliation of Net Loss to EBITDA (dollar amounts in thousands)
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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: |
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Three Months Ended |
Six Months Ended |
Twelve Months Ended |
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2013 |
2012 |
2013 |
2012 |
2013 |
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Net income (loss) |
$ |
1,803 |
$ |
(518) |
$ |
480 |
$ |
(3,034) |
$ |
(6,045) |
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Interest expense, net |
6,470 |
6,461 |
12,917 |
12,911 |
25,825 |
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Depreciation |
1,106 |
1,210 |
2,218 |
2,367 |
4,574 |
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Amortization of deferred financing costs |
780 |
780 |
1,560 |
1,560 |
3,120 |
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Amortization of customer relationships |
1,117 |
1,116 |
2,233 |
2,233 |
4,467 |
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Display cabinet amortization |
1,036 |
1,040 |
2,172 |
2,059 |
4,226 |
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State taxes |
13 |
24 |
25 |
48 |
(49) |
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Non-GAAP EBITDA |
$ |
12,325 |
$ |
10,113 |
$ |
21,605 |
$ |
18,144 |
$ |
36,118 |
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Source: Norcraft Companies, L.P.
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