Norcraft Companies, L.P. Reports Third Quarter 2012 Results

By admin

November 10, 2012 | 4:00 pm CST

EAGAN, Minn., Norcraft Companies, L.P. (Norcraft) today reports financial results for the third quarter ended September 30, 2012.

FINANCIAL RESULTS

Third Quarter of Fiscal 2012 Compared with Third Quarter of Fiscal 2011

Net sales increased $6.2 million, or 9.1%, from $67.7 million for the third quarter of 2011 to $73.9 million for the same quarter of 2012. Income from operations decreased $1.9 million, or 29.4%, from $6.6 million for the third quarter of 2011 to $4.7 million for the same quarter of 2012. Net loss increased $1.9 million from $0.7 million for the third quarter of 2011 to $2.6 million for the same quarter of 2012.

EBITDA (a non-GAAP measure defined in the attached table) was $8.0 million for the third quarter of 2012 compared to $9.9 million for the same quarter of 2011.

"While we are disappointed with our results, our sales and the cabinet industry did experience some growth recently. Our industry continues to be highly competitive, with significant discounting and sales promotions. However, we are optimistic about these early signs of recovery in the new home construction and home improvement markets and our ability to leverage the growth into improved profitability. As such, we continue to introduce new products and cost reduction initiatives," commented President and CEO, Mark Buller.

GENERAL

Norcraft Companies is a leader in manufacturing, assembling and finishing kitchen and bathroom cabinetry in the U.S. and parts of 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 six main brands: Mid Continent Cabinetry, Norcraft Cabinetry, UltraCraft, StarMark Cabinetry, Fieldstone Cabinetry and Brookwood.

Selected Financial Data Tables Follow- Norcraft Companies, L.P. Consolidated Balance Sheets (dollar amounts in thousands)
ASSETS	September 30, 2012 (unaudited)	December 31, 2011
Current assets:
Cash and cash equivalents	$ 28,747	$ 24,185
Trade accounts receivable, net	23,825	20,092
Inventories	20,345	17,503
Prepaid and other current assets	1,474	1,835
Total current assets	74,391	63,615

Non-current assets:
Property, plant and equipment, net	26,502	27,434
Goodwill	88,490	88,479
Intangible assets, net	72,045	77,732
Display cabinets, net	6,188	5,842
Other assets	301	568
Total non-current assets	193,526	200,055

Total assets	$ 267,917	$ 263,670

LIABILITIES AND MEMBER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$ 9,025	$ 6,566
Accrued expenses	20,592	13,775
Total current liabilities	29,617	20,341

Non-current liabilities:
Long-term debt	240,000	240,000
Unamortized premium on bonds payable	137	166
Other liabilities	118	108
Total non-current liabilities	240,255	240,274

Total liabilities	269,872	260,615

Commitments and contingencies	-	-

Member's equity (deficit):
Member's equity (deficit)	(3,804)	1,646
Accumulated other comprehensive income	1,849	1,409
Total member's equity (deficit)	(1,955)	3,055

Total liabilities and member's equity (deficit)	$ 267,917	$ 263,670

Norcraft Companies, L.P. Consolidated Statements of Comprehensive Loss (dollar amounts in thousands) (unaudited)

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Net sales	$ 73,863	$ 67,718	$ 217,550	$ 206,943
Cost of sales	55,360	48,815	160,679	150,223
Gross profit	18,503	18,903	56,871	56,720
Selling, general and administrative expenses	13,849	12,313	40,729	38,143
Income from operations	4,654	6,590	16,142	18,577

Interest expense, net	6,461	6,451	19,372	17,106
Amortization of deferred financing costs	780	795	2,340	1,666
Other expense, net	10	51	61	103
Total other expense	7,251	7,297	21,773	18,875
Net loss	(2,597)	(707)	(5,631)	(298)
Other comprehensive income (loss):
Foreign currency translation adjustment	500	(566)	440	(382)
Total other comprehensive income (loss)	500	(566)	440	(382)
Comprehensive loss	$ (2,097)	$ (1,273)	$ (5,191)	$ (680)

Norcraft Companies, L.P. Consolidated Statement of Cash Flows (dollar amounts in thousands) (unaudited)
	Nine Months Ended
	September 30,
	2012	2011
Cash flows from operating activities:
Net loss	$ (5,631)	$ (298)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization of property, plant and equipment	3,562	3,774
Amortization:
Customer relationships	3,350	3,350
Deferred financing costs	2,340	1,666
Display cabinets	3,053	2,888
Discount amortization/accreted interest	(29)	190
Provision for uncollectible accounts receivable	186	69
Provision for obsolete and excess inventories	(47)	32
Provision for warranty claims	2,419	2,284
Stock compensation expense	141	136
Gain on disposal of assets	(3)	-
Change in operating assets and liabilities:
Trade accounts receivable	(3,766)	(6,113)
Inventories	(2,722)	(1,444)
Prepaid expenses	363	369
Other assets	268	162
Accounts payable and accrued expenses	6,796	3,471
Net cash provided by operating activities	10,280	10,536

Cash flows from investing activities:
Proceeds from sale of property and equipment	5	6
Purchase of property, plant and equipment	(2,387)	(1,720)
Additions to display cabinets	(3,399)	(3,707)
Net cash used in investing activities	(5,781)	(5,421)

Cash flows from financing activities:
Borrowings on senior secured second lien notes payable	-	62,400
Payment of financing costs	(3)	(8,159)
Proceeds from issuance of member interests	50	89
Distributions to member	(10)	(58,015)
Net cash provided by (used in) financing activities	37	(3,685)

Effect of exchange rates on cash and cash equivalents	26	(112)
Net increase in cash and cash equivalents	4,562	1,318
Cash and cash equivalents, beginning of the period	24,185	28,657
Cash and cash equivalents, end of period	$ 28,747	$ 29,975

	Three Months Ended September 30,		Nine Months Ended September 30,			Twelve Months Ended September 30,
	2012	2011	2012	2011	2012
Net loss	$ (2,597)	$ (707)	$ (5,631)	$ (298)	$ (9,064)
Interest expense, net	6,461	6,451	19,372	17,106	25,815
Depreciation	1,195	1,217	3,562	3,774	4,723
Amortization of deferred financing costs	780	795	2,340	1,666	3,128
Amortization of customer relationships	1,117	1,116	3,350	3,350	4,467
Display cabinet amortization	994	926	3,053	2,888	4,170
State taxes	5	56	53	104	36

Non-GAAP EBITDA	$ 7,955	$ 9,854	$ 26,099	$28,590	$ 33,275