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-

 

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

Source: Norcraft Companies, L.P.

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