EAGAN, MN.--  Norcraft Companies, Inc. ("we", the “Company” or “Norcraft”) (NYSE:NCFT), a leading manufacturer of kitchen and bathroom cabinetry in the United States and Canada, today reported financial results for the second quarter ended June 30, 2014.

“We are encouraged by our continued improvement on multiple fronts with growth in our net sales, net income and cash flow providing momentum into the back half of 2014,” stated Mark Buller, Chairman and Chief Executive Officer of the Company. “Our ongoing shift in product mix towards higher end products remains on track for all our divisions as a result of our strategic growth initiatives. Our improved Adjusted EBITDA reflects our vigilant focus on costs, with our net income further benefiting from this focus and our dramatic reduction in interest expense. We are pleased with our progress during the quarter and excited to continue leveraging our well-positioned platform to further drive profits and cash flow.”

FINANCIAL RESULTS

Second Quarter of 2014 Compared with Second Quarter of 2013

In the second quarter of 2014, net sales increased $7.3 million, or 8.1%, to $97.6 million, as compared to $90.3 million in the second quarter of 2013. Sales increased in nearly all the Company’s divisions, driven largely by mix/price gains and promotional activity during the quarter.

Income from operations in the second quarter of 2014 increased $2.1 million, or 23.1%, to $11.2 million from $9.1 million for the second quarter of 2013. The increase was mainly attributable to higher sales and improvement in labor efficiency and leverage of fixed manufacturing costs. These positive factors were partly offset by moderately higher material costs and increased incentive stock compensation expense from stock options issued in connection with the Company’s recently completed initial public offering.

Net income of $4.8 million, or $0.23 per diluted share, in the second quarter of 2014 represented an increase of $3.0 million compared to $1.8 million in the second quarter of 2013.

Adjusted EBITDA in the second quarter of 2014 increased $2.3 million, or 18.2%, to $14.9 million, as compared to $12.6 million for the same quarter of 2013 (Adjusted EBITDA is a non-GAAP measure defined in the table below).

At June 30, 2014, the Company had cash of $46.5 million and total long-term debt of $149.6 million, as compared to cash of $39.1 million and total long-term debt of $150.0 million at December 31, 2013.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and webcast to discuss its results for the second quarter of 2014 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on August 13, 2014. Investors who wish to participate in the call should dial 1-877-705-6003 (inside the U.S.) or 1-201-493-6725 (outside the U.S.) at least 5 minutes prior to the start of the call. The live webcast will be available on the Investors section of the Company’s website at www.norcraftcompanies.com. Replays of the call will be available through September 13, 2014 and can be accessed at 1-877-870-5176 (U.S. callers) or 1-858-384-5517 (outside the U.S.) and entering the pass code 13587066.

ABOUT NORCRAFT COMPANIES

Norcraft is a leading manufacturer of kitchen and bathroom cabinetry in the United States and Canada. Norcraft provides its customers with a single source for a broad range of high-quality cabinetry, including stock and semi-custom cabinets manufactured in both framed and frameless (full access) construction. Norcraft markets its products through seven main brands: Mid Continent Cabinetry, Norcraft Cabinetry, UltraCraft, StarMark Cabinetry, Fieldstone Cabinetry, Brookwood and Urban Effects.

FORWARD LOOKING STATEMENTS AND INFORMATION

Statements in this press release regarding activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward looking statements. Forward looking statements may give management’s current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of the Company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘believe’’ and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward looking statements are based on management’s expectations and beliefs concerning future events affecting the Company. They are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Although management believes that the expectations reflected in its forward looking statements are reasonable, management does not know whether its expectations will prove correct. Such expectations can be affected by inaccurate assumptions that management might make or by known or unknown risks and uncertainties. Many factors that could cause actual results to differ materially from these forward looking statements including, but not limited to, the risks outlined under the “Risk Factors’’ section of the Company's 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.

Because of these factors, investors should not place undue reliance on any of these forward looking statements. Further, any forward looking statement speaks only as of the date on which it is made and, except as required by law, the Company undertakes no obligation to update any forward looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

 

 

 

 

 

 

 

Norcraft Companies, Inc.

Consolidated Balance Sheets

(dollar amounts in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2014

 

 

2013

 

 

 

 

(unaudited)

 

 

(audited)

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

46,468

 

 

 

$

39,106

 

Trade accounts receivable, net

 

 

28,957

 

 

 

21,449

 

Inventories

 

 

24,649

 

 

 

22,591

 

Prepaid and other current assets

 

 

2,074

 

 

 

2,590

 

Total current assets

 

 

102,148

 

 

 

85,736

 

Non-current assets:

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

24,953

 

 

 

25,208

 

Goodwill

 

 

88,462

 

 

 

88,466

 

Intangible assets, net

 

 

57,767

 

 

 

60,108

 

Display cabinets, net

 

 

6,321

 

 

 

5,864

 

Other assets

 

 

118

 

 

 

84

 

Total non-current assets

 

 

177,621

 

 

 

179,730

 

Total assets

 

 

$

279,769

 

 

 

$

265,466

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

$

1,875

 

 

 

$

1,500

 

Accounts payable

 

 

12,543

 

 

 

8,523

 

Accrued tax distributions

 

 

1,007

 

 

 

 

Accrued expenses

 

 

22,367

 

 

 

21,203

 

Total current liabilities

 

 

37,792

 

 

 

31,226

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

147,750

 

 

 

148,500

 

Unamortized discount on long-term debt

 

 

(692

)

 

 

(746

)

Deferred tax liabilities and other liabilities

 

 

37,991

 

 

 

36,560

 

Total non-current liabilities

 

 

185,049

 

 

 

184,314

 

Total liabilities

 

 

222,841

 

 

 

215,540

 

Commitments and contingencies

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 100,000,000 shares authorized; 17,311,573 issued and outstanding at June 30, 2014 and December 31, 2013

 

 

173

 

 

 

173

 

Additional paid-in capital

 

 

52,846

 

 

 

51,795

 

Accumulated deficit

 

 

(7,658

)

 

 

(13,703

)

Accumulated other comprehensive income

 

 

709

 

 

 

845

 

Total Norcraft Companies, Inc. equity

 

 

46,070

 

 

 

39,110

 

Noncontrolling interests

 

 

10,858

 

 

 

10,816

 

Total equity

 

 

56,928

 

 

 

49,926

 

Total liabilities and equity

 

 

$

279,769

 

 

 

$

265,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norcraft Companies, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(dollar amounts in thousands, except share and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

Net sales

 

 

$

97,601

 

 

 

$

90,284

 

 

 

$

181,631

 

 

 

$

167,632

 

Cost of sales

 

 

70,582

 

 

 

66,054

 

 

 

133,124

 

 

 

123,632

 

Gross profit

 

 

27,019

 

 

 

24,230

 

 

 

48,507

 

 

 

44,000

 

Selling, general and administrative expenses

 

 

15,868

 

 

 

15,175

 

 

 

30,542

 

 

 

29,031

 

Income from operations

 

 

11,151

 

 

 

9,055

 

 

 

17,965

 

 

 

14,969

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

2,226

 

 

 

6,470

 

 

 

4,402

 

 

 

12,917

 

Amortization of deferred financing costs

 

 

163

 

 

 

780

 

 

 

305

 

 

 

1,560

 

Expense related to tax receivable agreements

 

 

2,832

 

 

 

 

 

 

4,475

 

 

 

 

Other expense, net

 

 

41

 

 

 

2

 

 

 

100

 

 

 

12

 

Total other expense

 

 

5,262

 

 

 

7,252

 

 

 

9,282

 

 

 

14,489

 

Income before income taxes

 

 

5,889

 

 

 

1,803

 

 

 

8,683

 

 

 

480

 

Income tax expense

 

 

1,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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