Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - FUEL TECH, INC. | y93325e8vk.htm |
Exhibit 99.1
CONTACT:
|
David S. Collins | |
| Chief Financial Officer | ||
| (630) 845-4500 |
FOR IMMEDIATE RELEASE
| Tracy H. Krumme | ||
| Vice President, Investor Relations | ||
| (203) 425-9830 |
FUEL TECH REPORTS THIRD QUARTER 2011 RESULTS
WARRENVILLE, Ill., Nov. 7, 2011 – Fuel Tech, Inc. (NASDAQ: FTEK), a world leader in
advanced engineering solutions for the optimization of combustion systems and emissions control in
utility and industrial applications, today reported results for the three- and nine-month periods
ended September 30, 2011.
Revenues for the third quarter totaled $24.0 million, an increase of $3.7 million, or 19%,
compared to $20.3 million in the prior-year period. Net income for the quarter was $2.7 million,
or $0.11 per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share in
the prior year.
Revenues for the nine months ended September 30, 2011 totaled $65.7 million, representing an
increase of $8.9 million, or 16% from the comparable prior-year period amount of $56.8 million.
Net income for the nine-month period was $4.4 million, or $0.18 per diluted share, compared with
net income of $0.7 million in the same year-ago period. Adjusted EBITDA for the nine months ended
September 30, 2011 totaled $11.6 million, an increase of $3.2 million, or 39% from the comparable
prior-year period amount of $8.3 million.
Domestic revenues for the nine months ended September 30, 2011 of $54.3 million increased $7.8
million, or 17% over the prior year, while foreign revenues of $11.4 million rose $1.2 million or
11% over prior year amounts. Net income for the three- and nine-month periods ended September 30,
2011 included discrete tax benefits of approximately $0.6 million, which increased diluted earnings
per share by $0.03 in each respective period.
The Air Pollution Control (APC) technology segment generated third quarter revenues of
$12.2 million, up 19%, versus the prior year amount of $10.3 million. The increase reflects
greater bookings for both domestic and foreign operations along with the conversion of prior
quarter backlog into
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| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 2 |
revenue. Gross margin for the APC segment was 38% in the third quarter,
compared with 34% in the prior year. The increase reflects a shift in the overall mix of products
yielding higher margins.
The APC segment recorded revenues of $33.0 million in the nine-month period, an increase of
$5.2 million, or 19% from the prior year amount of $27.8 million. Segment gross margin for the
nine-month period stood at 44% versus 35% reported in the same prior year period.
Third quarter revenues for the FUEL CHEM® technology segment totaled $11.8 million,
an increase of $1.8 million, or 18%, versus the prior year amount of $10.0 million.
Current-quarter revenues include $11.0 million from coal-fired units, a 21% increase versus a year
ago, and $0.8 million from non-coal fired units, a 17% decrease versus the year-earlier quarter.
Third quarter segment gross margin was flat at 53% in both 2011 and 2010.
Revenues for the FUEL CHEM segment for the nine-month period totaled $32.7 million, an
increase of $3.7 million, or 13% versus the prior year amount of $29.0 million. Nine-month
revenues for 2011 include approximately $1.3 million in non-recurring installation work for a
specific new customer, while same period revenues for 2010 included a $2.0 million risk-share
payment with no offsetting costs received in the first quarter. Nine-month revenues for the FUEL
CHEM segment include $30.1 million from coal-fired units, a 14% increase versus a year ago, and
$2.6 million from non-coal fired units, a 1% increase versus the year-earlier period. Segment
gross margin decreased to 49% in the nine-month period from 52% in the comparable period in 2010.
The higher gross margin in 2010 is attributable to the aforementioned risk-share payment.
Excluding the risk share payment, our 2010 segment gross margin for the FUEL CHEM segment would
have been 48%.
Selling, general and administrative (SG&A) expenses totaled $7.7 million in the current
quarter versus $7.8 million in the year-ago quarter. Research and development (R&D) expenses were
$0.4 million versus $0.3 million in the same prior year period. SG&A expenses totaled $23.6
million in the nine-month period ended September 30, 2011 versus $23.3 million in the same year-ago
period. R&D expenses were $1.1 million in the nine-month period, an increase of $0.5 million from
the prior year amount of $0.6 million.
During the third quarter of 2011, the Company announced APC contract awards with a
value of $21.1 million. After accounting for the conversion of backlog to revenues during this
period, the backlog of capital projects for the APC segment totaled $22.9 million as of September
30, 2011. Subsequent to September 30, 2011, the Company announced an additional $5.1 million in
new pollution control orders, reflecting an increasing trend in this segment’s order activity.
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| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 3 |
During the three months ended September 30, 2011, 571,554 shares of common stock were
repurchased for approximately $3.4 million under our previously announced share repurchase program.
As of September 30, 2011, we have an additional $2.6 million remaining for share repurchases
through December 31, 2012.
Douglas G. Bailey, Chairman, President and Chief Executive Officer, commented, “We are pleased
to report a solid quarter with strong revenue and operating income gains achieved in both the APC
and FUEL CHEM segments. Record revenues for the third quarter and nine-month period were achieved,
which is particularly noteworthy given the challenging economic environment.”
Mr. Bailey continued, “On the APC front, interest in our pollution control technologies
remains strong, both domestically and abroad. Quotation activity remains quite active, due in most
part to the Cross-State Air Pollution Rule (CSAPR), which was issued by the EPA on July 6, 2011.
Among other requirements, the CSAPR focuses on nitrogen oxide (NOx) emission reductions through
additional air pollution control reductions from power plants beginning January 1, 2012, for annual
NOX and SO2 reductions, and May 1, 2012, for ozone season NOX
reductions. A second phase of more stringent emission reductions will take effect starting January
1, 2014. CSAPR has several key features, including the allocation of emission requirements to
individual sources directly by EPA, and programs to facilitate trading of allowances between
individual sources. CSAPR sets strict new state emissions caps to address the impact on downwind
states, and will require individual units to meet specific emission limits.”
Mr. Bailey added, “Where individual plants are facing allocation shortfalls, especially in
states with tight emission limits, utility operators are turning to Fuel Tech to help them meet
their requirements in a timely and cost-effective manner. Since the issuance of the CSAPR ruling,
we have received more than twenty mapping and modeling orders, often the first step in a larger
investment program, from existing and new domestic customers that are evaluating Selective
Non-Catalytic Reduction (SNCR) technology as an option to comply with their NOx emission
reduction requirements. Additionally, we received an award, from a
major utility and an existing customer, for an SNCR project for three large combustion boiler units
located in the South Central U.S. Given our level of discussions with other utility managers and
the tight timeline for CSAPR compliance, we anticipate additional SNCR orders over the next several
quarters.”
Mr. Bailey continued, “China continues to be an active and growing market for our
pollution control technologies. Thus far this year, China has accounted for $13 million, or 32%, of
the $41 million in APC orders announced year-to-date. We continue to see strong interest from this
market in
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| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 4 |
our ULTRA™ product line, evidenced by three awards for six ULTRA systems announced during
the third quarter. We are pleased to be satisfying this growing interest in our ULTRA technology
as worldwide recognition of the need for safer delivery of ammonia reagent to NOx reduction
equipment increases.”
Mr. Bailey continued, “As we have consistently stated, we believe the NOx control market in
China will increasingly emerge, the result of the country’s Twelfth Five-Year Plan that goes into
effect this year. The requirements in the Policy align well with our portfolio of NOx reduction
capabilities, which cover the full spectrum from combustion modifications to ASCR™ systems, and we
anticipate receiving future orders as a result of this new Policy.”
Mr. Bailey continued, “Our FUEL CHEM segment delivered strong quarterly and nine- month
results. Despite the challenging environment, we are continuing to win new business. Just last
week we were awarded an extension of a previously announced commercial order, from earlier this
year, whereby our proprietary TIFI® Targeted In-Furnace Injection™ technology will be installed on
three additional large coal-fired boilers. Fuel flexibility continues to be a driver for this
business segment as utilities are attracted to the compelling economic benefits of shifting to
coals of lower price and quality from the Illinois and Powder River Basins.”
Mr. Bailey concluded, “We continue to be encouraged about our business prospects and believe
that we are well positioned to increase our market share in both the APC and FUEL CHEM segments.
With respect to the balance of 2011, we reaffirm our outlook that revenues and profits should
exceed last year’s results.”
Conference Call
As a reminder, Fuel Tech will host a conference call tomorrow, November 8, 2011, at 9:00 AM EDT to
discuss the results. The call will simultaneously be broadcast over the Internet at
www.ftek.com and can be accessed on the Home page under “Upcoming
Events”. The call can also be accessed by dialing 866-713-8310 (domestic) or 617-597-5308
(international) and using the passcode “Fuel Tech.” A replay of the call will be available on the
website and can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and
using the passcode “78979570.” The replay will be available through December 3, 2011.
About Fuel Tech
Fuel Tech is a leading technology company engaged in the worldwide development,
commercialization and application of state-of-the-art proprietary technologies for air pollution
control, process optimization, and advanced engineering services. These technologies enable
customers to produce both energy and processed materials in a cost-effective and environmentally
sustainable manner.
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| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 5 |
The Company’s nitrogen oxide (NOx) reduction technologies include advanced combustion
modification techniques — such as Low NOx Burners and Over-Fire Air systems — and
post-combustion NOx control approaches, including NOxOUT® and HERT™ SNCR systems
as well as systems that incorporate ASCR™ (Advanced Selective Catalytic Reduction),
CASCADE™, ULTRA™ and NOxOUT-SCR® processes. These technologies
have established Fuel Tech as a leader in NOx reduction, with installations on over 640 units
worldwide, where coal, fuel oil, natural gas, municipal waste, biomass and other fuels are
utilized.
The Company’s FUEL CHEM® technology revolves around the unique application
of chemicals to improve the efficiency, reliability, fuel flexibility and environmental status of
combustion units by controlling slagging, fouling, corrosion, opacity and operational issues
associated with sulfur trioxide, ammonium bisulfate, particulate matter (PM2.5), carbon
dioxide and NOx. The Company has experienced with this technology, in the form of a customizable
FUEL CHEM program, on over 110 combustion units burning a wide variety of fuels including coal,
heavy oil, biomass, and municipal waste.
Fuel Tech also provides a range of combustion optimization services, including airflow
testing, coal flow testing and boiler tuning, as well as services to help optimize selective
catalytic reduction system performance, including catalyst management services and ammonia
injection grid tuning. In addition, flow corrective devices and physical and computational
modeling services are available to optimize flue gas distribution and mixing in both power plant
and industrial applications.
Many of Fuel Tech’s products and services rely heavily on the Company’s exceptional
Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed,
high-end visualization software. These capabilities, coupled with the Company’s innovative
technologies and multi-disciplined team approach, enable Fuel Tech to provide practical solutions
to some of our customers’ most challenging problems. For more information, visit Fuel Tech’s web
site at www.ftek.com.
This press release may contain statements of a forward-looking nature regarding future
events. These statements are only predictions and actual events may differ materially. Please
refer to documents that Fuel Tech files from time to time with the Securities and Exchange
Commission for a discussion of certain factors that could cause actual results to differ
materially from those contained in the forward-looking statements.
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| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 6 |
FUEL TECH, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 28,998 | $ | 30,524 | ||||
Marketable securities |
53 | — | ||||||
Accounts receivable, net of allowance for doubtful
accounts of $114 and $82, respectively |
27,920 | 21,175 | ||||||
Inventories |
857 | 807 | ||||||
Prepaid expenses and other current assets |
1,549 | 1,861 | ||||||
Prepaid income taxes |
740 | — | ||||||
Deferred income taxes |
255 | 89 | ||||||
Total current assets |
60,372 | 54,456 | ||||||
Property and equipment, net of accumulated
depreciation of $18,086 and $15,767, respectively |
13,590 | 14,384 | ||||||
Goodwill |
21,051 | 21,051 | ||||||
Other intangible assets, net of accumulated
amortization of $3,886 and $3,203, respectively |
5,647 | 6,050 | ||||||
Deferred income taxes |
4,108 | 5,000 | ||||||
Other assets |
2,362 | 2,262 | ||||||
Total assets |
$ | 107,130 | $ | 103,203 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Current liabilities: |
||||||||
Short-term debt |
$ | 2,343 | $ | 2,269 | ||||
Accounts payable |
8,416 | 7,516 | ||||||
Accrued liabilities: |
||||||||
Employee compensation |
2,741 | 2,863 | ||||||
Income taxes payable |
— | 1,857 | ||||||
Other accrued liabilities |
4,899 | 3,306 | ||||||
Total current liabilities |
18,399 | 17,811 | ||||||
Other liabilities |
1,346 | 1,482 | ||||||
Total liabilities |
19,745 | 19,293 | ||||||
Shareholders’ equity: |
||||||||
Common stock, $.01 par value, 40,000,000 shares
authorized, 23,767,961 and 24,213,467 shares issued
and outstanding, respectively |
238 | 242 | ||||||
Additional paid-in capital |
131,715 | 129,424 | ||||||
Accumulated deficit |
(45,014 | ) | (46,075 | ) | ||||
Accumulated other comprehensive income |
370 | 243 | ||||||
Nil coupon perpetual loan notes |
76 | 76 | ||||||
Total shareholders’ equity |
87,385 | 83,910 | ||||||
Total liabilities and shareholders’ equity |
$ | 107,130 | $ | 103,203 | ||||
| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 7 |
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per-share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per-share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 24,023 | $ | 20,279 | $ | 65,666 | $ | 56,798 | ||||||||
Costs and expenses: |
||||||||||||||||
Cost of sales |
13,050 | 11,496 | 35,069 | 32,063 | ||||||||||||
Selling, general and administrative |
7,701 | 7,808 | 23,618 | 23,306 | ||||||||||||
Gain on revaluation of ACT
liability |
— | (768 | ) | (758 | ) | (768 | ) | |||||||||
Research and development |
358 | 264 | 1,075 | 575 | ||||||||||||
| 21,109 | 18,800 | 59,004 | 55,176 | |||||||||||||
Operating income |
2,914 | 1,479 | 6,662 | 1,622 | ||||||||||||
Interest expense |
(47 | ) | (33 | ) | (125 | ) | (110 | ) | ||||||||
Interest income |
14 | 4 | 19 | 6 | ||||||||||||
Other (expense) income |
(57 | ) | 89 | (252 | ) | (169 | ) | |||||||||
Income before income taxes |
2,824 | 1,539 | 6,304 | 1,349 | ||||||||||||
Income tax expense |
(169 | ) | (722 | ) | (1,880 | ) | (627 | ) | ||||||||
Net income |
$ | 2,655 | $ | 817 | $ | 4,424 | $ | 722 | ||||||||
Net income per common share: |
||||||||||||||||
Basic |
$ | 0.11 | $ | 0.03 | $ | 0.18 | $ | 0.03 | ||||||||
Diluted |
$ | 0.11 | $ | 0.03 | $ | 0.18 | $ | 0.03 | ||||||||
Weighted-average number of
common shares outstanding: |
||||||||||||||||
Basic |
24,322,000 | 24,213,000 | 24,269,000 | 24,213,000 | ||||||||||||
Diluted |
24,850,000 | 24,381,000 | 24,881,000 | 24,401,000 | ||||||||||||
| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 8 |
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Operating Activities |
||||||||
Net income |
$ | 4,424 | $ | 722 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||
Depreciation |
2,251 | 2,440 | ||||||
Amortization |
677 | 665 | ||||||
(Gain) loss on equipment disposals |
(2 | ) | 28 | |||||
Gain on revaluation of ACT liability |
(758 | ) | (768 | ) | ||||
Deferred income taxes |
410 | (1,299 | ) | |||||
Stock based compensation |
2,197 | 3,769 | ||||||
Bad debt expense |
32 | 2 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(6,502 | ) | (4,437 | ) | ||||
Inventories |
(44 | ) | (451 | ) | ||||
Prepaid expenses, other current assets and other
noncurrent assets |
199 | (376 | ) | |||||
Accounts payable |
846 | 65 | ||||||
Accrued liabilities and other noncurrent liabilities |
(666 | ) | 4,368 | |||||
Net cash provided by operating activities |
3,064 | 4,728 | ||||||
Investing Activities |
||||||||
Decrease in restricted cash |
— | 200 | ||||||
Proceeds from the sale of equipment |
2 | — | ||||||
Purchases of property, equipment and patents |
(1,700 | ) | (1,305 | ) | ||||
Net cash (used in) investing activities |
(1,698 | ) | (1,105 | ) | ||||
Financing Activities |
||||||||
Proceeds from exercise of stock options |
336 | 10 | ||||||
Payments on short-term debt |
— | (686 | ) | |||||
Payments to repurchase common stock |
(3,367 | ) | — | |||||
Excess income tax benefits from exercise of stock options |
74 | — | ||||||
Redemption of nil coupon loan note |
— | (5 | ) | |||||
Net cash (used in) financing activities |
(2,957 | ) | (681 | ) | ||||
Effect of exchange rate fluctuations on cash |
65 | (12 | ) | |||||
Net (decrease) increase in cash and cash equivalents |
(1,526 | ) | 2,930 | |||||
Cash and cash equivalents at beginning of period |
30,524 | 20,965 | ||||||
Cash and cash equivalents at end of period |
$ | 28,998 | $ | 23,895 | ||||
| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 9 |
FUEL TECH, INC.
BUSINESS SEGMENT FINANCIAL DATA
(in thousands)
BUSINESS SEGMENT FINANCIAL DATA
(in thousands)
| Three months ended | Air Pollution | FUEL CHEM | ||||||||||||||
| September 30, 2011 | Control Segment | Segment | Other | Total | ||||||||||||
Revenues from external customers |
$ | 12,223 | $ | 11,800 | $ | — | $ | 24,023 | ||||||||
Cost of sales |
7,539 | 5,511 | — | 13,050 | ||||||||||||
Gross margin |
4,684 | 6,289 | — | 10,973 | ||||||||||||
Selling, general and administrative |
— | — | 7,701 | 7,701 | ||||||||||||
Research and development |
— | — | 358 | 358 | ||||||||||||
Operating income (loss) |
$ | 4,684 | $ | 6,289 | $ | (8,059 | ) | $ | 2,914 | |||||||
| Three months ended | Air Pollution | FUEL CHEM | ||||||||||||||
| September 30, 2010 | Control Segment | Segment | Other | Total | ||||||||||||
Revenues from external customers |
$ | 10,252 | $ | 10,027 | $ | — | $ | 20,279 | ||||||||
Cost of sales |
6,735 | 4,761 | — | 11,496 | ||||||||||||
Gross margin |
3,517 | 5,266 | — | 8,783 | ||||||||||||
Selling, general and administrative |
— | — | 7,808 | 7,808 | ||||||||||||
(Gain) from revaluation of
contingent performance obligation |
— | — | (768 | ) | (768 | ) | ||||||||||
Research and development |
— | — | 264 | 264 | ||||||||||||
Operating income (loss) |
$ | 3,517 | $ | 5,266 | $ | (7,304 | ) | $ | 1,479 | |||||||
| Nine months ended | Air Pollution | FUEL CHEM | ||||||||||||||
| September 30, 2011 | Control Segment | Segment | Other | Total | ||||||||||||
Revenues from external customers |
$ | 32,959 | $ | 32,707 | $ | — | $ | 65,666 | ||||||||
Cost of sales |
18,338 | 16,731 | — | 35,069 | ||||||||||||
Gross margin |
14,621 | 15,976 | — | 30,597 | ||||||||||||
Selling, general and administrative |
— | — | 23,618 | 23,618 | ||||||||||||
(Gain) from revaluation of
contingent performance
obligation |
— | — | (758 | ) | (758 | ) | ||||||||||
Research and development |
— | — | 1,075 | 1,075 | ||||||||||||
Operating income (loss) |
$ | 14,621 | $ | 15,976 | $ | (23,935 | ) | $ | 6,662 | |||||||
| Nine months ended | Air Pollution | FUEL CHEM | ||||||||||||||
| September 30, 2010 | Control Segment | Segment | Other | Total | ||||||||||||
Revenues from external customers |
$ | 27,757 | $ | 29,041 | $ | — | $ | 56,798 | ||||||||
Cost of sales |
18,039 | 14,024 | — | 32,063 | ||||||||||||
Gross margin |
9,718 | 15,017 | — | 24,735 | ||||||||||||
Selling, general and administrative |
— | — | 23,306 | 23,306 | ||||||||||||
(Gain) from revaluation of
contingent performance
obligation |
— | — | (768 | ) | (768 | ) | ||||||||||
Research and development |
— | — | 575 | 575 | ||||||||||||
Operating income (loss) |
$ | 9,718 | $ | 15,017 | $ | (23,113 | ) | $ | 1,622 | |||||||
| Note: | Fuel Tech is an integrated company that segregates its financial results into two reportable segments, both providing advanced technology and engineering solutions for the optimization of combustion systems in utility and industrial applications. The “Other” classification includes those profit and loss items not allocated by Fuel Tech to each reportable segment. |
| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 10 |
FUEL TECH, INC.
GEOGRAPHIC INFORMATION
(in thousands of dollars)
GEOGRAPHIC INFORMATION
(in thousands of dollars)
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
United States |
$ | 19,121 | $ | 17,015 | $ | 54,268 | $ | 46,517 | ||||||||
Foreign |
4,902 | 3,264 | 11,398 | 10,281 | ||||||||||||
| $ | 24,023 | $ | 20,279 | $ | 65,666 | $ | 56,798 | |||||||||
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Assets: |
||||||||
United States |
$ | 95,460 | $ | 92,485 | ||||
Foreign |
11,670 | 10,718 | ||||||
| $ | 107,130 | $ | 103,203 | |||||
| FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS | Page 11 |
FUEL TECH, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(in thousands of dollars)
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(in thousands of dollars)
| Nine Months Ended September 30 | ||||||||
| 2011 | 2010 | |||||||
Net income |
$ | 4,424 | $ | 722 | ||||
Interest expense |
125 | 110 | ||||||
Income tax expense |
1,880 | 627 | ||||||
Depreciation expense |
2,251 | 2,440 | ||||||
Amortization expense |
677 | 665 | ||||||
EBITDA |
9,357 | 4,564 | ||||||
Stock compensation expense |
2,197 | 3,769 | ||||||
ADJUSTED EBITDA |
$ | 11,554 | $ | 8,333 | ||||
Adjusted EBITDA
To supplement the Company’s consolidated financial statements presented in accordance with
generally accepted accounting principles in the United States (GAAP), the Company has provided an
Adjusted EBITDA disclosure as a measure of financial performance. Adjusted EBITDA is defined as
net income before interest expense, income tax expense, depreciation expense, amortization expense
and stock compensation expense. The Company’s reference to these non-GAAP measures should be
considered in addition to results prepared in accordance with GAAP standards, but are not a
substitute for, or superior to, GAAP results.
Adjusted EBITDA is provided to enhance investors’ overall understanding of the Company’s
current financial performance and ability to generate cash flow, which we believe is a meaningful
measure for our investor and analyst communities. In many cases non-GAAP financial measures are
utilized by these individuals to evaluate Company performance and ultimately determine a reasonable
valuation for our common stock. A reconciliation of Adjusted EBITDA to the nearest GAAP measure of
net income has been included in the financial table above.