Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - GSE Holding, Inc. | f8k_031413.htm |
| EX-99.2 - EXHIBIT 99.2 - GSE Holding, Inc. | exh_992.htm |
Exhibit 99.1
GSE Reports Fourth Quarter and Full Year 2012 Results
Announces Record Revenues and Adjusted EBITDA for Full Year 2012
HOUSTON, TX – March 14, 2013 – GSE Holding, Inc. (the “Company” or “GSE”) (NYSE: GSE), a leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications, today reported its financial results for the Company’s fourth quarter and full year 2012.
Selected financial highlights for the full year 2012:
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·
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Sales of $476.6 million vs. $464.5 million in 2011
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Gross margin of 16.3% vs. 15.2% in 2011
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Adjusted EBITDA of $45.7 million vs. $44.5 million in 2011
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·
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Adjusted net income of $15.5 million and adjusted diluted earnings per share of $0.80 per share
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Unadjusted net income of $1.1 million and diluted earnings per share of $0.06 per share
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Selected financial highlights for the fourth quarter of 2012:
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Sales of $121.4 million vs. $110.7 million in 4Q 2011
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Gross margin of 16.3% vs. 15.9% in 4Q 2011
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Adjusted EBITDA of $10.0 million vs. $8.8 million in 4Q 2011
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Mark Arnold, President and Chief Executive Officer stated that “During 2012 we saw gains across most of our end-markets, and began expanding our worldwide manufacturing capabilities. Most notably, we recently announced the groundbreaking on our new manufacturing facility in China, which will allow us to more readily service the fast-growing Asian Pacific geography. In addition to this facility, we also have planned capacity additions in 2013 for our existing facilities in Thailand and Egypt, and we have completed the addition of a GCL line to our Kingstree, South Carolina plant. We were recently awarded a contract with an Asian engineering company for a mining application in the region. This contract is one of the largest in our Company’s history and is expected to begin shipping in the second quarter of 2013. We are confident with our growth strategy and remain focused on expanding our manufacturing capabilities and market development globally”
Fourth Quarter Summary
Total revenue for the fourth quarter was $121.4 million, compared to $110.7 million for the prior year period. Strong sales in Energy, Coal Ash, and Oil and Gas helped offset a decline in our North American Environmental Containment end-market. The decline in revenue from the Environmental Containment end-market reflects the Company’s continued proactive decision to not pursue low margin contracts. Mr. Arnold continued, “The adoption of our innovative products such as our leak location liner system and our high performance geomembrane not only positively impacted our product mix during the quarter, but also reinforced our growth thesis that our customers want a total solution that helps them drive efficiencies to better manage their operations.”
Gross profit increased to $19.7 million in the fourth quarter of 2012 from $17.6 million in the prior year period, resulting in gross margin for the fourth quarter of 2012 improving to 16.3% from 15.9% in the prior year period, highlighting the Company's focus on more profitable end markets and higher value products.
The fourth quarter included an income tax benefit of approximately $2.0 million or $0.10 per share representing the reversal of the beginning of year valuation allowance reserve for U.S. net operating losses, which we believe are more likely than not to be utilized.
Adjusted EBITDA improved to $10.0 million from $8.8 million in the prior year period. Adjusted Net Income in the fourth quarter was $5.3 million, or $0.26 per fully diluted share compared to a loss of $0.4 million or ($0.04) per fully diluted share in the prior year period. Unadjusted net income for the quarter was $4.8 million, or $0.24 per fully diluted share, compared to a net loss of $0.9 million, or ($0.09) per fully diluted share in the prior year period.
Full Year 2012 Summary
Total revenue for 2012 was $476.6 million, compared to $464.5 million for the prior year. Gross profit increased to $77.7 million from $70.5 million in 2011, resulting in gross margin for the full year 2012 of 16.3%, a 110 basis point improvement from 15.2% in 2011. Adjusted Net Income for 2012 was $15.5 million, or $0.80 per fully diluted share up from $4.9 million or $0.41 per fully diluted share in 2011. Adjusted EBITDA in 2012 improved to $45.7 million from $44.5 million in 2011. Unadjusted net income for the full year was $1.1 million, or $0.06 per fully diluted share, compared to net income of $1.0 million, or $0.08 per fully diluted share in 2011.
Recent Events
On January 7, 2013 the Company announced the appointment of J. Michael Kirksey as Executive Vice President and Chief Financial Officer. Mr. Kirksey has over 35 years of finance and accounting experience, and spent the last five years as the CFO of a NYSE-Listed company. Throughout his career, Mr. Kirksey has served in several executive financial and general management positions and has gained extensive domestic and international experience, including leading many acquisition and divestiture transactions, both in the US and internationally.
Also in January, the Company held a groundbreaking ceremony for its new manufacturing facility in China. Construction of the facility is expected to be completed in late 2013 and add 44 million pounds of new manufacturing capacity. Once completed, the facility will have the ability to manufacture the Company's entire line of geomembrane products and service the growing demand for landfill expansions, industrial waste containment, coal ash containment and oil and gas fracking in the region.
In February, the Company announced the acquisition of SynTec, a manufacturer of geosynthetic drainage and soil reinforcement products. This acquisition provides GSE entry into the civil market and access to new technology for environmental and civil applications.
Conference Call
GSE will hold a conference call today, March 14, 2013 at 9:30 a.m. Central Time to discuss the Company’s strategy and operating results. The conference call can be accessed by dialing 877-616-4476 (domestic) or 402-875-4763 (international). A telephonic replay will be available approximately two hour after the call and can be accessed by dialing 1-855-859-2056, or for international callers, 1-404-537-3406. The passcode for the live call and the replay is 16362470. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 27, 2013.
Interested parties may also listen to a simultaneous webcast of the conference call via the Investor Relations section of GSE’s website at http://ir.gseworld.com.
Use of Non-GAAP Financial Measures (Adjusted EBITDA and Adjusted Net Income)
Adjusted EBITDA represents net income (loss) before interest expense, income tax expense, depreciation, amortization of intangibles, loss (gain) on foreign currency transactions, restructuring expenses, certain professional fees, stock-based compensation expense, public offering related costs, loss on extinguishment of debt and management fees. Adjusted Net Income represents Net Income attributable to GSE Holding, Inc. before public offering related costs and public offering related interest expense, loss on extinguishment of debt, certain professional fees and management fees. Adjusted EBITDA and Adjusted Net Income are “non-GAAP financial measures,” and are intended as supplemental measures of the Company’s performance that are not required by, or presented in accordance with, GAAP. Adjusted EBITDA and Adjusted Net Income should not be considered as alternatives to net income, income from continuing operations, earnings per share or any other performance measure derived in accordance with GAAP. The presentation of Adjusted EBITDA and Adjusted Net Income should not be construed to imply that future results will be unaffected by unusual or non-recurring items. Management believes these measures are meaningful to investors to enhance their understanding of the Company’s financial performance. Management’s calculation of these measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, appears in the section of this press release titled “Reconciliation of Net Income (Loss) to Adjusted EBITDA”. A reconciliation of Adjusted Net Income to net Income (loss) appears in the section of this press release titled “Reconciliation of Net Income (Loss) to Adjusted Net Income”.
About GSE Holding, Inc.
GSE is a global manufacturer and marketer of geosynthetic lining solutions, products and services used in the containment and management of solids, liquids, and gases for organizations engaged in waste management, mining, water, wastewater, and aquaculture.
GSE has a long history of manufacturing quality geosynthetic lining systems and developing innovative products. The Company's principal products are polyethylene-based geomembranes, geonets, geocomposites, geosynthetic clay liners, concrete protection liners and vertical barriers. GSE manufactures products primarily to line or cap hazardous and non-hazardous waste landfills; contain materials generated in certain mining processes; and contain water, liquid waste and industrial products in ponds, tanks, reservoirs, sewers, and canals. Headquartered in Houston, Texas, USA, GSE maintains sales offices throughout the world and manufacturing facilities in the United States, Chile, Germany, Thailand and Egypt.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements give management’s current expectations and projections relating to the Company’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking 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,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” 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. The forward-looking statements are based on the Company’s beliefs, assumptions and expectations of future performance, taking into account the information currently available to management. Important factors that could cause actual results to differ materially from statements included in this press release can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other documents filed with the SEC. These documents are available in the Investor Relations section of the Company’s website at http://www.gseworld.com.
The Company cannot assure you that it will realize the results or developments it expects or anticipates or, even if substantially realized, that they will result in the consequences or affect the Company or its operations in the way it expects. The forward-looking statements included in this press release are made only as of the date hereof. Management undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
GSE Holding, Inc.
Consolidated Balance Sheets
(In thousands, except share amounts)
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December 31,
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2012
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2011
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 18,068 | $ | 9,076 | ||||
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Accounts receivable:
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Trade, net of allowance for doubtful accounts of $869 and $1,736
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96,987 | 80,705 | ||||||
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Other
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3,626 | 3,054 | ||||||
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Inventory, net
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64,398 | 58,109 | ||||||
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Deferred income taxes
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1,111 | 935 | ||||||
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Prepaid expenses and other
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6,681 | 5,741 | ||||||
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Income taxes receivable
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1,538 | 2,447 | ||||||
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Total current assets
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192,409 | 160,067 | ||||||
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Property, plant and equipment, net
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70,172 | 57,270 | ||||||
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Goodwill
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58,895 | 58,895 | ||||||
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Intangible assets, net
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1,549 | 2,727 | ||||||
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Deferred income taxes
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5,858 | 2,519 | ||||||
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Deferred debt issuance costs, net
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7,003 | 8,387 | ||||||
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Other assets
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212 | 2,561 | ||||||
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TOTAL ASSETS
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$ | 336,098 | $ | 292,426 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$ | 36,632 | $ | 34,848 | ||||
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Accrued liabilities and other
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20,198 | 22,812 | ||||||
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Short-term debt
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985 | 2,864 | ||||||
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Current portion of long-term debt
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3,147 | 2,709 | ||||||
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Income taxes payable
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1,691 | 964 | ||||||
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Deferred income taxes
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1,156 | 1,135 | ||||||
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Total current liabilities
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63,809 | 65,332 | ||||||
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Other liabilities
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1,211 | 1,124 | ||||||
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Deferred income taxes
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1,078 | 1,416 | ||||||
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Long-term debt, net of current portion
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167,282 | 192,885 | ||||||
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Total liabilities
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233,380 | 260,757 | ||||||
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Commitments and Contingencies (Note 15)
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Stockholders’ equity:
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Common stock, $.01 par value, 150,000,000 shares authorized, 19,846,684 and 10,809,987 shares issued and outstanding at December 31, 2012 and 2011, respectively
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198 | 108 | ||||||
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Additional paid-in capital
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130,617 | 61,407 | ||||||
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Accumulated deficit
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(28,372 | ) | (29,456 | ) | ||||
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Accumulated other comprehensive income (loss)
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275 | (390 | ) | |||||
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Total stockholders’ equity
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102,718 | 31,669 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 336,098 | $ | 292,426 | ||||
GSE Holding, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share amounts)
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Three Months Ended December 31,
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Year Ended December 31,
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2012
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2011
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2012
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2011
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Net sales
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$ | 121,360 | $ | 110,660 | $ | 476,644 | $ | 464,451 | ||||||||
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Cost of products
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101,626 | 93,019 | 398,955 | 393,944 | ||||||||||||
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Gross profit
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19,734 | 17,641 | 77,689 | 70,507 | ||||||||||||
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Selling, general and administrative expenses
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14,642 | 12,975 | 49,326 | 44,474 | ||||||||||||
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Public offering related costs
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— | — | 9,655 | — | ||||||||||||
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Amortization of intangibles
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290 | 322 | 1,182 | 1,379 | ||||||||||||
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Operating income
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4,802 | 4,344 | 17,526 | 24,654 | ||||||||||||
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Other expenses (income):
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Interest expense, net
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3,961 | 5,103 | 16,797 | 20,081 | ||||||||||||
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Foreign currency transaction (gain) loss
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54 | (604 | ) | (459 | ) | (568 | ) | |||||||||
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Loss on extinguishment of debt
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— | — | 1,555 | 2,016 | ||||||||||||
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Other income, net
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(951 | ) | (254 | ) | (2,269 | ) | (1,182 | ) | ||||||||
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Income from continuing operations before income taxes
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1,738 | 99 | 1,902 | 4,307 | ||||||||||||
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Income tax (benefit) provision
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(3,127 | ) | 1,089 | 356 | 3,490 | |||||||||||
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Income (loss) from continuing operations
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4,865 | (990 | ) | 1,546 | 817 | |||||||||||
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Income (loss) from discontinued operations, net of tax
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(51 | ) | 53 | (462 | ) | 136 | ||||||||||
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Net income (loss).
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4,814 | (937 | ) | 1,084 | 953 | |||||||||||
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Other comprehensive income (loss):
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Foreign currency translation adjustment
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684 | (1,814 | ) | 665 | (2,125 | ) | ||||||||||
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Comprehensive income (loss)
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$ | 5,498 | $ | (2,751 | ) | $ | 1,749 | $ | (1,172 | ) | ||||||
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Basic net income (loss) per common share:
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Continuing operations
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$ | 0.24 | $ | (0.09 | ) | $ | 0.08 | $ | 0.08 | |||||||
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Discontinued operations
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(0.00 | ) | 0.00 | (0.02 | ) | 0.01 | ||||||||||
| $ | 0.24 | $ | (0.09 | ) | $ | 0.06 | $ | 0.09 | ||||||||
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Diluted net income (loss) per common share:
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Continuing operations
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$ | 0.24 | $ | (0.09 | ) | $ | 0.08 | $ | 0.07 | |||||||
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Discontinued operations
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(0.00 | ) | 0.00 | (0.02 | ) | 0.01 | ||||||||||
| $ | 0.24 | $ | (0.09 | ) | $ | 0.06 | $ | 0.08 | ||||||||
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Basic weighted-average common shares outstanding
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19,683 | 10,810 | 18,407 | 10,810 | ||||||||||||
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Diluted weighted-average common shares outstanding
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20,440 | 11,810 | 19,336 | 11,841 | ||||||||||||
GSE Holding, Inc.
Consolidated Statements of Cash Flows
(In thousands)
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Year Ended December 31,
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2012
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2011
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2010
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Cash flows from operating activities:
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Net income (loss)
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$ | 1,084 | $ | 953 | $ | (16,772 | ) | |||||
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(Income) loss from discontinued operations
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462 | (136 | ) | 4,428 | ||||||||
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Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
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Depreciation and amortization
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13,114 | 11,419 | 10,416 | |||||||||
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Amortization of debt issuance costs
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2,418 | 2,025 | 1,844 | |||||||||
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Amortization of intangible assets
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1,182 | 1,379 | 2,284 | |||||||||
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Amortization of premium/discount on senior notes
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935 | 744 | (40 | ) | ||||||||
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Loss on extinguishment of debt
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1,555 | 2,016 | — | |||||||||
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Deferred income tax (benefit) provision
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(3,862 | ) | 683 | (1,854 | ) | |||||||
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Stock-based compensation
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4,666 | 75 | 67 | |||||||||
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Revaluation of non-dollar denominated debt
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340 | (815 | ) | 345 | ||||||||
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Other
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176 | 75 | 116 | |||||||||
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Change in cash from operating assets and liabilities:
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Accounts receivable
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(16,757 | ) | (16,498 | ) | (24,539 | ) | ||||||
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Inventory
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(6,288 | ) | (7,463 | ) | (19,561 | ) | ||||||
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Prepaid expenses and other
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(1,781 | ) | 550 | (6,837 | ) | |||||||
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Accounts payable
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1,878 | 395 | 12,827 | |||||||||
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Accrued liabilities
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(1,398 | ) | 741 | 8,164 | ||||||||
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Income taxes (receivable) payable
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1,235 | (1,243 | ) | 2,615 | ||||||||
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Other assets and liabilities
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(489 | ) | 977 | (44 | ) | |||||||
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Net cash used in operating activities – continuing operations
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(1,530 | ) | (4,123 | ) | (26,541 | ) | ||||||
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Net cash provided by (used in) operating activities – discontinued operations
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(142 | ) | 5,010 | (3,219 | ) | |||||||
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Net cash provided by (used in) operating activities
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(1,672 | ) | 887 | (29,760 | ) | |||||||
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Cash flows from investing activities:
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Purchase of property, plant and equipment
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(26,137 | ) | (11,694 | ) | (3,337 | ) | ||||||
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Proceeds from the sale of assets
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33 | 32 | – | |||||||||
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Net cash used in investing activities – continuing operations
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(26,104 | ) | (11,662 | ) | (3,337 | ) | ||||||
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Net cash provided by investing activities – discontinued operations
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– | – | 2,284 | |||||||||
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Net cash used in investing activities
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(26,104 | ) | (11,662 | ) | (1,053 | ) | ||||||
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Cash flows from financing activities:
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Proceeds from lines of credit
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100,635 | 86,948 | 137,865 | |||||||||
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Repayments of lines of credit
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(110,490 | ) | (90,667 | ) | (109,918 | ) | ||||||
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Proceeds from long-term debt
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25,674 | 173,083 | — | |||||||||
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Repayments of long-term debt
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(44,318 | ) | (153,172 | ) | (2,256 | ) | ||||||
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Net proceeds from initial public offering
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65,927 | — | — | |||||||||
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Payments for debt issuance costs
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(1,748 | ) | (9,179 | ) | — | |||||||
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Payments for public offering costs
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— | (2,311 | ) | — | ||||||||
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Proceeds from the exercise of stock options
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1,018 | — | — | |||||||||
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Net cash provided by financing activities – continuing operations
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36,698 | 4,702 | 25,691 | |||||||||
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Net cash used in financing activities – discontinued operations
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— | (650 | ) | — | ||||||||
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Net cash provided by financing activities
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36,698 | 4,052 | 25,691 | |||||||||
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Effect of exchange rate changes on cash – continuing operations
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27 | 611 | (228 | ) | ||||||||
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Effect of exchange rate changes on cash – discontinued operations
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43 | 4 | (280 | ) | ||||||||
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Net increase (decrease) in cash and cash equivalents
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8,992 | (6,108 | ) | (5,630 | ) | |||||||
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Cash and cash equivalents at beginning of year
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9,076 | 15,184 | 20,814 | |||||||||
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Cash and cash equivalents at end of year
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$ | 18,068 | $ | 9,076 | $ | 15,184 | ||||||
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Supplemental cash flow disclosure:
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Cash paid for interest
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$ | 15,840 | $ | 15,626 | $ | 16,341 | ||||||
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Cash paid for income taxes
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$ | 1,375 | $ | 2,643 | $ | 22 | ||||||
GSE Holding, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in thousands)
(unaudited)
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Three Months Ended
December 31,
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Year Ended
December 31,
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2012
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2011
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2012
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2011
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Net Income (loss)
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$ | 4,814 | $ | (937 | ) | $ | 1,084 | $ | 953 | |||||||
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(Income) loss from discontinued operations, net of income tax
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51 | (53 | ) | 462 | (136 | ) | ||||||||||
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Interest expense
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3,961 | 5,105 | 16,797 | 20,088 | ||||||||||||
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Income tax (benefit) expense
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(3,127 | ) | 1,089 | 356 | 3,490 | |||||||||||
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Depreciation and amortization expense
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3,611 | 3,458 | 14,296 | 12,798 | ||||||||||||
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Foreign exchange (gain) loss
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53 | (604 | ) | (459 | ) | (568 | ) | |||||||||
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Loss on extinguishment of debt
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— | — | 1,555 | 2,016 | ||||||||||||
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Restructuring expense
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— | 569 | 93 | 950 | ||||||||||||
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Professional fees
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460 | (431 | ) | 1,056 | 2,712 | |||||||||||
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Stock-based compensation expense
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213 | — | 360 | 75 | ||||||||||||
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Public offering costs
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— | — | 9,655 | — | ||||||||||||
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Management fees
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— | 554 | 229 | 2,074 | ||||||||||||
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Other
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— | 76 | 188 | 84 | ||||||||||||
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Adjusted EBITDA
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$ | 10,036 | $ | 8,826 | $ | 45,672 | $ | 44,536 | ||||||||
GSE Holding, Inc.
Reconciliation of Net Income (Loss) to Adjusted Net Income
(in thousands)
(unaudited)
|
Three Months Ended
December 31,
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Year Ended
December 31,
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2012
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2011
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2012
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2011
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Net Income (loss)
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$ | 4,814 | $ | (937 | ) | $ | 1,084 | $ | 953 | |||||||
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(Income) loss from discontinued operations, net of income tax
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51 | (53 | ) | 462 | (136 | ) | ||||||||||
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Professional fees
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460 | — | 1,056 | — | ||||||||||||
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Management fees
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— | 554 | 229 | 2,074 | ||||||||||||
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Loss on extinguishment of debt
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— | — | 1,555 | 2,016 | ||||||||||||
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Public offering costs
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— | — | 9,655 | — | ||||||||||||
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Public offering interest related expense
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— | — | 1,470 | — | ||||||||||||
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Adjusted net income (loss)
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$ | 5,325 | $ | (436 | ) | $ | 15,511 | $ | 4,907 | |||||||
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Diluted weighted-average common shares outstanding
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20,440 | 10,810 | 19,336 | 11,841 | ||||||||||||
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Adjusted earnings (loss) per share
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$ | 0.26 | $ | (0.04 | ) | $ | 0.80 | $ | 0.41 | |||||||