NORCRAFT COMPANIES LP - FORM 8-K - EX-99.1 - PRESS RELEASE DATED AUGUST 9, 2013 - August 9, 2013

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Exhibit 99.1
 
 
NEWS RELEASE
 
 
FOR IMMEDIATE RELEASE
 
 
 
 
Contact:
Leigh E. Ginter
 
 
Chief Financial Officer
 
 
leigh.ginter@norcraftcompanies.com
 
 
(651) 234-3315
            

NORCRAFT COMPANIES, L.P.
REPORTS SECOND QUARTER 2013 RESULTS

August 9, 2013 – Eagan, Minnesota --- 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.”

CONFERENCE CALL
Norcraft has scheduled a conference call on Tuesday, August 13, 2013 at 10:00 a.m. Eastern Time. To participate, dial 877-352-9693 and use the conference ID 28978770. A telephonic replay will be available by calling 855-859-2056.

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
 
2012
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



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 could cause actual results to differ materially from these forward looking statements including, but not limited to, the risks outlined under Part I, Item 1A, “Risk Factors,’’ in the Annual Report on Form 10-K filed by the company with the Securities and Exchange Commission.
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 LP Reports