FURMANITE CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 6, 2015

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Investor Relations
(713) 634-7775
Email: investor@furmanite.com

FURMANITE CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR 2014 RESULTS


HOUSTON, TEXAS (March 6, 2015) – Furmanite Corporation (NYSE: FRM) today reported results for the three and twelve months ended December 31, 2014.

Fourth Quarter 2014 Results

Revenues for the three months ended December 31, 2014 were $133.9 million, an increase of $3.5 million, or 2.7%, over the $130.4 million reported for the three months ended December 31, 2013. Adjusted operating income for the three months ended December 31, 2014 and 2013 was $8.4 million(A) and $5.2 million,(A) respectively, excluding $0.8 million and $0.6 million, respectively, of incremental costs associated with certain retirement, management transition and integration expenses. Net income for the 2014 fourth quarter was $4.8 million, or $0.13 per diluted share, compared to $2.6 million, or $0.07 per diluted share, in the 2013 fourth quarter.

Twelve Months Ended December 31, 2014 Results

Revenues for the twelve months ended December 31, 2014 were $529.2 million, an increase of $101.9 million, or 23.8%, over the $427.3 million reported for the twelve months ended December 31, 2013. Adjusted operating income for the twelve months ended December 31, 2014 and 2013 was $22.9 million(A) and $25.5 million,(A) respectively, excluding $2.3 million of incremental costs in the current year and $0.7 million of incremental costs in the prior year, associated with certain retirement, management transition and integration expenses. Net income for the twelve months ended December 31, 2014 was $11.4 million, or $0.30 per diluted share, compared to $14.0 million, or $0.37 per diluted share for the twelve months ended December 31, 2013.

Foreign currency had unfavorable impacts on revenues and operating income of $2.3 million and $0.2 million, respectively, for the three months ended December 31, 2014 and favorable impacts on revenues and operating income of $0.4 million and $0.5 million, respectively, for the twelve months ended December 31, 2014.

Joseph Milliron, CEO and President of Furmanite Corporation said, “Our fourth quarter performance reflects the initial success of our initiatives and our strengthened operating foundation from which we expect to grow. Throughout 2014, we took significant action to unify Furmanite’s global operations and implement efficiencies in our internal processes and structure to reduce costs. Further, we have taken steps to strengthen our ability to partner with customers earlier and longer in their projects and throughout the life cycles of their assets, which we believe will generate further opportunity in our markets. Moving forward, we are focused on driving high performance and profitable growth across our global organization, and while challenges remain in our markets, we are committed to doing what is within our control to enhance shareholder value.”

Financial Position

As of December 31, 2014, the Company’s cash balance was $33.8 million. The Company’s cash balance, along with the $38.0 million of availability under its credit facility, provides the Company liquidity of $71.8 million.








Discontinuing Earnings Guidance

The Company is discontinuing its practice of providing financial guidance due to a number of factors, including variable industry dynamics, the impact of foreign exchange, global economic considerations and other challenges that can impact its forecasting capabilities. The Company will continue to provide investors with perspective on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment to continue to assist in guiding the investment community on its business outlook and environment.

Conference Call Details

In conjunction with the earnings release, Furmanite Corporation will host a conference call with, Joseph E. Milliron (Chief Executive Officer and President) and Robert S. Muff (Chief Financial Officer and Chief Administration Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Friday, March 6, 2015.

(A) These items are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”) and exclude the impact of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct costs associated with management transition and integration of the Furmanite Technical Solutions division. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measure is included at the end of the press release.

ABOUT FURMANITE CORPORATION

Furmanite Corporation (NYSE: FRM), founded in 1920, is one of the world’s largest specialty industrial services and specialty engineering project solutions companies, providing world class solutions to customer needs through more than 80 offices on six continents. The Company delivers a wide portfolio of inspection, mechanical and engineering services which help monitor, maintain, renew and construct the global energy, industrial and municipal infrastructures. Furmanite serves a broad range of industry sectors, including refining, offshore, sub-sea, pipeline, power generation, chemical, petrochemical, pulp and paper, water utilities, automotive, mining, marine and steel manufacturing. World Headquarters and Global Support Operations are located in Houston, Texas; Rotterdam, Netherlands; Kendal, United Kingdom and Melbourne, Australia. For more information, visit www.furmanite.com.

Certain of the Company’s statements in this press release are not purely historical, and as such are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company’s business, and other risks and uncertainties detailed most recently in this earnings release and the Company’s Form 10-K as of December 31, 2013 filed with the Securities and Exchange Commission. One or more of these factors could affect the Company’s business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements.
 

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FURMANITE CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
For the Three Months
 
For the Twelve Months
 
Ended December 31,
 
Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Revenues
$
133,885

 
$
130,357

 
$
529,197

 
$
427,294

Costs and expenses:
 
 
 
 
 
 
 
Operating costs
99,499

 
99,763

 
397,629

 
306,042

Depreciation and amortization expense
3,434

 
3,186

 
12,579

 
11,418

Selling, general and administrative expense
23,366

 
22,757

 
98,302

 
85,034

Total costs and expenses
126,299

 
125,706

 
508,510

 
402,494

 
 
 
 
 
 
 
 
Operating income
7,586

 
4,651

 
20,687

 
24,800

Interest income and other income (expense), net
340

 
(344
)
 
(92
)
 
(616
)
Interest expense
(449
)
 
(408
)
 
(1,811
)
 
(1,341
)
Income before income taxes
7,477

 
3,899

 
18,784

 
22,843

Income tax expense
(2,707
)
 
(1,317
)
 
(7,429
)
 
(8,816
)
Net income
$
4,770

 
$
2,582

 
$
11,355

 
$
14,027

 
 
 
 
 
 
 
 
Earnings per common share - Basic
$
0.13

 
$
0.07

 
$
0.30

 
$
0.37

Earnings per common share - Diluted
$
0.13

 
$
0.07

 
$
0.30

 
$
0.37

Adjusted diluted earnings per share1
$
0.14

 
$
0.08

 
$
0.34

 
$
0.38

 
 
 
 
 
 
 
 
Weighted-average number of common and common equivalent shares used in computing earnings per common share:
Basic
37,678

 
37,511

 
37,631

 
37,422

Diluted
37,897

 
37,762

 
37,867

 
37,630

 
 
 
 
 
 
 
 
EBITDA2
$
11,360


$
7,493


$
33,174


$
35,602


__________________
1 
Adjusted diluted earnings per share presented above is a non-GAAP financial measurement that excludes the impact of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct costs associated with management transition and integration of the Furmanite Technical Solutions division. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measure is included at the end of the press release.

2 
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) presented above is a non-GAAP financial measurement. The Company believes that investors and other users of the financial statements benefit from the presentation of this non-GAAP measurement because it provides an additional metric to evaluate the Company’s core operating performance by excluding the effects of depreciation and amortization expense, interest expense and income tax expense from net income. A reconciliation of EBITDA to the most directly comparable GAAP measure is included at the end of the press release.

3



FURMANITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
 
 
 
December 31,
 
2014
 
2013
 
 
 
 
Cash
$
33,753

 
$
33,240

Trade receivables, net
110,219

 
106,853

Inventories, net
37,383

 
35,443

Other current assets
21,335

 
21,159

Total current assets
202,690


196,695

 
 
 
 
Property and equipment, net
51,930

 
55,347

Other assets
29,551

 
33,125

Total assets
$
284,171


$
285,167

 
 
 
 
Total current liabilities
$
56,067

 
$
62,523

Total long-term debt
61,853

 
63,196

Other liabilities
23,787

 
25,952

Total stockholders’ equity
142,464

 
133,496

Total liabilities and stockholders’ equity
$
284,171


$
285,167


4






FURMANITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
 
 
For the Twelve Months Ended
December 31,
 
2014
 
2013
 
 
 
 
Net income
$
11,355

 
$
14,027

 
 
 
 
Depreciation, amortization and other non-cash items
13,560

 
17,364

Working capital changes
(14,414
)
 
(13,716
)
Net cash provided by operating activities
10,501


17,675

 
 
 
 
Capital expenditures
(8,090
)
 
(18,392
)
Acquisition of businesses
(265
)
 
(16,695
)
Proceeds from sale of assets
16

 
30

Payments on debt
(1,012
)
 
(2,274
)
Proceeds from issuance of debt
—

 
20,000

Debt issuance costs
—

 
(50
)
Excess tax benefits from stock-based compensation
989

 
—

Issuance of common stock
158

 
573

Other
(250
)
 
(250
)
Effect of exchange rate changes on cash
(1,534
)
 
(562
)
Increase in cash and cash equivalents
513


55

Cash and cash equivalents at beginning of period
33,240

 
33,185

Cash and cash equivalents at end of period
$
33,753


$
33,240



5



FURMANITE CORPORATION
BUSINESS SEGMENT DATA
(in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Technical Services
 
Engineering & Project Solutions
 
Corporate1
 
Total
Three months ended December 31, 2014
 
 
 
 
 
 
 
Revenues from external customers
$
96,319

 
$
37,566

 
$
—

 
$
133,885

Operating income (loss)2
$
11,498

 
$
821

 
$
(4,733
)
 
$
7,586

 
 
 
 
 
 
 
 
Three months ended December 31, 2013
 
 
 
 
 
 
 
Revenues from external customers
$
95,965

 
$
34,392

 
$
—

 
$
130,357

Operating income (loss)2
$
8,839

 
$
(1,808
)
 
$
(2,380
)
 
$
4,651

 
 
 
 
 
 
 
 
Twelve months ended December 31, 2014
 
 
 
 
 
 
 
Revenues from external customers
$
376,120

 
$
153,077

 
$
—

 
$
529,197

Operating income (loss)2
$
41,279

 
$
(391
)
 
$
(20,201
)
 
$
20,687

 
 
 
 
 
 
 
 
Twelve months ended December 31, 2013
 
 
 
 
 
 
 
Revenues from external customers
$
368,587

 
$
58,707

 
$
—

 
$
427,294

Operating income (loss)2
$
43,822

 
$
(2,003
)
 
$
(17,019
)
 
$
24,800

 
 
 
 
 
 
 
 
















_______________________________

1 
Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.
2
The Engineering & Project Solutions segment includes nil and approximately $0.5 million of direct costs associated with management transition and integration of the Furmanite Technical Solutions division for the three and twelve months ended December 31, 2014, respectively, and approximately $0.6 million and $0.7 million of such costs for the three and twelve months ended December 31, 2013, respectively. Corporate includes approximately $0.8 million and $1.7 million of incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive for the three and twelve months ended December 31, 2014, respectively.

6


FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
 
 
 
 
 
 
 
For the Three Months
 
Ended December 31, 2014
 
As Reported
 
Reconciling Items 1
 
Non GAAP Basis
Selling, general and administrative expense
$
23,366

 
$
(847
)
 
$
22,519

Operating income
7,586

 
847

 
8,433

Income before income taxes
7,477

 
847

 
8,324

Income tax expense
(2,707
)
 
(339
)
 
(3,046
)
Net income
$
4,770

 
$
508

 
$
5,278

Adjusted diluted earnings per share
$
0.13

 
$
0.01

 
$
0.14

 
 
 
 
 
 
 
For the Three Months
 
Ended December 31, 2013
 
As Reported
 
Reconciling Items 1
 
Non GAAP Basis
Selling, general and administrative expense
$
22,757

 
$
(580
)
 
$
22,177

Operating income
4,651

 
580

 
5,231

Income before income taxes
3,899

 
580

 
4,479

Income tax expense
(1,317
)
 
(232
)
 
(1,549
)
Net income
$
2,582

 
$
348

 
$
2,930

Adjusted diluted earnings per share
$
0.07

 
$
0.01

 
$
0.08

 
 
 
 
 
 
 
For the Twelve Months
 
Ended December 31, 2014
 
As Reported
 
Reconciling Items 1
 
Non GAAP Basis
Selling, general and administrative expense
$
98,302

 
$
(2,251
)
 
$
96,051

Operating income
20,687

 
2,251

 
22,938

Income before income taxes
18,784

 
2,251

 
21,035

Income tax expense
(7,429
)
 
(900
)
 
(8,329
)
Net income
$
11,355

 
$
1,351

 
$
12,706

Adjusted diluted earnings per share
$
0.30

 
$
0.04

 
$
0.34

 
 
 
 
 
 
 
For the Twelve Months
 
Ended December 31, 2013
 
As Reported
 
Reconciling Items 1
 
Non GAAP Basis
Selling, general and administrative expense
$
85,034

 
$
(650
)
 
$
84,384

Operating income
24,800

 
650

 
25,450

Income before income taxes
22,843

 
650

 
23,493

Income tax expense
(8,816
)
 
(260
)
 
(9,076
)
Net income
$
14,027

 
$
390

 
$
14,417

Adjusted diluted earnings per share
$
0.37

 
$
0.01

 
$
0.38

______________________________
1  
Consists of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct management transition and integration costs of the Furmanite Technical Solutions division, and the related income tax impacts.

7

FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
For the Three Months
 
For the Twelve Months
 
Ended December 31,
 
Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Reconciliation of EBITDA to Net income:
 
 
 
 
 
 
 
EBITDA
$
11,360


$
7,493


$
33,174


$
35,602

Less:
 
 
 
 
 
 
 
Depreciation and amortization expense
(3,434
)
 
(3,186
)
 
(12,579
)
 
(11,418
)
Interest expense
(449
)
 
(408
)
 
(1,811
)
 
(1,341
)
Income tax expense
(2,707
)
 
(1,317
)
 
(7,429
)
 
(8,816
)
Net income
$
4,770

 
$
2,582

 
$
11,355

 
$
14,027



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