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| 8-K - 8-K - Jason Industries, Inc. | form8-kxq12018earningsrele.htm |
Jason Industries Reports First Quarter 2018 Results
Margin Expansion In All Businesses
Net Debt to Adjusted EBITDA Reduced
Reaffirms Full Year Guidance
MILWAUKEE, May 3, 2018 -- Jason Industries, Inc. (NASDAQ: JASN, JASNW) (“Jason” or the “Company”) today reported results for first quarter 2018.
Key financial results for the first quarter 2018 versus the year ago period include:
• | Net sales of $167.3 million decreased 4.5 percent and included a negative 5.3 percent impact from the divestiture and planned exit of non-core businesses and a positive 2.9 percent from foreign currency translation. |
• | Operating income of $7.3 million, or 4.4 percent of net sales, increased from 4.3 percent of net sales on improved operational results. |
• | Net loss of $0.8 million, or $0.09 diluted loss per share, increased $0.3 million and $0.04 per share. Diluted loss per share was impacted $0.04 per share by the redemption premium on the conversion of preferred stock into common stock. |
• | Free cash flow was $0.2 million, an increase of $0.7 million, due to higher cash flows generated by operations. |
On an adjusted basis, first quarter 2018 results versus the year ago period include:
• | Adjusted EBITDA of $19.7 million, or 11.8 percent of net sales, increased $1.2 million and improved from 10.6 percent of net sales, driven by margin expansion from pricing and improved operational efficiencies. |
• | Adjusted Net Income of $0.7 million, or $0.02 Adjusted Earnings Per Share, improved $0.01 per share. |
“Our industrial segments, Finishing and Components, delivered organic growth of 1.5 percent and 6.0 percent, respectively, which was in-line with expectations” said Brian Kobylinski, chief executive officer of Jason. “Continued focus on profitable growth and operational improvement initiatives drove margin expansion for the fifth consecutive quarter, with all four businesses contributing to our 150 basis point gross margin improvement. This improvement drove an additional one quarter turn reduction in our net leverage which is now 5.3 times.”
Highlights during the quarter include:
• | Total Cost Reduction and Margin Expansion program savings were $0.3 million in the first quarter with a total of $20 million since the inception of the program. Actions taken and announced to-date are expected to achieve $24 million in annual run-rate cost savings. |
• | Completed the exit of a facility in Libertyville, IL, previously announced as part of the Cost Reduction and Margin Expansion program. |
• | Initiated move of Acoustics Richmond, IN facility into other existing facilities; project expected to be completed by the end of the second quarter. |
• | Achieved organic growth of 6.0 percent in Components and 1.5 percent in Finishing. Organic growth was achieved through strong industrial markets and targeted growth initiatives, while exiting low margin business and products. |
Key financial results within the segments for the first quarter 2018 versus the year ago period include:
• | Finishing net sales of $54.0 million increased $4.5 million, or 9.1 percent, including a positive foreign currency translation impact of 8.9 percent and a negative 1.3 percent impact from the exit of a non-core market in Brazil. Organic sales increased 1.5 percent and were impacted by pricing and higher volumes in industrial end markets, partially offset by strategic decisions to exit low-margin business and products. Adjusted EBITDA was $7.8 million, or 14.4 percent of net sales, an increase of $0.7 million from 14.3 percent of net sales. Adjusted EBITDA margin increased on improved pricing and savings resulting from the cost reduction program. |
• | Components net sales of $22.4 million increased $1.3 million, or 6.0 percent due to pricing and higher volumes in the rail market. Adjusted EBITDA was $3.1 million, or 13.7 percent of net sales, an increase of $0.4 million from 12.9 percent of net sales, with margins positively impacted by increased pricing and higher volumes. |
• | Seating net sales of $47.0 million decreased $0.3 million, or 0.7 percent, including a positive foreign currency translation impact of 0.9 percent. Organic sales decreased 1.6 percent on lower volumes in the motorcycle market and a delayed start to the spring turf care season, partially offset by volume growth in heavy industry. Adjusted EBITDA was |
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$5.9 million, or 12.6 percent of net sales, an increase of $0.4 million from 11.7 percent of net sales, with margins positively impacted by continuous improvement initiatives and pricing.
• | Acoustics net sales of $43.8 million decreased $13.4 million, or 23.4 percent, including a negative 15.3 percent impact from the divestiture of the Acoustics European operations. Organic sales decreased 8.1 percent due to lower overall North American vehicle demand and a shift from cars to light truck vehicles. Adjusted EBITDA was $5.8 million, or 13.2 percent of net sales, an improvement from 11.7 percent of net sales in the prior year. Adjusted EBITDA margin increased on improved material efficiencies and continuous improvement projects, partially offset by higher raw material costs. |
• | Corporate expenses of $2.9 million decreased $0.6 million on lower third-party professional fees and lower health care costs. |
Other Information:
• | Net debt to Adjusted EBITDA on a trailing twelve-month basis was 5.3x as of the end of the first quarter, a decrease from 5.5x as of the end of 2017. Total liquidity as of the end of the first quarter was $95.0 million, comprised of $48.0 million of cash and cash equivalents and $47.0 million of availability on revolving loan facilities globally. |
• | In the first quarter the Company completed a transaction in which the Company exchanged 1,395,640 shares of common stock for 12,136 shares of 8.0% Series A Convertible Perpetual Preferred Stock. The shares of Preferred Stock exchanged had an aggregate liquidation preference of $12.1 million, representing 24.4% of the Company’s outstanding Preferred Stock. With the completion of the exchange transaction, the Company has 27,362,021 common shares issued and outstanding, and 37,529 shares of Preferred Stock outstanding. |
2018 Guidance:
“We met our expectations in the first quarter and remain on track to deliver our commitments for the full year. Our team is gaining traction with operational performance improving, commercial activities increasing and customer relationships trending positively. We remain focused on EBITDA growth, cash generation and leverage reduction.”
For the full year 2018, Jason reaffirms guidance of net sales in the range of $600 to $615 million, Adjusted EBITDA of $66 to $70 million, and free cash flow of $13 to $17 million, resulting in an implied net debt to Adjusted EBITDA range of 5.3 to 4.9 times.
Conference Call:
The Company will hold a conference call to discuss its first quarter results today at 10:00 a.m. Eastern time. A live webcast of the call may be accessed over the Internet from the Company’s Investor Relations website at investors.jasoninc.com. Participants should follow the instructions provided on the website to download and install the necessary audio applications. The conference call is also available by dialing 877-451-6152 (domestic) or 201-389-0879 (international). Participants should ask for the Jason Industries First Quarter 2018 Earnings conference call.
A replay of the live conference call will be available beginning approximately one hour after the call. The replay will be available on the Company’s website or by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the replay passcode 13642137. The telephonic replay will be available until 11:59 pm (Eastern Time), May 10, 2018. The online replay will be available on the website immediately following the call.
About Jason Industries, Inc.
The Company is the parent company to a global family of manufacturing leaders within the finishing, components, seating, and automotive acoustics markets, including Osborn (Richmond, Ind. and Burgwald, Germany), Metalex (Libertyville, Ill.), Milsco (Milwaukee, Wis.), and Janesville Acoustics (Southfield, Mich.). Headquartered in Milwaukee, Wis., Jason employs more than 4,300 people in 13 countries.
Forward Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “guidance,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include projected financial information. Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the Company’s businesses are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. Such factors include, but are not limited to, the level of demand for the Company’s products; competition in the Company’s markets; the Company’s ability to grow and manage growth profitably; the Company’s ability to access additional capital; changes in applicable laws or regulations; the Company’s ability to attract and retain qualified personnel; the possibility that the Company may be adversely affected by other economic, business and/or competitive factors; and other risks and uncertainties identified in the Company’s most recent Annual Report on Form 10-K, as such may be amended or supplemented by subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission.
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The forward-looking statements contained in this press release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results and cause them to differ materially from those anticipated in the forward-looking statements.
Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP and Other Company Information
Included in this press release are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. Because the Company’s calculations of these measures may differ from similar measures used by other companies, you should be careful when comparing the Company’s non-GAAP financial measures to those of other companies. In this earnings release, we disclose the following non-GAAP financial measures, and we reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings Per Share, Net Debt to Adjusted EBITDA, and Free Cash Flow.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin - The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including goodwill and long-lived asset impairment charges, gains or losses on disposal of property, plant and equipment, integration and other operational restructuring charges, transactional legal fees, other professional fees, purchase accounting adjustments, and non-cash share based compensation expense. The Company defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net sales.
Management believes that Adjusted EBITDA provides a more clear picture of the Company’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. The Company uses this metric to facilitate a comparison of operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric and the Company uses this measure to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.
Adjusted Net Income and Adjusted Earnings Per Share - The Company defines Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) as net income and earnings per share (as defined by GAAP), excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including goodwill and long-lived asset impairment charges, gains or losses on disposal of property, plant and equipment, integration and other operational restructuring charges, transactional legal fees, other professional fees, purchase accounting adjustments, and non-cash share based compensation expense, net of their income tax impact. The tax rates used to calculate adjusted net income and adjusted earnings per share are based on a transaction specific basis. Adjusted earnings per share includes the impact of share based compensation to the extent it is dilutive in each period. Adjusted earnings per share includes the impact to Jason Industries common shares upon conversion of JPHI Holdings Inc. rollover shares and conversion of preferred stock. Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing the Company’s financial performance by eliminating expenses and income that are not reflective of the underlying business performance.
Net Debt to Adjusted EBITDA - The Company defines Net Debt to Adjusted EBITDA as current and long-term debt plus debt discounts less cash and cash equivalents, divided by pro forma Adjusted EBITDA for the trailing twelve months. Pro forma Adjusted EBITDA is calculated as Adjusted EBITDA as reported plus Adjusted EBITDA of acquisitions prior to the date of the acquisition during the trailing twelve months. Management believes that Net Debt to Adjusted EBITDA is useful in assessing the Company’s financial leverage.
Free Cash Flow - The Company defines Free Cash Flow as net cash flows from operating activities (as defined by GAAP) less capital expenditures and cash dividends on preferred stock. Management believes that Free Cash Flow is useful in assessing our ability to generate cash from business operations that is available for strategic capital decisions.
In addition to these non-GAAP financial measures, we also use the term “organic sales” to refer to GAAP net sales from existing operations excluding (i) sales from acquired businesses recorded prior to the first anniversary of the acquisition, (ii) sales from divested businesses or exited non-core businesses, and (iii) the impact of foreign currency translation. The impact of foreign currency translation is calculated as the difference between (a) the period-to-period change in results (excluding acquisitions, divestitures, and exited non-core businesses) and (b) the period-to-period change in results (excluding acquisitions, divestitures, and exited non-core businesses) after applying current period average foreign exchange rates to the prior year period. We use
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the term “organic sales growth” to refer to the measure of comparing current period organic sales with the corresponding prior year period organic sales.
Contact Information
Investor Relations:
Rachel Zabkowicz
investors@jasoninc.com
414.277.2007
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Jason Industries, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
Three Months Ended | |||||||
March 30, 2018 | March 31, 2017 | ||||||
Net sales | $ | 167,254 | $ | 175,193 | |||
Cost of goods sold | 131,582 | 140,584 | |||||
Gross profit | 35,672 | 34,609 | |||||
Selling and administrative expenses | 27,524 | 26,656 | |||||
Loss (gain) on disposals of property, plant and equipment - net | 234 | (330 | ) | ||||
Restructuring | 602 | 681 | |||||
Operating income | 7,312 | 7,602 | |||||
Interest expense | (8,027 | ) | (8,366 | ) | |||
Equity income | 100 | 143 | |||||
Other income - net | 71 | 113 | |||||
Loss before income taxes | (544 | ) | (508 | ) | |||
Tax provision (benefit) | 275 | (15 | ) | ||||
Net loss | $ | (819 | ) | $ | (493 | ) | |
Less net gain attributable to noncontrolling interests | — | 5 | |||||
Net loss attributable to Jason Industries | $ | (819 | ) | $ | (498 | ) | |
Redemption premium and accretion of dividends on preferred stock | 1,727 | 918 | |||||
Net loss available to common shareholders of Jason Industries | $ | (2,546 | ) | $ | (1,416 | ) | |
Net loss per share available to common shareholders of Jason Industries: | |||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.05 | ) | |
Weighted average number of common shares outstanding: | |||||||
Basic and diluted | 27,329 | 25,784 | |||||
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Jason Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
March 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 47,991 | $ | 48,887 | |||
Accounts receivable - net | 83,890 | 68,626 | |||||
Inventories - net | 75,372 | 70,819 | |||||
Other current assets | 18,093 | 15,655 | |||||
Total current assets | 225,346 | 203,987 | |||||
Property, plant and equipment - net | 151,693 | 154,196 | |||||
Goodwill | 45,838 | 45,142 | |||||
Other intangible assets - net | 128,041 | 131,499 | |||||
Other assets - net | 12,873 | 11,499 | |||||
Total assets | $ | 563,791 | $ | 546,323 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 9,430 | $ | 9,704 | |||
Accounts payable | 62,418 | 53,668 | |||||
Accrued compensation and employee benefits | 21,521 | 17,433 | |||||
Accrued interest | 215 | 276 | |||||
Other current liabilities | 21,169 | 19,806 | |||||
Total current liabilities | 114,753 | 100,887 | |||||
Long-term debt | 391,694 | 391,768 | |||||
Deferred income taxes | 25,324 | 25,699 | |||||
Other long-term liabilities | 22,505 | 22,285 | |||||
Total liabilities | 554,276 | 540,639 | |||||
Shareholders’ Equity | |||||||
Preferred stock | 38,277 | 49,665 | |||||
Jason Industries common stock | 3 | 3 | |||||
Additional paid-in capital | 155,397 | 143,788 | |||||
Retained deficit | (168,019 | ) | (167,710 | ) | |||
Accumulated other comprehensive loss | (16,143 | ) | (20,062 | ) | |||
Total shareholders’ equity | 9,515 | 5,684 | |||||
Total liabilities and shareholders’ equity | $ | 563,791 | $ | 546,323 | |||
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Jason Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Three Months Ended | |||||||
March 30, 2018 | March 31, 2017 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (819 | ) | $ | (493 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation | 6,709 | 6,943 | |||||
Amortization of intangible assets | 4,098 | 3,060 | |||||
Amortization of deferred financing costs and debt discount | 711 | 752 | |||||
Equity income | (100 | ) | (143 | ) | |||
Deferred income taxes | (1,073 | ) | (2,672 | ) | |||
Loss (gain) on disposals of property, plant and equipment - net | 234 | (330 | ) | ||||
Share-based compensation | 231 | 349 | |||||
Net increase (decrease) in cash, excluding effect of divestitures, due to changes in: | |||||||
Accounts receivable | (14,500 | ) | (9,985 | ) | |||
Inventories | (4,076 | ) | 2,513 | ||||
Other current assets | (1,150 | ) | 318 | ||||
Accounts payable | 8,980 | (898 | ) | ||||
Accrued compensation and employee benefits | 3,985 | 3,615 | |||||
Accrued interest | (61 | ) | (54 | ) | |||
Accrued income taxes | 17 | 1,293 | |||||
Other - net | 631 | (1,367 | ) | ||||
Total adjustments | 4,636 | 3,394 | |||||
Net cash provided by operating activities | 3,817 | 2,901 | |||||
Cash flows from investing activities | |||||||
Proceeds from disposals of property, plant and equipment | 49 | 674 | |||||
Payments for property, plant and equipment | (3,622 | ) | (3,396 | ) | |||
Acquisitions of patents | (9 | ) | (33 | ) | |||
Net cash used in investing activities | (3,582 | ) | (2,755 | ) | |||
Cash flows from financing activities | |||||||
Payments of First and Second Lien term loans | (775 | ) | (775 | ) | |||
Proceeds from other long-term debt | 1,247 | 2,555 | |||||
Payments of other long-term debt | (1,963 | ) | (1,520 | ) | |||
Other financing activities - net | (13 | ) | (8 | ) | |||
Net cash (used in) provided by financing activities | (1,504 | ) | 252 | ||||
Effect of exchange rate changes on cash and cash equivalents | 373 | 217 | |||||
Net (decrease) increase in cash and cash equivalents | (896 | ) | 615 | ||||
Cash and cash equivalents, beginning of period | 48,887 | 40,861 | |||||
Cash and cash equivalents, end of period | $ | 47,991 | $ | 41,476 | |||
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Jason Industries, Inc.
Quarterly Financial Information by Segment
(In thousands) (Unaudited)
2017 | 2018 | ||||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | FY | 1Q | 2Q | 3Q | 4Q | YTD | ||||||||||||||||||||||||
Finishing | |||||||||||||||||||||||||||||||||
Net sales | $ | 49,476 | $ | 49,757 | $ | 51,065 | $ | 49,986 | $ | 200,284 | $ | 53,978 | $ | 53,978 | |||||||||||||||||||
Adjusted EBITDA | 7,067 | 7,324 | 7,503 | 5,767 | 27,661 | 7,799 | 7,799 | ||||||||||||||||||||||||||
Adjusted EBITDA % net sales | 14.3 | % | 14.7 | % | 14.7 | % | 11.5 | % | 13.8 | % | 14.4 | % | 14.4 | % | |||||||||||||||||||
Components | |||||||||||||||||||||||||||||||||
Net sales | $ | 21,117 | $ | 21,713 | $ | 19,945 | $ | 19,846 | $ | 82,621 | $ | 22,393 | $ | 22,393 | |||||||||||||||||||
Adjusted EBITDA | 2,720 | 2,451 | 2,445 | 2,272 | 9,888 | 3,070 | 3,070 | ||||||||||||||||||||||||||
Adjusted EBITDA % net sales | 12.9 | % | 11.3 | % | 12.3 | % | 11.4 | % | 12.0 | % | 13.7 | % | 13.7 | % | |||||||||||||||||||
Seating | |||||||||||||||||||||||||||||||||
Net sales | $ | 47,373 | $ | 44,921 | $ | 32,963 | $ | 33,872 | $ | 159,129 | $ | 47,034 | $ | 47,034 | |||||||||||||||||||
Adjusted EBITDA | 5,530 | 5,897 | 2,621 | 2,300 | 16,348 | 5,933 | 5,933 | ||||||||||||||||||||||||||
Adjusted EBITDA % net sales | 11.7 | % | 13.1 | % | 8.0 | % | 6.8 | % | 10.3 | % | 12.6 | % | 12.6 | % | |||||||||||||||||||
Acoustics | |||||||||||||||||||||||||||||||||
Net sales | $ | 57,227 | $ | 56,086 | $ | 51,457 | $ | 41,812 | $ | 206,582 | $ | 43,849 | $ | 43,849 | |||||||||||||||||||
Adjusted EBITDA | 6,721 | 7,983 | 6,640 | 5,997 | 27,341 | 5,778 | 5,778 | ||||||||||||||||||||||||||
Adjusted EBITDA % net sales | 11.7 | % | 14.2 | % | 12.9 | % | 14.3 | % | 13.2 | % | 13.2 | % | 13.2 | % | |||||||||||||||||||
Corporate | |||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | (3,477 | ) | $ | (3,075 | ) | $ | (3,073 | ) | $ | (3,861 | ) | $ | (13,486 | ) | $ | (2,867 | ) | $ | (2,867 | ) | ||||||||||||
Consolidated | |||||||||||||||||||||||||||||||||
Net sales | $ | 175,193 | $ | 172,477 | $ | 155,430 | $ | 145,516 | $ | 648,616 | $ | 167,254 | $ | 167,254 | |||||||||||||||||||
Adjusted EBITDA | 18,561 | 20,580 | 16,136 | 12,475 | 67,752 | 19,713 | 19,713 | ||||||||||||||||||||||||||
Adjusted EBITDA % net sales | 10.6 | % | 11.9 | % | 10.4 | % | 8.6 | % | 10.4 | % | 11.8 | % | 11.8 | % | |||||||||||||||||||
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Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands) (Unaudited)
Organic Sales Growth
1Q 2018 | |||||||||
Finishing | Components | Seating | Acoustics | Jason Consolidated | |||||
Net sales | |||||||||
Organic sales growth | 1.5% | 6.0% | (1.6)% | (8.1)% | (2.1)% | ||||
Currency impact | 8.9% | —% | 0.9% | —% | 2.9% | ||||
Divestiture & Non-Core Exit | (1.3)% | —% | —% | (15.3)% | (5.3)% | ||||
Growth as reported | 9.1% | 6.0% | (0.7)% | (23.4)% | (4.5)% | ||||
Free Cash Flow
1Q | |||||||
2017 | 2018 | ||||||
Operating Cash Flow | $ | 2,901 | $ | 3,817 | |||
Less: Capital Expenditures | (3,396 | ) | (3,622 | ) | |||
Free Cash Flow | $ | (495 | ) | $ | 195 | ||
Net Debt to Adjusted EBITDA
March 30, 2018 | |||
Current and long-term debt | $ | 401,124 | |
Add: Debt discounts and deferred financing costs | 8,581 | ||
Less: Cash and cash equivalents | (47,991 | ) | |
Net Debt | $ | 361,714 | |
Adjusted EBITDA | |||
2Q17 | $ | 20,580 | |
3Q17 | 16,136 | ||
4Q17 | 12,475 | ||
1Q18 | 19,713 | ||
TTM Adjusted EBITDA | 68,904 | ||
Divestiture TTM Adjusted EBITDA* | (1,275 | ) | |
Pro Forma TTM Adjusted EBITDA | 67,629 | ||
Net Debt to Adjusted EBITDA** | 5.3x | ||
*Divestiture TTM Adjusted EBITDA excludes Adjusted EBITDA prior to the date of the divestiture during the trailing twelve months.
**Note the consolidated first lien net leverage ratio under the Company’s senior secured credit facilities was 3.78x as of March 30, 2018. See Form 10-Q for further discussion of the Company’s senior secured credit facilities.
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Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA
(In thousands) (Unaudited)
2017 | 2018 | ||||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | FY | 1Q | 2Q | 3Q | 4Q | YTD | ||||||||||||||||||||||||
Net (loss) income | $ | (493 | ) | $ | (4,737 | ) | $ | (1,601 | ) | $ | 2,358 | $ | (4,473 | ) | $ | (819 | ) | $ | (819 | ) | |||||||||||||
Interest expense | 8,366 | 8,395 | 8,203 | 8,125 | 33,089 | 8,027 | 8,027 | ||||||||||||||||||||||||||
Tax (benefit) provision | (15 | ) | 179 | (1,602 | ) | (8,946 | ) | (10,384 | ) | 275 | 275 | ||||||||||||||||||||||
Depreciation and amortization | 10,003 | 9,487 | 9,749 | 9,695 | 38,934 | 10,807 | 10,807 | ||||||||||||||||||||||||||
EBITDA | 17,861 | 13,324 | 14,749 | 11,232 | 57,166 | 18,290 | 18,290 | ||||||||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||
Restructuring(1) | 681 | 543 | 1,772 | 1,270 | 4,266 | 602 | 602 | ||||||||||||||||||||||||||
Integration and other restructuring costs(2) | — | — | — | (569 | ) | (569 | ) | 356 | 356 | ||||||||||||||||||||||||
Share-based compensation(3) | 349 | 324 | 231 | 215 | 1,119 | 231 | 231 | ||||||||||||||||||||||||||
(Gain) loss on disposals of fixed assets—net(4) | (330 | ) | 65 | (639 | ) | 145 | (759 | ) | 234 | 234 | |||||||||||||||||||||||
(Gain) loss on extinguishment of debt(5) | — | (1,564 | ) | (819 | ) | 182 | (2,201 | ) | — | — | |||||||||||||||||||||||
Loss on divestitures(6) | — | 7,888 | 842 | — | 8,730 | — | — | ||||||||||||||||||||||||||
Total adjustments | 700 | 7,256 | 1,387 | 1,243 | 10,586 | 1,423 | 1,423 | ||||||||||||||||||||||||||
Adjusted EBITDA | $ | 18,561 | $ | 20,580 | $ | 16,136 | $ | 12,475 | $ | 67,752 | $ | 19,713 | $ | 19,713 | |||||||||||||||||||
(1) | Restructuring includes costs associated with exit or disposal activities as defined by GAAP related to facility consolidation, including one-time employee termination benefits, costs to close facilities and relocate employees, and costs to terminate contracts other than capital leases. |
(2) | During 2018, integration and other restructuring costs includes costs associated with a $0.4 million force majeure incident at a supplier in the seating segment that resulted in incremental costs to maintain production and related insurance recoveries in subsequent periods. During 2017, integration and other restructuring costs includes a $0.6 million reversal of a liability recorded in acquisition accounting for the business combination in 2014. |
(3) | Represents non-cash share based compensation expense for awards under the Company’s 2014 Omnibus Incentive Plan. |
(4) | (Gain) loss on disposals of fixed assets for the third quarter of 2017 includes a gain of $0.5 million on the sale of a building related to the closure of the finishing segment’s Richmond, Virginia facility and for the first quarter of 2017 includes a gain of $0.4 million on the sale of equipment related to the closure of the components segment’s Buffalo Grove, Illinois facility. |
(5) | Represents a (gain) loss on extinguishment of Second Lien Term Loan debt in both the second and third quarter of 2017 and a $0.2 million prepayment fee to retire foreign debt in the fourth quarter of 2017. |
(6) | Represents the completed divestiture of the Company’s Acoustics European operations. A pre-tax loss of $7.9 million was recorded in the second quarter of 2017 when the business was classified as held for sale and a pre-tax loss of $0.8 million was recorded in the third quarter of 2017 upon closing of the divestiture. |
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Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income and Adjusted Earnings per Share
(In thousands, except per share amounts) (Unaudited)
2017 | 2018 | ||||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | FY | 1Q | 2Q | 3Q | 4Q | YTD | ||||||||||||||||||||||||
GAAP Net (loss) income | $ | (493 | ) | $ | (4,737 | ) | $ | (1,601 | ) | $ | 2,358 | $ | (4,473 | ) | $ | (819 | ) | $ | (819 | ) | |||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||
Restructuring | 681 | 543 | 1,772 | 1,270 | 4,266 | 602 | 602 | ||||||||||||||||||||||||||
Integration and other restructuring costs | — | — | — | (569 | ) | (569 | ) | 356 | 356 | ||||||||||||||||||||||||
Share based compensation | 349 | 324 | 231 | 215 | 1,119 | 231 | 231 | ||||||||||||||||||||||||||
(Gain) loss on disposal of fixed assets - net | (330 | ) | 65 | (639 | ) | 145 | (759 | ) | 234 | 234 | |||||||||||||||||||||||
(Gain) loss on extinguishment of debt | — | (1,564 | ) | (819 | ) | 182 | (2,201 | ) | — | — | |||||||||||||||||||||||
Loss on divestitures | — | 7,888 | 842 | — | 8,730 | — | — | ||||||||||||||||||||||||||
Tax effect on adjustments(1) | (55 | ) | (582 | ) | (214 | ) | (122 | ) | (973 | ) | (314 | ) | (314 | ) | |||||||||||||||||||
Tax (benefit) provision(2) | — | — | — | (3,787 | ) | (3,787 | ) | 410 | 410 | ||||||||||||||||||||||||
Adjusted net income (loss) | $ | 152 | $ | 1,937 | $ | (428 | ) | $ | (308 | ) | $ | 1,353 | $ | 700 | $ | 700 | |||||||||||||||||
Effective tax rate on adjustments(1) | 16 | % | 8 | % | 16 | % | 10 | % | 9 | % | 22 | % | 22 | % | |||||||||||||||||||
Diluted weighted average number of common shares outstanding (GAAP): | 25,784 | 26,042 | 26,241 | 26,255 | 26,082 | 27,329 | 27,329 | ||||||||||||||||||||||||||
Plus: effect of dilutive share-based compensation (non-GAAP)(3) | — | — | — | 530 | — | — | — | ||||||||||||||||||||||||||
Plus: effect of convertible preferred stock and rollover shares (non-GAAP)(3) | 3,967 | 3,815 | 3,889 | 3,982 | 3,917 | 3,309 | 3,309 | ||||||||||||||||||||||||||
Diluted weighted average number of common shares outstanding (non-GAAP)(3) | 29,751 | 29,857 | 30,130 | 30,767 | 29,999 | 30,638 | 30,638 | ||||||||||||||||||||||||||
Adjusted earnings (loss) per share | $ | 0.01 | $ | 0.06 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.05 | $ | 0.02 | $ | 0.02 | |||||||||||||||||
GAAP Net (loss) income per share available to common shareholders of Jason Industries | $ | (0.05 | ) | $ | (0.22 | ) | $ | (0.10 | ) | $ | 0.05 | $ | (0.32 | ) | $ | (0.09 | ) | $ | (0.09 | ) | |||||||||||||
Adjustments net of income taxes: | |||||||||||||||||||||||||||||||||
Restructuring | 0.02 | 0.01 | 0.04 | 0.04 | 0.13 | 0.02 | 0.02 | ||||||||||||||||||||||||||
Integration and other restructuring costs | — | — | — | (0.02 | ) | (0.02 | ) | 0.01 | 0.01 | ||||||||||||||||||||||||
Share based compensation | 0.02 | 0.02 | 0.01 | 0.01 | 0.06 | 0.01 | 0.01 | ||||||||||||||||||||||||||
(Gain) loss on disposal of fixed assets - net | (0.01 | ) | — | (0.01 | ) | — | (0.02 | ) | 0.01 | 0.01 | |||||||||||||||||||||||
(Gain) loss on extinguishment of debt | — | (0.04 | ) | (0.02 | ) | 0.01 | (0.06 | ) | — | — | |||||||||||||||||||||||
Loss on divestitures | — | 0.26 | 0.03 | — | 0.29 | — | — | ||||||||||||||||||||||||||
Tax (benefit) provision(2) | — | — | — | (0.12 | ) | (0.13 | ) | 0.02 | 0.02 | ||||||||||||||||||||||||
Redemption premium on preferred stock conversion | — | — | — | — | — | 0.04 | 0.04 | ||||||||||||||||||||||||||
GAAP to non-GAAP impact per share(3) | 0.03 | 0.03 | 0.04 | 0.02 | 0.12 | — | — | ||||||||||||||||||||||||||
Adjusted earnings (loss) per share | $ | 0.01 | $ | 0.06 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.05 | $ | 0.02 | $ | 0.02 | |||||||||||||||||
(1) | The effective tax rate on adjustments is impacted by nondeductible foreign transaction and restructuring costs, restructuring charges in foreign jurisdictions at statutory tax rates, and discrete non-cash tax expense related to the vesting of restricted stock units for which no tax benefit will be realized. |
(2) | Represents discrete tax items associated with The Tax Cuts and Jobs Act enacted in December 2017. |
(3) | Adjusted earnings (loss) per share includes the impact of share-based compensation to the extent it is dilutive in each period. Adjusted earnings per share includes the impact to Jason Industries common shares upon conversion of JPHI Holdings Inc. rollover shares, the conversion of 12,136 shares of preferred stock at a conversion rate of 115 preferred shares to common shares and the conversion of all remaining preferred stock at the voluntary conversion ratio. |
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