UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 11, 2015
ARC Group Worldwide, Inc.
(Exact Name of Registrant as Specified in its Charter)
Utah
(State or other jurisdiction of incorporation)
001-33400
(Commission File Number) |
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87-0454148
(IRS Employer Identification No.) |
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810 Flightline Blvd.
Deland, FL |
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32724 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrants telephone number, including area code: 303-467-5236
Former Name or Former Address, if Changed Since Last Report:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 0240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On May 11, 2015, ARC Group Worldwide, Inc. (the Company) announced its financial results for the quarter ended March 29, 2015. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, except as expressly set forth by specific reference in such a filing. The information in this Current Report on Form 8-K and the exhibit attached hereto as Exhibit 99.1 shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act, regardless of any general incorporation by reference language in such filings, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:
99.1 Press Release entitled ARC GROUP WORLDWIDE REPORTS THIRD QUARTER FISCAL YEAR 2015 FINANCIAL RESULTS issued by the Company on May 11, 2015.
ii
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ARC Group Worldwide, Inc. |
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(Registrant) |
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Date: May 11, 2015 |
By: |
/s/ Drew M. Kelley |
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Name: |
Drew M. Kelley |
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Title: |
Chief Financial Officer and Principal Accounting Officer |
iii
EXHIBIT INDEX
Exhibit No. |
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Description |
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99.1 |
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Press Release entitled ARC GROUP WORLDWIDE REPORTS THIRD QUARTER FISCAL YEAR 2015 FINANCIAL RESULTS issued by the Company on May 11, 2015. |
iv
Exhibit 99.1
FOR IMMEDIATE RELEASE
DATE: MAY 11, 2015
ARC GROUP WORLDWIDE REPORTS THIRD QUARTER FISCAL YEAR 2015 FINANCIAL RESULTS
Highlights for the quarter ended March 29, 2015, compared sequentially to the quarter ended December 28, 2014:
· Sales of $27.9 Million, an Increase of 3.0% from $27.1 Million;
· Facility EBITDA of $5.0 Million, an Increase of 8.7% from $4.6 Million;
· EBITDA of $4.3 Million, an Increase of 13.2% from $3.8 Million; and
· EPS of $0.02, an Increase from $0.00.
DELAND, FL., May 11, 2015/PRNewswire/ARC Group Worldwide, Inc. (ARC) (NASDAQ: ARCW), a leading global provider of advanced manufacturing and 3D printing solutions, today reported its third quarter fiscal year 2015 (March 29, 2015) financial results.
Third quarter revenue grew to $27.9 million, an increase of 33.5% and 3.0%, compared to the prior year and sequential periods, respectively. While year-over-year growth was largely related to acquisitions completed in late fiscal year 2014, the Company was still able to achieve sequential organic growth despite headwinds from a weak Euro, declining steel scrap prices, and order delays related to the west coast port dispute. The third quarter also saw little improvement in firearms business until the latter portion of March. Notably, revenue at our 3DMT Group grew 47.5% sequentially, to $4.7 million, during the quarter.
Third quarter Facility EBITDA grew to $5.0 million, an increase of 8.7% sequentially, with Facility EBITDA margins increasing to 18.1%, from 16.9%, in the prior sequential quarter. Overall, EBITDA grew to $4.3 million, an increase of 13.2% sequentially, with EBITDA margins increasing to 15.3%, from 14.0%, in the prior sequential quarter. 3DMT Group EBITDA was $0.52 million, an increase of 33.0% sequentially. ARC delivered quarterly EPS of $0.02, versus $0.00 EPS, in the prior sequential quarter.
Jason Young, Chairman and CEO, commented, In the third quarter, despite significant pressure from the dramatic decrease in the Euro, a decline in steel scrap prices, depressed firearm orders, and order delays due to the west coast port dispute, we were able to grow revenue and increase margins. In particular, we have been encouraged by the momentum in our 3DMT Group, where we expect continued improvement. While the operating environment remains challenging, and we continue to invest in our sales and R&D efforts, we expect to continue to grow and expand Facility EBITDA and related margins over time. In April, we raised net cash proceeds of $15.6 million from our equity offering, which has lowered pro forma net senior debt to approximately $39.5 million(1). Separately, we are considering a number of exciting acquisition opportunities which offer the potential for tremendous synergy and growth. We will evaluate these potential options, and any related financing, cognizant with the fact that our primary objective is to grow our existing businesses sales and profitability, as well as to further develop and monetize our investments in metal 3D printing. Overall, having just expanded and strengthened our institutional shareholder base, we remain committed to creating value for our shareholders and liquidity in our stock. Further, we remain optimistic regarding the long term prospects of our approach to advanced manufacturing through the combination of additive and subtractive processes.
(1)Pro forma net debt consists of our senior secured debt and capital lease obligations at March 29, 2015 totaling $60.8 million, less cash on hand of $4.0 million at March 29, 2015, less prepayment of principal on senior debt of $15.6 million, and retirement of capital lease obligations of $1.7 million in April 2015.
1
GAAP to Non-GAAP Reconciliation
EBITDA, Facility EBITDA, EBITDA margin, and Facility EBITDA margin are non-GAAP financial measures. EBITDA margin and Facility EBITDA margin are calculated by dividing EBITDA and Facility EBITDA, respectively, by sales. We have provided this non-GAAP financial information to aid in better understanding the Companys performance absent these charges. Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Companys non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Companys consolidated financial statements prepared in accordance with GAAP.
The reconciliation to GAAP is as follows (in thousands):
For the three months ended: |
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March 29, 2015 |
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December 28, 2014 |
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September 28, 2014 |
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June 30, 2014 |
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March 30, 2014 |
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Net Income (Loss) (GAAP) |
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$ |
434 |
|
$ |
(2 |
) |
$ |
232 |
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$ |
209 |
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$ |
1,650 |
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Plus: Interest Expense, Net |
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1,466 |
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1,213 |
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921 |
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618 |
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282 |
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Plus: Income Tax (Benefit) Expense |
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(39 |
) |
237 |
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153 |
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7 |
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1,342 |
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Plus: Depreciation and Amortization |
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2,395 |
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2,355 |
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2,311 |
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1,681 |
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914 |
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EBITDA (Non-GAAP) |
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$ |
4,256 |
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$ |
3,803 |
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$ |
3,617 |
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2,515 |
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$ |
4,188 |
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EBITDA Margin (Non-GAAP) |
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15.3 |
% |
14.0 |
% |
12.6 |
% |
10.6 |
% |
20.0 |
% |
Plus: Corporate Expense |
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$ |
780 |
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$ |
783 |
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$ |
1,448 |
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$ |
2,101 |
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$ |
592 |
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Facility EBITDA (Non-GAAP) |
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$ |
5,036 |
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$ |
4,586 |
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$ |
5,065 |
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$ |
4,616 |
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$ |
4,780 |
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Facility EBITDA Margin (Non-GAAP) |
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18.1 |
% |
16.9 |
% |
17.6 |
% |
19.5 |
% |
22.8 |
% |
EBITDA excludes interest expense, net and income taxes as these items are associated with our capitalization and tax structures. EBITDA also excludes depreciation and amortization expense as these non-cash expenses reflect the impact of prior capital expenditure decisions which may not be indicative of future capital expenditure requirements. Facility EBITDA consists of EBITDA from our operating segments. We believe this is a meaningful measurement of the operating performance of our manufacturing facilities. Corporate expenses primarily consist of costs not allocated to our manufacturing facilities such as compensation related costs for employees assigned to corporate, board of directors fees and expenses, professional fees, insurance costs, and marketing costs. Corporate expenses were higher in the quarters ended September 28, 2014 and June 30, 2014 as a result of costs incurred in connection with our acquisitions and integration related costs, costs associated with entering into and amending our debt agreements, and higher compensation costs associated with bonuses in fiscal year 2014.
About ARC Group Worldwide, Inc.
ARC Group Worldwide, Inc. is a leading global advanced manufacturing and 3D printing service provider. Founded in 1987, the Company offers its customers a compelling portfolio of advanced manufacturing technologies and cutting-edge capabilities to improve the efficiency of traditional manufacturing processes and accelerate their time to market. In addition to being a world leader in metal injection molding (MIM), ARC has significant expertise in 3D printing and imaging, materials science, advanced tooling, automation, machining, stamping, plastic injection molding, lean manufacturing, and robotics. For more information about ARC Group Worldwide, Inc., please visit www.ArcGroupWorldwide.com, or its operating subsidiaries at www.3DMaterialTechnologies.com, www.AFTmim.com, www.AFTmimHU.com, www.ARCmim.com, www.ArcWireless.net, www.ATCmold.com, www.FloMet.com, www.GeneralFlange.com, www.Injectamax.com, www.kecycorporation.com, www.TeknaSeal.com, and www.ThixoWorks.com.
Forward Looking Statements
This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are based on ARCs current expectations, estimates and projections about future events. These include, but are not limited to, statements, if any, regarding business plans, pro-forma statements and financial projections, ARCs ability to expand
2
its services and realize growth. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties, and the general effects of financial, economic, and regulatory conditions affecting our industries. Accordingly, actual results may differ materially. ARC does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For additional factors that may affect future results, please see filings made by ARC with the Securities and Exchange Commission (SEC), including its registration statement on Form S-1, as amended, its Form 10-K for the fiscal year ended June 30, 2014 and Forms 10-Q for the periods ended December 28, 2014 and September 28, 2014, as well as current reports on Form 8-K filed from time-to-time with the SEC.
CONTACT: Drew M. Kelley
PHONE: (303) 467-5236
Email: InvestorRelations@ArcGroupWorldwide.com
3
ARC Group Worldwide, Inc.
Unaudited Condensed Consolidated Statements of Operations
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For the three months ended |
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For the nine months ended |
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(in thousands, except for share and per share amounts) |
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March 29, 2015 |
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March 30, 2014 |
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March 29, 2015 |
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March 30, 2014 |
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Sales |
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$ |
27,864 |
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$ |
20,930 |
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$ |
83,668 |
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$ |
59,272 |
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Cost of sales |
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21,582 |
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14,501 |
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64,016 |
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40,888 |
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Gross profit |
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6,282 |
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6,429 |
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19,652 |
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18,384 |
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Selling, general, and administrative |
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4,549 |
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2,963 |
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14,967 |
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10,465 |
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Merger expense |
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194 |
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187 |
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194 |
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Income from operations |
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1,733 |
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3,272 |
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4,498 |
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7,725 |
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Other income, net |
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128 |
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2 |
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117 |
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9 |
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Interest expense, net |
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(1,466 |
) |
(282 |
) |
(3,600 |
) |
(781 |
) |
Income before income taxes |
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395 |
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2,992 |
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1,015 |
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6,953 |
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Income tax benefit (expense) |
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39 |
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(1,342 |
) |
(351 |
) |
(2,418 |
) |
Net income |
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434 |
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1,650 |
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664 |
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4,535 |
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Less: Net income attributable to non-controlling interest |
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(51 |
) |
(65 |
) |
(165 |
) |
(182 |
) |
Net income attributable to ARC Group Worldwide, Inc. |
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$ |
383 |
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$ |
1,585 |
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$ |
499 |
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$ |
4,353 |
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|
|
|
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|
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|
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Net income per common share: |
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|
|
|
|
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Basic and diluted income per share |
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$ |
0.02 |
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$ |
0.11 |
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$ |
0.03 |
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$ |
0.30 |
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Weighted average common shares outstanding: |
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|
|
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Basic and diluted |
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14,673,205 |
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14,673,205 |
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14,673,205 |
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14,561,872 |
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4
ARC Group Worldwide, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share amounts) |
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March 29, 2015 |
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June 30, 2014 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
4,043 |
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$ |
9,384 |
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Accounts receivable, net |
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16,036 |
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15,337 |
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Inventories, net |
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16,677 |
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15,231 |
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Prepaid and other current assets |
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3,585 |
|
2,606 |
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Total current assets |
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40,341 |
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42,558 |
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Property and equipment, net |
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45,024 |
|
45,268 |
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Goodwill |
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14,764 |
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16,357 |
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Intangible assets, net |
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28,220 |
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30,825 |
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Other |
|
1,481 |
|
1,381 |
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Total assets |
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$ |
129,830 |
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$ |
136,389 |
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|
|
|
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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|
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|
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Accounts payable |
|
$ |
7,594 |
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$ |
9,430 |
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Accrued expenses |
|
3,118 |
|
5,905 |
|
Deferred revenue |
|
828 |
|
1,016 |
|
Bank borrowings, current portion |
|
16,430 |
|
14,419 |
|
Capital lease obligations, current portion |
|
1,151 |
|
1,124 |
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Accrued escrow obligation |
|
4,291 |
|
2,400 |
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Total current liabilities |
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33,412 |
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34,294 |
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Long-term debt, net of current portion |
|
59,372 |
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62,757 |
|
Capital lease obligations, net of current portion |
|
3,857 |
|
4,723 |
|
Accrued escrow obligation |
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|
|
2,600 |
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Other |
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1,577 |
|
674 |
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Total liabilities |
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98,218 |
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105,048 |
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Commitments and contingencies |
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|
|
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Stockholders equity: |
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|
|
|
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Preferred stock, $0.001 par value, 2,000,000 authorized, no shares issued and outstanding |
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|
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Common stock, $0.0005 par value, 250,000,000 shares authorized; 15,088,522 shares issued and 15,080,121 shares outstanding at March 29, 2015 and June 30, 2014 |
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3 |
|
3 |
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Treasury stock, at cost; 8,401 shares at March 29, 2015 and June 30, 2014 |
|
(94 |
) |
(94 |
) |
Additional paid-in capital |
|
13,900 |
|
14,293 |
|
Retained earnings |
|
16,642 |
|
16,143 |
|
ARC Group Worldwide, Inc. total stockholder equity |
|
30,451 |
|
30,345 |
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Non-controlling interest |
|
1,161 |
|
996 |
|
Total stockholders equity |
|
31,612 |
|
31,341 |
|
Total liabilities and stockholders equity |
|
$ |
129,830 |
|
$ |
136,389 |
|
5
ARC Group Worldwide, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
|
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For the nine months ended |
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(in thousands) |
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March 29, 2015 |
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March 30, 2014 |
|
Cash flows from operating activities: |
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|
|
|
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Net income |
|
$ |
664 |
|
$ |
4,535 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
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Depreciation and amortization |
|
7,061 |
|
2,704 |
|
Non-cash stock based compensation expense |
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|
|
779 |
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Amortization of debt discount |
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|
|
316 |
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Bad debt expense and other |
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(6 |
) |
51 |
|
Deferred income taxes |
|
313 |
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|
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Changes in working capital: |
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|
|
|
|
Accounts receivable |
|
(670 |
) |
(10 |
) |
Inventory |
|
(1,446 |
) |
(1,577 |
) |
Prepaid expenses and other assets |
|
(490 |
) |
(51 |
) |
Accounts payable |
|
(1,835 |
) |
130 |
|
Other accrued expenses |
|
(1,901 |
) |
1,488 |
|
Deferred revenue |
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(188 |
) |
(329 |
) |
Net cash provided by operating activities |
|
1,502 |
|
8,036 |
|
|
|
|
|
|
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Cash flows from investing activities: |
|
|
|
|
|
Purchase of plant and equipment |
|
(4,236 |
) |
(2,623 |
) |
Net cash used in investing activities |
|
(4,236 |
) |
(2,623 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from debt issuance |
|
24,500 |
|
|
|
Repayments of long-term debt and capital lease obligations |
|
(26,714 |
) |
(3,358 |
) |
Stock issuance costs |
|
(256 |
) |
|
|
Repurchase of shares |
|
|
|
(93 |
) |
Net cash used in financing activities |
|
(2,470 |
) |
(3,451 |
) |
Effect of exchange rates on cash and cash equivalents |
|
(137 |
) |
|
|
Net (decrease) increase in cash and cash equivalents |
|
(5,341 |
) |
1,962 |
|
Cash and cash equivalents, beginning of period |
|
9,384 |
|
3,601 |
|
Cash and cash equivalents, end of period |
|
$ |
4,043 |
|
$ |
5,563 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
Cash paid for interest |
|
$ |
2,470 |
|
$ |
465 |
|
Cash paid for income taxes |
|
$ |
1,075 |
|
$ |
975 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
Termination of note receivable from related party |
|
$ |
|
|
$ |
272 |
|
6
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