ASV Holdings, Inc. (Nasdaq: ASV), a leading provider of
rubber-tracked compact track loaders and wheeled skid steer loaders
in the compact construction equipment market, today announced
Second Quarter and year-to-date 2018 results.
For the three months ended June 30, 2018, the Company reported
Net Sales of $31.9 million and Net Income of $0.3 million or $0.03
per share compared to Net Sales of $34.2 million and Net Income of
$1.8 million or $0.20 per share for the three months ended June 30,
2017.
Second Quarter 2018
Highlights
- $31.9 million in Net Sales represented
a year-over-year decrease of 6.7% from $34.2 million in the second
quarter of 2017.
- Machine sales revenues to North
American distribution grew 9% compared to second quarter 2017.
- Total machine sales revenues increased
year-over-year by 4.8% to $23.0 million.
- Second quarter 2018 net income of $0.3
million or $0.03 per share, compared to second quarter 2017
adjusted pro forma income of $0.8 million or $0.08 per share.
- Second quarter 2018 gross profit
percent adversely impacted 130 basis points by increased material
costs.
- EBITDA of $2.1 million or 6.6% of sales
compared to $3.3 million or 9.6% of sales for the second quarter of
2017.
- Adjusted EBITDA* of $2.2 million or
6.9% of sales compared to second quarter 2017 pro forma adjusted
EBITDA of $3.2 million or 9.4% of sales.
- Added 17 dealer / rental locations in
the quarter.
*The Glossary at the end of this press release contains further
details regarding reconciliation of GAAP items and Adjusted and
Pro-forma items.
Chairman and Chief Executive Officer, Andrew Rooke commented,
“In the second quarter, we continued to make good progress with
adding new dealers and penetrating into the rental market with
sales, which are among our top corporate objectives in scaling the
business. Our North American dealer rental locations now stand at
265 and our sales into rental locations accounted for approximately
15% of machine sales in the quarter. Second quarter financial
results, while below plan and impacted by several market headwinds,
were highlighted by positive operating cash flow of over $600,000,
we generated over $2 million in EBITDA and achieved 3 cents in EPS.
Although machine sales increased in the second quarter, our results
reflected a year-over-year quarterly decline in sales. This was
principally due to lower undercarriage sales to our largest
customer. In the second quarter of 2017, this customer’s
undercarriage purchases totaled 40% of their full year shipments,
and thus the comparison to that quarter shows an overall decline in
$2.7 million lower year-over-year sales for the 2018 quarter. Sharp
increases in material costs had a negative impact on our sales,
margins, and bottom-line, with the run rate of higher steel prices
resulting in approximately $2.5 million in higher costs, on an
annualized basis.
“Typical of a cyclical recovery, the higher level of demand for
industrial equipment has resulted in disruption within the supply
chain and lengthened lead times, most notably for engines, which
along with the rising steel costs, present challenges to sourcing
and deliveries during the balance of the year. These challenges
impact our entire industry and we are aggressively working to
overcome these headwinds with initiatives that will largely offset
their impact, from price surcharges introduced in May of this year,
to cost and sourcing improvements which are already yielding
results. We believe that industry wide market pricing will in time
move upwards in recognition of the new cost base for steel, which
will enable a margin recovery going forward. In addition, we are on
pace to recognize an estimated $1 million in annual savings from
relocating our parts distribution business back to Grand Rapids, as
we expected. We are confident in the continued strength of the
industries we serve and there remains plenty of work to do in the
quarters ahead to reach our longer-term sales growth and margin
targets.”
Missi How, Chief Financial Officer, added, “While temporary
spikes in input costs and component availability have presented
some challenges, we remain focused on managing what is in our
control and pursuing opportunities to grow the bottom line.
Inventory levels have increased as we have been receiving in long
lead time production components to support future builds, and in
addition, we have increased our finished machine inventory to
fulfill backlog requirements and support expected future activity
levels. Managing working capital is still a priority and we were
pleased that even with this step up of inventory, our net working
capital as a percent of sales of 23.5% was well within our target
range. We expect to continue to generate cash and maintain
reasonable working capital levels throughout the remainder of
2018.”
Outlook:
Given the first half performance and uncertainties in the supply
chain which are lengthening lead times and impacting customer
buying decisions, ASV’s 2018 sales are likely to be restricted to
show only high single digit growth for this year and remain subject
to how the pricing environment evolves and markets adjust to the
business environment.
Conference Call:
Management will host a conference call at 4:30 PM Eastern Time
today to discuss the results with the investment community. Anyone
interested in participating in the call should dial 1- 866-548-4713
if calling within the United States or 323-794-2093 if calling
internationally. A replay will be available until 11:59 PM ET
August 16, 2018 which can be accessed by dialing 844-512-2921 if
calling within the United States or 412-317-6671 if calling
internationally. Please use passcode 5362178 to access this replay.
The call will additionally be broadcast live and archived for 90
days over the internet with accompanying slides, accessible at the
investor relations portion of the Company's corporate website,
www.asvi.com in the “Investors” section.
About ASV Holdings, Inc.
ASV Holdings, Inc. is a designer and manufacturer of compact
construction equipment. Its patented Posi-Track rubber tracked,
multi-level suspension undercarriage system provides a competitive
market differentiator for its Compact Track Loader (CTL) product
line with brand attributes of power, performance and
serviceability. It’s wheeled Skid Steer Loaders (SSLs) also share
the common brand attributes. Equipment is sold through an
independent dealer network throughout North America, Australia, and
New Zealand. The company also sells OEM equipment and aftermarket
parts. ASV owns and operates a 238,000 square-foot production
facility in Grand Rapids, MN.
Forward-Looking Statements and non-GAAP Information
This release contains forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as
“may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “intends” or “continue,” and
other similar expressions that are predictions of or indicate
future events and future trends, or the negative of these terms or
other comparable terminology. Forward-looking statements in this
release include, without limitation: (1) projections of revenue,
earnings, capital structure and other financial items, (2)
statements of our plans and objectives, (3) statements regarding
the capabilities and capacities of our business operations, (4)
statements of expected future economic conditions and the effect on
us and on dealers or OEM customers, (5) expected benefits of our
cost reduction measures, and (6) assumptions underlying statements
regarding us or our business.
Our actual results may differ from information contained in
these forward looking-statements for many reasons, including those
described in the section entitled “Risk Factors” in our Form 10K
for the year ended December 31, 2017, which are available on our
EDGAR page at www.sec.gov. These statements are only current
predictions and are subject to known and unknown risks,
uncertainties and other factors that may cause our or our
industry’s actual results, levels of activity, performance or
achievements to be materially different from those anticipated by
the forward-looking statements. We discuss many of these risks in
greater detail under the heading “Risk Factors” and elsewhere in
the Form 10K. You should not rely upon forward-looking statements
as predictions of future events. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Except as required by law, after the
date of this release, we are under no duty to update or revise any
of the forward-looking statements, whether as a result of new
information, future events or otherwise.
We obtained the industry, market and competitive position data
in this release from our own internal estimates and research as
well as from industry and general publications and research surveys
and studies conducted by third parties. While we believe that each
of these studies and publications is reliable, we have not
independently verified market and industry data from third-party
sources. While we believe our internal company research is reliable
and the market definitions we use are appropriate, neither such
research nor these definitions have been verified by any
independent source.
We from time to time refer to various non-GAAP financial
measures in this release. We believe that this information is
useful to understanding our operating results by excluding certain
items that may not be indicative of our core operating results and
business outlook. Reference to these non-GAAP financial measures
should not be considered as a substitute for, or superior to,
results that are presented in a manner consistent with GAAP.
Rather, the non-GAAP financial information should be considered in
addition to results that are presented in a manner consistent with
GAAP. A reconciliation of non-GAAP financial measures referred to
in this release is provided in the tables at the conclusion of this
release.
ASV Holdings, Inc. Condensed Statements of
Operations (In thousands, except par value and per share
data) For the Three Months
For the Six Months Ended June 30, Ended
June 30, 2018 2017 2018
2017 Unaudited Unaudited
Unaudited Unaudited Net sales $ 31,860 $
34,240 $ 61,729 $ 62,250 Cost of goods sold 27,603
28,940 53,531 52,590
Gross profit 4,257 5,300 8,198 9,660 Research
and development costs 451 521 922 1,058 Selling, general and
administrative expense 2,934 2,770
6,341 5,483 Operating income 872
2,009 935 3,119 Other income (expense) Interest expense (464
) (887 ) (922 ) (1,765 ) Other income (expense) —
1 7 1 Total other
expense (464 ) (886 ) (915 ) (1,764 )
Income before taxes 408 1,123 20 1,355 Income tax
expense (benefit) 89 (629 ) 8
(629 )
Net income $ 319 $ 1,752
$ 12 $ 1,984 Earnings per share: Basic net
income per share $ 0.03 $ 0.20 $ 0.00 $ 0.24 Diluted net income per
share $ 0.03 $ 0.20 $ 0.00 $ 0.24 Weighted average common
shares outstanding: Basic weighted average common shares
outstanding 9,823 8,870 9,820 8,435 Diluted weighted average common
shares outstanding 9,823 8,870 9,820 8,435 Pro forma (C
corporation basis): Pro forma tax expense N/A $ 404 N/A $ 488 Pro
forma net income N/A $ 719 N/A $ 867 Pro forma earnings per
share: Basic net income per share N/A $ 0.08 N/A $ 0.10 Diluted net
income per share N/A $ 0.08 N/A $ 0.10
ASV
Holdings, Inc. Balance Sheets (In thousands, except
par value)
June
30,
December 31, 2018 2017
Unaudited ASSETS CURRENT ASSETS Cash $ 4 $ 3
Trade receivables, net 15,076 18,276 Receivables from affiliates 28
76 Inventory, net 30,698 26,691 Prepaid income tax 913 896 Prepaid
expenses and other 660 591 Total current assets
47,379 46,533
NON-CURRENT ASSETS Property, plant and
equipment, net 13,250 13,797 Intangible assets, net 22,004 23,277
Goodwill 30,579 30,579 Other long-term assets 274 311 Deferred tax
asset 624 624 Total assets $ 114,110 $ 115,121
LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable - current
portion $ 2,012 $ 2,000 Trade accounts payable 15,084 15,174
Payables to affiliates 784 1,063 Accrued compensation and benefits
1,315 1,483 Accrued warranties 1,654 1,869 Accrued product
liability- short term 321 778 Accrued other 896 1,039
Total current liabilities 22,066 23,406
NON-CURRENT
LIABILITIES Revolving loan facility 13,231 12,511 Notes payable
- long term, net 12,105 12,664 Other long-term liabilities
704 739 Total liabilities 48,106 49,320
STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value,
5,000 authorized, none outstanding at June 30, 2018 and December
31, 2017, respectively — — Common stock, $0.001 par value, 50,000
authorized, 9,834 and 9,806 shares issued and outstanding at June
30, 2018 and December 31, 2017, respectively 10 10 Additional
paid-in capital 65,625 65,434 Retained earnings 369
357 Total Stockholders' Equity 66,004 65,801
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 114,110 $
115,121
ASV Holdings, Inc. Statements of
Cash Flows (In thousands) For
the Six Months Ended June 30, 2018
2017 Unaudited Unaudited OPERATING
ACTIVITIES Net income $ 12 $ 1,984
Adjustments to reconcile to net income to
net cash provided by operating activities:
Depreciation 1,129 1,161 Amortization 1,273 1,273 Share-based
compensation 251 135 Deferred income tax (benefit) — (926 ) Loss on
sale of fixed assets 1 46 Amortization of deferred finance cost 71
112 Loss on debt extinguishment — 83 Bad debt expense 23 1 Changes
in operating assets and liabilities Trade receivables 3,177 (4,197
) Net trade receivables/payables from affiliates (231 ) 527
Inventory (4,089 ) 6,008 Prepaid income tax (17 ) — Prepaid
expenses (69 ) (287 ) Trade accounts payable (90 ) 891 Accrued
expenses (967 ) (1,431 ) Tax payable — 297 Other long-term
liabilities (40 ) 271 Net cash provided
by operating activities 434 5,948
INVESTING ACTIVITIES Decrease in restricted cash —
535 Purchase of property and equipment (501 ) (182 )
Net cash (used in) provided by investing activities
(501 ) 353
FINANCING ACTIVITIES
Principal payments on long-term debt (1,001 ) (1,288 ) Proceeds
from long-term note 425 — Debt issuance costs incurred — (9 )
Proceeds from issuance of common stock, net of offering costs —
10,405 Net payments on debt — (10,405 ) Shares repurchased for
income tax withholding on share-based compensation (76 ) — Net
borrowings (payments) on revolving credit facilities 720
(5,571 ) Net cash provided by (used in)
financing activities 68 (6,868 )
NET
CHANGE IN CASH 1 (567 )
Cash at
beginning of period 3 572
Cash at end of period $ 4 $ 5
Supplemental Information
Cautionary Statement Regarding Non-GAAP Measures
This release contains references to “EBITDA” and “Adjusted
EBITDA.” EBITDA is defined for the purposes of this release as net
income or loss before interest, income taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA plus stock-based
compensation, less the gain or loss related to non-recurring
events. Management believes that EBITDA and Adjusted EBITDA are
useful supplemental measures of our operating performance and
provide meaningful measures of overall corporate performance
exclusive of our capital structure and the method and timing of
expenditures associated with building and placing our products.
EBITDA is also presented because management believes that it is
frequently used by investment analysts, investors and other
interested parties as a measure of financial performance. Adjusted
EBITDA is also presented because management believes that it
provides a measure of our recurring core business.
However, EBITDA and Adjusted EBITDA are not recognized earnings
measures under generally accepted accounting principles of the
United States (“U.S. GAAP”) and do not have a standardized meaning
prescribed by U.S. GAAP. Therefore, EBITDA and Adjusted EBITDA may
not be comparable to similar measures presented by other issuers.
Investors are cautioned that EBITDA and Adjusted EBITDA should not
be construed as alternatives to net income or loss or other income
statement data (which are determined in accordance with U.S. GAAP)
as an indicator of our performance or as a measure of liquidity and
cash flows. Management’s method of calculating EBITDA and Adjusted
EBITDA may differ materially from the method used by other
companies and accordingly, may not be comparable to similarly
titled measures used by other companies.
Reconciliation of EBITDA to Adjusted EBITDA (in millions
except percentages) For the Quarter
Ended June 30, 2018 2017 Net
income $0.3 $1.8 Interest expense 0.5 0.9 Tax 0.1
(0.6) Depreciation & amortization 1.2 1.2
EBITDA
(1) $2.1 $3.3 % of Sales 6.6% 9.6%
EBITDA $2.1 $3.3
Stock compensation and transaction related compensation
costs (2) 0.1 0.1
Adjusted EBITDA (3) $2.2 $3.4
Adjusted
EBITDA as % of net revenues 6.9% 8.5% Pro-forma adjustment for
public company costs** - (0.2) Pro-forma Adjusted EBITDA (4)
$2.2 $3.2 % of Sales
6.9% 9.4%
** The Company converted to a C corporation in May 2017, so
the three months ended June 30, 2017 include a pro forma adjustment
for approximately $0.2 million of public company costs not included
in EBITDA relating to the period April 1, 2017 to May 17, 2017.
(1) EBITDA is defined as income or loss before interest,
income taxes, depreciation and amortization. EBITDA is not a
recognized measure under U.S. GAAP and does not have a standardized
meaning prescribed by U.S. GAAP. Therefore, EBITDA may not be
comparable to similar measures presented by other companies. The
table above reconciles net income to EBITDA. See “—Cautionary
Statements Regarding Non-GAAP Measures” for further information
regarding EBITDA. (2) Stock compensation and IPO transaction
related compensation costs. (3) Adjusted EBITDA is defined
as EBITDA less the gain or loss related to non-recurring events.
Adjusted EBITDA is not a recognized measure under U.S. GAAP and
does not have a standardized meaning prescribed by U.S. GAAP.
Therefore, Adjusted EBITDA may not be comparable to similar
measures presented by other companies. The table above reconciles
EBITDA to Adjusted EBITDA. See “—Cautionary Statements Regarding
Non-GAAP Measures” for further information regarding EBITDA.
(4)
2017 Pro Forma Adjusted EBITDA is defined
as Adjusted EBITDA less public company costs.
Reconciliation of GAAP Net Income to Adjusted Pro
Forma Net Income (in millions except shares and EPS)
For the Quarter Ended June 30, 2018
2017 Net income as reported $0.3 $1.8
Tax benefit from conversion to C corporation (1) - (0.9 )
Debt issuance cost written off on debt repayment from IPO proceeds
net of tax - 0.1 Pro-forma adjustment for public company costs net
of tax at 26.41% (2) - (0.2 )
Adjusted pro forma net income
$0.3 $0.8 Weighted average diluted
shares outstanding 9,823,000 8,870,000 Basic and Diluted (loss)
earnings per share as reported $0.03 $0.20 Total EPS Effect $0.00
($0.12 ) Adjusted (pro forma) earnings (loss) per share $0.03 $0.08
(1)
The tax benefit was generated from a tax
credit of $0.9 million arising from the establishment of a deferred
tax asset on conversion of the Company from a Minnesota limited
liability company to a Delaware corporation immediately prior to
the IPO in May 2017.
(2) Pro forma adjustments for public company costs: The Company
converted from a LLC to a corporation on May 11, 2017. The pro
forma adjustment reflects the run rate of actual public company
costs incurred in 2017 as if the company had been a corporation for
the whole of the period April 1, 2017 to June 30, 2017.
Net working capital as a % of annualized last quarter’s
sales is the sum of accounts receivable and inventory less
accounts payable divided by the last quarter’s sales annualized
(x4).
June 30, 2018 December 31, 2017
Accounts receivable 15,104 18,352
Inventory 30,698 26,691 Accounts
payable (15,868) (16,237)
Net
working capital
$29,934
$28,806
Last quarters annualized sales (LQS) 127,440
121,820
Net working capital % of LQS
23.5%
23.6%
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version on businesswire.com: https://www.businesswire.com/news/home/20180809005041/en/
ASV Holdings, Inc.Andrew Rooke, 218-327-5389Chairman and
Chief Executive Officerandrew.rooke@asvi.comorInvestor
RelationsDarrow Associates Inc.Peter Seltzberg,
516-419-9915Managing Directorpseltzberg@darrowir.com
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