JASNW Jason Industries - Warrant

Continued Adjusted EBITDA Margin Expansion

Reaffirms Full Year Guidance

Jason Industries, Inc. (NASDAQ:JASN) (NASDAQ:JASNW) (“Jason” or the “Company”) today reported results for third quarter 2018.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20181030005302/en/

Key financial results for the third quarter 2018 versus the year ago period include:

• Net sales of $145.3 million decreased 6.5 percent and included a negative 1.7 percent impact from the divestiture and planned exit of non-core businesses and a negative 0.5 percent from foreign currency translation.
• Operating income of $2.9 million, or 2.0 percent of net sales, decreased from 3.0 percent of net sales on higher cost of goods sold.
• Net loss of $5.5 million, or $0.23 diluted loss per share, increased $3.9 million and $0.13 per share, impacted by $2.2 million, or $0.08 per share, of lower tax benefits.
• Free cash flow was $6.2 million, an increase of $5.7 million, due to lower working capital requirements and timing of capital expenditures.

On an adjusted basis, third quarter 2018 results versus the year ago period include:

• Adjusted EBITDA of $15.2 million decreased $0.9 million, including an impact of $0.6 million from the Acoustics Europe business divested in August 2017. Adjusted EBITDA margins expanded to 10.5 percent of net sales from 10.4 percent, driven by operational efficiencies and pricing.
• Adjusted Net Loss of $3.7 million, or $0.12 Adjusted Loss Per Share, increased $0.11 per share.

“We improved margins for the seventh consecutive quarter, generated strong free cash flow and reduced leverage to 5.1 times. As best demonstrated by our Seating business, each of our teams continue to target select growth opportunities, improve operations and drive cash generation,” said Brian Kobylinski, chief executive officer of Jason. “Our progress remains steady and our results are in line with our expectations.”

Highlights during the quarter include:

• Total Cost Reduction and Margin Expansion program savings were $0.5 million in the third quarter with a total of $22 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.
• Achieved organic growth of 5.0 percent in Seating and 1.2 percent in Finishing. Organic growth was generated through select targeted growth initiatives, pricing actions and continued strength in U.S. industrial markets.
• Progressed the Nuneaton, United Kingdom Seating facility consolidation. Expected net proceeds from the facility sale are now $3.3 million with the consolidation and sale completed by year-end.

Key financial results within the segments for the third quarter 2018 versus the year ago period include:

• Finishing net sales were $51.0 million with organic sales increasing 1.2 percent. Targeted growth initiatives and strong industrial markets in the U.S. were partially offset by moderating European industrial markets. Adjusted EBITDA was $7.6 million, or 14.9 percent of net sales, an increase of $0.1 million from 14.7 percent of net sales. Adjusted EBITDA margin increased on pricing actions and was impacted by inflation on both materials and freight.
• Components net sales of $21.4 million increased $1.5 million, or 7.3 percent. Organic sales decreased 9.4 percent due to lower volumes in rail and expanded metal products. Organic sales exclude non-core smart meter product lines, which increased 16.7 percent in preparation for the planned exit of production by the end of 2018. Adjusted EBITDA was $2.6 million, or 12.0 percent of net sales, compared with 12.3 percent of net sales in the prior year.
• Seating net sales of $34.6 million increased $1.6 million with organic sales increasing 5.0 percent. Higher volumes in the construction, agriculture, and material handling markets offset expected declines in motorcycles. Adjusted EBITDA was $3.6 million, or 10.4 percent of net sales, an increase of $1.0 million from 8.0 percent of net sales, with margins positively impacted by continuous improvement initiatives, labor and material efficiencies and pricing.
• Acoustics net sales of $38.3 million decreased $13.2 million, or 25.6 percent, including a negative 11.5 percent impact from the divestiture of the Acoustics European operations. Organic sales decreased 14.1 percent due to end-of-life platform changes and a continuing shift from cars to light truck vehicles. Adjusted EBITDA was $4.5 million, or 11.7 percent of net sales, compared with 12.9 percent of net sales in the prior year. Adjusted EBITDA margin decreased on lower sales and input cost inflation, partially mitigated by improved material efficiencies, continuous improvement projects, and savings related to the closure of the Richmond, Indiana facility.
• Corporate expenses of $3.0 million decreased $0.1 million versus the prior year.

Other Information:

• Net debt to Adjusted EBITDA on a trailing twelve-month basis was 5.1x as of the end of the third quarter, a decrease from 5.5x as of the end of 2017. Total liquidity as of the end of the third quarter was $91.2 million, comprised of $51.4 million of cash and cash equivalents and $39.8 million of availability on revolving loan facilities globally.
• In the third quarter, Moody’s upgraded the company’s credit ratings with the corporate family rating raised to B3 from Caa1, the senior secured first lien term loan raised to B2 from B3, and the secured second lien term loan raised to Caa2 from Caa3. The Company’s recently extended senior secured first lien revolving credit facilities were assigned a rating of B2. Moody’s ratings outlook remained stable.

2018 Guidance:

Kobylinski stated, “Our nimbleness and execution are outpacing select end-market volatility and the impact of inflation. We continue to progress toward our goals and reaffirm our 2018 guidance.”

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 third 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 Third 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), November 6, 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 impact of the recent Tax Reform Act; 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.

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 the term “organic sales growth” to refer to the measure of comparing current period organic sales with the corresponding prior year period organic sales.

  Jason Industries, Inc. Condensed Consolidated Statements of Operations

(In thousands, except per share amounts) (Unaudited)

      Three Months Ended     Nine Months Ended September     September September     September 28, 2018 29, 2017 28, 2018 29, 2017 Net sales $ 145,295 $ 155,430 $ 480,973 $ 503,100 Cost of goods sold 116,818   123,457   379,702   400,874   Gross profit 28,477 31,973 101,271 102,226 Selling and administrative expenses 24,514 26,170 80,926 78,068 (Gain) loss on disposals of property, plant and equipment - net (91 ) (639 ) 154 (904 ) Restructuring 1,185   1,772   3,251   2,996   Operating income 2,869 4,670 16,940 22,066 Interest expense (8,348 ) (8,203 ) (24,778 ) (24,964 ) Gain on extinguishment of debt — 819 — 2,383 Equity income 468 295 903 715 Loss on divestiture — (842 ) — (8,730 ) Other income - net 51   58   606   261   Loss before income taxes (4,960 ) (3,203 ) (6,329 ) (8,269 ) Tax provision (benefit) 552   (1,602 ) 589   (1,438 ) Net loss $ (5,512 ) $ (1,601 ) $ (6,918 ) $ (6,831 ) Less net gain attributable to noncontrolling interests —   —   —   5   Net loss attributable to Jason Industries $ (5,512 ) $ (1,601 ) $ (6,918 ) $ (6,836 ) Redemption premium and accretion of dividends on preferred stock 781   955   3,274   2,809   Net loss available to common shareholders of Jason Industries $ (6,293 ) $ (2,556 ) $ (10,192 ) $ (9,645 ) Net loss per share available to common shareholders of Jason Industries: Basic and diluted $ (0.23 ) $ (0.10 ) $ (0.37 ) $ (0.37 )   Weighted average number of common shares outstanding: Basic and diluted 27,683 26,241 27,565 26,023   Jason Industries, Inc. Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts) (Unaudited)

      September 28, 2018     December 31, 2017 Assets Current assets Cash and cash equivalents $ 51,370 $ 48,887 Accounts receivable - net 73,341 68,626 Inventories - net 65,473 70,819 Other current assets 17,201   15,655   Total current assets 207,385 203,987 Property, plant and equipment - net 141,021 154,196 Goodwill 44,410 45,142 Other intangible assets - net 119,646 131,499 Other assets - net 14,080   11,499   Total assets $ 526,542   $ 546,323     Liabilities and Shareholders’ (Deficit) Equity Current liabilities Current portion of long-term debt $ 6,634 $ 9,704 Accounts payable 52,704 53,668 Accrued compensation and employee benefits 16,543 17,433 Accrued interest 82 276 Other current liabilities 15,525   19,806   Total current liabilities 91,488 100,887 Long-term debt 389,211 391,768 Deferred income taxes 24,973 25,699 Other long-term liabilities 21,272   22,285   Total liabilities 526,944   540,639     Shareholders’ (Deficit) Equity Preferred stock 39,818 49,665 Jason Industries common stock 3 3 Additional paid-in capital 155,348 143,788 Retained deficit (174,118 ) (167,710 ) Accumulated other comprehensive loss (21,453 ) (20,062 ) Total shareholders’ (deficit) equity (402 ) 5,684   Total liabilities and shareholders’ (deficit) equity $ 526,542   $ 546,323     Jason Industries, Inc. Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

      Nine Months Ended September 28, 2018     September 29, 2017 Cash flows from operating activities Net loss $ (6,918 ) $ (6,831 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 20,415 19,874 Amortization of intangible assets 11,242 9,365 Amortization of deferred financing costs and debt discount 2,199 2,232 Equity income (903 ) (715 ) Deferred income taxes (1,113 ) (8,540 ) Loss (gain) on disposals of property, plant and equipment - net 154 (904 ) Gain on extinguishment of debt — (2,383 ) Loss on divestiture — 8,730 Transaction fees on divestiture — (932 ) Share-based compensation 1,728 904 Net increase (decrease) in cash due to changes in: Accounts receivable (5,155 ) (332 ) Inventories 4,368 3,958 Other current assets 811 655 Accounts payable (506 ) (5,275 ) Accrued compensation and employee benefits (689 ) 7,647 Accrued interest (194 ) (80 ) Accrued income taxes (3,548 ) 2,061 Other - net (1,876 ) (4,954 ) Total adjustments 26,933   31,311   Net cash provided by operating activities 20,015   24,480   Cash flows from investing activities Proceeds from disposals of property, plant and equipment 202 8,758 Payments for property, plant and equipment (9,636 ) (10,363 ) Proceeds from divestitures, net of cash divested and debt assumed by buyer — 7,883 Acquisitions of patents (44 ) (64 ) Net cash (used in) provided by investing activities (9,478 ) 6,214   Cash flows from financing activities Payments of deferred financing costs (609 ) — Payments of First and Second Lien term loans (4,825 ) (21,051 ) Proceeds from other long-term debt 3,314 7,883 Payments of other long-term debt (5,358 ) (6,190 ) Other financing activities - net (14 ) (44 ) Net cash used in financing activities (7,492 ) (19,402 ) Effect of exchange rate changes on cash and cash equivalents (562 ) 1,599   Net increase in cash and cash equivalents 2,483 12,891 Cash, cash equivalents and restricted cash, beginning of period 48,887   40,861   Cash, cash equivalents and restricted cash, end of period $ 51,370   $ 53,752     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 $ 55,454 $ 51,016 $ 160,448 Adjusted EBITDA 7,067 7,324 7,503 5,767 27,661 7,799 8,437 7,579 23,815 Adjusted EBITDA % net sales 14.3 % 14.7 % 14.7 % 11.5 % 13.8 % 14.4 % 15.2 % 14.9 % 14.8 %   Components Net sales $ 21,117 $ 21,713 $ 19,945 $ 19,846 $ 82,621 $ 22,393 $ 24,559 $ 21,404 $ 68,356 Adjusted EBITDA 2,720 2,451 2,445 2,272 9,888 3,070 3,563 2,563 9,196 Adjusted EBITDA % net sales 12.9 % 11.3 % 12.3 % 11.4 % 12.0 % 13.7 % 14.5 % 12.0 % 13.5 %   Seating Net sales $ 47,373 $ 44,921 $ 32,963 $ 33,872 $ 159,129 $ 47,034 $ 44,993 $ 34,609 $ 126,636 Adjusted EBITDA 5,530 5,897 2,621 2,300 16,348 5,933 6,870 3,588 16,391 Adjusted EBITDA % net sales 11.7 % 13.1 % 8.0 % 6.8 % 10.3 % 12.6 % 15.3 % 10.4 % 12.9 %   Acoustics Net sales $ 57,227 $ 56,086 $ 51,457 $ 41,812 $ 206,582 $ 43,849 $ 43,418 $ 38,266 $ 125,533 Adjusted EBITDA 6,721 7,983 6,640 5,997 27,341 5,778 6,044 4,465 16,287 Adjusted EBITDA % net sales 11.7 % 14.2 % 12.9 % 14.3 % 13.2 % 13.2 % 13.9 % 11.7 % 13.0 %   Corporate Adjusted EBITDA $ (3,477 ) $ (3,075 ) $ (3,073 ) $ (3,861 ) $ (13,486 ) $ (2,867 ) $ (3,550 ) $ (2,965 ) $ (9,382 )   Consolidated Net sales $ 175,193 $ 172,477 $ 155,430 $ 145,516 $ 648,616 $ 167,254 $ 168,424 $ 145,295 $ 480,973 Adjusted EBITDA 18,561 20,580 16,136 12,475 67,752 19,713 21,364 15,230 56,307 Adjusted EBITDA % net sales 10.6 % 11.9 % 10.4 % 8.6 % 10.4 % 11.8 % 12.7 % 10.5 % 11.7 %   Jason Industries, Inc. Reconciliation of GAAP to Non-GAAP Measures

(In thousands) (Unaudited)

 

Organic Sales Growth

      3Q 2018                

Jason

Finishing

Components

Seating

Acoustics

Consolidated

 

Net sales

Organic sales growth 1.2% (9.4)% 5.0% (14.1)% (4.3)% Currency impact (1.3)% —% —% —% (0.5)% Divestiture & Non-Core Exit —% 16.7% —% (11.5)% (1.7)% Growth as reported (0.1)% 7.3% 5.0% (25.6)% (6.5)%  

YTD 2018

Jason

Finishing

Components

Seating

Acoustics

Consolidated

 

Net sales

Organic sales growth 3.3% (0.5)% 0.6% (10.0)% (2.3)% Currency impact 3.9%

—%

0.5% —% 1.4% Divestiture & Non-Core Exit (0.4)% 9.4% —% (13.8)% (3.5)% Growth as reported 6.8% 8.9% 1.1% (23.8)% (4.4)%  

Free Cash Flow

        3Q       YTD 2017     2018 2017     2018 Operating Cash Flow $ 3,648 $ 8,875 $ 24,480 $ 20,015 Less: Capital Expenditures (3,202 ) (2,697 ) (10,363 ) (9,636 ) Free Cash Flow $ 446 $ 6,178 $ 14,117 $ 10,379  

Net Debt to Adjusted EBITDA

      September 28, 2018 Current and long-term debt $ 395,845 Add: Debt discounts and deferred financing costs 7,324 Less: Cash and cash equivalents (51,370 ) Net Debt $ 351,799   Adjusted EBITDA 4Q17 $ 12,475 1Q18 19,713 2Q18 21,364 3Q18 15,230   TTM Adjusted EBITDA 68,782   Net Debt to Adjusted EBITDA* 5.1x

*Note the consolidated first lien net leverage ratio under the Company’s senior secured credit facilities was 3.68x as of September 28, 2018. See Form 10-Q for further discussion of the Company’s senior secured credit facilities.

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 ) $ (587 ) $ (5,512 )     $ (6,918 ) Interest expense 8,366 8,395 8,203 8,125 33,089 8,027 8,403 8,348 24,778 Tax (benefit) provision (15 ) 179 (1,602 ) (8,946 ) (10,384 ) 275 (238 ) 552 589 Depreciation and amortization 10,003   9,487   9,749   9,695   38,934   10,807   11,046   9,804     31,657   EBITDA 17,861   13,324   14,749   11,232   57,166   18,290   18,624   13,192     50,106   Adjustments: Restructuring(1) 681 543 1,772 1,270 4,266 602 1,464 1,185 3,251 Integration and other restructuring costs(2) — — — (569 ) (569 ) 356 712 — 1,068 Share-based compensation(3) 349 324 231 215 1,119 231 553 944 1,728 (Gain) loss on disposals of property, plant and equipment—net(4) (330 ) 65 (639 ) 145 (759 ) 234 11 (91 ) 154 (Gain) loss on extinguishment of debt(5) — (1,564 ) (819 ) 182 (2,201 ) — — — — Loss on divestiture(6) —   7,888   842   —   8,730 —   —   —     — Total adjustments 700   7,256   1,387   1,243   10,586   1,423   2,740   2,038     6,201   Adjusted EBITDA $ 18,561   $ 20,580   $ 16,136   $ 12,475   $ 67,752   $ 19,713   $ 21,364   $ 15,230     $ 56,307   (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 $1.5 million of net costs and recoveries associated with a force majeure incident at a supplier in the seating segment that resulted in incremental costs to maintain production and are expected to be recovered through insurance pending finalization of claims in future periods. The integration and other restructuring costs were partially offset by $0.4 million of legal settlement income related to proceeds from a supplier claim in the seating segment associated with periods prior to the Company’s go public business combination in 2014. During 2017, integration and other restructuring costs includes a $0.6 million reversal of a liability recorded in acquisition accounting for the go public business combination.   (3) Represents non-cash share based compensation expense for awards under the Company’s 2014 Omnibus Incentive Plan.   (4) (Gain) loss on disposals of property, plant and equipment for the first quarter of 2018 includes a loss of $0.2 million from the disposition of equipment in connection with the consolidation of the component segment’s Libertyville, Illinois facilities, 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 quarters 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.   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 ) $ (587 ) $ (5,512 )       $ (6,918 ) Adjustments: Restructuring 681 543 1,772 1,270 4,266 602 1,464 1,185 3,251 Integration and other restructuring costs — — — (569 ) (569 ) 356 712 — 1,068 Share based compensation 349 324 231 215 1,119 231 553 944 1,728 (Gain) loss on disposal of property, plant and equipment - net (330 ) 65 (639 ) 145 (759 ) 234 11 (91 ) 154 (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 ) (697 ) (445 ) (1,456 ) Tax (benefit) provision(2) —   —   —   (3,787 ) (3,787 ) 410   —   170         580   Adjusted net income (loss) $ 152   $ 1,937   $ (428 ) $ (308 ) $ 1,353   $ 700   $ 1,456   $ (3,749 )       $ (1,593 )   Effective tax rate on adjustments(1) 16 % 8 % 16 % 10 % 9 % 22 % 25 % 22 % 23 %   Diluted weighted average number of common shares outstanding (GAAP): 25,784 26,042 26,241 26,255 26,082 27,329 27,677 27,683 27,565 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   3,147   3,212         3,222   Diluted weighted average number of common shares outstanding (non-GAAP)(3) 29,751   29,857   30,130   30,767   29,999   30,638   30,824   30,895         30,787     Adjusted earnings (loss) per share $ 0.01   $ 0.06   $ (0.01 ) $ (0.01 ) $ 0.05   $ 0.02   $ 0.05   $ (0.12 )       $ (0.05 )   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 ) $ (0.05 ) $ (0.23 ) $ (0.37 ) Adjustments net of income taxes: Restructuring 0.02 0.01 0.04 0.04 0.13 0.02 0.04 0.03 0.09 Integration and other restructuring costs — — — (0.02 ) (0.02 ) 0.01 0.02 — 0.03 Share based compensation 0.02 0.02 0.01 0.01 0.06 0.01 0.02 0.03 0.06 (Gain) loss on disposal of property, plant and equipment - 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 — 0.01 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   —   0.02   0.04         0.07   Adjusted earnings (loss) per share $ 0.01   $ 0.06   $ (0.01 ) $ (0.01 ) $ 0.05   $ 0.02   $ 0.05   $ (0.12 )       $ (0.05 ) (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.  

View source version on businesswire.com: https://www.businesswire.com/news/home/20181030005302/en/

Jason Industries, Inc.Investor Relations:Rachel Zabkowiczinvestors@jasoninc.com414.277.2007