JACKSONVILLE, Fla., July 31 /PRNewswire-FirstCall/ -- Interline
Brands, Inc. (NYSE:IBI) ("Interline" or the "Company"), a leading
distributor and direct marketer of maintenance, repair and
operations ("MRO") products, reported sales and earnings for the
quarter ended June 26, 2009. Sales for the second quarter of 2009
decreased 13.3% compared to the prior year period. Earnings per
diluted share were $0.20 for the second quarter of 2009, a decrease
of 41% compared to earnings per diluted share of $0.34 in the
second quarter of 2008. Earnings per diluted share for the second
quarter of 2009 included a $0.04 per diluted share charge
associated with the previously announced consolidation of certain
distribution centers and closing of certain underperforming
professional contractor showrooms ("distribution network
consolidations"). Michael J. Grebe, Interline's Chairman and Chief
Executive Officer, commented, "I continue to be very encouraged by
the results of our ongoing efforts to optimize our distribution
network, improve the efficiency of our operations, and generate
free cash flow. We remain highly focused on executing against our
plans to remove $37 million in annual operating costs from the
business and to drive additional working capital improvements. We
have already begun to realize the benefits of these cost and
efficiency actions - delivering $0.07 in net benefits to our bottom
line in the second quarter - and we remain on track to deliver
$0.31 in net benefits for 2009. In addition, we generated over $6
million in free cash flow, ahead of our previously stated
expectations, and paid down an additional $20 million of debt
during the quarter. We are very pleased to be making permanent
improvements to our operations that will enhance our long-term
competitive position, and I am confident that we will be well
positioned when market conditions improve." Second Quarter 2009
Performance Sales for the quarter ended June 26, 2009 were $269.9
million, a 13.3% decrease compared to sales of $311.4 million in
the comparable 2008 period. Average organic daily sales decreased
14.7% for the quarter. Interline's facilities maintenance
end-market, which comprised 74% of sales, declined 7.8% during the
second quarter on an average daily sales basis, and declined 9.9%
on an average organic daily sales basis. The professional
contractor end-market, which comprised 16% of sales, declined 28.4%
in the quarter and the specialty distributor end-market, which
comprised 10% of sales, declined 20.6% for the quarter. "Overall,
the sales environment remained at levels consistent with what we
experienced during the first quarter. Our revenues were impacted by
continuing weakness in the housing sector and increasing softness
in the apartment market. Despite these headwinds, certain
maintenance, repair, and operations products, particularly our
janitorial and sanitation offering, as well as our new
institutional MRO offering, have held up relatively well. We
continue to focus our sales channels on these products and
end-markets. As residential and remodeling activity resumes to more
normalized levels, we look forward to significant performance
improvements across a number of our end-markets," said Mr. Grebe.
Gross profit decreased $17.5 million, or 15.1%, to $98.3 million
for the second quarter of 2009. As a percentage of sales, gross
profit was 36.4% compared to 37.2% for the second quarter of 2008.
SG&A expenses for the quarter were $78.9 million, down $9.7
million or 10.9% from the same period last year. SG&A expenses
for the quarter represented 29.2% of sales compared to 28.4% in the
second quarter of 2008. SG&A expenses included $2.1 million of
expenses related to the planned distribution network
consolidations. As a result, second quarter 2009 operating income
of $15.0 million, or 5.6% of sales, decreased 35.0% compared to
$23.1 million, or 7.4% of sales, in the second quarter of 2008. YTD
2009 Performance "The team has made great progress this year
towards our goal of improving our distribution network and supply
chain efficiency," commented Kenneth D. Sweder, Interline's Chief
Operating Officer. "Since the start of 2009, we have closed 18
centers and remain focused on additional network improvements to
drive higher profitability and enhance our long-term market
position and competitiveness." Sales for the six months ended June
26, 2009 were $526.7 million, a 12.3% decrease over sales of $600.6
million in the comparable 2008 period. Gross profit decreased $30.9
million, or 13.7%, to $194.9 million for the six months ended June
26, 2008, compared to $225.9 million in the prior year period. As a
percentage of sales, gross profit decreased to 37.0% from 37.6% in
the comparable 2008 period. SG&A expenses for the six months
ended June 26, 2009 were $162.8 million, or 30.9% of sales,
compared to $173.6 million, or 28.9% of sales, for the six months
ended June 27, 2008. SG&A expenses in 2009 included $4.5
million related to our previously announced reduction in force and
planned distribution network consolidations; a $3.0 million charge
for bad debt resulting from a customer seeking Chapter 11
bankruptcy protection; and a $0.7 million charge associated with
the adoption of FAS 141R - a new accounting standard on business
combinations. Operating income was $23.1 million, or 4.4% of sales,
for the six months ended June 26, 2009 compared to $44.3 million,
or 7.4% of sales, for the six months ended June 27, 2008,
representing a decrease of 47.9%. Earnings per diluted share were
$0.29 for the six months ended June 26, 2009, a decrease of 52%
over earnings per diluted share of $0.61 for the six months ended
June 27, 2008. Cash flow from operating activities for the six
months ended June 26, 2009 was $72.3 million compared to $27.2
million for the six months ended June 27, 2008. During the six
months ended June 26, 2009, the Company repaid $26.2 million of
term debt and used $34.2 million to repurchase and retire $36.4
million principal amount of 8 1/8% senior subordinated notes,
generating a $0.03 per diluted share gain on the early
extinguishment of debt. Business Outlook Mr. Grebe stated, "We do
not expect the third quarter sales environment to be significantly
different than the first half of the year. However, based on our
cash flow generation year-to-date, we now expect free cash flow for
the year of at least $70 million. Additionally, we are pushing
ahead to drive improvements in our Company from top to bottom. We
are strategically aligning our sales efforts, streamlining our
distribution network, executing against our cost and efficiency
actions, more efficiently managing our working capital, reducing
debt, and generating solid cash flow. These initiatives will ensure
we continue to progress towards our long-term vision, and I am
confident we are positioned well to deliver improving value to our
shareholders over the long term." Conference Call Interline Brands
will host a conference call on July 31, 2009 at 9:00 a.m. Eastern
Daylight Time. Interested parties may listen to the call toll free
by dialing 1-800-427-0638 or 1-706-634-1170. A digital recording
will be available for replay two hours after the completion of the
conference call by calling 1-800-642-1687 or 1-706-645-9291 and
referencing Conference I.D. Number 20865099. This recording will
expire on August 14, 2009. About Interline Interline Brands, Inc.
is a leading national distributor and direct marketer with
headquarters in Jacksonville, Florida. Interline provides
maintenance, repair and operations products to a diversified
customer base made up of professional contractors, facilities
maintenance professionals, and specialty distributors primarily
throughout the United States, Canada, the Caribbean and Central
America. Non-GAAP Financial Information This press release contains
financial information determined by methods other than in
accordance with generally accepted accounting principles ("GAAP").
Interline's management uses non-GAAP measures in its analysis of
the Company's performance. Investors are encouraged to review the
reconciliation of non-GAAP financial measures to the comparable
GAAP results available in the accompanying tables. Safe Harbor
Statement under the Private Securities Litigation Reform Act of
1995 The statements contained in this release which are not
historical facts are forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from those set forth in, or implied by, forward-looking
statements. The Company has tried, whenever possible, to identify
these forward-looking statements by using words such as "projects,"
"anticipates," "believes," "estimates," "expects," "plans,"
"intends," and similar expressions. Similarly, statements herein
that describe the Company's business strategy, outlook, objectives,
plans, intentions or goals are also forward-looking statements. The
risks and uncertainties involving forward-looking statements
include, for example, economic slowdowns, general market
conditions, credit market contractions, consumer spending and debt
levels, adverse changes in trends in the home improvement and
remodeling and home building markets, the failure to realize
expected benefits from acquisitions, material facilities systems
disruptions and shutdowns, the failure to locate, acquire and
integrate acquisition candidates, commodity price risk, foreign
currency exchange risk, interest rate risk, the dependence on key
employees and other risks described in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 27, 2009
and in the Company's Annual Report on Form 10-K for the fiscal year
ended December 26, 2008. These statements reflect the Company's
current beliefs and are based upon information currently available
to it. Be advised that developments subsequent to this release are
likely to cause these statements to become outdated with the
passage of time. The Company does not currently intend, however, to
update the information provided today prior to its next earnings
release. CONTACT: Tom Tossavainen PHONE: 904-421-1441 INTERLINE
BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF
JUNE 26, 2009 AND DECEMBER 26, 2008 (in thousands, except share and
per share data) June 26, December 26, 2009 2008 -----------
------------ ASSETS Current Assets: Cash and cash equivalents
$69,374 $62,724 Accounts receivable - trade (net of allowance for
doubtful accounts of $12,703 and $12,140) 137,934 139,522 Inventory
198,476 211,200 Income tax receivable - 1,452 Prepaid expenses and
other current assets 20,461 22,884 Deferred income taxes 19,564
19,010 ----------- ------------ Total current assets 445,809
456,792 Property and equipment, net 48,085 46,033 Goodwill 318,229
317,117 Other intangible assets, net 128,604 132,787 Other assets
9,637 10,119 ----------- ------------ Total assets $950,364
$962,848 =========== ============ LIABILITIES AND SHAREHOLDERS'
EQUITY Current Liabilities: Accounts payable $95,701 $68,255
Accrued expenses and other current liabilities 40,337 31,394
Accrued interest 388 1,072 Income tax payable 506 - Current portion
of long-term debt 1,963 1,625 Capital lease - current 253 239
----------- ------------ Total current liabilities 139,148 102,585
Long-Term Liabilities: Deferred income taxes 39,645 37,210
Long-term debt, net of current portion 339,015 401,765 Capital
lease - long term 96 226 Other liabilities 842 989 -----------
------------ Total liabilities 518,746 542,775 Commitments and
contingencies Senior preferred stock; $0.01 par value, 20,000,000
shares authorized; no shares outstanding as of June 26, 2009 and
December 26, 2008 - - ----------- ------------ Shareholders'
Equity: Common stock; $0.01 par value, 100,000,000 authorized;
32,563,211 issued and 32,451,797 outstanding as of June 26, 2009
and 32,561,360 issued and 32,449,946 outstanding as of December 26,
2008 326 326 Additional paid-in capital 573,823 571,868 Accumulated
deficit (141,489) (150,833) Accumulated other comprehensive income
941 695 Treasury stock, at cost, 111,414 shares as of June 26, 2009
and December 26, 2008 (1,983) (1,983) ----------- ------------
Total shareholders' equity 431,618 420,073 ----------- ------------
Total liabilities and shareholders' equity $950,364 $962,848
=========== ============ INTERLINE BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS THREE AND SIX MONTHS ENDED JUNE
26, 2009 AND JUNE 27, 2008 (in thousands, except share and per
share data) Three Months Ended Six Months Ended
----------------------- ----------------------- June 26, June 27,
June 26, June 27, 2009 2008 2009 2008 ----------- -----------
----------- ----------- Net sales $269,920 $311,429 $526,713
$600,575 Cost of sales 171,605 195,629 331,802 374,725 -----------
----------- ----------- ----------- Gross profit 98,315 115,800
194,911 225,850 Operating Expenses: Selling, general and
administrative expenses 78,898 88,585 162,818 173,598 Depreciation
and amortization 4,392 4,102 9,026 7,981 ----------- -----------
----------- ----------- Total operating expense 83,290 92,687
171,844 181,579 ----------- ----------- ----------- -----------
Operating income 15,025 23,113 23,067 44,271 (Loss) Gain on
extinguishment of debt, net (177) - 1,543 - Interest expense
(4,717) (7,004) (10,096) (14,746) Interest and other income 440 708
730 1,403 ----------- ----------- ----------- ----------- Income
before income taxes 10,571 16,817 15,244 30,928 Income tax
provision 4,149 5,642 5,900 11,079 ----------- -----------
----------- ----------- Net income $6,422 $11,175 $9,344 $19,849
=========== =========== =========== =========== Earnings Per Share:
Basic $0.20 $0.35 $0.29 $0.61 =========== =========== ===========
=========== Diluted $0.20 $0.34 $0.29 $0.61 =========== ===========
=========== =========== Weighted-Average Shares Outstanding: Basic
32,441,081 32,369,031 32,440,035 32,348,109 =========== ===========
=========== =========== Diluted 32,856,916 32,657,047 32,704,682
32,650,806 =========== =========== =========== ===========
INTERLINE BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS SIX MONTHS ENDED JUNE 26, 2009 AND JUNE 27, 2008 (in
thousands) Six Months Ended -------------------------------- June
26, June 27, 2009 2008 ------------ ------------ Cash Flows from
Operating Activities: Net income $9,344 $19,849 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 9,322 8,238 Gain on extinguishment of
debt, net (1,543) - Amortization of debt issuance costs 562 565
Amortization of discount on 8 1/8% senior subordinated notes 72 72
Write-off of deferred acquisition costs 672 - Share-based
compensation 1,955 2,353 Excess tax benefits from share-based
compensation - (147) Deferred income taxes 2,340 (1,003) Provision
for doubtful accounts 6,324 2,255 Loss on disposal of property and
equipment 12 19 Changes in assets and liabilities which provided
(used) cash: Accounts receivable - trade (4,673) (15,480) Inventory
12,830 (19,533) Prepaid expenses and other current assets 2,747
1,663 Other assets (190) 1,573 Accounts payable 27,428 31,071
Accrued expenses and other current liabilities 4,002 (3,758)
Accrued interest (684) 7 Income taxes 1,957 832 Other liabilities
(141) (1,402) ------------ ------------ Net cash provided by
operating activities 72,336 27,174 Cash Flows from Investing
Activities: Purchase of property and equipment, net (5,688)
(13,540) Purchase of short-term investments - (35,531) Proceeds
from sales and maturities of short-term investments - 80,121
Purchase of businesses, net of cash acquired (381) (536)
------------ ------------ Net cash (used in) provided by investing
activities (6,069) 30,514 Cash Flows from Financing Activities:
Increase (Decrease) in purchase card payable, net 726 (643)
Repayment of term debt (26,162) (2,150) Repayment of 8 1/8% senior
subordinated notes (34,157) - Payments on capital lease obligations
(116) (108) Proceeds from stock options exercised - 586 Excess tax
benefits from share-based compensation - 147 Treasury stock
acquired to satisfy minimum statutory tax withholding requirements
- (772) ------------ ------------ Net cash used in financing
activities (59,709) (2,940) Effect of exchange rate changes on cash
and cash equivalents 92 (40) ------------ ------------ Net increase
in cash and cash equivalents 6,650 54,708 Cash and cash equivalents
at beginning of period 62,724 4,975 ------------ ------------ Cash
and cash equivalents at end of period $69,374 $59,683 ============
============ Supplemental Disclosure of Cash Flow Information: Cash
paid during the period for: Interest $10,196 $14,431 ============
============ Income taxes, net of refunds $1,749 $12,315
============ ============ Schedule of Non-Cash Investing
Activities: Property acquired through lease incentives $3,009 $-
============ ============ Adjustments to liabilities assumed and
goodwill on businesses acquired $732 $- ============ ============
INTERLINE BRANDS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP
INFORMATION THREE AND SIX MONTHS ENDED JUNE 26, 2009 AND JUNE 27,
2008 (in thousands) Free Cash Flow Three Months Ended Six Month
Ended ------------------ --------------- June 26, June 27, June 26,
June 27, 2009 2008 2009 2008 ------ ------ ------ ------ Net cash
from operating activities $9,761 $(1,937) $72,336 $27,174 Less
capital expenditures (3,295) (7,040) (5,688) (13,540) ------ ------
------ ------- Free cash flow $6,466 $(8,977) $66,648 $13,634
====== ======= ======= ======= We define free cash flow as net cash
provided by operating activities, as defined under GAAP, less
capital expenditures. We believe that free cash flow is an
important measure of our liquidity and therefore our ability to
reduce debt and make strategic investments after considering the
capital expenditures necessary to operate the business. We use free
cash flow in the evaluation of the Company's business performance.
A limitation of this measure, however, is that it does not reflect
payments made in connection with investments and acquisitions,
which reduce liquidity. To compensate for this limitation,
management evaluates its investments and acquisitions through other
return on capital measures. Daily Sales Calculations Three Months
Ended Six Months Ended ------------------ ---------------- June 26,
June 27, % June 26, June 27, % 2009 2008 Variance 2009 2008
Variance ------ ------ -------- -------- -------- -------- Net
sales $269,920 $311,429 -13.3% $526,713 $600,575 -12.3% Less
acquisitions: (4,420) - (9,340) - -------- -------- --------
-------- Organic sales $265,500 $311,429 -14.7% $517,373 $600,575
-13.9% ======== ======== ===== ======== ======== ===== Daily sales:
Ship days 64 64 128 128 Average daily sales(1) $4,218 $4,866 -13.3%
$4,115 $4,692 -12.3% ======== ======== ===== ======== ========
===== Average organic daily sales(2) $4,148 $4,866 -14.7% $4,042
$4,692 -13.9% ======== ======== ===== ======== ======== ===== (1)
Average daily sales are defined as sales for a period of time
divided by the number of shipping days in that period of time. (2)
Average organic daily sales are defined as sales for a period of
time divided by the number of shipping days in that period of time
excluding any sales from acquisitions made subsequent to the
beginning of the prior year period. Average organic daily sales is
presented herein because we believe it to be relevant and useful
information to our investors since it is used by management to
evaluate the operating performance of our business, as adjusted to
exclude the impact of acquisitions, and compare our organic
operating performance with that of our competitors. However,
average organic daily sales is not a measure of financial
performance under GAAP and it should be considered in addition to,
but not as a substitute for, other measures of financial
performance reported in accordance with GAAP, such as net sales.
Management utilizes average organic daily sales as an operating
performance measure in conjunction with GAAP measures such as net
sales. Adjusted EBITDA Three Months Ended Six Months Ended
------------------ ---------------- June 26, June 27, June 26, June
27, 2009 2008 2009 2008 ---- ---- ---- ---- Adjusted EBITDA: Net
income (GAAP) $6,422 $11,175 $9,344 $19,849 Interest expense 4,717
7,004 10,096 14,746 Interest income (71) (353) (75) (888) Loss
(Gain) on extinguishment of debt 177 - (1,543) - Income tax
provision 4,149 5,642 5,900 11,079 Depreciation and amortization
4,541 4,245 9,322 8,238 ------- ------- ------- ------- Adjusted
EBITDA $19,935 $27,713 $33,044 $53,024 ======= ======= =======
======= Adjusted EBITDA differs from Consolidated EBITDA per our
credit facility agreement for purposes of determining our net
leverage ratio. We define Adjusted EBITDA as net income plus
interest expense (income), net, (gain) loss on extinguishment of
debt, provision for income taxes and depreciation and amortization.
Adjusted EBITDA is presented herein because we believe it to be
relevant and useful information to our investors since it is
consistently used by our management to evaluate the operating
performance of our business and to compare our operating
performance with that of our competitors. Management also uses
Adjusted EBITDA for planning purposes, including the preparation of
annual operating budgets, and to determine appropriate levels of
operating and capital investments. Adjusted EBITDA excludes certain
items, which we believe are not indicative of our core operating
results. We therefore utilize Adjusted EBITDA as a useful
alternative to net income as an indicator of our operating
performance compared to the Company's plan. However, Adjusted
EBITDA is not a measure of financial performance under GAAP.
Accordingly, Adjusted EBITDA should not be used in isolation or as
a substitute for other measures of financial performance reported
in accordance with GAAP, such as gross margin, operating income,
net income, cash flows from operating, investing and financing
activities or other income or cash flow statement data prepared in
accordance with GAAP. While we believe that some of the items
excluded from Adjusted EBITDA are not indicative of our core
operating results, these items do impact our income statement, and
management therefore utilizes Adjusted EBITDA as an operating
performance measure in conjunction with GAAP measures, such as
gross margin, operating income, net income, cash flows from
operating, investing and financing activities or other income or
cash flow statement data prepared in accordance with GAAP.
End-Market Classification Adjustment During the first quarter of
2009, we reported end-market sales for the professional contractor
and specialty distributor end markets using a slightly different
customer classification than used historically. This change
impacted the first quarter of 2009 and not prior year periods. The
impact was that $2.0 million of sales was moved from our
professional contractor end-market to our specialty distributor
end-market. Excluding this change in classification, professional
contractor end-market sales declined 23.6% and specialty
distributor end-market sales declined 14.2% during the first
quarter of 2009. For the remainder of 2009, including the second
quarter of 2009, we will report using our historical classification
for comparability purposes. DATASOURCE: Interline Brands, Inc.
CONTACT: Tom Tossavainen, for Interline Brands, Inc.,
+1-904-421-1441 Web Site: http://www.interlinebrands.com/
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