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 First
Quarter 2018 results.
For the three months ended March 31, 2018, the Company reported
Net Sales of $29.9 million and a Net Loss of $(0.3) million or
$(0.03) per share compared to Net Sales of $28.0 million and Net
Income of $0.2 million or $0.03 per share for the three months
ended March 31, 2017.
First Quarter 2018
Highlights
- $29.9 million in Net Sales represented
a year-over-year increase of 6.8% over $28.0 million in the first
quarter of 2017.
- Machine sales revenues to North
American distribution grew 31% compared to first quarter 2017.
Approximately 50% of this growth was from dealers signed before
December 31, 2017.
- Total machine sales revenues increased
year-over-year by 13.5% to $21.2 million.
- Adjusting for the costs of relocating
the distribution center, adjusted first quarter 2018 net income* of
$0.2 million or $0.02 per share, compared to first quarter 2017
adjusted pro forma C Corporation net loss of $(0.1) million or
$(0.02) per share.
- EBITDA of $1.3 million or 4.2% of sales
compared to $2.3 million or 8.3% of sales for the first quarter of
2017.
- Adjusted EBITDA* of $2.0 million or
6.7% of sales compared to first quarter 2017 pro forma adjusted
EBITDA of $2.0 million or 7.1% of sales.
- Completed relocation of aftermarket
parts distribution center to Grand Rapids, MN.
- Added 26 additional 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,
“Our focus on rebuilding the North American ASV dealership network
resulted in 31% year-over-year growth in North American ASV machine
sales, and we anticipate continued strength in North America
throughout the year. Australia’s record Q1 performance last year
did not repeat, however, we anticipate this region to generate
healthy sales and growth in 2018. We expect bottom line improvement
throughout the year through higher net sales, product mix
improvement, and the cost benefits from higher plant utilization,
and from engineering and manufacturing efficiencies. Although the
possible effect on demand of recently implemented surcharge pricing
to offset higher steel and aluminum costs is a potential headwind,
our products continue to see a healthy level of demand, and our
dealer network continues to grow. We are working hard to achieve
gradual margin expansion and higher levels of EBITDA margin and
profitability as we scale and grow the business.”
Missi How, Chief Financial Officer, commented, “Adjusting for
relocation costs that were incurred in the quarter, we were able to
achieve a positive adjusted net income of 2 cents per share versus
a loss last year. While this is satisfactory, we understand there
is more work to do. We believe that cost and efficiency savings
from relocating the parts distribution facility will start in the
second quarter and we have already achieved the projected $200,000
quarterly reduction in our interest expense from our recent debt
restructuring, which will continue throughout the year. Our current
ratio of 2.1 remains healthy, our leverage ratio at 2.6x trailing
adjusted EBITDA is well within target range, and we will continue
to pay down debt with our cash flow during the year.”
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 1-888-394-8218
if calling within the United States or 323-701-0225 if calling
internationally. A replay will be available until 11:59 PM ET May
15, 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 8796131 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
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 Registration Statement on Form S-1 (SEC File No.
333-216912), which was filed in connection with our initial public
offering and 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 Registration Statement on Form S-1. 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 Ended March
31, 2018 2017 Unaudited
Unaudited Net sales $ 29,870 $ 28,010 Cost of
goods sold 25,928 23,650 Gross
profit 3,942 4,360 Research and development costs 471 537
Selling, general and administrative expense 3,407
2,713 Operating income 64 1,110 Other
income (expense) - Interest expense (458 ) (878 ) Other income
(expense) 6 - Total other
expense (452 ) (878 ) (Loss) income before
taxes (388 ) 232 Income tax benefit (81 ) —
Net (loss) income $ (307 ) $ 232
(Loss) earnings per share: Basic net (loss) income per share $
(0.03 ) $ 0.03 Diluted net (loss) income per share $ (0.03 ) $ 0.03
Weighted average common shares outstanding: Basic weighted
average common shares outstanding 9,816 8,000 Diluted weighted
average common shares outstanding 9,816 8,000 Pro forma (C
corporation basis): Pro forma tax expense N/A $ 84 Pro forma net
income N/A $ 148 Pro forma earnings per share: Basic net
income per share N/A $ 0.02 Diluted net income per share N/A $ 0.02
ASV Holdings, Inc. Balance Sheets
(In thousands, except par value)
March
31,
December 31, 2018 2017
Unaudited Unaudited ASSETS CURRENT
ASSETS Cash $ 4 $ 3 Trade receivables, net 17,044 18,276
Receivables from affiliates 33 76 Inventory, net 28,029 26,691
Prepaid income tax 997 896 Prepaid expenses and other 325
591 Total current assets 46,432 46,533
NON-CURRENT
ASSETS Property, plant and equipment, net 13,613 13,797
Intangible assets, net 22,640 23,277 Goodwill 30,579 30,579
Deferred financing costs - revolving loan facility 280 298 Other
long-term assets 13 13 Deferred tax asset 624 624
Total assets $ 114,181 $ 115,121
LIABILITIES AND
STOCKHOLDERS' EQUITY Note payable - current portion $ 2,000 $
2,000 Trade accounts payable 14,600 15,174 Payables to affiliates
1,200 1,063 Accrued compensation and benefits 932 1,483 Accrued
warranties 1,666 1,869 Accrued product liability- short term 553
778 Accrued other 1,128 1,039 Total current
liabilities 22,079 23,406
NON-CURRENT LIABILITIES
Revolving loan facility 13,594 12,511 Note payable - long term, net
12,181 12,664 Other long-term liabilities 689 739
Total liabilities 48,543 49,320
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 5,000 authorized, none
outstanding at March 31, 2018 and December 31, 2017, respectively —
— Common stock, $0.001 par value, 50,000 authorized, 9,818 and
9,806 shares issued and outstanding at March 31, 2018 and December
31, 2017, respectively 10 10 Additional paid-in capital 65,578
65,434 Retained earnings 50 357 Total Stockholders'
Equity 65,638 65,801
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 114,181 $ 115,121
ASV
Holdings, Inc. Statements of Cash Flows (In
thousands) For the Three Months Ended
March 31, 2018 2017
Unaudited Unaudited OPERATING ACTIVITIES Net
(loss) income $ (307 ) $ 232
Adjustments to reconcile to net (loss)
income to net cash provided by operating activities:
Depreciation 547 584 Amortization 637 637 Share-based compensation
149 46 Loss on sale of fixed assets — 38 Amortization of deferred
finance cost 35 56 Bad debt expense 37 1 Inventory reserves 93 —
Changes in operating assets and liabilities Trade receivables 1,195
(1,394 ) Net trade receivables/payables from affiliates 180 291
Inventory (1,464 ) 2,348 Prepaid expenses 165 (381 ) Trade accounts
payable (574 ) (430 ) Accrued expenses (844 ) (1,316 ) Other
long-term liabilities (50 ) 420 Net
cash (used in) provided by operating activities (201 )
1,132
INVESTING ACTIVITIES Decrease in
restricted cash — 536 Purchase of property and equipment
(330 ) (38 ) Net cash (used in) provided by investing
activities (330 ) 498
FINANCING
ACTIVITIES Principal payments on term debt (500 ) (538 ) Debt
issuance costs incurred — (9 ) Shares repurchased for income tax
withholding on share-based compensation (51 ) — Net borrowings
(payments) on revolving credit facilities 1,083
(1,646 ) Net cash provided by (used in) financing
activities 532 (2,193 )
NET CHANGE
IN CASH 1 (563 )
Cash at
beginning of period 3 572
Cash at end of period $ 4 $ 9
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 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 March 31, 2018
2017 Net (loss) income ($0.3 ) $ 0.2
Interest expense 0.5 0.9 Depreciation &
amortization 1.2 1.2 Income tax benefit (0.1 )
-
EBITDA (1) $ 1.3 $ 2.3
% of Sales 4.2 % 8.3 %
EBITDA $ 1.3 $ 2.3
Costs of ConExpo trade show (2) - 0.1
Revision to accrual for legal proceeding
expenses less legal costs (3)
- (0.2 ) Stock compensation and transaction related
compensation costs (4) 0.1 0.1 Aftermarket parts
distribution center relocation (5) 0.6 -
Adjusted EBITDA (6)
$ 2.0 $ 2.4
Adjusted EBITDA as % of net revenues 6.8 % 8.5 %
Pro-forma adjustment for public company costs - (0.4 )
Pro-forma Adjusted EBITDA* (7) $ 2.0 $ 2.0 % of Sales 6.7 %
7.1 %
The Company converted to a C corporation in May 2017, so the
three months ended March 31, 2017 include a pro forma adjustment
for approximately $0.4 million of public company costs not included
in EBITDA.
(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) Costs associated with the 2017 ConExpo trade show. The
ConExpo show, which is held every three years, was held in Las
Vegas in March of this year. This show is an international
gathering place for the construction industries. It is estimated
that 130,000 professionals from around the world attended the
show.
(3) Revision to accrual for legal proceeding expenses is
included in Adjusted EBITDA since it is an adjustment in the period
to an accrual established at the formation of the Joint Venture and
is not representative of the operating activity in the reported
period. This adjustment was due to the settlement of a legal claim
lower than the accrued cost.
(4) Stock compensation and IPO transaction related compensation
costs.
(5) Aftermarket Parts Distribution Center relocation costs are
restructuring costs related to the movement of the ASV aftermarket
parts operation from Southaven Memphis to a facility adjacent to
the Company principal premises in Grand Rapids MN, which commenced
in quarter four of 2017 and was completed in quarter one of
2018.
(6) 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.
(7) 2017 Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA
less public company costs.
Reconciliation of GAAP Net Income to Adjusted Net Income
(in millions except shares and EPS)
For the Quarter Ended March 31, 2018
2017 Net (loss) income as reported ($0.3 ) $ 0.2
Revision to legal costs accrual - - Aftermarket parts
distribution center relocation- net of tax effect 0.5 - Loss
on debt extinguishment - - Pro-forma adjustment for public
company costs - (0.4 ) Pro-forma income
before tax 0.2 (0.2 ) Pro forma (C corporation basis) tax $ 0.0
$ 0.1
Adjusted net income (loss) $
0.2 ($0.1 ) Weighted average diluted
shares outstanding 9,816,000 8,000,000 Basic and Diluted (loss)
earnings per share as reported ($0.03 ) $ 0.03 Total EPS Effect $
0.05 ($0.05 ) Adjusted (pro forma C Corporation) earnings (loss)
per share $ 0.02 ($0.02 )
*Pro forma adjustments for public company costs and (C
corporation basis) tax expense: The company converted from a LLC to
a corporation on May 11, 2017. The pro forma adjustments reflect
the actual public company costs incurred in 2018 as if the company
had been a corporation for the same period in 2017, and a pro forma
(C corporation basis) tax charge on 2017 income at a tax rate of
36%.
Current Ratio
March 31, 2018 December 31, 2017
Current Assets $46,432 $46,533 Current
Liabilities $22,079 $23,406
Current
Ratio 2.1 2.0
Days Sales Outstanding, (DSO), is calculated by taking
the sum of net trade and related party receivables divided by
annualized sales per day (sales for the quarter, multiplied by 4,
and the sum divided by 365).
Days Payables Outstanding, (DPO), is calculated by taking
the sum of net trade and related party payables divided by
annualized cost of sales per day (cost of goods sold for the
quarter, multiplied by 4, and the sum divided by 365).
Debt net of deferred financing costs is calculated using
the Condensed Consolidated Balance Sheet amounts for 1) deferred
financing costs – revolving loan facility, 2) note payable – short
term, 3) revolving loan facility and 4) note payable – long term
net. Debt to Adjusted EBITDA ratio is calculated by dividing total
debt at the balance sheet date by trailing twelve month Adjusted
EBITDA.
March 31, 2018 December 31, 2017
Note payable – short term 2,000 2,000
Deferred financing costs – revolving loan facility
(280) (298) Revolving loan facility
13,594 12,511 Note payable – long term -net
12,181 12,664
Debt
$27,495
$26,877
Inventory turns are calculated by multiplying cost of
goods sold for the referenced three-month period by 4 and dividing
that figure by inventory as at the referenced period.
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).
March 31, 2018 December 31, 2017
Accounts receivable 17,077 18,352
Inventory 28,029 26,691 Accounts
payable (15,800) (16,237)
Net
working capital $29,306
$28,806 Last quarters annualized
sales (LQS) 119,480 121,820
Net
working capital % of LQS
24.5% 23.6%
Working capital is calculated as total current assets
less total current liabilities.
March 31, 2018 December 31, 2017 Total Current
Assets $46,432 $46,533 Less: Total Current Liabilities 22,079
23,406
Working Capital $24,353 $23,127
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version on businesswire.com: https://www.businesswire.com/news/home/20180508005637/en/
ASV Holdings, Inc.Andrew Rooke, 218-327-5389Chairman and
Chief Executive Officerandrew.rooke@asvi.comorInvestor
Relations:Darrow Associates Inc.Peter Seltzberg,
516-419-9915Managing Directorpseltzberg@darrowir.com
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