Files SEC Form 10-K Within Reporting
Deadline as Follow up to Preliminary Results Announced March 14,
2019
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
Fourth Quarter and Full Year 2018 results. For the three months
ended December 31, 2018, the Company reported Net Sales of $33.1
million and a Net Loss of $(32.7) million or $(3.33) per share
compared to Net Sales of $30.5 million and a Net Loss of $(0.8)
million or $(0.08) per share for the three months ended December
31, 2017. For the full year 2018, the Company reported Net Sales of
$127.6 million and a Net Loss of $(32.1) million or $(3.27) per
share compared to Net Sales of $123.3 million and Net Income of
$1.7 million or $0.19 per share for the full year 2017. The 2018
full year and fourth quarter GAAP net losses were primarily the
result of a $30.6 million impairment charge to goodwill.
Fourth Quarter 2018 and Comparison to
Fourth Quarter 2017
- $33.1 million in Net Sales represented
8.6% year-over-year growth from $30.5 million, driven by 24%
“same-store” dealer sales growth in North America.
- 8th consecutive quarter of
year-over-year quarterly machine revenue growth with 31%
year-over-year increase in North American machine sales and 17.2%
in total machine sales, to $24.6 million.
- Gross Margin of 8.6% compared to 13.6%,
was adversely impacted 340 basis points by increased material costs
net of price recovery, and 200 basis points from an increase in our
reserve for slow moving inventory.
- Non-cash goodwill impairment of $(30.6)
million or $(3.11) per share impact to net income.
- Adjusted net income of $0.1 million or
$0.01 per share compared to Adjusted net income of $0.5 million or
$0.05 per share.
- EBITDA loss of $(30.3) million or
(91.5) % of sales compared to $1.7 million or 5.6% of sales for the
fourth quarter of 2017.
- Adjusted EBITDA* of $1.6 million or
4.7% of sales compared to fourth quarter 2017 Adjusted EBITDA of
$2.2 million or 7.4% of sales.
- $30.2 million backlog of orders at
December 31, 2018, up $17.5 million or 137.8% from December 31,
2017.
Full Year 2018 and Comparison to Full
Year 2017
- $127.6 million in Net Sales represented
3.5% year-over-year growth from $123.3 million driven by 16%
“same-store” dealer sales growth in North America.
- 2018 gross margin of 11.9%, compared to
15.1%, was adversely impacted 190 basis points by increased
material costs, net of price recovery.
- Non-cash goodwill impairment of $(30.6)
million or $(3.11) per share impact to net income.
- Adjusted net income of $1.2 million or
$0.12 per share compared to Adjusted net income of $2.5 million or
$0.27 per share.
- EBITDA loss of $(24.7) million or
(19.3) % of sales compared to $9.9 million or 8.1% of sales for
full year 2017.
- Adjusted EBITDA* of $8.2 million or
6.4% of sales compared to 2017 Adjusted Pro-forma EBITDA of $10.1
million or 8.2% of sales.
*The Glossary at the end of this press release contains further
details regarding reconciliation of GAAP items and Adjusted
items.
Conference Call:
Management will host a conference call at 8:30 AM Eastern Time
on April 2, 2019 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
1-323-794-2093 if calling internationally. A replay will be
available until 11:59 PM ET April 9, 2019 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
6897490 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. Its 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
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 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 end of this
release.
ASV Holdings, Inc. Condensed Statements of
Operations (In thousands, except par value and per share
data) For the Quarter Ended December
31, For the Year Ended December 31, 2018
2017 2018 2017 Net sales $
33,076 $ 30,455 $ 127,580 $ 123,340 Cost of goods sold
30,243 26,310 112,348
104,698 Gross profit 2,833 4,145 15,232 18,642 Research and
development costs 489 508 1,896 2,070 Selling, general and
administrative expense 3,249 3,109 12,252 11,450 Loss on impairment
of goodwill 30,579 - 30,579
- Operating (loss) income (31,484 ) 528
(29,495 ) 5,122 Other income (expense) Interest expense (533 ) (655
) (1,946 ) (3,034 ) Loss on debt extinguishment - (906 ) - (989 )
Other income 1 2 9
2 Total other expense (532 ) (1,559 )
(1,937 ) (4,021 ) (Loss) income before taxes (32,016 )
(1,031 ) (31,432 ) 1,101 Income tax expense (benefit) 725
(236 ) 698 (608 )
Net (loss)
income $ (32,741 ) $ (795 ) $ (32,130 ) $ 1,709 Earnings
per share: Basic net (loss) income per share $ (3.33 ) $ (0.08 ) $
(3.27 ) $ 0.19 Diluted net (loss) income per share $ (3.33 ) $
(0.08 ) $ (3.27 ) $ 0.19 Weighted average common shares
outstanding: Basic weighted average common shares outstanding 9,837
9,801 9,828 9,125 Diluted weighted average common shares
outstanding 9,837 9,801 9,828 9,125
ASV Holdings,
Inc. Balance Sheets (In thousands, except par
value) December 31, 2018
2017 ASSETS CURRENT ASSETS Cash $ 2 $ 3
Accounts receivable, net 18,462 18,276 Receivables from affiliates
7 76 Income tax receivable 840 — Inventory, net 34,055 26,691
Prepaid income tax 43 896 Prepaid expenses and other 593
591 Total current assets 54,002 46,533 Property,
plant and equipment, net 12,662 13,797 Intangible assets, net
20,730 23,277 Goodwill — 30,579 Other long-term assets 237 311
Deferred tax asset — 624 Total assets $ 87,631
$ 115,121
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES Note payable - current portion $ 2,991 $
2,000 Trade accounts payable 18,834 15,174 Payables to affiliates
480 1,063 Accrued compensation and benefits 1,394 1,483 Accrued
warranties 1,584 1,869 Accrued product liability — 778 Accrued
other current liabilities 1,405 1,039 Total
current liabilities 26,688 23,406 Revolving loan facility 16,026
12,511 Note payable - long term, net 10,159 12,664 Other long-term
liabilities 727 739 Total liabilities 53,600
49,320 Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 5,000
authorized, none outstanding at December 31, 2018 and December 31,
2017, respectively
— —
Common stock, $0.001 par value, 50,000
authorized, 9,851 and 9,806 shares issued and outstanding at
December 31, 2018 and December 31, 2017, respectively
10 10 Additional paid-in capital 65,794 65,434 (Accumulated
deficit) Retained Earnings (31,773 ) 357 Total
Stockholders' Equity 34,031 65,801
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 87,631 $ 115,121
ASV Holdings, Inc. Statements of Cash
Flows (In thousands) For the Year Ended
December 31, 2018 2017 OPERATING
ACTIVITIES Net (loss) income $ (32,130 ) $ 1,709
Adjustments to reconcile to net (loss)
income to net cash provided by operating activities:
Depreciation 2,303 2,263 Amortization 2,547 2,547 Share-based
compensation 498 353 Deferred income tax (benefit) 624 (624 ) Loss
on disposal of fixed assets 7 57 Amortization of deferred finance
cost 142 212 Loss on debt extinguishment — 989 Loss on impairment
of goodwill 30,579 —
Prepayments and other fees incurred in
debt extinguishment
— (364 ) Bad debt expense 27 14 Inventory reserves 1,112 544
Changes in operating assets and liabilities Accounts receivable
(213 ) (4,687 ) Net accounts receivable from/payable to affiliates
(514 ) 102 Income tax receivable (840 ) — Other long-term assets —
(13 ) Inventory (8,662 ) 3,494 Prepaid income tax 853 (896 )
Prepaid expenses (2 ) (53 ) Trade accounts payable 3,660 3,198
Accrued expenses (829 ) (1,288 ) Other long-term liabilities
(12 ) (34 ) Net cash (used in) provided by operating
activities (850 ) 7,523
INVESTING
ACTIVITIES Purchase of property and equipment (989 )
(548 ) Net cash (used in) investing activities (989 )
(548 )
FINANCING ACTIVITIES Principal payments on
term debt (2,007 ) (1,075 ) Repayment of existing debt — (28,924 )
Borrowings on new term debt 425 15,000 Debt issuance costs incurred
— (366 ) Shares repurchased for income tax withholding on
share-based compensation (95 ) (25 ) Proceeds from issuance of
common stock, net of offering costs — 10,405 Net proceeds
(payments) on revolving credit facilities 3,515
(3,094 ) Net cash provided by (used in) financing activities
1,838 (8,079 )
NET CHANGE IN CASH
(1 ) (1,104 )
Cash at beginning of period
3 1,107
Cash at end of period $
2 $ 3
Supplemental Information
Cautionary Statement Regarding Non-GAAP Measures
In an effort to provide investors with additional information
regarding the Company’s results, ASV refers to various GAAP (U.S.
generally accepted accounting principles) and non-GAAP financial
measures which management believes provides useful information to
investors. These non-GAAP measures may not be comparable to
similarly titled measures being disclosed by other companies. In
addition, the Company believes that non-GAAP financial measures
should be considered in addition to, and not in lieu of, GAAP
financial measures. ASV believes that this non-GAAP information is
useful to understanding its operating results and the ongoing
performance of its underlying businesses. Management of ASV uses
both GAAP and non-GAAP financial measures to establish internal
budgets and targets and to evaluate the Company’s financial
performance against such budgets and targets.
This release contains references to Adjusted Net (Loss) Income,
“EBITDA” and “Adjusted EBITDA.” Adjusted Net (Loss) Income is
defined as GAAP net income that excludes the gain or loss related
to non-recurring events. Adjusted net income per share or "Adjusted
EPS" is calculated by dividing the Adjusted Net Income (Loss) for
the period by the weighted-average diluted shares outstanding for
the period. 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. We use Adjusted
Net Income (Loss) and Adjusted EPS to evaluate financial
performance, analyze the underlying trends in our business and
establish operational goals and forecasts. We believe that Adjusted
Net Income (Loss) and Adjusted EPS are useful measures because they
permit investors to better understand changes in underlying
operating performance over comparative periods by providing
financial results that are unaffected by non-recurring
events.
However, Adjusted Net Income, Adjusted EPS, 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, Adjusted Net Income, Adjusted EPS, EBITDA and Adjusted
EBITDA may not be comparable to similar measures presented by other
issuers. Investors are cautioned that Adjusted Net Income, Adjusted
EPS, 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 Adjusted Net Income, Adjusted
EPS, 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.
The amounts described below are unaudited, are reported in
millions of U.S. dollars (except per share data and percentages)
and are as of or for the three- and twelve-month periods ended
December 31, 2018 and 2017, unless otherwise indicated.
Reconciliation of GAAP Net Income to Adjusted Net Income
(in millions except shares and EPS)
For the Quarter Ended December 31, For the Year Ended
December 31, 2018 2017 2018
2017 Net (loss) income as reported (32.7 ) (0.8 )
(32.1 ) 1.7 Aftermarket parts distribution center relocation- net
of tax effect (1) - 0.3 0.5 0.3 Revision to legal costs accrual
& product liability settlement (2) 0.1 0.1 0.1 0.1 Consulting
costs associated with M&A (3) 0.1 - 0.1 - Engine supply impact
on production (4) 0.3 - 0.3 - Excess/slow moving inventory reserve
(5) 0.7 - 0.7 - Debt issuance cost written off on debt repayment
from IPO proceeds net of tax (6) - 0.9 - 1.0 Loss on impairment of
goodwill (7) 30.6 - 30.6 - Valuation allowance on deferred tax
assets (8) 1.0 - 1.0 - Pro-forma adjustment for public company
costs net of tax at 26.41% (9) - - - (0.6 )
Adjusted net income 0.1 0.5
1.2 2.5 Weighted average diluted
shares outstanding 9,837,000 9,801,000 9,828,000 9,125,000 Basic
and Diluted (loss) earnings per share as reported ($3.33 ) ($0.08 )
($3.27 ) $0.19 Total EPS Effect $3.34 $0.13 $3.39 $0.08 Adjusted
(pro forma) earnings per share $0.01 $0.05 $0.12 $0.27
(1) Aftermarket Parts Distribution Center
relocation costs are restructuring costs related to the movement of
the ASV aftermarket parts operation from Southaven, Mississippi 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.
(2) Revision to accrual for legal proceeding expenses 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. (3)
Consulting costs associated with M&A relates to legal and
professional costs incurred for merger and acquisition activity
during the year that were expensed since no transaction was
finalized. (4) Engine supply impact on production. The inability of
certain engine suppliers to provide engines resulted in customer
orders for machines not being produced or shipped and delayed until
2019. (5) Excess/slow moving inventory reserve. Change in estimate
for slow moving inventory, principally for aftermarket parts. (6)
Debt issuance cost written off on debt repayment from IPO proceeds
net of tax. (7) Non-cash loss on impairment of goodwill. (8)
Valuation allowance on deferred tax assets. (9) 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 January 1, 2017 to May 17, 2017.
Reconciliation of EBITDA to Adjusted
EBITDA (in millions except percentages)
For the Quarter Ended
December 31, For the Year Ended December 31, 2018
2017 2018 2017 Net (loss) income (32.7
) (0.8 ) (32.1 ) 1.7 Interest expense 0.5 0.6 1.9 3.0 Loss on debt
extinguishment - 0.9 - 1.0 Income Tax Expense (Benefit) 0.7 (0.2 )
0.7 (0.6 ) Depreciation & amortization 1.2 1.2
4.8 4.8
EBITDA (1) (30.3 ) 1.7 (24.7 )
9.9 % of Sales -91.5 % 5.6 % -19.3 % 8.1 %
EBITDA (30.3 ) 1.7 (24.7 ) 9.9 Costs of ConExpo trade show
(2) - - - 0.1 Revision to accrual for legal proceeding expenses
less legal costs (3) 0.1 0.1 0.1 (0.1 ) Consulting costs associated
with M&A (4) 0.1 - 0.1 - Engine supply impact on production (5)
0.3 - 0.3 - Excess/slow moving inventory reserve (6) 0.7 - 0.7 -
Stock compensation and transaction related compensation costs (7)
0.1 0.1 0.5 0.5 Aftermarket parts distribution center relocation
(8) - 0.3 0.6 0.3 Loss on impairment of goodwill (9) 30.6 -
30.6 -
Adjusted EBITDA (10) 1.6 2.2 8.2
10.7
Adjusted EBITDA as % of net revenues 4.7 % 7.4 % 6.4 %
8.7 % Pro-forma adjustment for public company costs - -
- (0.6 ) Pro-forma Adjusted EBITDA* (11)
1.6
2.2 8.2 10.1 % of
Sales
4.7 % 7.4 % 6.4 %
8.2 % (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 of ConExpo trade show. The
ConExpo show is an international gathering held every three years
for the construction industries, which was held in Las Vegas in
March of 2017. 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)
Consulting costs associated with M&A relates to legal and
professional costs incurred for merger and acquisition activity
during the year that were expensed since no transaction was
finalized. (5) Engine supply impact on production. The inability of
certain engine suppliers to provide engines resulted in customer
orders for machines not being produced or shipped and delayed until
2019. (6) Excess/slow moving inventory reserve. Change in estimate
for slow moving inventory, principally for aftermarket parts. (7)
Stock compensation and IPO transaction related compensation costs.
relates to cost of equity grants to employees and directors from
the ASV Equity Plan, and certain compensation and retention costs
paid as part of the company IPO in May 2017. (8) Aftermarket Parts
Distribution Center relocation costs are restructuring costs
related to the movement of the ASV aftermarket parts operation from
Southaven, Mississippi 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. (9) Non-cash
loss on impairment of goodwill (10) 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.
(11) 2017 Pro-forma Adjusted EBITDA is
defined as Adjusted EBITDA less public company costs. The Company
converted to a C corporation in May 2017, so the twelve months
ended December 31, 2017 include a pro-forma adjustment for
approximately $0.6 million of public company costs not included in
EBITDA relating to the period January 1, 2017 to May 17, 2017.
CURRENT
RATIO December 31, 2018
December 31, 2017 Current Assets 54,002
46,533 Current Liabilities 26,688
23,406
Current Ratio 2.0
2.0
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version on businesswire.com: https://www.businesswire.com/news/home/20190329005529/en/
Company ContactASV Holdings,
Inc.Andrew RookeChairman and Chief Executive
Officer218-327-5389andrew.rooke@asvi.com
Darrow Associates Inc.Peter Seltzberg, Managing DirectorInvestor
Relations(516) 419-9915pseltzberg@darrowir.com
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