UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date
of report (Date of earliest event reported): August 13, 2015
ATRM Holdings, Inc.
(Exact Name of Registrant as Specified in Its
Charter)
Minnesota |
|
0-22166 |
|
41-1439182 |
(State or other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
3050 Echo Lake Avenue, Suite 300, Mahtomedi, Minnesota |
|
55115 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (651) 704-1800
N/A |
(Former name or former address if changed since last report) |
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:
[ ] Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial
Condition.
On August 13, 2015, ATRM
Holdings, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2015 and providing its outlook
for the remainder of fiscal year 2015. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by
reference.
The information furnished
pursuant to this Current Report on Form 8-K, including the exhibit hereto, shall not be considered “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of that section, nor shall it be incorporated by reference into future filings by the Company under the Securities
Act of 1933, as amended, or under the Exchange Act, unless the Company expressly sets forth in such future filing that such information
is to be considered “filed” or incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release, dated August 13, 2015. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
|
ATRM Holdings, Inc. |
|
|
Dated: August 13, 2015 |
By: |
/s/ Paul H. Askegaard |
|
Name: |
Paul H. Askegaard |
|
Title: |
Chief Financial Officer |
EXHIBIT
INDEX
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release, dated August 13, 2015. |
Exhibit
99.1
ATRM
REPORTS SECOND QUARTER 2015
RESULTS
AND OUTLOOK FOR SECOND HALF OF YEAR
St.
Paul, Minn (08/13/15)—ATRM Holdings, Inc. (Nasdaq: ATRM) (“ATRM” or the “Company”) today reported
financial results for its fiscal second quarter ended June 30, 2015 and its outlook for the remainder of fiscal 2015.
Highlights:
● |
Negotiated
$3.7 million reduction in debt and accrued interest. |
|
|
● |
Implemented
organizational, process and contract improvements at KBS to boost commercial project performance. |
|
|
● |
Announced
anticipated rights offering to reduce debt and strengthen balance sheet. |
|
|
● |
Expect
increase in sales and improvement in operating results in second half of 2015. |
Q2
2015 Summary:
KBS,
the modular construction business acquired in April 2014, represents the Company’s continuing operations. Sales and other
operating results related to the Company’s former test handler product line are included in results from discontinued operations
in its consolidated statements of operations.
Net
sales were $6.8 million for Q2 2015, compared to $12.4 million for the same quarter a year ago. Sales of single family homes increased
to $6.3 million in Q2 2015 compared with $5.0 million in Q2 2014. Commercial sales decreased to $0.5 million in Q2 2015 compared
with $7.4 million in Q2 2014. Commercial sales were significantly higher in Q2 of last year as two large projects in process at
the time of the KBS acquisition were subsequently completed. In addition, due to site-preparation issues at a customer site, an
order for $1.3 million in sales that was expected to be realized in Q2 2015 is now expected to be realized in the second half
of 2015. All construction on this project required by KBS has been completed, but revenues will not be realized until the product
is delivered. Since Q2 2014, KBS has worked to eliminate site-related work (electrical, plumbing, heating, air conditioning, etc.)
it performs because of losses on past commercial projects. KBS’ new strategy is to have its customers’ general contractors
assume responsibility for site-related work while KBS focuses on its core competency of building modular units. We believe this
strategy change will improve profit margins and reduce risk. Site-related revenue represented approximately $3.0 million of the
decrease in commercial sales for Q2 2015 compared with Q2 2014. We believe that historically, site-related expenses exceeded site-related
revenues resulting in substantial historical losses for KBS on some commercial projects.
Total
costs and expenses for Q2 2015 decreased substantially to $7.7 million compared with $17.8 million for the same quarter in 2014:
● |
Cost
of sales for Q2 2015 decreased to $6.6 million from $11.6 million in Q2 2014 due primarily to the reduction in commercial
sales and site work described above. |
|
|
● |
Selling,
general and administrative expenses for Q2 2015 decreased to $1.1 million from $1.9 million in Q2 2014, due primarily to lower
legal and professional costs. Such costs were higher in Q2 2014 due to the acquisition of KBS and the divestiture of the Company’s
test handler product line. |
|
|
● |
Amortization
expense in Q2 2015 associated with intangible assets received in the KBS acquisition decreased to approximately $60,000 compared
with approximately $641,000 in Q2 2014. The higher expense in 2014 primarily included the amortization of purchased backlog
that shipped in the quarter. |
|
|
● |
Goodwill
impairment charge was $0 in Q2 2015 compared with approximately $3.7 million in Q2 2014. |
Loss
from continuing operations for Q2 2015 improved to approximately ($0.9 million) compared with approximately ($5.4 million) in
Q2 2014. The loss in Q2 2014 included a goodwill impairment charge of $3.7 million.
The
Company recorded a $3.7 million gain in Q2 2015 related to settling indemnity and other claims against the seller of KBS. The
gain included a $3.2 million reduction in the principal balance of a promissory note and approximately $0.5 million in forgiven
interest related to the note.
Interest
expense for Q2 2015 increased to $0.4 million from $0.2 million in Q2 2014.
Net
income for Q2 2015 was approximately $2.4 million, or $1.95 per diluted share, compared with a net loss of approximately ($4.8
million), or ($4.43) per diluted share, in Q2 2014.
Balance
Sheet as of June 30, 2015:
● |
Cash
and cash equivalents increased to approximately $1.1 million compared with $0.7 million at March 31, 2015. |
|
|
● |
The
Company’s interest-bearing debt decreased approximately $3.2 million to $12.8 million at June 30, 2015, compared with
$16.0 million at March 31, 2015. The decrease was primarily attributable to a reduction and restructuring of a note payable
to the seller of KBS. |
Management
Comments:
“We
had anticipated our second quarter net sales would increase over the first quarter due to weather-delayed first quarter shipments
shifting to the second quarter,” said Dan Koch, ATRM’s president and chief executive officer. “In fact, sales
of single family homes did increase 64% over the first quarter. However, the gain we made in sales of single family homes was
largely offset by lower commercial sales. Specifically, a $1.3 million commercial project that was supposed to ship in Q2 is now
expected to be delivered in the second half of 2015. As a result of this development, our second quarter sales of $6.8 million
were flat with the first quarter. We expect sales in the second half of 2015 to exceed sales in the first half of 2015.”
“We
are making significant progress in improving the KBS operations,” Mr. Koch continued. “The problems with several commercial
projects that were under contract at the time of the acquisition have adversely impacted our gross margins, including our margins
in Q2 2015, but have essentially been eradicated. We now have established standards and improved processes that we believe will
help prevent similar issues in the future. We expect that our commercial projects will be significantly more profitable in the
future due to the changes we have made. Also, while we have worked to improve our management of commercial projects, we have increased
our sales of single family homes substantially. We believe we are positioned to achieve sales in the second half of 2015 of at
least $16 million with continued improvement in gross margins and operating results.”
Jeff
Eberwein, Chairman of ATRM’s board of directors, commented, “We are very pleased to have reached a settlement agreement
with the seller of KBS that reduced our debt significantly. We expect to complete a rights offering of our common stock next month
that will allow us to further reduce our debt and strengthen our balance sheet. While the KBS turn-around has taken longer than
anticipated, we continue to believe it is a good business in a growing industry and, with its current factory capacity, KBS capable
of generating approximately $40 million in annualized revenues and achieving operating margins of five to ten percent or more.”
This
press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, and there will be
no sale of any securities in any state in which such an offer, solicitation, or purchase would be unlawful prior to the registration
or qualification of such securities under the securities laws of any such state. The offer of the shares of common stock issuable
upon exercise of the rights to be distributed in the proposed rights offering will be made only by means of the prospectus forming
a part of the Company’s registration statement filed with the SEC and related documents.
About
ATRM Holdings, Inc.
ATRM
Holdings, Inc. (Nasdaq: ATRM), through its wholly-owned subsidiaries KBS Builders, Inc. and Maine Modular Haulers, Inc., manufactures
modular housing units for commercial and residential applications. ATRM is based in St. Paul, Minnesota, with facilities in South
Paris and Waterford, Maine. ATRM’s website is www.atrmholdings.com.
Forward-Looking
Statements
This
press release may contain “forward-looking statements”, as such term is used within the meaning of the Private Securities
Litigation Reform Act of 1995. These “forward-looking statements” are not based on historical fact and involve assessments
of certain risks, developments, and uncertainties in the Company’s business looking to the future. Such forward-looking
statements can be identified by the use of terminology such as “may”, “will”, “should”, “expect”,
“anticipate”, “estimate”, “intend”, “continue”, or “believe”, or the
negatives or other variations of these terms or comparable terminology. Forward-looking statements may include projections, forecasts,
or estimates of future performance and developments. These forward-looking statements are based upon assumptions and assessments
that the Company believes to be reasonable as of the date hereof. Whether those assumptions and assessments will be realized will
be determined by future factors, developments, and events, which are difficult to predict and may be beyond the Company’s
control. Actual results, factors, developments, and events may differ materially from those the Company assumed and assessed.
Risks, uncertainties, contingencies, and developments, including those discussed in the Company’s filings with the Securities
and Exchange Commission, could cause the Company’s future operating results to differ materially from those set forth in
any forward-looking statement. There can be no assurance that any such forward-looking statement, projection, forecast or estimate
contained can be realized or that actual returns, results, or business prospects will not differ materially from those set forth
in any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking
statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions
to any of the forward-looking statements contained herein to reflect future results, events or developments.
Registration
Statement
The
Company has filed with the SEC a Registration Statement on Form S-1 (including a preliminary prospectus) related to the rights
offering, which was declared effective on August 13, 2015. A copy of the prospectus forming a part of the registration statement
may be obtained, free of charge, on the SEC website at www.sec.gov, or by contacting the information agent for the rights offering,
InvestorCom, Inc., toll free at (877) 972-0090. Before you invest, you should carefully read the prospectus and other documents
the Company has filed with the SEC for more complete information about the Company and the rights offering.
Contact: |
Paul
Askegaard |
|
ATRM
Holdings, Inc. |
|
(651)
704-1812 |
ATRM
Holdings, Inc.
Consolidated
Statements of Operations
(Unaudited)
(in
thousands, except share data)
| |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Net sales | |
| 6,800 | | |
$ | 12,389 | | |
$ | 13,601 | | |
$ | 12,389 | |
Costs and expenses: | |
| | | |
| | | |
| | | |
| | |
Cost of sales | |
| 6,620 | | |
| 11,586 | | |
| 13,502 | | |
| 11,586 | |
Selling, general and administrative expenses | |
| 1,053 | | |
| 1,872 | | |
| 1,909 | | |
| 2,640 | |
Amortization of intangibles | |
| 60 | | |
| 641 | | |
| 221 | | |
| 641 | |
Goodwill impairment charge | |
| - | | |
| 3,705 | | |
| - | | |
| 3,705 | |
Total costs and expenses | |
| 7,733 | | |
| 17,804 | | |
| 15,632 | | |
| 18,572 | |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) from continuing operations | |
| (933 | ) | |
| (5,415 | ) | |
| (2,031 | ) | |
| (6,183 | ) |
Settlement gain | |
| 3,687 | | |
| - | | |
| 3,687 | | |
| - | |
Interest expense | |
| (402 | ) | |
| (215 | ) | |
| (789 | ) | |
| (216 | ) |
Change in fair value of contingent earn-out | |
| - | | |
| 28 | | |
| - | | |
| 103 | |
Income (loss) from continuing operations before income taxes | |
| 2,352 | | |
| (5,602 | ) | |
| 867 | | |
| (6,296 | ) |
Income tax benefit (expense) | |
| (2 | ) | |
| 290 | | |
| (2 | ) | |
| 464 | |
Income (loss) from continuing operations | |
| 2,350 | | |
| (5,312 | ) | |
| 865 | | |
| (5,832 | ) |
Income from discontinued operations, net of income taxes | |
| - | | |
| 537 | | |
| - | | |
| 861 | |
Net income (loss) | |
$ | 2,350 | | |
$ | (4,775 | ) | |
$ | 865 | | |
$ | (4,971 | ) |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Basic income (loss) per share: | |
| | | |
| | | |
| | | |
| | |
Continuing operations | |
$ | 1.98 | | |
$ | (4.92 | ) | |
$ | 0.73 | | |
$ | (5.41 | ) |
Discontinued operations | |
| - | | |
| 0.50 | | |
| - | | |
| 0.80 | |
Net income (loss) | |
$ | 1.98 | | |
$ | (4.43 | ) | |
$ | 0.73 | | |
$ | (4.61 | ) |
| |
| | | |
| | | |
| | | |
| | |
Diluted income (loss) per share: | |
| | | |
| | | |
| | | |
| | |
Continuing operations | |
$ | 1.95 | | |
$ | (4.92 | ) | |
$ | 0.72 | | |
$ | (5.41 | ) |
Discontinued operations | |
| - | | |
| 0.50 | | |
| - | | |
| 0.80 | |
Net income (loss) | |
$ | 1.95 | | |
$ | (4.43 | ) | |
$ | 0.72 | | |
$ | (4.61 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 1,186 | | |
| 1,079 | | |
| 1,186 | | |
| 1,079 | |
Diluted | |
| 1,205 | | |
| 1,079 | | |
| 1,196 | | |
| 1,079 | |
ATRM
Holdings, Inc.
Consolidated
Balance Sheets
(Unaudited)
(In
Thousands)
| |
June 30, 2015 | | |
December 31, 2014 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 1,134 | | |
$ | 1,996 | |
Accounts receivable, net | |
| 3,994 | | |
| 2,804 | |
Costs and estimated profit in excess of billings | |
| 1,098 | | |
| 1,791 | |
Inventories | |
| 1,724 | | |
| 1,936 | |
Fair value of contingent earn-out, current | |
| 610 | | |
| 1,200 | |
Other current assets | |
| 74 | | |
| 117 | |
Total current assets | |
| 8,634 | | |
| 9,844 | |
| |
| | | |
| | |
Property and equipment, net | |
| 4,600 | | |
| 4,740 | |
| |
| | | |
| | |
Fair value of contingent earn-out, noncurrent | |
| 778 | | |
| 1,100 | |
Goodwill | |
| 1,733 | | |
| 1,733 | |
Other intangible assets, net | |
| 1,467 | | |
| 1,688 | |
| |
| | | |
| | |
Total assets | |
$ | 17,212 | | |
$ | 19,105 | |
| |
| | | |
| | |
| |
| | | |
| | |
Liabilities and shareholders’ deficit: | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Notes payable | |
$ | - | | |
$ | 5,500 | |
Current portion of long-term debt | |
| 1,075 | | |
| 45 | |
Trade accounts payable | |
| 4,632 | | |
| 5,129 | |
Billings in excess of costs and estimated profit | |
| 674 | | |
| 288 | |
Accrued taxes, other than income | |
| 306 | | |
| 873 | |
Accrued interest | |
| 516 | | |
| 670 | |
Other current liabilities | |
| 1,330 | | |
| 1,033 | |
Total current liabilities | |
| 8,533 | | |
| 13,538 | |
| |
| | | |
| | |
Long-term debt, noncurrent | |
| 11,760 | | |
| 9,542 | |
Deferred income taxes | |
| 9 | | |
| - | |
| |
| | | |
| | |
Shareholders’ deficit | |
| (3,090 | ) | |
| (3,975 | ) |
| |
| | | |
| | |
Total liabilities and shareholders’ deficit | |
$ | 17,212 | | |
$ | 19,105 | |