DELAND, Fla., Feb. 5, 2015 /PRNewswire/ -- ARC Group Worldwide,
Inc. ("ARC") (NASDAQ: ARCW), a leading global provider of advanced
manufacturing and 3D printing solutions, today reported its second
quarter fiscal year 2015 (December 28,
2014) financial results.
Second Quarter Operating Results
Second quarter fiscal year 2015 revenue was $27.1 million, an increase of 35.9% compared to
the prior year period. The year-over-year increase was
largely the result of acquisitions completed during the fourth
quarter of fiscal year 2014. Sequentially, weakness in the
firearms industry offset metal injection molding ("MIM") revenue
gains in other sectors, as well as record quarterly revenue at
Tekna Seal and robust sales growth at 3D Material Technologies and
Kecy. Quarterly revenue results at the Company's Hungarian
operations were also impacted by the decline of the Euro versus the
US dollar. In January 2015, the
Company entered into currency contracts to partially mitigate
potential further Euro depreciation.
Gross Profit for the period was $6.4
million, an increase of 0.9% compared to the prior year
period. Adjusted EBITDA was $3.8
million, an increase of 0.3% compared to the prior year
period. Sequentially, Adjusted EBITDA margins were 14.1%,
versus 14.2% and 9.6% in the prior two quarters since the Kecy
acquisition. Overall, while the Company continues to execute
on its integration and cost reduction strategies, margins during
the quarter were impacted by several factors, including: (i.) a
reduction in inventory levels at AFT to improve working capital
efficiency; (ii.) changes in the Company's direct workforce versus
contract labor staffing levels; (iii.) continued investment into
3DMT's proprietary Additive Manufacturing technology and services;
and (iv.) continued investment in the Company's sales and marketing
efforts.
Last quarter, the Company began the implementation of an
extensive margin enhancement program throughout each of its
operating units. ARC expects to realize improved operational
efficiencies and margins from these strategic initiatives,
particularly as revenue returns to normalized levels.
Separately, recent indications from firearm customers, defense
industry conferences, and other sector metrics, including FBI
background checks, have suggested the firearm market has begun to
stabilize and is poised for a potential rebound.
Jason Young, Chairman and CEO,
commented, "ARC remains in a transitional phase following our
acquisitive prior fiscal year, and while we have faced modest short
term weakness due to the slowdown in the firearms market, we remain
optimistic about the long term prospects of our approach to
advanced manufacturing through the strategic combination of
additive and subtractive processes. We believe our platform
is differentiated, and offers our customers unique and
comprehensive solutions to their manufacturing needs. We also
believe that as we fully integrate our offerings, we will be able
to improve our margins and expand our revenue over time. In
the short run, some of our efforts require investment and
productivity improvements, but long-term we believe we are
developing proprietary technology that will give our customers
innovative and compelling advantages."
GAAP to Non-GAAP Reconciliation
EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA
margin are non-GAAP financial measures. EBITDA margin and
Adjusted EBITDA margin are calculated by dividing EBITDA and
Adjusted EBITDA, respectively, by sales. We have provided
this non-GAAP financial information to aid in better understanding
the Company's performance absent these charges. Non-GAAP
financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in the United
States. The Company's non-GAAP financial measures are not
meant to be considered in isolation or as a substitute for
comparable GAAP financial measures, and should be read only in
conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
The reconciliation to GAAP is as follows (dollars in
thousands):
For the three
months ended:
|
December
28, 2014
|
|
September
28, 2014
|
|
June
30, 2014
|
|
December
29, 2013
|
Net (Loss) Income
(GAAP)
|
$ (2)
|
|
$
232
|
|
$
209
|
|
$ 1,575
|
|
Plus: Interest
Expense, Net
|
1,213
|
|
921
|
|
618
|
|
294
|
|
Plus: Income
Taxes
|
237
|
|
153
|
|
(7)
|
|
690
|
|
Plus: Depreciation
and Amortization
|
2,355
|
|
2,311
|
|
1,681
|
|
892
|
EBITDA (Non-GAAP)
|
$ 3,803
|
|
$
3,617
|
|
2,501
|
|
$ 3,451
|
EBITDA Margin
(Non-GAAP)
|
14.0%
|
|
12.6%
|
|
10.6%
|
|
17.3%
|
|
Plus: Merger
Expense
|
$ 11
|
|
$
176
|
|
$ 342
|
|
$
—
|
|
Plus: Other
Non-Recurring Expenses
|
—
|
|
286
|
|
—
|
|
—
|
|
Plus: Reorganization
expenses
|
—
|
|
—
|
|
—
|
|
351
|
|
Less: Gain on Early
Extinguishment of Debt
|
—
|
|
—
|
|
(578)
|
|
—
|
Adjusted EBITDA
(Non-GAAP)
|
$ 3,814
|
|
$
4,079
|
|
$ 2,265
|
|
$ 3,802
|
Adjusted EBITDA
Margin (Non-GAAP)
|
14.1%
|
|
14.2%
|
|
9.6%
|
|
19.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger expenses are costs incurred to effectuate our
acquisitions, such as advisory, legal and accounting fees.
Other non-recurring expenses consist primarily of accounting and
legal fees associated with our acquisitions and financing
activities. Reorganization expenses are primarily labor and
labor related costs association with the termination of
employees.
Adjusted EBITDA excludes interest expense, net and income taxes
because these items are associated with our capitalization and tax
structures. Adjusted EBITDA also excludes depreciation and
amortization expense because these non-cash expenses reflect the
impact of prior capital expenditure decisions which may not be
indicative of future capital expenditure requirements.
The Company has filed a registration statement (including a
preliminary prospectus and issuer free writing prospectuses) with
the U.S. Securities and Exchange Commission ("SEC") for the
offering of common stock to which this presentation relates.
Before you invest, you should read the prospectus in that
registration statement, the issuer free writing prospectuses and
other documents the Company has filed with the SEC for more
complete information about the Company and this offering. You
may obtain these documents free of charge by visiting the SEC
online database (EDGAR) on the SEC's website at www.sec.gov.
The Company's registration statement on Form S-1
containing the preliminary prospectus, dated January 20, 2015,
is available at the following link:
http://www.sec.gov/Archives/edgar/data/826326/000104746915000280/a2222688zs-1a.htm
Alternatively, you may obtain a copy of the prospectus and any
other publicly available documents from the Company by calling
(303) 467-5236 or from Brean Capital by calling (212)
702-6500.
About ARC Group Worldwide, Inc.
ARC Group Worldwide, Inc. is a leading global advanced
manufacturing and 3D printing service provider. With its business
founded in 1987, the Company offers its customers a compelling
portfolio of advanced manufacturing technologies and cutting-edge
capabilities to improve the efficiency of traditional manufacturing
processes and accelerate their time to market. In addition to being
a world leader in metal injection molding ("MIM"), ARC has
significant expertise in 3D printing and imaging, materials
science, advanced tooling, automation, machining, stamping, plastic
injection molding, lean manufacturing, and robotics. For more
information visit the website of ARC Group Worldwide, Inc. or its
operating subsidiaries at 3D Material Technologies, LLC, Advanced
Forming Technology, Inc. (Colorado), Advanced Forming Technology,
Kft. (Hungary), ARC MIM, ARC Wireless, LLC, Advance Tooling
Concepts, Flomet, LLC, General Flange & Forge, LLC, Injectamax
International, LLC, Kecy Metals Technology, Tekna Seal, LLC, and
Thixoforming.
Forward Looking Statements
This press release may contain "forward-looking" statements as
defined in the Private Securities Litigation Reform Act of 1995,
which are based on ARC's current expectations, estimates and
projections about future events. These include, but are not
limited to, statements, if any, regarding business plans, pro-forma
statements and financial projections, ARC's ability to expand its
services and realize growth. These statements are not
historical facts or guarantees of future performance, events or
results. Such statements involve potential risks and
uncertainties, and the general effects of financial, economic, and
regulatory conditions affecting our industries. Accordingly,
actual results may differ materially. ARC does not have any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. For additional factors that may affect future
results, please see filings made by ARC with the Securities and
Exchange Commission ("SEC"), including its registration statement
on Form S-1, as amended, its Form 10-K for the fiscal year ended
June 30, 2014 and Form 10-Q for the
period ended September 28, 2014, as
well as current reports on Form 8-K filed from time-to-time with
the SEC.
CONTACT: Drew M.
Kelley
PHONE: (303) 467-5236
Email:
InvestorRelations@ArcGroupWorldwide.com
ARC Group
Worldwide, Inc.
|
Unaudited
Condensed Consolidated Statements of Operations
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
(in thousands,
except for share and
per share
amounts)
|
|
December
28,
2014
|
|
December
29,
2013
|
|
December
28,
2014
|
|
December
29,
2013
|
Sales
|
|
27,106
|
|
19,942
|
|
55,804
|
|
38,342
|
Cost of
sales
|
|
20,719
|
|
13,610
|
|
42,434
|
|
26,387
|
Gross
profit
|
|
6,387
|
|
6,332
|
|
13,370
|
|
11,955
|
Selling, general and
administrative
|
|
4,919
|
|
3,780
|
|
10,418
|
|
7,502
|
Merger
expense
|
|
11
|
|
—
|
|
187
|
|
—
|
Income from
operations
|
|
1,457
|
|
2,552
|
|
2,765
|
|
4,453
|
Other (expense)
income, net
|
|
(9)
|
|
7
|
|
(11)
|
|
7
|
Interest expense,
net
|
|
(1,213)
|
|
(294)
|
|
(2,134)
|
|
(499)
|
Income before income
taxes
|
|
235
|
|
2,265
|
|
620
|
|
3,961
|
Income tax
expense
|
|
(237)
|
|
(690)
|
|
(390)
|
|
(1,076)
|
Net (loss)
income
|
|
(2)
|
|
1,575
|
|
230
|
|
2,885
|
Less: Net income
attributable to non-controlling interest
|
|
(58)
|
|
(61)
|
|
(114)
|
|
(117)
|
Net (loss) income
attributable to ARC Group
Worldwide, Inc.
|
|
(60)
|
|
1,514
|
|
116
|
|
2,768
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Basic and
diluted income per share
|
|
—
|
|
0.10
|
|
0.01
|
|
0.19
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
14,673,205
|
|
14,693,285
|
|
14,673,205
|
|
14,506,817
|
|
|
|
|
|
|
|
|
|
ARC Group
Worldwide, Inc.
|
Condensed
Consolidated Balance Sheets
|
|
(in thousands,
except for share and per share amounts)
|
|
December 28,
2014
|
|
|
June 30,
2014
|
ASSETS
|
|
(unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,859
|
|
|
$
|
9,384
|
Accounts receivable,
net
|
|
15,679
|
|
|
15,337
|
Inventories,
net
|
|
16,432
|
|
|
15,231
|
Prepaid and other
current assets
|
|
4,058
|
|
|
2,606
|
Total current
assets
|
|
40,028
|
|
|
42,558
|
Property and
equipment, net
|
|
45,772
|
|
|
45,268
|
Goodwill
|
|
14,764
|
|
|
16,357
|
Intangible assets,
net
|
|
29,089
|
|
|
30,825
|
Other
|
|
2,019
|
|
|
1,381
|
Total
assets
|
|
$
|
131,672
|
|
|
$
|
136,389
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,485
|
|
|
$
|
9,430
|
Accrued
expenses
|
|
5,623
|
|
|
5,905
|
Deferred
revenue
|
|
1,290
|
|
|
1,016
|
Bank borrowings,
current portion of long-term debt
|
|
13,120
|
|
|
14,419
|
Capital lease
obligations, current portion
|
|
1,140
|
|
|
1,124
|
Accrued escrow
obligation
|
|
4,291
|
|
|
2,400
|
Total current
liabilities
|
|
31,949
|
|
|
34,294
|
Long-term debt, net
of current portion
|
|
62,807
|
|
|
62,757
|
Capital lease
obligations, net of current portion
|
|
4,240
|
|
|
4,723
|
Accrued escrow
obligation
|
|
—
|
|
|
2,600
|
Other
|
|
1,276
|
|
|
674
|
Total
liabilities
|
|
100,272
|
|
|
105,048
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 2,000,000 authorized, no shares issued and
outstanding
|
|
—
|
|
|
—
|
Common stock, $0.0005
par value, 250,000,000 shares authorized; 15,088,522 shares issued
and 15,080,121 shares outstanding at December 28, 2014 and June 30,
2014
|
|
3
|
|
|
3
|
Treasury stock, at
cost; 8,401 shares at December 28, 2014 and June 30,
2014
|
|
(94)
|
|
|
(94)
|
Additional paid-in
capital
|
|
14,122
|
|
|
14,293
|
Retained
earnings
|
|
16,259
|
|
|
16,143
|
ARC Group Worldwide,
Inc. total stockholder equity
|
|
30,290
|
|
|
30,345
|
Non-controlling
interest
|
|
1,110
|
|
|
996
|
Total stockholders'
equity
|
|
31,400
|
|
|
31,341
|
Total liabilities and
stockholders' equity
|
|
$
|
131,672
|
|
|
$
|
136,389
|
ARC Group
Worldwide, Inc.
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
|
|
|
For the six months
ended
|
|
(in
thousands)
|
|
December 28,
2014
|
|
|
December 29,
2013
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
230
|
|
|
$
|
2,885
|
|
Adjustments to
reconcile net income to net cash (used in) provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,666
|
|
|
1,790
|
|
Non-cash stock based
compensation expense
|
|
—
|
|
|
779
|
|
Amortization of debt
discount
|
|
—
|
|
|
211
|
|
Bad debt expense and
other
|
|
(56)
|
|
|
59
|
|
Deferred income
taxes
|
|
12
|
|
|
—
|
|
Changes in working
capital
|
|
|
|
|
|
|
Accounts
receivable
|
|
(309)
|
|
|
526
|
|
Inventory
|
|
(1,200)
|
|
|
(936)
|
|
Prepaid expenses and
other assets
|
|
(1,502)
|
|
|
(200)
|
|
Accounts
payable
|
|
(2,944)
|
|
|
30
|
|
Other accrued
expenses
|
|
604
|
|
|
978
|
|
Deferred
revenue
|
|
274
|
|
|
(92)
|
|
Net cash (used in)
provided by operating activities
|
|
(225)
|
|
|
6,030
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchase of plant and
equipment
|
|
(3,446)
|
|
|
(892)
|
|
Net cash used in
investing activities
|
|
(3,446)
|
|
|
(892)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from debt
issuance
|
|
23,500
|
|
|
—
|
|
Repayments of
long-term debt and capital lease obligations
|
|
(25,216)
|
|
|
(3,112)
|
|
Stock issuance
costs
|
|
(138)
|
|
|
—
|
|
Repurchase of
shares
|
|
—
|
|
|
(93)
|
|
Net cash used in
financing activities
|
|
(1,854)
|
|
|
(3,205)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(5,525)
|
|
|
1,933
|
|
Cash and cash
equivalents, beginning of period
|
|
9,384
|
|
|
3,601
|
|
Cash and cash
equivalents, end of period
|
|
$
|
3,859
|
|
|
$
|
5,534
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
1,587
|
|
|
$
|
288
|
|
Cash paid for income
taxes
|
|
$
|
20
|
|
|
$
|
—
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
Termination of note
receivable from related party
|
|
$
|
—
|
|
|
$
|
272
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/arc-reports-second-quarter-fiscal-year-2015-financial-results-300031856.html
SOURCE ARC Group Worldwide, Inc.