Strong Year-over-Year GrowthImproved Capital
Structure with Total Debt Reduced by $259.3 Million
Presidio, Inc. (NASDAQ:PSDO), a leading North American IT solutions
provider delivering Digital Infrastructure, Cloud and Security
solutions to middle-market customers, today announced its financial
results for its fiscal third quarter ended March 31, 2017.
|
|
Three months ended |
|
|
|
Nine months ended |
|
|
(in $
millions) |
|
March 31, 2016 |
|
March 31, 2017 |
|
% Chg |
|
March 31, 2016 |
|
March 31, 2017 |
|
% Chg |
Total Revenue |
|
$ |
586.4 |
|
|
$ |
628.8 |
|
|
7.2 |
% |
|
$ |
1,961.0 |
|
|
$ |
2,088.3 |
|
|
6.5 |
% |
Adjusted Revenue
(1) |
|
$ |
586.6 |
|
|
$ |
628.9 |
|
|
7.2 |
% |
|
$ |
1,929.6 |
|
|
$ |
2,088.8 |
|
|
8.3 |
% |
Total Gross Margin |
|
$ |
123.7 |
|
|
$ |
142.1 |
|
|
14.9 |
% |
|
$ |
393.5 |
|
|
$ |
433.6 |
|
|
10.2 |
% |
Gross
Margin % |
|
21.1 |
% |
|
22.6 |
% |
|
|
|
20.1 |
% |
|
20.8 |
% |
|
|
Net Income (Loss) |
|
$ |
(6.4 |
) |
|
$ |
(15.0 |
) |
|
134.4 |
% |
|
$ |
4.0 |
|
|
$ |
(6.0 |
) |
|
(250.0 |
)% |
Diluted EPS |
|
$ |
(0.09 |
) |
|
$ |
(0.20 |
) |
|
n.m. |
|
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
n.m. |
|
Pro Forma Adjusted Net
Income (2) |
|
$ |
16.4 |
|
|
$ |
25.8 |
|
|
57.3 |
% |
|
$ |
70.9 |
|
|
$ |
81.5 |
|
|
15.0 |
% |
Pro Forma Diluted EPS
(2) |
|
$ |
0.18 |
|
|
$ |
0.27 |
|
|
50.0 |
% |
|
$ |
0.78 |
|
|
$ |
0.86 |
|
|
10.3 |
% |
Adjusted EBITDA
(3) |
|
$ |
40.6 |
|
|
$ |
52.7 |
|
|
29.8 |
% |
|
$ |
157.2 |
|
|
$ |
165.7 |
|
|
5.4 |
% |
Adj. EBITDA %
(3) |
|
6.9 |
% |
|
8.4 |
% |
|
|
|
8.1 |
% |
|
7.9 |
% |
|
|
|
(1) This financial measure is not based on U.S. GAAP; please
refer to the section of this press release entitled "About Non-GAAP
and Pro Forma Financial Measures" for additional information and to
the attached reconciliation to the most directly comparable U.S.
GAAP measure; in addition, please refer to the section entitled
"Third Quarter Fiscal Year 2017 Highlights" for additional
information regarding certain transactions that occurred during the
current fiscal year that impacted the comparability between periods
- had the current fiscal year transactions been on a comparable
basis, the growth in Adjusted Revenue for the three and nine months
ended March 31, 2017 would have been 12% and 11%,
respectively. |
|
(2) This non-GAAP financial measure adjusts certain historical
data on a pro forma basis following certain transactions.
Please refer to the section of this press release entitled "About
Non-GAAP and Pro Forma Financial Measures" for additional
information and to the attached reconciliation to the most directly
comparable U.S. GAAP measure. |
|
(3) This financial measure is not based on U.S. GAAP; please
refer to the section of this press release entitled "About Non-GAAP
and Pro Forma Financial Measures" for additional information and to
the attached reconciliation to the most directly comparable U.S.
GAAP measure. |
“We are pleased with our third quarter results where we achieved
solid top-line growth and profitability. We delivered Revenue
growth of 7.2%, Adjusted EBITDA growth of 29.8% and Pro Forma
Adjusted Net Income growth of 57.3%. We experienced a shift
towards software subscription sales in the quarter; on a comparable
basis with prior period sales our Revenue growth would have been
12%. In addition, with our strong cash flow generation and proceeds
from our successful initial public offering in March, we improved
our balance sheet and reduced our leverage to generate significant
shareholder value,” said Bob Cagnazzi, Chief Executive Officer of
Presidio. “Our performance is reflective of the impact of the
strategy we have been executing for the past several years to
combine our deep local engineering skills with scalable investments
in offerings such as cyber-security, managed services, Internet of
Things engineering, and managed cloud to become the premier
provider of complex IT infrastructure solutions and digital
transformation services for mid-market clients. The
fundamentals of our model, the market and technology trends remain
strong, and I believe Presidio is well-positioned for continued
growth over the long term.”
Third Quarter Fiscal Year 2017 Highlights
- Total Revenue for the three months ended March 31, 2017
increased $42.4 million or 7.2% to $628.8 million compared to
revenue of $586.4 million in the prior year quarter. Total Revenue
growth was driven by an increase in client demand for Cloud and
Security solutions deployed across both private and hybrid cloud
environments. The growth in our third quarter was impacted by an
increase in the proportion of our solutions being delivered in the
form of software subscriptions where we are an agent and
accordingly the revenue associated with these solutions is
recognized net of the related cost of sales in total revenue.
Historically, our solutions have typically involved providing a
full suite of services to our clients complemented with the
delivery of hardware and software. In these arrangements, we have
concluded that our relationship with the customer is that of a
principal and we recognize our revenue on a gross basis, with the
related costs included as cost of revenue. In the current period,
certain of the solutions we have provided have involved the
delivery of software subscriptions without additional hardware
and/or services. These new arrangements with our customers result
in the Company’s relationship with the customer to be that of an
agent requiring the Company to recognize the related revenue net of
the cost of revenue. Had these solutions been sold on the same
terms as comparable solutions sold in the prior year, our revenue
growth would have been approximately 12%.- Cloud Revenue increased
52.4% to $119.0 million in the three months ended March 31, 2017
compared to $78.1 million for the three months ended March 31,
2016, a result of strong demand in client engagements around cloud
and IT transformation, converged and hyper-converged infrastructure
and data center modernization to support new private cloud
infrastructure in all market sectors.- Security Revenue increased
84.7%, to $89.2 million in the three months ended March 31, 2017
compared to $48.3 million in the three months ended March 31, 2016,
driven by higher demand from customers as they look to stay ahead
of increasingly complex cyber security threats which drove adoption
of advanced security technologies.- Digital Infrastructure Revenue
decreased 8.6% to $420.6 million in the three months ended March
31, 2017 compared to $460.0 million in the three months ended March
31, 2016, driven by two factors, (1) the mix shift toward more
software subscription revenue in the Digital Infrastructure
solution set and (2) lower revenue generated by government clients,
particularly the federal government due to delays in spending as a
result of the continuing resolution. Had the software subscription
solutions been sold on the same terms as comparable solutions in
the prior year, the decline in our Digital Infrastructure revenue
would have been 4.9%. In addition, we noted that the decline in
Digital Infrastructure revenue was impacted by clients focused on
investing in cloud and security in the quarter.
- Gross Margin for the three months ended March 31, 2017
increased $18.4 million or 14.9% to $142.1 million compared to
$123.7 million in the prior year quarter due to strong revenue
growth and a favorable mix shift of solutions sold toward data
center and security technologies.
- Net Loss for the three months ended March 31, 2017 was $15.0
million, or $0.20 per diluted share, compared to a loss of $6.4
million, or $0.09 per diluted share, in the prior year quarter. The
Net Loss in the current year was largely due to non-recurring
expenses associated with our IPO, including losses on
extinguishment of debt associated with the redemption of our senior
notes and repurchase of our senior subordinated notes, share-based
compensation attributable to the occurrence of the IPO and higher
expense associated with the accelerated vesting of certain stay and
retention bonuses.
- Pro Forma Adjusted Net Income for the three months ended March
31, 2017 increased $9.4 million or 57.3% to $25.8 million, or $0.27
per pro forma diluted share, compared to $16.4 million, or $0.18
per pro forma diluted share, in the prior year quarter as a result
of the strong growth in Adjusted EBITDA and the impact of
deleveraging.
- Adjusted EBITDA increased $12.1 million, or 29.8%, to $52.7
million for the three months ended March 31, 2017, from $40.6
million for the three months ended March 31, 2016, reflecting the
impact of 7.2% Adjusted Revenue growth, adjusted gross margin
expansion and improvements in operating expense efficiency. As a
result, Adjusted EBITDA margins expanded from 6.9% for the three
months ended March 31, 2016 to 8.4% for the three months ended
March 31, 2017.
Nine Months Ended March 31, 2017 Highlights
- Total Revenue for the first nine months ended March 31, 2017
increased $127.3 million or 6.5% to $2,088.3 million compared to
revenue of $1,961.0 million in the first nine months of fiscal year
2016. The increase in Total Revenue resulted from an increase in
client demand across both Cloud and Security solutions along with a
higher proportion of services as part of our solutions. The growth
year-to-date was impacted by an increase in the proportion of our
solutions being delivered in the form of software subscriptions
where we are an agent and accordingly the revenue associated with
these solutions is recognized net of the related costs of sales in
total revenue.- Cloud Revenue increased 35.1%, to $367.1 million in
the nine months ended March 31, 2017, compared to $271.8 million
for the nine months ended March 31, 2016, a result of strong client
demand in client engagements around cloud and IT transformation,
converged and hyper-converged infrastructure and data center
modernization to support new private cloud infrastructure in all
market sectors.- Security Revenue increased 26.6%, to $225.7
million in the nine months ended March 31, 2017, compared to $178.3
million in the nine months ended March 31, 2016, driven by higher
demand from customers as they look to stay ahead of increasingly
complex cyber security threats which drove adoption of advanced
security technologies.- Digital Infrastructure Revenue decreased
1.0% to $1,495.5 million in the nine months ended March 31, 2017
compared to $1,510.9 million in the nine months ended March 31,
2016, driven by the mix shift toward more software subscription
revenue in the Digital Infrastructure solution set.
- Adjusted Revenue excludes the impact of purchase accounting
adjustments from our acquisitions and excludes revenue associated
with disposed businesses. Adjusted Revenue for the first nine
months ended March 31, 2017 increased $159.2 million or 8.3%. Had
the software subscription solutions been sold on the same terms as
comparable solutions sold in the prior year, our Adjusted Revenue
growth would have been approximately 11%.
- Gross Margin for the nine months ended March 31, 2017 increased
$40.1 million or 10.2% to $433.6 million compared to $393.5 million
in the first nine months of fiscal year 2016 due to an increase in
sales of managed services, operating efficiencies realized in the
delivery of those services, and an increase in sales of third party
support.
- Net Loss for the nine months ended March 31, 2017 was $6.0
million, or $0.08 per diluted share, compared to Net Income of $4.0
million, or $0.06 per diluted share, in the first nine months of
fiscal year 2016. The Net Loss in the current year was
largely due to non-recurring expenses associated with our IPO as
described in the third quarter highlights.
- Pro Forma Adjusted Net Income for the nine months ended March
31, 2017 increased $10.6 million or 15.0% to $81.5 million, or
$0.86 per pro forma diluted share, compared to $70.9 million, or
$0.78 per pro forma diluted share, in the first nine months of
fiscal year 2016.
- Adjusted EBITDA for the nine months ended March 31, 2017
increased $8.5 million or 5.4% to $165.7 million compared to $157.2
million in the first nine months of fiscal year 2016, reflecting
strong revenue growth, gross margin expansion, and the impact of
recent increases in operating efficiency realized during our third
quarter, partly offset by investments we have made in high-growth
areas of our business.
Capital Resources and Free Cash Flow
- As of March 31, 2017, Presidio had total debt of $776.9 million
and net debt of $749.1 million, representing 3.4x net total
leverage based on Adjusted EBITDA for the trailing twelve months
ended March 31, 2017.
- For the nine months ended March 31, 2017, we generated $96.3
million of Net cash provided by operating activities, an increase
of 69.8% or $39.6 million compared to $56.7 million in the nine
months ended March 31, 2016, driven by higher cash income in the
period.
- For the nine months ended March 31, 2017, we generated $63.1
million of Free Cash Flow, an increase of 65.2% or $22.9 million
compared to $38.2 million in the nine months ended March 31,
2016.
- In March 2017, after completing the IPO,- Presidio redeemed
$97.5 million in aggregate principal amount of senior notes at a
redemption price equal to 110.25% of the principal amount plus
accrued and unpaid interest,- Presidio repurchased and canceled all
of the $111.8 million in aggregate principal amount of senior
subordinated notes at a repurchase price equal to 110.25% of the
principal amount plus accrued and unpaid interest, and- Presidio
made a $50.0 million voluntary prepayment on the term loan
borrowing under its senior credit facility using the remaining
proceeds from the IPO, cash from operations and existing cash on
hand.
(in
millions) |
|
June 30, 2016 |
|
March 31, 2017 |
Cash and cash
equivalents |
|
$ |
33.0 |
|
|
$ |
27.8 |
|
Long-term debt: |
|
|
|
|
Revolving
credit facility |
|
$ |
— |
|
|
$ |
— |
|
Receivables securitization facility |
|
5.0 |
|
|
— |
|
Term loan
facility, due February 2022 |
|
732.3 |
|
|
651.9 |
|
Senior
notes, 10.25% due February 2023 |
|
222.5 |
|
|
125.0 |
|
Subordinated notes, 10.25% due February 2023 |
|
111.8 |
|
|
— |
|
Total long-term debt |
|
$ |
1,071.6 |
|
|
$ |
776.9 |
|
Net total leverage
ratio |
|
4.6x |
|
|
3.4x |
|
About Non-GAAP and Pro Forma Financial Measures
Our management regularly monitors certain financial measures to
track the progress of our business against internal goals and
targets. In addition to financial information presented in
accordance with GAAP, management uses Adjusted Revenue, Adjusted
EBITDA, Adjusted Net Income, Pro Forma Adjusted Net Income and Free
Cash Flow (collectively, "non-GAAP measures," as further described
below) in its evaluation of past performance and prospects for the
future. Our non-GAAP measures should be considered in addition to,
not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. They are not measurements of
our financial performance under GAAP and should not be considered
as alternatives to net income (loss) or revenue, as applicable, or
any other performance measures derived in accordance with GAAP and
may not be comparable to other similarly titled measures of other
businesses. These non-GAAP measures have limitations as analytical
tools and you should not consider them in isolation or as a
substitute for analysis of our operating results as reported under
GAAP and they include adjustments for items that may occur in
future periods. However, we believe these adjustments are
appropriate because the amounts recognized can vary significantly
from period to period, do not directly relate to the ongoing
operations of our business and complicate comparisons of our
internal operating results and operating results of other peer
companies over time.
We also adjust certain historical data on a pro forma basis
following certain significant transactions. Specifically, we have
provided a calculation of Pro Forma Adjusted Net Income to adjust
for lower after-tax interest expense associated with the redemption
and repurchase of notes as part of our IPO as if the IPO occurred
on July 1, 2015 (the beginning of our fiscal year ending June 30,
2016) and for lower after-tax interest expense associated with the
term loan refinancing that occurred in January 2017 as if the
refinancing occurred on July 1, 2016 (the beginning of our fiscal
year ending June 30, 2017). Pro Forma Adjusted Net Income is
for illustrative and informational purposes and is not intended to
represent or be indicative of what our financial condition or
results of operations would have been had the transactions occurred
on the dates indicated. Pro Forma Adjusted Net Income should not be
considered representative of our future financial condition or
results of operations.
Additional Information
In October 2015, we completed the sale of our Atlantix Global
Systems LLC subsidiary (“Atlantix”). Accordingly, our financial
results for the nine months ended March 31, 2016 presented herein
have been adjusted to exclude the operations of Atlantix as if the
sale had occurred at the beginning of the period. The
Company’s financial results are presented above on an “Adjusted”
basis to reflect the sale of Atlantix, as well as the adjustment of
non-cash, non-recurring, and/or unusual items.
In February 2016, we acquired the operations of Netech
Corporation (“Netech”). As a result of the acquisition of Netech,
our U.S. GAAP results include the operations of Netech in the
periods ending March 31, 2016.
On February 24, 2017, the board of directors of the Company
declared a 2-for-1 stock split of the Company’s common stock in the
form of a stock dividend payable on each share of common stock
issued and outstanding as of February 24, 2017. The number of
shares subject to and the exercise price of the Company’s
outstanding options were adjusted to equitably reflect the split.
All common stock share and per-share data included in these
financial statements give effect to the stock split and have been
adjusted retroactively for all periods presented.
In March 2017, the Company completed an IPO in which the Company
issued and sold 18,766,465 shares of common stock, inclusive of
2,099,799 shares issued and sold pursuant to the underwriters’
option to purchase additional shares, at the public offering price
of $14.00 per share. The Company received net proceeds of
$247.5 million, after deducting underwriting discounts and
commissions and other offering expenses from the sale of its shares
in the IPO. In addition, the Company incurred $7.2 million of
offering expenses in connection with the IPO, of which $6.5 million
had not been paid as of March 31, 2017.
Conference Call Information
We have scheduled a conference call for Thursday, May 11,
2017, at 5:00 p.m. Eastern Time to discuss our financial
results for the fiscal third quarter ended March 31, 2017.
Financial results will be released after the close of the U.S.
financial markets on Thursday, May 11, 2017.
Those wishing to participate via webcast should access the call
through Presidio's Investor Relations website
at http://investors.presidio.com. Those wishing to participate
via telephone may dial in at 1-877-407-9039 (USA) or 1-201-689-8470
(International). The conference call replay will be available via
webcast through Presidio's Investor Relations website. The
telephone replay will be available from 8:00 p.m. Eastern
Time on May 11, 2017, through May 18, 2017, by
dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The
replay passcode will be 13660475.
About Presidio
Presidio is a leading North American IT solutions provider
focused on Digital Infrastructure, Cloud and Security solutions. We
deliver this technology expertise through a full life cycle model
of professional, managed, and support services including strategy,
consulting, implementation and design. By taking the time to deeply
understand how our clients define success, we help them harness
technology advances, simplify IT complexity and optimize their
environments today while enabling future applications, user
experiences, and revenue models. We serve approximately 7,000
middle-market, large, and government organizations across a diverse
range of industries. More than 2,800 Presidio professionals,
including 1,600 technical engineers, are based in 60+ offices
across the US in a unique, local delivery model combined with the
national scale of a $2.7 billion dollar industry leader. We are
passionate about driving results for our clients and delivering the
highest quality of service in the industry. Presidio is owned by
funds affiliated with Apollo Global Management, LLC (NYSE:APO). For
more information visit: www.presidio.com.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
This press release contains “forward looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. The use of words such as “anticipates,” “expects,” “intends,”
“plans” and “believes,” among others, generally identify
forward-looking statements. These forward-looking statements
include statements relating to: future financial performance,
business prospects and strategy, anticipated trends, prospects in
the industries in which our businesses operate and other similar
matters. These forward looking statements are based on management’s
current expectations and assumptions about future events, which are
inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results could
differ materially from those contained in these forward looking
statements for a variety of reasons, including, among others: risks
and uncertainties related to the capital markets, changes in senior
management at Presidio, changes in our relationship with our vendor
partners, adverse changes in economic conditions, risks resulting
from a decreased demand for Presidio’s information technology
solutions, risks relating to rapid technological change in
Presidio’s industry and risks relating to acquisitions or
regulatory changes. Certain of these and other risks and
uncertainties are discussed in Presidio’s filings with the
Securities and Exchange Commission. Other unknown or unpredictable
factors that could also adversely affect our business, financial
condition and results of operations may arise from time to time. In
light of these risks and uncertainties, these forward looking
statements may not prove to be accurate. Accordingly, you should
not place undue reliance on these forward looking statements, which
only reflect the views of our management as of the date of this
press release. We do not undertake to update these forward-looking
statements.
Non-GAAP Reconciliations
The reconciliation of Adjusted Revenue from Total Revenue for
each of the periods presented is as follows:
(in
millions) |
|
Three months ended March 31, 2016 |
|
Three months ended March 31, 2017 |
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Total Revenue |
|
$ |
586.4 |
|
|
$ |
628.8 |
|
|
$ |
1,961.0 |
|
|
$ |
2,088.3 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Purchase
accounting adjustments (1) |
|
0.2 |
|
|
0.1 |
|
|
1.4 |
|
|
0.5 |
|
Revenue
from disposed business (2) |
|
— |
|
|
— |
|
|
(32.8 |
) |
|
— |
|
Total adjustments |
|
0.2 |
|
|
0.1 |
|
|
(31.4 |
) |
|
0.5 |
|
Adjusted
Revenue |
|
$ |
586.6 |
|
|
$ |
628.9 |
|
|
$ |
1,929.6 |
|
|
$ |
2,088.8 |
|
|
(1) Includes noncash adjustments associated with purchase
accounting (including deferred revenue step down). |
|
(2) Removes the historical revenue contribution of Atlantix
prior to the sale of the Atlantix business in October 2015. |
The reconciliation of Adjusted EBITDA from Net income (loss) for
each of the periods presented is as follows:
(in
millions) |
|
Three months ended March 31, 2016 |
|
Three months ended March 31, 2017 |
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Adjusted EBITDA
Reconciliation: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6.4 |
) |
|
$ |
(15.0 |
) |
|
$ |
4.0 |
|
|
$ |
(6.0 |
) |
Total
depreciation and amortization (1) |
|
20.7 |
|
|
21.7 |
|
|
58.7 |
|
|
65.3 |
|
Interest
and other (income) expense |
|
22.3 |
|
|
45.3 |
|
|
68.8 |
|
|
87.8 |
|
Income
tax expense (benefit) |
|
(6.2 |
) |
|
(15.9 |
) |
|
3.1 |
|
|
(9.6 |
) |
EBITDA |
|
30.4 |
|
|
36.1 |
|
|
134.6 |
|
|
137.5 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
0.6 |
|
|
7.9 |
|
|
1.8 |
|
|
8.9 |
|
Purchase
accounting adjustments (2) |
|
0.9 |
|
|
0.2 |
|
|
3.1 |
|
|
0.9 |
|
Transaction costs (3) |
|
6.7 |
|
|
8.5 |
|
|
15.6 |
|
|
14.5 |
|
Other
costs (4) |
|
2.0 |
|
|
— |
|
|
3.9 |
|
|
3.9 |
|
Earnings
from disposed business (5) |
|
— |
|
|
— |
|
|
(1.8 |
) |
|
— |
|
Total adjustments |
|
10.2 |
|
|
16.6 |
|
|
22.6 |
|
|
28.2 |
|
Adjusted EBITDA |
|
$ |
40.6 |
|
|
$ |
52.7 |
|
|
$ |
157.2 |
|
|
$ |
165.7 |
|
Adjusted EBITDA %
(6) |
|
6.9 |
% |
|
8.4 |
% |
|
8.1 |
% |
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes depreciation and amortization included within
total operating expenses and cost of revenue. |
|
(2) Includes noncash adjustments associated with purchase
accounting (including inventory step up, deferred revenue step down
and revaluation of deferred rent). |
|
(3) Includes transaction-related expenses related to (i) stay
and retention bonuses, (ii) transaction-related advisory and
diligence fees, (iii) transaction-related legal, accounting and tax
fees and (iv) professional fees and expenses associated with debt
refinancings. |
|
(4) Includes other expenses such as (i) certain non-recurring
costs incurred in the development of our new cloud service
offerings, (ii) severance charges and (iii) integration of
previously acquired managed services platforms into one
system. |
|
(5) Removes the historical earnings contribution of Atlantix
prior to the sale of the business in October 2015. |
|
(6) Adjusted EBITDA % represents the ratio of Adjusted EBITDA
to Adjusted Revenue. |
The reconciliation of Adjusted Net Income and Pro Forma Adjusted
Net Income from Net income (loss) for each of the periods presented
is as follows:
(in
millions) |
|
Three months ended March 31, 2016 |
|
Three months ended March 31, 2017 |
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Adjusted Net Income
reconciliation: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6.4 |
) |
|
$ |
(15.0 |
) |
|
$ |
4.0 |
|
|
$ |
(6.0 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
17.4 |
|
|
18.4 |
|
|
48.8 |
|
|
55.2 |
|
Amortization of debt issuance costs |
|
2.1 |
|
|
1.7 |
|
|
5.6 |
|
|
5.1 |
|
Loss on
disposal of business |
|
— |
|
|
— |
|
|
6.8 |
|
|
— |
|
Loss on
extinguishment of debt |
|
0.8 |
|
|
26.9 |
|
|
0.9 |
|
|
27.7 |
|
Share-based compensation expense |
|
0.6 |
|
|
7.9 |
|
|
1.8 |
|
|
8.9 |
|
Purchase
accounting adjustments |
|
0.9 |
|
|
0.2 |
|
|
3.1 |
|
|
0.9 |
|
Transaction costs |
|
6.7 |
|
|
8.5 |
|
|
15.6 |
|
|
14.5 |
|
Other
costs |
|
2.0 |
|
|
— |
|
|
3.9 |
|
|
3.9 |
|
Earnings
from disposed business |
|
— |
|
|
— |
|
|
(1.8 |
) |
|
— |
|
Income
tax impact of adjustments (1) |
|
(11.0 |
) |
|
(25.8 |
) |
|
(27.8 |
) |
|
(40.4 |
) |
Total adjustments |
|
19.5 |
|
|
37.8 |
|
|
56.9 |
|
|
75.8 |
|
Adjusted
Net Income |
|
13.1 |
|
|
22.8 |
|
|
60.9 |
|
|
69.8 |
|
Pro Forma
Adjustments: |
|
|
|
|
|
|
|
|
Interest
on notes repaid in IPO |
|
5.4 |
|
|
3.7 |
|
|
16.4 |
|
|
14.4 |
|
Interest
on term loan repricing |
|
— |
|
|
1.2 |
|
|
— |
|
|
4.7 |
|
Income
tax impact of adjustments |
|
(2.1 |
) |
|
(1.9 |
) |
|
(6.4 |
) |
|
(7.4 |
) |
Total Pro Forma
adjustments |
|
3.3 |
|
|
3.0 |
|
|
10.0 |
|
|
11.7 |
|
Pro Forma
Adjusted Net Income |
|
$ |
16.4 |
|
|
$ |
25.8 |
|
|
$ |
70.9 |
|
|
$ |
81.5 |
|
|
(1) Includes an estimated tax impact of the adjustments to net
income at our average statutory rate of 39.0% to arrive at an
appropriate effective tax rate on Adjusted Net Income, except for
(i) the adjustment of certain transaction costs that are
permanently nondeductible for tax purposes and (ii) the impact
of tax-deductible goodwill and intangible assets resulting from
certain historical acquisitions and further adjusted for discrete
tax items such as the remeasurement of deferred tax liabilities due
to state rate changes and write-off of deferred tax assets
resulting from reorganizations. |
The reconciliation of Pro Forma weighted-average shares -
diluted and Pro Forma Diluted EPS from GAAP weighted-average shares
for each of the periods presented is as follows:
|
|
Three months ended March 31, 2016 |
|
Three months ended March 31, 2017 |
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Share count: |
|
|
|
|
|
|
|
|
Weighted-average shares
– basic |
|
71,504,578 |
|
|
75,374,606 |
|
|
70,851,186 |
|
|
73,064,789 |
|
Dilutive
effect of stock options |
|
— |
|
|
— |
|
|
1,724,088 |
|
|
— |
|
Weighted-average shares
– diluted |
|
71,504,578 |
|
|
75,374,606 |
|
|
72,575,274 |
|
|
73,064,789 |
|
Pro Forma
shares issued at IPO (1) |
|
18,766,465 |
|
|
15,361,675 |
|
|
18,766,465 |
|
|
17,648,103 |
|
Dilutive
impact of stock options (2) |
|
1,745,490 |
|
|
4,602,512 |
|
|
— |
|
|
3,981,394 |
|
Total Pro
Forma adjustments |
|
20,511,955 |
|
|
19,964,187 |
|
|
18,766,465 |
|
|
21,629,497 |
|
Pro Forma
weighted-average shares – diluted |
|
92,016,533 |
|
|
95,338,793 |
|
|
91,341,739 |
|
|
94,694,286 |
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$ |
(0.09 |
) |
|
$ |
(0.20 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
Pro Forma
Diluted EPS |
|
$ |
0.18 |
|
|
$ |
0.27 |
|
|
$ |
0.78 |
|
|
$ |
0.86 |
|
|
(1) Includes an adjustment to reflect the shares issued in the
March 2017 IPO as if the IPO occurred at the beginning of the
period that are not already reflected in the basic weighted-average
shares presented. |
|
(2) Includes an adjustment to reflect the dilutive impact of
outstanding stock options on Pro Forma Adjusted Net Income that
were excluded from the calculation for GAAP purposes as
anti-dilutive due to the GAAP net loss in the period. |
We define Free Cash Flow as our net cash provided by operating
activities adjusted to include the impact of net borrowings
(repayments) on floor plan facility, the net cash impact of our
leasing business and the purchases of property and equipment. The
reconciliation of Free Cash Flow from Net cash provided by
operating activities for the periods presented is as follows:
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Net cash provided by
operating activities |
$ |
56.7 |
|
|
$ |
96.3 |
|
Adjustments to
reconcile to free cash flow: |
|
|
|
Net
borrowings on floor plan facility |
(7.3 |
) |
|
(38.7 |
) |
Additions
of equipment under sales-type and direct financing leases |
(58.4 |
) |
|
(76.3 |
) |
Proceeds
from collection of financing receivables |
4.8 |
|
|
8.8 |
|
Additions
to equipment under operating leases |
(2.5 |
) |
|
(1.6 |
) |
Proceeds
from disposition of equipment under operating leases |
1.0 |
|
|
1.4 |
|
Proceeds
from the discounting of financing receivables |
55.5 |
|
|
86.5 |
|
Retirements of discounted financing receivables |
(1.7 |
) |
|
(4.4 |
) |
Purchases
of property and equipment |
(9.9 |
) |
|
(8.9 |
) |
Total adjustments |
(18.5 |
) |
|
(33.2 |
) |
Free Cash Flow |
$ |
38.2 |
|
|
$ |
63.1 |
|
|
|
|
|
Presidio, Inc. |
Unaudited Condensed Consolidated Balance
Sheets |
(in
millions) |
|
|
As of June 30, 2016 |
|
As of March 31, 2017 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and
cash equivalents |
$ |
33.0 |
|
|
$ |
27.8 |
|
Accounts
receivable, net |
503.0 |
|
|
449.4 |
|
Unbilled
accounts receivable, net |
135.7 |
|
|
151.9 |
|
Financing
receivables, current portion |
83.1 |
|
|
86.5 |
|
Inventory |
48.3 |
|
|
24.1 |
|
Prepaid
expenses and other current assets |
68.2 |
|
|
67.4 |
|
Total current assets |
871.3 |
|
|
807.1 |
|
Property and equipment,
net |
32.9 |
|
|
32.7 |
|
Equipment under
operating leases, net |
2.9 |
|
|
1.8 |
|
Financing receivables,
less current portion |
102.0 |
|
|
111.5 |
|
Goodwill |
781.5 |
|
|
781.5 |
|
Identifiable intangible
assets, net |
825.5 |
|
|
770.3 |
|
Other assets |
7.0 |
|
|
31.9 |
|
Total assets |
$ |
2,623.1 |
|
|
$ |
2,536.8 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
Liabilities |
|
|
|
Current
maturities of long-term debt |
$ |
7.4 |
|
|
$ |
— |
|
Accounts
payable – trade |
382.3 |
|
|
346.6 |
|
Accounts
payable – floor plan |
223.3 |
|
|
184.6 |
|
Accrued
expenses and other current liabilities |
167.1 |
|
|
168.8 |
|
Discounted financing receivables, current portion |
75.3 |
|
|
82.1 |
|
Total current liabilities |
855.4 |
|
|
782.1 |
|
Long-term debt, net of
debt issuance costs and current maturities |
1,030.6 |
|
|
754.0 |
|
Discounted financing
receivables, less current portion |
87.1 |
|
|
103.4 |
|
Deferred income tax
liabilities |
288.0 |
|
|
273.6 |
|
Other liabilities |
15.1 |
|
|
33.0 |
|
Total liabilities |
2,276.2 |
|
|
1,946.1 |
|
Total stockholders’ equity |
346.9 |
|
|
590.7 |
|
Total liabilities and stockholders’ equity |
$ |
2,623.1 |
|
|
$ |
2,536.8 |
|
Presidio, Inc. |
Unaudited Condensed Consolidated Statements of
Operations |
(in
millions) |
|
|
|
Three months ended March 31, 2016 |
|
Three months ended March 31, 2017 |
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Total
revenue |
|
$ |
586.4 |
|
|
$ |
628.8 |
|
|
$ |
1,961.0 |
|
|
$ |
2,088.3 |
|
Total
cost of revenue |
|
462.7 |
|
|
486.7 |
|
|
1,567.5 |
|
|
1,654.7 |
|
Gross margin |
|
123.7 |
|
|
142.1 |
|
|
393.5 |
|
|
433.6 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Total
SG&A |
|
88.1 |
|
|
98.7 |
|
|
247.5 |
|
|
285.6 |
|
Transaction costs |
|
6.7 |
|
|
8.5 |
|
|
15.6 |
|
|
14.5 |
|
Depreciation and amortization |
|
19.2 |
|
|
20.5 |
|
|
54.5 |
|
|
61.3 |
|
Total
operating expenses |
|
114.0 |
|
|
127.7 |
|
|
317.6 |
|
|
361.4 |
|
Operating income |
|
9.7 |
|
|
14.4 |
|
|
75.9 |
|
|
72.2 |
|
Interest and other
(income) expense |
|
|
|
|
|
|
|
|
Interest expense |
|
21.5 |
|
|
18.3 |
|
|
60.9 |
|
|
59.9 |
|
Loss on disposal of business |
|
— |
|
|
— |
|
|
6.8 |
|
|
— |
|
Loss on extinguishment of debt |
|
0.8 |
|
|
26.9 |
|
|
0.9 |
|
|
27.7 |
|
Other (income) expense, net |
|
— |
|
|
0.1 |
|
|
0.2 |
|
|
0.2 |
|
Total
interest and other (income) expense |
|
22.3 |
|
|
45.3 |
|
|
68.8 |
|
|
87.8 |
|
Income (loss) before income taxes |
|
(12.6 |
) |
|
(30.9 |
) |
|
7.1 |
|
|
(15.6 |
) |
Income tax expense
(benefit) |
|
(6.2 |
) |
|
(15.9 |
) |
|
3.1 |
|
|
(9.6 |
) |
Net income (loss) |
|
$ |
(6.4 |
) |
|
$ |
(15.0 |
) |
|
$ |
4.0 |
|
|
$ |
(6.0 |
) |
Basic
EPS |
|
$ |
(0.09 |
) |
|
$ |
(0.20 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
Diluted
EPS |
|
$ |
(0.09 |
) |
|
$ |
(0.20 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
Presidio, Inc. |
Unaudited Condensed Consolidated Statements of Cash
Flows |
(in
millions) |
|
|
Nine months ended March 31, 2016 |
|
Nine months ended March 31, 2017 |
Net cash provided by operating activities |
$ |
56.7 |
|
|
$ |
96.3 |
|
Cash flows from
investing activities: |
|
|
|
Acquisition of businesses, net of cash and cash equivalents
acquired |
(251.3 |
) |
|
— |
|
Proceeds
from collection of escrow related to acquisition of business |
— |
|
|
0.6 |
|
Proceeds
from disposition of business |
36.3 |
|
|
— |
|
Additions
of equipment under sales-type and direct financing leases |
(58.4 |
) |
|
(76.3 |
) |
Proceeds
from collection of financing receivables |
4.8 |
|
|
8.8 |
|
Additions
to equipment under operating leases |
(2.5 |
) |
|
(1.6 |
) |
Proceeds
from disposition of equipment under operating leases |
1.0 |
|
|
1.4 |
|
Purchases
of property and equipment |
(9.9 |
) |
|
(8.9 |
) |
Net cash used in investing activities |
(280.0 |
) |
|
(76.0 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds
from initial public offering, net of underwriter discounts and
commissions |
— |
|
|
247.5 |
|
Payment
of initial public offering costs |
— |
|
|
(0.7 |
) |
Proceeds
from issuance of common stock under share-based compensation
plans |
— |
|
|
0.6 |
|
Payment
of future consideration on acquisitions |
(10.3 |
) |
|
— |
|
Deferred
financing costs |
(1.1 |
) |
|
— |
|
Proceeds
from the discounting of financing receivables |
55.5 |
|
|
86.5 |
|
Retirements of discounted financing receivables |
(1.7 |
) |
|
(4.4 |
) |
Net
borrowings (repayments) on the receivables securitization
facility |
25.0 |
|
|
(5.0 |
) |
Repayments of senior and subordinated notes |
(37.4 |
) |
|
(230.8 |
) |
Borrowings on term loans, net of original issue discount |
142.5 |
|
|
— |
|
Repayments of term loans |
(19.2 |
) |
|
(80.5 |
) |
Net
repayments on the floor plan facility |
(7.3 |
) |
|
(38.7 |
) |
Net cash provided by (used in) financing
activities |
146.0 |
|
|
(25.5 |
) |
Net decrease in cash and cash equivalents |
(77.3 |
) |
|
(5.2 |
) |
Cash and cash
equivalents: |
|
|
|
Beginning
of the period |
88.3 |
|
|
33.0 |
|
End of
the period |
$ |
11.0 |
|
|
$ |
27.8 |
|
Supplemental
disclosures of cash flow information |
|
|
|
Cash paid during the
period for: |
|
|
|
Interest |
$ |
62.0 |
|
|
$ |
68.7 |
|
Income
taxes, net of refunds |
$ |
23.3 |
|
|
$ |
2.6 |
|
Reduction of
discounted lease assets and liabilities |
$ |
62.3 |
|
|
$ |
65.3 |
|
Initial
public offering costs not yet paid |
$ |
— |
|
|
$ |
6.5 |
|
Source: Presidio, Inc.
Contact Information
Investor Relations Contact:
Ed Yuen
203-428-3216
investors@presidio.com
Media Contact:
Susanna Parry-Hoey
Chief Marketing Officer
212-485-0520
sparryhoey@presidio.com
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