DEERFIELD, Ill., July 26, 2017 /PRNewswire/ -- Essendant Inc.
(NASDAQ: ESND), a leading national wholesale distributor of
workplace items, today announced financial results for the second
quarter ended June 30, 2017.
Key results for second quarter 2017 were as follows:
Second Quarter 2017 Summary
- Revenue declined 6.9% to $1.3
billion, compared to $1.4
billion in the prior year quarter
- GAAP diluted earnings per share in the quarter of $0.14 decreased compared to $0.35 in the prior year quarter
- Adjusted diluted earnings per share(1) of
$0.28 in the quarter increased
sequentially from the first quarter of 2017, but decreased compared
to $0.55 in the prior year
quarter
- Free cash flow(1) was $67.4
million in the quarter and $112.1
million in the first six months of 2017
"We made good progress advancing our merchandising and pricing
initiatives, and our industrial products category delivered growth
for the second quarter in a row. However, this was offset by
top line pressure that is reflective of persistent industry
challenges," stated Ric Phillips,
interim president and chief executive officer of Essendant.
"In light of this pressure, we will continue to advance our
transformation initiatives, and we will look to build on and
accelerate our transformation in the second half of 2017."
Second Quarter Performance
- Net sales decreased 6.9% in comparison to the prior year
quarter, driven principally by reduced sales in technology, JanSan
and traditional office products categories, partly offset by growth
in cut-sheet paper and industrial products categories. Net sales by
product category were:
-
- JanSan Products: revenues of $339.4
million, a decrease of $(32.0)
million or 8.6%, primarily driven by declines in the
national retail channel.
- Technology Products: revenues of $300.2
million, a decrease of $(42.6)
million or 12.4%, as a result of reduced supplier promotions
and declines in the national retail channel and the independent
dealer channels.
- Traditional Office Products: revenues of $181.3 million, a decrease of $(21.2) million or 10.5%, due to sales declines
in the independent dealer channel and the national retail
channel.
- Industrial Products: revenues of $145.6
million, an increase of $2.4
million or 1.7%, due to growth initiatives and energy market
recovery.
- Cut-sheet Paper Products: revenues of $106.3 million, an increase of $4.8 million or 4.7%, primarily driven by
independent dealer channel sales increases.
- Automotive Products: revenues of $82.1
million, an increase of $1.6
million or 2.0%, driven by growth initiatives.
- Office Furniture: revenues of $67.9
million, a decrease of $(6.7)
million or 9.0%, primarily driven by sales declines in the
independent dealer channel.
- Gross profit was $177.6 million,
a decline of $(18.3) million versus
the prior year quarter. The decline was the result of lower sales
volumes, $(12.3) million with the
remainder of the decline primarily driven by lower supplier
allowances. Sales volume and supplier allowance declines more than
offset the benefits of merchandising and pricing actions related to
our transformation initiatives.
- Operating expenses were $161.7
million, a decrease from $169.4
million in the prior year quarter resulting from prior year
pension settlement expense of $11.7
million, creating a favorable comparison, partially offset
by current year quarter transformational expenses of $(5.4) million, and litigation accruals of
$(3.0) million, reflecting an
agreement to resolve a litigation matter. Adjusted operating
expenses were $153.3 million, a
decrease of $4.4 million, which was
primarily driven by overall cost containment actions including
decreased variable labor expenses, partially offset by a reset of
management incentives.
- Income tax expense was $4.5
million in the second quarter of 2017, a decline from
$7.8 million in the prior year
quarter due to lower pretax income, partially offset by the impact
of adopting new accounting guidance related to share-based
compensation.
- GAAP diluted earnings per share was $0.14 compared to $0.35 in the quarter last year. Adjusted diluted
earnings per share(1) were $0.28 compared to $0.55 in the quarter last year.
- Free cash flow totaled $67.4
million in the quarter, reflecting continued working capital
management and the timing of inventory receipts. Utilization of
free cash flow from lower inventories drove a reduction in
long-term debt of $60.5 million
during the quarter.
Outlook for 2017
- In light of the first half sales results, we anticipate full
year 2017 sales to decline 6% to 9% from 2016
- Similar to our experience in the first half of 2017, we expect
the range of 2017 sales decline to affect our second half adjusted
diluted earnings per share(1).
- Based on strong cash flow generation in the first half of 2017,
free cash flow(1) generation is expected to be in excess
of $90 million for the full year
2017
Conference Call
Essendant will hold a conference call followed by a question and
answer session on Thursday, July 27,
2017, at 7:30 a.m. CST, to
discuss second quarter 2017 results. To participate, callers within
the U.S. and Canada should dial
(877) 358-2531 and international callers should dial (412) 902-6623
approximately 10 minutes before the presentation. The
conference ID is "10108864." To listen to the webcast,
participants should visit the Investors section of the company's
website (investors.essendant.com), and click on the "Essendant Q2
2017 Earnings Call" button on the right side of the page, several
minutes before the event is broadcast. Interested parties can
access an archived version of the call, this news release, a
financial slide presentation and other information related to the
call, also located on the quarterly results section of Essendant's
investor website, within hours after the call ends.
Forward-Looking Statements
This news release contains forward-looking statements, including
references to goals, plans, strategies, objectives, projected costs
or savings, anticipated future performance, results or events and
other statements that are not strictly historical in nature. These
statements are based on management's current expectations,
forecasts and assumptions. This means they involve a number
of risks and uncertainties that could cause actual results to
differ materially from those expressed or implied here. These
risks and uncertainties include, but are not limited to the
following: Essendant's reliance on key customers, and the risks
inherent in continuing or increased customer concentration and
consolidations; the impact of price transparency, customer
consolidation and product sales mix changes on the Company's sales
and margins; Essendant's reliance on independent resellers for a
significant percentage of its net sales and, therefore, the
importance of the continued independence, viability and success of
these resellers; Essendant's reliance on supplier allowances and
promotional incentives; Essendant's exposure to the credit risk of
its customers; continuing or increasing competitive activity and
pricing pressures within existing or expanded product categories,
including competition from e-tailers and product manufacturers who
sell directly to Essendant's customers; the impact of supply chain
disruptions or changes in key suppliers' distribution strategies;
continued declines in end-user demand for products in the office,
technology and furniture product categories; Essendant may
experience financial cycles due to secular consumer demand,
recession or other events, most notably in the Company's Industrial
and Automotive businesses; the impact of the Company's
transformation program and possible disruption of business
operations and relationships with customers and suppliers;
Essendant's ability to manage inventory in order to maximize sales
and supplier allowances while minimizing excess and obsolete
inventory; Essendant's ability to attract and retain key management
personnel; the costs and risks related to compliance with laws,
regulations and industry standards affecting Essendant's business;
Essendant's ability to maintain its existing information technology
systems and to successfully procure, develop and implement new
systems and services without business disruption or other
unanticipated difficulties or costs; the impact on the Company's
reputation and relationships of a breach of the Company's
information technology systems or a failure to maintain the
security of private information; the availability of financing
sources to meet Essendant's business needs; Essendant's success in
effectively identifying, consummating and integrating acquisitions;
and unexpected events that could disrupt business operations,
increasing costs and decreasing revenues.
Shareholders, potential investors and other readers are urged to
consider these risks and uncertainties in evaluating
forward-looking statements and are cautioned not to place undue
reliance on the forward-looking statements. For additional
information about risks and uncertainties that could materially
affect Essendant's results, please see the company's Securities and
Exchange Commission filings. The forward-looking information
in this news release is made as of this date only, and the company
does not undertake any obligation to update any forward-looking
statement. Investors are advised to consult any further
disclosure by Essendant regarding the matters discussed in this
news release in its filings with the Securities and Exchange
Commission and in other written statements it makes from time to
time. It is not possible to anticipate or foresee all risks
and uncertainties, and investors should not consider any list of
risks and uncertainties to be exhaustive or complete.
Company Overview
Essendant Inc. is a leading national wholesale distributor of
workplace items, with 2016 net sales of $5.4
billion. The company sells a broad assortment of over
190,000 items, including janitorial and breakroom supplies,
technology products, traditional office products, industrial
supplies, cut sheet paper products, automotive products and office
furniture. The Company's network of 70 distribution centers enables
the Company to ship most products overnight to more than ninety
percent of the U.S. For more information, visit
www.essendant.com.
Essendant common stock trades on the NASDAQ Global Select Market
under the symbol ESND.
(1)
|
This is non-GAAP
information. See the Reconciliation of Non-GAAP Financial Measures
section of this document for more information.
|
|
|
|
Note: All EPS numbers
in this document are diluted, except losses or unless stated
otherwise.
|
Essendant Inc. and
Subsidiaries
|
|
Condensed
Consolidated Statements of Income (Loss)
|
|
(in thousands, except
per share data)
|
|
|
|
|
For the Three
Months Ended
|
|
|
For the Six Months
Ended
|
|
|
June 30,
|
|
|
June 30,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net sales
|
$
|
1,260,656
|
|
|
$
|
1,354,523
|
|
|
$
|
2,530,038
|
|
|
$
|
2,706,819
|
|
Cost of goods
sold
|
|
1,083,092
|
|
|
|
1,158,700
|
|
|
|
2,166,807
|
|
|
|
2,310,914
|
|
Gross
profit
|
|
177,564
|
|
|
|
195,823
|
|
|
|
363,231
|
|
|
|
395,905
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing, marketing
and administrative expenses
|
|
161,695
|
|
|
|
157,625
|
|
|
|
334,717
|
|
|
|
325,303
|
|
Impairment of
goodwill
|
|
-
|
|
|
|
-
|
|
|
|
198,828
|
|
|
|
-
|
|
Defined benefit plan
settlement loss
|
|
-
|
|
|
|
11,744
|
|
|
|
-
|
|
|
|
11,744
|
|
Operating income
(loss)
|
|
15,869
|
|
|
|
26,454
|
|
|
|
(170,314)
|
|
|
|
58,858
|
|
Interest expense,
net
|
|
6,299
|
|
|
|
5,677
|
|
|
|
13,038
|
|
|
|
11,574
|
|
Income (loss) before
income taxes
|
|
9,570
|
|
|
|
20,777
|
|
|
|
(183,352)
|
|
|
|
47,284
|
|
Income tax
expense
|
|
4,474
|
|
|
|
7,844
|
|
|
|
146
|
|
|
|
17,821
|
|
Net income
(loss)
|
$
|
5,096
|
|
|
$
|
12,933
|
|
|
$
|
(183,498)
|
|
|
$
|
29,463
|
|
Net income (loss) per
share - basic:
|
$
|
0.14
|
|
|
$
|
0.35
|
|
|
$
|
(5.01)
|
|
|
$
|
0.81
|
|
Average number of common
shares outstanding - basic
|
|
36,673
|
|
|
|
36,512
|
|
|
|
36,659
|
|
|
|
36,552
|
|
Net income (loss) per
share - diluted:
|
$
|
0.14
|
|
|
$
|
0.35
|
|
|
$
|
(5.01)
|
|
|
$
|
0.80
|
|
Average number of common
shares outstanding - diluted
|
|
36,873
|
|
|
|
36,910
|
|
|
|
36,659
|
|
|
|
36,897
|
|
Dividends declared
per share
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
Essendant Inc. and
Subsidiaries
|
|
Condensed
Consolidated Balance Sheets
|
|
(dollars in
thousands, except share data)
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
As of
June 30,
|
|
|
As of
December 31,
|
|
|
2017
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
23,889
|
|
|
$
|
21,329
|
|
Accounts receivable,
less allowance for doubtful accounts of $16,751 in 2017 and $18,196
in 2016
|
|
663,926
|
|
|
|
678,184
|
|
Inventories
|
|
800,323
|
|
|
|
876,837
|
|
Other current
assets
|
|
36,984
|
|
|
|
32,100
|
|
Total current
assets
|
|
1,525,122
|
|
|
|
1,608,450
|
|
Property, plant and
equipment, net
|
|
127,104
|
|
|
|
128,251
|
|
Intangible assets,
net
|
|
78,149
|
|
|
|
83,690
|
|
Goodwill
|
|
99,479
|
|
|
|
297,906
|
|
Other long-term
assets
|
|
45,971
|
|
|
|
45,209
|
|
Total
assets
|
$
|
1,875,825
|
|
|
$
|
2,163,506
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
508,639
|
|
|
$
|
484,602
|
|
Accrued
liabilities
|
|
188,940
|
|
|
|
197,804
|
|
Current maturities of
long-term debt
|
|
6,089
|
|
|
|
28
|
|
Total current
liabilities
|
|
703,668
|
|
|
|
682,434
|
|
Deferred income
taxes
|
|
1,307
|
|
|
|
6,378
|
|
Long-term
debt
|
|
504,932
|
|
|
|
608,941
|
|
Other long-term
liabilities
|
|
72,239
|
|
|
|
84,647
|
|
Total
liabilities
|
|
1,282,146
|
|
|
|
1,382,400
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common stock, $0.10
par value; authorized - 100,000,000 shares, issued - 74,435,628
shares in 2017 and 2016
|
|
7,444
|
|
|
|
7,444
|
|
Additional paid-in
capital
|
|
413,865
|
|
|
|
409,805
|
|
Treasury stock, at
cost – 36,967,119 shares in 2017 and 36,951,522 shares in
2016
|
|
(1,097,300)
|
|
|
|
(1,096,744)
|
|
Retained
earnings
|
|
1,313,209
|
|
|
|
1,507,057
|
|
Accumulated other
comprehensive loss
|
|
(43,539)
|
|
|
|
(46,456)
|
|
Total stockholders'
equity
|
|
593,679
|
|
|
|
781,106
|
|
Total liabilities and
stockholders' equity
|
$
|
1,875,825
|
|
|
$
|
2,163,506
|
|
Essendant Inc. and
Subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
(in
thousands)
|
|
|
|
|
For the Six Months
Ended
|
|
|
June 30,
|
|
|
2017
|
|
|
2016
|
|
Cash Flows From
Operating Activities:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(183,498)
|
|
|
$
|
29,463
|
|
Adjustments to
reconcile net (loss) income to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
21,534
|
|
|
|
22,936
|
|
Share-based
compensation
|
|
4,038
|
|
|
|
5,689
|
|
Gain on the
disposition of property, plant and equipment
|
|
(656)
|
|
|
|
(739)
|
|
Amortization of
capitalized financing costs
|
|
804
|
|
|
|
332
|
|
Excess tax cost
related to share-based compensation
|
|
-
|
|
|
|
193
|
|
Deferred income
taxes
|
|
(270)
|
|
|
|
(2,765)
|
|
Impairment of
goodwill
|
|
198,828
|
|
|
|
-
|
|
Pension settlement
charge
|
|
-
|
|
|
|
11,744
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Decrease (increase) in
accounts receivable, net
|
|
14,434
|
|
|
|
(28,439)
|
|
Decrease (increase) in
inventory
|
|
76,757
|
|
|
|
(44,017)
|
|
Increase in other
assets
|
|
(1,178)
|
|
|
|
(36,529)
|
|
Increase in accounts
payable
|
|
24,133
|
|
|
|
43,429
|
|
Decrease in accrued
liabilities
|
|
(19,603)
|
|
|
|
(12,219)
|
|
Decrease in other
liabilities
|
|
(9,512)
|
|
|
|
(5,062)
|
|
Net cash provided by
(used in) operating activities
|
|
125,811
|
|
|
|
(15,984)
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(13,677)
|
|
|
|
(19,327)
|
|
Proceeds from the
disposition of property, plant and equipment
|
|
-
|
|
|
|
2,770
|
|
Net cash used in
investing activities
|
|
(13,677)
|
|
|
|
(16,557)
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
|
|
|
Net borrowings under
revolving credit facility
|
|
31,375
|
|
|
|
43,876
|
|
Borrowings under Term
Loan
|
|
77,600
|
|
|
|
-
|
|
Repayments under Term
Loan
|
|
(1,518)
|
|
|
|
-
|
|
Net repayments under
Securitization Program
|
|
(200,000)
|
|
|
|
-
|
|
Net (disbursements)
proceeds from share-based compensation arrangements
|
|
(600)
|
|
|
|
1,285
|
|
Acquisition of
treasury stock, at cost
|
|
-
|
|
|
|
(6,839)
|
|
Payment of cash
dividends
|
|
(10,339)
|
|
|
|
(10,237)
|
|
Excess tax cost
related to share-based compensation
|
|
-
|
|
|
|
(193)
|
|
Payment of debt
issuance costs
|
|
(6,277)
|
|
|
|
-
|
|
Net cash (used in)
provided by financing activities
|
|
(109,759)
|
|
|
|
27,892
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
185
|
|
|
|
366
|
|
Net change in cash
and cash equivalents
|
|
2,560
|
|
|
|
(4,283)
|
|
Cash and cash
equivalents, beginning of period
|
|
21,329
|
|
|
|
29,983
|
|
Cash and cash
equivalents, end of period
|
$
|
23,889
|
|
|
$
|
25,700
|
|
Other Cash Flow
Information:
|
|
|
|
|
|
|
|
Income tax payments,
net
|
$
|
19,058
|
|
|
$
|
27,358
|
|
Interest
paid
|
|
11,809
|
|
|
|
11,750
|
|
Essendant Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Expenses, Adjusted Operating Income,
Adjusted Net Income, Adjusted Diluted Earnings Per Share,
Adjusted EBITDA, and Free Cash Flow
The Non-GAAP table below presents Adjusted Operating Expenses,
Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted
Earnings per Share, Adjusted EBITDA and Free Cash Flow for the
three and six months ended June 30,
2017 and 2016 (in thousands, except per share data). These
non-GAAP measures exclude certain non-recurring items and exclude
other items that do not reflect the Company's ongoing operations
and are included to provide investors with useful information about
the financial performance of our business. The presented non-GAAP
financial measures should not be considered in isolation or as
substitutes for the comparable GAAP financial measures. The
non-GAAP financial measures do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP, and these non-GAAP financial measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP financial measures.
In order to calculate the non-GAAP measures, management excludes
the following items to the extent they occur in the reporting
period, to facilitate the comparison of current and prior year
results and ongoing operations, as management believes these items
do not reflect the underlying cost structure of our business. These
items can vary significantly in amount and frequency.
- Restructuring charges. Workforce reduction and facility
closure charges such as employee termination costs, facility
closure and consolidation costs, and other costs directly
associated with shifting business strategies or business conditions
that are part of a restructuring program.
Restructuring actions were taken in 2015 to improve our operational
utilization, labor spend, inventory performance and functional
alignment of the organization. This included workforce
reductions and facility consolidations with an expense impact of
$0.3 million in the six months ended
June 30, 2016.
- Gain or loss on sale of assets or businesses. Sales of
assets, such as buildings or equipment, and businesses can cause
gains or losses. These transactions occur as the Company is
repositioning its business and reviewing its cost structure.
- Severance costs for operating leadership. Employee
termination costs related to members of the Company's operating
leadership team are excluded as they are based upon individual
agreements.
- Asset impairments. Changes in strategy or
macroeconomic events may cause asset impairments.
In the six months ended June 30,
2017, the Company recorded an impairment of goodwill of
$198.8 million, based on a decline in
market capitalization.
- Other actions. Actions, which may be non-recurring
events, that result from the changing strategies and needs of the
Company and do not reflect the underlying expense of the on-going
business. These include charges related to litigation totaling
$3.0 million and $9.0 million, respectively, for the three and six
months ended June 30, 2017 and
transformational expenses totaling $5.4
million and $8.4 million,
respectively, for the three and six months ended June 30, 2017. In the three and six months ended
June 30, 2016, other actions included
a settlement charge of $11.7 million
related to a defined benefit plan settlement.
Adjusted operating expenses and adjusted operating
income. Adjusted operating expenses and adjusted operating
income provide management and our investors with an understanding
of the results from the primary operations of our business by
excluding the effects of items described above that do not reflect
the ordinary expenses and earnings of our operations. Adjusted
operating expenses and adjusted operating income are used to
evaluate our period-over-period operating performance as they are
more comparable measures of our continuing business. These measures
may be useful to an investor in evaluating the underlying operating
performance of our business.
Adjusted net income and adjusted diluted earnings per
share. Adjusted net income and adjusted diluted earnings per
share provide a more comparable view of our Company's underlying
performance and trends than the comparable GAAP measures. Net
income and diluted earnings per share are adjusted for the effect
of items described above that do not reflect the ordinary earnings
of our operations.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA). Adjusted EBITDA is helpful in evaluating
our operating performance and is used by management for various
purposes, including as a measure of performance and as a basis for
strategic planning and forecasting. Net income is adjusted for the
effect of interest, taxes, depreciation and amortization and
stock-based compensation expense. Management believes that adjusted
EBITDA is also commonly used by investors to evaluate operating
performance between competitors because it helps reduce variability
caused by differences in capital structures, income taxes,
stock-based compensation accounting policies, and depreciation and
amortization policies.
Free cash flow. Free cash flow is useful to management
and our investors as it is a measure of the Company's liquidity. It
provides a more complete understanding of factors and trends
affecting our cash flows than the comparable GAAP measure. Net cash
provided by (used in) operating activities and net cash provided by
(used in) investing activities are aggregated and adjusted to
exclude the impact of acquisitions, net of cash acquired and
divestitures.
Outlook. Adjusted diluted earnings per share and free
cash flow are non-GAAP measures. A quantitative reconciliation of
our non-GAAP guidance to the corresponding GAAP information is not
available because the non-GAAP guidance excludes certain GAAP
information that is uncertain and difficult to predict. The
adjusted diluted EPS guidance excludes expenses of $(0.14) and $(5.50)
per share in the three and six months ended June 30, 2017, respectively, related to goodwill
impairment, litigation charges and transformational expenses.
Actual amounts for these expenses appear in the non-GAAP table
included later in this section. For the remainder of the year, the
factors that will be excluded are currently unknown due to the
level of unpredictability and uncertainty associated with these
items, but may include actions such as future restructuring
charges, gain or loss on future sales of assets or businesses, cash
flow impacts of acquisitions, and other actions.
Essendant Inc. and
Subsidiaries
|
|
Reconciliation of
Non-GAAP Financial Measures
|
|
Adjusted Operating
Expenses, Adjusted Operating Income,
|
|
Adjusted Net
Income, Adjusted Diluted Earnings Per Share, Adjusted EBITDA, and
Free Cash Flow
|
|
(unaudited)
|
|
(in thousands, except
per share data)
|
|
|
|
|
For the Three
Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
161,695
|
|
|
$
|
169,369
|
|
Litigation
reserve
|
|
(3,000)
|
|
|
|
-
|
|
Transformational
expenses
|
|
(5,444)
|
|
|
|
-
|
|
Defined benefit plan
settlement charge
|
|
-
|
|
|
|
(11,744)
|
|
Adjusted operating
expenses
|
$
|
153,251
|
|
|
$
|
157,625
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
15,869
|
|
|
$
|
26,454
|
|
Operating expense
adjustments noted above
|
|
8,444
|
|
|
|
11,744
|
|
Adjusted operating
income
|
$
|
24,313
|
|
|
$
|
38,198
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
5,096
|
|
|
$
|
12,933
|
|
Operating
expense adjustments noted above
|
|
8,444
|
|
|
|
11,744
|
|
Non-GAAP tax provision
on adjustments
|
|
|
|
|
|
|
|
Litigation
reserve
|
|
(1,164)
|
|
|
|
-
|
|
Transformational
expenses
|
|
(2,085)
|
|
|
|
-
|
|
Defined benefit plan
settlement charge
|
|
-
|
|
|
|
(4,416)
|
|
Adjusted net
income
|
$
|
10,291
|
|
|
$
|
20,261
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.14
|
|
|
$
|
0.35
|
|
Operating expense
adjustments noted above
|
|
0.23
|
|
|
|
0.32
|
|
Non-GAAP tax provision
on adjustments
|
|
(0.09)
|
|
|
|
(0.12)
|
|
Adjusted diluted
earnings per share
|
$
|
0.28
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
5,096
|
|
|
$
|
12,933
|
|
Provision for income
taxes
|
|
4,474
|
|
|
|
7,844
|
|
Interest expense,
net
|
|
6,299
|
|
|
|
5,677
|
|
Depreciation and
amortization
|
|
10,569
|
|
|
|
11,205
|
|
Equity compensation
expense
|
|
1,570
|
|
|
|
2,778
|
|
Operating expense
adjustments noted above
|
|
8,444
|
|
|
|
11,744
|
|
Adjusted earnings
before interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
36,452
|
|
|
$
|
52,181
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
|
72,786
|
|
|
$
|
(5,163)
|
|
Net cash used in
investing activities
|
|
(5,365)
|
|
|
|
(6,961)
|
|
Free cash
flow
|
$
|
67,421
|
|
|
$
|
(12,124)
|
|
|
For the Six Months
Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
533,545
|
|
|
$
|
337,047
|
|
Impairment of
goodwill
|
|
(198,828)
|
|
|
|
-
|
|
Litigation
reserve
|
|
(9,000)
|
|
|
|
-
|
|
Transformational
expenses
|
|
(8,395)
|
|
|
|
-
|
|
Defined benefit plan
settlement charge
|
|
-
|
|
|
|
(11,744)
|
|
Restructuring
charges
|
|
-
|
|
|
|
(254)
|
|
Adjusted operating
expenses
|
$
|
317,322
|
|
|
$
|
325,049
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
$
|
(170,314)
|
|
|
$
|
58,858
|
|
Operating expense
adjustments noted above
|
|
216,223
|
|
|
|
11,998
|
|
Adjusted operating
income
|
$
|
45,909
|
|
|
$
|
70,856
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(183,498)
|
|
|
$
|
29,463
|
|
Operating
expense adjustments noted above
|
|
216,223
|
|
|
|
11,998
|
|
Non-GAAP tax provision
on adjustments
|
|
|
|
|
|
|
|
Impairment of
goodwill
|
|
(6,559)
|
|
|
|
-
|
|
Litigation
reserve
|
|
(3,488)
|
|
|
|
-
|
|
Transformational
expenses
|
|
(3,203)
|
|
|
|
-
|
|
Defined benefit plan
settlement charge
|
|
-
|
|
|
|
(4,416)
|
|
Restructuring
charges
|
|
-
|
|
|
|
(91)
|
|
Adjusted net
income
|
$
|
19,475
|
|
|
$
|
36,954
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share (1)
|
$
|
(4.97)
|
|
|
$
|
0.80
|
|
Operating expense
adjustments noted above
|
|
5.86
|
|
|
|
0.33
|
|
Non-GAAP tax provision
on adjustments
|
|
(0.36)
|
|
|
|
(0.12)
|
|
Adjusted diluted
earnings per share
|
$
|
0.53
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(183,498)
|
|
|
$
|
29,463
|
|
Provision for income
taxes
|
|
146
|
|
|
|
17,821
|
|
Interest expense,
net
|
|
13,038
|
|
|
|
11,574
|
|
Depreciation and
amortization
|
|
21,534
|
|
|
|
22,936
|
|
Equity compensation
expense
|
|
4,038
|
|
|
|
5,689
|
|
Operating expense
adjustments noted above
|
|
216,223
|
|
|
|
11,998
|
|
Adjusted earnings
before interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
71,481
|
|
|
$
|
99,481
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
|
125,811
|
|
|
$
|
(15,984)
|
|
Net cash used in
investing activities
|
|
(13,677)
|
|
|
|
(16,557)
|
|
Free cash
flow
|
$
|
112,134
|
|
|
$
|
(32,541)
|
|
|
|
(1)
|
Diluted earnings per
share for the six months ended June 30, 2017 under GAAP reflect an
adjustment to the basic earnings per share due to the net loss. The
diluted earnings per share here does not reflect this
adjustment.
|
For Further Information
Contact:
investorrelations@essendant.com
(847) 627-2900
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SOURCE Essendant Inc.