MORRISVILLE, N.C., Aug. 3, 2017 /PRNewswire/ -- Alliance One
International, Inc. (NYSE: AOI) today announced results for its
fiscal quarter ended June 30,
2017.
Highlights
- Revenue for the quarter increased 6.1% to $277.0 million versus last year mainly due to
increased lamina sales and improved average selling price per
kilo.
- Selling, general and administrative expense ("SG&A")
decreased 12.8% to $33.8 million
driven by reduced legal and professional costs and decreased
incentive compensation.
- In April 2017, as previously
reported, the Company purchased and cancelled $28.6 million of its senior secured second lien
notes leaving face value of $662.9
million outstanding.
- The Company reaffirms fiscal year 2018 revenue and Adjusted
EBITDA guidance.
Pieter Sikkel, President and
Chief Executive Officer, said "Fiscal year 2018 is progressing
favorably and in line with our expectations. Excluding Malawi that has a much smaller crop this year,
global market conditions are positive and weather patterns are
good, supporting better growing conditions with crop sizes that
have returned to more normal levels in key markets where we are
currently buying. Our sales typically build through the year, with
the first fiscal quarter at lower levels in comparison to later
quarters based on a number of factors including the timing of crops
from the growing regions where we source tobacco. This year's first
quarter was consistent with past experience and sales are planned
to be more heavily weighted toward the back half of the year.
"Total kilos sold this quarter were similar to last year at 61.2
million; although South American shipments were noticeably reduced
from the prior year due to minimal carryover of smaller El Niño
affected 2016 crops. Other regions focused mainly on shipments of
prior year crops. Revenue for the quarter improved 6.1% or
$15.9 million to $277.0 million
versus last year due to a 4.8% increase in average sales price,
driven by higher lamina sales this year versus byproducts when
compared to last year's quarter. Additionally, at quarter end, our
uncommitted inventory reached a seven year low just inside the
mid-point of our stated target range of $50.0 to $150.0 million.
"Due to selling mainly prior year crops during the quarter that
were impacted by currency and smaller crops sizes last year, gross
profit decreased $5.4 million to
$28.6 million. Excluding the impact
of currency movement in Other Regions, gross profit would have been
consistent with the prior year. Offsetting these increased
costs, SG&A decreased 12.8% or $5.0
million to $33.8 million, as a
result of reduced professional fees and reduced incentive
compensation. Additionally, other income improved $4.8 million mainly related to increased sales of
intrastate trade tax credits in South America.
"As previously reported and consistent with our plan, in April
we purchased and cancelled $28.6
million of our senior secured second lien notes, leaving
face value of $662.9 million
outstanding. Our liquidity at quarter end was strong with available
credit lines and cash of $573.3
million including available lines for letters of credit.
"As we progress into the second quarter we anticipate that our
results will begin to reflect improvement versus last year in both
sales and profitability. Shipment weighting will swing to current
crop tobaccos where we should start to see the positive impact
versus last year. As a result and based on current
conditions, our guidance for fiscal year 2018 remains unchanged. We
anticipate improved sales in a range of $1,900.0 million to $2,000.0 million and Adjusted
EBITDA of $165.0 to $185.0
million.
Mr. Sikkel, concluded, "Our customers are focused on enhancing
global supply chain sustainability and driving positive change in
nicotine consumption habits with reduced risk products. Alliance
One is well positioned to continue to meet customer requirements
for traditional products with directed agronomy investments in
systems and people. Such investments, as well as others, uniquely
position our Company as a key supplier for new products our
customers are developing and we will continue to invest where
appropriate returns should be achievable. We will also pursue
additional growth opportunities and take further steps to
strengthen our preferred supplier position across our customers'
multiple product requirements. Our focus remains on execution with
a well measured approach to best position our company for success
in the future and to improve shareholder value."
Performance Summary for the Fiscal Quarter Ended June 30, 2017
Total sales and other operating revenues increased 6.1% to
$277.0 million primarily due to a
4.8% increase in average sales price due to product mix that more
heavily favored lamina sales this year when compared to last year's
quarter. Volumes were unchanged at 61.2 million kilos when compared
to the prior year mainly due to the timing of shipments.
Gross profit decreased 15.9% to $28.6
million, mainly due to higher prior crop conversion costs in
North America and the impact of
currency exchange rates. Increased conversion costs and currency
movement impacted costs per kilo, resulting in lower gross profit
as a percentage of sales at 10.3% this year compared to 13.0% last
year. Excluding the impact of currency movement in Other
Regions, gross profit would have otherwise been consistent with the
prior year.
SG&A decreased 12.8% to $33.8
million primarily from reduced professional fees and lower
incentive compensation costs. Other income increased $4.8 million primarily related to sales of
intrastate trade tax credits in South
America. With the lower gross profit offset by improved
SG&A and other income, operating loss improved $4.4 million, to $0.9
million, from the prior year.
During the three months ended June 30,
2017, we purchased $28.6
million of our existing senior secured second lien notes due
2021 at a discount resulting in debt retirement income of
$3.0 million.
Interest expense increased 11.4% to $34.1
million from the prior-year period, primarily due to
increased interest rates and higher average borrowings related to
increased tobacco purchases for anticipated sales.
Cash income taxes paid decreased from $3.7 million to $0.9
million and the effective tax rate was (2.1)% this year
compared to 11.3% last year. The variance in the effective tax rate
between this year and last year is the result of many factors
including the differences in forecasted income for the respective
years; differences in year-to-date income for the quarters; certain
losses for which no tax benefit is recorded; and, differences in
valuation allowances, net exchanges losses on income tax accounts
and net exchange gains related to liabilities for unrecognized tax
benefits.
Earnings Per Share
For the first quarter ended June 30,
2017, the Company reported a net loss of $32.5 million, or $3.63 per basic share, compared to a net loss for
the first fiscal quarter last year of $31.5
million, or $3.54 per basic
share. Included in net loss this year was $1.6 million of legal and professional fees for
the Kenya matter and $1.1 million of loss mainly related to
Kenya storage costs. After
adjusting for tax, the net impact of these items negatively
impacted earnings per basic share by $0.26 this year. Included in net loss last year
was $3.6 million of legal and
professional fees for the Kenya
matter and $1.6 million of loss
related to Kenya green leaf
sourcing mainly for storage as the operation continued to wind
down. After adjusting for tax, the net impact of these items last
year negatively impacted earnings per basic share by $0.53.
Liquidity and Capital Resources
As of June 30, 2017, available
credit lines and cash were $573.3
million, comprised of $264.4
million in cash and $308.9
million of credit lines, consisting of $60.0 million available under the U.S. ABL
facility for general corporate purposes (subject to limitations on
borrowing if unrestricted cash and cash equivalents exceed
$180.0 million), $241.7 million of notes payable to banks and
$7.2 million of availability
exclusively for letters of credit. In the future, the Company may
elect to redeem, repay, make open market purchases, retire or
cancel indebtedness prior to stated maturity under its various
global bank facilities and outstanding public notes, as they may
permit.
Financial Results Investor Call
The Company will hold a conference call to report financial
results for its fiscal quarter ended June
30, 2017, on Thursday, August 3,
2017 at 5:30 P.M. ET. The dial
in number for the call is (888) 395-3237 or outside the U.S. (719)
785-1764 and conference ID 9646563. Those seeking to listen to the
call may access a live broadcast on the Alliance One website.
Please visit www.aointl.com 15 minutes in advance to register.
For those who are unable to listen to the live event, a replay
will be available by telephone from 8:30
P.M. ET, August 3rd
through 8:30 P.M. ET August 8th. To access the replay, dial
(888) 203-1112 within the U.S., or (719) 457-0820 outside the U.S.,
and enter access code 9646563. Any replay, rebroadcast, transcript
or other reproduction of this conference call, other than the
replay accessible by calling the number above, has not been
authorized by Alliance One and is strictly prohibited.
Investors should be aware that any unauthorized reproduction of
this conference call may not be an accurate reflection of its
contents.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations of future
events. Such statements include, but are not limited to, statements
about future financial and operating results, plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based on the current
beliefs and expectations of management and are subject to
significant risks and uncertainties. If underlying
assumptions prove inaccurate or known or unknown risks or
uncertainties materialize, actual results may differ materially
from those currently anticipated expected or projected. The
following factors, among others, could cause actual results to
differ from those expressed or implied by the forward-looking
statements: changes in the timing of anticipated shipments,
changes in anticipated geographic product sourcing, political
instability, currency and interest rate fluctuations, shifts in the
global supply and demand position for tobacco products, changes in
tax laws and regulations or the interpretation of tax laws and
regulations, resolution of tax matters, adverse weather conditions,
changes in costs incurred in supplying tobacco and related services
and the impact of regulation and litigation. Additional factors
that could cause the Company's results to differ materially from
those expressed or implied by forward-looking statements can be
found in the Company's most recent Annual Report on Form 10-K and
the other filings with the Securities and Exchange Commission (the
"SEC") which are available at the SEC's Internet site
(http://www.sec.gov).
Non-GAAP Financial Information
This press release contains financial measures that have not
been prepared in accordance with generally accepted accounting
principles in the United States
("U.S. GAAP" or "GAAP"). They include EBITDA, Adjusted EBITDA
and Adjusted Net Debt. Tables showing the reconciliation of these
non-GAAP financial measures are attached to the release.
Adjusted EBITDA anticipated for fiscal year 2018 is calculated in a
manner consistent with the presentation of Adjusted EBITDA in the
attached tables. Because of the forward-looking nature of
this estimate of Adjusted EBITDA, it is impractical to present a
quantitative reconciliation of such measure to a comparable GAAP
measure, and accordingly no such GAAP measure is being
presented.
About Alliance One International, Inc.
Alliance One is a leading global independent leaf merchant. For
more information on Alliance One, visit the Company's website at
www.aointl.com.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30
|
|
(in thousands,
except per share data)
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Sales and other
operating revenues
|
$
276,993
|
|
$
261,101
|
|
Cost of goods and
services sold
|
248,358
|
|
227,050
|
|
Gross
profit
|
28,635
|
|
34,051
|
|
Selling, general and
administrative expenses
|
33,843
|
|
38,805
|
|
Other income
(expense)
|
4,304
|
|
(481)
|
|
Restructuring and
asset impairment charges
|
-
|
|
41
|
|
Operating
loss
|
(904)
|
|
(5,276)
|
|
Debt retirement
expense (income)
|
(2,975)
|
|
-
|
|
Interest
expense
|
34,101
|
|
30,602
|
|
Interest
income
|
968
|
|
1,838
|
|
Loss before income
taxes and other items
|
(31,062)
|
|
(34,040)
|
|
Income tax expense
(benefit)
|
646
|
|
(3,830)
|
|
Equity in net income
(loss) of investee companies
|
(925)
|
|
(1,329)
|
|
Net loss
|
(32,633)
|
|
(31,539)
|
|
|
Less: Net loss
attributable to noncontrolling interests
|
(90)
|
|
(34)
|
|
Net loss attributable
to Alliance One International, Inc.
|
$
(32,543)
|
|
$
(31,505)
|
|
|
|
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
Basic
|
$
(3.63)
|
|
$
(3.54)
|
|
|
Diluted
|
$
(3.63)
|
|
$
(3.54)
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
Basic
|
8,964
|
|
8,904
|
|
|
Diluted
|
8,964
|
|
8,904
|
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
|
LTM(5)
|
(in
thousands)
|
June 30,
2017
|
|
June 30,
2016
|
|
March 31,
2017
|
|
June 30,
2017
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
(32,543)
|
|
$
(31,505)
|
|
$
(62,928)
|
|
$
(63,966)
|
|
|
|
|
|
|
|
|
Plus: Interest
expense
|
34,101
|
|
30,602
|
|
132,667
|
|
136,165
|
Plus: Income tax
expense
|
646
|
|
(3,830)
|
|
23,481
|
|
27,956
|
Plus: Depreciation
and amortization expense
|
8,387
|
|
8,752
|
|
34,476
|
|
34,111
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
10,590
|
|
4,019
|
|
127,696
|
|
134,267
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances (recoveries) to suppliers(2)
|
-
|
|
-
|
|
-
|
|
-
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
-
|
|
43
|
|
(5,545)
|
|
(5,588)
|
Plus: Non-cash
employee stock based compensation
|
291
|
|
392
|
|
1,551
|
|
1,450
|
Less: Other income
(expense)
|
4,304
|
|
(481)
|
|
4,896
|
|
9,680
|
Plus: Restructuring
and asset impairment charges
|
-
|
|
41
|
|
1,375
|
|
1,334
|
Plus: Debt retirement
expense (income)
|
(2,975)
|
|
-
|
|
(300)
|
|
(3,275)
|
Plus: Amortization of
basis difference - CBT investment(3)
|
318
|
|
307
|
|
1,518
|
|
1,529
|
Plus: Kenyan
investigation legal & professional costs
|
1,556
|
|
3,551
|
|
7,171
|
|
5,176
|
Less: Kenyan green
leaf operation Adjusted EBITDA(4)
|
(1,072)
|
|
(1,647)
|
|
(8,013)
|
|
(7,438)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
6,548
|
|
$
10,480
|
|
$
136,583
|
|
$
132,651
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
|
$
1,461,650
|
Less:
Cash
|
|
|
|
|
|
|
264,406
|
Total debt less
cash
|
|
|
|
|
|
|
$
1,197,244
|
|
|
|
|
|
|
|
|
(Total debt less
cash) /Adjusted EBITDA(1)
|
|
|
|
|
|
|
9.03x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
|
|
|
|
|
|
|
(2) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
|
|
|
|
|
|
|
(3) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
(4) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this
table. In fiscal year 2016 we decided to exit green leaf sourcing
in the Kenyan market as part of our restructuring
program.
|
|
|
|
|
|
|
|
|
(5) Items for the
twelve months ended June 30, 2017 are derived by adding the items
for the three months ended June 30, 2017 and the fiscal year March
31, 2017 and subtracting the items for the three months ended June
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
|
LTM(7)
|
(in
thousands)
|
June 30,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Alliance One International, Inc.
|
$
(31,505)
|
|
$
(25,950)
|
|
$
65,532
|
|
$
59,977
|
|
|
|
|
|
|
|
|
Plus: Interest
expense
|
30,602
|
|
27,773
|
|
117,190
|
|
120,019
|
Plus: Income tax
expense (benefit)
|
(3,830)
|
|
(3,214)
|
|
32,215
|
|
31,599
|
Plus: Depreciation
and amortization expense
|
8,752
|
|
7,064
|
|
28,361
|
|
30,049
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
4,019
|
|
5,673
|
|
243,298
|
|
241,644
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances to suppliers(2)
|
-
|
|
430
|
|
-
|
|
(430)
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
43
|
|
(83)
|
|
(169)
|
|
(43)
|
Plus: Non-cash
employee stock based compensation
|
392
|
|
813
|
|
2,425
|
|
2,004
|
Less: Other income
(expense)
|
(481)
|
|
560
|
|
105,427
|
|
104,386
|
Plus: Restructuring
and asset impairment charges
|
41
|
|
2,948
|
|
5,888
|
|
2,981
|
Plus: Debt retirement
expense (income)
|
-
|
|
-
|
|
-
|
|
0
|
Plus: Amortization of
basis difference - CBT investment(3)
|
307
|
|
322
|
|
1,554
|
|
1,539
|
Plus: Kenyan
investigation legal & professional costs
|
3,551
|
|
-
|
|
8,579
|
|
12,130
|
Less: Kenyan green
leaf operation Adjusted EBITDA(4)
|
(1,647)
|
|
(5,377)
|
|
(16,666)
|
|
(12,936)
|
Plus: Reconsolidated
subsidiary incremental EBITDA after elimination of related party
transactions with AOI and its consolidated
subsidiaries(5)
|
-
|
|
1,252
|
|
16,800
|
|
15,548
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
10,480
|
|
$
16,173
|
|
$
189,614
|
|
$
183,922
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
|
$
1,369,233
|
Less: Debt of
reconsolidated subsidiary funded by affiliate(6)
|
|
|
|
|
|
|
67,397
|
Total adjusted
debt
|
|
|
|
|
|
|
$
1,301,836
|
Less:
Cash
|
|
|
|
|
|
|
158,211
|
Total adjusted debt
less cash(6)
|
|
|
|
|
|
|
$
1,143,625
|
|
|
|
|
|
|
|
|
(Total adjusted debt
less cash) /Adjusted EBITDA(1)(6)
|
|
|
|
|
|
|
6.22x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings
before interest, taxes, depreciation and amortization ("EBITDA")
and adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
|
|
|
|
|
|
|
(2) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
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(3) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
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(4) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is calculated
on the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program.
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(5) Adjusted EBITDA
of the subsidiary reconsolidated at the end of the fourth quarter
of fiscal year 2016 is calculated on the same basis as
Adjusted EBITDA as presented in this table, with eliminations for
related party transactions with AOI and its consolidated
subsidiaries, and is included in consolidated information
thereafter.
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(6) Represents the
portion of outstanding debt of the subsidiary reconsolidated at the
end of the fourth quarter of the fiscal year ended March 31, 2016
under a credit facility attributable to the participation interest
of another AOI subsidiary funding that portion of the borrowing
under the facility. As a result of a direct assignment of the
interest in such facility to such other AOI subsidiary on March 2,
2017, the amount of the debt attributable to the interest of such
other AOI subsidiary is eliminated in the determination of
consolidated total debt on and after March 2, 2017.
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(7) Items for the
twelve months ended June 30, 2016 are derived by adding the items
for the three months ended June 30, 2016 and the fiscal year ended
March 31, 2016 and subtracting the items for the three months ended
June 30, 2015.
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View original
content:http://www.prnewswire.com/news-releases/alliance-one-international-reports-fiscal-year-2018-first-quarter-results-300499190.html
SOURCE Alliance One International, Inc.