NEW YORK, May 15, 2020 /PRNewswire/ -- ALJ Regional
Holdings, Inc. (NASDAQ: ALJJ) ("ALJ") announced results
today for its second quarter ended March
31, 2020.
ALJ is a holding company, whose wholly owned subsidiaries are
Faneuil, Inc. ("Faneuil"), Floors-N-More, LLC, d/b/a Carpets
N' More ("Carpets"), and Phoenix Color Corp.
("Phoenix"). Faneuil
is a leading provider of call center services, back office
operations, staffing services, and toll collection services to
commercial and governmental clients across the United States. Carpets is one of the
largest floor covering retailers in Las
Vegas, Nevada, and a provider of multiple products for the
commercial, retail, and home builder markets including all types of
flooring, countertops, and cabinets. Phoenix is a leading manufacturer of book
components, educational materials, and related products producing
value-added components, heavily illustrated books, and specialty
commercial products using a broad spectrum of materials and
decorative technologies.
Investment Highlights – Three and Six Months Ended
March 31, 2020
Consolidated Results for ALJ
- ALJ recognized consolidated net revenue of $96.0 million for the three months ended
March 31, 2020, an increase of
$8.0 million, or 9.1%, compared to
$88.0 million for the three months
ended March 31, 2019. The increase
was driven by the start of production for new contracts at Faneuil,
offset by lower component sales related to education at
Phoenix and lower volumes at
Carpets. ALJ recognized consolidated net revenue of $90.5 million for the three months ended
December 31, 2019.
- ALJ recognized a net loss of $61.8
million and loss per share of $1.47 for the three months ended March 31, 2020, compared to net income of
$0.4 million and earnings per share
(EPS) of $0.01 (diluted) for the
three months ended March 31, 2019.
Net loss for the three months ended March
31, 2020 reflects a $59.0
million non-cash and non-recurring impairment of goodwill.
Excluding such impairment of goodwill, ALJ recognized a net loss of
$2.8 million and loss per share of
$0.07 (diluted) for the three months
ended March 31, 2020. Most of the net
loss was due to lower margin from Faneuil revenue as a result of
inefficiencies related to the startup of new contracts, operational
challenges related to the expansion of certain ongoing contracts,
the start of the effect of the COVID-19 pandemic. In addition,
lower volumes at Phoenix were
realized during the quarter. ALJ recognized a net loss of
$4.3 million and loss per share of
$0.10 (diluted) for the three months
ended December 31, 2019.
- ALJ recognized adjusted EBITDA of $4.7
million for the three months ended March 31, 2020, a decrease of $4.0 million, or 46.1%, compared to $8.7 million for the three months ended
March 31, 2019. The decrease was a
result of lower volumes from components primarily related to
education at Phoenix, operational
inefficiencies from the startup of new contracts, increased medical
claims, increased reserves for workers' compensation claims, and
higher rent expense for new call centers at Faneuil, lower volumes
from builders and fewer upgrades to higher margin products by
builder customers at Carpets, and the start of the effect of the
COVID-19 pandemic. ALJ recognized adjusted EBITDA of $3.4 million for the three months ended
December 31, 2019.
- ALJ recognized consolidated net revenue of $186.5 million for the six months ended
March 31, 2020, an increase of
$4.7 million, or 2.6%, compared to
$181.8 million for the six months
ended March 31, 2019. The increase
was driven by the start of production for new contracts at Faneuil,
offset by lower component sales related to education at
Phoenix and lower volumes at
Carpets.
- ALJ recognized a net loss of $66.1
million and loss per share of $1.57 (diluted) for the six months ended
March 31, 2020, compared to net
income of $1.1 million and EPS of
$0.03 (diluted) for the six months
ended March 31, 2019. Net loss for
the six months ended March 31, 2020
reflects a $59.0 million non-cash and
non-recurring impairment of goodwill. Excluding such impairment of
goodwill, ALJ recognized a net loss of $7.0
million and loss per share of $0.17 (diluted) for the six months ended
March 31, 2020, most of which was due
to lower margin from Faneuil revenue as a result of inefficiencies
related to the startup of new contracts and operational challenges
related to the expansion of certain ongoing contracts, and lower
volumes at both Phoenix and
Carpets.
- ALJ recognized adjusted EBITDA of $8.1
million for the six months ended March 31, 2020, a decrease of $9.3 million, or 53.5%, compared to $17.3 million for the six months ended
March 31, 2019. The decrease was a
result of operational inefficiencies from the startup of new
contracts, increased medical claims, increased reserves for
workers' compensation claims, and higher rent expense for new call
centers at Faneuil, lower volumes from components primarily related
to education at Phoenix, and lower
volumes from builders and fewer upgrades to higher margin products
by builder customers at Carpets.
- ALJ estimates consolidated net revenue for the three months
ending June 30, 2020 to be in the
range of $78.0 million to
$87.0 million, compared to
$84.2 million for the three months
ended June 30, 2019.
Jess Ravich, Chief Executive
Officer of ALJ, said, "We are extremely proud of our employees in
all three of our divisions who have continued to work during this
pandemic and provide essential services to our clients. The
health of our employees is paramount. We have taken safety
precautions to provide a safe workspace and we have partially
transitioned to a stay-at-home work force. The ability to
staff call center representatives at home will have a material
positive effect on Faneuil for years to come with attendant lower
capex needs. While results during this quarter were significantly
lower than anticipated, we are encouraged by the accomplishments
made at Faneuil to shed unprofitable contracts, increase pricing on
existing and renewing contacts, and accelerate a transition of its
workforce to at-home agents, which now comprise nearly one third of
Faneuil's workforce. In addition, while results from
Phoenix were below our
expectations, during the quarter, Phoenix extended its supply agreement with a
major customer for an additional five years, to 2027, and secured
at least $12.0 million of incremental
annual volume requirements, which we expect will start to
positively impact results during the fourth fiscal quarter of
2020. We closed the ninth amendment to our term-loan facility
in early May 2020, which provides ALJ
with the ability to execute Faneuil's growth and invest in our
long-term initiatives."
|
|
Three Months Ended March 31,
|
|
|
|
|
|
Amounts in
thousands, except per share amounts
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Net
revenue
|
|
$
|
96,026
|
|
|
$
|
87,996
|
|
|
$
|
8,030
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
78,763
|
|
|
|
68,657
|
|
|
|
10,106
|
|
Selling, general, and
administrative expense
|
|
|
18,467
|
|
|
|
16,089
|
|
|
|
2,378
|
|
Impairment of
goodwill
|
|
|
59,047
|
|
|
|
—
|
|
|
|
59,047
|
|
Total operating
expenses
|
|
|
156,277
|
|
|
|
84,746
|
|
|
|
71,531
|
|
Operating (loss)
income
|
|
|
(60,251)
|
|
|
|
3,250
|
|
|
|
(63,501)
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(2,844)
|
|
|
|
(2,625)
|
|
|
|
(219)
|
|
Total other
expense, net
|
|
|
(2,844)
|
|
|
|
(2,625)
|
|
|
|
(219)
|
|
(Loss) income
before income taxes
|
|
|
(63,095)
|
|
|
|
625
|
|
|
|
(63,720)
|
|
Benefit from
(provision for) income taxes
|
|
|
1,297
|
|
|
|
(202)
|
|
|
|
1,499
|
|
Net (loss)
income
|
|
$
|
(61,798)
|
|
|
$
|
423
|
|
|
$
|
(62,221)
|
|
Basic (loss)
earnings per share of common stock
|
|
$
|
(1.47)
|
|
|
$
|
0.01
|
|
|
|
|
|
Diluted (loss)
earnings per share of common stock
|
|
$
|
(1.47)
|
|
|
$
|
0.01
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
42,173
|
|
|
|
38,026
|
|
|
|
|
|
Diluted
|
|
|
42,173
|
|
|
|
38,076
|
|
|
|
|
|
|
|
|
Six Months
Ended March
31,
|
|
|
|
|
|
Amounts in
thousands, except per share amounts
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Net
revenue
|
|
$
|
186,491
|
|
|
$
|
181,780
|
|
|
$
|
4,711
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
154,489
|
|
|
|
143,303
|
|
|
|
11,186
|
|
Selling, general, and
administrative expense
|
|
|
35,077
|
|
|
|
31,736
|
|
|
|
3,341
|
|
Impairment of
goodwill
|
|
|
59,047
|
|
|
|
—
|
|
|
|
59,047
|
|
Loss (gain) on
disposal of assets and other gain, net
|
|
|
2
|
|
|
|
(223)
|
|
|
|
225
|
|
Total operating
expenses
|
|
|
248,615
|
|
|
|
174,816
|
|
|
|
73,799
|
|
Operating (loss)
income
|
|
|
(62,124)
|
|
|
|
6,964
|
|
|
|
(69,088)
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(5,408)
|
|
|
|
(5,340)
|
|
|
|
(68)
|
|
Interest from legal
settlement
|
|
|
200
|
|
|
|
—
|
|
|
|
200
|
|
Total other
expense, net
|
|
|
(5,208)
|
|
|
|
(5,340)
|
|
|
|
132
|
|
(Loss) income
before income taxes
|
|
|
(67,332)
|
|
|
|
1,624
|
|
|
|
(68,956)
|
|
Benefit from
(provision for) income taxes
|
|
|
1,257
|
|
|
|
(490)
|
|
|
|
1,747
|
|
Net (loss)
income
|
|
$
|
(66,075)
|
|
|
$
|
1,134
|
|
|
$
|
(67,209)
|
|
Basic (loss)
earnings per share of common stock
|
|
$
|
(1.57)
|
|
|
$
|
0.03
|
|
|
|
|
|
Diluted (loss)
earnings per share of common stock
|
|
$
|
(1.57)
|
|
|
$
|
0.03
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
42,173
|
|
|
|
38,037
|
|
|
|
|
|
Diluted
|
|
|
42,173
|
|
|
|
38,087
|
|
|
|
|
|
Results for Faneuil
Anna Van Buren, CEO of Faneuil,
stated, "I am so proud of our over 5,500 employees who continue to
work during this pandemic helping Americans get information about
their healthcare, transportation, utilities, and unemployment
benefits. Second quarter revenue increased 26% over the prior
year. New client logos and the successful implementation of
one new transportation client and one new health benefit exchange
operation contributed to our growth. Adjusted EBITDA results were
affected by increased medical claims and a higher than expected
increase in workers' compensation reserves. At the end of February,
we completed the consolidation of sites in Wichita, KS with an expected cost savings of
approximately $1.0 million annually.
With the onset of COVID-19, Faneuil began moving operations to
enable employees to work from home in March to protect our
employees' safety while continuing to deliver services for our
clients. After the close of the quarter we were awarded three new
state contracts to assist with the unemployment crisis. We were
able to start all three projects within days of being awarded the
contracts, and the results will be seen starting in our third
fiscal quarter."
Faneuil recognized net revenue of $58.8
million for the three months ended March 31, 2020 compared to $46.6 million for the three months ended
March 31, 2019. Net revenue
increased $12.2 million, or 26.3%,
due to a $14.6 million increase in
new customer contracts, offset by a $1.4
million net decrease in existing customer revenue mostly due
to lower call volumes and a $1.0
million reduction driven by the completion of customer
contracts. Faneuil recognized net revenue of $58.6 million for the three months ended
December 31, 2019.
Faneuil segment adjusted EBITDA was $1.4
million for the three months ended March 31, 2020 compared to $2.8 million for the three months ended
March 31, 2019. Segment
adjusted EBITDA decreased $1.4
million, or 50.9%, driven by operational inefficiencies from
the startup of new contracts, increased medical claims, increased
reserves for workers' compensation claims, and higher rent expense
for new call centers. Faneuil recognized segment adjusted EBITDA of
$1.7 million for the three months
ended December 31, 2019.
Faneuil recognized net revenue of $117.4
million for the six months ended March 31, 2020 compared to $101.8 million for the six months ended
March 31, 2019. Net revenue
increased $15.6 million, or 15.3%,
due to a $22.2 million increase in
new customer contracts, offset by a $3.5
million net decrease in existing customer revenue mostly due
to lower call volumes and a $3.1
million reduction driven by the completion of customer
contracts.
Faneuil segment adjusted EBITDA was $3.0
million for the six months ended March 31, 2020 compared to $7.7 million for the six months ended
March 31, 2019. Segment
adjusted EBITDA decreased $4.7
million, or 60.9%, driven by operational inefficiencies from
the startup of new contracts, increased medical claims, increased
reserves for workers' compensation claims, and higher rent expense
for new call centers.
Faneuil estimates its net revenue for the three months ending
June 30, 2020 to be in the range of
$48.0 million to $53.2 million, compared to $44.8 million for the three months ended
June 30, 2019.
Faneuil's contract backlog expected to be realized within the
next twelve months as of March 31,
2020 was $225.6 million,
compared to $167.6 million as of
March 31, 2019 and $223.1 million as of December 31, 2019. Faneuil's total contract
backlog as of March 31, 2020 was
$607.2 million as compared to
$403.4 million as of March 31, 2019 and $614.3
million as of December 31,
2019.
Results for Carpets
Steve Chesin, CEO of Carpets
stated, "Our results continue to be impacted by lower volumes,
unfavorable customer mix, and lower than anticipated upgrades from
customers due to increased pricing for housing in the Las Vegas market. The shelter-in-place
mandate in Las Vegas has added
uncertainty to the marketplace. We continue to align our cost
structure to the level of business activity."
Carpets recognized net revenue of $10.5
million for the three months ended March 31, 2020 compared to $12.1 million for the three months ended
March 31, 2019. Net revenue
decreased $1.5 million, or 12.7%,
which was primarily attributable to lower volumes from floorings,
cabinets, and granite. The decrease in volumes from large
builders was somewhat offset by the increased volumes from
commercial customers as a result of Carpets' efforts to attract and
service multi-family construction projects. Carpets recognized net
revenue of $9.8 million for the three
months ended December 31,
2019.
Carpets recognized segment adjusted EBITDA of $0.1 million for the three months ended
March 31, 2020 compared $0.3 million for the three months ended
March 31, 2019. Segment adjusted
EBITDA decreased $0.2 million, or
79.8%, due to lower overall volumes. Carpets recognized
segment adjusted EBITDA loss of ($0.1)
million for the three months ended December 31, 2019.
Carpets recognized net revenue of $20.3
million for the six months ended March 31, 2020 compared to $24.5 million for the six months ended
March 31, 2019. Net revenue
decreased $4.1 million, or 16.9%,
which was primarily attributable to lower volumes from floorings,
cabinets, and granite.
Carpets segment adjusted EBITDA loss for the six months ended
March 31, 2020 was less than
($0.1) million compared to segment
adjusted EBITDA of $0.4 million for
the six months ended March 31,
2019. Segment adjusted EBITDA decreased $0.5 million, or 105.3%, due to lower
volumes.
Carpets estimates its net revenue for the three months ending
June 30, 2020 to be in the range of
$9.0 million to $9.8 million, compared to $12.8 million for the three months ended
June 30, 2019.
Carpets total backlog, which is expected to be fully realized
within the next 12 months, as of March 31,
2020 was $8.3 million compared
to $11.4 million as of March 31, 2019 and $9.4
million as of December 31,
2019.
Results for Phoenix
Marc Reisch, CEO of Phoenix, stated, "The $2.7 million decrease in our fiscal second
quarter revenues versus prior year was due to lower component
sales. The decrease of $2.2 million
of segment adjusted EBITDA for the quarter versus prior year was
due to the lower component revenues and a higher bad debt
allowance. The decrease in component revenues was primarily
due to the ongoing industry-wide slowdown for education book
components that is expected to continue into the third fiscal
quarter. Fiscal second quarter revenues were also somewhat
negatively impacted by the COVID-19 pandemic, and we expect the
pandemic to have a more significant impact at least through the
fiscal third quarter. During the second quarter, Phoenix extended the term, and significantly
increased the net sales requirements of its strategic supply
agreement with a major customer. The increase in net sales from
this agreement is expected to begin to ramp up in the fiscal fourth
quarter."
Phoenix recognized net revenue
of $26.7 million for the three months
ended March 31, 2020 compared to
$29.3 million for the three months
ended March 31, 2019. Net revenue
decreased $2.7 million, or 9.1%, due
to lower component sales primarily related to education.
Phoenix recognized net revenue of
$22.1 million for the three months
ended December 31, 2019.
Phoenix recognized segment
adjusted EBITDA of $4.2 million for
the three months ended March 31, 2020
compared to $6.3 million for the
three months ended March 31, 2019.
Segment adjusted EBITDA decreased by $2.2
million, or 34.0%, as a result of the decrease in volumes
from components primarily related to books, and a higher bad debt
allowance. Phoenix
recognized segment adjusted EBITDA of $2.8
million for the three months ended December 31, 2019.
Phoenix recognized net revenue
of $48.8 million for the six months
ended March 31, 2020 compared to
$55.5 million for the six months
ended March 31, 2019. Net revenue
decreased $6.8 million, or 12.2%, due
to several large orders during the six months ended March 31, 2019 that did not reoccur during the
six months ended March 31, 2020 and
lower component sales primarily related to education.
Phoenix recognized segment
adjusted EBITDA of $7.0 million for
the six months ended March 31, 2020
compared to $10.6 million for the six
months ended March 31, 2019. Segment
adjusted EBITDA decreased by $3.5
million, or 33.5%, as a result of the decrease in volumes
from components primarily related to books and a higher bad debt
allowance. Although production labor decreased in response to the
decreased volumes, such decrease in production labor did not keep
pace with the decreased volumes.
Phoenix estimates its net
revenue for the three months ending June 30,
2020 to be in the range of $21.0
million to $24.0 million,
compared to $26.7 million for the
three months ended June 30, 2019.
Phoenix's contract backlog
expected to be realized within the next twelve months as of
March 31, 2020 was $70.7 million, compared to $69.5 million as of March
31, 2019 and $67.7 million as
of December 31, 2019.
Phoenix's total contract backlog
as of March 31, 2020 was $313.6 million as compared to $146.9 million as of March
31, 2019 and $160.8 million as
of December 31, 2019.
Non-GAAP Financial Measures
In our earnings releases, prepared remarks, conference calls,
presentations, and webcasts, we may present certain adjusted
financial measures that are not calculated according to generally
accepted accounting principles in the
United States ("GAAP"). These non-GAAP financial measures
are designed to complement the GAAP financial information presented
in this release because management believes they present
information regarding ALJ that is useful to investors. The non-GAAP
financial measures presented should not be considered in isolation
from, or as a substitute for, the comparable GAAP financial
measure.
We present adjusted EBITDA because we believe it is frequently
used by analysts, investors, and other interested parties in the
evaluation of our company. ALJ defines segment adjusted
EBITDA as segment net income (loss) before depreciation and
amortization expense, interest expense, litigation loss, recovery
of litigation loss, restructuring and cost reduction initiatives,
loan amendment expenses, fair value of warrants issued in
connection with loan amendments, stock-based compensation,
acquisition-related expenses, (loss) gain on disposal of assets and
other gain, net, provision for income taxes, and other
non-recurring items. Adjusted EBITDA measures are
not calculated in the same manner by all companies and,
accordingly, may not be an appropriate measure for
comparison. Below are reconciliations of our net (loss)
income, the most directly comparable GAAP measure, to consolidated
adjusted EBITDA:
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(61,798)
|
|
|
$
|
423
|
|
|
$
|
(62,221)
|
|
Impairment of
goodwill
|
|
|
59,047
|
|
|
|
—
|
|
|
|
59,047
|
|
Depreciation and
amortization expense
|
|
|
4,918
|
|
|
|
4,837
|
|
|
|
81
|
|
Interest
expense
|
|
|
2,844
|
|
|
|
2,625
|
|
|
|
219
|
|
Restructuring and cost
reduction initiatives
|
|
|
475
|
|
|
|
332
|
|
|
|
143
|
|
Loan amendment
fees
|
|
|
239
|
|
|
|
136
|
|
|
|
103
|
|
Fair value of warrants
issued in connection with
loan amendments
|
|
|
122
|
|
|
|
—
|
|
|
|
122
|
|
Stock-based
compensation
|
|
|
111
|
|
|
|
186
|
|
|
|
(75)
|
|
Acquisition-related
expenses
|
|
|
50
|
|
|
|
—
|
|
|
|
50
|
|
(Benefit from)
provision for income taxes
|
|
|
(1,297)
|
|
|
|
202
|
|
|
|
(1,499)
|
|
Consolidated
Adjusted EBITDA
|
|
$
|
4,711
|
|
|
$
|
8,741
|
|
|
$
|
(4,030)
|
|
|
|
|
Six Months
Ended March
31,
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(66,075)
|
|
|
$
|
1,134
|
|
|
$
|
(67,209)
|
|
Impairment of
goodwill
|
|
|
59,047
|
|
|
|
—
|
|
|
|
59,047
|
|
Depreciation and
amortization expense
|
|
|
10,160
|
|
|
|
9,283
|
|
|
|
877
|
|
Interest
expense
|
|
|
5,408
|
|
|
|
5,340
|
|
|
|
68
|
|
Restructuring and cost
reduction initiatives
|
|
|
790
|
|
|
|
603
|
|
|
|
187
|
|
Fair value of warrants
issued in connection with
loan amendments
|
|
|
716
|
|
|
|
—
|
|
|
|
716
|
|
Loan amendment
expenses
|
|
|
414
|
|
|
|
337
|
|
|
|
77
|
|
Stock-based
compensation
|
|
|
223
|
|
|
|
371
|
|
|
|
(148)
|
|
Acquisition-related
expenses
|
|
|
99
|
|
|
|
12
|
|
|
|
87
|
|
Loss (gain) on
disposal of assets and other gain,
net
|
|
|
2
|
|
|
|
(223)
|
|
|
|
225
|
|
Interest from legal
settlement
|
|
|
(200)
|
|
|
|
—
|
|
|
|
(200)
|
|
Recovery of litigation
loss
|
|
|
(1,256)
|
|
|
|
—
|
|
|
|
(1,256)
|
|
(Benefit from)
provision for income taxes
|
|
|
(1,257)
|
|
|
|
490
|
|
|
|
(1,747)
|
|
Consolidated
Adjusted EBITDA
|
|
$
|
8,071
|
|
|
$
|
17,347
|
|
|
$
|
(9,276)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Consolidated Financial Information - Segment Net Revenue, Segment
Adjusted EBITDA, and Debt
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Segment Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Faneuil
|
|
$
|
58,825
|
|
|
$
|
46,590
|
|
|
$
|
12,235
|
|
|
|
26.3
|
%
|
Carpets
|
|
|
10,548
|
|
|
|
12,088
|
|
|
|
(1,540)
|
|
|
|
(12.7)
|
%
|
Phoenix
|
|
|
26,653
|
|
|
|
29,318
|
|
|
|
(2,665)
|
|
|
|
(9.1)
|
%
|
Total Segment Net
Revenue
|
|
$
|
96,026
|
|
|
$
|
87,996
|
|
|
$
|
8,030
|
|
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Faneuil
|
|
$
|
1,372
|
|
|
$
|
2,793
|
|
|
$
|
(1,421)
|
|
|
|
(50.9)
|
%
|
Carpets
|
|
|
55
|
|
|
|
272
|
|
|
|
(217)
|
|
|
|
(79.8)
|
%
|
Phoenix
|
|
|
4,178
|
|
|
|
6,335
|
|
|
|
(2,157)
|
|
|
|
(34.0)
|
%
|
Corporate
|
|
|
(894)
|
|
|
|
(659)
|
|
|
|
(235)
|
|
|
|
(35.7)
|
%
|
Total Segment
Adjusted EBITDA
|
|
$
|
4,711
|
|
|
$
|
8,741
|
|
|
$
|
(4,030)
|
|
|
|
(46.1)
|
%
|
|
|
|
|
Six Months
Ended March
31,
|
|
|
|
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Segment Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Faneuil
|
|
$
|
117,392
|
|
|
$
|
101,792
|
|
|
$
|
15,600
|
|
|
|
15.3
|
%
|
Carpets
|
|
|
20,322
|
|
|
|
24,450
|
|
|
|
(4,128)
|
|
|
|
(16.9)
|
%
|
Phoenix
Color
|
|
|
48,777
|
|
|
|
55,538
|
|
|
|
(6,761)
|
|
|
|
(12.2)
|
%
|
Total Segment Net
Revenue
|
|
$
|
186,491
|
|
|
$
|
181,780
|
|
|
$
|
4,711
|
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended March
31,
|
|
|
|
|
|
|
|
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Faneuil
|
|
$
|
3,025
|
|
|
$
|
7,739
|
|
|
$
|
(4,714)
|
|
|
|
(60.9)
|
%
|
Carpets
|
|
|
(23)
|
|
|
|
432
|
|
|
|
(455)
|
|
|
|
(105.3)
|
%
|
Phoenix
Color
|
|
|
7,018
|
|
|
|
10,556
|
|
|
|
(3,538)
|
|
|
|
(33.5)
|
%
|
Corporate
|
|
|
(1,949)
|
|
|
|
(1,380)
|
|
|
|
(569)
|
|
|
|
(41.2)
|
%
|
Total Segment
Adjusted EBITDA
|
|
$
|
8,071
|
|
|
$
|
17,347
|
|
|
$
|
(9,276)
|
|
|
|
(53.5)
|
%
|
As of March 31, 2020 and
September 30, 2019, consolidated debt
and consolidated net debt were comprised of the following
(exclusive of deferred financing costs):
|
|
March
31,
|
|
|
September 30,
|
|
Amounts in
thousands
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
|
|
|
Term loan
payable
|
|
$
|
78,188
|
|
|
$
|
81,082
|
|
Line of
credit
|
|
|
19,536
|
|
|
|
9,823
|
|
Equipment financing
agreement
|
|
|
2,513
|
|
|
|
3,101
|
|
Capital
leases
|
|
|
6,983
|
|
|
|
5,158
|
|
Total
debt
|
|
|
107,220
|
|
|
|
99,164
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
3,099
|
|
|
|
4,529
|
|
Net
debt
|
|
$
|
104,121
|
|
|
$
|
94,635
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2020, ALJ was in
compliance with all debt covenants.
|
|
Financial Covenants Compliance
|
|
|
March 31,
2020
|
|
|
(actual)
|
|
(required)
|
Leverage
Ratio
|
|
5.54
|
|
< 7.25
|
Fixed Charges
Ratio
|
|
0.79
|
|
> 0.65
|
About ALJ Regional Holdings, Inc.
ALJ Regional Holdings, Inc. is the parent company of (i)
Faneuil, Inc., a leading provider of call center services, back
office operations, staffing services, and toll collection services
to commercial and governmental clients across the United States, (ii) Floors-N-More, LLC,
d/b/a Carpets N' More, one of the largest floor covering retailers
in Las Vegas, Nevada, and a
provider of multiple products for the commercial, retail, and home
builder markets including all types of flooring, countertops, and
cabinets, and (iii) Phoenix Color Corp., a leading manufacturer of
book components, educational materials, and related products
producing value-added components, heavily illustrated books, and
specialty commercial products using a broad spectrum of materials
and decorative technologies.
Forward-Looking Statements
ALJ's second quarter ended March 31,
2020 earnings release and related communications contain
forward-looking statements within the meaning of federal securities
laws. Such statements include information regarding our
expectations, impact of COVID-19, goals or intentions regarding the
future, including but not limited to statements about our financial
projections and business growth, our plans to reduce capital
expenditures and deleverage our balance sheet, our ability to
achieve target adjusted EBITDA margins on customer contracts, the
impact of new customer contracts for Faneuil, the impact of new
Faneuil contracts on Faneuil's financial results, operational
improvements implemented by Carpets, and other statements including
the words "will" and "expect" and similar expressions. You
should not place undue reliance on these statements, as they
involve certain risks and uncertainties, and actual results or
performance may differ materially from those discussed in any such
statement. Factors that could cause actual results to differ
materially are discussed in our annual report on Form 10-K and
quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission and available through EDGAR on the SEC's
website at www.sec.gov. All forward-looking statements
in this release are made as of the date hereof and we assume no
obligation to update any forward-looking statement.
View original
content:http://www.prnewswire.com/news-releases/alj-regional-holdings-inc-announces-earnings-for-the-second-quarter-ended-march-31-2020-301059946.html
SOURCE ALJ Regional Holdings, Inc.