Balchem Corporation (NASDAQ: BCPC) today reported for the third
quarter 2018 record third quarter net earnings of $19.2 million,
compared to net earnings of $16.0 million for the third quarter
2017. Record third quarter adjusted net earnings(a) were $23.7
million, compared to $20.4 million in the prior year quarter.
Record third quarter adjusted EBITDA(a) was $38.4 million, compared
to $35.7 million in the prior year quarter.
Third Quarter 2018 Financial Highlights:
- Quarterly net sales of $155.0 million in the third quarter
2018, an increase of $4.3 million, or 2.9%, compared to the prior
year quarter.
- Year over year sales growth in three of our four segments, with
record quarterly sales for our Human Nutrition & Health segment
and record third quarter sales for our Specialty Products
segment.
- Record third quarter earnings from operations of $25.5 million,
an increase of $2.4 million, or 10.5%, from the prior year.
- Record third quarter net earnings were $19.2 million, an
increase of $3.2 million, or 19.8%, from the prior year, resulting
in earnings per share of $0.59.
- Record third quarter adjusted EBITDA of $38.4 million increased
$2.7 million, or 7.4%, from the prior year.
- Record third quarter adjusted net earnings of $23.7 million
increased $3.3 million or 16.2% from the prior year, resulting in
adjusted earnings per share(a) of $0.73.
- Third quarter cash flows from operations were $32.5 million for
2018 with record third quarter free cash flow(a) of $26.9
million.
Recent Highlights:
- On August 29, 2018 the Company acquired 100% of the outstanding
common shares of Bioscreen Technologies, S.r.l., a privately held
manufacturer of encapsulated and fermented feed nutrition
ingredients, headquartered in Bertinoro, Italy. Bioscreen
manufactures high-performance encapsulates and fermented products
that deliver value-added solutions to an international animal
nutrition and health customer base.
- The Company reduced its revolving loan by $32.8 million in the
third quarter of 2018, reducing net debt to $135.3 million as of
September 30, 2018.
Ted Harris, Chairman, CEO, and President of
Balchem said, “We are pleased to report record third quarter
adjusted net earnings and adjusted EBITDA, quarterly sales growth
in three of our four segments, along with record third quarter free
cash flow. In addition, while the closing of the Bioscreen
acquisition only occurred on August 29th, our team has already made
good progress with the integration efforts, and we are pleased with
the capabilities this acquisition adds to our portfolio. As we
further strengthen our balance sheet, with our net debt leverage
ratio at 0.8, as of September 30, 2018, and with the current
economic uncertainties, we are pleased that our strong balance
sheet and revolving credit facility provide us the flexibility to
capitalize on both organic and acquisition opportunities.”
Results for Period Ended September 30,
2018 (unaudited)($000 Omitted Except for Net Earnings per
Share)
For the Three Months Ended September
30, |
|
|
|
|
|
2018 |
|
|
2017 |
|
Unaudited |
Net sales |
$ |
155,043 |
|
$ |
150,716 |
Gross margin |
|
48,002 |
|
|
46,181 |
Operating expenses |
|
22,537 |
|
|
23,126 |
Earnings from
operations |
|
25,465 |
|
|
23,055 |
Other expense |
|
1,936 |
|
|
2,358 |
Earnings before income
tax expense |
|
23,529 |
|
|
20,697 |
Income tax
expense |
|
4,315 |
|
|
4,654 |
Net earnings |
$ |
19,214 |
|
$ |
16,043 |
|
|
|
Diluted net earnings
per common share |
$ |
0.59 |
|
$ |
0.50 |
|
|
|
Adjusted
EBITDA(a) |
$ |
38,380 |
|
$ |
35,720 |
Adjusted net
earnings(a) |
$ |
23,653 |
|
$ |
20,360 |
Adjusted net earnings
per common share(a) |
$ |
0.73 |
|
$ |
0.63 |
|
|
|
Shares used in the
calculations of diluted and adjusted net earnings per common
share |
|
32,566 |
|
|
32,241 |
For the Nine Months Ended September
30, |
|
|
|
|
|
2018 |
|
|
2017 |
|
Unaudited |
Net sales |
$ |
480,140 |
|
$ |
435,526 |
Gross margin |
|
152,927 |
|
|
137,371 |
Operating expenses |
|
72,431 |
|
|
66,782 |
Earnings from
operations |
|
80,496 |
|
|
70,589 |
Other expense |
|
6,729 |
|
|
6,623 |
Earnings before income
tax expense |
|
73,767 |
|
|
63,966 |
Income tax
expense |
|
15,528 |
|
|
15,870 |
Net earnings |
$ |
58,239 |
|
$ |
48,096 |
|
|
|
Diluted net earnings
per common share |
$ |
1.79 |
|
$ |
1.49 |
|
|
|
Adjusted EBITDA(a) |
$ |
120,338 |
|
$ |
107,841 |
Adjusted net
earnings(a) |
$ |
72,601 |
|
$ |
59,800 |
Adjusted net earnings
per common share(a) |
$ |
2.24 |
|
$ |
1.86 |
|
|
|
Shares used in the
calculation of diluted and adjusted net earnings per common
share |
|
32,452 |
|
|
32,203 |
(a)See “Non-GAAP Financial Information” for a
reconciliation of GAAP and non-GAAP financial measures.
Segment Financial Results for the Third Quarter of
2018:
The Human Nutrition &
Health segment generated record quarterly sales of $85.9
million, an increase of $4.5 million or 5.6% compared to the prior
year quarter. The increase was primarily driven by higher powder
systems sales into food and beverage markets and higher chelated
minerals and choline nutrients sales, partially offset by lower
flavor systems sales. Record quarterly earnings from operations for
this segment of $13.1 million increased $2.7 million or 25.7%
compared to $10.4 million in the prior year quarter, primarily due
to the aforementioned higher sales and lower operating expenses,
partially offset by mix and certain higher raw material costs.
The Animal Nutrition &
Health segment sales of $40.4 million increased $2.4
million or 6.3% compared to the prior year quarter. The increased
sales were primarily due to increased monogastric species sales
primarily due to higher volumes and average selling prices,
partially offset by lower ruminant species sales. Third quarter
earnings from operations for this segment of $5.1 million were down
slightly from the prior year comparable quarter of $5.2 million,
with the higher sales being offset by mix, increased raw material
costs and certain higher selling, marketing, and research
expenses.
The Specialty Products segment
generated record third quarter sales of $17.6 million, an increase
of $0.4 million or 2.1% compared to the prior year quarter,
primarily due to increased plant nutrition volumes and higher sales
of ethylene oxide for the medical device sterilization market.
Quarterly earnings from operations for this segment were $5.8
million, versus $5.6 million in the prior year comparable quarter,
an increase of $0.2 million or 2.9%, primarily due to the
aforementioned higher sales.
The Industrial Products segment
sales of $11.1 million decreased $3.0 million or 21.0% from the
prior year comparable quarter, primarily due to reduced sales of
choline and choline derivatives used in shale fracking
applications. Earnings from operations for the Industrial Products
segment were $1.7 million, a decrease of $0.4 million or 17.6%
compared with the prior year comparable quarter, and were primarily
a reflection of the aforementioned lower sales volumes.
Consolidated gross margin for the quarter ended
September 30, 2018 of $48.0 million increased by $1.8 million or
3.9%, compared to $46.2 million for the prior year comparable
period. Gross margin as a percentage of sales increased to 31.0% as
compared to 30.6% in the prior year period. The increase was
primarily due to mix and certain higher average selling prices.
Operating expenses of $22.5 million for the third quarter were down
$0.6 million from the prior year comparable quarter, principally
due to the timing of an insurance recovery, partially offset by
certain higher compensation-related expenses and an impairment
charge related to the IFP tradename. Excluding transaction and
integration costs of $0.2 million and non-cash operating expense
associated with amortization of intangible assets of $5.4 million,
operating expenses were $16.9 million, or 10.9% of
sales.
Interest expense was $1.8 million in the third quarter of 2018. Our
effective tax rates for the three months ended September 30, 2018
and 2017 were 18.3% and 22.5%, respectively. The company’s
effective tax rate for the three months ended September 30, 2018 is
lower primarily due to the impact of the Tax Cuts and Jobs
Act.
For the quarter ended September 30, 2018, cash
flows provided by operating activities were $32.5 million, and
record third quarter free cash flow was $26.9 million. The $159.8
million of net working capital on September 30, 2018 included a $35
million reduction in the current portion of long-term debt,
resulting from the second quarter repayment of existing debt
through the initial use of revolving debt from our new credit
facility, and this revolving debt is classified as long-term debt
on our balance sheet. In addition, the net working capital included
a cash balance of $42.7 million, which reflects capital
expenditures of $5.6 million and accelerated principal payments on
the revolving loan of $32.8 million in the third quarter of 2018.
The Company continues to invest in projects across all facilities
to improve capabilities and operating efficiencies.
Ted Harris said, “Our results in the third
quarter reflected sales growth in three of our four segments and
record third quarter adjusted net earnings and adjusted EBITDA. We
are proud of this strong performance, particularly in light of the
macroeconomic challenges we are facing across several of our
reporting segments.”
Mr. Harris went on to add, “We are progressing
our strategic growth initiatives and are pleased with the Bioscreen
acquisition and the opportunities it affords us, as its
manufacturing, technical and commercial capabilities provide a
platform to accelerate our growth in Europe and broaden the range
of health and nutrition solutions that we bring to our
customers.”
Quarterly Conference CallA
quarterly conference call will be held on Tuesday, November 6,
2018, at 11:00 AM Eastern Time (ET) to review third quarter 2018
results. Ted Harris, Chairman of the Board, CEO and President, and
Bill Backus, Chief Accounting Officer will host the call. We
invite you to listen to the conference by calling toll-free
1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior
to the scheduled start time of the conference call. The
conference call will be available for replay two hours after the
conclusion of the call through end of day Tuesday, November 20,
2018. To access the replay of the conference call, dial
1-877-660-6853 (local dial-in 1-201-612-7415), and use conference
ID #13684529.
Segment InformationBalchem
Corporation reports four business segments: Human Nutrition &
Health; Animal Nutrition & Health; Specialty Products; and
Industrial Products. The Human Nutrition & Health segment
delivers customized food and beverage ingredient systems, as well
as key nutrients into a variety of applications across the food,
supplement and pharmaceutical industries. The Animal Nutrition
& Health segment manufactures and supplies products to numerous
animal health markets. Through Specialty Products, Balchem provides
specialty-packaged chemicals for use in healthcare and other
industries, and also provides chelated minerals to the
micronutrient agricultural market. The Industrial Products segment
manufactures and supplies certain derivative products into
industrial applications.
Forward-Looking StatementsThis
release contains forward-looking statements, which reflect
Balchem’s expectation or belief concerning future events that
involve risks and uncertainties. Balchem can give no assurance that
the expectations reflected in forward-looking statements will prove
correct and various factors could cause results to differ
materially from Balchem’s expectations, including risks and factors
identified in Balchem’s annual report on Form 10-K for the year
ended December 31, 2017. Forward-looking statements are qualified
in their entirety by the above cautionary statement. Balchem
assumes no duty to update its outlook or other forward-looking
statements as of any future date.
Contact: Mary Ann Brush, Balchem
Corporation (Telephone: 845-326-5600)
Selected Financial Data($ in
000’s)
Business Segment Net Sales:
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
2017 |
Human Nutrition &
Health |
$ |
85,890 |
$ |
81,365 |
$ |
253,966 |
$ |
232,523 |
Animal Nutrition &
Health |
|
40,410 |
|
38,010 |
|
128,587 |
|
113,136 |
Specialty Products |
|
17,629 |
|
17,264 |
|
58,233 |
|
56,813 |
Industrial Products |
|
11,114 |
|
14,077 |
|
39,354 |
|
33,054 |
Total |
$ |
155,043 |
$ |
150,716 |
$ |
480,140 |
$ |
435,526 |
Business Segment Earnings Before Income
Taxes:
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Human Nutrition &
Health |
$ |
13,106 |
|
$ |
10,426 |
|
$ |
36,175 |
|
$ |
31,942 |
|
Animal Nutrition &
Health |
|
5,064 |
|
|
5,154 |
|
|
19,661 |
|
|
14,219 |
|
Specialty Products |
|
5,769 |
|
|
5,607 |
|
|
19,583 |
|
|
20,125 |
|
Industrial
Products |
|
1,728 |
|
|
2,096 |
|
|
6,861 |
|
|
4,397 |
|
Transaction and
integration costs |
|
(202 |
) |
|
(228 |
) |
|
(1,784 |
) |
|
(2,181 |
) |
Indemnification
settlement |
|
- |
|
|
- |
|
|
- |
|
|
2,087 |
|
Interest and other
expense |
|
(1,936 |
) |
|
(2,358 |
) |
|
(6,729 |
) |
|
(6,623 |
) |
Total |
$ |
23,529 |
|
$ |
20,697 |
|
$ |
73,767 |
|
$ |
63,966 |
|
Selected
Balance Sheet Items |
September 30, |
|
December 31, |
|
2018 |
|
2017 |
Cash and Cash
Equivalents |
$ |
42,671 |
|
$ |
40,416 |
Accounts Receivable,
net |
|
101,205 |
|
|
91,226 |
Inventories |
|
71,778 |
|
|
60,696 |
Other Current
Assets |
|
10,052 |
|
|
6,998 |
Total Current
Assets |
|
225,706 |
|
|
199,336 |
|
|
|
|
|
|
Property, Plant &
Equipment, net |
|
194,081 |
|
|
189,793 |
Goodwill |
|
449,015 |
|
|
441,361 |
Intangible Assets With
Finite Lives, net |
|
111,142 |
|
|
128,073 |
Other Assets |
|
6,132 |
|
|
5,073 |
Total Assets |
$ |
986,076 |
|
$ |
963,636 |
|
|
|
|
|
|
Current
Liabilities |
$ |
65,951 |
|
$ |
73,396 |
Current Portion of
Long-Term Debt |
|
- |
|
|
35,000 |
Long-Term Debt |
|
178,000 |
|
|
183,964 |
Deferred Income
Taxes |
|
49,461 |
|
|
48,548 |
Long-Term
Obligations |
|
7,462 |
|
|
5,847 |
Total Liabilities |
|
300,874 |
|
|
346,755 |
Stockholders'
Equity |
|
685,202 |
|
|
616,881 |
Total Liabilities and
Stockholders' Equity |
$ |
986,076 |
|
$ |
963,636 |
Balchem CorporationCondensed
Consolidated Statements of Cash Flows(Dollars in
thousands)(unaudited) |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
|
|
Cash flows from
operating activities: |
|
Net earnings |
$ |
58,239 |
|
$ |
48,096 |
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities: |
|
|
Depreciation and
amortization |
|
33,460 |
|
|
33,170 |
|
Stock
compensation expense |
|
5,208 |
|
|
4,348 |
|
Other
adjustments |
|
(1,708 |
) |
|
526 |
|
Changes in
assets and liabilities |
|
(16,014 |
) |
|
(6,686 |
) |
Net cash provided by operating
activities |
|
79,185 |
|
|
79,454 |
|
|
|
|
Cash flow from
investing activities: |
|
|
Cash paid for
acquisition, net of cash acquired |
|
(17,399 |
) |
|
(17,393 |
) |
Capital
expenditures and intangible assets acquired |
|
(13,691 |
) |
|
(18,084 |
) |
Proceeds from
insurance and sale of assets |
|
4,741 |
|
|
2,000 |
|
Net cash used in investing activities |
|
(26,349 |
) |
|
(33,477 |
) |
|
|
|
Cash flows from
financing activities: |
|
|
Proceeds from
revolving debt |
|
210,750 |
|
|
22,000 |
|
Principal
payments on long-term and revolving debt |
|
(252,250 |
) |
|
(69,634 |
) |
Proceeds from
stock options exercised |
|
8,133 |
|
|
9,524 |
|
Dividends
paid |
|
(13,428 |
) |
|
(12,069 |
) |
Other |
|
(2,616 |
) |
|
(1,833 |
) |
Net cash
used in financing activities |
|
(49,411 |
) |
|
(52,012 |
) |
|
|
|
Effect of
exchange rate changes on cash |
|
(1,170 |
) |
|
2,133 |
|
|
|
|
Increase/(Decrease) in cash and cash
equivalents |
|
2,255 |
|
|
(3,902 |
) |
|
|
|
Cash and cash
equivalents, beginning of period |
|
40,416 |
|
|
38,643 |
|
Cash and cash
equivalents, end of period |
$ |
42,671 |
|
$ |
34,741 |
|
Non-GAAP Financial Information
In addition to disclosing financial results in
accordance with United States (U.S.) generally accepted accounting
principles (GAAP), this earnings release contains non-GAAP
financial measures that we believe are helpful in understanding and
comparing our past financial performance and our future results.
The non-GAAP financial measures disclosed by the company exclude
certain business combination accounting adjustments and certain
other items related to acquisitions, certain unallocated equity
compensation, and certain one-time or unusual transactions. These
non-GAAP financial measures should not be considered a substitute
for, or superior to, financial measures calculated in accordance
with GAAP, and the financial results calculated in accordance with
GAAP and reconciliations from these results should be carefully
evaluated. Management believes that these non-GAAP measures provide
useful information about the Company's core operating results and
thus are appropriate to enhance the overall understanding of the
Company's past financial performance and its prospects for the
future. The non-GAAP financial measures in this press release
include adjusted gross margin, adjusted earnings from operations,
adjusted net earnings and the related adjusted per diluted share
amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, and
free cash flow. EBITDA is defined as earnings before interest,
other expense/income, taxes, depreciation and amortization.
Adjusted EBITDA is defined as earnings before interest, other
expense/income, taxes, depreciation, amortization, stock-based
compensation, acquisition-related expenses, indemnification
settlements, legal settlements, and the fair valuation of acquired
inventory. Adjusted income tax expense is defined as income
tax expense adjusted for the impact of ASU 2016-09. Free cash flow
is defined as net cash provided by operating activities less
capital expenditures.
Set forth below are reconciliations of the
non-GAAP financial measures to the most directly comparable GAAP
financial measures.
Table 1
Reconciliation of Non-GAAP Measures to
GAAP(Dollars in thousands, except per share
data)(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
adjusted gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin |
$ |
48,002 |
|
$ |
46,181 |
|
$ |
152,927 |
|
$ |
137,371 |
|
Amortization of
intangible assets (1) |
|
765 |
|
|
722 |
|
|
2,362 |
|
|
2,022 |
|
Adjusted gross
margin |
$ |
48,767 |
|
$ |
46,903 |
|
$ |
155,289 |
|
$ |
139,393 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
adjusted earnings from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings from
operations |
$ |
25,465 |
|
$ |
23,055 |
|
$ |
80,496 |
|
$ |
70,589 |
|
Amortization of
intangible assets (1) |
|
6,208 |
|
|
6,602 |
|
|
18,680 |
|
|
20,145 |
|
Transaction and
integration costs (2) |
|
202 |
|
|
228 |
|
|
1,784 |
|
|
2,181 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
(2,087 |
) |
Adjusted earnings from
operations |
$ |
31,875 |
|
$ |
29,885 |
|
$ |
100,960 |
|
$ |
90,828 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
adjusted net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net earnings |
$ |
19,214 |
|
$ |
16,043 |
|
$ |
58,239 |
|
$ |
48,096 |
|
Amortization of
intangible assets (1) |
|
6,278 |
|
|
6,718 |
|
|
19,290 |
|
|
20,505 |
|
Transaction and
integration costs (2) |
|
202 |
|
|
228 |
|
|
1,784 |
|
|
2,181 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
(2,087 |
) |
Income tax adjustment
(4) |
|
(2,041 |
) |
|
(2,630 |
) |
|
(6,712 |
) |
|
(8,895 |
) |
Adjusted net
earnings |
$ |
23,653 |
|
$ |
20,359 |
|
$ |
72,601 |
|
$ |
59,800 |
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings
per common share – diluted |
$ |
0.73 |
|
$ |
0.63 |
|
$ |
2.24 |
|
$ |
1.86 |
|
1 Amortization of intangible assets:
Amortization of intangible assets consists of amortization of
customer relationships, trademarks and trade names, developed
technology, regulatory registration costs, patents and trade
secrets, and other intangibles acquired primarily in connection
with business combinations. We record expense relating to the
amortization of these intangibles in our GAAP financial statements.
Amortization expenses for our intangible assets are inconsistent in
amount and are significantly impacted by the timing and valuation
of an acquisition. Consequently, our non-GAAP adjustments exclude
these expenses to facilitate an evaluation of our current operating
performance and comparisons to our past operating performance.
2 Transaction and integration costs: Transaction
and integration costs related to acquisitions are expensed in our
GAAP financial statements. Management excludes this item for the
purposes of calculating Adjusted EBITDA and other non-GAAP
financial measures. We believe that excluding this item from our
non-GAAP financial measures is useful to investors because this
item is associated with each transaction, and is inconsistent in
amount and frequency causing comparison of current and historical
financial results to be difficult.
3 Indemnification settlement: Indemnification
settlement related to a favorable settlement we received relating
to the SensoryEffects acquisition which is included in our GAAP
financial statements. Management excluded this settlement for the
purposes of calculating Adjusted EBITDA and other non-GAAP
financial measures. We believe that excluding the settlement from
our non-GAAP financial measures is useful to investors because this
type of settlement is infrequent causing comparison of current and
historical financial results to be difficult.
4 Income tax adjustment: For purposes of
calculating adjusted net earnings and adjusted diluted earnings per
share, we adjust the provision for (benefit from) income taxes to
tax effect the taxable and deductible non-GAAP adjustments
described above as they have a significant impact on our income tax
(benefit) provision. Additionally, the income tax adjustment is
adjusted for the impact of adopting ASU 2016-09, “Improvements to
Employee Share-Based Payment Accounting”, and uses our non-GAAP
effective rate applied to both our GAAP earnings before income tax
expense and non-GAAP adjustments described above. The income tax
adjustment for the three months ended September 30, 2018 and 2017,
respectively, is calculated as the difference between the September
30, 2018 and 2017 year-to-date income tax adjustment, respectively,
and the June 30, 2018 and 2017 year-to-date income tax adjustment,
respectively. See Table 3 for the calculation of our non-GAAP
effective tax rate.
The following table sets forth a reconciliation
of Net Income calculated using amounts determined in accordance
with GAAP to EBITDA and to Adjusted EBITDA for the three and nine
months ended September 30, 2018 and 2017.
Table 2
|
Three Months
Ended September 30, |
|
Nine Months Ended September
30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net income - as reported |
$ |
19,214 |
$ |
16,043 |
$ |
58,239 |
$ |
48,096 |
|
Add back: |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
4,315 |
|
4,654 |
|
15,528 |
|
15,870 |
|
Other expense |
|
1,936 |
|
2,358 |
|
6,729 |
|
6,623 |
|
Depreciation and amortization |
|
10,964 |
|
10,973 |
|
32,850 |
|
32,810 |
|
EBITDA |
|
36,429 |
|
34,028 |
|
113,346 |
|
103,399 |
|
Add back certain items: |
|
|
|
|
|
|
|
|
Non-cash compensation expense related to equity
awards |
|
1,749 |
|
1,463 |
|
5,208 |
|
4,348 |
|
Transaction and integration costs |
|
202 |
|
228 |
|
1,784 |
|
2,181 |
|
|
|
- |
|
- |
|
- |
|
(2,087 |
) |
Adjusted EBITDA |
$ |
38,380 |
$ |
35,719 |
$ |
120,338 |
$ |
107,841 |
|
The following table sets forth a reconciliation
of our GAAP effective income tax rate to our non-GAAP effective
income tax rate for the nine months ended September 30, 2018 and
2017.
Table 3
|
|
Nine MonthsEnded
September 30, |
|
|
2018 |
Effective Tax Rate |
|
2017 |
Effective Tax Rate |
GAAP Income Tax Expense |
$ |
15,528 |
21.1 |
% |
$ |
15,870 |
24.8 |
% |
Impact of ASU 2016-09 adoption(5) |
|
1,770 |
|
|
2,552 |
|
Adjusted Income Tax Expense |
$ |
17,298 |
23.4 |
% |
$ |
18,422 |
28.8 |
% |
5 Impact of ASU 2016-09 adoption: In March 2016,
the FASB issued ASU No. 2016-09, “Improvements to Employee
Share-Based Payment Accounting” (“ASU 2016-09”), which addresses
the accounting for share-based payment transactions, including the
income tax consequences, classification of awards as either equity
or liabilities, and classification on the statement of cash flows.
The Company adopted ASU 2016-09 on January 1,
2017 prospectively (prior periods have not been
restated). The primary impact of adoption was the
recognition during the three and nine months ended September 30,
2018 and 2017, of excess tax benefits as a reduction to the
provision for income taxes and the classification of these excess
tax benefits in operating activities in the consolidated statement
of cash flows instead of financing activities. The
presentation requirements for cash flows related to employee taxes
paid for withheld shares had no impact to any of the periods
presented in the consolidated statement of cash flows, since such
cash flows have historically been presented in financing
activities. The Company also elected to continue estimating
forfeitures when determining the amount of stock-based compensation
costs to be recognized in each period. No other provisions of ASU
2016-09 had a material impact on the Company’s financial statements
or disclosures.
The following table sets forth a reconciliation
of net cash provided by operating activities to free cash flow for
the three and nine months ended September 30, 2018 and 2017.
Table 4
|
Three MonthsEnded
September 30, |
|
Nine Months Ended September
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net cash provided by operating activities |
$ |
32,489 |
|
$ |
33,762 |
|
$ |
79,185 |
|
$ |
79,454 |
|
Capital expenditures |
|
(5,553 |
) |
|
(6,857 |
) |
|
(13,253 |
) |
|
(17,676 |
) |
Free cash flow |
$ |
26,936 |
|
$ |
26,905 |
|
$ |
65,932 |
|
$ |
61,778 |
|
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