Delivers Solid Year-over-Year Annual Revenue and
Earnings GrowthStrong Growth in Security and Cloud
OfferingsSignificant Deleveraging Through Strong Cash Flow
GenerationProvides Guidance for Fiscal 2018
Presidio, Inc. (NASDAQ:PSDO) ("Presidio"), a leading North American
IT solutions provider delivering Digital Infrastructure, Cloud and
Security solutions to middle-market customers, today announced its
financial results for its fiscal fourth quarter and fiscal year
ended June 30, 2017.
| |
|
Three months ended |
|
|
|
Fiscal year ended |
|
|
| (in $
millions) |
|
June 30,2016 |
|
June 30,2017 |
|
% Chg |
|
June 30,2016 |
|
June 30,2017 |
|
% Chg |
| Total Revenue |
|
$ |
753.9 |
|
|
$ |
729.3 |
|
|
(3.3 |
)% |
|
$ |
2,714.9 |
|
|
$ |
2,817.6 |
|
|
3.8 |
% |
| Adjusted Revenue1 |
|
$ |
754.1 |
|
|
$ |
729.4 |
|
|
(3.3 |
)% |
|
$ |
2,683.7 |
|
|
$ |
2,818.2 |
|
|
5.0 |
% |
| Total Gross Margin |
|
$ |
147.1 |
|
|
$ |
152.3 |
|
|
3.5 |
% |
|
$ |
540.6 |
|
|
$ |
585.9 |
|
|
8.4 |
% |
| Gross
Margin % |
|
19.5 |
% |
|
20.9 |
% |
|
|
|
19.9 |
% |
|
20.8 |
% |
|
|
| Net Income (Loss) |
|
$ |
(7.4 |
) |
|
$ |
10.4 |
|
|
n.m. |
|
|
$ |
(3.4 |
) |
|
$ |
4.4 |
|
|
n.m. |
|
| Diluted EPS |
|
$ |
(0.10 |
) |
|
$ |
0.11 |
|
|
n.m. |
|
|
$ |
(0.05 |
) |
|
$ |
0.05 |
|
|
n.m. |
|
| Adjusted EBITDA1 |
|
$ |
53.9 |
|
|
$ |
60.4 |
|
|
12.1 |
% |
|
$ |
211.1 |
|
|
$ |
226.1 |
|
|
7.1 |
% |
| Adj. EBITDA
%1 |
|
7.1 |
% |
|
8.3 |
% |
|
|
|
7.9 |
% |
|
8.0 |
% |
|
|
| Pro Forma Adjusted Net
Income2 |
|
$ |
23.4 |
|
|
$ |
30.6 |
|
|
30.8 |
% |
|
$ |
94.3 |
|
|
$ |
112.1 |
|
|
18.9 |
% |
| Pro Forma Diluted
EPS2 |
|
$ |
0.25 |
|
|
$ |
0.32 |
|
|
28.0 |
% |
|
$ |
1.03 |
|
|
$ |
1.18 |
|
|
14.6 |
% |
“Fiscal 2017 was an exciting year for Presidio,
as we achieved solid top-line growth, strong cash flow generation
and attractive profitability. For the year, Pro Forma Adjusted Net
Income grew by 18.9% due to strong execution in our Security and
Cloud solution areas, which benefited from revenue growth of 30%
and 28%, respectively. In addition, we successfully completed our
initial public offering, significantly improved our financial
flexibility by reducing our leverage and continued to execute on
our strategic growth initiatives to drive sustainable long-term
shareholder value,” said Bob Cagnazzi, Chief Executive Officer of
Presidio.
Cagnazzi continued, “We are off to a good start
to the fiscal year, and our early momentum, particularly in our
Security and Cloud solution areas, provides us with the confidence
to achieve our Fiscal 2018 guidance3, which includes: Total Revenue
growth of approximately 5.5%; Adjusted EBITDA margin in the low 8%
range; and Pro Forma Diluted EPS growth in the high single digit
range. In addition, we expect to finish Fiscal 2018 with our net
total leverage ratio in the mid-2x range, which is in line with our
long-term strategy of reducing debt, excluding any strategic
acquisitions.”
|
_________________________________ |
| (1) |
|
This financial
measure is not based on U.S. GAAP. Please refer to the section of
this press release entitled "About Non-GAAP and Pro Forma Financial
Measures" for additional information and to the attached
reconciliation to the most directly comparable U.S. GAAP measure.
In addition, please refer to the sections entitled "Fiscal Year
2017 Highlights" and "Fourth Quarter Fiscal 2017 Highlights" for
additional information regarding certain transactions that occurred
during the fiscal year ended June 30, 2017 that impacted the
comparability with the fiscal year ended June 30, 2016. Had these
transactions been on a comparable basis in terms of software
subscription sales as discussed below, the growth in Adjusted
Revenue for the three months and fiscal year ended June 30, 2017
would have been (0.1)% and 7.8%, respectively. See the section
entitled “Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations—Results of Operations—Fiscal
Year Ended June 30, 2017 Compared to Fiscal Year Ended June 30,
2016” in the Company’s Annual Report on Form 10-K for a description
of the Company’s shift towards the net treatment of software
subscription sales. |
| |
|
|
| (2) |
|
This non-GAAP
financial measure adjusts certain historical data on a pro forma
basis following certain transactions. Please refer to the
section of this press release entitled "About Non-GAAP and Pro
Forma Financial Measures" for additional information and to the
section entitled "Non-GAAP Reconciliations" for reconciliation to
the most directly comparable U.S. GAAP measure. |
| |
|
|
| (3) |
|
The Company has not
reconciled forward looking non-GAAP financial measures which
includes Adjusted EBITDA margin, Pro Forma Diluted EPS and net
total leverage ratio to their most directly comparable GAAP
measures because certain items that impact these measures are
not within its control and are subject to constant change. The
company is unable to predict with reasonable certainty the ultimate
timing or amount of items such as income taxes, unusual gains and
losses, transaction costs and purchase accounting fair value
adjustments and their impact on its financial statements without
unreasonable effort. These items are uncertain, depend on various
factors, and could materially impact the Company’s forward-looking
guidance on GAAP measures. |
Fiscal Year 2017 Highlights
- Total Revenue increased $102.7 million, or 3.8%, to $2,817.6
million for the fiscal year ended June 30, 2017, compared to
Total Revenue of $2,714.9 million for the fiscal year ended
June 30, 2016. The increase in Total Revenue resulted from an
increase in client demand across both Security and Cloud solutions
along with a higher proportion of services as part of our
solutions. The growth was impacted by an increase in the proportion
of our solutions being delivered in the form of new software
subscriptions where the revenue associated with these solutions are
recognized net of the related costs of sales in Total Revenue.
- Security revenue increased $74.7 million, or 30.0%, to $324.1
million in the fiscal year ended June 30, 2017, compared to
$249.4 million in the fiscal year ended June 30, 2016, driven
by higher demand from customers as they look to stay ahead of
increasingly complex cyber security threats which drove adoption of
advanced security technologies and services.
- Cloud revenue increased $109.4 million, or 27.9%, to $501.1
million in the fiscal year ended June 30, 2017, compared to
$391.7 million for the fiscal year ended June 30, 2016, a
result of strong demand in client engagements around multi-cloud
and IT transformation, converged and hyper-converged
infrastructure, data center modernization and associated services
to support new multi-cloud infrastructure.
- Digital Infrastructure decreased $81.4 million, or 3.9%, to
$1,992.4 million in the fiscal year ended June 30, 2017,
compared to $2,073.8 million in the fiscal year ended June 30,
2016. Excluding the impact of the sale of Atlantix in Fiscal 2016
and the solutions delivered in the form of software subscriptions,
the Digital Infrastructure solution area would have been
approximately flat, year-over-year.
- Adjusted Revenue excludes the impact of purchase accounting
adjustments from our acquisitions and excludes revenue associated
with disposed businesses. Adjusted Revenue for the fiscal year
ended June 30, 2017 increased $134.5 million or 5.0%. Had the
software subscription solutions described previously been sold on
the same terms as comparable solutions sold in the prior year, our
Adjusted Revenue growth would have been approximately 7.8%.
- Total Gross Margin for the fiscal year ended June 30, 2017
increased $45.3 million, or 8.4%, to $585.9 million for the fiscal
year ended June 30, 2017, as compared to $540.6 million for
the fiscal year ended June 30, 2016, primarily a result of an
increase in Total Revenue between periods and an expansion of Total
Gross Margin as a percent of Total Revenue. Total Gross Margin as a
percent of Total Revenue increased from 19.9% in the prior year to
20.8% in the fiscal year ended June 30, 2017 as a result of the
sale of higher margin solutions.
- Net Income for the fiscal year ended June 30, 2017 was
$4.4 million, or $0.05 of Net Income per diluted share, compared to
a Net Loss of $3.4 million, or $0.05 of Net Loss per diluted share,
in the fiscal year ended June 30, 2016.
- Pro Forma Adjusted Net Income for the fiscal year ended
June 30, 2017 increased $17.8 million or 18.9% to $112.1
million, or $1.18 per pro forma diluted share, compared to $94.3
million, or $1.03 per pro forma diluted share, in the fiscal year
ended June 30, 2016 as a result of the strong growth in
Adjusted EBITDA and the favorable impact of deleveraging.
- Adjusted EBITDA increased $15.0 million, or 7.1%, to $226.1
million for the fiscal year ended June 30, 2017, from $211.1
million for the fiscal year ended June 30, 2016, primarily
driven by growth in Adjusted Revenue as well as Total Gross Margin
percent expansion, offset by the net impact of sales investments we
have made in high-growth areas of our business to drive future
growth. Adjusted EBITDA margins expanded to 8.0% for the fiscal
year ended June 30, 2017 from 7.9% for the fiscal year ended
June 30, 2016.
Fourth Quarter Fiscal Year 2017 Highlights
- Total Revenue for the quarter ended June 30, 2017
decreased $24.6 million or 3.3% to $729.3 million compared to Total
Revenue of $753.9 million in the prior year's fourth quarter. The
decline in Total Revenue was impacted by an increase in the
proportion of new software subscription sales in our solutions; had
the software subscription sales been sold on the same terms as the
prior year, the decline would have been 0.1%.
- Security revenue increased 38.4% to $98.4 million in the three
months ended June 30, 2017, compared to $71.1 million in the three
months ended June 30, 2016, driven by higher demand from customers
as they look to stay ahead of increasingly complex cyber security
threats which drove adoption of advanced security technologies and
services.
- Cloud revenue increased 11.9% to $134.0 million in the three
months ended June 30, 2017 compared to $119.8 million for the three
months ended June 30, 2016, a result of strong demand in client
engagements around multi cloud and IT transformation, converged and
hyper-converged infrastructure, data center modernization and
associated services to support new multi cloud infrastructure in
all market sectors.
- Digital Infrastructure revenue decreased 11.7% to $496.9
million in the three months ended June 30, 2017 compared to $563.0
million in the three months ended June 30, 2016, driven by lower
revenue generated by government clients, particularly the federal
government. Revenue growth was negatively impacted by the change in
delivery of software subscriptions and the associated net revenue
treatment.
- Total Gross Margin for the three months ended June 30,
2017 increased $5.2 million or 3.5% to $152.3 million compared to
$147.1 million in the prior year quarter and Total Gross Margin as
a percent of Total Revenue expanded to 20.9% in the three months
ended June 30, 2017 from 19.5% in the prior year quarter. The
expansion in Total Gross Margin was due to a favorable mix of
higher margin solutions, as well as higher services gross margins
in the period.
- Net Income for the three months ended June 30, 2017 was
$10.4 million, or $0.11 of Net Income per diluted share, compared
to a Net Loss of $7.4 million, or $0.10 of Net Loss per diluted
share, in the prior year quarter. We benefited from higher Total
Gross Margin and improved operating efficiency in the form of lower
selling, general and administrative expenses. In addition, we
realized lower transaction costs, interest expense and loss on
extinguishment of debt in the three months ended June 30,
2017.
- Pro Forma Adjusted Net Income for the three months ended
June 30, 2017 increased $7.2 million or 30.8% to $30.6
million, or $0.32 per pro forma diluted share, compared to $23.4
million, or $0.25 per pro forma diluted share, in the prior year
quarter.
- Adjusted EBITDA increased $6.5 million, or 12.1%, to $60.4
million for the three months ended June 30, 2017, from $53.9
million for the three months ended June 30, 2016. Adjusted
EBITDA margins expanded to 8.3% for the three months ended
June 30, 2017 from 7.1% for the three months ended
June 30, 2016.
Capital Resources and Free Cash Flow
- As of June 30, 2017, the Company had total long-term debt of
$751.6 million and total net debt (defined as the total principal
of debt outstanding, excluding discounts and issuance costs less
cash and cash equivalents) of $724.1 million, representing 3.2x net
total leverage (defined as total net debt divided by Adjusted
EBITDA) for the fiscal year ended June 30, 2017.
- For the fiscal year ended June 30, 2017, we generated $94.0
million of Free Cash Flow, an increase of 14.4% or $11.8 million
compared to $82.2 million in the fiscal year ended June 30,
2016 primarily a result of the increase in Adjusted EBITDA.
- During the fiscal year ended June 30, 2017, the Company:
- utilized proceeds from its initial public offering ("IPO") to
redeem $97.5 million in aggregate principal amount of senior
notes,
- utilized proceeds from the IPO to repurchase and cancel all of
the $111.8 million in aggregate principal amount of senior
subordinated notes, and
- made cumulative repayments totaling $105.7 million on its term
loan facility due February 2022 using cash from operations and
existing cash on hand, as well as the remaining proceeds from the
IPO.
| |
| (in
millions) |
|
June 30, 2016 |
|
June 30, 2017 |
| Cash and cash
equivalents |
|
$ |
33.0 |
|
|
$ |
27.5 |
|
| Long-term debt: |
|
|
|
|
| Revolving
credit facility |
|
$ |
— |
|
|
$ |
— |
|
|
Receivables securitization facility |
|
5.0 |
|
|
— |
|
| Term loan
facility, due February 2022 |
|
732.3 |
|
|
626.6 |
|
| Senior
notes, 10.25% due February 2023 |
|
222.5 |
|
|
125.0 |
|
|
Subordinated notes, 10.25% due February 2023 |
|
111.8 |
|
|
— |
|
|
Total long-term debt |
|
$ |
1,071.6 |
|
|
$ |
751.6 |
|
Business Outlook
In Fiscal 2018 we expect to continue our strong
execution in our Security and Cloud solution areas and our
full-year Fiscal 2018 outlook is as follows:
- Total Revenue growth is expected to be approximately 5.5%;
- Adjusted EBITDA margin is expected to be in the low 8%
range;
- Pro Forma Diluted EPS is expected to grow in the high
single digit range; and
- Net total leverage is expected to be in the mid-2x range at the
end of Fiscal 2018, excluding any strategic acquisitions.
The above forward-looking statements reflect
Presidio’s expectations as of today’s date. Given the number of
risk factors, uncertainties and assumptions discussed below, actual
results may differ materially. Presidio does not intend to update
its forward-looking statements until its next quarterly results
announcement, other than in publicly available statements.
About Non-GAAP and Pro Forma Financial
Measures
Our management regularly monitors certain
financial measures to track the progress of our business against
internal goals and targets. In addition to financial information
presented in accordance with GAAP, management uses Adjusted
Revenue, Adjusted EBITDA, Adjusted Net Income, Pro Forma Adjusted
Net Income, Pro Forma Diluted EPS and Free Cash Flow (collectively,
"non-GAAP measures," as further described below) in its evaluation
of past performance and prospects for the future. Our non-GAAP
measures should be considered in addition to, not as a substitute
for, or superior to, financial measures calculated in accordance
with GAAP. They are not measurements of our financial performance
under GAAP and should not be considered as alternatives to net
income (loss) or revenue, as applicable, or any other performance
measures derived in accordance with GAAP and may not be comparable
to other similarly titled measures of other businesses. These
non-GAAP measures have limitations as analytical tools and you
should not consider them in isolation or as a substitute for
analysis of our operating results as reported under GAAP and they
include adjustments for items that may occur in future periods.
However, we believe these adjustments are appropriate because the
amounts recognized can vary significantly from period to period, do
not directly relate to the ongoing operations of our business and
complicate comparisons of our internal operating results and
operating results of other peer companies over time.
We also adjust certain historical data on a pro
forma basis following certain significant transactions.
Specifically, we have provided a calculation of Pro Forma Adjusted
Net Income to adjust for lower after-tax interest expense
associated with the redemption and repurchase of notes as part of
our IPO as if the IPO occurred on July 1, 2015 (the beginning of
our fiscal year ending June 30, 2016) and for lower after-tax
interest expense associated with the term loan refinancing that
occurred in January 2017 as if the refinancing occurred on July 1,
2016 (the beginning of our fiscal year ending June 30, 2017).
Pro Forma Adjusted Net Income is for illustrative and informational
purposes and is not intended to represent or be indicative of what
our financial condition or results of operations would have been
had the transactions occurred on the dates indicated. Pro Forma
Adjusted Net Income should not be considered representative of our
future financial condition or results of operations.
Additional Information
Subsequent to June 30, 2017, we have made a
total of $15.0 million of voluntary prepayments on our term loan
facility due February 2022.
Presidio announced the appointment on May 11, 2017, of Benjamin
A. Pawson as Chief Accounting Officer in addition to his current
duties as Controller.
In March 2017, the Company completed an IPO in
which the Company issued and sold 18,766,465 shares of common
stock, inclusive of 2,099,799 shares issued and sold pursuant to
the underwriters’ option to purchase additional shares, at the
public offering price of $14.00 per share. The Company
received net proceeds of $247.5 million, after deducting
underwriting discounts and commissions and other offering expenses
from the sale of its shares in the IPO. In addition, the
Company incurred $7.2 million of offering expenses in connection
with the IPO.
On February 24, 2017, the board of directors of
the Company declared a 2-for-1 stock split of the Company’s common
stock in the form of a stock dividend payable on each share of
common stock issued and outstanding as of February 24, 2017. The
number of shares subject to and the exercise price of the Company’s
outstanding options were adjusted to equitably reflect the split.
All common stock share and per-share data included in these
financial statements give effect to the stock split and have been
adjusted retroactively for all periods presented.
In February 2016, we acquired the operations of
Netech Corporation (“Netech”). As a result of the acquisition of
Netech, our U.S. GAAP results include the operations of Netech in
the periods ending June 30, 2016.
In October 2015, we completed the sale of our
Atlantix Global Systems LLC subsidiary (“Atlantix”). Accordingly,
our financial results for the fiscal year ended June 30, 2016
presented herein have been adjusted to exclude the operations of
Atlantix as if the sale had occurred at the beginning of the
period. The Company’s financial results are presented above
on an “Adjusted” basis to reflect the sale of Atlantix, as well as
the adjustment of non-cash, non-recurring, and/or unusual
items.
Conference Call Information
We have scheduled a conference call
for Thursday, September 21, 2017, at 5:00 p.m. Eastern
Time to discuss our financial results for the fiscal fourth quarter
and fiscal year ended June 30, 2017. Financial results
will be released after the close of the U.S. financial markets
on September 21, 2017.
Those wishing to participate via webcast should
access the call through Presidio's Investor Relations website
at http://investors.presidio.com. Those wishing to participate
via telephone may dial in at 1-877-407-9039 (USA) or 1-201-689-8470
(International). The conference call replay will be available via
webcast through Presidio's Investor Relations website. The
telephone replay will be available from 8:00 p.m. Eastern
Time on September 21, 2017, through September 28,
2017, by dialing 1-844-512-2921 (USA) or 1-412-317-6671
(International). The replay passcode will be 13667444.
About Presidio
Presidio is a leading North American IT
solutions provider focused on Digital Infrastructure, Cloud and
Security solutions. We deliver this technology expertise through a
full life cycle model of professional, managed, and support
services including strategy, consulting, implementation and design.
By taking the time to deeply understand how our clients define
success, we help them harness technology advances, simplify IT
complexity and optimize their environments today while enabling
future applications, user experiences, and revenue models. We serve
approximately 7,000 middle-market, large, and government
organizations across a diverse range of industries. More than 2,700
Presidio professionals, including more than 1,500 technical
engineers, are based in 60+ offices across the United States in a
unique, local delivery model combined with the national scale of a
$2.8 billion dollar industry leader. We are passionate about
driving results for our clients and delivering the highest quality
of service in the industry. Presidio is owned by funds affiliated
with Apollo Global Management, LLC (NYSE:APO). For more information
visit: www.presidio.com.
Source: Presidio, Inc.
Contact Information
Investor Relations Contact:Ed
Yuen866-232-3762investors@presidio.com
Media Contact:Dori WhiteVice President of Corporate
Marketing212-324-4301doriwhite@presidio.com
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995
This press release contains “forward looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. The use of words such as “anticipates,”
“expects,” “intends,” “plans” and “believes,” among others,
generally identify forward-looking statements. These
forward-looking statements include statements relating to: future
financial performance, business prospects and strategy, anticipated
trends, prospects in the industries in which our businesses operate
and other similar matters. These forward looking statements are
based on management’s current expectations and assumptions about
future events, which are inherently subject to uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
results could differ materially from those contained in these
forward looking statements for a variety of reasons, including,
among others: risks and uncertainties related to the capital
markets, changes in senior management at Presidio, changes in our
relationship with our vendor partners, adverse changes in economic
conditions, risks resulting from a decreased demand for Presidio’s
information technology solutions, risks relating to rapid
technological change in Presidio’s industry and risks relating to
acquisitions or regulatory changes. Certain of these and other
risks and uncertainties are discussed in Presidio’s filings with
the Securities and Exchange Commission. Other unknown or
unpredictable factors that could also adversely affect our
business, financial condition and results of operations may arise
from time to time. In light of these risks and uncertainties, these
forward looking statements may not prove to be accurate.
Accordingly, you should not place undue reliance on these forward
looking statements, which only reflect the views of our management
as of the date of this press release. We do not undertake to update
these forward-looking statements.
Non-GAAP Reconciliations
The reconciliation of Adjusted Revenue from
Total Revenue for each of the periods presented is as follows:
| (in
millions) |
|
Three monthsended June 30, 2016 |
|
Three monthsended June 30, 2017 |
|
Fiscal yearended June 30, 2016 |
|
Fiscal yearended June 30, 2017 |
| Total Revenue |
|
$ |
753.9 |
|
|
$ |
729.3 |
|
|
$ |
2,714.9 |
|
|
$ |
2,817.6 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
| Purchase
accounting adjustments (1) |
|
0.2 |
|
|
0.1 |
|
|
1.6 |
|
|
0.6 |
|
| Revenue
from disposed business (2) |
|
— |
|
|
— |
|
|
(32.8 |
) |
|
— |
|
| Total adjustments |
|
0.2 |
|
|
0.1 |
|
|
(31.2 |
) |
|
0.6 |
|
| Adjusted
Revenue |
|
$ |
754.1 |
|
|
$ |
729.4 |
|
|
$ |
2,683.7 |
|
|
$ |
2,818.2 |
|
(1) Includes noncash adjustments associated with purchase
accounting (including deferred revenue step down).
(2) Removes the historical revenue contribution of Atlantix
prior to the sale of the Atlantix business in October 2015.
The reconciliation of Adjusted EBITDA from Net
Income (Loss) for each of the periods presented is as follows:
| (in
millions) |
|
Three monthsended June 30, 2016 |
|
Three monthsended June 30, 2017 |
|
Fiscal yearended June 30, 2016 |
|
Fiscal yearended June 30, 2017 |
| Adjusted EBITDA
Reconciliation: |
|
|
|
|
|
|
|
|
| Net Income (Loss) |
|
$ |
(7.4 |
) |
|
$ |
10.4 |
|
|
$ |
(3.4 |
) |
|
$ |
4.4 |
|
| Total
depreciation and amortization (1) |
|
23.0 |
|
|
21.9 |
|
|
81.7 |
|
|
87.2 |
|
| Interest
and other (income) expense |
|
29.7 |
|
|
13.3 |
|
|
98.5 |
|
|
101.1 |
|
| Income
tax expense (benefit) |
|
0.7 |
|
|
12.2 |
|
|
3.8 |
|
|
2.6 |
|
| EBITDA |
|
46.0 |
|
|
57.8 |
|
|
180.6 |
|
|
195.3 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
0.4 |
|
|
1.3 |
|
|
2.2 |
|
|
10.2 |
|
| Purchase
accounting adjustments (2) |
|
0.8 |
|
|
0.1 |
|
|
3.9 |
|
|
1.0 |
|
|
Transaction costs (3) |
|
5.0 |
|
|
0.3 |
|
|
20.6 |
|
|
14.8 |
|
| Other
costs (4) |
|
1.7 |
|
|
0.9 |
|
|
5.6 |
|
|
4.8 |
|
| Earnings
from disposed business (5) |
|
— |
|
|
— |
|
|
(1.8 |
) |
|
— |
|
| Total adjustments |
|
7.9 |
|
|
2.6 |
|
|
30.5 |
|
|
30.8 |
|
| Adjusted EBITDA |
|
$ |
53.9 |
|
|
$ |
60.4 |
|
|
$ |
211.1 |
|
|
$ |
226.1 |
|
| Adjusted EBITDA %
(6) |
|
7.1 |
% |
|
8.3 |
% |
|
7.9 |
% |
|
8.0 |
% |
(1) Includes depreciation and amortization included within total
operating expenses and cost of revenue.
(2) Includes noncash adjustments associated with purchase
accounting (including inventory step up, deferred revenue step down
and revaluation of deferred rent).
(3) Includes transaction-related expenses related to (i) stay
and retention bonuses, (ii) transaction-related advisory and
diligence fees, (iii) transaction-related legal, accounting and tax
fees and (iv) professional fees and expenses associated with debt
refinancings and (v) transaction-related severance charges.
(4) Includes other expenses such as (i) certain non-recurring
costs incurred in the development of our new cloud service
offerings, (ii) certain unusual legal expenses, (iii) integration
of previously acquired managed services platforms into one system,
and (iv) severance charges.
(5) Removes the historical earnings contribution of Atlantix
prior to the sale of the business in October 2015.
(6) Adjusted EBITDA % represents the ratio of Adjusted EBITDA to
Adjusted Revenue.
The reconciliation of Adjusted Net Income and
Pro Forma Adjusted Net Income from Net Income (Loss) for each of
the periods presented is as follows:
| (in
millions) |
|
Three monthsended June 30, 2016 |
|
Three monthsended June 30, 2017 |
|
Fiscal yearended June 30, 2016 |
|
Fiscal yearended June 30, 2017 |
| Adjusted Net Income
reconciliation: |
|
|
|
|
|
|
|
|
| Net Income (Loss) |
|
$ |
(7.4 |
) |
|
$ |
10.4 |
|
|
$ |
(3.4 |
) |
|
$ |
4.4 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
18.4 |
|
|
18.4 |
|
|
67.2 |
|
|
73.6 |
|
|
Amortization of debt issuance costs |
|
2.0 |
|
|
1.4 |
|
|
7.6 |
|
|
6.5 |
|
| Loss on
disposal of business |
|
— |
|
|
— |
|
|
6.8 |
|
|
— |
|
| Loss on
extinguishment of debt |
|
8.8 |
|
|
0.8 |
|
|
9.7 |
|
|
28.5 |
|
|
Share-based compensation expense |
|
0.4 |
|
|
1.3 |
|
|
2.2 |
|
|
10.2 |
|
| Purchase
accounting adjustments |
|
0.8 |
|
|
0.1 |
|
|
3.9 |
|
|
1.0 |
|
|
Transaction costs |
|
5.0 |
|
|
0.3 |
|
|
20.6 |
|
|
14.8 |
|
| Other
costs |
|
1.7 |
|
|
0.9 |
|
|
5.6 |
|
|
4.8 |
|
| Earnings
from disposed business |
|
— |
|
|
— |
|
|
(1.8 |
) |
|
— |
|
| Income
tax impact of adjustments (1) |
|
(9.4 |
) |
|
(3.0 |
) |
|
(37.2 |
) |
|
(43.4 |
) |
| Total adjustments |
|
27.7 |
|
|
20.2 |
|
|
84.6 |
|
|
96.0 |
|
| Adjusted
Net Income |
|
20.3 |
|
|
30.6 |
|
|
81.2 |
|
|
100.4 |
|
| Pro Forma
Adjustments: |
|
|
|
|
|
|
|
|
| Interest
on notes repaid in IPO |
|
5.1 |
|
|
— |
|
|
21.5 |
|
|
14.4 |
|
| Interest
on term loan repricing |
|
— |
|
|
— |
|
|
— |
|
|
4.7 |
|
| Income
tax impact of adjustments |
|
(2.0 |
) |
|
— |
|
|
(8.4 |
) |
|
(7.4 |
) |
| Total Pro Forma
adjustments |
|
3.1 |
|
|
— |
|
|
13.1 |
|
|
11.7 |
|
| Pro Forma
Adjusted Net Income |
|
$ |
23.4 |
|
|
$ |
30.6 |
|
|
$ |
94.3 |
|
|
$ |
112.1 |
|
(1) Includes an estimated tax impact of the adjustments to net
income at our average statutory rate to arrive at an appropriate
effective tax rate on Adjusted Net Income, except for (i) the
adjustment of certain transaction costs that are permanently
nondeductible for tax purposes and (ii) the impact of
tax-deductible goodwill and intangible assets resulting from
certain historical acquisitions and further adjusted for discrete
tax items such as: the tax benefit associated with excess stock
compensation deductions, the remeasurement of deferred tax
liabilities due to state rate changes and the write-off of deferred
tax assets resulting from
reorganizations.
The reconciliation of Pro Forma weighted-average
shares - diluted and Pro Forma Diluted EPS from GAAP
weighted-average shares for each of the periods presented is as
follows:
| |
|
Three monthsended June 30, 2016 |
|
Three monthsended June 30, 2017 |
|
Fiscal yearended June 30, 2016 |
|
Fiscal yearended June 30, 2017 |
| Share count: |
|
|
|
|
|
|
|
|
| Weighted-average shares
– basic |
|
71,924,155 |
|
|
90,925,367 |
|
|
71,117,963 |
|
|
77,517,700 |
|
| Dilutive
effect of stock options |
|
— |
|
|
5,463,531 |
|
|
— |
|
|
4,344,139 |
|
| Weighted-average shares
– diluted |
|
71,924,155 |
|
|
96,388,898 |
|
|
71,117,963 |
|
|
81,861,839 |
|
| Pro Forma
shares issued at IPO (1) |
|
18,766,465 |
|
|
— |
|
|
18,766,465 |
|
|
13,248,165 |
|
| Dilutive
impact of stock options (2) |
|
1,938,969 |
|
|
— |
|
|
1,712,240 |
|
|
— |
|
| Total Pro
Forma adjustments |
|
20,705,434 |
|
|
— |
|
|
20,478,705 |
|
|
13,248,165 |
|
| Pro Forma
weighted-average shares – diluted |
|
92,629,589 |
|
|
96,388,898 |
|
|
91,596,668 |
|
|
95,110,004 |
|
| |
|
|
|
|
|
|
|
|
| Diluted
EPS |
|
$ |
(0.10 |
) |
|
$ |
0.11 |
|
|
$ |
(0.05 |
) |
|
$ |
0.05 |
|
| Pro Forma
Diluted EPS |
|
$ |
0.25 |
|
|
$ |
0.32 |
|
|
$ |
1.03 |
|
|
$ |
1.18 |
|
(1) Includes an adjustment to reflect the shares issued in the
March 2017 IPO as if the IPO occurred at the beginning of the
period that are not already reflected in the basic weighted-average
shares presented.
(2) Includes an adjustment to reflect the dilutive impact of
outstanding stock options on Pro Forma Adjusted Net Income that
were excluded from the calculation for GAAP purposes as
anti-dilutive due to the GAAP net loss in the period.
We define Free Cash Flow as our net cash
provided by operating activities adjusted to include the impact of
net borrowings (repayments) on floor plan facility, the net cash
impact of our leasing business and the purchases of property and
equipment. The reconciliation of Free Cash Flow from Net cash
provided by operating activities for the periods presented is as
follows:
| |
|
Fiscal year ended June 30, 2016 |
|
Fiscal year ended June 30, 2017 |
| Net cash provided by
operating activities |
|
$ |
86.1 |
|
|
$ |
51.0 |
|
| Adjustments to
reconcile to free cash flow: |
|
|
|
|
| Net
borrowings on floor plan facility |
|
20.9 |
|
|
41.6 |
|
| Additions
of equipment under sales-type and direct financing leases |
|
(95.4 |
) |
|
(100.1 |
) |
| Proceeds
from collection of financing receivables |
|
6.5 |
|
|
9.8 |
|
| Additions
to equipment under operating leases |
|
(2.7 |
) |
|
(2.0 |
) |
| Proceeds
from disposition of equipment under operating leases |
|
1.0 |
|
|
1.5 |
|
| Proceeds
from the discounting of financing receivables |
|
86.4 |
|
|
108.6 |
|
|
Retirements of discounted financing receivables |
|
(4.2 |
) |
|
(5.0 |
) |
| Purchases
of property and equipment |
|
(16.4 |
) |
|
(11.4 |
) |
| Total adjustments |
|
(3.9 |
) |
|
43.0 |
|
| Free Cash Flow |
|
$ |
82.2 |
|
|
$ |
94.0 |
|
|
Presidio, Inc. |
|
Consolidated Balance Sheets |
| (in
millions) |
| |
| |
As of June 30, 2016 |
|
As of June 30, 2017 |
|
Assets |
|
|
|
| Current Assets |
|
|
|
| Cash and
cash equivalents |
$ |
33.0 |
|
|
$ |
27.5 |
|
| Accounts
receivable, net |
503.0 |
|
|
576.3 |
|
| Unbilled
accounts receivable, net |
135.7 |
|
|
159.8 |
|
| Financing
receivables, current portion |
83.1 |
|
|
84.2 |
|
|
Inventory |
48.3 |
|
|
27.7 |
|
| Prepaid
expenses and other current assets |
68.2 |
|
|
63.4 |
|
|
Total current assets |
871.3 |
|
|
938.9 |
|
| Property and equipment,
net |
32.9 |
|
|
32.1 |
|
| Financing receivables,
less current portion |
102.0 |
|
|
113.6 |
|
| Goodwill |
781.5 |
|
|
781.5 |
|
| Identifiable intangible
assets, net |
825.5 |
|
|
751.9 |
|
| Other assets |
9.9 |
|
|
32.7 |
|
|
Total assets |
$ |
2,623.1 |
|
|
$ |
2,650.7 |
|
| Liabilities and
Stockholders’ Equity |
|
|
|
| Current
Liabilities |
|
|
|
| Current
maturities of long-term debt |
$ |
7.4 |
|
|
$ |
— |
|
| Accounts
payable – trade |
382.3 |
|
|
350.5 |
|
| Accounts
payable – floor plan |
223.3 |
|
|
264.9 |
|
| Accrued
expenses and other current liabilities |
167.1 |
|
|
216.3 |
|
|
Discounted financing receivables, current portion |
75.3 |
|
|
79.9 |
|
|
Total current liabilities |
855.4 |
|
|
911.6 |
|
| Long-term debt, net of
debt issuance costs and current maturities |
1,030.6 |
|
|
730.7 |
|
| Discounted financing
receivables, less current portion |
87.1 |
|
|
104.7 |
|
| Deferred income tax
liabilities |
288.0 |
|
|
270.4 |
|
| Other liabilities |
15.1 |
|
|
30.4 |
|
|
Total liabilities |
2,276.2 |
|
|
2,047.8 |
|
| Commitments and
contingencies (Note 13) |
|
|
|
| Stockholders’
Equity |
|
|
|
| Preferred stock: |
|
|
|
| $0.01 par
value; 100 shares authorized and zero shares issued and outstanding
at June 30, 2017 and June 30, 2016 |
— |
|
|
— |
|
| Common stock: |
|
|
|
| $0.01 par
value; 250,000,000 shares authorized and 90,969,919 shares issued
and outstanding at June 30, 2017, 100,000,000 shares authorized and
71,922,836 shares issued and outstanding at June 30, 2016 |
0.7 |
|
|
0.9 |
|
|
Additional paid-in capital |
373.9 |
|
|
625.3 |
|
|
Accumulated deficit |
(27.7 |
) |
|
(23.3 |
) |
|
Total stockholders’ equity |
346.9 |
|
|
602.9 |
|
|
Total liabilities and stockholders’
equity |
$ |
2,623.1 |
|
|
$ |
2,650.7 |
|
|
Presidio, Inc. |
|
Consolidated Statements of Operations |
| (in
millions) |
|
|
|
|
|
Three months ended June 30, 2016 |
|
Three months ended June 30, 2017 |
|
Fiscal year ended June 30, 2016 |
|
Fiscal year ended June 30, 2017 |
| Revenue |
|
|
|
|
|
|
|
|
|
Product |
|
$ |
644.4 |
|
|
$ |
615.4 |
|
|
$ |
2,319.8 |
|
|
$ |
2,373.2 |
|
|
Service |
|
109.5 |
|
|
113.9 |
|
|
395.1 |
|
|
444.4 |
|
| Total
revenue |
|
753.9 |
|
|
729.3 |
|
|
2,714.9 |
|
|
2,817.6 |
|
| Cost of revenue |
|
|
|
|
|
|
|
|
|
Product |
|
522.2 |
|
|
489.3 |
|
|
1,866.5 |
|
|
1,884.2 |
|
|
Service |
|
84.6 |
|
|
87.7 |
|
|
307.8 |
|
|
347.5 |
|
| Total
cost of revenue |
|
606.8 |
|
|
577.0 |
|
|
2,174.3 |
|
|
2,231.7 |
|
|
Gross margin |
|
147.1 |
|
|
152.3 |
|
|
540.6 |
|
|
585.9 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Total
SG&A |
|
97.6 |
|
|
95.6 |
|
|
345.1 |
|
|
381.2 |
|
|
Transaction costs |
|
5.0 |
|
|
0.3 |
|
|
20.6 |
|
|
14.8 |
|
|
Depreciation and amortization |
|
21.5 |
|
|
20.5 |
|
|
76.0 |
|
|
81.8 |
|
| Total
operating expenses |
|
124.1 |
|
|
116.4 |
|
|
441.7 |
|
|
477.8 |
|
|
Operating income |
|
23.0 |
|
|
35.9 |
|
|
98.9 |
|
|
108.1 |
|
| Interest and other
(income) expense |
|
|
|
|
|
|
|
|
|
Interest expense |
|
21.0 |
|
|
12.6 |
|
|
81.9 |
|
|
72.5 |
|
|
Loss on disposal of business |
|
— |
|
|
— |
|
|
6.8 |
|
|
— |
|
|
Loss on extinguishment of debt |
|
8.8 |
|
|
0.8 |
|
|
9.7 |
|
|
28.5 |
|
|
Other (income) expense, net |
|
(0.1 |
) |
|
(0.1 |
) |
|
0.1 |
|
|
0.1 |
|
| Total
interest and other (income) expense |
|
29.7 |
|
|
13.3 |
|
|
98.5 |
|
|
101.1 |
|
|
Income (loss) before income taxes |
|
(6.7 |
) |
|
22.6 |
|
|
0.4 |
|
|
7.0 |
|
| Income tax expense
(benefit) |
|
0.7 |
|
|
12.2 |
|
|
3.8 |
|
|
2.6 |
|
|
Net income (loss) |
|
$ |
(7.4 |
) |
|
$ |
10.4 |
|
|
$ |
(3.4 |
) |
|
$ |
4.4 |
|
| Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
| Basic
EPS |
|
$ |
(0.10 |
) |
|
$ |
0.11 |
|
|
$ |
(0.05 |
) |
|
$ |
0.06 |
|
| Diluted
EPS |
|
$ |
(0.10 |
) |
|
$ |
0.11 |
|
|
$ |
(0.05 |
) |
|
$ |
0.05 |
|
| Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
71,924,155 |
|
|
90,925,367 |
|
|
71,117,962 |
|
|
77,517,700 |
|
|
Diluted |
|
71,924,155 |
|
|
96,388,898 |
|
|
71,117,962 |
|
|
81,861,839 |
|
|
Presidio, Inc. |
|
Consolidated Statements of Cash Flows |
| (in
millions) |
| |
| |
Fiscal Year Ended June 30, 2016 |
|
Fiscal Year Ended June 30, 2017 |
| Cash flows from
operating activities: |
|
|
|
| Net
income (loss) |
$ |
(3.4 |
) |
|
$ |
4.4 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
Amortization of intangible assets |
67.2 |
|
|
73.6 |
|
|
Depreciation of property and equipment in operating expenses |
8.8 |
|
|
8.2 |
|
|
Depreciation of property and equipment in cost of revenue |
5.7 |
|
|
5.4 |
|
| Provision
for sales returns and credit losses |
1.5 |
|
|
2.0 |
|
|
Amortization of debt issuance costs |
7.6 |
|
|
6.5 |
|
| Loss on
extinguishment of debt |
9.7 |
|
|
28.5 |
|
| Loss on
disposal of business |
6.8 |
|
|
— |
|
| Noncash
lease income |
(5.0 |
) |
|
(3.7 |
) |
|
Share-based compensation expense |
2.2 |
|
|
10.2 |
|
| Deferred
income tax expense (benefit) |
(19.6 |
) |
|
(17.6 |
) |
|
Other |
— |
|
|
0.4 |
|
| Change in
assets and liabilities, net of acquisitions and dispositions: |
|
|
|
| Unbilled
and accounts receivable |
(37.6 |
) |
|
(98.4 |
) |
|
Inventory |
(4.5 |
) |
|
20.6 |
|
| Prepaid
expenses and other assets |
13.5 |
|
|
(20.6 |
) |
| Accounts
payable – trade |
21.7 |
|
|
(31.9 |
) |
| Accrued
expenses and other liabilities |
11.5 |
|
|
63.4 |
|
|
Net cash provided by operating
activities |
86.1 |
|
|
51.0 |
|
| Cash flows from
investing activities: |
|
|
|
|
Acquisition of businesses, net of cash and cash equivalents
acquired |
(251.3 |
) |
|
— |
|
| Proceeds
from collection of escrow related to acquisition of business |
— |
|
|
0.6 |
|
| Proceeds
from disposition of business |
36.3 |
|
|
— |
|
| Additions
of equipment under sales-type and direct financing leases |
(95.4 |
) |
|
(100.1 |
) |
| Proceeds
from collection of financing receivables |
6.5 |
|
|
9.8 |
|
| Additions
to equipment under operating leases |
(2.7 |
) |
|
(2.0 |
) |
| Proceeds
from disposition of equipment under operating leases |
1.0 |
|
|
1.5 |
|
| Purchases
of property and equipment |
(16.4 |
) |
|
(11.4 |
) |
|
Net cash used in investing
activities |
(322.0 |
) |
|
(101.6 |
) |
| Cash flows from
financing activities: |
|
|
|
| Proceeds
from initial public offering, net of underwriter discounts and
commissions |
— |
|
|
247.5 |
|
| Payments
of initial public offering costs |
— |
|
|
(7.2 |
) |
| Proceeds
from issuance of common stock under share-based compensation
plans |
— |
|
|
1.1 |
|
|
Repurchases of common stock |
(0.1 |
) |
|
— |
|
| Payments
of future consideration on acquisitions |
(10.3 |
) |
|
— |
|
| Deferred
financing costs |
(1.2 |
) |
|
— |
|
| Proceeds
from the discounting of financing receivables |
86.4 |
|
|
108.6 |
|
|
Retirements of discounted financing receivables |
(4.2 |
) |
|
(5.0 |
) |
| Net
borrowings (repayments) on the receivables securitization
facility |
5.0 |
|
|
(5.0 |
) |
|
Repayments of senior and subordinated notes |
(66.3 |
) |
|
(230.8 |
) |
|
Borrowings of term loans, net of original issue discount |
306.6 |
|
|
— |
|
|
Repayments of term loans |
(156.2 |
) |
|
(105.7 |
) |
| Net
borrowings (repayments) on the floor plan facility |
20.9 |
|
|
41.6 |
|
| Net cash
provided by financing activities |
180.6 |
|
|
45.1 |
|
| Net
decrease in cash and cash equivalents |
(55.3 |
) |
|
(5.5 |
) |
| Cash and cash
equivalents: |
|
|
|
| Beginning
of the period |
88.3 |
|
|
33.0 |
|
| End of
the period |
$ |
33.0 |
|
|
$ |
27.5 |
|
| Supplemental
disclosures of cash flow information |
|
|
|
| Cash paid during the
period for: |
|
|
|
|
Interest |
$ |
74.0 |
|
|
$ |
75.7 |
|
| Income
taxes, net of refunds |
$ |
23.7 |
|
|
$ |
3.3 |
|
| Reduction of discounted
lease assets and liabilities |
$ |
82.8 |
|
|
$ |
89.6 |
|
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