ASV Holdings, Inc. (Nasdaq: ASV), a leading provider of
rubber-tracked compact track loaders and wheeled skid steer loaders
in the compact construction equipment market, today announced Full
Year and Fourth Quarter 2017 results.
For the Full Year 2017, the Company reported Net Sales of $123.3
million and Net Income of $1.7 million or $0.19 per share compared
to Net Sales of $103.8 million and a Net Loss of $(1.2) million or
$(0.15) per share for the year ended December 31, 2016.
For the three months ended December 31, 2017, the Company
reported Net Sales of $30.5 million and a Net Loss of $(0.8)
million or $(0.08) per share compared to Net Sales of $25.0 million
and a Net Loss of $(2.1) million or $(0.26) per share for the three
months ended December 31, 2016.
Full Year 2017
Highlights
- $123.3 million in Net Sales represented
a year-over-year increase of 18.8% over $103.8 million in
2016.
- Machine sales revenues increased year
over year by 32.0% to $81.5 million.
- Adjusted 2017 net income* of $2.0
million or $0.22 per share, compared to 2016 adjusted pro forma C
Corporation net loss of $(1.2) million or $(0.13) per share,
representing a positive swing of $3.2 million.
- EBITDA of $9.9 million or 8.1% of sales
compared to $10.7 million or 10.3% of sales for 2016.
- Adjusted EBITDA* of $10.7 million or
8.7% of sales compared to 2016 pro forma adjusted EBITDA of $7.8
million or 7.5% of sales.
- Independent dealer / rental locations
increased to 222 at December 31, 2017 compared to 133 at December
31, 2016.
- Transition to ASV distribution
substantially completed during the year, with 97.0% of machine
sales to the ASV network in 2017.
- Reduced total Net Indebtedness by $16.5
million to $26.9 million as of December 31, 2017 compared to $43.4
million at December 31, 2016 representing a 40% reduction in debt.
Leverage ratio at December 31, 2017 cut by nearly 60% to 2.5x
trailing adjusted EBITDA, compared to 5.6x at December 31,
2016.
Fourth Quarter 2017
Highlights
- $30.5 million in Net Sales represented
a year-over-year increase of 21.5% over $25.0 million in the fourth
quarter of 2016.
- Machine sales revenues increased
year-over-year by 39.0% to $21.0 million.
- Adjusted fourth quarter 2017 net
income* of $0.5 million or $0.05 per share, compared to fourth
quarter 2016 adjusted pro forma C Corporation net loss of $(0.8)
million or $(0.10) per share, representing a positive swing of $1.3
million. The largest adjustment to earnings came from debt
refinancing costs as discussed below.
- EBITDA of $1.7 million or 5.6% of sales
compared to $2.4 million or 9.8% of sales for the fourth quarter of
2016.
- Adjusted EBITDA* of $2.2 million or
7.4% of sales compared to fourth quarter 2016 pro forma adjusted
EBITDA of $1.0 million or 4.0% of sales.
- Completed re-financing of credit
facility with new 5-year, $50.0 million facility, reducing weighted
average effective interest cost to approximately 5.3%, compared to
6.9% at December 31, 2016. We incurred $0.9 million debt
refinancing costs including the amortized costs of the prior
facilities and a pre-payment penalty in the period.
*The Glossary at the end of this press release contains further
details regarding reconciliation of GAAP items and Adjusted and
Pro-forma items.
Chairman and Chief Executive Officer, Andrew Rooke commented,
“2017 was a transformative year for ASV, in which we reassumed
substantially all of the branding and distribution of our product
line. We have nearly doubled our independent dealer and rental
network locations, and established the infrastructure needed to
thrive and grow as a public company. While public company costs
impacted our bottom line, we have been profitable each quarter on
an adjusted basis, we’ve significantly strengthened the balance
sheet and we remain well-positioned for improvements in each of our
key performance indicators during 2018 and beyond. My thanks go to
the ASV team who led this, and to all stakeholders who contributed
to our efforts.”
“Our performance for the year was highlighted by a
year-over-year incremental $2.9 million in adjusted EBITDA,
representing 15% margin on incremental sales. We generated $7.5
million in cash flow from operations, and total indebtedness was
reduced almost 40% from a year ago. Our 18.8% top-line growth for
the year, essentially all coming from machine sales, also
benefitted from our progress in the rental market, to which our
sales were approximately 40% higher in 2017 than in 2016. With the
build out of North America retail and rental distribution to 222
locations, and continued strength in Australia and New Zealand, we
are optimistic about the opportunities for further expansion.”
Mr. Rooke continued, “The relocation of our aftermarket parts
distribution center next to our Grand Rapids, Minnesota
headquarters and manufacturing facility, which we started in the
fourth quarter of 2017, is expected to be completed by the end of
the first quarter 2018, ahead of plan. While we will incur certain
costs from this move in the first quarter, we expect significant
customer service and parts availability improvements and reduced
operating costs, once fully transitioned, to yield a payback of
approximately one year or less. The end-markets that ASV serves are
building momentum and our products continue to enjoy unique and
well-understood advantages and value to dealers and end-users
alike. We expect to take advantage of these strong markets to
increase our sales, EBITDA margin and net income in 2018 and
beyond.”
Missi How, Chief Financial Officer, commented, “We are pleased
with the progress we made in 2017. We generated nearly $7.5 million
in operating cash compared to $2.4 million in 2016, and we swung to
a reported pretax profit of $1.1 million for the year versus a loss
of $1.2 million last year. A primary focus has been the
strengthening of our balance sheet. We made significant progress in
managing our inventory, which improved our days on hand and lowered
our DSO, resulting in an improvement in our net working capital to
annualized last quarters’ sales to 23.6% as compared to 31.6% in
2016. Cash generated from operations together with the proceeds
from the IPO enabled us to reduce our total net debt by $16.5
million during 2017 and lower our leverage ratio to 2.5x trailing
adjusted EBITDA. With the re-structuring of our credit facility
completed in the fourth quarter, we expect the benefits of the
refinancing to reduce our annual interest expense by approximately
$0.8 million in 2018.”
Conference Call:
Management will host a conference call at 4:30 PM Eastern Time
today to discuss the results with the investment community. Anyone
interested in participating in the call should dial 888-394-8218 if
calling within the United States or 323-701-0225 if calling
internationally. A replay will be available until 11:59 PM ET March
29, 2018 which can be accessed by dialing 844-512-2921 if calling
within the United States or 412-317-6671 if calling
internationally. Please use passcode 4517711 to access this
replay.
The call will additionally be broadcast live and archived for 90
days over the internet with accompanying slides, accessible at the
investor relations portion of the Company's corporate website,
www.asvi.com in the “Investors” section.
About ASV Holdings, Inc.
ASV Holdings, Inc. is a designer and manufacturer of compact
construction equipment. Its patented Posi-Track rubber tracked,
multi-level suspension undercarriage system provides a competitive
market differentiator for its Compact Track Loader (CTL) product
line with brand attributes of power, performance and
serviceability. Its wheeled Skid Steer Loaders (SSLs) also share
the common brand attributes. Equipment is sold through an
independent dealer network throughout North America, Australia, and
New Zealand. The company also sells OEM equipment and aftermarket
parts. ASV owns and operates a 238,000 square-foot production
facility in Grand Rapids, MN.
Forward-Looking Statements
This release contains forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as
“may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “intends” or “continue,” and
other similar expressions that are predictions of or indicate
future events and future trends, or the negative of these terms or
other comparable terminology. Forward-looking statements in this
release include, without limitation: (1) projections of revenue,
earnings, capital structure and other financial items, (2)
statements of our plans and objectives, (3) statements regarding
the capabilities and capacities of our business operations, (4)
statements of expected future economic conditions and the effect on
us and on dealers or OEM customers, (5) expected benefits of our
cost reduction measures, and (6) assumptions underlying statements
regarding us or our business.
Our actual results may differ from information contained in
these forward looking-statements for many reasons, including those
described in the section entitled “Risk Factors” in our
Registration Statement on Form S-1 (SEC File No. 333-216912), which
was filed in connection with our initial public offering and our
Form 10K which are available on our EDGAR page at www.sec.gov.
These statements are only current predictions and are subject to
known and unknown risks, uncertainties and other factors that may
cause our or our industry’s actual results, levels of activity,
performance or achievements to be materially different from those
anticipated by the forward-looking statements. We discuss many of
these risks in greater detail under the heading “Risk Factors” and
elsewhere in the Registration Statement on Form S-1. You should not
rely upon forward-looking statements as predictions of future
events. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
Except as required by law, after the date of this release, we are
under no duty to update or revise any of the forward-looking
statements, whether as a result of new information, future events
or otherwise.
We obtained the industry, market and competitive position data
in this release from our own internal estimates and research as
well as from industry and general publications and research surveys
and studies conducted by third parties. While we believe that each
of these studies and publications is reliable, we have not
independently verified market and industry data from third-party
sources. While we believe our internal company research is reliable
and the market definitions we use are appropriate, neither such
research nor these definitions have been verified by any
independent source.
We from time to time refer to various non-GAAP financial
measures in this release. We believe that this information is
useful to understanding our operating results by excluding certain
items that may not be indicative of our core operating results and
business outlook. Reference to these non-GAAP financial measures
should not be considered as a substitute for, or superior to,
results that are presented in a manner consistent with GAAP.
Rather, the non-GAAP financial information should be considered in
addition to results that are presented in a manner consistent with
GAAP. A reconciliation of non-GAAP financial measures referred to
in this release is provided in the tables at the conclusion of this
release.
ASV Holdings, Inc.
Statements of Operations
(In thousands, except par value and per
share data)
For the Quarter Ended
December 31, For the Year Ended December 31,
2017 2016 2017
2016 Net sales $ 30,455 $ 25,050
$ 123,340 $ 103,803 Cost of goods sold 26,310
21,175 104,698 87,417 Gross
profit 4,145 3,875 18,642 16,386 Research and development costs 508
490 2,070 1,999 Selling, general and administrative expense
3,109 2,159 11,450 8,377
Operating income 528 1,226 5,122 6,010 Other income
(expense) Interest expense (655 ) (1,147 ) (3,034 ) (4,963 ) Loss
on debt extinguishment (906 ) (2,196 ) (989 ) (2,196 ) Loss on sale
of assets — — — (24 ) Other income 2 —
2 — Total other expense (1,559 )
(3,343 ) (4,021 ) (7,183 ) Income (loss)
before taxes (1,031 ) (2,117 ) 1,101 (1,173 ) Income tax benefit
(loss) (236 ) — (608 ) —
Net income (loss) $ (795 ) $ (2,117 ) $ 1,709 $
(1,173 ) Earnings per share: Basic net income (loss) per share $
(0.08 ) $ (0.26 ) $ 0.19 $ (0.15 ) Diluted net income (loss) per
share $ (0.08 ) $ (0.26 ) $ 0.19 $ (0.15 ) Weighted average common
shares outstanding: Basic weighted average common shares
outstanding 9,801 8,000 9,125 8,000 Diluted weighted average common
shares outstanding 9,801 8,000 9,125 8,000 Pro forma (C corporation
basis): Pro forma tax (benefit) N/A $ (762 ) N/A $ (422 ) Pro forma
net income (loss) N/A $ (1,355 ) N/A $ (751 ) Pro forma earnings
per share: Basic net income per share N/A $ (0.17 ) N/A $ (0.09 )
Diluted net income per share N/A $ (0.17 ) N/A $ (0.09 )
ASV Holdings, Inc.
Balance Sheets
(In thousands, except par
value)
December 31, 2017 2016
ASSETS CURRENT ASSETS Cash $ 3 $ 572 Cash -
restricted — 535 Trade receivables, net 18,276 13,603 Receivables
from affiliates 76 1,413 Inventory, net 26,691 30,896 Prepaid
income tax 896 - Prepaid expenses and other 591 537
Total current assets 46,533 47,556
NON-CURRENT ASSETS
Property, plant and equipment, net 13,797 15,402 Intangible assets,
net 23,277 25,824 Goodwill 30,579 30,579 Deferred financing costs -
revolving loan facility 298 371 Other long-term assets 13 -
Deferred tax asset 624 - Total assets $ 115,121 $
119,732
LIABILITIES AND STOCKHOLDERS' EQUITY Note payable -
current portion $ 2,000 $ 3,000 Trade accounts payable 15,174
11,976 Payables to affiliates 1,063 2,298 Accrued compensation and
benefits 1,483 1,073 Accrued warranties 1,869 1,870 Accrued product
liability- short term 778 2,125 Accrued other 1,039
1,312 Total current liabilities 23,406 23,654
NON-CURRENT
LIABILITIES Revolving loan facility 12,511 15,605 Note payable
- long term, net 12,664 26,265 Other long-term liabilities
739 773 Total liabilities 49,320 66,297
STOCKHOLDERS'
EQUITY
Preferred stock, $0.001 par value, 5,000
authorized, none outstanding at December 31, 2017 and December 31,
2016, respectively
— —
Common stock, $0.001 par value, 50,000
authorized, 9,806 and 8,000 shares issued and outstanding at
December 31, 2017 and December 31, 2016, respectively
10 8 Additional paid-in capital 65,434 54,779 Retained earnings
(accumulated deficit) 357 (1,352 ) Total
Stockholders' Equity 65,801 53,435
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 115,121 $ 119,732
ASV Holdings, Inc.
Statements of Cash Flows
(In thousands)
For the Year Ended December 31, 2017
2016 OPERATING ACTIVITIES Net income (loss) $
1,709 $ (1,173 )
Adjustments to reconcile to net income
(loss) to net cash provided by operating activities:
Depreciation 2,263 2,181 Amortization 2,547 2,547 Share-based
compensation 353 — Deferred income tax (benefit) (624 ) — Loss on
sale of fixed assets 57 24 Amortization of deferred finance cost
212 545 Loss on debt extinguishment 989 2,196
Prepayments and other fees incurred in
debt extinguishment
(364 ) (369 ) Bad debt expense 14 42 Inventory reserves 544 —
Changes in operating assets and liabilities Trade receivables
(4,687 ) 578 Net trade receivables/payables from affiliates 102 186
Other long-term assets (13 ) — Inventory 3,494 (1,997 ) Prepaid
income tax (896 ) - Prepaid expenses (53 ) (439 ) Trade accounts
payable 3,198 (647 ) Accrued expenses (1,288 ) (1,223 ) Other
long-term liabilities (34 ) (34 ) Net cash provided
by operating activities 7,523 2,417
INVESTING
ACTIVITIES Proceeds on disposal of fixed assets — 2 Purchase of
property and equipment (548 ) (325 ) Net cash (used
in) investing activities (548 ) (323 )
FINANCING
ACTIVITIES Principal payments on term debt (1,075 ) (5,500 )
Repayment of existing debt (28,924 ) (32,500 ) Borrowings on new
term debt 15,000 30,000 Debt issuance costs incurred (366 ) (1,220
) Shares repurchased for income tax withholding on share-based
compensation (25 ) — Members equity contribution — 5,000 Repayment
of existing revolving credit facility — (12,165 ) Initial borrowing
on new revolving credit facility — 16,716 Proceeds from issuance of
common stock, net of offering costs 10,405 — Net payments on
revolving credit facilities (3,094 ) (1,318 ) Net
cash (used in) financing activities (8,079 ) (987 )
NET CHANGE IN CASH (1,104 ) 1,107
Cash at
beginning of period 1,107 -
Cash at end of
period $ 3 $ 1,107
Supplemental Information
Cautionary Statement Regarding Non-GAAP Measures
This release contains references to “EBITDA” and “Adjusted
EBITDA.” EBITDA is defined for the purposes of this release as net
income or loss before interest, income taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA less the gain or
loss related to non-recurring events. Management believes that
EBITDA and Adjusted EBITDA are useful supplemental measures of our
operating performance and provide meaningful measures of overall
corporate performance exclusive of our capital structure and the
method and timing of expenditures associated with building and
placing our products. EBITDA is also presented because management
believes that it is frequently used by investment analysts,
investors and other interested parties as a measure of financial
performance. Adjusted EBITDA is also presented because management
believes that it provides a measure of our recurring core
business.
However, EBITDA and Adjusted EBITDA are not recognized earnings
measures under generally accepted accounting principles of the
United States (“U.S. GAAP”) and do not have a standardized meaning
prescribed by U.S. GAAP. Therefore, EBITDA and Adjusted EBITDA may
not be comparable to similar measures presented by other issuers.
Investors are cautioned that EBITDA and Adjusted EBITDA should not
be construed as alternatives to net income or loss or other income
statement data (which are determined in accordance with U.S. GAAP)
as an indicator of our performance or as a measure of liquidity and
cash flows. Management’s method of calculating EBITDA and Adjusted
EBITDA may differ materially from the method used by other
companies and accordingly, may not be comparable to similarly
titled measures used by other companies.
Reconciliation of EBITDA to Adjusted EBITDA (in millions except
percentages)
For the Quarter EndedDecember
31,
For the Year EndedDecember
31,
2017 2016 2017 2016
Net income (loss) ($0.8) ($2.1) $1.7
($1.2) Interest Expense 0.6 1.1 3.0 5.0 Loss on debt
extinguishment 0.9 2.2 1.0 2.2 Depreciation & Amortization 1.2
1.2 4.8 4.7 Income Tax (Benefit) Expense (0.2) - (0.6) -
EBITDA (1)
$1.7 $2.4 $9.9 $10.7
% of Sales
5.6% 9.8% 8.1% 10.3%
EBITDA $1.7 $2.4 $9.9 $10.7
Costs of ConExpo trade show (2) - - 0.1 -
Revision to accrual for legal proceeding
expenses less legal costs (3)
0.1 (0.9) (0.1) (1.4) Stock compensation and transaction related
compensation costs (4) 0.1 - 0.5 - Aftermarket parts distribution
center relocation (5) 0.3 - 0.3 -
Adjusted EBITDA (6)
$2.2 $1.5 $10.7 $9.3 Adjusted EBITDA
as % of net revenues 7.4% 6.0% 8.7% 9.0% Pro-forma adjustment
for public company costs - (0.5) - (1.5)
Pro-forma Adjusted
EBITDA* $2.2 $1.0 $10.7 $7.8 % of
Sales 7.4% 4.0% 8.7% 7.5%
*
The Company converted to a C corporation in May 2017, and
consequently 2017 EBITDA for the three and twelve months ended
December 31, 2017 includes approximately $0.5 million and $1.5
million of public company costs not included in 2016 EBITDA. For
the three and twelve months ended December 31, 2016, Pro Forma
Adjusted EBITDA is $1.0 million and $7.8 million. (1) EBITDA
is defined as income or loss before interest, income taxes,
depreciation and amortization. EBITDA is not a recognized measure
under U.S. GAAP and does not have a standardized meaning prescribed
by U.S. GAAP. Therefore, EBITDA may not be comparable to similar
measures presented by other companies. The table above reconciles
net income to EBITDA. See “—Cautionary Statements Regarding
Non-GAAP Measures” for further information regarding EBITDA.
(2) Costs associated with the 2017 ConExpo trade show. The ConExpo
show, which is held every three years, was held in Las Vegas in
March of this year. This show is an international gathering place
for the construction industries. It is estimated that 130,000
professionals from around the world attended the show. (3)
Revision to accrual for legal proceeding expenses is included in
Adjusted EBITDA since it is an adjustment in the period to an
accrual established at the formation of the Joint Venture and is
not representative of the operating activity in the reported
period. This adjustment was due to the settlement of a legal claim
lower than the accrued cost. (4) Stock compensation and IPO
transaction related compensation costs. (5) Aftermarket
Parts Distribution Center relocation costs are restructuring costs
related to the movement of the ASV aftermarket parts operation from
Southaven Memphis to a facility adjacent to the Company principal
premises in Grand Rapids MN, which commenced in quarter four of
2017 and was completed in quarter one of 2018. (6) Adjusted
EBITDA is defined as EBITDA less the gain or loss related to
non-recurring events. Adjusted EBITDA is not a recognized measure
under U.S. GAAP and does not have a standardized meaning prescribed
by U.S. GAAP. Therefore, Adjusted EBITDA may not be comparable to
similar measures presented by other companies. The table above
reconciles EBITDA to Adjusted EBITDA. See “—Cautionary Statements
Regarding Non-GAAP Measures” for further information regarding
EBITDA. (6) 2016 Pro Forma Adjusted EBITDA is defined as
Adjusted EBITDA less public company costs
Reconciliation
of GAAP Net Income to Adjusted Net Income (in millions except
shares and EPS)
For the Quarter EndedDecember
31,
For the Year EndedDecember
31,
2017 2016 2017 2016 Net income
(loss) as reported ($0.8) ($2.1) $1.7 ($1.2) Revision to legal
costs accrual & product liability settlement 0.1 (0.9) 0.1
(1.4) Aftermarket parts distribution center relocation 0.3 - 0.3 -
Loss on debt extinguishment 0.9 2.2 1.0 2.2 Pro-forma adjustment
for public company costs - (0.5) - (1.5) Pro-forma income before
tax 0.5 (1.3) 3.1 (1.9) Pro forma (C corporation basis) tax $ -
$0.5 ($1.1) $0.7
Adjusted Net Income (loss) $0.5
($0.8) $2.0 ($1.2) Weighted average
diluted shares outstanding 9,801,000 8,000,000 9,125,000 8,000,000
Basic and Diluted earnings (loss) per share as reported ($0.08)
($0.26) $0.19 ($0.15) Total EPS Effect $0.13 $0.16 $0.03 $0.02
Adjusted (pro forma C Corporation) earnings (loss) per share $0.05
($0.10) $0.22 ($0.13)
*Pro forma adjustments for public company costs and (C
corporation basis) tax expense: The company converted from a LLC to
a corporation on May 11, 2017. The pro forma adjustments reflect
the actual public company costs incurred in 2017 as if the company
had been a corporation for the same period in 2016, and a pro forma
(C corporation basis) tax charge on income at a tax rate of
36%.
Current Ratio
December 31, 2017 December 31,
2016 Current Assets $46,533 $47,556 Current
Liabilities $23,406 $23,654
Current Ratio
2.0 2.0
Days Sales Outstanding, (DSO), is calculated by taking
the sum of net trade and related party receivables divided by
annualized sales per day (sales for the quarter, multiplied by 4,
and the sum divided by 365).
Days Payables Outstanding, (DPO), is calculated by taking
the sum of net trade and related party payables divided by
annualized cost of sales per day (cost of goods sold for the
quarter, multiplied by 4, and the sum divided by 365).
Debt net of deferred financing costs is calculated using
the Condensed Consolidated Balance Sheet amounts for 1) deferred
financing costs – revolving loan facility, 2) note payable – short
term, 3) revolving loan facility and 4) note payable – long term
net. Debt to Adjusted EBITDA ratio is calculated by dividing total
debt at the balance sheet date by trailing twelve month Adjusted
EBITDA.
December 31, 2017 December 31,
2016 Note payable – short term 2,000 3,000
Deferred financing costs – revolving loan facility (298)
(371) Revolving loan facility 12,511 15,605
Note payable – long term -net 12,664 26,265
Debt
$26,877
$44,499
Inventory turns are calculated by multiplying cost of
goods sold for the referenced three-month period by 4 and dividing
that figure by inventory as at the referenced period.
Net working capital as a % of annualized last quarter’s
sales is the sum of accounts receivable and inventory less
accounts payable divided by the last quarter’s sales annualized
(x4).
December 31, 2017 December 31,
2016 Accounts receivable 18,352 15,016 Inventory
26,691 30,896 Accounts payable (16,237)
(14,274)
Net working capital
$28,806
$31,638
Last quarters annualized sales (LQS) 121,820 100,200
Net working capital % of LQS
23.6%
31.6%
Working capital is calculated as total current assets
less total current liabilities
December 31, 2017 December 31,
2016 Total Current Assets $46,533 $47,556 Less:
Total Current Liabilities 23,406 23,654
Working
Capital $23,127 $23,902
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version on businesswire.com: https://www.businesswire.com/news/home/20180322005560/en/
ASV Holdings, Inc.Andrew Rooke, 218-327-5389Chairman and Chief
Executive Officerandrew.rooke@asvi.comorDarrow Associates Inc.Peter
Seltzberg, 516-419-9915Managing Director, Investor
Relationspseltzberg@darrowir.com
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