Furmanite Corporation (NYSE:FRM) today reported results for the three and twelve months ended December 31, 2014.
Fourth Quarter 2014 Results
Revenues for the three months ended December 31, 2014 were $133.9 million, an increase of $3.5 million, or 2.7%, over the $130.4 million reported for the three months ended December 31, 2013. Adjusted operating income for the three months ended December 31, 2014 and 2013 was $8.4 million(A) and $5.2 million,(A) respectively, excluding $0.8 million and $0.6 million, respectively, of incremental costs associated with certain retirement, management transition and integration expenses. Net income for the 2014 fourth quarter was $4.8 million, or $0.13 per diluted share, compared to $2.6 million, or $0.07 per diluted share, in the 2013 fourth quarter.
Twelve Months Ended December 31, 2014 Results
Revenues for the twelve months ended December 31, 2014 were $529.2 million, an increase of $101.9 million, or 23.8%, over the $427.3 million reported for the twelve months ended December 31, 2013. Adjusted operating income for the twelve months ended December 31, 2014 and 2013 was $22.9 million(A) and $25.5 million,(A) respectively, excluding $2.3 million of incremental costs in the current year and $0.7 million of incremental costs in the prior year, associated with certain retirement, management transition and integration expenses. Net income for the twelve months ended December 31, 2014 was $11.4 million, or $0.30 per diluted share, compared to $14.0 million, or $0.37 per diluted share for the twelve months ended December 31, 2013.
Foreign currency had unfavorable impacts on revenues and operating income of $2.3 million and $0.2 million, respectively, for the three months ended December 31, 2014 and favorable impacts on revenues and operating income of $0.4 million and $0.5 million, respectively, for the twelve months ended December 31, 2014.
Joseph Milliron, CEO and President of Furmanite Corporation said, “Our fourth quarter performance reflects the initial success of our initiatives and our strengthened operating foundation from which we expect to grow. Throughout 2014, we took significant action to unify Furmanite’s global operations and implement efficiencies in our internal processes and structure to reduce costs. Further, we have taken steps to strengthen our ability to partner with customers earlier and longer in their projects and throughout the life cycles of their assets, which we believe will generate further opportunity in our markets. Moving forward, we are focused on driving high performance and profitable growth across our global organization, and while challenges remain in our markets, we are committed to doing what is within our control to enhance shareholder value.”
Financial Position
As of December 31, 2014, the Company’s cash balance was $33.8 million. The Company’s cash balance, along with the $38.0 million of availability under its credit facility, provides the Company liquidity of $71.8 million.
Discontinuing Earnings Guidance
The Company is discontinuing its practice of providing financial guidance due to a number of factors, including variable industry dynamics, the impact of foreign exchange, global economic considerations and other challenges that can impact its forecasting capabilities. The Company will continue to provide investors with perspective on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment to continue to assist in guiding the investment community on its business outlook and environment.
Conference Call Details
In conjunction with the earnings release, Furmanite Corporation will host a conference call with, Joseph E. Milliron (Chief Executive Officer and President) and Robert S. Muff (Chief Financial Officer and Chief Administration Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Friday, March 6, 2015.
(A) These items are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”) and exclude the impact of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct costs associated with management transition and integration of the Furmanite Technical Solutions division. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measure is included at the end of the press release.
ABOUT FURMANITE CORPORATION
Furmanite Corporation (NYSE:FRM), founded in 1920, is one of the world’s largest specialty industrial services and specialty engineering project solutions companies, providing world class solutions to customer needs through more than 80 offices on six continents. The Company delivers a wide portfolio of inspection, mechanical and engineering services which help monitor, maintain, renew and construct the global energy, industrial and municipal infrastructures. Furmanite serves a broad range of industry sectors, including refining, offshore, sub-sea, pipeline, power generation, chemical, petrochemical, pulp and paper, water utilities, automotive, mining, marine and steel manufacturing. World Headquarters and Global Support Operations are located in Houston, Texas; Rotterdam, Netherlands; Kendal, United Kingdom and Melbourne, Australia. For more information, visit www.furmanite.com.
Certain of the Company’s statements in this press release are not purely historical, and as such are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company’s business, and other risks and uncertainties detailed most recently in this earnings release and the Company’s Form 10-K as of December 31, 2013 filed with the Securities and Exchange Commission. One or more of these factors could affect the Company’s business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements.
FURMANITE CORPORATION | ||||||||||||||||
CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months | For the Twelve Months | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues | $ | 133,885 | $ | 130,357 | $ | 529,197 | $ | 427,294 | ||||||||
Costs and expenses: | ||||||||||||||||
Operating costs | 99,499 | 99,763 | 397,629 | 306,042 | ||||||||||||
Depreciation and amortization expense | 3,434 | 3,186 | 12,579 | 11,418 | ||||||||||||
Selling, general and administrative expense | 23,366 | 22,757 | 98,302 | 85,034 | ||||||||||||
Total costs and expenses | 126,299 | 125,706 | 508,510 | 402,494 | ||||||||||||
Operating income | 7,586 | 4,651 | 20,687 | 24,800 | ||||||||||||
Interest income and other income (expense), net | 340 | (344 | ) | (92 | ) | (616 | ) | |||||||||
Interest expense | (449 | ) | (408 | ) | (1,811 | ) | (1,341 | ) | ||||||||
Income before income taxes | 7,477 | 3,899 | 18,784 | 22,843 | ||||||||||||
Income tax expense | (2,707 | ) | (1,317 | ) | (7,429 | ) | (8,816 | ) | ||||||||
Net income | $ | 4,770 | $ | 2,582 | $ | 11,355 | $ | 14,027 | ||||||||
Earnings per common share - Basic | $ | 0.13 | $ | 0.07 | $ | 0.30 | $ | 0.37 | ||||||||
Earnings per common share - Diluted | $ | 0.13 | $ | 0.07 | $ | 0.30 | $ | 0.37 | ||||||||
Adjusted diluted earnings per share1 | $ | 0.14 | $ | 0.08 | $ | 0.34 | $ | 0.38 | ||||||||
Weighted-average number of common and common equivalent shares used in computing earnings per common share: | ||||||||||||||||
Basic | 37,678 | 37,511 | 37,631 | 37,422 | ||||||||||||
Diluted | 37,897 | 37,762 | 37,867 | 37,630 | ||||||||||||
EBITDA2 | $ | 11,360 | $ | 7,493 | $ | 33,174 | $ | 35,602 |
__________________ | ||
1 | Adjusted diluted earnings per share presented above is a non-GAAP financial measurement that excludes the impact of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct costs associated with management transition and integration of the Furmanite Technical Solutions division. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measure is included at the end of the press release. | |
2 | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) presented above is a non-GAAP financial measurement. The Company believes that investors and other users of the financial statements benefit from the presentation of this non-GAAP measurement because it provides an additional metric to evaluate the Company’s core operating performance by excluding the effects of depreciation and amortization expense, interest expense and income tax expense from net income. A reconciliation of EBITDA to the most directly comparable GAAP measure is included at the end of the press release. | |
FURMANITE CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Cash | $ | 33,753 | $ | 33,240 | ||||
Trade receivables, net | 110,219 | 106,853 | ||||||
Inventories, net | 37,383 | 35,443 | ||||||
Other current assets | 21,335 | 21,159 | ||||||
Total current assets | 202,690 | 196,695 | ||||||
Property and equipment, net | 51,930 | 55,347 | ||||||
Other assets | 29,551 | 33,125 | ||||||
Total assets | $ | 284,171 | $ | 285,167 | ||||
Total current liabilities | $ | 56,067 | $ | 62,523 | ||||
Total long-term debt | 61,853 | 63,196 | ||||||
Other liabilities | 23,787 | 25,952 | ||||||
Total stockholders’ equity | 142,464 | 133,496 | ||||||
Total liabilities and stockholders’ equity | $ | 284,171 | $ | 285,167 | ||||
FURMANITE CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
For the Twelve Months Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 11,355 | $ | 14,027 | ||||
Depreciation, amortization and other non-cash items | 13,560 | 17,364 | ||||||
Working capital changes | (14,414 | ) | (13,716 | ) | ||||
Net cash provided by operating activities | 10,501 | 17,675 | ||||||
Capital expenditures | (8,090 | ) | (18,392 | ) | ||||
Acquisition of businesses | (265 | ) | (16,695 | ) | ||||
Proceeds from sale of assets | 16 | 30 | ||||||
Payments on debt | (1,012 | ) | (2,274 | ) | ||||
Proceeds from issuance of debt | — | 20,000 | ||||||
Debt issuance costs | — | (50 | ) | |||||
Excess tax benefits from stock-based compensation | 989 | — | ||||||
Issuance of common stock | 158 | 573 | ||||||
Other | (250 | ) | (250 | ) | ||||
Effect of exchange rate changes on cash | (1,534 | ) | (562 | ) | ||||
Increase in cash and cash equivalents | 513 | 55 | ||||||
Cash and cash equivalents at beginning of period | 33,240 | 33,185 | ||||||
Cash and cash equivalents at end of period | $ | 33,753 | $ | 33,240 | ||||
FURMANITE CORPORATION | |||||||||||||||
BUSINESS SEGMENT DATA | |||||||||||||||
(in thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Technical | Engineering & | Corporate1 | Total | ||||||||||||
Three months ended December 31, 2014 | |||||||||||||||
Revenues from external customers | $ | 96,319 | $ | 37,566 | $ | — | $ | 133,885 | |||||||
Operating income (loss)2 | $ | 11,498 | $ | 821 | $ | (4,733 | ) | $ | 7,586 | ||||||
Three months ended December 31, 2013 | |||||||||||||||
Revenues from external customers | $ | 95,965 | $ | 34,392 | $ | — | $ | 130,357 | |||||||
Operating income (loss)2 | $ | 8,839 | $ | (1,808 | ) | $ | (2,380 | ) | $ | 4,651 | |||||
Twelve months ended December 31, 2014 | |||||||||||||||
Revenues from external customers | $ | 376,120 | $ | 153,077 | $ | — | $ | 529,197 | |||||||
Operating income (loss)2 | $ | 41,279 | $ | (391 | ) | $ | (20,201 | ) | $ | 20,687 | |||||
Twelve months ended December 31, 2013 | |||||||||||||||
Revenues from external customers | $ | 368,587 | $ | 58,707 | $ | — | $ | 427,294 | |||||||
Operating income (loss)2 | $ | 43,822 | $ | (2,003 | ) | $ | (17,019 | ) | $ | 24,800 | |||||
_______________________________ | ||
1 | Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments. | |
2 | The Engineering & Project Solutions segment includes nil and approximately $0.5 million of direct costs associated with management transition and integration of the Furmanite Technical Solutions division for the three and twelve months ended December 31, 2014, respectively, and approximately $0.6 million and $0.7 million of such costs for the three and twelve months ended December 31, 2013, respectively. Corporate includes approximately $0.8 million and $1.7 million of incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive for the three and twelve months ended December 31, 2014, respectively. | |
FURMANITE CORPORATION | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
(in thousands, except per share data) | ||||||||||||
For the Three Months | ||||||||||||
Ended December 31, 2014 | ||||||||||||
As Reported | Reconciling Items 1 | Non GAAP Basis | ||||||||||
Selling, general and administrative expense | $ | 23,366 | $ | (847 | ) | $ | 22,519 | |||||
Operating income | 7,586 | 847 | 8,433 | |||||||||
Income before income taxes | 7,477 | 847 | 8,324 | |||||||||
Income tax expense | (2,707 | ) | (339 | ) | (3,046 | ) | ||||||
Net income | $ | 4,770 | $ | 508 | $ | 5,278 | ||||||
Adjusted diluted earnings per share | $ | 0.13 | $ | 0.01 | $ | 0.14 | ||||||
For the Three Months | ||||||||||||
Ended December 31, 2013 | ||||||||||||
As Reported | Reconciling Items 1 | Non GAAP Basis | ||||||||||
Selling, general and administrative expense | $ | 22,757 | $ | (580 | ) | $ | 22,177 | |||||
Operating income | 4,651 | 580 | 5,231 | |||||||||
Income before income taxes | 3,899 | 580 | 4,479 | |||||||||
Income tax expense | (1,317 | ) | (232 | ) | (1,549 | ) | ||||||
Net income | $ | 2,582 | $ | 348 | $ | 2,930 | ||||||
Adjusted diluted earnings per share | $ | 0.07 | $ | 0.01 | $ | 0.08 | ||||||
For the Twelve Months | ||||||||||||
Ended December 31, 2014 | ||||||||||||
As Reported | Reconciling Items 1 | Non GAAP Basis | ||||||||||
Selling, general and administrative expense | $ | 98,302 | $ | (2,251 | ) | $ | 96,051 | |||||
Operating income | 20,687 | 2,251 | 22,938 | |||||||||
Income before income taxes | 18,784 | 2,251 | 21,035 | |||||||||
Income tax expense | (7,429 | ) | (900 | ) | (8,329 | ) | ||||||
Net income | $ | 11,355 | $ | 1,351 | $ | 12,706 | ||||||
Adjusted diluted earnings per share | $ | 0.30 | $ | 0.04 | $ | 0.34 | ||||||
For the Twelve Months | ||||||||||||
Ended December 31, 2013 | ||||||||||||
As Reported | Reconciling Items 1 | Non GAAP Basis | ||||||||||
Selling, general and administrative expense | $ | 85,034 | $ | (650 | ) | $ | 84,384 | |||||
Operating income | 24,800 | 650 | 25,450 | |||||||||
Income before income taxes | 22,843 | 650 | 23,493 | |||||||||
Income tax expense | (8,816 | ) | (260 | ) | (9,076 | ) | ||||||
Net income | $ | 14,027 | $ | 390 | $ | 14,417 | ||||||
Adjusted diluted earnings per share | $ | 0.37 | $ | 0.01 | $ | 0.38 |
______________________________ | ||
1 | Consists of 1) incremental compensation expenses pursuant to the provisions of a retirement agreement with a Company executive and 2) direct management transition and integration costs of the Furmanite Technical Solutions division, and the related income tax impacts. | |
FURMANITE CORPORATION | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures (continued) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
For the Three Months | For the Twelve Months | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reconciliation of EBITDA to Net income: | ||||||||||||||||
EBITDA | $ | 11,360 | $ | 7,493 | $ | 33,174 | $ | 35,602 | ||||||||
Less: | ||||||||||||||||
Depreciation and amortization expense | (3,434 | ) | (3,186 | ) | (12,579 | ) | (11,418 | ) | ||||||||
Interest expense | (449 | ) | (408 | ) | (1,811 | ) | (1,341 | ) | ||||||||
Income tax expense | (2,707 | ) | (1,317 | ) | (7,429 | ) | (8,816 | ) | ||||||||
Net income | $ | 4,770 | $ | 2,582 | $ | 11,355 | $ | 14,027 |
Contacts:
Robert S. Muff, 713-634-7775
Investor
Relations
investor@furmanite.com