Furmanite Corporation (NYSE:FRM) today reported results for the quarter ended March 31, 2015.
First Quarter 2015 Results
Revenues for the three months ended March 31, 2015 were $122.3 million, a decrease of $2.6 million, or 2.1%, from the $124.9 million reported for the three months ended March 31, 2014. Operating income was $2.3 million for the 2015 first quarter, compared to $2.5 million for the same quarter last year. Net income was $0.3 million, or $0.01 per diluted share, in the 2015 first quarter, compared to $1.0 million, or $0.03 per diluted share, in the 2014 first quarter.
Foreign currency exchange rate changes unfavorably impacted revenues, operating income, net income and diluted earnings per share by $4.3 million, $0.2 million, $0.7 million and $0.02 per share, respectively, for the three months ended March 31, 2015.
Excluding the foreign currency impacts, $0.5 million of incremental costs associated with the Company’s 2015 Annual Meeting and certain other non-routine expenses, adjusted operating income for the three months ended March 31, 2015 increased by $0.3 million to $3.0 million(A), compared to $2.7 million(A), for the three months ended March 31, 2014. Adjusted net income increased to $1.4 million(A), or $0.04(A) per diluted share, for the 2015 first quarter, compared to $1.3 million(A), or $0.03(A) per diluted share, in the 2014 first quarter.
Joseph Milliron, Chairman, CEO and President of Furmanite Corporation said, “Our 2015 first quarter results demonstrate the resolve of our global team under challenging circumstances. We faced several obstacles, including the United Steel Workers’ strike, a fire at our Kendal, U.K. operations center and customer concerns over declining oil prices. In spite of these conditions, we still delivered improvement over prior year adjusted revenue and net income results, excluding the impact of foreign currency exchange rate changes and certain non-routine items.” Mr. Milliron continued, “That said, make no mistake—we are not satisfied with our first quarter results, even considering all that we were working against. While the quarter saw some positive indicators, considerable room for improvement remains, and our new Board and the management team remain firmly committed to delivering the sustainable long-term results that our shareholders expect.”
Financial Position
As of March 31, 2015, the Company’s cash balance was $29.1 million. The Company’s cash balance, along with the $85.8 million of availability under its credit facility, provides the Company liquidity of $114.9 million.
Conference Call Details
In conjunction with the earnings release, Furmanite Corporation will host a conference call with Joseph E. Milliron (Chairman, Chief Executive Officer and President) and Robert S. Muff (Chief Financial Officer and Chief Administrative Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Monday, May 11, 2015.
(A) These items are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”) and exclude the impact of 1) foreign currency exchange rate changes, 2) the write off of debt issuance costs associated with an amendment to the Company’s credit facility, 3) incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders and 4) direct costs associated with the integration of the Furmanite Technical Solutions division. Management believes that results excluding these impacts provide additional meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation, by excluding the impact of foreign currency exchange rate changes and certain expenses not representative of ongoing operations. Reconciliations to the applicable GAAP measures are 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, 2014 and Form 10-Q as of March 31, 2015 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 | |||||||||
| Ended March 31, | |||||||||
| 2015 | 2014 | ||||||||
| Revenues | $ | 122,338 | $ | 124,941 | |||||
| Costs and expenses: | |||||||||
| Operating costs | 93,870 | 94,702 | |||||||
| Depreciation and amortization expense | 3,082 | 2,989 | |||||||
| Selling, general and administrative expense | 23,056 | 24,732 | |||||||
| Total costs and expenses | 120,008 | 122,423 | |||||||
| Operating income | 2,330 | 2,518 | |||||||
| Interest income and other income (expense), net | (523 | ) | (165 | ) | |||||
| Interest expense | (632 | ) | (449 | ) | |||||
| Income before income taxes | 1,175 | 1,904 | |||||||
| Income tax expense | (862 | ) | (888 | ) | |||||
| Net income | $ | 313 | $ | 1,016 | |||||
| Earnings per common share - Basic | $ | 0.01 | $ | 0.03 | |||||
| Earnings per common share - Diluted | $ | 0.01 | $ | 0.03 | |||||
| Adjusted diluted earnings per share1 | $ | 0.04 | $ | 0.03 | |||||
| Weighted-average number of common and common equivalent shares used in computing earnings per common share: | |||||||||
| Basic | 37,750 | 37,567 | |||||||
| Diluted | 37,932 | 37,827 | |||||||
| EBITDA2 | $ | 4,889 | $ | 5,342 | |||||
| Adjusted EBITDA2 | $ | 6,161 | $ | 5,739 | |||||
__________________
1 Adjusted diluted earnings per share
presented above is a non-GAAP financial measurement that excludes the
impact of 1) foreign currency exchange rate changes, 2) incremental
professional fees associated with the Company’s 2015 Annual Meeting of
Stockholders, 3) the write off of debt issuance costs associated with an
amendment to the Company’s credit facility and 4) direct costs
associated with the integration of the Furmanite Technical Solutions
division. Management believes that results excluding these impacts
provide additional meaningful and comparable information to analysts and
is useful in comparing the operational trends of Furmanite Corporation,
by excluding the impact of foreign currency exchange rate changes and
certain expenses not representative of ongoing operations.
Reconciliations to the applicable GAAP measures are 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. Adjusted EBITDA further excludes 1)
foreign currency exchange rate changes, 2) incremental professional fees
associated with the Company’s 2015 Annual Meeting of Stockholders and 3)
direct costs associated with the integration of the Furmanite Technical
Solutions division. Reconciliations of EBITDA and Adjusted EBITDA to the
most directly comparable GAAP measures are included at the end of the
press release.
| FURMANITE CORPORATION | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Cash | $ | 29,092 | $ | 33,753 | ||||
| Trade receivables, net | 113,835 | 110,219 | ||||||
| Inventories, net | 38,939 | 37,383 | ||||||
| Other current assets | 20,695 | 21,335 | ||||||
| Total current assets | 202,561 | 202,690 | ||||||
| Property and equipment, net | 50,424 | 51,930 | ||||||
| Other assets | 28,838 | 29,551 | ||||||
| Total assets | $ | 281,823 | $ | 284,171 | ||||
| Total current liabilities | $ | 58,347 | $ | 56,067 | ||||
| Total long-term debt | 59,891 | 61,853 | ||||||
| Other liabilities | 22,696 | 23,787 | ||||||
| Total stockholders’ equity | 140,889 | 142,464 | ||||||
| Total liabilities and stockholders’ equity | $ | 281,823 | $ | 284,171 | ||||
| FURMANITE CORPORATION | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (in thousands) | |||||||||
| (Unaudited) | |||||||||
| For the Three Months Ended March 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net income | $ | 313 | $ | 1,016 | |||||
| Depreciation, amortization and other non-cash items | 3,414 | 2,823 | |||||||
| Working capital changes | (5,059 | ) | (4,953 | ) | |||||
| Net cash used in operating activities | (1,332 | ) | (1,114 | ) | |||||
| Capital expenditures | (1,764 | ) | (1,679 | ) | |||||
| Proceeds from sale of assets | 3 | — | |||||||
| Proceeds from issuance of debt | 35,600 | — | |||||||
| Payments on debt | (35,452 | ) | (909 | ) | |||||
| Debt issuance costs | (531 | ) | — | ||||||
| Issuance of common stock | — | 14 | |||||||
| Other | (260 | ) | (140 | ) | |||||
| Effect of exchange rate changes on cash | (925 | ) | 395 | ||||||
| Decrease in cash and cash equivalents | (4,661 | ) | (3,433 | ) | |||||
| Cash and cash equivalents at beginning of period | 33,753 | 33,240 | |||||||
| Cash and cash equivalents at end of period | $ | 29,092 | $ | 29,807 | |||||
| FURMANITE CORPORATION | ||||||||||||||||
| BUSINESS SEGMENT DATA | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
Technical | Engineering | Corporate1 | Total | |||||||||||||
| Three months ended March 31, 2015 | ||||||||||||||||
| Revenues from external customers | $ | 85,964 | $ | 36,374 | $ | — | $ | 122,338 | ||||||||
| Operating income (loss)2 | $ | 8,730 | $ | 4 | $ | (6,404 | ) | $ | 2,330 | |||||||
| Three months ended March 31, 2014 | ||||||||||||||||
| Revenues from external customers | $ | 87,750 | $ | 37,191 | $ | — | $ | 124,941 | ||||||||
| Operating income (loss)2 | $ | 7,665 | $ | (757 | ) | $ | (4,390 | ) | $ | 2,518 | ||||||
_______________________________
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 For the three months ended March
31, 2015, Corporate includes approximately $0.5 million of incremental
professional fees associated with the Company’s 2015 Annual Meeting of
Stockholders. The Engineering & Project Solutions segment included
approximately $0.2 million of direct costs associated with the
integration of the Furmanite Technical Solutions division for the three
months ended March 31, 2014.
| FURMANITE CORPORATION | |||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| For the Three Months | |||||||||||||||||
| Ended March 31, 2015 | |||||||||||||||||
| As Reported | Foreign | Other | Non-GAAP | ||||||||||||||
| Revenues | $ | 122,338 | $ | 4,285 | $ | — | $ | 126,623 | |||||||||
| Operating costs | 93,870 | 3,190 | — | 97,060 | |||||||||||||
| Depreciation & amortization | 3,082 | 88 | — | 3,170 | |||||||||||||
| Selling, general and administrative expense | 23,056 | 815 | (450 | ) | 23,421 | ||||||||||||
| Operating income | 2,330 | 192 | 450 | 2,972 | |||||||||||||
| Interest income and other income (expense), net | (523 | ) | 542 | — | 19 | ||||||||||||
| Interest expense | (632 | ) | — | 149 | (483 | ) | |||||||||||
| Income before income taxes | 1,175 | 734 | 599 | 2,508 | |||||||||||||
| Income tax expense | (862 | ) | (50 | ) | (239 | ) | (1,151 | ) | |||||||||
| Net income | $ | 313 | $ | 684 | $ | 360 | $ | 1,357 | |||||||||
| Diluted earnings per share | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.04 | |||||||||
| For the Three Months | |||||||||||||||||
| Ended March 31, 2014 | |||||||||||||||||
| As Reported | Foreign | Other | Non-GAAP | ||||||||||||||
| Revenues | $ | 124,941 | $ | — | $ | — | $ | 124,941 | |||||||||
| Operating costs | 94,702 | — | — | 94,702 | |||||||||||||
| Depreciation & amortization | 2,989 | — | — | 2,989 | |||||||||||||
| Selling, general and administrative expense | 24,732 | — | (220 | ) | 24,512 | ||||||||||||
| Operating income | 2,518 | — | 220 | 2,738 | |||||||||||||
| Interest income and other income (expense), net | (165 | ) | 177 | — | 12 | ||||||||||||
| Interest expense | (449 | ) | — | — | (449 | ) | |||||||||||
| Income before income taxes | 1,904 | 177 | 220 | 2,301 | |||||||||||||
| Income tax expense | (888 | ) | (44 | ) | (88 | ) | (1,020 | ) | |||||||||
| Net income | $ | 1,016 | $ | 133 | $ | 132 | $ | 1,281 | |||||||||
| Diluted earnings per share | $ | 0.03 | $ | — | $ | — | $ | 0.03 | |||||||||
______________________________
1 Consists of 1)
incremental professional fees associated with the Company’s 2015 Annual
Meeting of Stockholders, 2) the write off of debt issuance costs
associated with an amendment to the Company’s credit facility and 3)
direct costs associated with the integration of the Furmanite Technical
Solutions division.
| FURMANITE CORPORATION | |||||||||
| Reconciliation of Non-GAAP Financial Measures (continued) | |||||||||
| (in thousands) | |||||||||
| For the Three Months | |||||||||
| Ended March 31, | |||||||||
| 2015 | 2014 | ||||||||
| Reconciliation of EBITDA to Net income: | |||||||||
| EBITDA | $ | 4,889 | $ | 5,342 | |||||
| Less: | |||||||||
| Depreciation and amortization expense | (3,082 | ) | (2,989 | ) | |||||
| Interest expense | (632 | ) | (449 | ) | |||||
| Income tax expense | (862 | ) | (888 | ) | |||||
| Net income | $ | 313 | $ | 1,016 | |||||
| Reconciliation of Adjusted EBITDA to Net income: | |||||||||
| Adjusted EBITDA | $ | 6,161 | $ | 5,739 | |||||
| Foreign currency impacts | (822 | ) | (177 | ) | |||||
| Incremental professional fees associated with 2015 Annual Meeting of Stockholders | (450 | ) | — | ||||||
| Direct costs associated with the integration of the Furmanite Technical Solutions division | — | (220 | ) | ||||||
| EBITDA | 4,889 | 5,342 | |||||||
| Less: | |||||||||
| Depreciation and amortization expense | (3,082 | ) | (2,989 | ) | |||||
| Interest expense | (632 | ) | (449 | ) | |||||
| Income tax expense | (862 | ) | (888 | ) | |||||
| Net income | $ | 313 | $ | 1,016 | |||||
Contacts:
Robert S. Muff, 713-634-7775
Investor
Relations
investor@furmanite.com
