Jason Industries (JASN) Tops Q2 EPS by 2c; Will Evaluate Monetizing Real Estate Assets

November 4, 2016 8:05 AM EDT
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Jason Industries (NASDAQ: JASN) reported Q2 EPS of ($0.06), $0.02 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $170.1 million versus the consensus estimate of $170.2 million.

Cost Reduction and Margin Expansion Program:

As part of the previously announced Cost Reduction and Margin Expansion program, the Company announced the following business portfolio optimization and cost reduction actions:

  • Acoustics has initiated a sale process for its European operations to divest approximately $30 million in non-core revenue. The Company expects to complete the sale of the European operations in the next two quarters. The sale of this business will drive margin expansion and a focus on growth in the core North American automotive market.
  • Finishing will close operations in Brazil by the end of 2016, exiting approximately $6 million of revenue in a non-core geographic end market. The exit from this market will drive margin expansion, strategic focus, and simplification of the Finishing business.
  • Components will close a manufacturing facility in Libertyville, Ill. as part of the Company‚Äôs ongoing footprint rationalization. The facility closure will consolidate two existing facilities in Libertyville, optimizing footprint and capacity in response to declining demand in the railcar market better positioning the business to serve customers through a single manufacturing facility in the Midwest. The closure will achieve annual run-rate cost savings of $1.3 million beginning in the fourth quarter of 2017. As a result of this action, Jason expects to record a pre-tax restructuring charge to earnings of approximately $1.5 million in the first half of 2017.

In addition to these actions, the Company announced it has commenced a process to evaluate monetizing certain real estate assets through a sale leaseback transaction to accelerate net debt reduction.

Cost Reduction and Margin Expansion actions taken and announced to-date will achieve $11 million in annual run-rate savings in selling and administrative costs, and $11 million in annual run-rate savings in supply chain and footprint rationalization savings by the end of 2017. Global cost reduction program savings were $2.4 million in the third quarter and $4.8 million year-to-date in 2016.

GUIDANCE:

Jason Industries sees FY2016 revenue of $695-705 million, versus prior guidance of $715-730 million and the consensus of $718.6 million.

For earnings history and earnings-related data on Jason Industries (JASN) click here.



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