Form 8-K Blue Bird Corp For: Dec 06

December 6, 2017 4:34 PM


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 6, 2017
 
 
BLUE BIRD CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-36267
 
46-3891989
(State or Other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
402 Blue Bird Boulevard
Fort Valley, Georgia
 
31030
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (478) 822-2801

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).





Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


ITEM 2.02        RESULTS OF OPERATIONS AND FINANCIAL CONDITION

In accordance with General Instruction B.2. to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The information regarding the results of operations and financial condition of Blue Bird Corporation (the “Company”) responsive to this Item 2.02, and contained in Exhibit 99.1 filed herewith, is incorporated into this Item 2.02 by reference.
 
ITEM 7.01        REGULATION FD DISCLOSURE

In accordance with General Instruction B.2. to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The Company, which is the leading independent designer and manufacturer of school buses, announced it will present via live web cast its fiscal 2017 full-year and fourth quarter financial results on December 6, 2017. A live web cast is scheduled at approximately 4:30 p.m. Eastern Time. Speakers on the web cast will include: Phil Horlock, President and Chief Executive Officer; Phil Tighe, Chief Financial Officer and other company leaders.

The web cast can be accessed through a link on the investor relations page of Company’s web site at http://blue-bird.com. Investors are advised to log on to the website at least 15 minutes prior to the start of the web cast to allow sufficient time for downloading any necessary software. The web cast will be available for replay at the same address approximately three hours following its conclusion, and will remain available for a period of at least 12 months.

ITEM 9.01        FINANCIAL STATEMENTS AND EXHIBITS
(d)     Exhibits

Exhibit No.     Description
99.1        Press release of the Company, dated December 6, 2017.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
                    
                                    
 
 
Blue Bird Corporation
 
 
 
Dated:
December 6, 2017
/s/ Paul Yousif
 
 
Paul Yousif
 
 
Vice President


Exhibit Index
 
Exhibit No.        Description
99.1            Press release of the Company, dated December 6, 2017.



capturea05.jpg

BLUE BIRD DELIVERS STRONG FISCAL 2017 FINANCIAL PERFORMANCE

Achieved Guidance; Full Year Unit Sales up 7%, Net Income up $21.9 million,
Adjusted Diluted EPS up 11% and Adjusted EBITDA down $3.3 million
FY2018 Guidance Announced


Fort Valley, GA, December 6, 2017 – Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leading independent designer and manufacturer of school buses, announced today its fiscal 2017 full year and fourth quarter results

Full Year and Fourth Quarter Highlights

Bus sales for the year were 11,317, representing an increase of 701 buses (or 7%) over the last year. Bus sales for the quarter totaled 3,608 buses, 300 units (or 9%) higher than the same period last year.

Net sales revenue for the full-year of $990.6 million, representing an increase of $58.6 million (or 6%). Net sales for the fourth quarter of $312.7 million, $26.3 million (or 9%) higher than the same period last year.

Full year income from continuing operations of $28.8 million, up $21.5 million compared with last year. Fourth quarter income from continuing operations of $14.4 million, up $3.3 million compared with the same period last year.

Diluted earnings per share was $0.74, an increase of $0.60 compared with last year. Fourth quarter diluted earnings per share of $0.28, a decrease of $0.11 compared with the same period last year. Adjusted Diluted Earnings per Share was $1.27 and $0.51 for the full year and fourth quarter, an increase of $0.13 and $0.09, respectively.

Full year Adjusted EBITDA1 of $68.9 million, down $3.3 million compared with last year. Fourth quarter Adjusted EBITDA1 of $25.1 million was down $0.8 million compared with the same period last year.

Full year net cash provided by continuing operations was $47.9 million, an increase of $22.6 million compared with last year. Fourth quarter net cash provided by continuing operations was $41.9 million, up $37.9 million compared with the same period last year. Adjusted Free Cash Flow1 for the full-year and fourth quarter was $43.7 million and $40.7 million, respectively.

Net debt as of September 30, 2017 was $88.6 million, $11.2 million (or 11%) lower than the same time last year.

Gross margin for the full year was 12.9%, down 100 bps. compared with last year. Gross margin in the quarter was 12.6%, down 90 bps. from last year.

Announcing full-year fiscal 2018 net sales guidance of $1,000 million - $1,030 million, Adjusted EBITDA guidance of $78 - $82 million and Adjusted Free Cash Flow guidance of $36 - $40 million.

1


(in millions except EPS data)
Three Months Ended September 30, 2017
 
B/(W) 
 2016
 
Fiscal Year Ended September 30, 2017
 
B/(W) 
 2016
Unit Sales
3,608

 
300

 
11,317

 
701

GAAP Measures:
 
 
 
 
 
 
 
Revenue
$
312.7

 
$
26.3

 
$
990.6

 
$
58.6

Income from Continuing Operations
$
14.4

 
$
3.3

 
$
28.8

 
$
21.5

Diluted Earnings per Share from Continuing Operations
$
0.28

 
$
(0.11
)
 
$
0.74

 
$
0.58

Non-GAAP Measures1:
 
 
 
 
 
 
 
Adjusted EBITDA
$
25.1

 
$
0.8

 
$
68.9

 
$
(3.3
)
Adjusted Income from Continuing Operations
$
15.1

 
$
1.8

 
$
37.1

 
$
10.4

Adjusted Diluted Earnings per Share
$
0.51

 
$
0.09

 
$
1.27

 
$
0.13

1 Reconciliation to relevant GAAP metrics shown below

“We are pleased with our achievements in fiscal 2017 and are well positioned for profit growth in fiscal 2018," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “We maintained our strong leadership position in alternative-fuel-powered buses, built a record number of buses in our plant, achieved our highest bus sales in 15 years and put in place key initiatives to drive profit growth. We are pleased to announce our full-year fiscal 2018 net revenue guidance of $1,000 million - $1,030 million, Adjusted EBITDA guidance of $78 - $82 million and Adjusted Free Cash Flow guidance of $36 - $40 million.”

Fourth Quarter 2017 Results

Net Sales
Total net sales were $312.7 million for the fourth quarter of fiscal 2017, an increase of $26.3 million, or 9.2%, from prior year period. Bus unit sales were 3,608 units for the quarter compared with 3,308 units for the same period last year.

Gross Profit
Fourth quarter gross profit of $39.5 million represents an increase of $0.8 million from the fourth quarter of last year.

Income/Loss from Continuing Operations
Income from continuing operations was $14.4 million for the fourth quarter of fiscal 2017, an increase of $3.3 million compared with the same period last year. The increase was primarily driven by lower operating and interest expenses, partially offset by higher tax expense.

Adjusted Income from Continuing Operations
Adjusted Income from Continuing Operations was $15.1 million, representing an increase of $1.8 million compared with the same period last year.

Adjusted EBITDA
Adjusted EBITDA was $25.1 million, or 8.0% of net sales, for the fourth quarter of fiscal 2017, representing an increase of $0.8 million compared with the fourth quarter of the prior year.


Full Year 2017 Results

Net Sales
Total net sales were $990.6 million for the fiscal year ended September 30, 2017, an increase of $58.6 million, or 6.3%, compared with the prior year. This was primarily driven by higher bus unit sales, which were 701 units above the same period last year.

Gross Profit
Full year gross profit was $127.4 million, a decrease of $2.0 million from the prior year.

Income/Loss from Continuing Operations
Income from continuing operations was $28.8 million for the fiscal year ended September 30, 2017, which was $21.5 million above the same period in the prior year. The increase was primarily driven by a decrease of $29.9 million in selling, general and administrative expenses, which was partially offset by a decrease of $2.0 million in gross profit.


2


Adjusted Income from Continuing Operations
Adjusted Income from Continuing Operations was $37.1 million, representing an increase of $10.4 million compared with the prior year.

Adjusted EBITDA
Adjusted EBITDA was $68.9 million, or 7.0% of net sales, for the fiscal year ended September 30, 2017, a decrease of $3.3 million from the prior year. The decrease in adjusted EBITDA was primarily the result of lower gross profit.





Conference Call Details

Blue Bird will discuss its fourth quarter 2017 results and other related matters in a conference call at 4:30 PM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird's website at www.blue-bird.com.

Webcast participants should log on and register at least 15 minutes prior to the start time on the Investor Relations homepage of Blue Bird’s website at http://investors.blue-bird.com. Click the link in the events box on the Investor Relations landing page.

Participants desiring audio only should dial 800-281-7829 or 323-794-2140.

A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.

About Blue Bird Corporation

Blue Bird is the leading independent designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and approximately 180,000 buses in operation today. Blue Bird’s longevity and reputation in the school bus industry have made it an iconic American brand. Blue Bird distinguishes itself from its principal competitors by its singular focus on the design, engineering, manufacture and sale of school buses and related parts. As the only manufacturer of chassis and body production specifically designed for school bus applications, Blue Bird is recognized as an industry leader for school bus innovation, safety, product quality/reliability/durability, operating costs and drivability. In addition, Blue Bird is the market leader in alternative fuel applications with its propane-powered and compressed natural gas-powered school buses. Blue Bird manufactures school buses at two facilities in Fort Valley, Georgia. Its Micro Bird joint venture operates a manufacturing facility in Drummondville, Quebec, Canada. Service and after-market parts are distributed from Blue Bird’s parts distribution center located in Delaware, Ohio.

Key Non-GAAP Financial Measures We Use to Evaluate Our Performance

This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” "Adjusted EBITDA Margin," "Adjusted Income/Loss from Continuing Operations," "Adjusted Diluted Earnings per Share," “Free Cash Flow” and “Adjusted Free Cash Flow” because management views these metrics as a useful way to look at the performance of our operations between periods and to exclude decisions on capital investment and financing that might otherwise impact the review of profitability of the business based on present market conditions.

3



Adjusted EBITDA is defined as income from continuing operations prior to interest income, interest expense, income taxes, and depreciation, amortization, and disposals, as adjusted to add back certain charges that we may record each year, such as stock-compensation expense and transaction costs, as these expenses are not considered an indicator of ongoing company performance. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales. Adjusted income (loss) from continuing operations is net income from continuing operations net of taxes, as adjusted to add back certain transaction costs not considered an indicator of ongoing company performance. Adjusted diluted earnings per share represents adjusted income (loss) from continuing operations by diluted weighted average common shares outstanding (as if we had GAAP net income during the respective period). Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations, and Adjusted Diluted Earnings per Share are not measures of performance defined in accordance with GAAP. The measures are used as a supplement to GAAP results in evaluating certain aspects of our business, as described below.

We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations, and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our operations, excluding decisions made with respect to capital investment, financing, and other expenses. We believe that the non-GAAP metrics offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance the evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations, and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations, and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Continuing Operations, and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measures of “Free Cash Flow” and "Adjusted Free Cash Flow" are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We define free cash flow as net cash provided by/used in continuing operations minus cash paid for fixed assets. We define adjusted free cash flow as free cash flow minus cash paid for special compensation and other business combination expenses. We use free cash flow and adjusted free cash flow, and ratios based on both, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets and intangible assets are a necessary component of ongoing operations. In limited circumstances in which proceeds from sales of fixed or intangible assets exceed purchases, free cash flow would exceed cash flow from operations. However, since we do not anticipate being a net seller of fixed or intangible assets, we expect free cash flow to be less than operating cash flows.

4



Forward Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:

Inherent limitations of internal controls impacting financial statements
Growth opportunities
Future profitability
Ability to expand market share
Customer demand for certain products
Economic conditions that could affect fuel costs, commodity costs, industry size and financial conditions of our dealers and suppliers
Labor or other constraints on the Company’s ability to maintain a competitive cost structure
Volatility in the tax base and other funding sources that support the purchase of buses by our end customers
Lower or higher than anticipated market acceptance for our products
Other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.


Contact:
Mark Benfield
Investor Relations & Government Affairs
(478) 822-2315
Mark.Benfield@blue-bird.com

5



BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands except for share data)
September 30, 2017
 
October 1, 2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
62,616

 
$
52,309

Accounts receivable, net
10,148

 
20,315

Inventories
76,155

 
53,806

Other current assets
11,528

 
6,104

Total current assets
$
160,447

 
$
132,534

Property, plant and equipment, net
34,708

 
33,466

Goodwill
18,825

 
18,825

Intangible assets, net
57,481

 
59,491

Equity investment in affiliate
11,625

 
12,944

Deferred tax asset
11,755

 
19,080

Other assets
975

 
1,526

Total assets
$
295,816

 
$
277,866

Liabilities and Stockholders' Deficit
 
 
 
Current liabilities
 
 
 
Accounts payable
$
87,331

 
$
80,646

Warranty
8,573

 
7,972

Accrued expenses
18,229

 
20,455

Deferred warranty income
6,776

 
5,666

Other current liabilities
9,847

 
4,032

Current portion of senior term debt
8,000

 
11,750

Total current liabilities
$
138,756

 
$
130,521

Long-term liabilities
 
 
 
Long-term debt
$
143,224

 
$
140,366

Warranty
12,337

 
11,472

Deferred warranty income
12,519

 
10,521

Other liabilities
15,064

 
15,592

Pension
32,426

 
56,368

Total long-term liabilities
$
215,570

 
$
234,319

Stockholders' deficit
 
 
 
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 400,000 issued with liquidation preference of $40,000 at September 30, 2017 and 500,000 issued with liquidation preference of $50,000 at October 1, 2016
$
40,000

 
$
50,000

Common stock, $0.0001 par value, 100,000,000 shares authorized, 23,739,344 and 22,518,058 issued and outstanding at September 30, 2017 and October 1, 2016, respectively.
2

 
2

Additional paid-in capital
45,418

 
50,771

Accumulated deficit
(100,055
)
 
(128,856
)
Accumulated other comprehensive loss
(43,875
)
 
(58,891
)
Total stockholders' deficit
$
(58,510
)
 
$
(86,974
)
Total liabilities and stockholders' deficit
$
295,816

 
$
277,866



6



BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three Months Ended
 
Fiscal Year Ended
(in thousands except for share data)
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Net sales
$
312,687

 
$
286,414

 
$
990,602

 
$
932,010

Cost of goods sold
273,176

 
247,733

 
863,234

 
802,654

Gross profit
$
39,511

 
$
38,681

 
$
127,368

 
$
129,356

Operating expenses
 
 
 
 
 
 
 
Selling, general and administrative expenses
19,049

 
21,382

 
72,831

 
102,711

Operating profit
$
20,462

 
$
17,299

 
$
54,537

 
$
26,645

Interest expense
(1,450
)
 
(3,676
)
 
(7,251
)
 
(16,412
)
Interest income
77

 
15

 
140

 
133

Other (expense) income, net
(12
)
 
(42
)
 
1

 
(26
)
Loss on debt extinguishment

 

 
(10,142
)
 

Income before income taxes
$
19,077

 
$
13,596

 
$
37,285

 
$
10,340

Income tax expense
(6,026
)
 
(3,920
)
 
(11,832
)
 
(5,989
)
Equity in net income of non-consolidated affiliate
1,310

 
1,383

 
3,307

 
2,877

Net income from continuing operations
$
14,361

 
$
11,059

 
$
28,760

 
$
7,228

Income (loss) from discontinued operations, net of tax
183

 
(282
)
 
41

 
(328
)
Net income
$
14,544

 
$
10,777

 
$
28,801

 
$
6,900

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Net income (from above)
$
14,544

 
$
10,777

 
$
28,801

 
$
6,900

Less: preferred stock dividends
1,317

 
963

 
4,261

 
3,878

Less: preferred stock repurchase
6,091

 

 
6,091

 

Net income available to common stockholders
$
7,136

 
$
9,814

 
$
18,449

 
$
3,022

 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
24,070,033

 
22,014,111

 
23,343,772

 
21,252,616

Diluted weighted average shares outstanding
25,466,321

 
27,554,678

 
24,877,729

 
21,315,619

 
 
 
 
 
 
 
 
Basic earnings per share, continuing operations
$
0.29

 
$
0.46

 
$
0.79

 
$
0.16

Basic earnings per share, discontinued operations
0.01

 
(0.01
)
 

 
(0.02
)
Basic earnings per share
$
0.30

 
$
0.45

 
$
0.79

 
$
0.14

 
 
 
 
 
 
 
 
Diluted earnings per share, continuing operations
$
0.27

 
$
0.40

 
$
0.74

 
$
0.16

Diluted earnings per share, discontinued operations
0.01

 
(0.01
)
 

 
(0.02
)
Diluted earnings per share
$
0.28

 
$
0.39

 
$
0.74

 
$
0.14



7


BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Fiscal Year Ended
(in thousands of dollars)
September 30, 2017
 
October 1, 2016
Cash flows from operating activities
 
 
 
Net income
$
28,801

 
$
6,900

(Income) loss from discontinued operations, net of tax
(41
)
 
328

Adjustments to reconcile net income to net cash provided by continuing operations:
 
 
 
Depreciation and amortization
8,180

 
8,046

Amortization of debt costs
1,107

 
3,007

Share-based compensation
1,270

 
12,717

Equity in net income of affiliate
(3,307
)
 
(2,877
)
(Gain) loss on disposal of fixed assets
(33
)
 
72

Deferred taxes
(1,202
)
 
8,957

Provision for bad debt

 
(5
)
Amortization of deferred actuarial pension losses
6,291

 
4,787

Loss on debt extinguishment
10,142

 

Changes in assets and liabilities:
 
 
 
Accounts receivable
10,167

 
(6,564
)
Inventories
(22,349
)
 
(4,626
)
Other assets
(5,469
)
 
(2,457
)
Accounts payable
8,404

 
(830
)
Accrued expenses, pension and other liabilities
1,288

 
(4,474
)
Dividend from equity investment in affiliate
4,626

 
2,316

Total adjustments
$
19,115

 
$
18,069

Net cash provided by continuing operations
$
47,875

 
$
25,297

Net cash used in discontinued operations
(234
)
 
(192
)
Total cash provided by operating activities
$
47,641

 
$
25,105

Cash flows from investing activities
 
 
 
Cash paid for fixed assets and acquired intangible assets
(9,252
)
 
(9,583
)
Proceeds from sale of fixed assets
48

 

Total cash used in investing activities
$
(9,204
)
 
$
(9,583
)
Cash flows from financing activities
 
 
 
Repayments under the former senior term loan
$
(161,500
)
 
$
(36,750
)
Borrowings under new term loan
156,887

 

Repayments under the new term loan
(6,000
)
 

Cash paid for capital leases
(155
)
 
(221
)
Cash paid for debt issuance costs
(299
)
 
(1,117
)
Cash paid to extinguish debt
(507
)
 

Contributions from former majority stockholder

 
16,971

Payment of dividends on preferred stock
(4,261
)
 
(2,881
)
Cash paid for employee taxes on stock option exercises and vested restricted shares
(1,013
)
 
(3,892
)
Proceeds from exercises of warrants
23,045

 
11,816

Common stock, preferred stock, and warrant repurchases under the share repurchase program
(34,327
)
 

Total cash used in financing activities
$
(28,130
)
 
$
(16,074
)
Change in cash and cash equivalents
10,307

 
(552
)
Cash and cash equivalents, beginning of year
52,309

 
52,861

Cash and cash equivalents, end of year
$
62,616

 
$
52,309


8


 
Fiscal Year Ended
(in thousands of dollars)
September 30, 2017
 
October 1, 2016
 
 
 
 
Supplemental disclosures of cash flow information
 
 
 
Cash paid during the period for:
 
 
 
Interest paid, net of interest received
$
6,081

 
$
13,315

Income tax paid, net of tax refunds
8,420

 
159

Non-cash Investing and Financing activities
 
 
 
Capital lease acquisitions
$

 
$
100

Change in accounts payable for capital additions to property, plant and equipment
(1,719
)
 
2,081

Common stock dividend on Series A preferred stock (market value of common shares)

 
998

Cashless exercise of stock options
4,216

 
2,312


9


Reconciliation of Net Income to Adjusted EBITDA
(Unaudited)
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Net income
$
14,544

 
$
10,777

 
$
28,801

 
$
6,900

Income (loss) from discontinued operations, net of tax
183

 
(282
)
 
41

 
(328
)
Income from continuing operations
$
14,361

 
$
11,059

 
$
28,760

 
$
7,228

Interest expense, net
1,373

 
3,661

 
7,111

 
16,279

Income tax expense
6,026

 
3,920

 
11,832

 
5,989

Depreciation, amortization, and disposals
2,099

 
2,064

 
8,205

 
8,118

Loss on debt extinguishment

 

 
10,142

 

Special compensation payment

 
16

 

 
17,128

Business combination expenses

 
3,559

 
(174
)
 
3,798

One-time post-retirement benefit adjustment

 

 

 
896

Share-based compensation
366

 

 
1,270

 
12,717

Product redesign initiatives
828

 

 
1,758

 

Adjusted EBITDA
$
25,053

 
$
24,279

 
$
68,904

 
$
72,153

Adjusted EBITDA margin (percentage of net sales)
8.0
%
 
8.5
%
 
7.0
%
 
7.7
%


Reconciliation of Free Cash Flow to Adjusted Free Cash Flow
(Unaudited)
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Net cash provided by continuing operations
$
41,903

 
$
3,990

 
$
47,875

 
$
25,297

Cash paid for fixed assets and acquired intangible assets
(2,059
)
 
(3,072
)
 
(9,252
)
 
(9,583
)
   Free cash flow
$
39,844

 
$
918

 
$
38,623

 
$
15,714

Cash paid for special compensation payment

 
(1,371
)
 

 
(17,128
)
Cash paid for business combination expenses

 
(261
)
 
(3,313
)
 
(500
)
Cash paid for product redesign initiatives
(828
)
 

 
(1,758
)
 

Adjusted free cash flow
40,672

 
2,550

 
43,694

 
33,342



10


Reconciliation of Net Income to Adjusted Income from Continuing Operations
(Unaudited)
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Net income
$
14,544

 
$
10,777

 
$
28,801

 
$
6,900

Add: (income) loss from discontinued operations, net of tax
(183
)
 
282

 
(41
)
 
328

Income from continuing operations
14,361

 
11,059

 
28,760

 
7,228

One-time charge adjustments, net of tax benefit or expense (1)
 
 
 
 
 
 
 
Special compensation payment

 
10

 

 
10,962

Loss on debt extinguishment

 

 
6,491

 

Business combination expenses

 
2,278

 
(111
)
 
2,431

Post-retirement benefit adjustment

 

 

 
573

Share-based compensation
234

 

 
813

 
8,139

Product redesign initiatives
530

 

 
1,125

 

Adjusted income from continuing operations, non-GAAP
$
15,125

 
$
13,347

 
37,077

 
29,333

 
(1) Amounts are net of estimated statutory tax rates of 36%.



Reconciliation of Diluted EPS to Adjusted Diluted EPS
(Unaudited)
 
Three Months Ended
 
Fiscal Year Ended
 
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Diluted earnings per share - Cont. Ops.
$
0.27

 
$
0.40

 
$
0.74

 
$
0.16

One-time charge adjustments, net of tax benefit or expense
0.24

 
0.02

 
0.53

 
0.98

Adjusted diluted earnings per share, non-GAAP (1)
$
0.51

 
$
0.42

 
$
1.27

 
$
1.14

Weighted average dilutive shares outstanding (2)
29,732,978

 
31,868,742

 
29,179,941

 
25,629,683

 
(1) Numerator is adjusted income from continuing operations, non-GAAP.
(2) With adjusted income from continuing operations, potentially dilutive shares of convertible preferred stock excluded under GAAP were included for the adjusted diluted earnings per share calculation for all periods. Potentially dilutive shares included with basic shares outstanding were 4,266,657 and 4,302,212 for the three months and fiscal year ended September 30, 2017, respectively, and 4,314,064 for both the three months and fiscal year ended October 1, 2016.







11

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