Form 8-K Manitex International, For: Mar 05

 

 

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 the earliest event reported) March 5, 2015

 

 

MANITEX INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Michigan		001-32401		42-1628978
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

9725 Industrial Drive, Bridgeview, Illinois		60455
(Address of Principal Executive Offices)		(Zip Code)

(708) 430-7500

(Registrant’s Telephone Number, Including Area Code)

9725 Industrial Drive, Bridgeview, Illinois

(Former Name or Former Address, if Changed Since Last Report)

 

 

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))

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On March 5, 2015, Manitex International, Inc. (the “Company”) issued a press release announcing its unaudited financial results for the fourth quarter and the year ended December 31, 2014 (the “Press Release”). The full text of the Press Release is being furnished as Exhibit 99.1 to this Current Report. The Company also posted presentation slides (Exhibit 99.2) that will be referenced during the conference call and webcast which will take place today March 5, 2015 at 4:30 pm eastern time to discuss the fourth quarter and full year 2014 results. Both Exhibits can be accessed from the Investor Relations section of the Company’s website at www.ManitexInternational.com.

The information in this Current Report (including Exhibit 99.1 and 99.2) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The Company references certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached Press Release. Disclosures regarding definitions of these financial measures used by the Company and why the Company’s management believes these financial measures provide useful information to investors is also included in the Press Release.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d) Exhibits.

See the Exhibit Index set forth below for a list of exhibits included with this Current Report on Form 8-K.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.

 

Date: March 5, 2015

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press release dated March 5, 2015
99.2		Webcast presentation slides dated March 5, 2015

Exhibit 99.1

Manitex International, Inc. Reports Fourth Quarter and Full Year 2014 Results

Reports Record Annual Net Revenues of $264.1 Million

New Acquisitions of PM Group and ASV Advance Manitex into 2015

Bridgeview, IL, March 5, 2015 — Manitex International, Inc. (Nasdaq: MNTX), a leading international provider of cranes and specialized material and container handling equipment, today announced fourth quarter and full year 2014 results.

Full Year 2014 Financial Highlights:

 

•

Net revenues for 2014 rose 7.8% to a record $264.1 million, compared to the prior year’s revenue of $245.1 million.

 

•

Adjusted EBITDA (1)(2) (i.e. excluding $2.4 million of transaction related expenses) for the full year 2014 was $20.9 million, or 7.9% of sales, compared to $21.5 million and 8.8% of sales for 2013.

 

•

Net income was $7.1 million or $0.51 per share, compared to net income of $10.2 million or $0.80 per share for the full year of 2013.

 

•

Adjusted net income (1)(2) (i.e. excluding $2.5 million of transaction related expenses) of $8.8 million or $0.63 per share, compared to net income of $10.2 million for 2013 or $0.80 per share

 

•

Consolidated backlog at December 31, 2014 was $107.3 million, compared to $77.3 million at December 31, 2013.

Fourth Quarter 2014 Financial Highlights:

 

•

Net revenues of $66.9 million, represented a 2.3% year-over-year increase from $65.4 million.

 

•

Adjusted EBITDA (1)(2) was $5.3 million or 8.0% of sales, compared to the fourth quarter 2013 of $6.2 million and 9.5% of sales. Adjusted net income(1)(2) was $2.2 million or $0.16 per share, compared to the fourth quarter 2013 net income and earnings per share of $3.0 million and $0.22 respectively.

Transactions:

 

•

On December 19th 2014 completed the acquisition of 51% of ASV Inc., a joint venture with Terex Corp.

 

•

Subsequent to the end of the year, on January 15th 2015, completed the acquisition of PM Group.

 

(1)

Adjusted EBITDA and adjusted net income are non-GAAP (generally accepted accounting principles in the United States of America) financial measures. These measures may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled “Non-GAAP Financial Measures.”

 

(2)	Adjustments include approximately $2.4 million in transaction costs associated with ASV Joint Venture and PM- Group Acquisition and other expense, reconciled in tables below

Chairman and Chief Executive Officer, David Langevin, commented, “While we achieved record net sales and maintained our track record of profitability and ebitda generation even in a difficult equipment operating environment, our Company’s biggest achievements in the year were the transactions we consummated, which have positioned us for continued long term shareholder growth. ASV has an excellent track record in serving the housing industry and we believe that there is substantial value that our shareholders will recognize from ASV’s contribution, with margins that are higher than ours and exposure to the growing construction market. Further, the PM Group brings to Manitex shareholders a similar opportunity with its product extension in our most profitable crane category and a restructured balance sheet. We welcome the excellent and devoted PM and ASV employees to the Manitex family. The addition of PM and ASV, along with the many other Manitex product brands further establishes Manitex as a premier specialized niche equipment provider serving a broad range of end markets.”

 

— more —

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2014 revenues increased $19.0 million or 7.8% from 2013 to $264.1 million, including $2.3 million from the ASV JV that commenced operations in mid-December of 2014. Excluding ASV, 2014 revenues increased 6.8%, driven substantially by growth in container handling equipment, material handling equipment and equipment distribution revenues that grew year over year by 20%, 14% and 24% respectively. Crane revenues decreased in line with the reduction in our largest market, the boom and truck crane market that was down almost 8% year over year and shipments of larger tonnage cranes being down almost 19% reflecting a softer oil and gas market. Our CVS container handling products benefited from a modest strengthening in Europe as well as expansion and improved distribution into overseas markets.

In the fourth quarter of 2014, revenues were $66.9 million, including $2.3 million of revenues from the previously referenced ASV JV, and were an increase year over year of $1.5 million or 2.3%. Container handling increased approximately 2% year over year but both cranes and material handling equipment showed year over year reductions of three to four percent. Partially offsetting the reduction in the material handling equipment was an increase in shipments of military material handling equipment. Equipment distribution sales were up almost 70% from a relatively low level in the fourth quarter of 2013.

Adjusted net income for 2014 of $8.8 million or $0.63 per share was a decrease of $1.4 million, or $0.17 per share, over 2013. A $19.0 million year over year improvement in revenues resulted in a gross profit increase of $1.8 million which partially offset additional operating expenses of $0.1 million, operating expenses from acquired businesses of $2.9 million, and increased tax expense of $0.2 million. Adjusted net income excludes $2.5 million pre-tax of acquisition related and other costs. Included in these costs is approximately $0.5 million of costs related to the PM Group acquisition that was completed in January of 2015. Gross profit of $48.3 million was equal to 18.3% of sales, a slight reduction from the 19.0% gross profit percent for 2013, principally a result of changes in product mix in sales, particularly from the reduction in higher tonnage crane sales. The increase in operating expense was principally increased sales expense from expanding and reorganizing the sales organization offsetting reduced performance compensation and reduced R&D expenses as a number of new products were now launched into production. In total, after adjustments for deal and other related costs SG&A as a percent of revenue was 11.1% compared to 10.6% in 2013.

Excluding $2.5 million pretax of acquisition related and other costs, adjusted net income for the fourth quarter of 2014 was $2.2 million or $0.16 per share compared to net income of $3.0 million and $0.22 per share for the fourth quarter of 2013. A sales improvement of $1.5 million resulted in a gross profit decrease of $0.1 million from the impact of a change in the sales mix between the two periods. Additional operating expenses of $0.2 million, operating expenses from acquired businesses of $0.6 million, and reduced tax expense of $0.1 million resulted in adjusted net income for the period of $2.2 million. Gross profit was equal to 18.9% of sales, an increase from 2014 quarter three of 240 basis points and a decrease from 2013 quarter four of 60 basis points, resulting from mix in sales. Operating expenses excluding the impact of newly acquired businesses increased $0.2 million compared to the fourth quarter of 2013 largely from increased selling expenses. In total, adjusted SG&A in quarter four of 2014 was 11.8% of sales compared to 10.6% in the same period of 2013.

Andrew Rooke, Manitex International President and Chief Operating Officer, commented, “2014 was another year of significant progress for the Company, in an environment that continued to be challenging, particularly in the second half of the year, and where our principal market, boom and truck cranes, was adversely impacted by a slower oil and gas sector and was down approximately 8% year over year. It would not be an overstatement to say that the acquisition of the PM Group and the ASV joint venture with Terex made 2014 a transformational year for Manitex. Consistent with our legacy, we found opportunities to significantly diversify our market and geographic exposures. Operationally, the fourth quarter was an improvement from the third, as our mix of sales improved benefiting gross profit percent which came in at 18.9%, and we started with ASV operations in the last two weeks of the year.

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Mr. Rooke continued, “The year was behind the levels of 2013 in terms of our profitability, but we are pleased with our long-term business position and we believe that the underlying fundamentals of our strategy are sound. In closing the two large transactions, PM and ASV, we incurred some additional debt and issued some shares. On the debt side, our projected average debt servicing cost is approximately 6%, which is very favorable for a company our size. That said, we’re conscious of this debt and our plan is to pay much of this down with cash flow we generate this year and beyond. Additional acquisition related costs are expected to be charged in the first quarter of 2015, approximating $1.3 million, and beyond that we would expect cleaner quarterly comparisons going forward.”

Mr. Langevin concluded, “We believe that 2015 will be another challenging year for the equipment sector in general although we will continue to work hard to achieve our long term growth targets. We are implementing cost saving actions that could save us approximately $4 million this year and approximately $15 million over the next three years. These benefits will assist us in margin protection and we believe we will realize further benefits from production and integration efficiencies as well as new sales opportunities resulting from the PM and ASV additions. We’re optimistic that the line of knuckle boom cranes we added form the PM Group could be a very meaningful contributor to orders and to our financial performance in 2015 and beyond, and we believe that ASV will be a significant contributor to long term value enhancement for our shareholders.”

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 1-888-430-8690 if calling within the United States or 719-325-2186 if calling internationally. A replay will be available until March 12, 2015 which can be accessed by dialing 877-870-5176 if calling within the United States or 858-384-5517 if calling internationally. Please use passcode 2115556 to access the replay. The call will also be accompanied by a webcast over the Internet with slides, which are also accessible at the Investor Relations section of the Company’s corporate website at www.manitexinternational.com.

About Manitex International, Inc.

Manitex International, Inc. is a leading worldwide provider of highly engineered specialized equipment including boom trucks, cranes, container handling equipment and reach stackers, rough terrain forklifts, and other related equipment. Our products, which are manufactured in facilities located in the USA, Canada, and Italy, are targeted to selected niche markets where their unique designs and engineering excellence fill the needs of our customers and provide a competitive advantage. We have consistently added to our portfolio of branded products and equipment both through internal development and focused acquisitions to diversify and expand our sales and profit base while remaining committed to our niche market strategy. Our brands include Manitex, CVS Ferrari, PM, Badger, Liftking, Load King, Sabre, and Valla. ASV, our Joint Venture with Terex Corporation, manufactures and sells a line of high quality compact track and skid steer loaders.

Forward-Looking Statement

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This release contains statements that are forward-looking in nature which express the beliefs and expectations of management including statements regarding the Company’s expected results of operations or liquidity; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “will,” “should,” “could,” and similar expressions. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. These factors and additional information are discussed in the Company’s filings with the Securities and Exchange Commission and statements in this release should be evaluated in light of these important factors. Although we

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believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

Company Contact
Manitex International, Inc. David Langevin Chairman and Chief Executive Officer (708) 237-2060 [email protected]		Darrow Associates Inc. Peter Seltzberg, Managing Director Investor Relations (516) 510-8768 [email protected]

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MANITEX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for share and per share amounts)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2014				2013				2014				2013
		Unaudited				Unaudited				Unaudited				Unaudited
Net revenues		$	66,909			$	65,431			$	264,081			$	245,072
Cost of sales			54,308				52,652				215,817				198,596
Gross profit			12,601				12,779				48,264				46,476
Operating expenses
Research and development costs			643				828				2,552				2,912
Selling, general and administrative expenses			10,222				6,931				31,776				26,026
Total operating expenses			10,865				7,759				34,328				28,938
Operating income			1,736				5,020				13,936				17,538
Other income (expense)
Interest expense			(958	)			(765	)			(3,150	)			(2,946	)
Foreign currency transaction (loss) gain			(80	)			(23	)			(107	)			(95	)
Other income			31				(59	)			(36	)			(50	)
Total other expense			(1,007	)			(847	)			(3,293	)			(3,091	)
Income before income taxes			729				4,173				10,643				14,447
Income tax			393				1,182				3,676				4,269
Net income			336				2,991				6,967				10,178
Add: Net loss attributable to noncontrolling interest			136				—				136				—
		$	472			$	2,991			$	7,103			$	10,178
Earnings Per Share
Basic		$	0.03			$	0.22			$	0.51			$	0.80
Diluted		$	0.03			$	0.22			$	0.51			$	0.80
Weighted average common share outstanding
Basic			13,980,142				13,760,918				13,858,189				12,671,205
Diluted			14,029,205				13,821,352				13,904,289				12,717,575

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MANITEX INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

		As of December 31,
		2014				2013
		Unaudited				Unaudited
ASSETS
Current assets
Cash		$	4,370			$	6,091
Trade receivables (net)			68,439				38,165
Accounts receivable finance			—				326
Accounts receivable from related party			1,025				—
Other receivables			243				1,541
Inventory (net)			96,367				72,734
Deferred tax asset			1,325				1,272
Prepaid expense and other			1,733				1,669
Total current assets			173,502				121,798
Total fixed assets (net)			28,846				11,143
Intangible assets (net)			51,922				24,036
Deferred tax asset			2,081				2,117
Goodwill			50,830				22,489
Other long-term assets			4,176				1,031
Investments in equity interest			5,951				—
Total assets		$	317,308			$	182,614
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable—short term		$	11,999			$	6,910
Revolving credit facilities			2,798				2,707
Current portion of capital lease obligations			1,631				1,812
Accounts payable			35,191				24,974
Accounts payable related parties			503				789
Tax payable on conversion of ASV			16,500				—
Accrued expenses			13,003				8,808
Other current liabilities			2,407				1,930
Total current liabilities			84,032				47,930
Long-term liabilities
Revolving term credit facilities			46,457				37,306
Notes payable			40,088				2,482
Capital lease obligations			2,710				2,984
Convertible notes			6,611				—
Deferred gain on sale of building			1,268				1,648
Deferred tax liability			4,163				4,074
Other long-term liabilities			1,973				1,199
Total long-term liabilities			103,270				49,693
Total liabilities			187,302				97,623
Commitments and contingencies
Shareholders’ equity
Preferred Stock—Authorized 150,000 shares, no shares issued or outstanding at December 31, 2014 and December 31, 2013			—				—
Common Stock—no par value, authorized, 20,000,000 shares issued and outstanding, 14,989,694 and 13,801,277 shares at December 31, 2014 and December 31, 2013, respectively			82,040				68,554
Paid in capital			1,789				1,191
Retained earnings			21,960				14,857
Accumulated other comprehensive (loss) income			(1,023	)			389
Equity attributable to shareholders of Manitex International, Inc.			104,766				84,991
Equity attributable to noncontrolling interest			25,240				—
Total Equity
			130,006				84,991
Total liabilities and shareholders’ equity		$	317,308			$	182,614

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MANITEX INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Thousands of Dollars)

 

		For the years ended December 31,
		2014				2013				2012
		Unaudited				Unaudited				Unaudited
Cash flows from operating activities:
Net income		$	6,967			$	10,178			$	8,077
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			4,572				3,945				3,498
Provisions for allowance for doubtful accounts			165				172				17
Acquisition expenses financed by the seller			183				—				—
(Gain) loss on disposal of assets			3				(100	)			(119	)
Deferred income taxes			(254	)			(168	)			181
Inventory reserves			(39	)			47				1
Reserves for uncertain tax positions			(35	)			(83	)			183
Stock based deferred compensation			1,104				664				226
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable			(13,172	)			1,653				(12,494	)
(Increase) decrease in accounts receivable finance			315				271				378
(Increase) decrease in inventory			(5,849	)			(8,852	)			(17,187	)
(Increase) decrease in prepaid expenses			(58	)			(424	)			117
(Increase) decrease in other assets			141				(892	)			11
Increase (decrease) in accounts payable			3,125				(4,079	)			6,702
Increase (decrease) in accrued expense			711				(89	)			2,765
Increase (decrease) in other current liabilities			650				(131	)			1,168
Increase (decrease) in other long-term liabilities			(30	)			(36	)			(8	)
Net cash (used) provided by for operating activities			(1,501	)			2,076				(6,484	)
Cash flows from investing activities:
Proceeds from sale of fixed assets			—				139				212
Purchase of property and equipment			(924	)			(1,215	)			(1,125	)
Acquisition of business assets, net of cash acquired			(24,998	)			(13,000	)			(345	)
Net cash used for investing activities			(25,922	)			(14,076	)			(1,258	)
Cash flows from financing activities:
New borrowings term loan			—				15,000				—
Repayment of term loan			—				(15,000	)			—
Net proceeds of stock offering			12,500				13,927				3,781
Proceeds from issuance of convertible note payable			7,500
Borrowing on revolving credit facilities			5,563				5,409				9,221
Net borrowings (repayments) on working capital facilities			2,532				(1,960	)			4,181
Payment of fees related to new financing			(519	)			—				—
New borrowings—notes payable			677				809				764
Note payments			(1,060	)			(916	)			(7,884	)
Proceeds from capital leases			942				—				—
Repayment on capital lease obligations			(1,397	)			(1,185	)			(795	)
Excess tax benefits related to vesting of restricted stock			22				86
Shares repurchased for income tax withholding on share-based compensation			(114	)			(70	)			—
Net cash provided by financing activities			26,646				16,100				9,268
Effect of exchange rate change on cash			(944	)			102				292
Net (decrease) increase in cash and cash equivalents			(777	)			4,100				1,526
Cash and cash equivalents at the beginning of the year			6,091				1,889				71
Cash and cash equivalents at end of year		$	4,370			$	6,091			$	1,889

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Supplemental Information

In an effort to provide investors with additional information regarding the Company’s results, Manitex International refers to various non-GAAP (U.S. generally accepted accounting principles) financial measures which management believes provides useful information to investors. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Manitex International believes that this information is useful to understanding its operating results and the ongoing performance of its underlying businesses. Management of Manitex International uses both GAAP and non–GAAP financial measures to establish internal budgets and targets and to evaluate the Company’s financial performance against such budgets and targets.

The amounts described below are unaudited, are reported in thousands of U.S. dollars, and are as of, or for the three and twelve month periods ended December 31, 2014, unless otherwise indicated.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: “Adjusted EBITDA” (earnings before interest, tax, foreign exchange transaction gain / losses, other income / expense acquisition related expense and other exceptional costs and depreciation and amortization) and Adjusted Net Income. These non-GAAP terms, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Neither Adjusted Net Income nor Adjusted EBITDA are a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA and Adjusted Net Income are significant components in understanding and assessing financial performance. Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as a substitute for net earnings, operating income and other consolidated earnings data prepared in accordance with GAAP or as a measure of our profitability. A reconciliation of net income to Adjusted EBITDA and Adjusted Net Income is provided below.

The Company’s management believes that Adjusted EBITDA and Adjusted EBITDA as a percentage of sales and Adjusted Net Income represent key operating metrics for its business. Adjusted Earnings Before Interest, Taxes, foreign exchange transaction gain / losses, other income / expense, acquisition related expense and other exceptional costs and Depreciation and Amortization (Adjusted EBITDA) and Adjusted Net Income, GAAP net income adjusted for acquisition and certain other one off items are a key indicator used by management to evaluate operating performance. While Adjusted EBITDA and Adjusted Net Income are not intended to replace any presentation included in our consolidated financial statements under generally accepted accounting principles (GAAP) and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, we believe these measures are useful to investors in assessing our operating results, capital expenditure and working capital requirements and the ongoing performance of its underlying businesses. These calculations may differ in method of calculation from similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA and Adjusted Net Income to GAAP financial measures for the three and twelve month periods ended December 31, 2014 and 2013 is included with this press release below and with the Company’s related Form 8-K.

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Acquisition of 51% of ASV Inc.

On December 19, 2014, the Company acquired 51% of A.S.V., Inc. from Terex Corporation (“Terex”). Subsequent to the acquisition date ASV was converted to an LLC and its name was changed to A.S.V., LLC (ASV). ASV located in Grand Rapids, Minnesota manufactures a line of high quality compact rubber tracked and skid steer loaders. The ASV products will be distributed through the Terex distribution channels as well as through Manitex and other independent dealers. The products are used in the site clearing, general construction, forestry, golf course maintenance and landscaping industries, with general construction being the largest market.

ASV’s financial results are included in the Company’s consolidated results beginning on December 20, 2014.

Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands)

 

		Three Months Ended								Twelve Months Ended
		December 31, 2014				December 31, 2013				December 31, 2014				December 31, 2013
Net income			472				2,991				7,103				10,178
Net loss attributable to noncontrolling interest			(136	)			—				(136	)			—
Income tax			393				1,182				3,676				4,269
Interest expense			958				765				3,150				2,946
Foreign currency transaction losses (gain)			80				23				107				95
Other (income) expense			(31	)			59				36				50
Acquisition and other expense			2,356				—				2,356				—
Depreciation & Amortization			1,238				1,205				4,572				3,945
Adjusted Earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)		$	5,330			$	6,225			$	20,864			$	21,483
Adjusted EBITDA % to sales			8.0	%			9.5	%			7.9	%			8.8	%

Reconciliation of GAAP Net Income to Adjusted Net Income (in thousands)

 

		Three Months Ended								Twelve Months Ended
		December 31, 2014				December 31, 2013				December 31, 2014				December 31, 2013
Net income as reported			472				2,991				7,103				10,178
Pre – tax acquisition and other expenses			2,517				—				2,517				—
Tax effect based on jurisdictional blend			(804	)			—				(804	)			—
Adjusted Net Income		$	2,185			$	2,991			$	8,816			$	10,178
Weighted average diluted shares outstanding			14,029,205				13,821,352				13,904,289				12,717,575
Diluted earnings per share as reported		$	0.03			$	0.22			$	0.51			$	0.80
Total EPS Effect		$	0.13				—			$	0.12				—
Adjusted Diluted earnings per share		$	0.16			$	0.22			$	0.63			$	0.80

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Acquisition and other expense

After tax expense and per share amounts (Adjusted Net Income) are calculated using pre-tax amounts, applying a tax rate based on jurisdictional rates to arrive at an after-tax amount. This number is divided by the weighted average diluted shares to provide the impact on earnings per share. The company assesses the impact of these items because when discussing earnings per share, the Company adjusts for items it believes are not reflective of operating activities in the periods.

 

Fourth Quarter 2014		Pre-tax				After-tax				EPS
Deal transaction related		$	2,176			$	1,481			$	0.11
Exceptional operating cost			341				232				0.02
Total		$	2,517			$	1,713			$	0.12

There were no items adjusting Fourth Quarter 2013 or Full Year 2013

Backlog

Backlog is defined as purchase orders that have been received by the Company. The disclosure of backlog aids in the analysis the Company’s customers’ demand for product, as well as the ability of the Company to meet that demand. Backlog is not necessarily indicative of sales to be recognized in a specified future period.

 

		December 31, 2014				September 30, 2014				December 31, 2013				September 30, 2013
Backlog		$	107,327			$	102,056			$	77,281			$	96,684
12/31/2014 increase v prior period							5.2	%			38.9	%			11.0	%

Current Ratio is calculated by dividing current assets by current liabilities.

 

		December 31, 2014				December 31, 2013
Current Assets		$	173,502			$	121,798
Current Liabilities		$	84,032			$	47,930
Current Ratio			2.1				2.5

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).

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Debt is calculated using the Condensed Consolidated Balance Sheet amounts for current and long term portion of long term debt, capital lease obligations, notes payable and lines of credit. Debt to Adjusted EBITDA ratio is calculated by dividing total debt at the balance sheet date by trailing twelve month Adjusted EBITDA.

 

		December 31, 2014				December 31, 2013
Current portion of long term debt			11,999			$	6,910
Current portion of capital lease obligations			1,631				1,812
Revolving credit facilities			2,798				2,707
Revolving term credit facilities			46,457				37,306
Notes payable – long term			40,088				2,482
Capital lease obligations			2,710				2,984
Convertible Notes			6,611				—
Debt		$	112,294			$	54,201
Trailing 12 month Adjusted EBITDA		$	20,864			$	21,483
Debt to Adjusted EBITDA Ratio			5.4	*			2.5

 

*

The ASV acquisition has been included in the consolidated results for the period from December 20, 2014, the date of the transaction. Consequently, included in trailing twelve month adjusted EBITDA are only 12 days from December 20 to December 31 2014 therefore excluding $14.3 million in EBITDA from ASV for 2014. Full year of ASV contribution would have resulted in a Debt/Adjusted EBITDA ratio of approximately 3.2x for the year.

Interest Cover is calculated by dividing Adjusted EBITDA (Earnings before interest, tax, foreign exchange transaction gain / losses, other income / expense and depreciation and amortization) for the trailing twelve month period (January 1 to December 31) by interest expense as reported in the Consolidated Statement of Income for the same period.

 

		12 Month Period January 1, 2014 to December 31, 2014				12 Month Period January 1, 2013 to December 31, 2013
Adjusted EBITDA		$	20,864			$	21,483
Interest Expense			3,150				2,946
Interest Cover Ratio			6.6				7.3

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.

Manufacturing Expenses include manufacturing wages, salaries, fixed and variable overhead costs.

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Operating Working Capital is calculated using the Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus inventories, less Accounts payable. The Company considers excessive working capital as an inefficient use of resources, and seeks to minimize the level of investment without adversely impacting the ongoing operations of the business.

 

		December 31, 2014				December 31, 2013
Trade receivables (net)		$	68,439			$	38,165
Inventory (net)			96,367				72,734
Less: Accounts payable			35,694				25,763
Total Operating Working Capital		$	129,112			$	85,136
% of Trailing Three Month Annualized Net Sales			48.2	%			32.5	%

Trailing Twelve Months Adjusted EBITDA is calculated by adding the reported Adjusted EBITDA for the past 4 quarters.

 

Three Months Ended:		Adjusted EBITDA
March 31, 2014		$	4,722
June 30, 2014			6,293
September 30, 2014			4,519
December 31, 2014			5,330
Trailing Twelve Months Adjusted EBITDA		$	20,864

Trailing Three Month Annualized Net Sales is calculated using the net sales for quarter, multiplied by four.

 

		Three Months Ended
		December 31, 2014				December 31, 2013
Net sales			66,909			$	65,431
Multiplied by 4			4				4
Trailing Three Month Annualized Net Sales		$	267,636			$	261,724

Working capital is calculated as total current assets less total current liabilities

 

		December 31, 2014				December 31, 2013
Total Current Assets		$	173,502			$	121,798
Less: Total Current Liabilities			84,032				47,930
Working Capital		$	89,470			$	73,868

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