ATLANTA–(BUSINESS WIRE)–Select
Interior Concepts, Inc. (NASDAQ: SIC), a premier installer and
nationwide distributor of interior building products, today announced
its financial results for the first quarter ended March 31, 2019.
FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS COMPARED TO FIRST QUARTER 2018
-
Consolidated net sales increased 31.1% to $136.9 million, including
organic sales growth of 4.8% - Gross profit grew 38.6% to $38.7 million
-
Net income increased to $0.1 million compared to net loss of $1.3
million -
EBITDA increased to $11.2 million; Adjusted EBITDA increased 17.2% to
$12.5 million -
Operating cash flow totaled $10.6 million, up from a cash flow deficit
of $1.5 million -
Acquired Intown Design, an installer of residential and light
commercial countertops and cabinets in Georgia and neighboring
Southeastern states, further strengthening the Company’s presence on
the East Coast
Tyrone Johnson, Chief Executive Officer of Select Interior Concepts,
stated, “We achieved another quarter of significant growth in our
business, with results across the board in line with our expectations.
We further solidified our position as a key industry player across our
highly-complementary installation and distribution businesses. Price/mix
benefits and the contribution from acquisitions drove a 150 basis point
improvement in gross margin. Excluding approximately $2.0 million of
incremental corporate and public company infrastructure costs, Adjusted
EBITDA margin increased by approximately 40 basis points year over year.”
Mr. Johnson continued, “Our objective to deliver meaningful sales growth
while improving Adjusted EBITDA margin remains on track for 2019. The
structural advantages of our business model are allowing us to generate
favorable price/mix performance and we are poised to deliver stronger
results from cross-selling opportunities as we continue to integrate our
businesses. Our acquisition pipeline remains robust, and we have a
strong balance sheet that enables us to continue to drive accretive
inorganic growth. Our corporate and public company infrastructure is in
place, providing significant scalability for the next stage of our
growth. We remain excited about the prospects for the Company in 2019
and beyond.”
RESULTS FOR THE FIRST QUARTER OF 2019
Net sales for the first quarter of 2019 increased by 31.1% to $136.9
million, compared to net sales of $104.4 million for the first quarter
of 2018. Residential Design Services (“RDS”) segment sales increased
40.0% and Architectural Surfaces Group (“ASG”) segment sales increased
20.9%, compared to the first quarter of 2018. Net sales increased on an
organic basis by $5.0 million, or 4.8%, primarily driven by price/mix,
which more than offset lower volume. Acquisitions added $27.5 million to
net sales.
Gross profit for the first quarter of 2019 increased by 38.6% to $38.7
million, compared to $27.9 million for the first quarter of 2018. The
increase in gross profit was due to higher net sales from our existing
business and acquired businesses. Gross margin for the first quarter of
2019 was 28.3% (on a combined basis including intercompany
eliminations), compared to 26.8% for the first quarter of 2018. The
gross margin improvement is primarily a result of better price/mix, and
a favorable contribution from acquisitions. In our RDS segment, gross
margin increased 1.2% to 28.3% in the first quarter of 2019, from 27.1%
in the first quarter of 2018, as a result of favorable shifts in product
and customer mix. In our ASG segment, gross margin for the first quarter
of 2019 increased 1.8% to 27.9%, compared to 26.1% for the first quarter
of 2018, as a result of a favorable shift in product pricing and mix.
Operating expenses for the first quarter of 2019 were $35.5 million, or
25.9% of net sales, compared to $27.0 million, or 25.9% of net sales,
for the first quarter of 2018. Operating expenses for the first quarter
of 2019 and the first quarter of 2018 included $2.8 million and $4.1
million, respectively, of nonrecurring costs, primarily for professional
fees and equity-based compensation. Operating expenses excluding
nonrecurring costs were $32.7 million, or 23.9% of net sales for the
first quarter of 2019, compared to $22.9 million, or 21.9% of net sales,
for the first quarter of 2018. The increase of $9.8 million reflects
incremental operating expenses from recently acquired businesses, SIC
corporate costs, investments in the business units for continued growth
and higher depreciation and amortization.
For the first quarter of 2019, net income was $0.1 million, compared to
a net loss of $1.3 million for the first quarter of 2018. Net income for
the first quarter of 2019 includes the after-tax impact of $1.7 million
of other income, which primarily results from a change in the fair value
of earnout payments for completed acquisitions.
EBITDA for the first quarter of 2019 increased 108.2% to $11.2 million,
compared to EBITDA of $5.4 million for the first quarter of 2018.
Excluding the impact of equity compensation and nonrecurring costs,
Adjusted EBITDA for the first quarter of 2019 increased by 17.2% to
$12.5 million, compared to $10.7 million for the first quarter of 2018.
For the first quarter of 2019, Adjusted EBITDA as a percentage of net
sales was 9.1%, compared to 10.2% for the first quarter of 2018,
primarily attributable to the factors discussed above in gross margin
and operating expenses.
Operating cash flow totaled $10.6 million for the first quarter of 2019,
compared to a cash flow deficit of $1.5 million in the first quarter of
2018. Operating cash flow as a percentage of Adjusted EBITDA was 84.3%
for the first quarter of 2019. Liquidity from cash-on-hand and borrowing
availability under our revolving credit facility totaled $66.8 million
at March 31, 2019.
FINANCIAL RESULTS CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call today at 9:00 a.m. EDT to
discuss results for the first quarter ended March 31, 2019 and other
matters relating to the Company. During the conference call, the Company
may discuss and answer one or more questions concerning business and
financial matters and trends affecting the Company. The Company’s
responses to these questions, as well as other matters discussed during
the conference call, may contain or constitute material information that
has not been previously disclosed. To participate in the conference
call, dial 1-877-705-6003 from the United States, and international
callers may dial 1-201-493-6725, approximately 15 minutes before the
call. A webcast and presentation will also be available at www.selectinteriorconcepts.com
under the investor relations section. A replay of the call and webcast
will be available on the Company’s website approximately 4 hours after
the completion of the call.
ABOUT SELECT INTERIOR CONCEPTS
Select Interior Concepts is a premier installer and nationwide
distributor of interior building products with leading market positions
in highly attractive markets. The Residential Design Services segment
provides integrated design, sourcing and installation solutions to
customers, in the selection of a broad array of interior products and
finishes, including flooring, cabinets, countertops, window treatments,
and related interior items. The Architectural Surfaces Group segment
distributes natural and engineered stone through a national network of
distribution centers and showrooms under proprietary brand names such as
AG&M, Modul and Pental. For more information, visit: www.selectinteriorconcepts.com.
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and, as
such, may involve known and unknown risks, uncertainties and
assumptions. Forward-looking statements may be identified by the use of
words such as “anticipate,” “believe,” “estimate,” “intend,” “could,”
“should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,”
“predict,” “project,” “forecast,” “potential,” “continue,” and other
forms of these words or similar words or expressions or the negatives
thereof. Forward-looking statements are based on historical information
available at the time the statements are made and are based on
management’s reasonable belief or expectations with respect to future
events. Forward-looking statements are subject to risks, uncertainties,
and other factors, including, but not limited to, those factors
contained in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2018 (our “Annual Report”), that may cause the Company’s
actual results, level of activity, performance or achievement to be
materially different from the results or plans expressed or implied by
such forward-looking statements. All forward-looking statements in this
press release are qualified by the factors, risks and uncertainties
contained in our Annual Report. Forward-looking statements should not be
read as a guarantee of future performance or results, and will not
necessarily be accurate indications of the times at or by which such
performance or results will be achieved. Forward-looking statements
speak only as of the date on which they are made and the Company
undertakes no obligation to update any forward-looking statement to
reflect future events, developments or otherwise, except as may be
required by applicable law.
USE OF NON-GAAP FINANCIAL MEASURES
This press release and the schedules hereto include EBITDA and Adjusted
EBITDA, which are financial measures that have not been calculated in
accordance with accounting principles generally accepted in the United
States, or GAAP, and are therefore referred to as non-GAAP financial
measures. We have provided definitions below for these non-GAAP
financial measures and have provided tables in the schedules hereto to
reconcile these non-GAAP financial measures to the comparable GAAP
financial measures.
We believe that these non-GAAP financial measures provide valuable
information regarding our earnings and business trends by excluding
specific items that we believe are not indicative of the ongoing
operating results of our businesses, providing a useful way for
investors to make a comparison of our performance over time and against
other companies in our industry.
We have provided these non-GAAP financial measures as supplemental
information to our GAAP financial measures and believe these non-GAAP
measures provide investors with additional meaningful financial
information regarding our operating performance and cash flows. Our
management and board of directors also use these non-GAAP measures as
supplemental measures to evaluate our businesses and the performance of
management, including the determination of performance-based
compensation, to make operating and strategic decisions, and to allocate
financial resources. We believe that these non-GAAP measures also
provide meaningful information for investors and securities analysts to
evaluate our historical and prospective financial performance. These
non-GAAP measures should not be considered a substitute for or superior
to GAAP results. Furthermore, the non-GAAP measures presented by us may
not be comparable to similarly titled measures of other companies.
| Select Interior Concepts, Inc. | |||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
| (In thousands) | |||||||||||
|
ASSETS |
March 31, 2019 | December 31, 2018 | |||||||||
| Cash and cash equivalents | $ | 7,110 | $ | 6,362 | |||||||
| Restricted cash | – | 3,000 | |||||||||
| Accounts receivable, net | 63,413 | 63,601 | |||||||||
| Inventories | 109,941 | 108,270 | |||||||||
| Prepaid expenses and other current assets | 3,696 | 2,809 | |||||||||
| Income taxes receivables | 834 | 1,263 | |||||||||
| Total current assets | $ | 184,994 | $ | 185,305 | |||||||
| Property and equipment, net | 21,783 | 19,798 | |||||||||
| Deferred tax assets, net | 9,355 | 9,355 | |||||||||
| Goodwill | 98,976 | 94,593 | |||||||||
| Customer relationships, net | 80,431 | 79,843 | |||||||||
| Other intangible assets, net | 21,343 | 20,872 | |||||||||
| Other assets | 6,175 | 6,248 | |||||||||
| Total assets | $ | 423,057 | $ | 416,014 | |||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
| Accounts payable | $ | 40,430 | $ | 37,265 | |||||||
| Accrued expenses and other current liabilities | 25,925 | 27,620 | |||||||||
| Income taxes payable | 984 | 984 | |||||||||
| Customer deposits | 9,379 | 9,908 | |||||||||
| Current portion of long-term debt, net | 1,331 | 1,368 | |||||||||
| Current portion of capital lease obligations | 620 | 500 | |||||||||
| Total current liabilities | $ | 78,669 | $ | 77,645 | |||||||
|
Long-term debt, net of current portion and financing fees |
154,475 | 142,442 | |||||||||
| Long-term capital lease obligations | 1,434 | 1,544 | |||||||||
| Line of credit | 29,611 | 36,706 | |||||||||
| Other long-term Liabilities | 9,489 | 8,983 | |||||||||
| Total Liabilities | $ | 273,678 | $ | 267,320 | |||||||
| Class A common stock | 257 | 257 | |||||||||
| Additional paid in capital | 157,159 | 156,601 | |||||||||
| Accumulated deficit | (8,037 | ) | (8,164 | ) | |||||||
| Total stockholders’ equity | $ | 149,379 | $ | 148,694 | |||||||
| Total liabilities and stockholders’ equity | $ | 423,057 | $ | 416,014 | |||||||
| Select Interior Concepts, Inc. | |||||||||||
| Condensed Consolidated Statement of Operations (Unaudited) | |||||||||||
|
Three Months Ended March 31, |
|||||||||||
| (in thousands, except share data) | 2019 | 2018 | |||||||||
| Revenues, net | $ | 136,920 |
|
$ | 104,386 | ||||||
| Cost of revenues | 98,187 |
|
76,436 | ||||||||
| Gross profit | $ | 38,733 | $ | 27,950 | |||||||
| Operating expenses | |||||||||||
| Selling, general and administrative expenses | 35,467 | 27,000 | |||||||||
| Income from operations | $ | 3,266 | $ | 950 | |||||||
| Other expense | |||||||||||
| Interest expense | 4,329 | 2,523 | |||||||||
| Other (income) expense, net | (1,715 | ) | 239 | ||||||||
| Total other expense, net | $ | 2,614 | $ | 2,762 | |||||||
|
Income (loss) before provision (benefit) for income taxes |
$ | 652 | $ | (1,812 | ) | ||||||
| Provision (benefit) for income taxes | 525 | (503 | ) | ||||||||
| Net income (loss) | $ | 127 | $ | (1,309 | ) | ||||||
| Earnings (loss) per common share | |||||||||||
| Basic common stock | $ | 0.00 | $ | (0.05 | ) | ||||||
| Diluted common stock | $ | 0.00 | $ | (0.05 | ) | ||||||
| Weighted average shares outstanding | |||||||||||
| Basic common stock | 25,766,260 | 25,614,626 | |||||||||
| Diluted common stock | 25,826,120 | 25,614,626 | |||||||||
| Select Interior Concepts, Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
|
Three Months Ended March 31, |
|||||||||||
| (in thousands) | 2019 | 2018 | |||||||||
| Net cash provided by (used in) operating activities | $ | 10,551 | $ | (1,458 | ) | ||||||
| Purchase of property and equipment, net | (1,871 | ) | (2,058 | ) | |||||||
| Acquisition of NSI, LLC | – | (290 | ) | ||||||||
| Acquisition of Elegant Home Design, LLC (Indemnity payment in 2019) | (1,000 | ) | (11,492 | ) | |||||||
|
Escrow release payment related to acquisition of Greencraft Holdings, LLC |
(3,000 | ) | – | ||||||||
| Acquisition of Intown Design, Inc. | (10,662 | ) | – | ||||||||
| Net cash used in investing activities | $ | (16,533 | ) | $ | (13,840 | ) | |||||
| Proceeds from (paydown of) line of credit, net | (7,119 | ) | 13,061 | ||||||||
| Proceeds from term loan | 11,500 | 6,250 | |||||||||
| Term loan and line of credit deferred issuance costs | – | (31 | ) | ||||||||
| Payments on notes payable | (388 | ) | (294 | ) | |||||||
| Principal payments on long-term debt | (263 | ) | (263 | ) | |||||||
| Net cash provided by financing activities | $ | 3,730 | $ | 18,723 | |||||||
| Net increase (decrease) in cash | $ | (2,252 | ) | $ | 3,425 | ||||||
| Cash and restricted cash, beginning of period | $ | 9,362 | $ | 5,547 | |||||||
| Cash and restricted cash, end of period | $ | 7,110 | $ | 8,972 | |||||||
| Select Interior Concepts, Inc. | |||||||||||||
| Segment Information (Unaudited) | |||||||||||||
| (in thousands) |
Three Months Ended March 31, 2019 |
||||||||||||
| Net Sales | Gross Profit | Gross Margin | |||||||||||
| RDS | $ | 79,985 | $ | 22,640 | 28.3% | ||||||||
| ASG | 57,505 | 16,021 | 27.9% | ||||||||||
| Elims/Corp | (570) | 72 | n/a | ||||||||||
| Total | $ | 136,920 | $ | 38,733 | 28.3% | ||||||||
|
Three Months Ended March 31, 2018 |
|||||||||||||
| Net Sales | Gross Profit | Gross Margin | |||||||||||
| RDS | $ | 57,141 |
|
$ | 15,508 | 27.1% | |||||||
| ASG | 47,575 | 12,440 | 26.1% | ||||||||||
| Elims/Corp | (330) | 2 | n/a | ||||||||||
| Total | $ | 104,386 | $ | 27,950 | 26.8% | ||||||||
| Select Interior Concepts, Inc. | |||||||||||
| Reconciliation of Net Income to Adjusted EBITDA (Unaudited) | |||||||||||
| (in thousands) | Three Months Ended March 31, | ||||||||||
| Reconciliation of net income to Adj. EBITDA | 2019 | 2018 | |||||||||
| Consolidated net income (loss) | $ | 127 | $ | (1,309 | ) | ||||||
| Income tax expense (benefit) | 525 | (503 | ) | ||||||||
| Interest expense | 4,329 | 2,523 | |||||||||
| Depreciation and amortization | 6,249 | 4,684 | |||||||||
| EBITDA | $ | 11,230 | $ | 5,395 | |||||||
| Stock based compensation | 561 | 1,675 | |||||||||
| Purchase accounting fair value adjustments | (1,522 | ) | 234 | ||||||||
| Acquisition and integration related costs | 1,454 | 1,283 | |||||||||
| Employee related reorganization costs | 439 | 274 | |||||||||
| Other non-recurring costs | 347 | 949 | |||||||||
| IPO and public company readiness costs | – | 867 | |||||||||
| Total Addbacks | $ | 1,279 | $ | 5,282 | |||||||
| Adjusted EBITDA | $ | 12,509 | $ | 10,677 | |||||||
EBITDA is defined as consolidated net income before interest, taxes and
depreciation and amortization.
Adjusted EBITDA is defined as consolidated net income before (i) income
tax expense, (ii) interest expense, (iii) depreciation and amortization
expense, (iv) non-cash stock compensation expense, and (v) adjustments
for costs that are deemed to be transitional in nature or not related to
our core operations, such as severance, facility closure costs, and
professional and legal fees related to business acquisitions, or similar
transitional costs and expenses related to integrating acquired
businesses into our Company.
Contacts
Media Inquiries:
Janelle Joseph
(646) 818-9119
[email protected]
Investor
Relations:
Rodny Nacier
(470) 548-7370
[email protected]
