ASV Holdings, Inc. Reports Second Quarter 2019 Results

GRAND RAPIDS, Minn.--(BUSINESS WIRE)-- ASV Holdings, Inc. (Nasdaq: ASV), a leading provider of rubber-tracked compact track loaders and wheeled skid steer loaders in the compact construction equipment market, today announced Second Quarter 2019 results. For the three months ended June 30, 2019, the Company reported Net Sales of $36.0 million and a Net Loss of $(0.2) million, or $(0.02) per share compared to Net Sales of $31.9 million and Net Income of $0.3 million, or $0.03 per share for the three months ended June 30, 2018.

Second Quarter 2019 Highlights With Comparison to Second Quarter 2018:

  • Net Sales increased 12.9% year-over-year to $36.0 million compared to $31.9 million.
  • North America machine sales increased 38%.
  • Excluding $0.5 million of costs associated with the Merger Agreement, Adjusted Net Income* was $0.3 million or $0.03 per share compared to Net Income and Adjusted Net Income of $0.3 million or $0.03 per share.
  • Adjusted EBITDA* was $2.2 million or 6.1% of sales compared to second quarter 2018 Adjusted EBITDA of $2.2 million or 6.9% of sales.
  • $29.2 million in net debt* as of June 30, reflects $4.8 million in operating cash flow generated in the quarter to reduce indebtedness.
  • 53 net dealer / rental locations added brings total number of ASV dealer / rental locations to 346, compared to 265 a year ago.

*The Glossary at the end of this press release contains further details regarding reconciliation of GAAP items and Adjusted items.

During the Second Quarter, ASV announced an agreement to be acquired by an affiliate of Yanmar Holdings of Osaka, Japan, for $7.05/share, subject to shareholder approval and other closing conditions. ASV expects the acquisition to close in Q3-2019. For more information, see ASV’s Current Report on Form 8-K, dated June 27, 2019 and Preliminary Proxy Statement, dated July 18, 2019.

ASV’s Chairman and CEO, Andrew Rooke commented, “We saw significant improvement in the business during the second quarter, as we had anticipated, with sales rebounding and margins starting to recover. Compared to the First Quarter 2019, Adjusted EBITDA almost doubled, and we resumed profitability. The strength in our North American machine sales, which grew 38%, was the primary driver of our performance, due to a growing dealer count and same store sales, and increased penetration into the rental segment. Weakness in sales to Australia and continued challenges in the supply chain were partial offsets to this growth.”

Missi How, Chief Financial Officer of ASV commented, “We are pleased to announce improvement throughout the enterprise here in the Second Quarter assisted by favorable results from our initiatives that realized $2.3 million in quarterly benefit from pricing increases and cost reductions. We have worked hard to manage our working capital, sourcing, and operating expenses, and our margins and balance sheet improvement are testament to the commitment, focus, and execution of our team. We finished the quarter with net debt of $29.2 million, and EBITDA of $2.1 million, for a leverage ratio of 4.0.

About ASV Holdings, Inc.

ASV Holdings, Inc. is a designer and manufacturer of compact construction equipment. Its patented Posi-Track rubber tracked, multi-level suspension undercarriage system provides a competitive market differentiator for its Compact Track Loader (CTL) product line with brand attributes of power, performance and serviceability. It’s wheeled Skid Steer Loaders (SSLs) also share the common brand attributes. Equipment is sold through an independent dealer network throughout North America, Australia, and New Zealand. The company also sells OEM equipment and aftermarket parts. ASV owns and operates a 238,000 square-foot production facility in Grand Rapids, MN.

Forward-Looking Statements and non-GAAP Information

This release contains forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “intends” or “continue,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. Forward-looking statements in this release include, without limitation: (1) projections of revenue, earnings, capital structure and other financial items, (2) statements of our plans and objectives, (3) statements regarding the capabilities and capacities of our business operations, (4) statements of expected future economic conditions and the effect on us and on dealers or OEM customers, (5) expected benefits of our cost reduction measures, and (6) assumptions underlying statements regarding us or our business.

Our actual results may differ from information contained in these forward looking-statements for many reasons, including those described in the section entitled “Risk Factors” in our Form 10-K which are available on our EDGAR page at www.sec.gov. These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in the Form 10-K. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, after the date of this release, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise.

We from time to time refer to various non-GAAP financial measures in this release. We believe that this information is useful to understanding our operating results by excluding certain items that may not be indicative of our core operating results and business outlook. Reference to these non-GAAP financial measures should not be considered as a substitute for, or superior to, results that are presented in a manner consistent with GAAP. Rather, the non-GAAP financial information should be considered in addition to results that are presented in a manner consistent with GAAP. A reconciliation of non-GAAP financial measures referred to in this release is provided in the tables at the end of this release.

ASV Holdings, Inc.

Condensed Statements of Operations

(In thousands, except par value and per share data)

 

 

 

For the Three Months Ended

June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Unaudited

 

 

Unaudited

 

 

Unaudited

 

Net sales

 

$

36,018

 

 

$

31,860

 

 

$

63,356

 

 

$

61,729

 

Cost of goods sold

 

 

31,435

 

 

 

27,603

 

 

 

55,338

 

 

 

53,531

 

Gross profit

 

 

4,583

 

 

 

4,257

 

 

 

8,018

 

 

 

8,198

 

Research and development costs

 

 

523

 

 

 

451

 

 

 

1,015

 

 

 

922

 

Selling, general and administrative expense

 

 

3,713

 

 

 

2,934

 

 

 

6,849

 

 

 

6,341

 

Operating income

 

 

347

 

 

 

872

 

 

 

154

 

 

 

935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(570

)

 

 

(464

)

 

 

(1,122

)

 

 

(922

)

Other income

 

 

 

 

 

 

 

 

8

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

 

(570

)

 

 

(464

)

 

 

(1,114

)

 

 

(915

)

(Loss) Income before income taxes

 

 

(223

)

 

 

408

 

 

 

(960

)

 

 

20

 

Income tax expense (benefit)

 

 

 

 

 

89

 

 

 

 

 

 

8

 

Net (loss) income

 

$

(223

)

 

$

319

 

 

$

(960

)

 

$

12

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share of common stock

 

$

(0.02

)

 

$

0.03

 

 

$

(0.10

)

 

$

0.00

 

Diluted net (loss) income per share of common stock

 

$

(0.02

)

 

$

0.03

 

 

$

(0.10

)

 

$

0.00

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

9,901

 

 

 

9,823

 

 

 

9,882

 

 

 

9,820

 

Diluted weighted average common shares outstanding

 

 

9,901

 

 

 

9,823

 

 

 

9,882

 

 

 

9,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASV Holdings, Inc.

Condensed Balance Sheets

(In thousands, except par value)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash

 

$

8

 

 

$

2

 

Accounts receivable, net

 

 

15,594

 

 

 

18,462

 

Receivables from affiliates

 

 

26

 

 

 

7

 

Income tax receivable

 

 

 

 

 

840

 

Inventory, net

 

 

33,241

 

 

 

34,055

 

Prepaid income tax

 

 

65

 

 

 

43

 

Prepaid expenses and other

 

 

745

 

 

 

593

 

Total current assets

 

 

49,679

 

 

 

54,002

 

Property, plant and equipment, net

 

 

11,862

 

 

 

12,662

 

Operating lease assets, net

 

 

1,054

 

 

 

 

Intangible assets, net

 

 

19,457

 

 

 

20,730

 

Other long-term assets

 

 

313

 

 

 

237

 

Total assets

 

$

82,365

 

 

$

87,631

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Notes payable - current portion

 

$

2,012

 

 

$

2,991

 

Trade accounts payable

 

 

13,352

 

 

 

18,834

 

Payables to affiliates

 

 

 

 

 

480

 

Accrued compensation and benefits

 

 

1,296

 

 

 

1,394

 

Accrued warranties

 

 

1,405

 

 

 

1,584

 

Operating lease liability- current portion

 

 

287

 

 

 

 

Accrued other current liabilities

 

 

1,710

 

 

 

1,405

 

Total current liabilities

 

 

20,062

 

 

 

26,688

 

Revolving loan facility

 

 

18,315

 

 

 

16,026

 

Notes payable - long term, net

 

 

9,139

 

 

 

10,159

 

Operating lease liability- long term

 

 

827

 

 

 

 

Other long-term liabilities

 

 

651

 

 

 

727

 

Total liabilities

 

 

48,994

 

 

 

53,600

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000 authorized, none outstanding at June 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

 

Common stock, $0.001 par value, 50,000 authorized, 9,910 and 9,851 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

 

10

 

 

 

10

 

Additional paid-in capital

 

 

66,094

 

 

 

65,794

 

Accumulated deficit

 

 

(32,733

)

 

 

(31,773

)

Total Stockholders' Equity

 

 

33,371

 

 

 

34,031

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

82,365

 

 

$

87,631

 

ASV Holdings, Inc.

Condensed Statements of Cash Flows

(In thousands)

 

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Unaudited

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(960

)

 

$

12

 

Adjustments to reconcile to net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,174

 

 

 

1,129

 

Amortization

 

 

1,273

 

 

 

1,273

 

Share-based compensation

 

 

265

 

 

 

251

 

Loss on sale of fixed assets

 

 

36

 

 

 

1

 

Amortization of deferred finance cost

 

 

89

 

 

 

71

 

Bad debt expense

 

 

(5

)

 

 

23

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,873

 

 

 

3,177

 

Net accounts receivable/payable from affiliates

 

 

(498

)

 

 

(231

)

Income tax receivable

 

 

840

 

 

 

 

Inventory

 

 

744

 

 

 

(4,089

)

Prepaid income tax

 

 

(22

)

 

 

(17

)

Prepaid expenses

 

 

(153

)

 

 

(69

)

Operating lease asset and liabilities

 

 

60

 

 

 

 

Trade accounts payable

 

 

(5,482

)

 

 

(90

)

Accrued expenses

 

 

72

 

 

 

(967

)

Other long-term liabilities

 

 

(80

)

 

 

(40

)

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

226

 

 

 

434

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(336

)

 

 

(501

)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(336

)

 

 

(501

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Principal payments on term debt

 

 

(1,984

)

 

 

(1,001

)

Proceeds from long-term note

 

 

 

 

 

425

 

Debt issuance costs incurred

 

 

(180

)

 

 

 

Shares repurchased for income tax withholding on share-based compensation

 

 

(9

)

 

 

(76

)

Net borrowings on revolving credit facilities

 

 

2,289

 

 

 

720

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

116

 

 

 

68

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

6

 

 

 

1

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

2

 

 

 

3

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$

8

 

 

$

4

 

Supplemental Information

Cautionary Statement Regarding Non-GAAP Measures

In an effort to provide investors with additional information regarding the Company’s results, ASV refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP 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. ASV believes that this non-GAAP information is useful to understanding its operating results and the ongoing performance of its underlying businesses. Management of ASV 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.

This release contains references to Adjusted Net (Loss) Income, “EBITDA” and “Adjusted EBITDA.” Adjusted Net (Loss) Income is defined as GAAP net income that excludes the gain or loss related to non-recurring events. Adjusted net income per share or "Adjusted EPS" is calculated by dividing the Adjusted Net Income (Loss) for the period by the weighted-average diluted shares outstanding for the period. EBITDA is defined for the purposes of this release as net income or loss before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus stock-based compensation, less the gain or loss related to non-recurring events. Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures of our operating performance and provide meaningful measures of overall corporate performance exclusive of our capital structure and the method and timing of expenditures associated with building and placing our products. EBITDA is also presented because management believes that it is frequently used by investment analysts, investors and other interested parties as a measure of financial performance. Adjusted EBITDA is also presented because management believes that it provides a measure of our recurring core business. We use Adjusted Net Income (Loss) and Adjusted EPS to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts. We believe that Adjusted Net Income (Loss) and Adjusted EPS are useful measures because they permit investors to better understand changes in underlying operating performance over comparative periods by providing financial results that are unaffected by non-recurring events.

However, Adjusted Net Income, Adjusted EPS, EBITDA and Adjusted EBITDA are not recognized earnings measures under generally accepted accounting principles of the United States (“U.S. GAAP”) and do not have a standardized meaning prescribed by U.S. GAAP. Therefore, Adjusted Net Income, Adjusted EPS, EBITDA and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted Net Income, Adjusted EPS, EBITDA and Adjusted EBITDA should not be construed as alternatives to net income or loss or other income statement data (which are determined in accordance with U.S. GAAP) as an indicator of our performance or as a measure of liquidity and cash flows. Management’s method of calculating Adjusted Net Income, Adjusted EPS, EBITDA and Adjusted EBITDA may differ materially from the method used by other companies and accordingly, may not be comparable to similarly titled measures used by other companies. Cautionary Statement Regarding Non-GAAP Measures. The amounts described below are unaudited, are reported in millions of U.S. dollars (except per share data and percentages) and are as of or for the three-month periods ended June 30, 2019 and 2018, unless otherwise indicated.

Reconciliation of EBITDA to Adjusted EBITDA (in millions except percentages)

 

 

 

 

 

 

 

 

 

 

 

For the Three Months

 

For the Six Months

Ended June 30,

Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Net (loss) income

 

(0.2)

 

0.3

 

(1.0)

 

-

Interest expense

 

0.6

 

0.5

 

1.1

 

0.9

Depreciation & amortization

 

1.2

 

1.2

 

2.5

 

2.4

Income tax expense

 

-

 

0.1

 

-

 

-

EBITDA (1)

 

1.6

 

2.1

 

2.6

 

3.3

% of Sales

 

4.4%

6.6%

4.1%

 

5.4%

 

 

 

 

 

 

 

 

 

EBITDA

 

1.6

 

2.1

 

2.6

 

3.3

Stock compensation costs (2)

 

0.1

 

0.1

 

0.3

 

0.2

Aftermarket parts distribution center relocation (3)

 

-

 

-

 

-

 

0.6

Transaction costs associated with pending merger (4)

 

0.5

 

-

 

0.5

 

-

Adjusted EBITDA (5)

 

2.2

 

2.2

 

3.4

 

4.1

Adjusted EBITDA as % of net revenues

 

6.1%

 

6.9%

 

5.3%

 

6.8%

(1) EBITDA is defined as income or loss before interest, income taxes, depreciation and amortization. EBITDA is not a recognized measure under U.S. GAAP and does not have a standardized meaning prescribed by U.S. GAAP. Therefore, EBITDA may not be comparable to similar measures presented by other companies. The table above reconciles net income to EBITDA. See “—Cautionary Statements Regarding Non-GAAP Measures” for further information regarding EBITDA.

(2) Stock compensation costs relate to the cost of equity grants to employees and directors from the ASV Equity Plan.

(3) Aftermarket Parts Distribution Center relocation costs are restructuring costs related to the movement of the ASV aftermarket parts operation from Southaven, Mississippi to a facility adjacent to the Company principal premises in Grand Rapids MN, which commenced in quarter four of 2017 and was completed in quarter one of 2018.

(4) Transaction costs associated with pending merger.

(5) Adjusted EBITDA is defined as EBITDA plus stock-based compensation, less the gain or loss related to non-recurring events. Adjusted EBITDA is not a recognized measure under U.S. GAAP and does not have a standardized meaning prescribed by U.S. GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other companies. The table above reconciles EBITDA to Adjusted EBITDA. See “—Cautionary Statements Regarding Non-GAAP Measures” for further information regarding EBITDA.

Reconciliation of GAAP Net Income to Adjusted Net Income (in millions except shares and EPS)

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Net (loss) income as reported

 

(0.2)

 

0.3

 

(1.0)

 

-

Aftermarket parts distribution center relocation- net of tax effect (1)

 

-

 

-

 

-

 

0.5

Transaction costs associated with pending merger (2)

 

0.5

 

-

 

0.5

 

-

Adjusted net (loss) income

 

0.3

 

0.3

 

(0.5)

 

0.5

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

9,901,000

 

9,823,000

 

9,882,000

 

9,820,000

Basic and diluted loss per share as reported

 

($0.02)

 

$0.03

 

($0.10)

 

$0.00

Total EPS effect of adjusting items

 

$0.05

 

$0.00

 

$0.05

 

$0.05

Adjusted (loss) earnings per share

 

$0.03

 

$0.03

 

($0.05)

 

$0.05

(1) Aftermarket Parts Distribution Center relocation costs are restructuring costs related to the movement of the ASV aftermarket parts operation from Southaven, Mississippi to a facility adjacent to the Company principal premises in Grand Rapids MN, which commenced in quarter four of 2017 and was completed in quarter one of 2018.

(2) Transaction costs associated with pending merger.

CURRENT RATIO

June 30, 2019

December 31, 2018

Current Assets

49,679

54,002

Current Liabilities

20,062

26,688

Current Ratio

2.5

2.0

 

NET WORKING CAPITAL

June 30, 2019

December 31, 2018

Accounts receivable

15,620

18,469

Inventory

33,241

34,055

Accounts payable

(13,352)

(19,314)

Net working capital

35,509

33,210

Last quarters annualized sales (LQS)

144,072

132,300

Net working capital % of LQS

24.6%

25.1%

 

NET DEBT

June 30, 2019

December 31, 2018

Note payable – short term

2,012

2,991

Deferred financing costs – revolving loan facility

(299)

(223)

Revolving loan facility

18,315

16,026

Note payable – long term -net

9,139

10,159

Net Debt

29,167

28,953

Net debt is calculated as outstanding principal balance less debt issuance costs, less cash on hand, and does not include operating lease liabilities unless stated.

ASV Holdings, Inc.
Andrew Rooke
Chairman and Chief Executive Officer
218-327-5389
andrew.rooke@asvi.com

Darrow Associates Inc.
Peter Seltzberg, Managing Director
Investor Relations
(516) 419-9915
pseltzberg@darrowir.com

Source: ASV Holdings, Inc.