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ASV Holdings, Inc. Reports First Quarter 2019 Results

GRAND RAPIDS, Minn.–(BUSINESS WIRE)–lt;a href="https://twitter.com/hashtag/CTL?src=hash" target="_blank"gt;#CTLlt;/agt;–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 First Quarter
2019 results. For the three months ended March 31, 2019, the Company
reported Net Sales of $27.3 million and a Net Loss of $(0.7) million or
$(0.07) per share compared to Net Sales of $29.9 million and a Net Loss
of $(0.3) million or $(0.03) per share for the three months ended March
31, 2018.

First Quarter 2019 and Comparison to First
Quarter 2018

  • $27.3 million in Net Sales represented 8.5% year-over-year decline
    from $29.9 million.
  • 6% year-over-year decline in North American machine sales and 12%
    decline in total machine sales, to $18.7 million.
  • Gross Margin was $3.4 million, or 12.6% of sales compared to $3.9
    million, or 13.2% of sales in last year’s first quarter and compared
    to $2.8 million, or 8.6% of sales in the fourth quarter of 2018.
  • Adjusted net loss of $(0.7) million or $(0.07) per share compared to
    adjusted net income of $0.2 million or $0.02 per share.
  • EBITDA of $1.0 million or 3.7% of sales compared to $1.3 million or
    4.2% of sales for the first quarter of 2018.
  • Adjusted EBITDA* of $1.1 million or 4.2% of sales compared to first
    quarter 2018 adjusted EBITDA of $2.0 million or 6.7% of sales.

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

Chairman and CEO, Andrew Rooke commented, “First quarter results were
again impacted by changing market conditions and engine supply
constraints, but initiatives we implemented to recover costs through
pricing and reductions in our operating costs resulted in a significant
recovery of gross margin in the quarter compared to the back half of
last year. At 12.6% gross margin, we made good incremental progress
towards our target, and with some easing in the engine supply chain and
the start of the heavy landscape and construction season here in North
America in particular, we are well-positioned for a continued
improvement in sales, margins, and profitability.”

“We are focused on developing our distribution here in North America,
adding a net seven new dealer/rental locations in the quarter and expect
to add more this year from a promising pipeline of prospects. Our brand
awareness is increasing from our marketing, dealer support programs and
the launch of new products such as the RT-65 which started shipping at
the end of the quarter. We expect this to be reflected in improved sell
through rates from our dealer network, which we did experience in the
quarter, together with further penetration into the strongly performing
rental market,” concluded Mr. Rooke.

Missi How, CFO, commented, “In addition to our price and manufacturing
cost reduction activities, we remain vigilant on operating expenses,
which for the quarter were still favorable to last year even after
increasing our marketing investment in the period. With the lower level
of sales than anticipated in the quarter, our inventory increased and
pushed up our net debt, as well as our net working capital as a
percentage of last quarter’s sales which exceeded our target of 25%, but
we expect this to come back in range during the year as volume improves
and purchases are rebalanced.”

Conference Call:
Management will host a conference call at
4:30 PM Eastern Time on May 2, 2019 to discuss the results with the
investment community. Anyone interested in participating in the call
should dial 1-800-239-9838 if calling within the United States or
1-323-794-2551 if calling internationally. A replay will be available
until 11:59 PM ET May 9, 2019 which can be accessed by dialing
844-512-2921 if calling within the United States or 412-317-6671 if
calling internationally. Please use passcode 1071038 to access this
replay. The call will additionally be broadcast live and archived for 90
days over the internet with accompanying slides, accessible at the
investor relations portion of the Company’s corporate website, www.asvi.com
in the “Investors” section.

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 10K 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 10K.
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 March 31,
2019   2018
Unaudited Unaudited
Net sales $ 27,338 $ 29,870
 
Cost of goods sold   23,903   25,928
 
Gross profit 3,435 3,942
 
Research and development costs 493 471
Selling, general and administrative expense   3,136   3,407
 
Operating (loss) income (194 ) 64
 
Other income (expense)
Interest expense (551 ) (458 )
Other income (expense)   8   6
 
Total other expense   (543 )   (452 )
 
Loss before income taxes (737 ) (388 )
 
Income tax expense (benefit)     (81 )
 
Net loss $ (737 ) $ (307 )
 
Earnings per share:
Basic net loss per share of common stock $ (0.07 ) $ (0.03 )
Diluted net loss per share of common stock $ (0.07 ) $ (0.03 )
 
Weighted average common shares outstanding:
Basic weighted average common shares outstanding 9,863 9,816
Diluted weighted average common shares outstanding 9,863 9,816
 

ASV Holdings, Inc.

Condensed Balance Sheets

(In thousands, except par value)

   
March 31, December 31,
2019 2018
Unaudited
ASSETS
CURRENT ASSETS
Cash $ 1,232 $ 2
Accounts receivable, net 18,044 18,462
Receivables from affiliates 23 7
Income tax receivable 840 840
Inventory, net 37,969 34,055
Prepaid income tax 43 43
Prepaid expenses and other   437   593
Total current assets 58,588 54,002
Property, plant and equipment, net 12,298 12,662
Operating lease assets, net 977
Intangible assets, net 20,094 20,730
Other long-term assets   339   237
Total assets $ 92,296 $ 87,631
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Notes payable – current portion $ 2,991 $ 2,991
Trade accounts payable 17,825 18,834
Payables to affiliates 416 480
Accrued compensation and benefits 903 1,394
Accrued warranties 1,489 1,584
Operating lease liability- current portion 238
Accrued other current liabilities   1,163   1,405
Total current liabilities 25,025 26,688
Revolving loan facility 22,707 16,026
Notes payable – long term, net 9,621 10,159
Operating lease liability- long term 796
Other long-term liabilities   644   727
Total liabilities 58,793 53,600
 
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value, 5,000 authorized, none
outstanding at March 31, 2019 and December 31, 2018, respectively
Common stock, $0.001 par value, 50,000 authorized, 9,897 and 9,851
shares issued and outstanding at March 31, 2019 and December 31,
2018, respectively
10 10
Additional paid-in capital 66,003 65,794
Accumulated deficit   (32,510 )   (31,773
Total Stockholders’ Equity   33,503   34,031
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 92,296   $ 87,631
 

ASV Holdings, Inc.

Condensed Statements of Cash Flows

(In thousands)

 
For the Three Months Ended March 31,
2019   2018
Unaudited Unaudited
OPERATING ACTIVITIES
Net loss $ (737 ) $ (307 )

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

Depreciation 579 547
Amortization 637 637
Share-based compensation 136 149
Loss on sale of fixed assets 1 35
Amortization of deferred finance cost 42
Bad debt expense 3 37
Inventory Reserves 93
Changes in operating assets and liabilities
Accounts receivable 415 1,195
Net accounts receivable/payable from affiliates (79 ) 180
Inventory (3,943 ) (1,464

)

Prepaid income tax

 

Prepaid expenses 156 165
Operating lease asset and liabilities 56
Trade accounts payable (1,009 ) (574 )
Accrued expenses (747 ) (844 )
Tax payable
Other long-term liabilities   (85 )   (50 )
 
Net cash used in operating activities   (4,575 )   (201 )
 
INVESTING ACTIVITIES
Purchase of property and equipment   (185 )   (330 )
 
Net cash used in investing activities   (185 )   (330 )
 
FINANCING ACTIVITIES
Principal payments on term debt (502 ) (500 )
Debt issuance costs incurred (180 )
Shares repurchased for income tax withholding on share-based
compensation
(9 ) (51 )
Net borrowings (payments) on revolving credit facilities   6,681   1,083
 
Net cash provided by financing activities   5,990   532
 
NET CHANGE IN CASH   1,230   1
 
Cash at beginning of period   2   3
 
Cash at end of period $ 1,232 $ 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. 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 March 31, 2019 and 2018, unless otherwise indicated.

Reconciliation of GAAP Net Income to Adjusted Net Income (in
millions except shares and EPS)
  For the Quarter Ended March 31,
2019   2018
Net loss as reported (0.7 ) (0.3 )
Aftermarket parts distribution center relocation- net of tax effect
(1)
  0.5  
Adjusted net (loss) income (0.7 ) 0.2  
 
Weighted average diluted shares outstanding 9,863,000 9,816,000
Basic and diluted loss per share as reported ($0.07 ) ($0.03 )
Total EPS effect $0.00 $0.05
Adjusted (loss) earnings per share ($0.07 ) $0.02
 
  (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.
 

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

   
For the Quarter Ended March 31,
2019 2018
Net loss (0.7 ) (0.3 )
Interest expense 0.5 0.5
Depreciation & amortization 1.2 1.2
Income tax expense (benefit)   (0.1 )
EBITDA (1) 1.0   1.3  
% of Sales 3.7 % 4.2 %
 
EBITDA 1.0 1.3
Stock compensation costs (2) 0.1 0.1
Aftermarket parts distribution center relocation (3)   0.6  
Adjusted EBITDA (4) 1.1   2.0  
Adjusted EBITDA as % of net revenues 4.2 % 6.7 %
 
(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) 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.
 
         
CURRENT RATIO   March 31, 2019   December 31, 2018
Current Assets   58,588   54,002
Current Liabilities   25,025   26,688
Current Ratio   2.3   2.0
   
         
NET WORKING CAPITAL   March 31, 2019   December 31, 2018
Accounts receivable   18,067   18,469
Inventory   37,969   34,055
Accounts payable   (18,241)   (19,314)
Net working capital  

37,795

 

33,210

Last quarters annualized sales (LQS)   109,352   132,300
Net working capital % of LQS  

34.6%

 

25.1%

 

Contacts

ASV Holdings, Inc.
Andrew Rooke
Chairman and Chief Executive
Officer
218-327-5389
[email protected]

Darrow Associates Inc.
Peter Seltzberg, Managing Director
Investor
Relations
(516) 419-9915
[email protected]

leverton

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