Norcraft Companies, L.P. Reports Third Quarter 2012 Results

EAGAN, Minn., Nov. 9, 2012 /PRNewswire/ -- Norcraft Companies, L.P. (Norcraft) today reports financial results for the third quarter ended September 30, 2012.

FINANCIAL RESULTS

Third Quarter of Fiscal 2012 Compared with Third Quarter of Fiscal 2011

Net sales increased $6.2 million, or 9.1%, from $67.7 million for the third quarter of 2011 to $73.9 million for the same quarter of 2012. Income from operations decreased $1.9 million, or 29.4%, from $6.6 million for the third quarter of 2011 to $4.7 million for the same quarter of 2012. Net loss increased $1.9 million from $0.7 million for the third quarter of 2011 to $2.6 million for the same quarter of 2012.

EBITDA (a non-GAAP measure defined in the attached table) was $8.0 million for the third quarter of 2012 compared to $9.9 million for the same quarter of 2011.

"While we are disappointed with our results, our sales and the cabinet industry did experience some growth recently. Our industry continues to be highly competitive, with significant discounting and sales promotions. However, we are optimistic about these early signs of recovery in the new home construction and home improvement markets and our ability to leverage the growth into improved profitability. As such, we continue to introduce new products and cost reduction initiatives," commented President and CEO, Mark Buller.

CONFERENCE CALL

Norcraft has scheduled a conference call on Tuesday, November 13, 2012 at 9:00 a.m. Eastern Time. To participate, dial 877-352-9693 and use the conference ID 64409120. A telephonic replay will be available by calling 855-859-2056.

GENERAL

Norcraft Companies is a leader in manufacturing, assembling and finishing kitchen and bathroom cabinetry in the U.S. and parts of Canada. We provide our customers with a single source for a broad range of high-quality cabinetry, including stock, semi-custom and custom cabinets manufactured in both framed and frameless, or full access construction. We market our products through six main brands: Mid Continent Cabinetry, Norcraft Cabinetry, UltraCraft, StarMark Cabinetry, Fieldstone Cabinetry and Brookwood.

Contact:

Leigh E. Ginter


Chief Financial Officer


leigh.ginter@norcraftcompanies.com


(651) 234-3315

 

-Selected Financial Data Tables Follow-


 

Norcraft Companies, L.P.

Consolidated Balance Sheets

(dollar amounts in thousands)

 

 ASSETS


September 30,

 2012

(unaudited)


December 31,

 2011

 


Current assets:






Cash and cash equivalents


$      28,747


$        24,185


Trade accounts receivable, net


23,825


20,092


Inventories


20,345


17,503


Prepaid and other current assets


1,474


1,835


Total current assets


74,391


63,615








Non-current assets:






Property, plant and equipment, net


26,502


27,434


Goodwill


88,490


88,479


Intangible assets, net


72,045


77,732


Display cabinets, net


6,188


5,842


Other assets


301


568


Total non-current assets


193,526


200,055








Total assets


$    267,917


$     263,670








LIABILITIES AND MEMBER'S EQUITY (DEFICIT)








Current liabilities:






Accounts payable


$        9,025


$          6,566


Accrued expenses


20,592


13,775


Total current liabilities


29,617


20,341








Non-current liabilities:






Long-term debt


240,000


240,000


Unamortized premium on bonds payable


137


166


Other liabilities


118


108


Total non-current liabilities


240,255


240,274








Total liabilities


269,872


260,615








Commitments and contingencies


-


-








Member's equity (deficit):






Member's equity (deficit)


(3,804)


1,646


Accumulated other comprehensive income


1,849


1,409


Total member's equity (deficit)


(1,955)


3,055








Total liabilities and member's equity (deficit)


$     267,917


$      263,670





















 

 

Norcraft Companies, L.P.

Consolidated Statements of Comprehensive Loss

(dollar amounts in thousands)

(unaudited)

 








Three Months Ended

September 30,


Nine Months Ended

September 30,


2012


2011


2012


2011

Net sales

$  73,863


$  67,718


$ 217,550


$ 206,943

Cost of sales

55,360


48,815


160,679


150,223

Gross profit

18,503


18,903


56,871


56,720

Selling, general and administrative expenses

13,849


12,313


40,729


38,143

Income from operations

4,654


6,590


16,142


18,577









Interest expense, net

6,461


6,451


19,372


17,106

Amortization of deferred financing costs

780


795


2,340


1,666

Other expense, net

10


51


61


103

Total other expense

7,251


7,297


21,773


18,875

Net loss

(2,597)


(707)


(5,631)


(298)

Other comprehensive income (loss):








Foreign currency translation adjustment

500


(566)


440


(382)

Total other comprehensive income (loss)

500


(566)


440


(382)

Comprehensive loss

$  (2,097)


$ (1,273)


$  (5,191)


$     (680)


























 

 

 

Norcraft Companies, L.P.

Consolidated Statement of Cash Flows

(dollar amounts in thousands)

(unaudited)

 



Nine Months Ended



September 30,



2012


2011

Cash flows from operating activities:





Net loss


$          (5,631)


$           (298)

Adjustments to reconcile net loss to net cash provided by operating





activities:





Depreciation and amortization of property, plant and equipment


3,562


3,774

Amortization:





Customer relationships


3,350


3,350

Deferred financing costs


2,340


1,666

Display cabinets


3,053


2,888

Discount amortization/accreted interest


(29)


190

Provision for uncollectible accounts receivable


186


69

Provision for obsolete and excess inventories


(47)


32

Provision for warranty claims


2,419


2,284

Stock compensation expense


141


136

Gain on disposal of assets


(3)


-

Change in operating assets and liabilities:





Trade accounts receivable


(3,766)


(6,113)

Inventories


(2,722)


(1,444)

Prepaid expenses


363


369

Other assets


268


162

Accounts payable and accrued expenses


6,796


3,471

Net cash provided by operating activities


10,280


10,536






Cash flows from investing activities:





Proceeds from sale of property and equipment


5


6

Purchase of property, plant and equipment


(2,387)


(1,720)

Additions to display cabinets


(3,399)


(3,707)

Net cash used in investing activities


(5,781)


(5,421)






Cash flows from financing activities:





Borrowings on senior secured second lien notes payable


-


62,400

Payment of financing costs


(3)


(8,159)

Proceeds from issuance of member interests


50


89

Distributions to member


(10)


(58,015)

Net cash provided by (used in) financing activities


37


(3,685)






Effect of exchange rates on cash and cash equivalents


26


(112)

Net increase in cash and cash equivalents


4,562


1,318

Cash and cash equivalents, beginning of the period


24,185


28,657

Cash and cash equivalents, end of period


$         28,747


$       29,975












Norcraft Companies, L.P.

Reconciliation of Net Loss to EBITDA

(dollar amounts in thousands)


EBITDA is net loss before interest expense, income tax expense, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry, as their calculation eliminates the effects of financing, income taxes and the accounting effects of capital spending, as these items may vary for different companies for reasons unrelated to overall operating performance. We also believe this financial metric provides information relevant to investors regarding our ability to service and/or incur debt. EBITDA is not a presentation made in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net loss, cash flows from operating activities or other operation statement or cash flow statement data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to those of other similarly titled measures reported by other companies. The calculation of EBITDA is shown below:

 


Three Months Ended September 30,


Nine Months Ended

September 30,


Twelve Months Ended

September 30,


2012


2011


2012


2011


2012

Net loss

$ (2,597)


$   (707)


$ (5,631)


$    (298)


$    (9,064)

Interest expense, net

6,461


6,451


19,372


17,106


25,815

Depreciation

1,195


1,217


3,562


3,774


4,723

Amortization of deferred financing costs

780


795


2,340


1,666


3,128

Amortization of customer relationships

1,117


1,116


3,350


3,350


4,467

Display cabinet amortization

994


926


3,053


2,888


4,170

State taxes

5


56


53


104


36











Non-GAAP EBITDA

$  7,955


$  9,854


$  26,099


$28,590


$    33,275











 

FORWARD LOOKING STATEMENTS AND INFORMATION

Statements in this press release regarding activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward looking statements. Forward looking statements may give management's current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of the company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as ''anticipate,'' ''estimate,'' ''expect,'' ''project,'' ''intend,'' ''plan,'' ''believe'' and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward looking statements are based on management's expectations and beliefs concerning future events affecting the company. They are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond the company's control. Although management believes that the expectations reflected in its forward looking statements are reasonable, management does not know whether its expectations will prove correct. Such expectations can be affected by inaccurate assumptions that management might make or by known or unknown risks and uncertainties. Many factors could cause actual results to differ materially from these forward looking statements including, but not limited to, the risks outlined under Part I, Item 1A, "Risk Factors,'' in the Annual Report on Form 10-K filed by the company with the Securities and Exchange Commission.

Because of these factors, investors should not place undue reliance on any of these forward looking statements. Further, any forward looking statement speaks only as of the date on which it is made and, except as required by law, the company undertakes no obligation to update any forward looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

 

SOURCE Norcraft Companies, L.P.



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