Norcraft Companies, L.P. Reports First Quarter 2013 Results

Contact:

Leigh E. Ginter

Chief Financial Officer

[email protected]

(651) 234-3315

Norcraft Companies, L.P.

Consolidated Balance Sheets

(dollar amounts in thousands)

March 31, 2013 (unaudited)

December 31, 2012

ASSETS

Current assets:

Cash and cash equivalents

$

27,431

$

23,019

Trade accounts receivable, net

24,973

20,264

Inventories

21,674

19,760

Prepaid and other current assets

1,808

2,220

Total current assets

75,886

65,263

Non-current assets:

Property, plant and equipment, net

25,562

25,961

Goodwill

88,479

88,484

Intangible assets, net

68,252

70,148

Display cabinets, net

5,804

6,019

Other assets

191

268

Total non-current assets

188,288

190,880

Total assets

$

264,174

$

256,143

LIABILITIES AND MEMBER'S EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

11,134

$

7,133

Accrued expenses

20,436

14,893

Total current liabilities

31,570

22,026

Non-current liabilities:

Long-term debt

240,000

240,000

Unamortized premium on bonds payable

117

127

Other liabilities

51

48

Total non-current liabilities

240,168

240,175

Total liabilities

271,738

262,201

Commitments and contingencies

—

—

Member's equity (deficit):

Member's equity (deficit)

(9,001)

(7,686)

Accumulated other comprehensive income

1,437

1,628

Total member's equity (deficit)

(7,564)

(6,058)

Total liabilities and member's equity (deficit)

$

264,174

$

256,143

Norcraft Companies, L.P.

Consolidated Statements of Comprehensive Income (Loss)

(dollar amounts in thousands)

(unaudited)

Three Months Ended

March 31,

2013

2012

Net sales

$

77,348

$

67,862

Cost of sales

57,578

49,942

Gross profit

19,770

17,920

Selling, general and administrative expenses

13,856

13,179

Income from operations

5,914

4,741

Other expense:

Interest expense, net

6,447

6,450

Amortization of deferred financing costs

780

780

Other expense, net

10

27

Total other expense

7,237

7,257

Net loss

(1,323)

(2,516)

Other comprehensive income (loss):

Foreign currency translation adjustment

(191)

223

Total other comprehensive income (loss)

(191)

223

Comprehensive loss

$

(1,514)

$

(2,293)

Norcraft Companies, L.P.

Consolidated Statement of Cash Flows

(dollar amounts in thousands)

(unaudited)

Three Months Ended

March 31,

2013

2012

Cash flows from operating activities:

Net loss

$

(1,323)

$

(2,516)

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

Depreciation and amortization of property, plant and equipment

1,112

1,157

Amortization:

Customer relationships

1,116

1,117

Deferred financing costs

780

780

Display cabinets

1,136

1,019

Discount amortization/accreted interest

(10)

(10)

Provision for uncollectible accounts receivable

51

(14)

Provision for obsolete and excess inventories

66

69

Provision for warranty claims

753

757

Stock compensation expense

5

46

Gain on disposal of assets

—

(1)

Change in operating assets and liabilities:

Trade accounts receivable

(4,807)

(2,678)

Inventories

(2,011)

(1,625)

Prepaid expenses

410

269

Other assets

77

78

Accounts payable and accrued expenses

8,823

7,719

Net cash provided by operating activities

6,178

6,167

Cash flows from investing activities:

Proceeds from sale of property, plant and equipment

—

2

Purchase of property, plant and equipment

(816)

(484)

Additions to display cabinets

(921)

(1,136)

Net cash used in investing activities

(1,737)

(1,618)

Cash flows from financing activities:

Proceeds from issuance of member interests

3

—

Distributions to member

—

(10)

Net cash provided by (used in) financing activities

3

(10)

Effect of exchange rates on cash and cash equivalents

(32)

6

Net increase in cash and cash equivalents

4,412

4,545

Cash and cash equivalents, beginning of the period

23,019

24,185

Cash and cash equivalents, end of period

$

27,431

$

28,730

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 its 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
March 31,

Twelve Months Ended

March 31,

2013

2012

2013

Net loss

$

(1,323)

$

(2,516)

$

(8,366)

Interest expense, net

6,447

6,450

25,816

Depreciation

1,112

1,157

4,678

Amortization of deferred financing costs

780

780

3,120

Amortization of customer relationships

1,116

1,117

4,466

Display cabinet amortization

1,136

1,019

4,230

State taxes

12

24

(38)

Non-GAAP EBITDA

$

9,280

$

8,031

$

33,906