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Furmanite Corporation Reports First Quarter 2015 Results

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Furmanite Corporation (NYSE:FRM) today reported results for the quarter ended March 31, 2015.

First Quarter 2015 Results

Revenues for the three months ended March 31, 2015 were $122.3 million, a decrease of $2.6 million, or 2.1%, from the $124.9 million reported for the three months ended March 31, 2014. Operating income was $2.3 million for the 2015 first quarter, compared to $2.5 million for the same quarter last year. Net income was $0.3 million, or $0.01 per diluted share, in the 2015 first quarter, compared to $1.0 million, or $0.03 per diluted share, in the 2014 first quarter.

Foreign currency exchange rate changes unfavorably impacted revenues, operating income, net income and diluted earnings per share by $4.3 million, $0.2 million, $0.7 million and $0.02 per share, respectively, for the three months ended March 31, 2015.

Excluding the foreign currency impacts, $0.5 million of incremental costs associated with the Company’s 2015 Annual Meeting and certain other non-routine expenses, adjusted operating income for the three months ended March 31, 2015 increased by $0.3 million to $3.0 million(A), compared to $2.7 million(A), for the three months ended March 31, 2014. Adjusted net income increased to $1.4 million(A), or $0.04(A) per diluted share, for the 2015 first quarter, compared to $1.3 million(A), or $0.03(A) per diluted share, in the 2014 first quarter.

Joseph Milliron, Chairman, CEO and President of Furmanite Corporation said, “Our 2015 first quarter results demonstrate the resolve of our global team under challenging circumstances. We faced several obstacles, including the United Steel Workers’ strike, a fire at our Kendal, U.K. operations center and customer concerns over declining oil prices. In spite of these conditions, we still delivered improvement over prior year adjusted revenue and net income results, excluding the impact of foreign currency exchange rate changes and certain non-routine items.” Mr. Milliron continued, “That said, make no mistake-we are not satisfied with our first quarter results, even considering all that we were working against. While the quarter saw some positive indicators, considerable room for improvement remains, and our new Board and the management team remain firmly committed to delivering the sustainable long-term results that our shareholders expect.”

Financial Position

As of March 31, 2015, the Company’s cash balance was $29.1 million. The Company’s cash balance, along with the $85.8 million of availability under its credit facility, provides the Company liquidity of $114.9 million.

Conference Call Details

In conjunction with the earnings release, Furmanite Corporation will host a conference call with Joseph E. Milliron (Chairman, Chief Executive Officer and President) and Robert S. Muff (Chief Financial Officer and Chief Administrative Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Monday, May 11, 2015.

(A) These items are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”) and exclude the impact of 1) foreign currency exchange rate changes, 2) the write off of debt issuance costs associated with an amendment to the Company’s credit facility, 3) incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders and 4) direct costs associated with the integration of the Furmanite Technical Solutions division. Management believes that results excluding these impacts provide additional meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation, by excluding the impact of foreign currency exchange rate changes and certain expenses not representative of ongoing operations. Reconciliations to the applicable GAAP measures are included at the end of the press release.

ABOUT FURMANITE CORPORATION

Furmanite Corporation (NYSE:FRM) , founded in 1920, is one of the world’s largest specialty industrial services and specialty engineering project solutions companies, providing world class solutions to customer needs through more than 80 offices on six continents. The Company delivers a wide portfolio of inspection, mechanical and engineering services which help monitor, maintain, renew and construct the global energy, industrial and municipal infrastructures. Furmanite serves a broad range of industry sectors, including refining, offshore, sub-sea, pipeline, power generation, chemical, petrochemical, pulp and paper, water utilities, automotive, mining, marine and steel manufacturing. World Headquarters and Global Support Operations are located in Houston, Texas; Rotterdam, Netherlands; Kendal, United Kingdom and Melbourne, Australia. For more information, visit www.furmanite.com.

Certain of the Company’s statements in this press release are not purely historical, and as such are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company’s business, and other risks and uncertainties detailed most recently in this earnings release and the Company’s Form 10-K as of December 31, 2014 and Form 10-Q as of March 31, 2015 filed with the Securities and Exchange Commission. One or more of these factors could affect the Company’s business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements.

FURMANITE CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(Unaudited)
For the Three Months
Ended March 31,
2015 2014
Revenues $ 122,338 $ 124,941
Costs and expenses:
Operating costs 93,870 94,702
Depreciation and amortization expense 3,082 2,989
Selling, general and administrative expense 23,056 24,732
Total costs and expenses 120,008 122,423
Operating income 2,330 2,518
Interest income and other income (expense), net (523 ) (165 )
Interest expense (632 ) (449 )
Income before income taxes 1,175 1,904
Income tax expense (862 ) (888 )
Net income $ 313 $ 1,016
Earnings per common share – Basic $ 0.01 $ 0.03
Earnings per common share – Diluted $ 0.01 $ 0.03
Adjusted diluted earnings per share1 $ 0.04 $ 0.03
Weighted-average number of common and common equivalent shares used in computing earnings per common share:
Basic 37,750 37,567
Diluted 37,932 37,827
EBITDA2 $ 4,889 $ 5,342
Adjusted EBITDA2 $ 6,161 $ 5,739

__________________
1 Adjusted diluted earnings per share presented above is a non-GAAP financial measurement that excludes the impact of 1) foreign currency exchange rate changes, 2) incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders, 3) the write off of debt issuance costs associated with an amendment to the Company’s credit facility and 4) direct costs associated with the integration of the Furmanite Technical Solutions division. Management believes that results excluding these impacts provide additional meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation, by excluding the impact of foreign currency exchange rate changes and certain expenses not representative of ongoing operations. Reconciliations to the applicable GAAP measures are included at the end of the press release.
2 Earnings before interest, taxes, depreciation and amortization (“EBITDA”) presented above is a non-GAAP financial measurement. The Company believes that investors and other users of the financial statements benefit from the presentation of this non-GAAP measurement because it provides an additional metric to evaluate the Company’s core operating performance by excluding the effects of depreciation and amortization expense, interest expense and income tax expense from net income. Adjusted EBITDA further excludes 1) foreign currency exchange rate changes, 2) incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders and 3) direct costs associated with the integration of the Furmanite Technical Solutions division. Reconciliations of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measures are included at the end of the press release.

FURMANITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
March 31, December 31,
2015 2014
Cash $ 29,092 $ 33,753
Trade receivables, net 113,835 110,219
Inventories, net 38,939 37,383
Other current assets 20,695 21,335
Total current assets 202,561 202,690
Property and equipment, net 50,424 51,930
Other assets 28,838 29,551
Total assets $ 281,823 $ 284,171
Total current liabilities $ 58,347 $ 56,067
Total long-term debt 59,891 61,853
Other liabilities 22,696 23,787
Total stockholders’ equity 140,889 142,464
Total liabilities and stockholders’ equity $ 281,823 $ 284,171
FURMANITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
For the Three Months Ended

March 31,

2015 2014
Net income $ 313 $ 1,016
Depreciation, amortization and other non-cash items 3,414 2,823
Working capital changes (5,059 ) (4,953 )
Net cash used in operating activities (1,332 ) (1,114 )
Capital expenditures (1,764 ) (1,679 )
Proceeds from sale of assets 3
Proceeds from issuance of debt 35,600
Payments on debt (35,452 ) (909 )
Debt issuance costs (531 )
Issuance of common stock 14
Other (260 ) (140 )
Effect of exchange rate changes on cash (925 ) 395
Decrease in cash and cash equivalents (4,661 ) (3,433 )
Cash and cash equivalents at beginning of period 33,753 33,240
Cash and cash equivalents at end of period $ 29,092 $ 29,807
FURMANITE CORPORATION
BUSINESS SEGMENT DATA
(in thousands)
(Unaudited)

Technical
Services

Engineering
& Project
Solutions

Corporate1

Total
Three months ended March 31, 2015
Revenues from external customers $ 85,964 $ 36,374 $ $ 122,338
Operating income (loss)2 $ 8,730 $ 4 $ (6,404 ) $ 2,330
Three months ended March 31, 2014
Revenues from external customers $ 87,750 $ 37,191 $ $ 124,941
Operating income (loss)2 $ 7,665 $ (757 ) $ (4,390 ) $ 2,518

_______________________________
1 Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.
2 For the three months ended March 31, 2015, Corporate includes approximately $0.5 million of incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders. The Engineering & Project Solutions segment included approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three months ended March 31, 2014.

FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
For the Three Months
Ended March 31, 2015
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 122,338 $ 4,285 $ $ 126,623
Operating costs 93,870 3,190 97,060
Depreciation & amortization 3,082 88 3,170
Selling, general and administrative expense 23,056 815 (450 ) 23,421
Operating income 2,330 192 450 2,972
Interest income and other income (expense), net (523 ) 542 19
Interest expense (632 ) 149 (483 )
Income before income taxes 1,175 734 599 2,508
Income tax expense (862 ) (50 ) (239 ) (1,151 )
Net income $ 313 $ 684 $ 360 $ 1,357
Diluted earnings per share $ 0.01 $ 0.02 $ 0.01 $ 0.04
For the Three Months
Ended March 31, 2014
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 124,941 $ $ $ 124,941
Operating costs 94,702 94,702
Depreciation & amortization 2,989 2,989
Selling, general and administrative expense 24,732 (220 ) 24,512
Operating income 2,518 220 2,738
Interest income and other income (expense), net (165 ) 177 12
Interest expense (449 ) (449 )
Income before income taxes 1,904 177 220 2,301
Income tax expense (888 ) (44 ) (88 ) (1,020 )
Net income $ 1,016 $ 133 $ 132 $ 1,281
Diluted earnings per share $ 0.03 $ $ $ 0.03

______________________________
1 Consists of 1) incremental professional fees associated with the Company’s 2015 Annual Meeting of Stockholders, 2) the write off of debt issuance costs associated with an amendment to the Company’s credit facility and 3) direct costs associated with the integration of the Furmanite Technical Solutions division.

FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands)
For the Three Months
Ended March 31,
2015 2014
Reconciliation of EBITDA to Net income:
EBITDA $ 4,889 $ 5,342
Less:
Depreciation and amortization expense (3,082 ) (2,989 )
Interest expense (632 ) (449 )
Income tax expense (862 ) (888 )
Net income $ 313 $ 1,016
Reconciliation of Adjusted EBITDA to Net income:
Adjusted EBITDA $ 6,161 $ 5,739
Foreign currency impacts (822 ) (177 )
Incremental professional fees associated with 2015 Annual Meeting of Stockholders (450 )
Direct costs associated with the integration of the Furmanite Technical Solutions division (220 )
EBITDA 4,889 5,342
Less:
Depreciation and amortization expense (3,082 ) (2,989 )
Interest expense (632 ) (449 )
Income tax expense (862 ) (888 )
Net income $ 313 $ 1,016

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