Furmanite Corporation Reports Strong Fourth Quarter 2012 Operating Results; Issues Full Year 2012 Re
Furmanite Corporation Reports Strong Fourth Quarter 2012 Operating Results; Issues Full Year 2012 Results; Initiates 2013 Guidance
Revenues of $93.2 million; Operating income $4.2 million, including restructuring charges of $2.7 million
HOUSTON--(BUSINESS WIRE)-- Furmanite Corporation (NYS: FRM) today reported results for the quarter and year ended December 31, 2012.
Fourth Quarter 2012 Results
Revenues for the three months ended December 31, 2012 were $93.2 million, an increase of $11.4 million, or 13.9% above the $81.8 million reported for the three months ended December 31, 2011. Adjusted operating income for the quarter was $6.9 million(A) before $2.7 million of EMEA restructuring costs, an increase of $2.3 million(A), or 50.9%, over adjusted operating income of $4.6 million(A) for the three months ended December 31, 2011. Net income for the quarter was $1.1 million or $0.03 per diluted share after a 73% effective income tax rate, which was heavily impacted by the effects of the restructuring costs. Foreign currency effects had an insignificant impact on quarterly revenues and operating income.
Year Ended December 2012 Results
Revenues for the year ended December 31, 2012 were $326.5 million compared with $316.2 million for the year ended December 31, 2011, an increase of $10.3 million or 3.3%. Foreign currency effects impacted revenues unfavorably by $3.7 million, but had minimal effect on operating income. Operating income for the year ended December 31, 2012, including $3.6 million of restructuring costs, was $7.5 million. Net income for the year was $0.8 million, or $0.02 per diluted share.
The EMEA restructuring actions implemented were greater than anticipated with total direct restructuring costs for the year of $3.6 million, $0.9 million above the Company's initial estimates. The initiative was substantially complete as of the end of the year, with any remaining costs expected to be negligible. In addition to the direct restructuring costs, significant related indirect costs and inefficiencies impacted operating results.
The Company also absorbed direct costs associated with its corporate headquarters' relocation of $1.6 million, as well as substantial costs associated with the startup of its new inspection service line, other acquisition timing, integration and assimilation, and implementation of the Company's new global organizational structure.
Income Taxes
The tax impacts associated with the cost reduction initiative dramatically affected the Company's effective tax rate, which totaled 87% of pre-tax earnings for the year. In contrast, prior year income taxes were favorably impacted by approximately $8.9 million in connection with a valuation allowance reversal and an acquisition related tax benefit. Accordingly, neither the current year nor prior year reflects a reasonable income tax rate, for the Company, considering the statutory income tax rates in the countries in which the Company operates. The Company expects a more normalized annual effective income tax rate in the low to mid thirty percent range beginning in 2013 based on blended statutory income tax rates.
Charles R. Cox, Chairman and CEO of Furmanite Corporation said, "This has been a great year for Furmanite in many respects, far better than our full year numbers indicate. We are very pleased with the fourth quarter operating results our team has achieved, representing a record performance in revenues and with solid adjusted operating income." Mr. Cox continued, "All key elements of the transformation we committed to in early 2010 are now in place and we are ready to begin fully leveraging our global footprint, premier brands and extraordinary technical capabilities."
Joseph Milliron, Furmanite President and COO, said, "With our EMEA restructuring initiatives now complete and our new global organizational structure firmly guiding us down a path that leads to consistent, controlled and sustainable growth, our recent results represent what is possible when we are all working as one single global team." Mr. Milliron continued, "We are particularly encouraged by our clients' support of Furmanite entering the non-destructive testing and inspection markets, not only though our new mid-stream oil and gas opportunities, but also as a bundled solution with our heritage services; all backed by Furmanite's reputation for safety and quality."
Financial Position
As of December 31, 2012, the Company's cash balance was $33.2 million. The Company's cash balance along with the $34.1 million of availability under its credit facility provide the Company liquidity of $67.3 million.
2013 Earnings Guidance
The Company is commencing earnings guidance and expects annual revenue for 2013 to be in the range of $370 million to $395 million. For the same period, net income available to common shareholders is expected to be in the range of $0.40 to $0.44 per diluted share. The Company does not intend to provide specific guidance for individual quarters, but will confirm or update annual guidance at least quarterly.
Conference Call Details
In conjunction with the earnings release, Furmanite Corporation will host a conference call with Charles R. Cox (Chairman and CEO), Joseph E. Milliron (President and COO) and Robert S. Muff (Principal Financial Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Friday, March 8, 2013.
(A)These items are non-GAAP financial measures that exclude the impact of the restructuring costs specifically discussed in this earnings release and in the related earnings conference call. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measures is included at the end of this press release.
ABOUT FURMANITE CORPORATION
Furmanite Corporation (NYS: FRM) , founded in 1920, is one of the world's largest specialty industrial services companies, providing world class solutions to customer needs through more than 75 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 from time to time in the Company's periodic reports 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 | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
For the Three Months | For the Twelve Months | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues | $ | 93,203 | $ | 81,814 | $ | 326,492 | $ | 316,207 | ||||||||
Costs and expenses: | ||||||||||||||||
Operating costs | 66,406 | 58,471 | 233,337 | 219,146 | ||||||||||||
Depreciation and amortization expense | 2,571 | 1,951 | 8,889 | 8,231 | ||||||||||||
Selling, general and administrative expense | 20,038 | 16,895 | 76,754 | 68,379 | ||||||||||||
Total costs and expenses | 89,015 | 77,317 | 318,980 | 295,756 | ||||||||||||
Operating income | 4,188 | 4,497 | 7,512 | 20,451 | ||||||||||||
Interest income and other income (expense), net | 42 | (27 | ) | (237 | ) | (126 | ) | |||||||||
Interest expense | (277 | ) | (259 | ) | (1,105 | ) | (1,017 | ) | ||||||||
Income before income taxes | 3,953 | 4,211 | 6,170 | 19,308 | ||||||||||||
Income tax (expense) benefit | (2,882 | ) | 7,005 | (5,365 | ) | 4,662 | ||||||||||
Net income | $ | 1,071 | $ | 11,216 | $ | 805 | $ | 23,970 | ||||||||
Earnings per common share - Basic | $ | 0.03 | $ | 0.30 | $ | 0.02 | $ | 0.65 | ||||||||
Earnings per common share - Diluted | $ | 0.03 | $ | 0.30 | $ | 0.02 | $ | 0.64 | ||||||||
Adjusted diluted earnings per share (A) | $ | 0.10 | $ | 0.30 | $ | 0.11 | $ | 0.65 | ||||||||
Weighted average number of common and common equivalent shares used in computing earnings per common share: | ||||||||||||||||
Basic | 37,304 | 37,130 | 37,266 | 37,034 | ||||||||||||
Diluted | 37,508 | 37,306 | 37,494 | 37,296 | ||||||||||||
(A)These items are non-GAAP financial measures that exclude the impact of the restructuring costs specifically discussed in this earnings release and in the related earnings conference call. Management believes that results excluding these charges provide more meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation. A reconciliation to the applicable GAAP measures is included at the end of this press release.
FURMANITE CORPORATION | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
December 31, | December 31, | |||||
2012 | 2011 | |||||
Cash | $ | 33,185 | $ | 34,524 | ||
Trade receivables, net | 77,042 | 71,508 | ||||
Inventories | 31,711 | 26,557 | ||||
Other current assets | 15,355 | 13,171 | ||||
Total current assets | 157,293 | 145,760 | ||||
Property and equipment, net | 42,243 | 34,060 | ||||
Other assets | 32,092 | 27,412 | ||||
Total assets | $ | 231,628 | $ | 207,232 | ||
Total current liabilities | $ | 50,439 | $ | 41,999 | ||
Total long-term debt | 39,609 | 31,051 | ||||
Other liabilities | 22,501 | 15,293 | ||||
Total stockholders' equity | 119,079 | 118,889 | ||||
Total liabilities and stockholders' equity | $ | 231,628 | $ | 207,232 | ||
FURMANITE CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
For the Twelve Months Ended | ||||||||
December 31, | ||||||||
2012 | 2011 | |||||||
Net income | $ | 805 | $ | 23,970 | ||||
Depreciation, amortization and other non-cash items | 14,741 | 921 | ||||||
Working capital changes | (669 | ) | (17,003 | ) | ||||
Net cash provided by operating activities | 14,877 | 7,888 | ||||||
Capital expenditures | (9,286 | ) | (6,450 | ) | ||||
Acquisition of businesses, net of cash acquired | (12,540 | ) | (4,073 | ) | ||||
Proceeds from sale of assets | 140 | 137 | ||||||
Proceeds from issuance of debt | 39,300 | - | ||||||
Payments on debt | (34,191 | ) | (207 | ) | ||||
Debt issuance costs | (595 | ) | - | |||||
Issuance of common stock | 584 | 270 | ||||||
Effect of exchange rate changes on cash | 372 | (211 | ) | |||||
Decrease in cash and cash equivalents | (1,339 | ) | (2,646 | ) | ||||
Cash and cash equivalents at beginning of year | 34,524 | 37,170 | ||||||
Cash and cash equivalents at end of year | $ | 33,185 | $ | 34,524 | ||||
FURMANITE CORPORATION | ||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||
(in thousands, except per share data) | ||||||||||||
For the Three Months | ||||||||||||
Ended December 31, 2012 | ||||||||||||
As Reported | Reconciling Item(1) | Non GAAP basis | ||||||||||
Operating costs | $ | 66,406 | $ | (2,059 | ) | $ | 64,347 | |||||
Selling, general and administrative expense | 20,038 | (686 | ) | 19,352 | ||||||||
Operating income | 4,188 | 2,745 | 6,933 | |||||||||
Income before income taxes | 3,953 | 2,745 | 6,698 | |||||||||
Income tax expense | (2,882 | ) | (64 | ) | (2,946 | ) | ||||||
Net income | $ | 1,071 | $ | 2,681 | $ | 3,752 | ||||||
Adjusted diluted earnings per share | $ | 0.03 | $ | 0.07 | $ | 0.10 | ||||||
For the Three Months | ||||||||||||
Ended December 31, 2011 | ||||||||||||
As Reported | Reconciling Item(1) | Non GAAP basis | ||||||||||
Operating costs | $ | 58,471 | $ | (20 | ) | $ | 58,451 | |||||
Selling, general and administrative expense | 16,895 | (76 | ) | 16,819 | ||||||||
Operating income | 4,497 | 96 | 4,593 | |||||||||
Income before income taxes | 4,211 | 96 | 4,307 | |||||||||
Income tax benefit | 7,005 | 6 | 7,011 | |||||||||
Net income | $ | 11,216 | $ | 102 | $ | 11,318 | ||||||
Adjusted diluted earnings per share | $ | 0.30 | $ | 0.00 | $ | 0.30 | ||||||
For the Twelve Months | ||||||||||||
Ended December 31, 2012 | ||||||||||||
As Reported | Reconciling Item(1) | Non GAAP basis | ||||||||||
Operating costs | $ | 233,337 | $ | (2,286 | ) | $ | 231,051 | |||||
Selling, general and administrative expense | 76,754 | (1,291 | ) | 75,463 | ||||||||
Operating income | 7,512 | 3,577 | 11,089 | |||||||||
Income before income taxes | 6,170 | 3,577 | 9,747 | |||||||||
Income tax expense | (5,365 | ) | (227 | ) | ||||||||
