Interline Brands Announces Fourth Quarter and Fiscal Year 2012 Sales and Earnings Results
Jacksonville, FL - Interline Brands, Inc., a leading distributor and direct marketer of broad-line maintenance, repair and operations ("MRO") products to the facilities maintenance end-market, reported sales and earnings for the fiscal quarter and year ended December 28, 2012(1).
Michael J. Grebe, Chairman and Chief Executive Officer commented, "In 2012 we committed to driving improved results from our strategic initiatives and capitalizing on the opportunities in our markets. I am pleased to say that we delivered on both fronts. We also completed the acquisition of JanPak which extended our leadership as the largest national, broad-line JanSan platform in the United States, expanded our geographic footprint and product offering, and enhanced the depth and breadth of our customer base and team. Earlier in the year, we transitioned to a privately-held company with our partners at Goldman Sachs and P2 Capital. This transition has allowed us to focus on developing the business for long-term growth as we execute against our strategy of building a leading facilities maintenance business through robust and customer-centric procurement technology, global supply chain excellence, increased product breadth and a personalized sales experience. We exit 2012 with a much stronger business than we started, and we look forward to continued success in 2013 and beyond."
Fourth Quarter 2012 Results
Sales for the quarter ended December 28, 2012 were $323.7 million, a 6.8% increase compared to sales of $303.0 million for the quarter ended December 30, 2011. On an organic daily basis, sales increased 4.6% for the quarter. Sales to our institutional facilities customers, comprising 46% of sales, increased 13.4% for the quarter, and 6.0% on an organic daily basis. Sales to our multi-family housing facilities customers, comprising 29% of sales, increased 5.2% for the quarter, and 6.9% on a daily basis. Sales to our residential facilities customers, comprising of 25% sales, decreased 1.2% for the quarter, and increased 0.5% on a daily basis.
Gross profit increased $4.9 million, or 4.3%, to $117.9 million for the fourth quarter of 2012, compared to $113.1 million for the fourth quarter of 2011. As a percentage of sales, gross profit decreased 90 basis points to 36.4% compared to 37.3%. On an organic basis, gross margin decreased 50 basis points to 36.8%.
Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2012 increased $7.1 million, or 8.1%, to $95.3 million from $88.2 million for the fourth quarter of 2011. As a percentage of sales, SG&A expenses were 29.4% compared to 29.1%, an increase of 30 basis points. On an organic basis and excluding distribution center consolidation and restructuring costs, acquisition costs and share-based compensation, SG&A as a percentage of sales was flat year-over-year.
Fourth quarter 2012 Adjusted EBITDA of $26.9 million, or 8.3% of sales, decreased 3.2% compared to $27.8 million, or 9.2% of sales, in the fourth quarter of 2011.
Kenneth D. Sweder, President and Chief Operating Officer commented, "While our financial performance was somewhat unfavorably impacted by Superstorm Sandy and its aftermath as well as one less selling day during the period, we are pleased with the quarter's results. More importantly, I am pleased with the continued execution of our growth initiatives in the fourth quarter and full year 2012, which have been focused on broadening our offering, optimizing our supply chain, executing strategic acquisitions and further developing our leading national accounts platform. Our continued focus going forward is on delivering solutions to our customers that uniquely address the needs of the facilities they serve. This approach is reflected in our national platform with distinct end-market competencies."
Including merger-related expenses of $1.9 million as well as increased interest expense and depreciation and amortization expense associated with the previously disclosed acquisition of Interline, net loss for the fourth quarter of 2012 was $3.7 million compared to net income of $8.6 million for the fourth quarter of 2011 period.
Operating Free Cash Flow and Leverage
Cash flow provided by operating activities for the fourth quarter of 2012 was $33.7 million compared to $29.8 million for the fourth quarter of 2011. Fourth quarter 2012 Operating Free Cash Flow was $37.8 million.
"Excluding borrowings for the JanPak acquisition, our strong cash flows allowed us to repay $24 million in debt during the quarter. Additionally, our capital structure and liquidity position remain strong with cash and cash equivalents of $17.5 million and excess availability under the asset-based credit facility of $113.5 million. This provides us the flexibility to continue to invest in and grow our business," said Mr. Grebe.
Fiscal 2012 Results
Sales for the fiscal year ended December 28, 2012 were $1,322.3 million, a 5.8% increase over sales of $1,249.5 million for the fiscal year ended December 30, 2011. On an organic daily basis, sales increased 4.9% for the fiscal year ended December 28, 2012. Sales to our institutional facilities customers, comprising 45% of sales, increased 8.5% for the year, and 5.9% on an organic daily basis. Sales to our multi-family housing facilities customers, comprising 32% of sales, increased 7.9% for the year, and 8.3% on a daily basis. Sales to our residential facilities customers, comprising 23% of sales, decreased 1.2% for the year, and 0.8% on a daily basis.
Gross profit increased $19.5 million, or 4.2%, to $482.0 million for the fiscal year ended December 28, 2012, compared to $462.5 million for the fiscal year ended December 30, 2011. As a percentage of sales, gross profit decreased to 36.4% compared to 37.0%. On an organic basis, gross margin decreased 40 basis points to 36.6%.
SG&A expenses for the fiscal year ended December 28, 2012 were $370.9 million, or 28.1% of sales, compared to $354.8 million, or 28.4% of sales, for the fiscal year ended December 30, 2011. On an organic basis and excluding distribution center consolidation and restructuring costs, acquisition costs and share-based compensation, SG&A as a percentage of sales improved 30 basis points compared to the prior year.
Adjusted EBITDA of $121.5 million, or 9.2% of sales, for the fiscal year ended December 28, 2012 increased 3.7% compared to $117.2 million, or 9.4% of sales, for the fiscal year ended December 30, 2011.
Including merger-related expenses of $58.7 million, a loss on extinguishment of debt of $2.2 million and increased interest expense and depreciation and amortization expense associated with the previously disclosed acquisition of Interline, net loss for the fiscal year ended December 28, 2012 was $15.6 million compared to net income of $37.7 million for the fiscal year ended December 30, 2011.
Cash flow provided by operating activities for the fiscal year ended December 28, 2012 was $29.3 million compared to $72.9 million for the fiscal year ended December 30, 2011. Cash flow provided by operating activities was reduced by $38.8 million in cash expenses associated with the previously disclosed acquisition of Interline. Operating Free Cash Flow in the fiscal year ended December 28, 2012 was $85.6 million compared to Operating Free Cash Flow of $89.6 million for the fiscal year ended December 30, 2011.
About Interline
Interline Brands, Inc. is a leading distributor and direct marketer with headquarters in Jacksonville, Florida. Interline provides broad-line MRO products to a diversified facilities maintenance customer base of institutional, multi-family housing and residential customers located primarily throughout North America, Central America and the Caribbean. For more information, visit the Company's website at http://www.interlinebrands.com.
Recent releases and other news, reports and information about the Company can be found on the "Investor Relations" page of the Company's website at http://ir.interlinebrands.com/.
Non-GAAP Financial Information
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Interline's management uses non-US GAAP measures in its analysis of the Company's performance. Investors are encouraged to review the reconciliation of non-US GAAP financial measures to the comparable US GAAP results available in the accompanying tables.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, forward-looking statements. The Company has tried, whenever possible, to identify these forward-looking statements by using words such as "projects," "anticipates," "believes," "estimates," "expects," "plans," "intends," and similar expressions. Similarly, statements herein that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. The risks and uncertainties involving forward-looking statements include, for example, economic slowdowns, general market conditions, credit market contractions, consumer spending and debt levels, natural or man-made disasters, adverse changes in trends in the home improvement and remodeling and home building markets, the failure to realize expected benefits from acquisitions, material facilities systems disruptions and shutdowns, the failure to locate, acquire and integrate acquisition candidates, commodity price risk, foreign currency exchange risk, interest rate risk, the dependence on key employees and other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2012. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time. The Company does not currently intend to update the information provided today prior to its next earnings release.
(1) To facilitate comparability with the prior year periods, the attached financial statements present combined Successor (September 8, 2012 to December 28, 2012) and Predecessor (December 31, 2011 to September 7, 2012) information for the fiscal year ended December 28, 2012. We present the combined information to assist readers in understanding and assessing the trends and significant changes in our results of operations on a comparable basis. The combined presentation does not comply with accounting principles generally accepted in the United States of America, but we believe this combined presentation is appropriate because it provides a more meaningful comparison and more relevant analysis of our results of operations for the fiscal year ended December 28, 2012, compared to the fiscal year ended December 30, 2011, than a presentation of separate historical results for the Predecessor and Successor periods would provide. See our Annual Report on Form 10-K for a presentation of Predecessor and Successor financial statements.
(2) Net debt of $775.7 million is comprised of long-term debt of $814.0 million plus $0.7 million of capital leases less cash and cash equivalents of $17.5 million and $21.5 million of unamortized fair value premium resulting from the acquisition of Interline.
This report has been truncated. For more information, and to view balance sheets, please visit http://ir.interlinebrands.com/sec.cfm.
