JACKSONVILLE, Fla. — Interline Brands, Inc., a distributor and direct marketer of broad-line maintenance, repair and operations products to the facilities maintenance end-market, reported on Monday its sales and earnings for the fiscal quarter ended Sept. 26.
Michael J. Grebe, Chairman and Chief Executive Officer, commented, "We continued to see good momentum and solid growth across our end-markets during the third quarter, with net sales up 5 percent. Our institutional business contributed nicely to our growth driven primarily by our national accounts program, higher cross-selling activity, and strong underlying fundamentals in the market. Our multi-family business also performed well during the quarter despite lower demand for HVAC products caused by milder weather conditions in August. We remain encouraged by the traction we are gaining from our growth initiatives, which has resulted in new customer wins, market share gains and an enhanced competitive position across all of our facilities maintenance end-markets."
Mr. Grebe added, "The pace of our investment spend began to moderate during the quarter, which combined with higher returns on investment and strong execution helped contribute to a double digit EBITDA margin of 10.1 percent. We feel good about the strength of the market fundamentals across all of our end markets and will continue to prudently invest in our business and in opportunities that advance our strategic initiatives and market position."
Sales for the quarter ended September 26, 2014 were $442.4 million, a 5.0 percent increase compared to sales of $421.5 million for the 2013 third quarter. Sales to institutional facilities customers, comprising 50 percent of sales, increased 6.8 percent for the quarter. Sales to our multi-family housing facilities customers, comprising 31 percent of sales, increased 4.8 percent. Sales to our residential facilities customers, comprising 19 percent of sales, increased 1.6 percent.
Gross profit increased $7.4 million, or 5.0 percent, to $154.4 million for the third quarter of 2014, compared to $147.0 million for Q3 2013. As a percentage of sales, gross profit was consistent year-over-year at 34.9 percent.
Selling, general and administrative expenses for the third quarter of 2014 decreased $16.6 million, or 12.7 percent, to $113.5 million from $130.1 million for the third quarter of 2013.
Third quarter 2014 Adjusted EBITDA increased 6.9 percent to $44.6 million compared to $41.8 million in the third quarter of 2013. As a percentage of sales, Adjusted EBITDA improved to 10.1 percent from 9.9 percent in the prior year.
Kenneth D. Sweder, President and Chief Operating Officer, commented, "The ongoing integration of our institutional businesses is progressing as expected. More broadly, our continued investments in key areas like ecommerce and marketing, product merchandising, sales force training and supply chain programs are improving our results and relevance with key customers."
Net income for the third quarter of 2014 was $7.2 million compared to a net loss of $7.2 million for the third quarter of 2013.
Sales for the nine months ended Sept. 26 were $1.26 billion, a 4.3 percent increase compared to sales of $1.21 billion for the nine months ended Sept. 27, 2013. Year-to-date sales to institutional facilities customers, Interline's multi-family housing facilities customers and our residential facilities customers increased 5.2 percent, 5.2 percent and 1.4 percent, respectively, compared to the same period in the prior year. Year-to-date sales breakdown for institutional facilities customers was 50 percent, 30 percent and 20 percent, respectively.
YTD gross profit increased by $18.8 million, or 4.5 percent, to $435.8 million from $417.0 million the same period in 2013. As a percentage of sales, gross profit increased 10 basis points to 34.6 percent from 34.5 percent.
YTD SG&A expenses decreased $5.6 million, or 1.6 percent, to $341.7 million from $347.3 million for the same period last year.
YTD adjusted EBITDA of $106.1 million, or 8.4 percent of sales, increased 4.5 percent.
During the second quarter of 2014 Interline made a strategic marketing decision to rebrand certain trademark assets and begin to consolidate several brands under a new national brand name within its institutional customer end-market. As a result of the rebranding initiative the Company recorded a non-cash write-off of $67.5 million related to the impairment of certain indefinite-lived trademark assets due to a change in the expected useful life of the intangible assets.
