Interline Brands, Inc., a leading distributor and direct marketer of maintenance, repair and operations products ("MRO"), reported earnings of $0.26 per diluted share for the fourth quarter and $1.12 per diluted share for the year ended December 30, 2011.
"2011 was a successful investment year in which we strengthened and expanded our business and our team. We acquired Northern Colorado Paper to extend our leading position in an attractive end-market, increased our sales force in key areas, added our fourth regional replenishment center to enhance scale and fulfillment rates, consolidated a number of distribution centers and expanded our technology and customer capabilities. We also delivered solid financial performance. In particular, adjusted EBITDA increased over 12% to $109.6 million during the year, and we increased our free cash flow over 24% to $53.5 million. In 2012, we expect to further leverage these capabilities and our very strong balance sheet to deliver improved results," commented Michael J. Grebe, Chairman and Chief Executive Officer.
Fourth Quarter 2011 Performance
Sales for the quarter ended December 30, 2011 were $303.0 million, a 2.8% increase compared to sales of $294.8 million in the comparable 2010 period. On an average organic daily basis, sales increased 2.2% for the quarter. Interline's facilities maintenance end-market, which comprised 74% of sales, increased 13.6% on an average daily basis during the fourth quarter, and 3.4% on an average organic daily basis. The professional contractor end-market, which comprised 15% of sales, increased 0.5% on an average daily basis for the quarter. The specialty distributor end-market, which comprised 11% of sales, decreased 1.9% on an average daily basis for the quarter.
Gross profit increased $0.4 million, or 0.3%, to $113.1 million for the fourth quarter of 2011, compared to $112.7 million for the fourth quarter of 2010. As a percentage of sales, gross profit decreased 90 basis points to 37.3% compared to 38.2% for the prior year quarter. This decrease was primarily related to the recent acquisitions of CleanSource, Inc. ("CleanSource") and Northern Colorado Paper ("NCP"), as they had lower gross profit margins.
"Our end-market fundamentals are improving. Multi-family remains strong, we are seeing increased activity from our stable base of institutional customers as we deliver a broader MRO offering, and our residential-focused business is beginning to see some slightly higher demand. These fundamentals, combined with our investments, are delivering growth. For example, excluding the well-publicized impact of the R22 HVAC transition late in 2010, our fourth quarter average organic daily sales were up 4.2% over last year," commented Kenneth D. Sweder, Interline's President and Chief Operating Officer.
Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2011 increased $1.0 million, or 1.2%, to $88.2 million from $87.1 million for the fourth quarter of 2010. As a percentage of sales, SG&A expenses decreased to 29.1% from 29.6% for the fourth quarter of 2010.
Fourth quarter 2011 Adjusted EBITDA of $25.6 million, or 8.4% of sales, decreased 1.9% compared to $26.1 million, or 8.8% of sales, in the fourth quarter of 2010.
Net income for the quarter ended December 30, 2011 increased $6.8 million to $8.6 million compared to $1.7 million in the comparable 2010 period.
Earnings per diluted share for the fourth quarter of 2011 were $0.26 compared to earnings per diluted share of $0.05 for the fourth quarter of 2010. Earnings per diluted share for the fourth quarter of 2010 include a $0.20 per diluted share impact from our November 2010 refinancing.
During the fourth quarter of 2011, the Company repurchased 978,384 shares of its common stock at an aggregate cost of $14.0 million, or an average cost of $14.28 per share.
Fiscal Year 2011 Performance
Sales in 2011 were $1,249.5 million, a 14.9% increase over sales of $1,087.0 million in 2010.
Gross profit increased $48.2 million, or 11.6%, to $462.5 million in 2011, compared to $414.2 million in the prior year. As a percentage of sales, gross profit decreased to 37.0% from 38.1%.
SG&A expenses for the year ended December 30, 2011 were $354.8 million, or 28.4% of sales, compared to $318.8 million, or 29.3% of sales, for the year ended December 31, 2010.
Adjusted EBITDA was $109.6 million, or 8.8% of sales, for the year ended December 30, 2011 compared to $97.4 million, or 9.0% of sales, for the year ended December 31, 2010, representing an increase of 12.5%.
Net income in 2011 increased $9.8 million to $37.7 million compared to $27.9 million in 2010.
Earnings per diluted share were $1.12 for the year ended December 30, 2011, an increase of 35% over earnings per diluted share of $0.83 for the year ended December 31, 2010.
Earnings per diluted share for the year ended December 30, 2011 include a $0.02 per diluted share charge associated with ongoing efforts to enhance the Company's distribution network. Earnings per diluted share for the year ended December 31, 2010 include a $0.20 per diluted share impact from our November 2010 refinancing, a $0.06 per diluted share charge associated with ongoing efforts to enhance the Company's distribution network and a $0.02 per diluted share charge associated with previously announced changes in the Company's executive management.
During 2011, the Company completed the repurchase of $25.0 million worth of its common stock under a previously announced share repurchase program authorized by the Board of Directors. In total, the Company repurchased 1,783,822 shares of its common stock at an average cost of $14.01 per share.
Cash flow from operating activities for the twelve months ended December 30, 2011 was $72.9 million compared to $60.8 million for the twelve months ended December 31, 2010.
Business Outlook
Mr. Grebe stated, "We are encouraged by the improving fundamentals in our markets and the early successes of our investments. In 2012, we are committed to capitalizing on the opportunities in our markets and driving results from our strategic initiatives that will enable us to generate better growth as we further position ourselves as a premier broad-line MRO distributor."
Conference Call
Interline will host a conference call on February 24, 2012 at 9:00 a.m. Eastern Time. Interested parties may listen to the call toll free by dialing 1-800-427-0638 or 1-706-634-1170. A digital recording will be available for replay two hours after the completion of the conference call by calling 1-855-859-2056 or 1-404-537-3406 and referencing Conference I.D. Number 46286253. This recording will expire on March 9, 2012.
For more information or to access the full report, visit the company's website at www.interlinebrands.com.
