JACKSONVILLE, Fla., May 4 /PRNewswire-FirstCall/ -- Interline Brands, Inc. ("Interline" or the "Company"), a leading distributor and direct marketer of maintenance, repair and operations products, reported earnings for the fiscal quarter ended March 31, 2006. Sales for the first quarter of 2006 increased 14.3% over the same period of the prior year, with one fewer shipping day than in the prior year period. Average daily sales increased 16.1%. Adjusted pro forma earnings per diluted share was $0.27 for the first quarter of 2006, an increase of 13% over adjusted pro forma earnings per diluted share of $0.24 in the same period last year. GAAP earnings per diluted share was $0.26 for the first quarter of 2006 compared to GAAP earnings per diluted share of $0.04 for the first quarter of 2005.
Michael Grebe, Interline's President and Chief Executive Officer, commented, "We are pleased with Interline's continued strong performance during the first quarter of 2006. Business conditions remained favorable in our key customer markets in most regions of the country."
First Quarter 2006 Performance
Sales for the quarter ended March 31, 2006 were $224.7 million, a 14.3% increase over sales of $196.5 million in the comparable 2005 period. Average organic daily sales growth for the first quarter was 10.5%.
"Our professional contractor business continued to favorably impact our top line in the quarter, with organic revenue growth of over fifteen percent," said William Sanford, Executive Vice President and Chief Operating Officer.
Gross profit increased $10.2 million to $85.7 million for the first quarter of 2006, up from $75.5 million in the comparable period of 2005. As a percentage of net sales, gross profit during the quarter declined to 38.1% from 38.4% in the comparable 2005 period, primarily as a result of product mix.
SG&A expenses for the first quarter of 2006 were $61.7 million compared to $53.7 million for the first quarter of 2005. As a percentage of net sales, SG&A expenses were 27.5% compared to 27.3% in the comparable 2005 period. SG&A expenses in the first quarter of 2006 included $0.7 million in share- based compensation expense, which is $0.5 million more than in the prior year quarter. This is a result of the adoption of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment," which requires options to be expensed, and 2006 grants of stock options and restricted stock units.
"Our operations team performed exceptionally well in the quarter," said Mr. Grebe. "We were able to keep operating expenses in line despite rising fuel costs and fluctuating raw material prices."
Operating income was $20.6 million, or 9.2% of sales, for the first quarter of 2006 compared to $18.6 million, or 9.5% of sales, for the first quarter of 2005, a 10.5% increase. Excluding $0.5 million of incremental share-based compensation, operating income for the first quarter of 2006 was 9.4% of sales, and increased 13.0% over the comparable prior year period.
Business Outlook
Mr. Grebe stated, "We are very pleased with our financial performance for the first quarter. Our guidance includes the estimated effect of all share- based compensation expense. Earnings per diluted share for the second quarter are expected to be $0.26 - $0.28, and include $0.02 per share of share-based compensation expense, which is $0.01 per share greater than in the prior year quarter. Earnings per share for fiscal year 2006 are expected to be $1.23 - $1.25, including $0.06 per share in total share-based compensation expense, which is $0.04 higher than in fiscal year 2005."
With the exception of specifying incremental share-based compensation expense, the Company has not changed its annual guidance provided on February 23, 2006.
Conference Call
Interline Brands will host a conference call on May 5, 2006 at 9 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 1-800-642-1687 or 1-706-645-9291 and referencing Conference I.D. Number 8206934. This recording will expire on May 19, 2006.
About Interline
Interline Brands, Inc. is a leading national distributor and direct marketer with headquarters in Jacksonville, Florida. Interline provides maintenance, repair and operations (MRO) products to approximately 160,000 professional contractors, facilities maintenance professionals, and specialty distributors across North America and Central America.
Non-GAAP Financial Information
This press release contains financial information determined by methods other than in accordance with GAAP. Interline's management uses non-GAAP measures in its analysis of the Company's performance. There were certain events which affected the period-over-period comparability of the Company's financial statements as presented in conformity with generally accepted accounting principles. These events include IPO related activities such as the expense associated with the early extinguishment of debt and the timing effect of paying off debt with proceeds from the IPO in the first quarter of 2005, the adoption of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment," and the issuance of stock options and restricted stock units in the first quarter of 2006. In order to present a meaningful comparison, the accompanying table below shows the estimated effect on the Company's net income of recording the IPO transactions as if they had occurred at the beginning of the first quarter of 2005 and not recording the effect of adopting Statement of Financial Accounting Standards No. 123R, "Share-Based Payment," and the issuance of stock options and restricted stock units. Management believes presentations of financial measures excluding the impact of these items provide useful supplemental information in evaluating the financial results of the business. These disclosures should not be viewed as a substitute for operating income or net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors are encouraged to review the reconciliation of these and other non-GAAP financial measures to the comparable GAAP results available in the accompanying table.
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 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 material facilities systems disruptions and shutdowns, the failure to locate, acquire and integrate acquisition candidates, 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 30, 2005. 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, however, to update the information provided today prior to its next earnings release.
CONTACT: Tom Tossavainen
PHONE: 904-421-1441
INTERLINE BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2006 AND DECEMBER 30, 2005
(in thousands, except share and per share data)
March 31, December 30,
2006 2005
ASSETS
Current Assets:
Cash and cash equivalents $16,712 $2,958
Accounts receivable - trade (net
of allowance for doubtful accounts
of $8,475 and $8,150) 116,704 113,271
Accounts receivable - other 9,068 12,163
Inventory 164,621 165,282
Prepaid expenses and other current
assets 6,905 5,498
Deferred income taxes 14,537 13,945
Total current assets 328,547 313,117
Property and equipment, net 29,159 29,865
Goodwill 249,554 249,574
Other intangible assets, net 102,527 104,244
Other assets 9,175 8,969
Total assets $718,962 $705,769
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $68,902 $69,182
Accrued expenses and other current
liabilities 22,484 21,574
Accrued merger expenses 5,064 5,408
Accrued interest 5,989 2,152
Income taxes payable 5,916 1,780
Revolver -- 3,000
Current portion of long-term debt 1,400 1,400
Capital lease - current 452 452
Total current liabilities 110,207 104,948
Long-Term Liabilities:
Deferred income taxes 34,101 34,646
Long-term debt, net of current portion 280,325 280,675
Capital lease - long term 875 958
Total liabilities 425,508 421,227
Commitments and contingencies
Senior preferred stock, $0.01 par
value, 20,000,000 shares authorized,
no shares outstanding as of March 31,
2006 and December 30, 2005 -- --
Stockholders' equity:
Common stock; $0.01 par value,
100,000,000 authorized;
32,220,669 issued and 32,204,192
outstanding as of March 31, 2006
and 32,220,669 issued and
outstanding as of December 30, 2005 322 322
Additional paid-in capital 557,136 558,183
Accumulated deficit (264,596) (273,037)
Accumulated other comprehensive
income 975 992
Deferred compensation -- (1,918)
Treasury stock, at cost, 16,477
shares as of March 31, 2006 (383) --
Total stockholders' equity 293,454 284,542
Total liabilities and
stockholders' equity $718,962 $705,769
INTERLINE BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2006 AND APRIL 1, 2005
(in thousands, except share and per share data)
Three Months Ended
March 31, April 1,
2006 2005
Net sales $224,674 $196,491
Cost of sales 138,966 121,005
Gross profit 85,708 75,486
Operating Expenses:
Selling, general and
administrative expenses 61,678 53,740
Depreciation and amortization 3,445 3,117
Total operating expense 65,123 56,857
Operating income 20,585 18,629
Loss on extinguishment of debt -- (10,340)
Interest expense (6,952) (6,270)
Interest income 60 120
Other income 126 168
Income before income taxes 13,819 2,307
Provision for income taxes 5,378 914
Net income 8,441 1,393
Earnings Per Share:
Basic $0.26 $0.04
Diluted $0.26 $0.04
Weighted-Average Shares Outstanding:
Basic 32,091,133 31,917,175
Diluted 32,584,503 32,313,188
INTERLINE BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2006 AND APRIL 1, 2005
(in thousands)
Three Months Ended
March 31, April 1,
2006 2005
Cash Flows from Operating Activities:
Net income $8,441 $1,393
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 3,445 3,117
Amortization and write-off of
debt issuance costs 418 2,685
Redemption premium on 11.5%
senior subordinated notes -- 8,050
Stock based compensation 716 238
Deferred income taxes (1,117) 356
Provision for doubtful accounts 836 354
Changes in assets and liabilities,
net of business acquired:
Accounts receivable - trade (4,269) (7,528)
Accounts receivable - other 3,095 1,536
Inventory 661 (468)
Prepaid expenses and other current
assets (1,407) (1,888)
Other assets (206) (543)
Accounts payable (280) 665
Accrued expenses and other current
liabilities 527 (1,478)
Accrued merger expenses (64) (111)
Accrued interest 3,837 2,810
Income taxes payable 4,136 (6,033)
Net cash provided by operating
activities 18,769 3,155
Cash Flows from Investing Activities:
Purchase of property and equipment,
net (1,527) (1,543)
Purchase of businesses, net of cash
acquired (193) (1,009)
Net cash used in investing
activities (1,720) (2,552)
Cash Flows from Financing Activities:
(Decrease) increase in revolver, net (3,000) 17,000
Repayment of long-term debt (350) (70,250)
Payment of redemption premium on
11.5% senior subordinated notes -- (8,050)
Initial public offering costs -- (578)
Proceeds from exercise of
underwriters over-allotment options -- 2,333
Excess tax benefits from stock-based
compensation 155 --
Payments on capital lease obligations (83) --
Net cash used in financing
activities (3,278) (59,545)
Effect of exchange rate changes on
cash and cash equivalents (17) (38)
Net increase (decrease) in cash and
cash equivalents 13,754 (58,980)
Cash and cash equivalents at
beginning of period 2,958 69,178
Cash and cash equivalents at end of
period $16,712 $10,198
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $2,697 $1,611
Income taxes (net of refunds) $2,246 $6,595
Schedule of Non-Cash Investing and
Financing Activities:
Treasury stock acquired with accrued
expenses and other current
liabilities $383 $--
Adjustments to liabilities assumed
and goodwill on businesses acquired $20 $--
INTERLINE BRANDS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
THREE MONTHS ENDED MARCH 31, 2006 AND APRIL 1, 2005
(In thousands, except share and per share data)
Three Months Ended
March 31, April 1,
2006 2005
Income before income taxes (GAAP) $13,819 $2,307
Add back the following items:
Incremental share-based compensation
expense 469 --
Loss on early extinguishment of debt -- 10,340
Adjust interest expense associated
with use of IPO proceeds to repay or
redeem portions of the previously
existing term loan and outstanding
11.5% notes and elimination of
amortization of deferred financing fees -- 456
Adjusted pro forma income before
income taxes 14,288 13,103
Income taxes 5,558 5,189
Adjusted pro forma net income $8,730 $7,914
Adjusted pro forma earnings per share - basic $0.27 $0.25
Adjusted pro forma earnings per share -
diluted $0.27 $0.24
Shares outstanding - basic 32,091,133 31,917,175
Shares outstanding - diluted 32,584,503 32,313,188
Incremental share-based compensation expense represents higher expense
than in the comparable 2005 period associated with the adoptions of
Statement of Financial Accounting Standards No. 123R, "Share-Based
Payment," which requires options to be expensed, and our 2006 grants of
stock options and restricted stock units.
Adjusted Operating Income Three Months Ended
March 31, April 1,
2006 2005
Net Sales $224,674 $196,491
Operating Income 20,585 18,629
Additional stock-based compensation
expense 469 --
Adjusted Operating Income $21,054 $18,629
Adjusted Operating Income percentage
of net sales 9.4% 9.5%
Daily Sales Calculations Three Months Ended
March 31, April 1,
2006 2005 % Variance
Net Sales $224,674 $196,491 14.3%
Less: Acquisition $(10,962)
Organic Sales $213,712 $196,491 8.8%
Daily Sales:
Ship Days 64 65
Average Daily Sales $3,511 $3,023 16.1%
Average Organic Daily Sales $3,339 $3,023 10.5%
Average daily sales are defined as sales for a period of time divided by
the number of shipping days in that period of time.
Average organic daily sales are defined as sales for a period of time
divided by the number of shipping days in that period of time excluding
any sales from acquisitions made subsequent to the beginning of the prior
year period.
Three Months Ended
March 31, April 1,
2006 2005
Adjusted EBITDA:
Net income (GAAP) $8,441 $1,393
Interest expense 6,952 6,270
Interest income (60) (120)
Loss on extinguishment of debt -- 10,340
Additional stock-based compensation 469 --
Provision for income taxes 5,378 914
Depreciation and amortization 3,445 3,117
Adjusted EBITDA $24,625 $21,914
Adjusted EBITDA is presented herein because we believe it to be relevant
and useful information to our investors because it is used by our
management to evaluate the operating performance of our business and
compare our operating performance with that of our competitors.
Management also uses Adjusted EBITDA for planning purposes, including the
preparation of annual operating budgets, to determine appropriate levels
of operating and capital investments. Adjusted EBITDA excludes certain
items, including loss on extinguishment of debt and additional stock-
based compensation, which we believe are not indicative of our core
operating results. We therefore utilize Adjusted EBITDA as a useful
alternative to net income as an indicator of our operating performance.
However, Adjusted EBITDA is not a measure of financial performance under
GAAP and Adjusted EBITDA should be considered in addition to, but not as
a substitute for, other measures of financial performance reported in
accordance with GAAP, such as net income. While we believe that some of
the items excluded from Adjusted EBITDA are not indicative of our core
operating results, these items do impact our income statement, and
management therefore utilizes Adjusted EBITDA as an operating performance
measure in conjunction with GAAP measures such as net income and gross
margin.
