WOODLAND HILLS, CA -- (Marketwire) -- 03/28/13 -- In the news release, "Great American Group Announces Improved Fourth Quarter and Full Year 2012 Financial Results," issued earlier today, please be advised that due to formatting revisions in the Consolidated Statement of Cash Flows for the year ended December 31, 2011, the last two rows should read "20,080" rather than "-" and "15,034" rather than "(5,046)". Complete corrected text follows.
Great American Group Announces Improved Fourth Quarter and Full Year 2012 Financial Results
WOODLAND HILLS, CA -- March 28, 2013 -- Great American Group, Inc.® (OTCBB: GAMR) ("Great American Group" or the "Company"), a leading provider of asset disposition, valuation and appraisal services, today announced financial results for its fourth quarter and full year ended December 31, 2012.
- Fiscal 2012 total revenues of $83.9 million, a 32.1% increase from $63.5 million a year ago
- Fiscal 2012 net income of $3.5 million, versus net income of $0.6 million from a year ago
- Fiscal 2012 diluted earnings per share of $0.12, versus diluted earnings per share of $0.02 from a year ago
"During fiscal 2012 we experienced significant year-over-year improvements in our financial results with a strong increase in revenues and profitability, as business activity across a number of our divisions improved from prior year levels," said Andrew Gumaer, Chief Executive Officer of Great American Group. Mr. Gumaer added, "GA Europe, GA Appraisals, and GA Keen Realty are three of our divisions that experienced significant increases in business activity in 2012 and helped to drive our overall financial performance. The positive contributions from all three divisions helped to diversify Great American's revenues and offset a decline in activity in our US Retail business. We are pleased with the growth that each of these three divisions have experienced over the last several years and hope to continue our investment in their future development."
Fourth Quarter Results
For the fourth quarter, the Company reported total revenues of $30.7 million, a significant increase from revenues of $11.4 million in the fourth quarter of 2011. Revenues from services and fees were $24.5 million, compared to $10.5 million in the same period the prior year. Revenues from sale of goods were $6.3 million, compared to $0.9 million in the fourth quarter of 2011. The increase in total revenues during the quarter was primarily due to increases in the UK Retail Stores segment, as well as the retail liquidation segment that participated in the liquidation of Comet, a 236 store electronics chain in the United Kingdom. The Company's results include the consolidation of Shoon, the UK shoe retailer in which the Company invested last May. Shoon contributed $10.2 million of revenue and net income of $0.5 million to our Company's consolidated results in 2012.
Direct cost of services was $7.8 million, compared to $3.8 million a year ago. The increase in direct cost of services was primarily the result of an increase in costs incurred as result of services performed in connection with the Comet liquidation engagement during the fourth quarter of 2012. Cost of goods sold was $4.3 million in the fourth quarter of 2012, compared to $1.1 million in the fourth quarter of the prior year.
Selling, general and administrative expenses increased to $13.7 million, compared to $6.1 million in the fourth quarter of 2011. The increase in selling, general and administrative expenses was primarily attributed to increases in payroll and operating expenses from the ongoing expansion of the Company's UK operations and the operating expenses of Shoon.
Operating income for the fourth quarter of 2012 was $4.9 million, compared to $0.3 million during the fourth quarter of 2011.
Interest expense during the fourth quarter of 2012 declined to $0.7 million from $1.0 million in the same period a year ago. The decline in interest expense was primarily the result of a decrease in US retail liquidation activity that required borrowings from our line of credit in 2011.
Pretax income was $4.1 million compared to pretax loss of $0.5 million in the fourth quarter of 2011. Net income was $2.4 million, or $0.08 per diluted share, compared to net loss of $0.7 million, or $0.02 per diluted share in the fourth quarter of 2011.
Twelve Months Ended December 31, 2012
For the twelve months of 2012, the Company reported improved total revenues of $83.9 million, compared to $63.5 million in the twelve months of 2011. Revenues from services and fees were $65.6 million, compared to $60.6 million a year ago. Sales of goods were $18.3 million compared to $2.9 million in the same period of 2011.
Total operating expenses were $76.5 million, compared to $56.1 million in 2011. Operating income was $7.4 million, flat compared to the prior year. Pretax income was $6.3 million, compared to $2.7 million during the twelve months of 2011. The Company recorded a provision for income taxes of $1.9 million compared to $2.1 million in the same period of 2011. Net income during the twelve months of 2012 was $3.5 million, or $0.12 per diluted share, compared with $0.6 million, or $0.02 in the same period of 2011.
Adjusted EBITDA for the twelve months of 2012 was $8.7 million compared to $8.5 million in 2011.
Financial Position
At December 31, 2012, the Company had $18.7 million in cash and cash equivalents and $7.9 million of restricted cash, an increase compared to $15.0 million of cash and cash equivalents at December 31, 2011.
Conference Call
The Company will host a conference call today at 4:30 p.m. ET, to discuss results for the fourth quarter ended December 31, 2012. To participate in the event by telephone, please dial (877) 407-0789, 10 minutes prior to the start time (to allow time for registration) and use conference ID # 408841. International callers should dial (201) 689-8562. A digital replay will be available beginning March 28, 2013, at 7:30 p.m. ET, through April 4, 2013, at 11:59 p.m. ET. To access the replay, dial (877) 870-5176 (U.S.), and use passcode 408841. International callers should dial (858) 384-5517 and enter the same passcode.
The call will also be broadcast over the Internet and can be accessed on the Investor Relations section of the Company's website at www.greatamerican.com. A replay of the call will also be available for 90 days on the website.
About Great American Group, Inc. (OTCBB: GAMR)
Great American Group is a leading provider of asset disposition and auction solutions, advisory and valuation services, capital investment, and real estate advisory services for an extensive array of companies. A trusted strategic partner at every stage of the business lifecycle, Great American Group efficiently deploys resources with sector expertise to assist companies, lenders, capital providers, private equity investors and professional service firms in maximizing the value of their assets. The company has in-depth experience within the retail, industrial, real estate, healthcare, energy and technology industries. The corporate headquarters is located in Woodland Hills, Calif. with additional offices in Atlanta, Boston, Charlotte, N.C., Chicago, Dallas, New York, San Francisco and London. For more information, call (818) 884-3737 or visit www.greatamerican.com.
Forward-Looking Statements
This press release may contain forward-looking statements by Great American Group that are not based on historical fact, including, without limitation, statements containing the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions and statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in Great American Group's filings with the SEC, including, without limitation, the risks described in Great American Group's proxy statement/prospectus filed with the SEC on July 19, 2012, and its Annual Report on Form 10-K for the year ended December 31, 2011. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and Great American Group undertakes no duty to update this information.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including Adjusted EBITDA, may be considered non-GAAP financial measures. Great American Group believes this information is useful to investors because it provides a basis for measuring Great American Group's performance against the contingent share earnout provisions in the AAMAC transaction. In addition, Great American Group's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating Great American Group's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by Great American Group may not be comparable to similarly titled amounts reported by other companies.
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
December 31, December 31,
2012 2011
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 18,721 $ 15,034
Restricted cash 7,923 -
Accounts receivable, net 16,591 7,482
Advances against customer contracts 2,441 5,276
Inventory 2,216 -
Goods held for sale or auction 10,196 12,934
Loan receivable - 8,306
Note receivable - related parties 611 3,844
Deferred income taxes 4,114 4,460
Prepaid expenses and other current assets 1,145 1,110
------------- -------------
Total current assets 63,958 58,446
Property and equipment, net 970 916
Goodwill 5,688 5,688
Other intangible assets, net 140 140
Deferred income taxes 9,484 10,504
Other assets 343 664
------------- -------------
Total assets $ 80,583 $ 76,358
============= =============
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities $ 16,886 $ 13,718
Auction and liquidation proceeds payable 864 18
Mandatorily redeemable noncontrolling
interests 2,856 3,408
Revolving credit facility 2,304 1,942
Current portion of long-term debt 1,724 1,724
Notes payable 9,628 11,555
Current portion of capital lease obligation 13 29
------------- -------------
Total current liabilities 34,275 32,394
Capital lease obligation, net of current
portion - 13
Long-term debt, net of current portion 50,483 52,207
------------- -------------
Total liabilities 84,758 84,614
------------- -------------
Commitments and contingencies
Great American Group, Inc. stockholders'
equity (deficit):
Preferred stock, $0.0001 par value;
10,000,000 shares authorized; none issued - -
Common stock, $0.0001 par value; 135,000,000
shares authorized; 30,002,975 and
31,001,609 issued and outstanding as of
December 31, 2012 and 2011, respectively 4 4
Additional paid-in capital 3,082 3,177
Retained earnings (deficit) (7,669) (11,190)
Accumulated other comprehensive income
(loss) (520) (247)
------------- -------------
Total Great American Group, Inc.
stockholders' equity (deficit) (5,103) (8,256)
Noncontrolling interests 928 -
------------- -------------
Total equity (deficit) (4,175) (8,256)
------------- -------------
Total liabilities and equity (deficit) $ 80,583 $ 76,358
============= =============
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
Three Months Ended
December 31, Year Ended December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenues:
Services and fees $ 24,470 $ 10,480 $ 65,624 $ 60,627
Sale of goods 6,260 887 18,312 2,899
----------- ----------- ----------- -----------
Total revenues 30,730 11,367 83,936 63,526
----------- ----------- ----------- -----------
Operating expenses:
Direct cost of
services 7,814 3,845 23,911 19,749
Cost of goods sold 4,301 1,104 12,750 3,391
Selling, general and
administrative 13,679 6,098 39,834 32,946
----------- ----------- ----------- -----------
Total operating
expenses 25,794 11,047 76,495 56,086
----------- ----------- ----------- -----------
Operating income
(loss) 4,936 320 7,441 7,440
Other income (expense):
Other income (expense) - 13 - -
Interest income 15 67 201 476
Loss from equity
investment in Great
American Real Estate,
LLC (165) 153 (120) (369)
Gain from bargain
purchase - - 1,366 -
Interest expense (661) (1,011) (2,612) (4,885)
----------- ----------- ----------- -----------
Income (loss) before
benefit (provision)
for income taxes 4,125 (458) 6,276 2,662
Benefit (provision) for
income taxes (1,549) (196) (1,936) (2,060)
----------- ----------- ----------- -----------
Net income (loss) 2,576 (654) 4,340 602
Net income attributable
to noncontrolling
interests 194 - 819 -
----------- ----------- ----------- -----------
Net income (loss)
attributable to
Great American
Group, Inc. $ 2,382 $ (654) $ 3,521 $ 602
=========== =========== =========== ===========
Basic earnings (loss)
per share $ 0.08 $ (0.02) $ 0.12 $ 0.02
Diluted earnings (loss)
per share $ 0.08 $ (0.02) $ 0.12 $ 0.02
Weighted average basic
shares outstanding 28,682,975 28,681,609 28,682,975 28,539,651
Weighted average diluted
shares outstanding 29,614,252 28,681,609 29,614,252 29,408,466
GREAT AMERICAN GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Year ended December 31,
------------------------
2012 2011
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 4,340 $ 602
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 835 981
Provision for doubtful accounts 108 424
Impairment of goods held for sale or auction 194 159
Share-based payments - 431
Effect of foreign currency on operations (98) (14)
Noncash interest expense - 1,083
Amortization of discount on note payable - 609
Loss on equity investment in Great American
Real Estate, LLC 120 369
Gain from bargain purchase (1,366) -
Loss on disposal of assets 3 4
Deferred income taxes 1,366 1,871
Change in fair value of mandatorily redeemable
noncontrolling interests - (83)
Income allocated to mandatorily redeemable
noncontrolling interests 1,928 3,934
Change in operating assets and liabilities:
Accounts receivable and advances against
customer contracts (6,172) (7,032)
Inventory 1,618 -
Goods held for sale or auction 2,361 224
Loan receivable 8,519 (8,306)
Prepaid expenses and other assets (33) 1,093
Accounts payable and accrued expenses 1,641 3,300
Auction and liquidation proceeds payable 846 (1,694)
----------- -----------
Net cash (used in) provided by operating
activities 16,210 (2,045)
----------- -----------
Cash flows from investing activities:
Acquisition of business (1,246) -
Purchase of noncontrolling interest in
subsidiary (95) -
Purchases of property and equipment (634) (264)
Proceeds from sale of property and equipment 21 -
Decrease (increase) in notes receivable -
related party 3,233 2,706
Equity investment in Great American Real Estate,
LLC (120) (1,202)
Decrease (increase) in restricted cash (7,923) -
----------- -----------
Net cash provided by (used in) investing
activities (6,764) 1,240
----------- -----------
Cash flows from financing activities:
Proceeds from revolving line of credit 362 1,942
Proceeds from note payable - 7,000
Repayment of notes payable and capital lease
obligations (2,138) (7,786)
Repayments of long-term debt (1,724) (1,724)
Payment of employment taxes on vesting of
restricted stock - (132)
Proceeds from formation of noncontrolling
interests 78 -
Distributions to noncontrolling interests (2,466) (3,301)
----------- -----------
Net cash (used in) provided by financing
activities (5,888) (4,001)
Effect of foreign currency on cash 129 (240)
----------- -----------
Net (decrease) increase in cash and cash
equivalents 3,687 (5,046)
Cash and cash equivalents, beginning of year 15,034 20,080
----------- -----------
Cash and cash equivalents, end of year $ 18,721 $ 15,034
=========== ===========
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
(Dollars in thousands)
Three Months Ended
December 31,
------------------------
2012 2011
----------- -----------
Adjusted EBITDA Reconciliation:
Net income (loss) as reported $ 2,382 $ (654)
Adjustments:
Provision (benefit) for income taxes 1,549 196
Interest expense 661 1,011
Interest income (15) (67)
Depreciation and amortization 224 356
Share based compensation - -
----------- -----------
Total EBITDA adjustments 2,419 1,496
----------- -----------
Adjusted EBITDA $ 4,801 $ 842
=========== ===========
Year Ended December 31,
------------------------
2012 2011
----------- -----------
Adjusted EBITDA Reconciliation:
Net income (loss) as reported $ 3,521 $ 602
Adjustments:
Provision (benefit) for income taxes 1,936 2,060
Interest expense 2,612 4,885
Interest income (201) (476)
Depreciation and amortization 835 981
Share based compensation - 431
----------- -----------
Total EBITDA adjustments 5,182 7,881
----------- -----------
Adjusted EBITDA $ 8,703 $ 8,483
=========== ===========
Investor Contacts:
Great American Group
Phil Ahn
SVP, Strategy & Corporate Development
818-884-3737
Addo Communications
Patricia Nir
310-829-5400
