Exhibit 99.1
FOR IMMEDIATE RELEASE
DATE: November 5, 2015
ARC GROUP WORLDWIDE, INC. REPORTS FIRST QUARTER FISCAL YEAR 2016 RESULTS
DELAND, FL., November 5, 2015/Marketwired/—ARC Group Worldwide, Inc. (“ARC” and the “Company”) (NASDAQ: ARCW), a leading global provider of advanced manufacturing and 3D printing solutions, today reported its first quarter fiscal year 2016 (September 27, 2015) results.
Fiscal First Quarter Results
Fiscal first quarter revenue was $24.5 million, a decrease of 14.7% compared to the prior year period. The decrease was due to lower sales to European automotive customers and delayed U.S. product launches, as well as macro and customer attrition issues. At the same time, 3DMT Group reported record metal 3D printing revenue during the first fiscal quarter. EBITDA for the fiscal year first quarter was $2.6 million, a decrease of 27.1% compared to the prior year period. EBITDA margin decreased to 10.8%, from 12.6% in the prior year period, primarily related to lower plant level utilization. While near term headwinds remain, Management is optimistic about the medium to long term forecast for the Company.
ARC Announces New Senior Leadership Hire
ARC has hired Mr. Stuart Gold in a newly created position, as Executive Vice President of Global Sales & Marketing for the Company. Mr. Gold brings a strong track record of success in sales and marketing, most recently at a private equity-backed educational technology company, as well as previous leadership roles in sales and marketing at companies such as Cendant, Cisco, and Microsoft.
Jason Young, Chairman and CEO, commented, “While we were disappointed in the performance of the business in the first fiscal quarter, we remain optimistic about the future of ARC. Driving sales is an important focus for the Company, and we are excited to have Mr. Gold join ARC to lead that effort.”
GAAP to Non-GAAP Reconciliation
EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA margin is calculated by dividing EBITDA by sales. We have provided this non-GAAP financial information to aid in better understanding the Company’s performance absent these charges. Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP.
The reconciliation to GAAP is as follows (in thousands):
For the three months ended: | | September 27,
2015 | | September 28,
2014 | |
Net (Loss) Income (GAAP) | | $ | (441 | ) | $ | 232 | |
Plus: Interest Expense, Net | | 1,141 | | 921 | |
Plus: Income Tax (Benefit) Expense | | (426 | ) | 153 | |
Plus: Depreciation and Amortization | | 2,362 | | 2,311 | |
EBITDA (Non-GAAP) | | $ | 2,636 | | $ | 3,617 | |
EBITDA Margin (Non-GAAP) | | 10.8 | % | 12.6 | % |
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EBITDA excludes interest expense, net and income taxes as these items are associated with our capitalization and tax structures. EBITDA also excludes depreciation and amortization expense as these non-cash expenses reflect the impact of prior capital expenditure decisions which may not be indicative of future capital expenditure requirements.
About ARC Group Worldwide, Inc.
ARC Group Worldwide, Inc. (NASDAQ: ARCW), is a leading global advanced manufacturing and 3D printing service provider. The Company offers its customers a compelling portfolio of advanced manufacturing technologies and cutting-edge capabilities to improve the efficiency of traditional manufacturing processes and accelerate their time to market. In addition to being a world leader in metal injection molding, ARC has significant expertise in plastic and metal 3D printing, precision stamping, traditional and clean room plastic injection molding, advanced rapid tooling, thixomolding, lean manufacturing, antennas, hermetic seals, robotics, and flanges and forges.
Forward Looking Statements
This press release may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995, which are based on ARC’s current expectations, estimates and projections about future events. These include, but are not limited to, statements, if any, regarding business plans, pro-forma statements and financial projections, ARC’s ability to expand its services and realize growth. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties, and the general effects of financial, economic, and regulatory conditions affecting our industries. Accordingly, actual results may differ materially. ARC does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For additional factors that may affect future results, please see filings made by ARC with the Securities and Exchange Commission (“SEC”), including its Form 10-K for the fiscal year ended June 30, as well as current reports on Form 8-K filed from time-to-time with the SEC and the disclosures of risks included in the Company’s Form S-1 declared effective by the SEC on April 1, 2015.
CONTACT: Drew M. Kelley
PHONE: (303) 467-5236
Email: InvestorRelations@ArcGroupWorldwide.com
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ARC Group Worldwide, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except for share and per share amounts)
| | For the three months ended | |
| | September 27,
2015 | | September 28,
2014 | |
Sales | | $ | 24,489 | | $ | 28,698 | |
Cost of sales | | 20,005 | | 21,715 | |
Gross profit | | 4,484 | | 6,983 | |
Selling, general and administrative | | 4,213 | | 5,499 | |
Merger expense | | — | | 176 | |
Income from operations | | 271 | | 1,308 | |
Other income (expense), net | | 3 | | (2 | ) |
Interest expense, net | | (1,141 | ) | (921 | ) |
(Loss) income before income taxes | | (867 | ) | 385 | |
Income tax benefit (expense) | | 426 | | (153 | ) |
Net (loss) income | | (441 | ) | 232 | |
Less: Net income attributable to non-controlling interest | | (29 | ) | (56 | ) |
Net (loss) income attributable to ARC Group Worldwide, Inc. | | $ | (470 | ) | $ | 176 | |
| | | | | |
Net (loss) income per common share: | | | | | |
Basic and diluted (loss) income per share | | $ | (0.03 | ) | $ | 0.01 | |
| | | | | |
Weighted average common shares outstanding: | | | | | |
Basic and diluted | | 18,123,883 | | 14,673,205 | |
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ARC Group Worldwide, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share amounts)
| | September 27,
2015 | | June 30, 2015 | |
| | (unaudited) | | | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash | | $ | 4,146 | | $ | 4,821 | |
Accounts receivable, net | | 14,406 | | 15,385 | |
Inventories, net | | 16,982 | | 16,386 | |
Deferred tax assets | | 637 | | 672 | |
Prepaid and other current assets | | 3,263 | | 2,330 | |
Total current assets | | 39,434 | | 39,594 | |
Property and equipment, net | | 42,925 | | 43,813 | |
Goodwill | | 14,801 | | 14,801 | |
Intangible assets, net | | 25,597 | | 26,441 | |
Other | | 1,346 | | 1,374 | |
Total assets | | $ | 124,103 | | $ | 126,023 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 8,350 | | $ | 7,338 | |
Accrued expenses | | 2,149 | | 3,026 | |
Deferred revenue | | 847 | | 991 | |
Bank borrowings, current portion of long-term debt | | 6,348 | | 5,995 | |
Capital lease obligations, current portion | | 882 | | 857 | |
Accrued escrow obligation | | 4,291 | | 4,291 | |
Total current liabilities | | 22,867 | | 22,498 | |
Long-term debt, net of current portion | | 50,207 | | 51,971 | |
Deferred taxes | | 2,217 | | 2,029 | |
Capital lease obligations, net of current portion | | 2,670 | | 2,784 | |
Total liabilities | | 77,961 | | 79,282 | |
Commitments and contingencies | | | | | |
Stockholders’ equity: | | | | | |
Preferred stock, $0.001 par value, 2,000,000 authorized, no shares issued and outstanding | | — | | — | |
Common stock, $0.0005 par value, 250,000,000 shares authorized; 19,037,698 shares issued and 19,029,297 shares issued and outstanding at September 27, 2015, and 18,538,522 shares issued and 18,530,121 shares issued and outstanding at June 30, 2015 | | 5 | | 5 | |
Treasury stock, at cost; 8,401 shares at September 27, 2015 and June 30, 2015 | | (94 | ) | (94 | ) |
Additional paid-in capital | | 29,658 | | 29,751 | |
Retained earnings | | 15,461 | | 15,931 | |
Accumulated other comprehensive loss | | (21 | ) | (58 | ) |
ARC Group Worldwide, Inc. total stockholder equity | | 45,009 | | 45,535 | |
Non-controlling interest | | 1,133 | | 1,206 | |
Total stockholders’ equity | | 46,142 | | 46,741 | |
Total liabilities and stockholders’ equity | | $ | 124,103 | | $ | 126,023 | |
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ARC Group Worldwide, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| | For the three months ended | |
| | September 27,
2015 | | September 28,
2014 | |
Cash flows from operating activities: | | | | | |
Net (loss) income | | $ | (441 | ) | $ | 232 | |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | | | | | |
Depreciation and amortization | | 2,362 | | 2,311 | |
Bad debt expense and other | | 5 | | 29 | |
Deferred income taxes | | 150 | | 23 | |
Changes in working capital: | | | | | |
Accounts receivable | | 974 | | (277 | ) |
Inventory | | (596 | ) | (1,068 | ) |
Prepaid expenses and other assets | | (815 | ) | (600 | ) |
Accounts payable | | 962 | | (2,474 | ) |
Other accrued expenses | | (950 | ) | (558 | ) |
Deferred revenue | | (145 | ) | (164 | ) |
Net cash provided by (used in) operating activities | | 1,506 | | (2,546 | ) |
| | | | | |
Cash flows from investing activities: | | | | | |
Purchase of plant and equipment | | (629 | ) | (2,457 | ) |
Net cash used in investing activities | | (629 | ) | (2,457 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from debt issuance | | — | | 3,500 | |
Repayments of long-term debt and capital lease obligations | | (1,589 | ) | (569 | ) |
Net cash (used in) provided by financing activities | | (1,589 | ) | 2,931 | |
Effect of exchange rates on cash | | 37 | | — | |
Net decrease in cash | | (675 | ) | (2,072 | ) |
Cash, beginning of period | | 4,821 | | 9,384 | |
Cash, end of period | | $ | 4,146 | | $ | 7,312 | |
Supplemental disclosures of cash flow information: | | | | | |
Cash paid for interest | | $ | 1,050 | | $ | 843 | |
Cash paid for income taxes | | $ | 123 | | $ | 25 | |
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