Furmanite Corporation Reports Second Quarter 2014 Results
Revenues increase $37.8 million, or 34.9%, to $146.2 million;
Operating income of $8.3 million;
Net income of $4.5 million, $0.12 diluted earnings per share
HOUSTON–(BUSINESS WIRE)–Jul. 30, 2014– Furmanite Corporation (NYSE: FRM) today reported results for the three and six months ended June 30, 2014.
Second Quarter 2014 Results
Revenues for the three months ended June 30, 2014 were $146.2 million, an increase of $37.8 million, or 34.9%, over the $108.4 million reported for the three months ended June 30, 2013. Operating income for the three months ended June 30, 2014 was $8.3 million compared to $11.6 million for the three months ended June 30, 2013, a decrease of $3.3 million. Net income for the 2014 second quarter was $4.5 million, or $0.12 per diluted share, compared to $6.8 million, or $0.18 per diluted share, in the 2013 second quarter.
Six Months Ended June 30, 2014 Results
Revenues for the six months ended June 30, 2014 were $271.2 million, an increase of $73.8 million, or 37.4%, over the $197.4 million reported for the six months ended June 30, 2013. Operating income for the six months ended June 30, 2014 was $10.8 millioncompared to $15.7 million for the six months ended June 30, 2013, a decrease of $4.9 million. Net income for the six months endedJune 30, 2014 was $5.5 million, or $0.15 per diluted share, compared to $9.3 million, or $0.25 per diluted share for the six months ended June 30, 2013.
Additionally, foreign currency had an insignificant, favorable impact on revenues and operating income for the three and six months ended June 30, 2014; however, the Company’s effective income tax rate for those periods still remained slightly higher than the full year expected rate.
Charles R. Cox, CEO of Furmanite Corporation, said, “We are pleased to report that the Orange Way driven trends we have seen in the Americas for over a year now are positively impacting both APAC and EMEA, with revenues and operating income up significantly for the quarter! The market strength that we expected to resume in the Americas after the slow first quarter, however, did not materialize to the extent we were anticipating in our Technical Services business. As a result, we did not achieve adequate leverage on our overall costs, which led to our year-over-year decline in operating income.” Mr. Cox continued, “Thankfully, we have seen a strong start to both third quarter activity and second half turnaround planning.”
Joseph Milliron, Furmanite President and COO, added, “Although we saw good revenue growth in the Americas for our Engineering & Project Solutions segment this quarter, our Technical Services segment was down nearly 10% from the prior year in the region. While our customers continue to express a positive outlook, we saw a number of projects delayed, downsized or canceled in the second quarter. In addition to an encouraging market outlook for the balance of the year, we are also taking proactive steps to expedite the global implementation of our work process improvement initiatives in order to provide lean efficiencies and reduce our overhead burden.” Mr. Milliron continued, “We are extremely pleased to see the progress in APAC and EMEA as the Orange Way strategy of working together as one single global team takes hold and begins to bear fruit in those regions. We look forward to having all three of our regions performing well during the second half of the year.”
Mr. Cox concluded, “We fully recognize that we have a significant hill to climb at this point in the year; however, with what appears to be a strong market in the Americas, the positive trends in APAC and EMEA, combined with our work process improvements and cost management initiatives that we began in the second quarter, we continue to view our previously issued full-year earnings estimates as achievable.”
As of June 30, 2014, the Company’s cash balance was $37.8 million. The Company’s cash balance, along with the $38.7 million of availability under its credit facility, provides the Company liquidity of $76.5 million.
The Company is increasing its 2014 revenue guidance, with annual revenues now expected to be in the range of $560 million to $580 million, and reiterating its previously issued 2014 estimated net income available to common shareholders in the range of $0.45 to $0.50 per diluted share.
Conference Call Details
In conjunction with the earnings release, Furmanite Corporation will host a conference call with Charles R. Cox (CEO), Joseph E. Milliron (President and COO) and Robert S. Muff (Chief Financial Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m.(Central) on Thursday, July 31, 2014.
ABOUT FURMANITE CORPORATION
Furmanite Corporation (NYSE: FRM), founded in 1920, is one of the world’s largest specialty industrial services and specialty engineering project solutions companies, providing world class solutions to customer needs through more than 80 offices on six continents. The Company delivers a wide portfolio of inspection, mechanical and engineering services which help monitor, maintain, renew and construct the global energy, industrial and municipal infrastructures. Furmanite serves a broad range of industry sectors, including refining, offshore, sub-sea, pipeline, power generation, chemical, petrochemical, pulp and paper, water utilities, automotive, mining, marine and steel manufacturing. World Headquarters and Global Support Operations are located in Houston, Texas;Rotterdam, Netherlands; Kendal, United Kingdom and Melbourne, Australia. For more information, visit www.furmanite.com
Certain of the Company’s statements in this press release are not purely historical, and as such are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company’s business, and other risks and uncertainties detailed most recently in this earnings release and the Company’s Form 10-K as of December 31, 2013 filed with the Securities and Exchange Commission. One or more of these factors could affect the Company’s business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements.
|CONSOLIDATED INCOME STATEMENTS|
|(in thousands, except per share data)|
|For the Three Months||For the Six Months|
|Ended June 30,||Ended June 30,|
|Costs and expenses:|
|Depreciation and amortization expense||2,988||2,679||5,977||5,508|
|Selling, general and administrative expense||25,778||22,376||50,510||41,776|
|Total costs and expenses||137,938||96,752||260,361||181,712|
|Interest income and other income (expense), net||(439||)||(181||)||(604||)||148|
|Income before income taxes||7,420||11,165||9,324||15,294|
|Income tax expense||(2,913||)||(4,404||)||(3,801||)||(5,969||)|
|Earnings per common share – Basic||$||0.12||$||0.18||$||0.15||$||0.25|
|Earnings per common share – Diluted||$||0.12||$||0.18||$||0.15||$||0.25|
|Weighted-average number of common and common equivalent shares used in computing earnings per common share:|
|Reconciliation of EBITDA to Net income:|
|Depreciation and amortization expense||(2,988||)||(2,679||)||(5,977||)||(5,508||)|
|Income tax expense||(2,913||)||(4,404||)||(3,801||)||(5,969||)|
1Earnings before interest, taxes, depreciation and amortization (“EBITDA”) presented above is a financial measurement not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). A reconciliation of EBITDA to the most directly comparable GAAP measure is presented above. The Company believes that investors and other users of the financial statements benefit from the presentation of this non-GAAP measurement because it provides an additional metric to evaluate the Company’s core operating performance by excluding the effects of depreciation and amortization expense, interest expense and income tax expense from net income.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|June 30,||December 31,|
|Trade receivables, net||116,727||106,853|
|Other current assets||19,515||21,159|
|Total current assets||211,659||196,695|
|Property and equipment, net||54,335||55,347|
|Total current liabilities||$||68,493||$||62,523|
|Total long-term debt||62,728||63,196|
|Total stockholders’ equity||140,941||133,496|
|Total liabilities and stockholders’ equity||$||297,488||$||285,167|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|For the Six Months Ended
|Depreciation, amortization and other non-cash items||6,202||10,381|
|Working capital changes||(2,899||)||(17,206||)|
|Net cash provided by operating activities||8,826||2,500|
|Acquisition of businesses||–||(905||)|
|Proceeds from sale of assets||3||30|
|Payments on debt||(912||)||(2,227||)|
|Issuance of common stock||32||154|
|Effect of exchange rate changes on cash||279||(1,170||)|
|Increase (decrease) in cash and cash equivalents||4,537||(8,497||)|
|Cash and cash equivalents at beginning of period||33,240||33,185|
|Cash and cash equivalents at end of period||$||37,777||$||24,688|
|BUSINESS SEGMENT DATA|
|Three months ended June 30, 2014|
|Revenues from external customers||$||106,289||$||39,953||$||–||$||146,242|
|Operating income (loss)||$||14,284||$||(590||)||$||(5,390||)||$||8,304|
|Three months ended June 30, 2013|
|Revenues from external customers||$||103,914||$||4,462||$||–||$||108,376|
|Operating income (loss)||$||17,693||$||(9||)||$||(6,060||)||$||11,624|
|Six months ended June 30, 2014|
|Revenues from external customers||$||194,039||$||77,144||$||–||$||271,183|
|Operating income (loss)2||$||21,949||$||(1,347||)||$||(9,780||)||$||10,822|
|Six months ended June 30, 2013|
|Revenues from external customers||$||187,707||$||9,707||$||–||$||197,414|
|Operating income (loss)||$||26,336||$||34||$||(10,668||)||$||15,702|
1 Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.
2 The Engineering & Project Solutions segment includes approximately $0.2 million of costs associated with the integration of the Furmanite Technical Solutions division for the six months ended June 30, 2014.
Source: Furmanite Corporation
Robert S. Muff, (713) 634-7775