MP MENASHE,
Revenue in the third quarter of 2016 increased by 5.5% to a new record
of
Gross margin in the third quarter was 40.5%, an increase of a full percentage point as compared to a margin of 39.5% in the same period in the prior year. The improved margin was primarily attributable to lower raw material costs.
Operating expenses in the third quarter were
Operating income in the third quarter was
Adjusted EBITDA, which excludes share-based compensation, legal
settlements and loss contingencies expenses and non-recurring items, was
Finance expense in the third quarter was
The Company's reported net income attributable to controlling interest
increased by 12.8% to
The Company's balance sheet as of
Guidance
The Company reduced its 2016 annual guidance to reflect the third
quarter results and the continued organizational and operational
transition in
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About
Non-GAAP Financial Measures
The non-GAAP measures presented by the Company should be considered in addition to, and not as a substitute for, comparable GAAP measures. A reconciliation of GAAP net income attributable to controlling interest to adjusted net income attributable to controlling interest and net income to Adjusted EBITDA are provided in the schedules within this release. The Company provides these non-GAAP financial measures because it believes that they present a better measure of the Company's core business and management uses the non-GAAP measures internally to evaluate the Company's ongoing performance. Accordingly, the Company believes that they are useful to investors in enhancing an understanding of the Company's operating performance.
Forward-Looking Statements
Information provided in this press release may contain statements
relating to current expectations, estimates, forecasts and projections
about future events that are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally relate to the Company's plans,
objectives and expectations for future operations, including its
projected results of operations and the expected timing of expanding its
manufacturing facilities. These forward-looking statements are based
upon management's current estimates and projections of future results or
trends. Actual results may differ materially from those projected as a
result of certain risks and uncertainties. These factors include, but
are not limited to: the strength of the home renovation and construction
sectors; economic conditions within any of our key existing markets;
actions by our competitors; changes in raw material prices, particularly
polymer resins and pigments; fluctuations in currency exchange rates;
the success of our expansion efforts in
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Condensed consolidated balance sheets | ||||||||||
As of | ||||||||||
|
September |
|
||||||||
(Unaudited) | (Audited) | |||||||||
ASSETS |
||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents and short-term bank deposits | $ | 74,542 | $ | 62,807 | ||||||
Trade receivables, net | 73,873 | 59,185 | ||||||||
Other accounts receivable and prepaid expenses | 37,880 | 32,230 | ||||||||
Inventories | 102,005 | 95,479 | ||||||||
Total current assets | 288,300 | 249,701 | ||||||||
LONG-TERM ASSETS: | ||||||||||
Severance pay fund | 3,418 | 3,296 | ||||||||
Other receivables long-term | 7,912 | 8,603 | ||||||||
Total long-term assets | 11,330 | 11,899 | ||||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 222,100 | 225,438 | ||||||||
OTHER ASSETS | 5,123 | 6,883 | ||||||||
|
36,548 | 35,821 | ||||||||
Total assets | $ | 563,401 | $ | 529,742 | ||||||
LIABILITIES AND EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Short-term bank credit | $ | 8,667 | $ | 3,241 | ||||||
Trade payables | 44,958 | 46,382 | ||||||||
Related party and other loan | 3,387 | 3,251 | ||||||||
Accrued expenses and other liabilities | 29,463 | 27,986 | ||||||||
Total current liabilities | 86,475 | 80,860 | ||||||||
LONG-TERM LIABILITIES: | ||||||||||
Long-term loan and financing leaseback from a related party | 8,398 | 8,472 | ||||||||
Legal settlements and loss contingencies long-term | 12,684 | 11,190 | ||||||||
Accrued severance pay | 4,370 | 4,309 | ||||||||
Long-term warranty provision | 1,022 | 934 | ||||||||
Deferred tax liabilities, net | 14,223 | 14,767 | ||||||||
Share-based payment | 30 | 148 | ||||||||
Total long-term liabilities | 40,727 | 39,820 | ||||||||
REDEEMABLE NON-CONTROLLING INTEREST | 10,702 | 8,841 | ||||||||
EQUITY: | ||||||||||
Ordinary shares | 370 | 370 | ||||||||
|
(39,430 | ) | - | |||||||
Additional paid-in capital | 145,772 | 142,765 | ||||||||
Accumulated other comprehensive (loss) income |
280 | (1,892 | ) | |||||||
Retained earnings | 318,505 | 258,978 | ||||||||
Total equity | 425,497 | 400,221 | ||||||||
Total liabilities and equity | $ | 563,401 | $ | 529,742 | ||||||
|
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Condensed consolidated statements of income | ||||||||||||||||||||
Three months ended |
Nine months ended |
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|
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
Revenues | $ | 144,306 | $ | 136,816 | $ | 403,568 | $ | 372,154 | ||||||||||||
Cost of revenues | 85,845 | 82,729 | 242,514 | 220,147 | ||||||||||||||||
Gross profit | 58,461 | 54,087 | 161,054 | 152,007 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 929 | 630 | 2,578 | 2,059 | ||||||||||||||||
Marketing and selling | 17,967 | 14,116 | 51,775 | 44,474 | ||||||||||||||||
General and administrative | 10,370 | 9,904 | 30,251 | 27,012 | ||||||||||||||||
Legal settlements and loss contingencies, net | 1,020 | 4,719 | 2,753 | 4,719 | ||||||||||||||||
Total operating expenses | 30,286 | 29,369 | 87,357 | 78,264 | ||||||||||||||||
Operating income | 28,175 | 24,718 | 73,697 | 73,743 | ||||||||||||||||
Finance expenses, net | 1,120 | 106 | 2,318 | 2,397 | ||||||||||||||||
Income before taxes on income | 27,055 | 24,612 | 71,379 | 71,346 | ||||||||||||||||
Taxes on income | 4,282 | 4,193 | 10,213 | 11,280 | ||||||||||||||||
Net income | $ | 22,773 | $ | 20,419 | $ | 61,166 | $ | 60,066 | ||||||||||||
Net income attributable to non-controlling interest | (430 | ) | (613 | ) | (1,639 | ) | (1,010 | ) | ||||||||||||
Net income attributable to controlling interest |
$ | 22,343 | $ | 19,806 | $ | 59,527 | $ | 59,056 | ||||||||||||
Basic net income per ordinary share | $ | 0.65 | $ | 0.56 | $ | 1.71 | $ | 1.68 | ||||||||||||
Diluted net income per ordinary share | $ | 0.65 | $ | 0.56 | $ | 1.70 | $ | 1.67 | ||||||||||||
Weighted average number of ordinary shares used in |
34,412,294 |
35,294,755 |
34,867,064 |
35,238,001 |
||||||||||||||||
Weighted average number of ordinary shares used in |
34,450,561 |
35,464,130 |
34,927,479 |
35,468,422 |
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|
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Selected Condensed consolidated statements of cash flows (Unaudited) | ||||||||||
Nine months ended |
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|
2016 | 2015 | ||||||||
Cash flows from operating activities: |
||||||||||
Net income | $ | 61,166 | $ | 60,066 | ||||||
Adjustments required to reconcile net income to net cash provided
by |
||||||||||
Depreciation and amortization | 21,043 | 15,628 | ||||||||
Share-based compensation expense | 2,533 | 608 | ||||||||
Accrued severance pay, net | (74 | ) | 191 | |||||||
Changes in deferred tax, net | (5,975 | ) | (2,116 | ) | ||||||
Capital loss | 27 | - | ||||||||
Legal settlements and loss contingencies, net |
2,753 | 4,719 | ||||||||
Compensation paid by a shareholder | 266 | - | ||||||||
Increase in trade receivables | (13,595 | ) | (4,944 | ) | ||||||
Increase in other accounts receivable and prepaid expenses | (1,027 | ) | (2,288 | ) | ||||||
Increase in inventories | (3,715 | ) | (14,078 | ) | ||||||
Decrease in trade payables | (413 | ) | (9,484 | ) | ||||||
Increase (decrease) in warranty provision | 30 | (506 | ) | |||||||
Increase in accrued expenses and other liabilities including related party | 2,613 | 3,637 | ||||||||
Net cash provided by operating activities | 65,632 | 51,433 | ||||||||
Cash flows from investing activities: |
||||||||||
Purchase of property, plant and equipment | (16,961 | ) | (57,542 | ) | ||||||
Proceeds from sale of property, plant and equipment | 21 | - | ||||||||
Decrease in long term deposits | 27 | 131 | ||||||||
Net cash used in investing activities (*) | (16,913 | ) | (57,411 | ) | ||||||
Cash flows from financing activities: |
||||||||||
Dividend paid by subsidiary to non-controlling interest | (243 | ) | - | |||||||
Changes in short-term bank credit and loans, net | 5,121 | 6,770 | ||||||||
Repayment of a financing leaseback related to Bar-Lev transaction | (826 | ) | (819 | ) | ||||||
Purchase of treasury shares at cost | (39,430 | ) | - | |||||||
Net cash provided by (used in) financing activities | (35,378 | ) | 5,951 | |||||||
Effect of exchange rate differences on cash and cash equivalents | (1,606 | ) | (1,706 | ) | ||||||
Increase in cash and cash equivalents and short-term bank deposits | 11,735 | (1,733 | ) | |||||||
Cash and cash equivalents and short-term bank deposits at
beginning of |
62,807 |
54,327 |
||||||||
Cash and cash equivalents and short-term bank deposits at end of
the |
$ | 74,542 | $ | 52,594 | ||||||
Non - cash investing: |
||||||||||
Changes in trade payables balances related to purchase of fixed assets | (1,126 | ) | 2,115 | |||||||
(*) Cash used in investing activities does not include changes in bank deposits as such balance is included in the "cash and cash equivalents and short term bank deposits" line at the beginning and end of the period. |
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Three months ended |
Nine months ended |
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|
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Unaudited) |
||||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA: | ||||||||||||||||
Net income | $ | 22,773 | $ | 20,419 | $ | 61,166 | $ | 60,066 | ||||||||
Finance expenses, net | 1,120 | 106 | 2,318 | 2,397 | ||||||||||||
Taxes on income | 4,282 | 4,193 | 10,213 | 11,280 | ||||||||||||
Depreciation and amortization | 7,074 | 6,030 | 21,043 | 15,628 | ||||||||||||
Legal settlements and loss contingencies, net (a) | 1,020 | 4,719 | 2,753 | 4,719 | ||||||||||||
Compensation paid by a shareholder (b) | 266 | - | 266 | - | ||||||||||||
Share-based compensation expense (c) | 986 | 745 | 2,533 | 1,146 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 37,521 | $ | 36,212 | $ | 100,292 | $ | 95,236 | ||||||||
(a) | Consists of legal settlements expenses and loss contingencies, net, related to individual silicosis claims. | |
(b) | One time bonus paid by a shareholder to Company's employees. | |
(c) | Share-based compensation includes expenses related to stock options and restricted stock units granted to employees of the Company. | |
In addition, includes expenses for phantom awards granted and related payroll expenses as a result of exercises. | ||
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Three months ended |
Nine months ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
(Unaudited) |
|||||||||||||||||
Reconciliation of net income attributable to controlling |
|||||||||||||||||
Net income attributable to controlling interest | $ | 22,343 | $ | 19,806 | $ | 59,527 | $ | 59,056 | |||||||||
Legal settlements and loss contingencies, net (a) | 1,020 | 4,719 | 2,753 | 4,719 | |||||||||||||
Compensation paid by a shareholder (b) | 266 | - | 266 | - | |||||||||||||
Share-based compensation expense (c) | 986 | 745 | 2,533 | 1,146 | |||||||||||||
Tax adjustment (d) | - | - | (1,158 | ) | - | ||||||||||||
Total adjustments | 2,272 | 5,464 | 4,394 | 5,865 | |||||||||||||
Less tax on non-tax adjustments (e) | 360 | 866 | 884 | 927 | |||||||||||||
Total adjustments after tax | 1,912 | 4,598 | 3,509 | 4,938 | |||||||||||||
Adjusted net income attributable to controlling interest (Non-GAAP) | $ | 24,255 | $ | 24,404 | $ | 63,036 | $ | 63,994 | |||||||||
Adjusted diluted EPS (f) | $ | 0.70 | $ | 0.69 | $ | 1.80 | $ | 1.80 | |||||||||
(a) | Consists of legal settlements expenses and loss contingencies, net, related to individual silicosis claims. | |
(b) | One time bonus paid by a shareholder to Company's employees. | |
(c) |
Share-based compensation includes expenses related to stock options and restricted stock units granted to employees of the Company. In addition, includes expenses for phantom awards granted and the related payroll expenses as a result of exercises. |
|
(d) | Tax adjustment as a result of tax settlement with the Israeli tax authorities. | |
(e) |
Tax adjustments for the three and nine months ended |
|
(f) |
In calculating adjusted diluted (Non-GAAP) EPS, the diluted weighted average number of shares outstanding excludes the effects of share-based compensation expense in accordance with FASB ASC 718. |
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Geographic breakdown of revenues by region (Unaudited) | ||||||||||||||||
Three months ended |
Nine months ended |
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|
2016 | 2015 | 2016 | 2015 | ||||||||||||
|
$ | 58,379 | $ | 61,685 | $ | 167,634 | $ | 166,792 | ||||||||
|
35,637 | 29,258 | 94,848 | 79,603 | ||||||||||||
|
22,379 | 19,804 | 64,280 | 52,860 | ||||||||||||
|
11,316 | 10,632 | 32,729 | 30,054 | ||||||||||||
|
6,985 | 7,067 | 20,407 | 18,469 | ||||||||||||
Rest of World | 9,610 | 8,371 | 23,670 | 24,376 | ||||||||||||
$ | 144,306 | $ | 136,816 | $ | 403,568 | $ | 372,154 |
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