UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 14, 2018
NINE ENERGY SERVICE, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-38347 | 80-0759121 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
2001 Kirby Drive, Suite 200
Houston, Texas 77019
(Address of Principal Executive Offices)
(281) 730-5100
(Registrants Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition |
On May 14, 2018, Nine Energy Service, Inc. (the Company) issued a press release providing information on its results of operations for the first quarter ended March 31, 2018. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information under this Item 2.02 and in Exhibit 99.1 in this Current Report on Form 8-K are being furnished and shall not be deemed filed for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information under this Item 2.02 and in Exhibit 99.1 in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | Nine Energy Service, Inc. press release dated May 14, 2018. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 14, 2018
NINE ENERGY SERVICE, INC. | ||
By: | /s/ Theodore R. Moore | |
Theodore R. Moore | ||
Senior Vice President and General Counsel |
3
Exhibit 99.1
Nine Energy Service Announces First Quarter 2018 Results
| Revenue, Net Income and Adjusted EBITDAA of $173.8 million, $1.7 million and $24.1 million, respectively for the first quarter of 2018 |
| First quarter 2018 Revenue and Adjusted EBITDA increased approximately 13% and 29%, respectively over the fourth quarter 2017 |
| First quarter 2018 ROICB of 3% |
HOUSTON, May 14, 2018 Nine Energy Service, Inc. (Nine or the Company) (NYSE: NINE) reported first quarter 2018 revenues of $173.8 million, net income of $1.7 million and adjusted EBITDA of $24.1 million. First quarter 2018 revenues increased approximately 13% as compared to the fourth quarter 2017 revenues of $154.3 million. For the first quarter of 2018, the Company reported net income of $1.7 million, or $0.08 per diluted share. This compares to a net loss of $(29.8) million, or $(1.89) per diluted share in the fourth quarter of 2017, which included a $35.5 million goodwill and intangible impairment. The Company reported first quarter 2018 adjusted EBITDA of $24.1 million, an increase of approximately 29% compared to fourth quarter 2017 adjusted EBITDA of $18.7 million, and represented the fifth sequential quarterly increase. The Company had provided first quarter 2018 revenue guidance between $166.0 and $168.0 million and adjusted EBITDA guidance between $22.0 and $24.0 million, with actual results outperforming the midpoint of first quarter 2018 revenue guidance by approximately 4% and the midpoint of first quarter adjusted EBITDA guidance by approximately 5%. For the first quarter of 2018, the Company generated an ROIC of 3%.
Nines President and Chief Executive Officer, Ann Fox, commented, Nine continues to capitalize and execute on the improving macro backdrop, increasing adjusted EBITDA by 29% quarter over quarter and generating $17.3 million in cash flow from operations despite a use of net working capital due to growing revenue by 13%. North American land activity and completion complexity continue to increase, allowing the Company to differentiate through wellsite execution and a comprehensive technology portfolio. By having both the conveyance and the tools, we provide a differentiated and sustainable value proposition to our customers by driving efficiencies and increasing production.
The Completion Solutions Segment continues to drive growth for Nine. Completion Solutions revenue grew approximately 15% quarter over quarter despite no additional equipment coming online during the first quarter of 2018, but rather was driven by a significant increase in utilization and profitability across all service lines. We anticipate this trend will continue into the second quarter. Nines Scorpion Plugs continue to gain market share and we are still running field trials for the EON XLR frac sleeve and casing flotation tools.
We remain very optimistic on North American shale as macro fundamentals continue to improve. Our disciplined approach to deploying capital has allowed us to navigate the labor and supply chain constraints within the industry and maintain our service execution at the wellsite, while still delivering substantial financial growth. ROIC remains at the forefront for measuring
Company performance and guiding Management decision-making. Our 8% ROIC target for 2018 is on track. We are anticipating our sixth sequential quarter of revenue and adjusted EBITDA growth into the second quarter of 2018 and remain focused on supplementing our completions technology portfolio through our three-pronged strategy.
Business Segment Results
Completion Solutions
During the first quarter of 2018, the Companys Completion Solutions segment, which includes the Companys cementing, completion tools, wireline and coiled tubing services reported revenues of $154.6 million compared to fourth quarter 2017 revenues of $134.7 million, representing an approximate 15% increase. For the first quarter 2018, Completion Solutions reported adjusted gross profitc of $33.2 million compared to fourth quarter 2017 adjusted gross profit of $25.8 million, representing an approximate 29% increase.
Production Solutions
During the first quarter of 2018, the Companys Production Solutions segment, which includes well services, generated revenues of $19.2 million compared to fourth quarter 2017 revenues of $19.6 million, representing an approximate 2% decrease. For the first quarter 2018, Production Solutions reported adjusted gross profit of $2.4 million compared to fourth quarter 2017 adjusted gross profit of $2.9 million, representing an approximate 19% decrease.
Other Financial Information
During the first quarter of 2018, the Company reported selling, general and administrative expense of $15.4 million, compared to $11.9 million for the fourth quarter of 2017. Depreciation and amortization expense (D&A) in the first quarter of 2018 was $15.0 million, compared to $15.3 million for the fourth quarter of 2017.
During the first quarter of 2018, the Companys effective tax rate was 5%. The effective income tax rate for the quarter was primarily attributable to changes in pre-tax book income and valuation allowance positions as well as tax liability in states where income is expected to exceed available net operating losses.
Liquidity
During the first quarter of 2018, the Company reported net cash provided by operating activities of $17.3 million, compared to $1.9 million for the fourth quarter of 2017.
As of March 31, 2018, Nines cash and cash equivalents were $72.9 million with $50.0 million of revolver capacity, $49.4 million of which is currently available, resulting in a total liquidity position of $122.3 million as of March 31, 2018.
ABCSee end of press release for definitions
Conference Call Information
The call is scheduled for Monday, May 14, 2018 at 10:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the Nine Energy Service Earnings Call. Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call.
For those who cannot listen to the live call, a telephonic replay of the call will be available through May 28, 2018 and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13679364.
About Nine Energy Service
Nine Energy Service is an oilfield services company that offers completion and production solutions throughout North America. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Strategically located throughout the U.S. and Canada, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and throughout Canada.
For more information on the Company, please visit Nines website at nineenergyservice.com.
Forward Looking Statements
| The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the general nature of the energy service industry risks related to economic conditions; volatility of crude oil and natural gas commodity prices; a decline in demand for our services, including due to declining commodity prices; our ability to implement price increases or maintain pricing of our core services; the loss of, or interruption or delay in operations by, one or more significant customers; the loss of or interruption in operations of one or more key suppliers; the adequacy of our capital resources and liquidity; our ability to implement new technologies and services; the incurrence of significant costs and liabilities resulting from litigation; the loss of, or inability to attract, key personnel; and other factors to be discussed in the Business and Risk Factors sections of the Companys Annual Report on Form 10-K for the year ended December 31, 2017 and the subsequently filed Quarterly Reports on Form 10-Q and Periodic |
Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. |
Nine Energy Service Investor Contact:
Heather Schmidt
Director, Investor Relations and Marketing
(281) 730-5113
investors@nineenergyservice.com
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Revenues |
$ | 173,807 | $ | 154,280 | ||||
Cost and expenses |
| |||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
138,227 | 125,566 | ||||||
General and administrative expenses |
15,428 | 11,924 | ||||||
Depreciation |
13,109 | 13,096 | ||||||
Amortization of intangibles |
1,900 | 2,198 | ||||||
Impairment of intangibles |
| 3,800 | ||||||
Impairment of goodwill |
| 31,530 | ||||||
Loss on equity method investment |
75 | 113 | ||||||
Loss (gain) on sale of property and equipment |
370 | (105 | ) | |||||
|
|
|
|
|||||
Income (loss) from operations |
4,698 | (33,842 | ) | |||||
|
|
|
|
|||||
Other expense |
| |||||||
Interest expense |
2,930 | 3,923 | ||||||
|
|
|
|
|||||
Total other expense |
2,930 | 3,923 | ||||||
|
|
|
|
|||||
Income (loss) before income taxes |
1,768 | (37,765 | ) | |||||
Provision (benefit) for income taxes |
93 | (7,954 | ) | |||||
|
|
|
|
|||||
Net income (loss) |
$ | 1,675 | $ | (29,811 | ) | |||
Net income (loss) per share |
| |||||||
Basic |
$ | 0.08 | $ | (1.89 | ) | |||
Diluted |
$ | 0.08 | $ | (1.89 | ) | |||
Weighted average shares outstanding |
| |||||||
Basic |
21,902,519 | 15,773,015 | ||||||
Diluted |
22,069,353 | 15,773,015 | ||||||
Other comprehensive income, net of tax |
||||||||
Foreign currency translation adjustments, net of tax of $0 and $0 |
$ | (394 | ) | $ | (6 | ) | ||
|
|
|
|
|||||
Total other comprehensive loss, net of tax |
(394 | ) | (6 | ) | ||||
|
|
|
|
|||||
Total comprehensive income (loss) |
$ | 1,281 | $ | (29,817 | ) |
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
March 31, 2018 |
December 31, 2017 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 72,900 | $ | 17,513 | ||||
Accounts receivable, net |
116,080 | 99,565 | ||||||
Inventories |
21,748 | 22,230 | ||||||
Prepaid expenses and other |
6,859 | 7,929 | ||||||
Total current assets |
217,587 | 147,237 | ||||||
Property and equipment, net |
253,066 | 259,039 | ||||||
Goodwill |
93,756 | 93,756 | ||||||
Intangible assets, net |
61,645 | 63,545 | ||||||
Other long-term assets |
1,181 | 4,806 | ||||||
Notes receivable from shareholders |
10,501 | 10,476 | ||||||
|
|
|
|
|||||
Total assets |
$ | 637,736 | $ | 578,859 | ||||
|
|
|
|
|||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities |
||||||||
Long-term debt, current portion |
$ | 2,774 | $ | 241,509 | ||||
Accounts payable |
36,446 | 29,643 | ||||||
Accrued expenses |
22,383 | 14,687 | ||||||
Income taxes payable |
721 | 581 | ||||||
|
|
|
|
|||||
Total current liabilities |
62,324 | 286,420 | ||||||
Long-term liabilities |
||||||||
Long-term debt |
110,936 | | ||||||
Deferred taxes |
4,970 | 5,017 | ||||||
Other long term liabilities |
66 | 64 | ||||||
|
|
|
|
|||||
Total liabilities |
178,296 | 291,501 | ||||||
|
|
|
|
|||||
Stockholders equity |
||||||||
Common stock (120,000,000 shares authorized at $.01 par value; 24,278,857 |
239 | 158 | ||||||
Additional paid-in capital |
555,685 | 384,965 | ||||||
Accumulated other comprehensive income (loss) |
(4,078 | ) | (3,684 | ) | ||||
Retained earnings (accumulated deficit) |
(92,406 | ) | (94,081 | ) | ||||
Total stockholders equity |
459,440 | 287,358 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity |
$ | 637,736 | $ | 578,859 | ||||
|
|
|
|
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Cash flows from operating activities |
||||||||
Net Income (loss) |
$ | 1,675 | $ | (29,811 | ) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities |
||||||||
Depreciation |
13,109 | 13,096 | ||||||
Amortization of intangibles |
1,900 | 2,198 | ||||||
Amortization of deferred financing costs |
853 | 403 | ||||||
Provision for doubtful accounts |
(270 | ) | 183 | |||||
Deferred tax benefit |
(47 | ) | (8,439 | ) | ||||
Impairment of goodwill |
| 31,530 | ||||||
Impairment of intangibles |
| 3,800 | ||||||
Provision for inventory obsolescence |
| 336 | ||||||
Stock-based and deferred compensation expense |
2,240 | 1,188 | ||||||
Loss (gain) on sales of assets |
370 | (105 | ) | |||||
Loss (gain) on revaluation of contingent consideration |
1,063 | (6 | ) | |||||
Loss on equity method investment |
75 | 113 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions |
| |||||||
Accounts receivable |
(16,387 | ) | (5,240 | ) | ||||
Inventories |
406 | (1,652 | ) | |||||
Prepaid expenses and other current assets |
757 | 1,761 | ||||||
Accounts payable and accrued expenses |
11,357 | (6,521 | ) | |||||
Income taxes receivable/payable |
140 | 581 | ||||||
Other assets and liabilities |
66 | (1,519 | ) | |||||
|
|
|
|
|||||
Net cash provided by operating activities |
17,307 | 1,896 | ||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Proceeds from sales of assets |
1,096 | 374 | ||||||
Proceeds from property and equipment casualty losses |
| 203 | ||||||
Purchases of property and equipment |
(6,468 | ) | (15,225 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(5,372 | ) | (14,648 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Borrowings on revolving credit facilities |
| 2,981 | ||||||
Payments on revolving credit facilities |
(96,182 | ) | (787 | ) | ||||
Payments on term loans |
(155,701 | ) | (750 | ) | ||||
Proceeds from term loan |
125,000 | | ||||||
Payment of contingent liability on Scorpion purchase |
| (1,325 | ) | |||||
Proceeds from issuance of common stock in IPO, net offering costs |
171,616 | | ||||||
Proceeds from other issuances of common stock |
300 | | ||||||
Deferred financing costs |
(1,385 | ) | | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
43,648 | 119 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
55,583 | (12,633 | ) | |||||
Impact of foreign currency exchange on cash |
(196 | ) | (25 | ) | ||||
Cash and cash equivalents |
||||||||
Beginning of period |
17,513 | 30,171 | ||||||
|
|
|
|
|||||
End of period |
$ | 72,900 | $ | 17,513 | ||||
|
|
|
|
NINE ENERGY SERVICE, INC.
SEGMENT DATA
(In Thousands)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Revenues |
||||||||
Completion Solutions |
$ | 154,644 | $ | 134,723 | ||||
Production Solutions |
19,163 | 19,557 | ||||||
|
|
|
|
|||||
$ | 173,807 | $ | 154,280 | |||||
|
|
|
|
|||||
Gross profit(1) |
||||||||
Completion Solutions |
$ | 33,218 | $ | 25,793 | ||||
Production Solutions |
2,362 | 2,921 | ||||||
|
|
|
|
|||||
$ | 35,580 | $ | 28,714 | |||||
|
|
|
|
|||||
General and administrative expenses |
15,428 | 11,924 | ||||||
Depreciation |
13,109 | 13,096 | ||||||
Amortization of intangibles |
1,900 | 2,198 | ||||||
Impairment of intangibles |
| 3,800 | ||||||
Impairment of goodwill |
| 31,530 | ||||||
Loss on equity method investment |
75 | 113 | ||||||
Loss (gain) on sale of assets |
370 | (105 | ) | |||||
|
|
|
|
|||||
Income (loss) from operations |
$ | 4,698 | $ | (33,842 | ) | |||
|
|
|
|
|||||
Capital expenditures |
||||||||
Completion Solutions |
$ | 5,283 | $ | 14,647 | ||||
Production Solutions |
692 | 578 | ||||||
Corporate |
493 | | ||||||
|
|
|
|
|||||
$ | 6,468 | $ | 15,225 | |||||
Assets |
||||||||
Completion Solutions |
$ | 442,433 | $ | 428,702 | ||||
Production Solutions |
117,240 | 119,607 | ||||||
Corporate |
78,063 | 30,550 | ||||||
|
|
|
|
|||||
$ | 637,736 | $ | 578,859 | |||||
(1) Excludes depreciation and amortization, shown below. |
| |||||||
GEOGRAPHICAL SPLIT (In Thousands) (Unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Revenues |
||||||||
United States |
$ | 166,705 | $ | 148,294 | ||||
Canada |
7,102 | 5,986 | ||||||
|
|
|
|
|||||
$ | 173,807 | $ | 154,280 | |||||
|
|
|
|
|||||
March 31, 2018 |
December 31, 2017 |
|||||||
Long-lived assets: |
||||||||
United States |
$ | 415,138 | $ | 426,858 | ||||
Canada |
5,011 | 4,764 | ||||||
|
|
|
|
|||||
$ | 420,149 | $ | 431,622 |
NINE ENERGY SERVICE, INC.
RECONCILIATION OF ADJUSTED GROSS PROFIT
(In Thousands)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Calculation of gross profit |
||||||||
Revenues |
$ | 173,807 | $ | 154,280 | ||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
138,227 | 125,566 | ||||||
Depreciation (related to cost of revenues) |
12,892 | 12,860 | ||||||
Amortization |
1,900 | 2,198 | ||||||
|
|
|
|
|||||
Gross profit |
$ | 20,788 | $ | 13,656 | ||||
|
|
|
|
|||||
Adjusted gross profit (excluding depreciation and amortization) reconciliation |
||||||||
Gross profit |
$ | 20,788 | $ | 13,656 | ||||
Depreciation (related to cost of revenues) |
12,892 | 12,860 | ||||||
Amortization |
1,900 | 2,198 | ||||||
|
|
|
|
|||||
Adjusted gross profit |
$ | 35,580 | $ | 28,714 | ||||
|
|
|
|
NINE ENERGY SERVICE, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In Thousands)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
EBITDA reconciliation: |
||||||||
Net income (loss) |
$ | 1,675 | $ | (29,811 | ) | |||
|
|
|
|
|||||
Interest expense |
2,930 | 3,923 | ||||||
Depreciation |
13,109 | 13,096 | ||||||
Amortization |
1,900 | 2,198 | ||||||
Provision (benefit) from income taxes |
93 | (7,954 | ) | |||||
|
|
|
|
|||||
EBITDA |
$ | 19,707 | $ | (18,548 | ) | |||
|
|
|
|
|||||
Adjusted EBITDA reconciliation: |
||||||||
EBITDA |
$ | 19,707 | $ | (18,548 | ) | |||
|
|
|
|
|||||
Impairment of goodwill and other intangible assets |
| 35,330 | ||||||
Transaction expenses |
377 | 207 | ||||||
Loss or gains from the revaluation of contingent liabilities (1) |
1,063 | (6 | ) | |||||
Loss on equity investment |
75 | 113 | ||||||
Non-cash stock-based compensation expense |
2,240 | 1,188 | ||||||
Loss (gain) on sale of property and equipment |
370 | (105 | ) | |||||
Legal fees and settlements (2) |
305 | 196 | ||||||
Inventory write-down |
| 335 | ||||||
|
|
|
|
|||||
Adjusted EBITDA |
$ | 24,137 | $ | 18,710 | ||||
|
|
|
|
|||||
(1) | Loss or gain related to the revaluation of liability for contingent consideration relating to our acquisition of Scorpion to be paid in shares of Company common stock and in cash, contingent upon quantities of Scorpion Composite Plugs sold during 2016 and gross margin related to the product sales for three years following the acquisition. |
(2) | Amount represents fees and legal settlements associated with legal proceedings brought pursuant to the Fair Labor Standards Act and/or similar state laws. |
NINE ENERGY SERVICE, INC.
RECONCILIATIONS OF ROIC CALCULATIONS
(In Thousands)
(Unaudited)
Three Months Ended | ||||||||
March 31, 2018 |
December 31, 2017 |
|||||||
Income (loss) from continuing operations, net of tax |
$ | 1,675 | $ | (29,811 | ) | |||
Add back: |
||||||||
Interest Expense |
2,930 | 3,923 | ||||||
Taxes on interest |
(615 | ) | (1,373 | ) | ||||
|
|
|
|
|||||
After-tax net operating profit (loss) |
$ | 3,990 | $ | (27,261 | ) | |||
Total capital as of prior period end: |
||||||||
Total stockholders equity |
$ | 287,358 | $ | 315,987 | ||||
Total debt |
242,235 | 240,840 | ||||||
Less cash and cash equivalents |
(17,513 | ) | (30,171 | ) | ||||
|
|
|
|
|||||
Total capital |
$ | 512,080 | $ | 526,656 | ||||
|
|
|
|
|||||
Total capital as of period end: |
||||||||
Total stockholders equity |
$ | 459,440 | $ | 287,358 | ||||
Total debt |
115,274 | 242,235 | ||||||
Less cash and cash equivalents |
(72,900 | ) | (17,513 | ) | ||||
|
|
|
|
|||||
Total capital |
$ | 501,814 | $ | 512,080 | ||||
|
|
|
|
|||||
Average total capital |
$ | 506,947 | $ | 519,368 | ||||
|
|
|
|
|||||
ROIC |
3 | % | -21 | % |
AAdjusted EBITDA is defined as EBITDA further adjusted for (i) impairment of goodwill and other intangible assets, (ii) transaction expenses related to acquisitions or the Combination, (iii) loss from discontinued operations, (iv) loss or gains from the revaluation of contingent liabilities, (v) non-cash stock-based compensation expense, (vi) loss or gains on sale of assets, (vii) inventory write-down and (viii) adjustment for other expenses or charges, to exclude certain items which we believe are not reflective of ongoing performance of our business, such as transaction expenses associated with our IPO, legal expenses and settlement costs related to litigation outside the ordinary course of business, and restructuring costs. Management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure.
BROIC is defined as after-tax net operating profit, divided by average total capital. We define after-tax net operating profit as income (loss) from continuing operations (net of tax) plus interest expense, less taxes on interest. We define total capital as book value of equity plus the book value of debt less balance sheet cash and cash equivalents. We then take the average of the current and prior year-end total capital for use in this analysis. Management believes ROIC is a meaningful measure because it quantifies how well we generate operating income relative to the capital we have invested in our business and illustrates the profitability of a business or project taking into account the capital invested. Management uses ROIC to assist them in capital resource allocation decisions and in evaluating business performance.
CAdjusted gross profit is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management uses adjusted gross profit to evaluate operating performance and to determine resource allocation between segments. We prepare adjusted gross profit (excluding depreciation and amortization) to eliminate the impact of depreciation and amortization because we do not consider depreciation and amortization indicative of our core operating performance.