EX-99.1 2 a13-12029_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

Armored AutoGroup Inc. (“Armored AutoGroup” or the “Company”) today announced 2013 first quarter financial results.  The Company generated net sales of $74.4 million for the quarter ended March 31, 2013 compared to net sales of $86.4 million for the quarter ended March 31, 2012.  Net sales in the Company’s North American market decreased year-over-year by $10.4 million (15 percent) to $56.6 million for the quarter ended March 31, 2013 primarily due to colder and wetter weather conditions in the early part of 2013 compared to this period in 2012.  Net sales in the Company’s international markets decreased 8%  to $17.8 million for the quarter ended March 31, 2013 primarily due to lower sales in Europe which continues to endure a weak economic environment and further attributable to the timing of sales to certain Middle East distributors.  The Company reported a net loss of $0.5 million for the quarter ended March 31, 2013.  The Company generated Adjusted EBITDA of $21.9 million for the quarter ended March 31, 2013 compared to Adjusted EBITDA of $29.7 million for the comparable period in 2012.

 

Armored AutoGroup has provided a reconciliation of net earnings (loss) to EBITDA and Adjusted EBITDA in the accompanying EBITDA and Adjusted EBITDA Reconciliation. The Company presents this information because management uses it to monitor and evaluate the Company’s ongoing operating results and trends, and the covenants in its debt agreements are tied to these measures.

 

ABOUT ARMORED AUTOGROUP

 

Armored AutoGroup Inc., headquartered in Danbury, CT, is primarily comprised of the Armor All® and STP® brands. The current product line of Armor All protectants, wipes, tire and wheel care products, glass cleaners, air freshners, leather care products and washes is designed to clean, shine, refresh and protect interior and exterior automobile surfaces. The offering of STP oil and fuel additives, functional fluids and automotive appearance products has a broad customer base ranging from professional racers to car enthusiasts and ‘‘Do-it-Yourselfers’’. The Company has a diversified geographic footprint with direct operations in the United States, Canada, Australia, Mexico China and the U.K. and distributor relationships in approximately 50 countries.  For more information, please visit www.armorall.com and www.stp.com.

 

On November 5, 2010, affiliates of Avista Capital Holdings, L.P. (‘‘Avista’’) acquired certain equity interests, assets and liabilities of The Clorox Company’s (‘‘Clorox’’) Auto-Care Products Business, excluding the Prestone and YPF licensed brands, that operated through various Clorox wholly-owned or controlled legal entities throughout the world pursuant to the terms of a Purchase and Sale Agreement, dated September 21, 2010 (the ‘‘Acquisition’’). After completion of the Acquisition, the Company was renamed the’’Armored AutoGroup.” Armored AutoGroup Parent, Inc. (‘‘AAG Parent’’ or ‘‘Parent’’) indirectly owns all of our issued and outstanding capital stock through its direct subsidiary and our direct parent, Armored AutoGroup Intermediate Inc.

 

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

 

The information herein may contain forward-looking statements including, without limitation, statements concerning our operations, our economic performance and financial condition.  Forward-looking statements are not historical facts, but only predictions and generally can be identified by use of statements that include such words as “may”, “might”, “will”, “should”, “estimate”, “project”, “plan”, “anticipate”, “expect”, “intend”,

 



 

“outlook”, “believe” and other similar expressions that are intended to identify forward-looking statements and information.  These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified under “Risk Factors” in our Form 10-K Annual Report dated April 1, 2013.

 

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:  our inability to implement our business strategy in a timely and effective manner; global market and economic conditions; competition from other companies; the loss of significant customers or customer relations; our reliance on complex information systems; the cost of capital expenditures required for our businesses; levels of customers’ advertising and marketing spending, which may be impacted by economic factors and general market conditions; developments in technology and related changes in consumer behavior;  fluctuations in raw material prices; our substantial indebtedness and our ability to service our debt;  fluctuations in currency exchange rates; unfavorable political conditions in international markets and risks relating to concentrations in international operations; our reliance on a limited number of suppliers; the seasonality of our business ; the reliance of our businesses on limited production facilities; labor disturbances; environmental obligations and liabilities; an adverse outcome of pending or threatened litigation; the enforcement of intellectual property rights and the impact of changes in applicable law and regulations.

 

We caution you that the foregoing list of important factors is not exclusive.  In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements may not in fact occur.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or revise any of them in light of new information, future events or otherwise, except as required by law.  Comparison of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

 

The following information contains financial measures other than in accordance with generally accepted accounting principles and should not be considered in isolation from or as a substitute for the Company’s historical consolidated financial statements.  The Company presents this information because management uses it to monitor and evaluate the Company’s ongoing operating results and trends, and the covenants in its debt agreements are tied to these measures.  The Company believes this information provides investors with an understanding of the Company’s operating performance over comparative periods.

 



 

Armored AutoGroup Inc.

 

BALANCE SHEETS

 

(In thousands, except share and per share amounts)

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

10,710

 

$

4,206

 

Accounts receivable

 

75,465

 

69,602

 

Inventories

 

45,377

 

42,444

 

Due from Clorox

 

 

 

Other current assets

 

12,821

 

12,891

 

Total current assets

 

144,373

 

129,143

 

 

 

 

 

 

 

Property, plant and equipment

 

30,726

 

31,473

 

Goodwill

 

361,036

 

362,216

 

Intangible assets

 

343,034

 

352,905

 

Deferred financing costs and other assets

 

4,844

 

5,020

 

Total assets

 

$

884,013

 

$

880,757

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

20,596

 

13,158

 

Accrued expenses and other current liabilities

 

29,920

 

28,571

 

Income taxes payable

 

 

 

Due to Parent

 

795

 

795

 

Due to Clorox

 

106

 

137

 

Revolver

 

 

 

Current portion of long-term debt

 

229

 

279

 

Total current liabilities

 

51,646

 

42,940

 

 

 

 

 

 

 

Long-term debt

 

553,538

 

553,581

 

Other liability

 

2,500

 

2,500

 

Deferred income taxes

 

101,924

 

105,131

 

Total liabilities

 

709,608

 

704,152

 

 

 

 

 

 

 

Shareholder’s Equity:

 

 

 

 

 

Common stock

 

 

 

Additional paid-in capital

 

260,815

 

260,750

 

Accumulated deficit

 

(86,090

)

(85,585

)

Accumulated other comprehensive loss

 

(320

)

1,440

 

Total shareholder’s equity

 

174,405

 

176,605

 

Total liabilities and shareholder’s equity

 

$

884,013

 

$

880,757

 

 



 

Armored AutoGroup Inc.

 

STATEMENTS OF RESULTS OF OPERATIONS

 

(In thousands)

 

 

 

Three Months ended March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales

 

$

74,413

 

$

86,396

 

Cost of products sold

 

40,485

 

43,090

 

 

 

 

 

 

 

Gross profit

 

33,928

 

43,306

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Selling and administrative expenses

 

9,603

 

13,147

 

Advertising costs

 

3,573

 

5,263

 

Research and development costs

 

638

 

515

 

Amortization of acquired intangible assets

 

9,175

 

9,175

 

Total operating expenses

 

22,989

 

28,100

 

Operating profit

 

10,939

 

15,206

 

Non-operating expenses (income):

 

 

 

 

 

Interest expense

 

11,906

 

12,090

 

Other expense, net

 

112

 

(219

)

 

 

 

 

 

 

Loss before benefit for income taxes

 

(1,079

)

3,335

 

Benefit for income taxes

 

(573

)

2,229

 

Net loss

 

$

(506

)

$

1,106

 

 



 

Armored AutoGroup Inc.

 

STATEMENTS OF CASH FLOWS

 

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

2012

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(506

)

$

1,106

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

11,883

 

11,586

 

Goodwill impairment

 

 

 

Share-based compensation

 

65

 

65

 

Deferred income taxes

 

(3,332

)

(3,300

)

Other

 

 

55

 

Cash effect of changes in:

 

 

 

 

 

Accounts receivable

 

(5,863

)

(35,352

)

Inventories

 

(2,933

)

(5,118

)

Due from Clorox

 

(31

)

10,838

 

Other current assets

 

(1,846

)

(2,107

)

Book overdraft

 

 

(1,987

)

Accounts payable and accrued liabilities

 

8,787

 

24,933

 

Income taxes

 

2,022

 

3,930

 

Other

 

(51

)

 

Net cash provided by (used in) operating activities

 

8,197

 

4,649

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(944

)

(2,946

)

Other

 

 

 

Net cash used in investing activities

 

(944

)

(2,946

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under revolver

 

 

8,000

 

Payments on revolver

 

 

(8,000

)

Principle payments on term loan

 

(750

)

(750

)

Advance from Parent

 

 

 

Deferred financing costs

 

 

 

Net cash used in financing activities

 

(750

)

(750

)

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

1

 

352

 

Net increase (decrease) in cash

 

6,504

 

1,305

 

Cash at beginning of period

 

4,206

 

4,935

 

Cash at end of period

 

$

10,710

 

$

6,240

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

Cash paid for interest

 

$

4,679

 

$

4,714

 

Cash paid for income taxes

 

$

737

 

$

1,558

 

 



 

ARMORED AUTOGROUP INC.

 

EBITDA AND ADJUSTED EBITDA RECONCILIATION

 

 

 

Three Months Ended

 

 

 

Mar 31,

 

Mar 31,

 

 

 

2013

 

2012

 

Adjusted EBITDA Reconciliation:

 

 

 

 

 

Net earnings (loss)

 

$

(506

)

$

1,106

 

Interest expense

 

11,906

 

11,925

 

Provision (benefit) for income taxes

 

(492

)

2,229

 

Depreciation and amortization expense

 

10,915

 

10,599

 

EBITDA

 

21,823

 

25,859

 

Share based compensation (1)

 

65

 

65

 

Loss from Unrestricted Subsidiary

 

140

 

 

 

Transition Services Agreement (2)

 

 

 

436

 

Total acquisition related charges (3)

 

282

 

1,898

 

Workforce retention and other transitional charges (4)

 

 

 

182

 

Sponsor monitoring fees (5)

 

250

 

267

 

Non-cash write-off of assets (6)

 

 

 

 

Enterprise Resource Planning implementation (7)

 

47

 

962

 

Adjusted EBITDA

 

$

22,607

 

$

29,669

 

 

EBITDA is defined as net earnings before interest expense (net), income taxes, depreciation and amortization including goodwill impairment, and is used by management to measure operating performance of the business. ‘‘Adjusted EBITDA’’ is calculated by adding to or subtracting from EBITDA items of expense and income as described below.  We also use EBITDA and Adjusted EBITDA as a measure to calculate certain incentive-based compensation and certain financial covenants related to our Credit Facility and as a factor in our tangible and intangible asset impairment test. EBITDA and Adjusted EBITDA are supplemental measures of our performance and our ability to service indebtedness that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net earnings or other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as measures of our liquidity. In addition, our measurements of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

 


(1)                                 Non-cash compensation expenses include share-based compensation expense related to options granted under the Company’s 2010 Stock Option Plan.

 

(2)                                 In conjunction with the Acquisition agreement, the Company entered into a shared services agreement (“Transition Services Agreement” or “TSA”) with Clorox whereby Clorox provides certain services, equipment and office space to the Company. Reflects costs incurred under the Transition Services Agreement with Clorox.

 

(3)                                 Reflects an adjustment for acquisition-related charges, the incremental cost of transitioning to a stand-alone basis and proforma cost savings.

 

(4)                                 Reflects one-time retention charges and other one-time compensation costs.

 

(5)                                 Amounts related to a monitoring agreement with Avista Capital Holdings, L.P..

 

(6)                                 Reflects amounts for non-cash write-off of certain machinery and equipment.

 

(7)                                 Reflects one-time non-capitalizable costs related to the implementation of our new Enterprise Resource Planning software.