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): November 8, 2018 | ||
Horizon Global Corporation (Exact Name of Registrant as Specified in its Charter) |
Delaware | 001-37427 | 47-3574483 |
_____________________ (State or Other Jurisdiction | _____________ (Commission | ______________ (IRS Employer |
of Incorporation) | File Number) | Identification No.) |
2600 West Big Beaver Road, Suite 555, Troy, Michigan _____________________ | 48084 ___________ (Zip Code) | |
(Address of principal executive offices) |
Registrant’s telephone number, including area code: | (248) 593-8820 _____________ |
Not Applicable |
________________________________________ (Former name or former address, if changed since last report) |
Exhibit No. | Description | |||
99.1 | ||||
HORIZON GLOBAL CORPORATION | ||||||
Date: | November 8, 2018 | By: | /s/ David G. Rice | |||
Name: | David G. Rice | |||||
Title: | Chief Financial Officer |
CONTACT: | Christi Cowdin | ||
Director, Corporate Communications & Investor Relations | |||
(248) 593-8810 | |||
ccowdin@horizonglobal.com |
▪ | Completed the Americas Action Plan |
▪ | Net sales of $227.8 million, down 5.1 percent |
▪ | Non-cash goodwill impairment of $26.6 million in Europe-Africa segment |
▪ | Operating loss of $23.9 million, or 10.5 percent of sales |
▪ | Third quarter diluted loss per share of $1.31 |
▪ | Named Carl Bizon permanent President and Chief Executive Officer |
▪ | New leadership commences business improvement initiatives for Europe-Africa |
▪ | Completed ramp-up of the Kansas City distribution center and, at quarter end, reduced shippable past due orders to approximately two days’ sales |
▪ | De-layering of organization and consolidation of facilities in the Americas is now complete |
(1) | Please refer to “Company and Business Segment Financial Information,” which details certain costs, expenses, other charges, gains or income, collectively described as ‘’Special Items,’’ that are included in the determination of operating profit under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating profit excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. Further, the Company presents adjusted operating profit excluding these Special Items to provide investors with a better understanding of the Company’s view of our results as compared to prior periods. |
(2) | Appendix I details certain costs, expenses, other charges, gains or income, collectively described as “Special Items,” that are included in the determination of net income under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted net income and adjusted diluted earnings per share excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. |
(3) | We evaluate growth in our operations on both an as reported basis and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our growth, consistent with how we evaluate our performance. Constant currency revenue results are calculated by translating current period revenue in local currency using the prior period’s currency conversion rate. This non-GAAP measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-titled measures by other issuers due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. See Appendix II for reconciliation. |
September 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,310 | $ | 29,570 | ||||
Receivables, net of reserves of approximately $4.5 million and $3.1 million at September 30, 2018 and December 31, 2017, respectively | 122,250 | 91,770 | ||||||
Inventories | 161,110 | 171,500 | ||||||
Prepaid expenses and other current assets | 11,930 | 10,950 | ||||||
Total current assets | 322,600 | 303,790 | ||||||
Property and equipment, net | 105,370 | 113,020 | ||||||
Goodwill | 10,410 | 138,190 | ||||||
Other intangibles, net | 81,930 | 90,230 | ||||||
Deferred income taxes | 6,900 | 4,290 | ||||||
Other assets | 9,170 | 11,510 | ||||||
Total assets | $ | 536,380 | $ | 661,030 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 12,530 | $ | 16,710 | ||||
Accounts payable | 109,390 | 138,730 | ||||||
Accrued liabilities | 57,430 | 53,070 | ||||||
Total current liabilities | 179,350 | 208,510 | ||||||
Long-term debt | 342,260 | 258,880 | ||||||
Deferred income taxes | 13,600 | 14,870 | ||||||
Other long-term liabilities | 19,000 | 38,370 | ||||||
Total liabilities | 554,210 | 520,630 | ||||||
Commitments and contingent liabilities | — | — | ||||||
Total Horizon Global shareholders' equity | (15,550 | ) | 141,890 | |||||
Noncontrolling interest | (2,280 | ) | (1,490 | ) | ||||
Total shareholders' equity | (17,830 | ) | 140,400 | |||||
Total liabilities and shareholders' equity | $ | 536,380 | $ | 661,030 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales | $ | 227,840 | $ | 240,120 | $ | 677,990 | $ | 696,990 | ||||||||
Cost of sales | (184,220 | ) | (181,700 | ) | (548,350 | ) | (525,510 | ) | ||||||||
Gross profit | 43,620 | 58,420 | 129,640 | 171,480 | ||||||||||||
Selling, general and administrative expenses | (40,920 | ) | (45,130 | ) | (145,220 | ) | (134,610 | ) | ||||||||
Impairment | (26,640 | ) | — | (125,770 | ) | — | ||||||||||
Operating profit (loss) | (23,940 | ) | 13,290 | (141,350 | ) | 36,870 | ||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (7,650 | ) | (5,540 | ) | (19,790 | ) | (16,650 | ) | ||||||||
Loss on extinguishment of debt | — | — | — | (4,640 | ) | |||||||||||
Other expense, net | (1,510 | ) | (1,310 | ) | (9,240 | ) | (2,560 | ) | ||||||||
Other expense, net | (9,160 | ) | (6,850 | ) | (29,030 | ) | (23,850 | ) | ||||||||
Income (loss) before income tax benefit | (33,100 | ) | 6,440 | (170,380 | ) | 13,020 | ||||||||||
Income tax benefit | 100 | 120 | 12,460 | 3,350 | ||||||||||||
Net income (loss) | (33,000 | ) | 6,560 | (157,920 | ) | 16,370 | ||||||||||
Less: Net loss attributable to noncontrolling interest | (240 | ) | (330 | ) | (720 | ) | (920 | ) | ||||||||
Net income (loss) attributable to Horizon Global | $ | (32,760 | ) | $ | 6,890 | $ | (157,200 | ) | $ | 17,290 | ||||||
Net income (loss) per share attributable to Horizon Global: | ||||||||||||||||
Basic | $ | (1.31 | ) | $ | 0.28 | $ | (6.28 | ) | $ | 0.70 | ||||||
Diluted | $ | (1.31 | ) | $ | 0.27 | $ | (6.28 | ) | $ | 0.69 | ||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 25,101,847 | 24,948,410 | 25,028,072 | 24,728,643 | ||||||||||||
Diluted | 25,101,847 | 25,379,252 | 25,028,072 | 25,154,800 |
Nine months ended September 30, | ||||||||
2018 | 2017 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | (157,920 | ) | $ | 16,370 | |||
Adjustments to reconcile net income (loss) to net cash used for operating activities: | ||||||||
Net loss on dispositions of property and equipment | 490 | 330 | ||||||
Depreciation | 12,540 | 10,280 | ||||||
Amortization of intangible assets | 6,170 | 7,660 | ||||||
Impairment of goodwill and intangible assets | 125,770 | — | ||||||
Amortization of original issuance discount and debt issuance costs | 6,050 | 5,090 | ||||||
Deferred income taxes | (3,370 | ) | 840 | |||||
Loss on extinguishment of debt | — | 4,640 | ||||||
Non-cash compensation expense | 1,430 | 2,760 | ||||||
Amortization of purchase accounting inventory step-up | — | 420 | ||||||
Increase in receivables | (35,120 | ) | (28,360 | ) | ||||
(Increase) decrease in inventories | 5,980 | (7,920 | ) | |||||
Decrease in prepaid expenses and other assets | 1,410 | 3,490 | ||||||
Increase (decrease) in accounts payable and accrued liabilities | (30,060 | ) | (17,440 | ) | ||||
Other, net | 590 | (480 | ) | |||||
Net cash used for operating activities | (66,040 | ) | (2,320 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (10,820 | ) | (20,270 | ) | ||||
Acquisition of businesses, net of cash acquired | — | (19,800 | ) | |||||
Net proceeds from disposition of property and equipment | 160 | 1,080 | ||||||
Net cash used for investing activities | (10,660 | ) | (38,990 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on credit facilities | 12,550 | 36,970 | ||||||
Repayments of borrowings on credit facilities | (14,390 | ) | (41,630 | ) | ||||
Proceeds from Term B Loan, net of issuance costs | 45,430 | — | ||||||
Repayments of borrowings on Term B Loan, inclusive of transaction costs | (6,490 | ) | (187,820 | ) | ||||
Proceeds from ABL Revolving Debt | 72,430 | 114,500 | ||||||
Repayments of borrowings on ABL Revolving Debt | (34,830 | ) | (94,500 | ) | ||||
Proceeds from issuance of common stock, net of offering costs | — | 79,920 | ||||||
Repurchase of common stock | — | (10,000 | ) | |||||
Proceeds from issuance of Convertible Notes, net of issuance costs | — | 121,130 | ||||||
Proceeds from issuance of Warrants, net of issuance costs | — | 20,930 | ||||||
Payments on Convertible Note Hedges, inclusive of issuance costs | — | (29,680 | ) | |||||
Other, net | (300 | ) | (240 | ) | ||||
Net cash provided by financing activities | 74,400 | 9,580 | ||||||
Effect of exchange rate changes on cash | 40 | 1,960 | ||||||
Cash and Cash Equivalents: | ||||||||
Decrease for the period | (2,260 | ) | (29,770 | ) | ||||
At beginning of period | 29,570 | 50,240 | ||||||
At end of period | $ | 27,310 | $ | 20,470 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 13,520 | $ | 10,090 | ||||
Cash paid for taxes | $ | 4,340 | $ | 6,110 |
Common Stock | Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Horizon Global Shareholders’ Equity | Noncontrolling Interest | Total Shareholders’ Equity | ||||||||||||||||||||||||
Balance at December 31, 2017, as reported | $ | 250 | $ | 159,490 | $ | (10,000 | ) | $ | (17,860 | ) | $ | 10,010 | $ | 141,890 | $ | (1,490 | ) | $ | 140,400 | ||||||||||||
Impact of ASU 2018-02 | — | 340 | — | (900 | ) | 560 | — | — | — | ||||||||||||||||||||||
Balance at December 31, 2017, as restated | $ | 250 | $ | 159,830 | $ | (10,000 | ) | $ | (18,760 | ) | $ | 10,570 | $ | 141,890 | $ | (1,490 | ) | $ | 140,400 | ||||||||||||
Net loss | — | — | — | (57,510 | ) | — | (57,510 | ) | (250 | ) | (57,760 | ) | |||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 4,680 | 4,680 | 10 | 4,690 | |||||||||||||||||||||||
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations | — | (200 | ) | — | — | — | (200 | ) | — | (200 | ) | ||||||||||||||||||||
Non-cash compensation expense | — | 720 | — | — | — | 720 | — | 720 | |||||||||||||||||||||||
Balance at March 31, 2018 | $ | 250 | $ | 160,350 | $ | (10,000 | ) | $ | (76,270 | ) | $ | 15,250 | $ | 89,580 | $ | (1,730 | ) | $ | 87,850 | ||||||||||||
Net loss | — | — | — | (66,930 | ) | — | (66,930 | ) | (230 | ) | (67,160 | ) | |||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (6,010 | ) | (6,010 | ) | (80 | ) | (6,090 | ) | |||||||||||||||||||
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations | — | (10 | ) | — | — | — | (10 | ) | — | (10 | ) | ||||||||||||||||||||
Non-cash compensation expense | — | 490 | — | — | — | 490 | — | 490 | |||||||||||||||||||||||
Balance at June 30, 2018 | $ | 250 | $ | 160,830 | $ | (10,000 | ) | $ | (143,200 | ) | $ | 9,240 | $ | 17,120 | $ | (2,040 | ) | $ | 15,080 | ||||||||||||
Net loss | — | — | — | (32,760 | ) | — | (32,760 | ) | (240 | ) | (33,000 | ) | |||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (40 | ) | (40 | ) | (40 | ) | |||||||||||||||||||||
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations | — | (90 | ) | — | — | — | (90 | ) | — | (90 | ) | ||||||||||||||||||||
Non-cash compensation expense | — | 220 | — | — | — | 220 | — | 220 | |||||||||||||||||||||||
Balance at September 30, 2018 | $ | 250 | $ | 160,960 | $ | (10,000 | ) | $ | (175,960 | ) | $ | 9,200 | $ | (15,550 | ) | $ | (2,280 | ) | $ | (17,830 | ) |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Horizon Americas | ||||||||||||||||
Net sales | $ | 115,510 | $ | 115,460 | $ | 319,810 | $ | 351,400 | ||||||||
Operating profit | $ | 7,270 | $ | 10,930 | $ | 4,730 | $ | 38,840 | ||||||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance | $ | 660 | $ | 660 | $ | 5,010 | $ | 660 | ||||||||
Distribution center inefficiencies & fines | $ | 1,420 | $ | — | $ | 6,520 | $ | — | ||||||||
Restructuring | $ | 2,800 | $ | 120 | $ | 5,310 | $ | 120 | ||||||||
Adjusted operating profit | $ | 12,150 | $ | 11,710 | $ | 21,570 | $ | 39,620 | ||||||||
Horizon Europe-Africa | ||||||||||||||||
Net sales | $ | 78,520 | $ | 87,950 | $ | 256,420 | $ | 253,070 | ||||||||
Operating profit (loss) | $ | (31,370 | ) | $ | 2,680 | $ | (132,150 | ) | $ | 5,950 | ||||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance | $ | — | $ | 1,150 | $ | 1,560 | $ | 3,790 | ||||||||
Acquisition & integration | $ | 70 | $ | — | $ | 730 | $ | 270 | ||||||||
Impairment of goodwill & other intangibles | $ | 26,640 | $ | — | $ | 125,770 | $ | — | ||||||||
Restructuring | $ | 1,370 | $ | 140 | $ | 2,820 | $ | 230 | ||||||||
Brink Group transaction & termination costs | $ | — | $ | — | $ | 660 | $ | — | ||||||||
Adjusted operating profit | $ | (3,290 | ) | $ | 3,970 | $ | (610 | ) | $ | 10,240 | ||||||
Horizon Asia-Pacific | ||||||||||||||||
Net sales | $ | 33,810 | $ | 36,710 | $ | 101,760 | $ | 92,520 | ||||||||
Operating profit | $ | 5,960 | $ | 5,880 | $ | 15,020 | $ | 13,240 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance | $ | — | $ | — | $ | 70 | $ | 270 | ||||||||
Acquisition & integration costs | $ | 50 | $ | 980 | $ | 70 | $ | 1,000 | ||||||||
Restructuring | $ | 90 | $ | — | $ | 190 | $ | 30 | ||||||||
Adjusted operating profit | $ | 6,100 | $ | 6,860 | $ | 15,350 | $ | 14,540 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (5,800 | ) | $ | (6,200 | ) | $ | (28,950 | ) | $ | (21,160 | ) | ||||
Special Items to consider in evaluating operating loss: | ||||||||||||||||
Acquisition & integration | $ | — | $ | 120 | $ | 50 | $ | 2,700 | ||||||||
Brink Group transaction & termination costs | $ | 1,130 | $ | — | $ | 10,940 | $ | — | ||||||||
Severance | $ | — | $ | 10 | $ | — | $ | 520 | ||||||||
Restructuring | $ | — | $ | 520 | $ | — | $ | 260 | ||||||||
CEO separation costs & severance | $ | — | $ | — | $ | 2,750 | $ | — | ||||||||
Adjusted operating loss | $ | (4,670 | ) | $ | (5,550 | ) | $ | (15,210 | ) | $ | (17,680 | ) | ||||
Total Company | ||||||||||||||||
Net sales | $ | 227,840 | $ | 240,120 | $ | 677,990 | $ | 696,990 | ||||||||
Operating profit (loss) | $ | (23,940 | ) | $ | 13,290 | $ | (141,350 | ) | $ | 36,870 | ||||||
Total Special Items to consider in evaluating operating profit (loss) | $ | 34,230 | $ | 3,700 | $ | 162,450 | $ | 9,850 | ||||||||
Adjusted operating profit | $ | 10,290 | $ | 16,990 | $ | 21,100 | $ | 46,720 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) attributable to Horizon Global, as reported | $ | (32,760 | ) | $ | 6,890 | $ | (157,200 | ) | $ | 17,290 | ||||||
Impact of Special Items to consider in evaluating quality of income (loss): | ||||||||||||||||
Impairment of goodwill & other intangibles | 26,640 | — | 125,770 | — | ||||||||||||
Brink Group transaction & termination costs | 1,140 | — | 16,740 | — | ||||||||||||
Severance | 2,040 | 2,330 | 8,020 | 5,240 | ||||||||||||
Distribution center inefficiencies & fines | 1,420 | — | 6,520 | — | ||||||||||||
CEO separation costs & severance | — | — | 2,750 | — | ||||||||||||
Restructuring | 2,870 | 380 | 6,940 | 750 | ||||||||||||
Acquisition & integration costs | 130 | 1,250 | 850 | 4,120 | ||||||||||||
Loss on extinguishment of debt | — | — | — | 4,640 | ||||||||||||
Tax impact of Special Items | (1,760 | ) | (1,180 | ) | (9,660 | ) | (4,740 | ) | ||||||||
Adjusted net income (loss) attributable to Horizon Global | $ | (280 | ) | $ | 9,670 | $ | 730 | $ | 27,300 | |||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Diluted earnings (loss) per share attributable to Horizon Global, as reported | $ | (1.31 | ) | $ | 0.27 | $ | (6.28 | ) | $ | 0.69 | ||||||
Impact of Special Items to consider in evaluating quality of EPS: | ||||||||||||||||
Impairment of goodwill & other intangibles | 1.06 | — | 5.03 | — | ||||||||||||
Brink Group transaction & termination costs | 0.05 | — | 0.67 | — | ||||||||||||
Severance | 0.08 | 0.09 | 0.32 | 0.21 | ||||||||||||
Distribution center inefficiencies & fines | 0.06 | — | 0.26 | — | ||||||||||||
CEO separation costs & severance | — | — | 0.11 | — | ||||||||||||
Restructuring | 0.11 | 0.02 | 0.28 | 0.03 | ||||||||||||
Acquisition & integration costs | 0.01 | 0.05 | 0.03 | 0.16 | ||||||||||||
Loss on extinguishment of debt | — | — | — | 0.18 | ||||||||||||
Tax impact of Special Items | (0.07 | ) | (0.05 | ) | (0.39 | ) | (0.19 | ) | ||||||||
Impact of change in dilutive shares outstanding due to Special Items | — | — | — | — | ||||||||||||
Adjusted earnings (loss) per share attributable to Horizon Global | $ | (0.01 | ) | $ | 0.38 | $ | 0.03 | $ | 1.08 | |||||||
Weighted average shares outstanding, diluted, as reported | 25,101,847 | 25,379,252 | 25,028,072 | 25,154,800 | ||||||||||||
Dilution effect on adjusted net income | — | — | — | — | ||||||||||||
Diluted weighted-average shares outstanding, as adjusted | 25,101,847 | 25,379,252 | 25,028,072 | 25,154,800 |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | |||||||||||||||||||||||
Horizon Americas | Horizon Europe-Africa | Horizon Asia-Pacific | Consolidated | Horizon Americas | Horizon Europe-Africa | Horizon Asia-Pacific | Consolidated | |||||||||||||||||
Revenue growth as reported | — | % | (10.7 | )% | (7.9 | )% | (5.1 | )% | (9.0 | )% | 1.3 | % | 10.0 | % | (2.7 | )% | ||||||||
Less: currency impact | (0.5 | )% | (1.2 | )% | (5.7 | )% | (1.5 | )% | (0.2 | )% | 6.5 | % | (0.1 | )% | 2.2 | % | ||||||||
Revenue growth at constant currency | 0.5 | % | (9.5 | )% | (2.2 | )% | (3.6 | )% | (8.8 | )% | (5.2 | )% | 10.1 | % | (4.9 | )% |
Less: | Add: | |||||||||||||||
Year Ended December 31, 2017 | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2018 | Twelve Months Ended September 30, 2018 | |||||||||||||
Net loss attributable to Horizon Global | $ | (3,550 | ) | $ | 17,290 | $ | (157,200 | ) | $ | (178,040 | ) | |||||
Bank stipulated adjustments: | ||||||||||||||||
Interest expense, net (as defined) | 22,410 | 16,650 | 24,920 | 30,680 | ||||||||||||
Income tax (benefit) expense | 9,750 | (3,350 | ) | (12,460 | ) | 640 | ||||||||||
Depreciation and amortization | 25,340 | 17,940 | 18,710 | 26,110 | ||||||||||||
Extraordinary charges (a) | 2,520 | — | 23,000 | 25,520 | ||||||||||||
Non-cash compensation expense (b) | 3,630 | 2,760 | 1,440 | 2,310 | ||||||||||||
Other non-cash expenses or losses | 2,180 | 1,050 | 127,310 | 128,440 | ||||||||||||
Pro forma EBITDA of permitted acquisition | 840 | 840 | — | — | ||||||||||||
Interest-equivalent costs associated with any Specified Vendor Receivables Financing | 1,490 | 960 | 1,380 | 1,910 | ||||||||||||
Debt extinguishment costs | 4,640 | 4,640 | — | — | ||||||||||||
Items limited to a % of consolidated EBITDA(c): | ||||||||||||||||
Non-recurring expenses (d) | 2,440 | 1,310 | 7,500 | 8,630 | ||||||||||||
Acquisition integration costs (e) | 11,210 | 8,230 | 5,050 | 8,030 | ||||||||||||
Synergies related to permitted acquisition (f) | 1,480 | 1,480 | — | |||||||||||||
Consolidated Bank EBITDA, as defined | $ | 84,380 | $ | 69,800 | $ | 39,650 | $ | 54,230 |
September 30, 2018 | ||||
Total Consolidated Indebtedness (f) | $ | 361,207 | ||
Consolidated Bank EBITDA, as defined | 54,230 | |||
Actual leverage ratio | 6.66 | x | ||
Covenant requirement | 7.00 | x |
(a) | Extraordinary distribution costs from Q1 and Q2 2018 that were included in special items, but not included as an addback in prior quarter's leverage calculations have been adjusted with the Q3 leverage calculation and are now included as extraordinary items. |
(b) | Non-cash compensation expenses resulting from the grant of restricted units of common stock and common stock options. |
(c) | Under the Fourth Amendment, the EBITDA limitation for nonrecurring expenses or costs was increased from 25% of Consolidated EBITDA for the period to 45% of Consolidated EBITDA for the period; provided further that such percentage shall be (i) 35% of Consolidated EBITDA on September 30, 2019 and (ii) 25% of Consolidated EBITDA on December 31, 2018 and thereafter. As such, the amounts added to Consolidated Net Income pursuant to items b-d shall not exceed 45% of Consolidated EBITDA, excluding these items, for such period. |
(d) | Under the Amended Term Loan Agreement, cost and expenses related to cost savings projects, including restructuring and severance expenses, are not to exceed $5 million in any fiscal year and $20 million in aggregate, commencing on or after January 1, 2015. The Fourth Amendment has raised the annual cap to $7.5 million in any fiscal year and $25 million in aggregate. |
(e) | Under the 2018 Term Loan Agreement, costs and expenses related to the integration of the Westfalia Group acquisition are not to exceed $10 million in any fiscal year and $30 million in aggregate, or other permitted acquisitions are not to exceed $7.5 million in any fiscal year and $20 million in aggregate. |
(f) | “Total Consolidated Indebtedness” refers to the sum of “long-term debt” and “current maturities, long-term debt”, with our Convertible Notes at their face value of $125.0 million and less unrestricted cash. Unrestricted cash included in the calculation was $27.3 million as of September 30, 2018. |
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