Delaware (State or other jurisdiction of incorporation) | 001-33059 (Commission File Number) | 20-5657551 (IRS Employer Identification No.) |
CONTACT: | Jim Pach | Devin Sullivan |
Principal Financial Officer | Senior Vice President | |
(630) 845-4500 | The Equity Group Inc. | |
(212) 836-9608 |
• | Revenues rose 18.6% to $16.1 million from $13.5 million in Q3 2017 |
• | SG&A declined 17.4% to $4.1 million from $5.0 million in Q3 2017 |
• | Net income from continuing operations of $1.1 million, or $0.04 per diluted share, compared to a net loss from continuing operations of $(0.2) million, or $(0.01) per diluted share |
• | Adjusted EBITDA of $1.3 million |
• | At September 30, 2018: |
• | capital projects backlog of $21.3 million |
• | total cash and equivalents, including restricted cash, of $10.7 million |
• | debt free |
• | (877) 423-9820 (Domestic) |
• | (201) 493-6749 (International) |
September 30, 2018 | December 31, 2017 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 4,198 | $ | 8,366 | ||
Restricted cash | 6,520 | 1,020 | ||||
Marketable securities | 3 | 6 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,413 and $1,545, respectively | 26,437 | 19,690 | ||||
Inventories, net | 647 | 945 | ||||
Prepaid expenses and other current assets | 2,348 | 3,592 | ||||
Income taxes receivable | 135 | 129 | ||||
Total current assets | 40,288 | 33,748 | ||||
Property and equipment, net of accumulated depreciation of $26,385 and $25,938, respectively | 6,117 | 6,272 | ||||
Goodwill | 2,116 | 2,116 | ||||
Other intangible assets, net of accumulated amortization of $6,575 and $6,421, respectively | 1,184 | 1,671 | ||||
Restricted cash | — | 5,000 | ||||
Assets held for sale | 485 | 485 | ||||
Other assets | 490 | 1,192 | ||||
Total assets | $ | 50,680 | $ | 50,484 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 12,874 | $ | 9,065 | ||
Accrued liabilities: | ||||||
Employee compensation | 1,055 | 1,487 | ||||
Income taxes payable | — | 73 | ||||
Other accrued liabilities | 3,125 | 5,098 | ||||
Total current liabilities | 17,054 | 15,723 | ||||
Other liabilities | 325 | 420 | ||||
Total liabilities | 17,379 | 16,143 | ||||
COMMITMENTS AND CONTINGENCIES (Note 12) | ||||||
Shareholders’ equity: | ||||||
Common stock, $.01 par value, 40,000,000 shares authorized, 24,825,891 and 24,777,001 shares issued, and 24,170,585, and 24,132,910 shares outstanding, respectively | 248 | 248 | ||||
Additional paid-in capital | 138,895 | 138,760 | ||||
Accumulated deficit | (103,222 | ) | (102,503 | ) | ||
Accumulated other comprehensive loss | (1,212 | ) | (768 | ) | ||
Nil coupon perpetual loan notes | 76 | 76 | ||||
Treasury stock, at cost | (1,484 | ) | (1,472 | ) | ||
Total shareholders’ equity | 33,301 | 34,341 | ||||
Total liabilities and shareholders’ equity | $ | 50,680 | $ | 50,484 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Revenues | $ | 16,070 | $ | 13,548 | $ | 40,708 | $ | 31,780 | ||||
Costs and expenses: | ||||||||||||
Cost of sales | 10,654 | 8,498 | 26,545 | 19,383 | ||||||||
Selling, general and administrative | 4,105 | 4,968 | 13,789 | 16,045 | ||||||||
Restructuring charge | — | — | — | 119 | ||||||||
Research and development | 265 | 216 | 814 | 780 | ||||||||
Intangible assets abandonment and building impairment | — | — | 317 | 2,965 | ||||||||
15,024 | 13,682 | 41,465 | 39,292 | |||||||||
Operating income (loss) from continuing operations | 1,046 | (134 | ) | (757 | ) | (7,512 | ) | |||||
Interest income | 1 | 2 | 3 | 8 | ||||||||
Other expense | 8 | (41 | ) | (59 | ) | (45 | ) | |||||
Income (loss) from continuing operations before income taxes | 1,055 | (173 | ) | (813 | ) | (7,549 | ) | |||||
Income tax (benefit) expense | — | (5 | ) | (2 | ) | 10 | ||||||
Net income (loss) from continuing operations | 1,055 | (178 | ) | (815 | ) | (7,539 | ) | |||||
Loss from discontinued operations (net of income tax benefit of $0 in 2018 and 2017) | (10 | ) | (239 | ) | (109 | ) | (2,238 | ) | ||||
Net income (loss) | $ | 1,045 | $ | (417 | ) | $ | (924 | ) | $ | (9,777 | ) | |
Net income (loss) per common share: | ||||||||||||
Basic | ||||||||||||
Continuing operations | $ | 0.04 | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.32 | ) | |
Discontinued operations | $ | — | $ | (0.01 | ) | $ | — | $ | (0.09 | ) | ||
Basic net income (loss) per common share | $ | 0.04 | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.41 | ) | |
Diluted | ||||||||||||
Continuing operations | $ | 0.04 | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.32 | ) | |
Discontinued operations | $ | — | $ | (0.01 | ) | $ | — | $ | (0.09 | ) | ||
Diluted net income (loss) per common share | $ | 0.04 | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.41 | ) | |
Weighted-average number of common shares outstanding: | ||||||||||||
Basic | 24,171,000 | 24,133,000 | 24,162,000 | 23,784,000 | ||||||||
Diluted | 24,588,000 | 24,133,000 | 24,162,000 | 23,784,000 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net income (loss) | $ | 1,045 | $ | (417 | ) | $ | (924 | ) | $ | (9,777 | ) | |
Other comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustments | (263 | ) | 190 | (441 | ) | 686 | ||||||
Unrealized gains (losses) from marketable securities, net of tax | 6 | (2 | ) | (3 | ) | (1 | ) | |||||
Total other comprehensive income (loss) | (257 | ) | 188 | (444 | ) | 685 | ||||||
Comprehensive income (loss) | $ | 788 | $ | (229 | ) | $ | (1,368 | ) | $ | (9,092 | ) |
Nine Months Ended September 30, | ||||||
2018 | 2017 | |||||
Operating Activities | ||||||
Net loss | $ | (924 | ) | $ | (9,777 | ) |
Loss from discontinued operations | 109 | 2,238 | ||||
Net loss from continuing operations | (815 | ) | (7,539 | ) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||
Depreciation | 502 | 1,075 | ||||
Amortization | 158 | 161 | ||||
(Gain) loss on disposal of equipment | (11 | ) | 158 | |||
Provision for doubtful accounts, net of recoveries | (62 | ) | — | |||
Excess and obsolete inventory reserve | — | 228 | ||||
Intangible assets abandonment and building impairment | 317 | 2,965 | ||||
Stock-based compensation, net of forfeitures | 135 | 1,207 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (7,192 | ) | (1,691 | ) | ||
Inventories | 280 | 78 | ||||
Prepaid expenses, other current assets and other non-current assets | 1,840 | 294 | ||||
Accounts payable | 3,896 | 2,726 | ||||
Accrued liabilities and other non-current liabilities | (1,378 | ) | (3,474 | ) | ||
Net cash used in operating activities - continuing operations | (2,330 | ) | (3,812 | ) | ||
Net cash used in operating activities - discontinued operations | (334 | ) | (1,723 | ) | ||
Net cash used in operating activities | (2,664 | ) | (5,535 | ) | ||
Investing Activities | ||||||
Purchases of equipment and patents | (392 | ) | (511 | ) | ||
Proceeds from the sale of equipment | 1 | 1 | ||||
Net cash used in investing activities | (391 | ) | (510 | ) | ||
Financing Activities | ||||||
Taxes paid on behalf of equity award participants | (12 | ) | (258 | ) | ||
Net cash used in financing activities | (12 | ) | (258 | ) | ||
Effect of exchange rate fluctuations on cash | (601 | ) | 607 | |||
Net decrease in cash, cash equivalents and restricted cash | (3,668 | ) | (5,696 | ) | ||
Cash, cash equivalents, and restricted cash at beginning of period | 14,386 | 17,846 | ||||
Cash, cash equivalents and restricted cash at end of period | $ | 10,718 | $ | 12,150 |
Three months ended September 30, 2018 | Air Pollution Control Segment | FUEL CHEM Segment | Other | Total | ||||||||
Revenues from external customers | $ | 10,882 | $ | 5,188 | $ | — | $ | 16,070 | ||||
Cost of sales | (8,116 | ) | (2,538 | ) | — | (10,654 | ) | |||||
Gross margin | 2,766 | 2,650 | — | 5,416 | ||||||||
Selling, general and administrative | — | — | (4,105 | ) | (4,105 | ) | ||||||
Research and development | — | — | (265 | ) | (265 | ) | ||||||
Operating income (loss) from continuing operations | $ | 2,766 | $ | 2,650 | $ | (4,370 | ) | $ | 1,046 |
Three months ended September 30, 2017 | Air Pollution Control Segment | FUEL CHEM Segment | Other | Total | ||||||||
Revenues from external customers | $ | 8,799 | $ | 4,749 | $ | — | $ | 13,548 | ||||
Cost of sales | (6,184 | ) | (2,314 | ) | — | (8,498 | ) | |||||
Gross margin | 2,615 | 2,435 | — | 5,050 | ||||||||
Selling, general and administrative | — | — | (4,968 | ) | (4,968 | ) | ||||||
Research and development | — | — | (216 | ) | (216 | ) | ||||||
Operating income (loss) from continuing operations | $ | 2,615 | $ | 2,435 | $ | (5,184 | ) | $ | (134 | ) |
Nine Months Ended September 30, 2018 | Air Pollution Control Segment | FUEL CHEM Segment | Other | Total | ||||||||
Revenues from external customers | $ | 27,872 | $ | 12,836 | $ | — | $ | 40,708 | ||||
Cost of sales | (20,040 | ) | (6,505 | ) | — | (26,545 | ) | |||||
Gross margin | 7,832 | 6,331 | — | 14,163 | ||||||||
Selling, general and administrative | — | — | (13,789 | ) | (13,789 | ) | ||||||
Research and development | — | — | (814 | ) | (814 | ) | ||||||
Intangible assets abandonment | — | — | (317 | ) | (317 | ) | ||||||
Operating income (loss) from continuing operations | $ | 7,832 | $ | 6,331 | $ | (14,920 | ) | $ | (757 | ) |
Nine Months Ended September 30, 2017 | Air Pollution Control Segment | FUEL CHEM Segment | Other | Total | ||||||||
Revenues from external customers | $ | 18,346 | $ | 13,434 | $ | — | $ | 31,780 | ||||
Cost of sales | (12,787 | ) | (6,596 | ) | — | (19,383 | ) | |||||
Gross margin | 5,559 | 6,838 | — | 12,397 | ||||||||
Selling, general and administrative | — | — | (16,045 | ) | (16,045 | ) | ||||||
Restructuring charge | (58 | ) | (61 | ) | — | (119 | ) | |||||
Research and development | — | — | (780 | ) | (780 | ) | ||||||
Building impairment | — | — | (2,965 | ) | (2,965 | ) | ||||||
Operating income (loss) from continuing operations | $ | 5,501 | $ | 6,777 | $ | (19,790 | ) | $ | (7,512 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Revenues: | ||||||||||||
United States | $ | 11,629 | $ | 8,888 | $ | 30,701 | $ | 21,537 | ||||
Foreign | 4,441 | 4,660 | 10,007 | 10,243 | ||||||||
$ | 16,070 | $ | 13,548 | $ | 40,708 | $ | 31,780 |
September 30, 2018 | December 31, 2017 | |||||
Assets: | ||||||
United States | $ | 34,942 | $ | 29,945 | ||
Foreign | 15,738 | 20,539 | ||||
$ | 50,680 | $ | 50,484 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net loss | $ | 1,045 | $ | (417 | ) | $ | (924 | ) | $ | (9,777 | ) | |
Interest income | (1 | ) | (2 | ) | (3 | ) | (8 | ) | ||||
Income tax expense | — | 5 | 2 | (10 | ) | |||||||
Depreciation expense | 147 | 320 | 502 | 1,075 | ||||||||
Amortization expense | 52 | 52 | 158 | 462 | ||||||||
EBITDA | 1,243 | (42 | ) | (265 | ) | (8,258 | ) | |||||
Intangible assets abandonment and building impairment | — | — | 374 | 2,965 | ||||||||
Stock compensation expense | 97 | 51 | 135 | 1,207 | ||||||||
ADJUSTED EBITDA | 1,340 | 9 | 244 | (4,086 | ) |
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