Katy Industries, Inc. Reports 2016 First Quarter Results
/EINPresswire.com/ -- ST. LOUIS, MO--(Marketwired - May 03, 2016) -
- Net sales increased 33% over prior year
- Gross profit increased $1.4 million over prior year
- Operating income increased $1.4 million over prior year with the exclusion of one-time items
Katy Industries, Inc. (OTC PINK: KATY), a leading manufacturer, importer and distributor of commercial cleaning and consumer storage products, as well as a contract manufacturer of structural foam products, today reported financial results for the first quarter ended April 1, 2016.
"We are pleased that the first Quarter continued to show improvement in our operations," said David J. Feldman, Katy Chief Executive Officer. "Sales demand remains strong and we will continue to have gains in operating income throughout 2016 by capitalizing on the synergies of our acquisitions and manufacturing realignment."
Year-to-Date Financial Results
Financial highlights for the three months ended April 1, 2016 as compared to the three months ended March 27, 2015, included:
- Net sales increased 33.2% from $21.3 million during the three months ended March 27, 2015 to $28.4 million during the three months ended April 1, 2016. The increase was a result of the Tiffin, Ohio business acquisition, which contributed an incremental $6.5 million in net sales. Gross margin was 16.3% for the three months ended April 1, 2016, an increase of 130 basis points from the same period a year ago. The increase was primarily a result of lower operating costs associated with the relocation of our Bridgeton, Missouri facility to Jefferson City, Missouri and reduced raw material prices during the three months ended April 1, 2016. As a result of the increase in sales and an increase in gross margin, our gross profit increased $1.4 million from $3.2 million to $4.6 million.
- Selling, general and administrative expenses increased $0.7 million to $4.0 million for the three months ended April 1, 2016 from $3.3 million for the same period a year ago. The increase was primarily due to the derecognition of a deferred lease obligation no longer owed as a result of our termination of the lease for our Bridgeton, Missouri facility during the three months ended March 27, 2015.
- Severance, restructuring and related charges decreased $1.1 million to $0.5 million for the three months ended April 1, 2016 as compared to $1.6 million for the three months ended March 27, 2015 due to the relocation of our Bridgeton, Missouri facility to Jefferson City, Missouri.
- Operating income increased from an operating loss of $1.6 million during the three months ended March 27, 2015 to operating income of $0.1 million during the three months ended April 1, 2016 primarily due to the reduction of severance, restructuring and related charges and increased gross profit. With the exclusion of one-time items related to our facility relocation, operating income was $0.7 million for the three months ended April 1, 2016 versus an operating loss of $0.7 million for the three months ended March 27, 2015.
- Interest expense increased by $1.2 million during the three months ended April 1, 2016 as compared to the three months ended March 27, 2015 as a result of the increased borrowings under the BMO Credit Agreement and Second Lien Credit Agreement which were entered into in the second quarter of 2015.
- Overall, we reported a net loss of $1.2 million, or $0.15 per basic and diluted share, for the three months ended April 1, 2016, as compared to net loss of $1.8 million, or $0.23 per basic and diluted share, for the three months ended March 27, 2015. With the exclusion of one-time items related to our facility relocation, net loss was $0.6 million for the three months ended April 1, 2016 versus net loss of $1.0 million for the three months ended March 27, 2015.
Liquidity and Capital Resources
Cash used in operating activities before changes in operating assets and liabilities was $1.2 million in the three months ended March 27, 2015 as compared to $0.1 million in the same period of 2016. Changes in operating assets and liabilities from continuing operations provided $2.1 million in the three months ended April 1, 2016 as compared to $2.3 million in the same period of 2015.
Cash flows used by investing activities of $0.7 million in the three months ended April 1, 2016 were primarily due to capital expenditures related to the relocation of the Bridgeton, Missouri facility to Jefferson City, Missouri.
Cash flows used by financing activities of $1.3 million in the three months ended April 1, 2016 were due to a reduction of $0.8 million in our bank borrowings, net of debt issuance costs since December 31, 2015, primarily due to the timing of needed borrowings.
Non-GAAP Financial Measures
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements include all statements of the Company's plans, beliefs or expectations with respect to future events or developments and often may be identified by such words or phrases as "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "may," "should," "will," "continue," "is subject to," or similar expressions. These forward-looking statements are based on the opinions and beliefs of Katy's management, as well as assumptions made by, and information currently available to, the Company's management. Additionally, the forward-looking statements are based on Katy's current expectations and projections about future events and trends affecting the financial condition of its business. The forward-looking statements are subject to risks and uncertainties that may lead to results that differ materially from those expressed in any forward-looking statement made by the Company or on its behalf. These risks and uncertainties include, without limitation, conditions in the general economy and in the markets served by the Company, including changes in the demand for its products; success of any restructuring or cost control efforts; an increase in interest rates; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers' operations or other causes affecting availability of component materials or finished goods at reasonable prices; changes in product mix, costs and yields; labor issues at the Company's facilities or those of its suppliers; legal claims or other regulatory actions; and other risks identified from time to time in the Company's filings with the SEC, including its Report on Form 10-K for the year ended December 31, 2015. Katy undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Katy Industries, Inc. is a diversified corporation focused on the manufacture, import and distribution of commercial cleaning products, consumer home products and a contract manufacturer of structural foam products.
KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS AND
COMPREHENSIVE LOSS - UNAUDITED
(In thousands, except per share data)
Three Months Ended
April 1, March 27,
2016 2015
----------- -----------
Net sales $ 28,394 $ 21,310
Cost of goods sold 23,774 18,105
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Gross profit 4,620 3,205
Selling, general and administrative expenses 3,955 3,252
Severance, restructuring and related charges 526 1,600
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Operating income (loss) 139 (1,647)
Interest expense (1,392) (209)
Other, net 30 28
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Loss before income tax expense (1,223) (1,828)
Income tax expense (6) (8)
----------- -----------
Net loss $ (1,229) $ (1,836)
=========== ===========
Other comprehensive income (loss):
Foreign currency translation 23 (58)
Total comprehensive loss $ (1,206) $ (1,894)
=========== ===========
Loss per share of common stock - Basic $ (0.15) $ (0.23)
Loss per share of common stock - Diluted $ (0.15) $ (0.23)
KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED
(In thousands)
April 1, December 31,
2016 2015
----------- -----------
Assets
Current Assets:
Cash $ 63 $ 53
Accounts receivable, net 14,171 12,211
Inventories, net 16,194 19,267
Other current assets 1,564 2,164
----------- -----------
Total current assets 31,992 33,695
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Other Assets:
Goodwill 8,377 8,377
Intangibles, net 20,608 20,877
Other 1,761 1,747
----------- -----------
Total other assets 30,746 31,001
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Property and Equipment:
Land and improvements 535 535
Buildings and improvements 6,696 6,269
Machinery and equipment 45,815 44,617
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Property and Equipment 53,046 51,421
Less - Accumulated depreciation (37,122) (36,646)
----------- -----------
Property and equipment, net 15,924 14,775
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Total assets $ 78,662 $ 79,471
=========== ===========
Liabilities and Stockholders' Deficit
Current Liabilities:
Accounts payable $ 21,725 $ 20,440
Book overdraft 486 918
Accrued compensation 1,077 1,149
Accrued expenses 7,271 7,142
Deferred revenue 93 130
Current maturities of long-term debt 1,663 1,143
Revolving credit agreement 23,093 23,969
----------- -----------
Total current liabilities 55,408 54,891
Payable to Related Party 4,419 4,268
Long-Term Debt 21,093 21,435
Other Liabilities 7,686 7,615
----------- -----------
Total liabilities 88,606 88,209
----------- -----------
Stockholders' Deficit
15% Convertible preferred stock, $100 par value;
authorized 1,200,000 shares; issued and
outstanding 1,131,551 shares; liquidation value
$113,155 108,256 108,256
Common stock, $1 par value; authorized
35,000,000 shares; issued 9,822,304 shares 9,822 9,822
Additional paid-in capital 27,110 27,110
Accumulated other comprehensive loss (1,608) (1,631)
Accumulated deficit (132,087) (130,858)
Treasury stock, at cost, 1,871,128 shares (21,437) (21,437)
----------- -----------
Total stockholders' deficit (9,944) (8,738)
----------- -----------
Total liabilities and stockholders' deficit $ 78,662 $ 79,471
=========== ===========
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Three Months Ended
April 1, March 27,
2016 2015
----------- -----------
Cash flows from operating activities:
Net loss $ (1,229) $ (1,836)
Depreciation 504 545
Amortization of intangible assets 268 47
Amortization of debt issuance costs 37 57
Stock-based compensation 32 20
Payment In Kind interest expense 280 -
Other (20) -
----------- -----------
(128) (1,167)
----------- -----------
Changes in operating assets and liabilities:
Accounts receivable (1,975) (519)
Inventories 3,031 (2,522)
Other assets 479 (726)
Accounts payable 847 4,426
Accrued expenses (114) 764
Payable to related party 125 125
Deferred revenue (37) (37)
Other liabilities (304) 760
----------- -----------
2,052 2,271
----------- -----------
Net cash provided by operations 1,924 1,104
----------- -----------
Cash flows from investing activities:
Capital expenditures (748) (362)
----------- -----------
Net cash used in investing activities (748) (362)
----------- -----------
Cash flows from financing activities:
Net borrowings on revolving credit facility (876) (199)
Payment on capital lease obligation (23) -
Decrease in book overdraft (432) (349)
Direct costs associated with debt facilities 62 -
----------- -----------
Net cash used in financing activities (1,269) (548)
----------- -----------
Effect of exchange rate changes on cash 103 (117)
----------- -----------
Net increase in cash 10 77
Cash, beginning of period 53 66
----------- -----------
Cash, end of period $ 63 $ 143
=========== ===========
Supplemental cash flows disclosure:
Interest paid $ 843 $ 127
Income taxes paid $ 1 $ 1
Supplemental information of non-cash investing and
financing activities:
Capital leases included in accrued expenses and
other noncurrent liabilities $ 473 $ -
Capital expenditures included in accounts
payable $ 429 $ -
Collateralized debt fees included in accrued
expenses $ 240 $ -
Company contact:
Katy Industries, Inc.
Curt Kroll
(314) 656-4381
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