Furmanite Corporation Reports Second Quarter 2015 Results

Delivers Second Quarter Diluted Earnings per Share of $0.09, Adjusted Diluted Earnings per Share of $0.14(A)

Appoints Jeffery G. Davis as Interim Executive Chairman

HOUSTON--()--Furmanite Corporation (NYSE:FRM) today reported results for the three and six months ended June 30, 2015.

The Company also announced today that the Furmanite Board of Directors (the “Board”) has appointed Jeffery G. Davis as Interim Executive Chairman, effective immediately. In connection with this appointment, Mr. Davis has resigned from his roles of Lead Independent Director and member of the Audit Committee. Mr. Davis, who joined the Board in May 2015, is the retired Chairman and CEO of the Brock Group, a leading provider of industrial specialty services. Mr. Davis replaces Joseph Milliron, who served as Chairman during a transition period following the retirement of the Company’s former Chairman earlier this year. Mr. Milliron continues as Chief Executive Officer and President of Furmanite and as a member of the Board.

Mr. John Linnartz, Chairman of the Nominating and Governance Committee said, “The Board was unanimous in its decision to appoint Jeff to the role of Interim Executive Chairman. In this new capacity, Jeff will bring his strong industry experience and operational expertise directly to the management level to support all initiatives to drive shareholder value. We are pleased to have him in this expanded role.”

Mr. Milliron added, “We are pleased to continue taking steps to enhance Furmanite’s governance and believe separating the Chairman and CEO roles advances our commitment to aligning with best practices. We welcome Jeff in this new capacity, and on behalf of the management team, we look forward to working closely together to achieve our strategic objectives.”

Mr. Davis stated, “Furmanite has significant prospects for growth and value creation, and I look forward to working with our customers, management and the Board to optimize these opportunities.”

Second Quarter 2015 Results

Revenues for the three months ended June 30, 2015 were $129.6 million, a decrease of $16.6 million, or 11.4%, from the $146.2 million reported for the three months ended June 30, 2014. Operating income was $6.3 million for the 2015 second quarter, compared to $8.3 million for the same quarter last year. Net income was $3.4 million, or $0.09 per diluted share in the 2015 second quarter, compared to $4.5 million, or $0.12 per diluted share, in the 2014 second quarter.

Foreign currency exchange rate changes unfavorably impacted revenues, operating income, net income and diluted earnings per share by $6.0 million, $0.7 million, $1.1 million and $0.03 per share, respectively, for the three months ended June 30, 2015.

Excluding the foreign currency impacts, as well as $1.7 million of incremental costs associated with the Company’s 2015 Annual Meeting and certain other non-routine items, adjusted operating income for the three months ended June 30, 2015 increased by $0.1 million to $8.4 million(A), compared to $8.3 million(A), for the three months ended June 30, 2014. Adjusted net income increased to $5.2 million(A), or $0.14(A) per diluted share, for the 2015 second quarter, compared to $4.9 million(A), or $0.13(A) per diluted share, in the 2014 second quarter.

Six Months Ended June 30, 2015 Results

Revenues for the six months ended June 30, 2015 were $252.0 million, a decrease of $19.2 million, or 7.1%, from the $271.2 million reported for the six months ended June 30, 2014. Operating income was $8.7 million in the six months ended June 30, 2015, compared to $10.8 million for the same period last year. Net income was $3.7 million, or $0.10 per diluted share, compared to $5.5 million, or $0.15 per diluted share, in the six months ended June 30, 2014.

Foreign currency exchange rate changes unfavorably impacted revenues, operating income, net income and diluted earnings per share by $10.3 million, $0.9 million, $1.8 million and $0.05 per share, respectively, for the six months ended June 30, 2015.

Excluding the foreign currency impacts, as well as $2.2 million of incremental costs associated with the Company’s 2015 Annual Meeting and certain other non-routine items, adjusted operating income for the six months ended June 30, 2015 increased by $0.4 million to $11.4 million(A), compared to $11.0 million(A), for the six months ended June 30, 2014. Adjusted net income increased to $6.6 million(A), or $0.17(A) per diluted share, in the six months ended June 30, 2015, compared to $6.2 million(A), or $0.16(A) per diluted share, in the six months ended June 30, 2014.

Mr. Milliron continued, “Our second quarter results, excluding foreign currency impacts and non-routine items, demonstrate that our company-wide commitment to controlling costs and reducing expenses is taking hold. We remain focused on expanding our cost initiatives to improve margins and profitability across our business segments.” Mr. Milliron concluded, “Combined with the continued growth of contracts and projects, we expect we will be able to further enhance our bottom line results.”

Financial Position

As of June 30, 2015, the Company’s cash balance was $39.2 million. The Company’s cash balance, along with the $73.4 million of availability under its credit facility, provides the Company liquidity of $112.6 million.

Conference Call Details

In conjunction with the earnings release, Furmanite Corporation will host a conference call with Jeffery G. Davis (Interim Executive Chairman), Joseph E. Milliron (Chief Executive Officer and President) and Robert S. Muff (Chief Financial Officer and Chief Administrative Officer). The call will begin at 10:00 a.m. (Eastern) / 9:00 a.m. (Central) on Tuesday, August 4, 2015 and can be accessed in the “Investors” section of Furmanite’s website.

(A) These items are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”) and exclude the impact of 1) foreign currency exchange rate changes, 2) the write off of debt issuance costs associated with an amendment to the Company’s credit facility, 3) a non-routine pension curtailment/settlement gain 4) incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders and 5) direct costs associated with the integration of the Furmanite Technical Solutions division. Management believes that results excluding these impacts provide additional meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation, by excluding the impact of foreign currency exchange rate changes and certain items not representative of ongoing operations. Reconciliations to the applicable GAAP measures are included at the end of the press release.

ABOUT FURMANITE CORPORATION

Furmanite Corporation (NYSE: FRM), founded in 1920, is one of the world’s largest specialty industrial services and specialty engineering project solutions companies, providing world class solutions to customer needs through more than 80 offices on six continents. The Company delivers a wide portfolio of inspection, mechanical and engineering services which help monitor, maintain, renew and construct the global energy, industrial and municipal infrastructures. Furmanite serves a broad range of industry sectors, including refining, offshore, sub-sea, pipeline, power generation, chemical, petrochemical, pulp and paper, water utilities, automotive, mining, marine and steel manufacturing. World Headquarters and Global Support Operations are located in Houston, Texas; Rotterdam, Netherlands; Kendal, United Kingdom and Melbourne, Australia. For more information, visit www.furmanite.com.

Certain of the Company’s statements in this press release are not purely historical, and as such are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company’s business, and other risks and uncertainties detailed most recently in this earnings release and the Company’s Form 10-K as of December 31, 2014 and Form 10-Q as of March 31, 2015 filed with the Securities and Exchange Commission. One or more of these factors could affect the Company’s business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements.

FURMANITE CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(Unaudited)
       
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
 
Revenues $ 129,629 $ 146,242 $ 251,967 $ 271,183
Costs and expenses:
Operating costs 95,741 109,172 189,611 203,874
Depreciation and amortization expense 3,169 2,988 6,251 5,977
Selling, general and administrative expense 24,396   25,778   47,452   50,510  
Total costs and expenses 123,306   137,938   243,314   260,361  
Operating income 6,323 8,304 8,653 10,822
Interest income and other income (expense), net (555 ) (439 ) (1,078 ) (604 )
Interest expense (356 ) (445 ) (988 ) (894 )
Income before income taxes 5,412 7,420 6,587 9,324
Income tax expense (2,037 ) (2,913 ) (2,899 ) (3,801 )
Net income $ 3,375   $ 4,507   $ 3,688   $ 5,523  
 
Earnings per common share - Basic $ 0.09 $ 0.12 $ 0.10 $ 0.15
Earnings per common share - Diluted $ 0.09 $ 0.12 $ 0.10 $ 0.15
Adjusted diluted earnings per share1 $ 0.14 $ 0.13 $ 0.17 $ 0.16
 
Weighted-average number of common and common equivalent shares used in computing earnings per common share:
Basic 37,836 37,617 37,793 37,593
Diluted 38,030 37,836 37,982 37,832
 
EBITDA2 $ 8,937 $ 10,853 $ 13,826 $ 16,195
Adjusted EBITDA2 $ 11,689 $ 11,307 $ 17,850 $ 17,046
__________________
1   Adjusted diluted earnings per share presented above is a non-GAAP financial measurement that excludes the impact of 1) foreign currency exchange rate changes, 2) incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders, 3) a non-routine pension curtailment/settlement gain, 4) the write off of debt issuance costs associated with an amendment to the Company’s credit facility and 5) direct costs associated with the integration of the Furmanite Technical Solutions division. Management believes that results excluding these impacts provide additional meaningful and comparable information to analysts and is useful in comparing the operational trends of Furmanite Corporation, by excluding the impact of foreign currency exchange rate changes and certain expenses not representative of ongoing operations. Reconciliations to the applicable GAAP measures are included at the end of the press release.
 
2 Earnings before interest, taxes, depreciation and amortization (“EBITDA”) presented above is a non-GAAP financial measurement. The Company believes that investors and other users of the financial statements benefit from the presentation of this non-GAAP measurement because it provides an additional metric to evaluate the Company’s core operating performance by excluding the effects of depreciation and amortization expense, interest expense and income tax expense from net income. Adjusted EBITDA further excludes 1) foreign currency exchange rate changes, 2) a non-routine pension curtailment/settlement gain, 3) incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders and 4) direct costs associated with the integration of the Furmanite Technical Solutions division. Reconciliations of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measures are included at the end of the press release.
 
 
FURMANITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
 
June 30,   December 31,
2015 2014
 
Cash $ 39,169 $ 33,753
Trade receivables, net 121,118 110,219
Inventories, net 41,840 37,383
Other current assets 16,301 21,335
Total current assets 218,428 202,690
 
Property and equipment, net 50,277 51,930
Other assets 28,182 29,551
Total assets $ 296,887   $ 284,171
 
Total current liabilities $ 58,775 $ 56,067
Total long-term debt 68,891 61,853
Other liabilities 22,318 23,787
Total stockholders’ equity 146,903 142,464
Total liabilities and stockholders’ equity $ 296,887   $ 284,171
 
 
FURMANITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 

For the Six Months Ended
June 30,

2015   2014
 
Net income $ 3,688 $ 5,523
 
Depreciation, amortization and other non-cash items 7,016 6,202
Working capital changes (5,569 ) (2,899 )
Net cash provided by operating activities 5,135 8,826
 
Capital expenditures (4,015 ) (3,477 )
Proceeds from sale of assets 113 3
Proceeds from issuance of debt 44,600
Payments on debt (39,054 ) (912 )
Debt issuance costs (571 )
Issuance of common stock 46 32
Other, net (315 ) (214 )
Effect of exchange rate changes on cash (523 ) 279  
Increase in cash and cash equivalents 5,416 4,537
Cash and cash equivalents at beginning of period 33,753   33,240  
Cash and cash equivalents at end of period $ 39,169   $ 37,777  
 
 
FURMANITE CORPORATION
BUSINESS SEGMENT DATA
(in thousands)
(Unaudited)
 
       

Technical
Services

 

Engineering
& Project
Solutions

  Corporate1   Total
Three months ended June 30, 2015
Revenues from external customers $ 91,415 $ 38,214 $ $ 129,629
Operating income (loss)2 $ 13,259 $ 516 $ (7,452 ) $ 6,323
 
Three months ended June 30, 2014
Revenues from external customers $ 106,289 $ 39,953 $ $ 146,242
Operating income (loss)2 $ 14,284 $ (590 ) $ (5,390 ) $ 8,304
 
Six months ended June 30, 2015
Revenues from external customers $ 177,379 $ 74,588 $ $ 251,967
Operating income (loss)2 $ 21,989 $ 520 $ (13,856 ) $ 8,653
 
Six months ended June 30, 2014
Revenues from external customers $ 194,039 $ 77,144 $ $ 271,183
Operating income (loss)2 $ 21,949 $ (1,347 ) $ (9,780 ) $ 10,822
_______________________________
1   Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.
2 For the three and six months ended June 30, 2015, Corporate includes approximately $1.7 million and $2.2 million, respectively, of incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders. For the three and six months ended June 30, 2014, the Engineering & Project Solutions segment includes nil and approximately $0.2 million, respectively, of direct costs associated with the integration of the Furmanite Technical Solutions division.
 
 
FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
       
For the Three Months
Ended June 30, 2015
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 129,629 $ 5,966 $ $ 135,595
Operating costs 95,741 4,138 332 100,211
Depreciation & amortization 3,169 113 3,282
Selling, general and administrative expense 24,396 1,016 (1,700 ) 23,712
Operating income 6,323 699 1,368 8,390
Interest income and other income (expense), net (555 ) 572 17
Interest expense (356 ) (356 )
Income before income taxes 5,412 1,271 1,368 8,051
Income tax expense (2,037 ) (196 ) (591 ) (2,824 )
Net income $ 3,375 $ 1,075 $ 777 $ 5,227
Diluted earnings per share $ 0.09 $ 0.03 $ 0.02 $ 0.14
 
For the Three Months
Ended June 30, 2014
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 146,242 $ $ $ 146,242
Operating costs 109,172 109,172
Depreciation & amortization 2,988 2,988
Selling, general and administrative expense 25,778 25,778
Operating income 8,304 8,304
Interest income and other income (expense), net (439 ) 454 15
Interest expense (445 ) (445 )
Income before income taxes 7,420 454 7,874
Income tax expense (2,913 ) (69 ) (2,982 )
Net income $ 4,507 $ 385 $ $ 4,892
Diluted earnings per share $ 0.12 $ 0.01 $ $ 0.13
______________________________
1   Consists of 1) a non-routine pension curtailment/settlement gain and 2) incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders.
 
 
FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures (Continued)
(in thousands, except per share data)
         
For the Six Months
Ended June 30, 2015
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 251,967 $ 10,251 $ $ 262,218
Operating costs 189,611 7,328 332 197,271
Depreciation & amortization 6,251 201 6,452
Selling, general and administrative expense 47,452 1,831 (2,150 ) 47,133
Operating income 8,653 891 1,818 11,362
Interest income and other income (expense), net (1,078 ) 1,114 36
Interest expense (988 ) 149 (839 )
Income before income taxes 6,587 2,005 1,967 10,559
Income tax expense (2,899 ) (246 ) (830 ) (3,975 )
Net income $ 3,688 $ 1,759 $ 1,137 $ 6,584
Diluted earnings per share $ 0.10 $ 0.05 $ 0.02 $ 0.17
 
For the Six Months
Ended June 30, 2014
As Reported

Foreign
Currency
Impacts

Other
Reconciling
Items 1

Non-GAAP
Basis

Revenues $ 271,183 $ $ $ 271,183
Operating costs 203,874 203,874
Depreciation & amortization 5,977 5,977
Selling, general and administrative expense 50,510 (220 ) 50,290
Operating income 10,822 220 11,042
Interest income and other income (expense), net (604 ) 631 27
Interest expense (894 ) (894 )
Income before income taxes 9,324 631 220 10,175
Income tax expense (3,801 ) (113 ) (88 ) (4,002 )
Net income $ 5,523 $ 518 $ 132 $ 6,173
Diluted earnings per share $ 0.15 $ 0.01 $ $ 0.16
______________________________
1   Consists of 1) a non-routine pension curtailment/settlement gain, 2) incremental professional fees and other costs associated with the Company’s 2015 Annual Meeting of Stockholders, 3) the write off of debt issuance costs associated with an amendment to the Company’s credit facility and 4) direct costs associated with the integration of the Furmanite Technical Solutions division.
 
 
FURMANITE CORPORATION
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands)
       
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
 
Reconciliation of EBITDA to Net income:
EBITDA $ 8,937 $ 10,853 $ 13,826 $ 16,195
Less:
Depreciation and amortization expense (3,169 ) (2,988 ) (6,251 ) (5,977 )
Interest expense (356 ) (445 ) (988 ) (894 )
Income tax expense (2,037 ) (2,913 ) (2,899 ) (3,801 )
Net income $ 3,375   $ 4,507   $ 3,688   $ 5,523  
 
Reconciliation of Adjusted EBITDA to Net income:
Adjusted EBITDA $ 11,689 $ 11,307 17,850 17,046
Foreign currency impacts (1,384 ) (454 ) (2,206 ) (631 )
Pension curtailment/settlement gain 332 332
Incremental professional fees and other costs associated with 2015 Annual Meeting of Stockholders (1,700 ) (2,150 )
Direct costs associated with the integration of the Furmanite Technical Solutions division       (220 )
EBITDA 8,937 10,853 13,826 16,195
Less:
Depreciation and amortization expense (3,169 ) (2,988 ) (6,251 ) (5,977 )
Interest expense (356 ) (445 ) (988 ) (894 )
Income tax expense (2,037 ) (2,913 ) (2,899 ) (3,801 )
Net income $ 3,375   $ 4,507   $ 3,688   $ 5,523  

Contacts

Furmanite Corporation
Robert S. Muff, 713-634-7775
Investor Relations
investor@furmanite.com

Release Summary

Furmanite Corporation Reports Second Quarter 2015 Results

Contacts

Furmanite Corporation
Robert S. Muff, 713-634-7775
Investor Relations
investor@furmanite.com