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Section 1: 8-K (8-K)

8-K

 

 

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 14, 2016

 

 

AMPLIFY SNACK BRANDS, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware   001-37530   47-1254894

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

500 West 5th Street, Suite 1350

Austin, Texas

  78701
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: 512.600.9893

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition

On November 14, 2016, the Company issued a press release announcing its results for the quarter ended September 30, 2016. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The information in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

  

Description

99.1    Press Release, dated November 14, 2016, issued by Amplify Snack Brands, Inc.

 

* Pursuant to Item 601(b)(2) of Regulation S-K, certain exhibits and schedules to this agreement have been omitted. The Company hereby agrees to furnish a supplemental copy of any or all of such omitted exhibits or schedules to the Securities and Exchange Commission, upon its request.


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Amplify Snack Brands, Inc.
(Registrant)
By:  

/s/ Brian Goldberg

  Brian Goldberg
  Chief Financial Officer

November 14, 2016


Exhibit Index

 

Exhibit
No.

  

Description

99.1    Press Release, dated November 14, 2016, issued by Amplify Snack Brands, Inc.

 

* Pursuant to Item 601(b)(2) of Regulation S-K, certain exhibits and schedules to this agreement have been omitted. The Company hereby agrees to furnish a supplemental copy of any or all of such omitted exhibits or schedules to the Securities and Exchange Commission, upon its request.
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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

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Amplify Snack Brands, Inc. Reports Third Quarter 2016 Financial Results

Third Quarter Net Sales Increased 48% Year-Over-Year to $68.0 Million

Closing of Tyrrells Acquisition Diversifies Brand Portfolio and Geographic Presence, Adds

Talented International Team and In-house Manufacturing Capabilities

Austin, Texas – November 14, 2016 – Amplify Snack Brands, Inc. (“Amplify” or the “Company”) (NYSE:BETR), a leading marketer and manufacturer of branded better-for-you snack food products, today reported financial results for the three and nine months ended September 30, 2016.

Three Months Ended September 30, 2016 Highlights

 

    Net sales were $68.0 million, up 48.1% year-over-year

 

    Gross profit was $32.3 million, representing 47.6% of net sales

 

    GAAP net income was $1.6 million, or $0.02 per fully diluted share

 

    Non-GAAP adjusted net income was $9.0 million, or $0.12 per fully diluted share

 

    Adjusted EBITDA was $20.1 million, representing 29.6% of net sales

Nine Months Ended September 30, 2016 Highlights

 

    Net sales were $182.2 million, up 32.5% year-over-year

 

    Gross profit was $93.3 million, representing 51.2% of net sales

 

    GAAP net income was $18.8 million, or $0.25 per fully diluted share

 

    Non-GAAP adjusted net income was $30.4 million, or $0.40 per fully diluted share

 

    Adjusted EBITDA was $61.4 million, representing 33.7% of net sales

“We are very pleased to have completed the Tyrrells acquisition in the third quarter. Through this transaction, we diversified our better-for-you snack food offerings, expanded our geographic presence, and gained a highly-talented international team as well as in-house manufacturing capabilities,” commented Tom Ennis, Amplify’s President and Chief Executive Officer. “Strong brand sales gains continued in the quarter, despite a more challenging market backdrop, and we experienced certain transitory operational execution issues that impacted our results. Amplify is now a much stronger and more diversified company, and we’ve proactively taken steps to sharpen execution going forward. We remain very excited about the significant potential we have to leverage our newly expanded portfolio of terrific better-for-you brands to drive continued sales growth, profitability and value for our shareholders.”

Three Months Ended September 30, 2016

Net sales increased 48.1% to $68.0 million compared to $45.9 million for the three months ended September 30, 2015. The increase in net sales reflects solid growth of the SkinnyPop brand, new distribution of the Paqui brand, and the addition of the Oatmega brand. In addition, the Tyrrells’ international portfolio of brands which the Company acquired on September 2, 2016 contributed $8.6 million to net sales in the third quarter. The impact of foreign currency exchange on net sales and earnings in the quarter was immaterial based on the inclusion of Tyrrells results for a partial month of the three months ended September 30, 2016.


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Gross profit was $32.3 million, or 47.6% of net sales, compared to $25.7 million, or 55.9% of net sales for the three months ended September 30, 2015. The decrease in gross margin percentage for the three months ended September 30, 2016 was primarily due to a higher level of trade promotional activity, a shift in mix of brand and customer sales, including the addition of Tyrrells, and a delay in timing of planned cost savings. The Tyrrells gross margin was 27.1% for the three months ended September 30, 2016.

GAAP SG&A was $24.9 million compared to $21.2 million for the third quarter ended September 30, 2015. GAAP net income was $1.6 million, or $0.02 per fully diluted share, compared to a net loss of $3.0 million, or a loss of $0.04 per fully diluted share, for the three months ended September 30, 2015. Adjusted net income, which is a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was $9.0 million, or $0.12 per fully diluted share, based on 75.6 million diluted shares outstanding, compared to adjusted net income of $9.2 million for the three months ended September 30, 2015, or $0.12 per fully diluted share, based on 75.0 million diluted shares outstanding.

Adjusted EBITDA, which is a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, increased 11.0% to $20.1 million from $18.1 million for the three months ended September 30, 2015, primarily reflecting higher net sales and gross profit, partially offset by higher Adjusted SG&A. Adjusted SG&A, which is a non-GAAP financial measure used by the Company that makes certain adjustments to SG&A calculated under GAAP, was $12.7 million, compared to Adjusted SG&A of $7.6 million for the three months ended September 30, 2015. The increase in Adjusted SG&A was primarily driven by increased consumer marketing activities to drive brand awareness and customer trial, new costs associated with a full quarter contribution from Oatmega and a partial month contribution of Tyrrells, as well as investments in infrastructure and personnel. As a percentage of net sales, Adjusted EBITDA was 29.6% compared to 39.4% in the three months ended September 30, 2015.

Nine Months Ended September 30, 2016

Net sales for the nine months ended September 30, 2016 increased 32.5% to $182.2 million, compared to $137.5 million during the nine months ended September 30, 2015. The increase in net sales reflects solid growth of the SkinnyPop brand, new distribution of the Paqui and Oatmega brands, and the addition of the Tyrrells’ international portfolio of brands which the Company acquired on September 2, 2016.

GAAP net income increased $13.3 million to $18.8 million, or $0.25 per fully diluted share, compared to net income of $5.5 million, or $0.07 per fully diluted share, for the nine months ended September 30, 2015. Adjusted net income, which is a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was $30.4 million, or $0.40 per fully diluted share, based on 75.1 million diluted shares outstanding, compared to adjusted net income of $28.1 million for the nine months ended September 30, 2015, or $0.38 per fully diluted share, based on 74.7 million diluted shares outstanding.

Adjusted EBITDA, a non-GAAP financial measure, increased 9.3% to $61.4 million from $56.1 million for the nine months ended September 30, 2015. Adjusted EBITDA as a percentage of net sales for the nine months ended September 30, 2016 was 33.7%, compared to 40.8% for the nine months ended September 30, 2015.

 

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Balance Sheet and Cash Flow

As of September 30, 2016, the Company had cash and cash equivalents of $17.2 million and net availability under its $50 million revolving line of credit of $44.5 million. Net debt, as defined under the Company’s credit facility, represents outstanding indebtedness less cash and cash equivalents, was $596.2 million as of September 30, 2016, compared to $182.5 million as of December 31, 2015. The increase was primarily attributable to the acquisition of the Tyrrells portfolio of international brands during the nine months ended September 30, 2016. Amplify’s leverage ratio as calculated under the Company’s credit facility increased to 5.8x trailing twelve month EBITDA at September 30, 2016, up from 2.6x at June 30, 2016. The Company remains committed to reducing its long-term net leverage to under 4.5x via organic growth, cost reduction initiatives, and subsequent free cash generation.

Outlook

The Company is updating its full year 2016 outlook to reflect its year-to-date performance, the September 2, 2016 completion of the Tyrrells acquisition, and its view of the remainder of the year. For the full year 2016 the Company now expects to report:

 

    Net sales of $268 million to $272 million

 

    Adjusted EBITDA of $84 million to $86 million

 

    Adjusted EPS of $0.49 to $0.51

 

    The outlook assumes an estimated foreign currency exchange rate in the fourth quarter of 1.24 USD:GBP.

Additional details will be provided on the Company’s earnings call.

The Company has not reconciled its expected Adjusted EBITDA to net income or Adjusted EPS to earnings per share under “Outlook” because it has not finalized calculations for several factors necessary to provide the reconciliations, including net income, interest expense and income tax expense. In addition, certain items that impact net income and other reconciling metrics are out of the Company’s control and/or cannot be reasonably predicted at this time.

Conference Call and Webcast

The Company will host a conference call with members of the executive management team to discuss these results today, Monday, November 14, 2016 at 4:00 p.m. Central time (5:00 p.m. Eastern time). Investors interested in participating in the live call can dial 877-407-9039 from the U.S. International callers can dial 201-689-8470.

In addition, the call will be broadcast live over the Internet hosted at the “Investor Relations” section of the Company’s website at http://amplifysnackbrands.com. The webcast will be archived for 30 days. A telephone replay will be available approximately two hours after the call concludes and will be available through Monday, November 28, 2016, by dialing 877-870-5176 from the U.S., or 858-384-5517 from international locations, and entering confirmation code 13647860.

 

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About Amplify Snack Brands, Inc.

Headquartered in Austin, Texas, Amplify Snack Brands is a high growth snack food company focused on developing and marketing products that appeal to consumers’ growing preference for Better-For-You (BFY) snacks. Our brands SkinnyPop®, Tyrrells®, Paqui® and Oatmega® embody our BFY mission of “snacking without compromise” and have amassed a loyal customer base across a wide range of food distribution channels in the United States, United Kingdom, Canada, Europe and Australia. For additional information, please visit: http://amplifysnackbrands.com.

Forward-Looking Statements

This press release contains certain forward-looking statements regarding our performance, including in the section titled “Outlook.” Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “could”, “intends”, “target”, “projects”, “contemplates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

The important factors that could cause actual results to differ materially from those in any forward-looking statements include, but are not limited to, the following: (i) changes in consumer preferences and discretionary spending may have a material adverse effect on our brand loyalty, net sales, results of operations and financial condition, (ii) we rely on sales to a limited number of distributors and retailers for the substantial majority of our net sales, and the loss of one or more such distributors or retailers may harm our business, (iii) sales of a limited number of SkinnyPop products and flavors contributed all of our historical profitability and cash flow and a reduction in the sale of our SkinnyPop products would have a material adverse effect on our ability to remain profitable and achieve future growth, and (iv) our ability to successfully integrate the Tyrrells business and our other recent acquisitions with our existing operations.

Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release are included in our Annual Report on Form 10-K for the year ended December 31, 2015 and our Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission (“SEC”) and in other filings we will make with the SEC from time to time, particularly under the caption Risk Factors.

You should not place undue reliance upon forward-looking statements as predictions of future events. Amplify has based the forward-looking statements contained in this press release on its current expectations and projections about future events and trends that it believes may affect its business, financial condition, results of operations and prospects. The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. Amplify undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

 

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Non-GAAP Measures

In order to aid understanding of Amplify’s business performance, it has presented results in conformity with accounting principles generally accepted in the United States (“GAAP”) and has also presented Adjusted SG&A, Adjusted EBITDA and Adjusted net income and the corresponding earnings per share, which are non-GAAP measures that are explained and reconciled to the comparable GAAP measures in the tables included in this release.

Management believes that Adjusted SG&A, Adjusted EBITDA and Adjusted net income and the corresponding earnings per share, which are non-GAAP measurements, are meaningful to investors because they provide a view of the Company with respect to ongoing operating results. Adjusted EBITDA and Adjusted net income are not and should not be considered alternatives to net income or any other figure calculated in accordance with GAAP, or as an indicator of operating performance. The Company’s calculation of Adjusted SG&A, Adjusted EBITDA and Adjusted net income and the corresponding earnings per share may differ from methods used by other companies. Management believes that these non-GAAP measurements are important to help gain an understanding of the Company’s overall operating results in the periods presented. Such non-GAAP measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. We have not reconciled our expected Adjusted EBITDA to net income or Adjusted EPS to earnings per share under “Outlook” because we have not finalized our calculations of several factors necessary to provide the reconciliations, including net income, interest expense and income tax expense. In addition, certain items that impact net income and other reconciling metrics are out of our control and/or cannot be reasonably predicted at this time.

CONTACT

Investors

ICR

Katie Turner

646-277-1228

Media

ICR

Cory Ziskind

646-277-1232

cory.ziskind@icrinc.com

 

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Amplify Snack Brands, Inc. and Consolidated Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

     September 30, 2016      December 31, 2015  
     (unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 17,187       $ 18,751   

Accounts receivable, net

     39,740         11,977   

Inventories

     18,943         6,829   

Other current assets

     8,563         1,293   
  

 

 

    

 

 

 

Total current assets

     84,433         38,850   

Property and equipment, net

     51,959         2,153   

Other assets:

     

Goodwill

     177,541         47,421   

Intangible assets, net

     557,614         269,468   

Other non-current assets (1)

     55         40   
  

 

 

    

 

 

 

Total assets

   $ 871,602       $ 357,932   
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Current liabilities:

     

Accounts payable and accrued liabilities

   $ 46,815       $ 14,532   

Senior term loan- current portion

     6,000         12,750   

Founder contingent consideration

     2,197         25,197   

Tax receivable obligation- current portion

     6,595         6,632   

Note payable, net

     984         —     

Other current liabilities

     4,675         217   
  

 

 

    

 

 

 

Total current liabilities

     67,266         59,328   

Long-term liabilities:

     

Senior term loan (1)

     572,281         181,704   

Revolving credit facility

     4,144         —     

Notes payable, net

     6,642         3,757   

Net deferred tax liabilities

     62,277         5,115   

Tax receivable obligation

     89,497         89,498   

Other liabilities

     5,806         3,107   
  

 

 

    

 

 

 

Total long-term liabilities

     740,647         283,181   

Total shareholders’ equity

     63,689         15,423   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 871,602       $ 357,932   
  

 

 

    

 

 

 

 

(1)  In the first quarter of 2016, the Company adopted accounting guidance which requires debt issuance costs to be presented as a reduction to the carrying value of the related debt liability, rather than as a deferred charge (asset). This presentation resulted in debt issuance costs being presented in the same manner that debt discounts have historically been presented. As a result, the Company reclassified $2.9 million of debt issuance costs from Other assets to a deduction from the carrying value of the Senior term loan as of December 31, 2015.

 

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Amplify Snack Brands, Inc. and Consolidated Subsidiaries

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2016 and 2015

(unaudited, in thousands, except share and per share data)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 

Net sales

   $ 67,982      $ 45,914      $ 182,193      $ 137,543   

Cost of goods sold

     35,646        20,260        88,891        60,787   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     32,336        25,654        93,302        76,756   

Operating expenses:

        

Sales and marketing

     8,903        5,146        22,551        13,780   

General and administrative

     15,971        16,068        27,688        37,085   

Gain on change in fair value of contingent consideration

     (505     —          (505     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     24,369        21,214        49,734        50,865   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     7,967        4,440        43,568        25,891   

Interest expense

     5,636        3,311        11,788        9,324   

Other income

     (4,221     —          (4,221     —     

Loss on extinguishment of debt

     1,100        —          1,100        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     5,452        1,129        34,901        16,567   

Income tax expense

     3,807        4,118        16,086        11,092   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 1,645      $ (2,989   $ 18,815      $ 5,475   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic and diluted

   $ 0.02      $ (0.04   $ 0.25      $ 0.07   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     75,455,047        74,982,461        75,032,287        74,707,855   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     75,557,760        74,982,461        75,094,446        74,707,855   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Amplify Snack Brands, Inc. and Consolidated Subsidiaries

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA and Adjusted Net Income

(in thousands)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 

Net income (loss)

   $ 1,645      $ (2,989   $ 18,815      $ 5,475   

Non-GAAP adjustments:

        

Interest expense

     5,636        3,311        11,788        9,324   

Income tax expense

     3,807        4,118        16,086        11,092   

Depreciation expense

     539        98        814        206   

Amortization of intangible assets

     1,279        1,064        3,433        3,165   

Equity-based compensation expense

     1,803        997        3,972        2,435   

Gain on change in fair value of contingent consideration

     (505     —          (505     —     

Other income (1)

     (4,221     —          (4,221     —     

Loss on extinguishment of debt

     1,100        —          1,100        —     

Founder contingent compensation

     —          4,602        —          13,805   

Transaction-related expenses:

        

IPO-related expenses (2)

     —          6,715        —          9,352   

Secondary equity offering-related expenses (3)

     —          —          615        —     

Acquisition-related expenses (4)

     9,024        67        9,498        462   

Executive recruitment (5)

     —          127        —          742   

Recapitalization expenses (6)

     —          —          —          91   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 20,107      $ 18,110      $ 61,395      $ 56,149   

Less:

        

Interest expense

     5,636        3,311        11,788        9,324   

Depreciation expense

     539        98        814        206   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income before taxes

     13,932        14,701        48,793        46,619   

Income tax expense above

     3,807        4,118        16,086        11,092   

Adjustments to income tax expense (7)

     1,112        1,429        2,332        7,385   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income tax expense

     4,919        5,547        18,418        18,477   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 9,013      $ 9,154      $ 30,375      $ 28,142   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per share- diluted

   $ 0.12      $ 0.12      $ 0.40      $ 0.38   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding- diluted

     75,557,760        74,982,461        75,094,446        74,707,855   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes a gain of approximately $3.6 million, recognized in September 2016 associated with the settlement of a forward currency exchange contract entered into in connection with our acquisition of Tyrrells, as well as foreign currency gains from intra-entity loans between Tyrrells entities.
(2) Includes performance bonuses and related payroll taxes paid to employees upon the completion of the IPO, a financial advisory fee paid to an advisor in connection with the IPO, and legal, accounting, consulting, printing, filing and listing fees paid in connection with the IPO process.
(3) Includes legal, accounting, printing and filing fees paid in connection with the Company’s secondary equity public offering, which closed in May 2016.
(4) Includes legal, accounting, consulting and ratings agency fees along with severance expenses and integration costs incurred in connection with our acquisition of the Tyrrells’ international portfolio of brands in September 2016, the Oatmega brand in April 2016 and the Paqui brand in April 2015.
(5) Represents the recognized expense associated with sign-on and retention bonuses for certain executive hires and certain recruiting fees. We are permitted to add back expenses of this type in determining Adjusted EBITDA under the Credit Agreement governing our term loan. Adjusted EBITDA (as defined therein) is used thereunder in determining our financial maintenance covenants and for calculating ratios in our debt incurrence covenants and is therefore an important measure of our financial performance and our ability to take certain actions in operating our business.

 

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(6) Represents expenses we incurred in connection with a distribution paid in May 2015 to members of the former parent entity of the Company.
(7) The table below reflects an adjustment to income tax expense for the periods presented associated with addbacks to net income as presented in the table above.

 

     Three Months Ended     Nine Months Ended  
     September 30,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 

Adjustments to net income

   $ 8,480      $ 13,572      $ 13,892      $ 30,052   

Less:

        

Non-deductible equity-based compensation

     883        997        2,599        2,435   

Non-deductible IPO, secondary equity offering, and acquisition-related expenses

     4,790        8,967        5,405        8,967   
  

 

 

   

 

 

   

 

 

   

 

 

 

Permanent differences

     5,673        9,964        8,004        11,402   
  

 

 

   

 

 

   

 

 

   

 

 

 
     2,807        3,608        5,888        18,650   

Federal and state statutory rate, net of federal tax benefit for state tax expense

     39.6     39.6     39.6     39.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments to income tax expense

   $ 1,112      $ 1,429      $ 2,332      $ 7,385   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

9


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Amplify Snack Brands, Inc.

Reconciliation of GAAP Selling and Marketing and General and Administrative (“SG&A”) Expenses

to Adjusted SG&A Expenses

(In thousands)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 

SG&A

   $ 24,874      $ 21,214      $ 50,239      $ 50,865   

Less:

        

Depreciation expense

     (91     (48     (207     (61

Amortization of intangible assets

     (1,279     (1,064     (3,433     (3,165

Equity-based compensation expense

     (1,803     (997     (3,972     (2,435

Founder contingent compensation

     —          (4,602     —          (13,805

Transaction-related expenses:

        

IPO-related expenses (1)

     —          (6,715     —          (9,352

Secondary equity offering-related expenses (2)

     —          —          (615     —     

Acquisition-related expenses (3)

     (9,024     (67     (9,498     (462

Executive recruitment (4)

     —          (127     —          (742

Recapitalization expenses (5)

     —          —          —          (91
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted SG&A

   $ 12,677      $ 7,594      $ 32,514      $ 20,752   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes performance bonuses and related payroll taxes paid to employees upon the completion of the IPO, a financial advisory fee paid to an advisor in connection with the IPO, and legal, accounting, consulting, printing, filing and listing fees paid in connection with the IPO process.
(2) Includes legal, accounting, printing and filing fees paid in connection with the Company’s secondary equity public offering, which closed in May 2016.
(3) Includes legal, accounting, consulting and ratings agency fees along with severance expenses and integration costs incurred in connection with our acquisition of the Tyrrells’ international portfolio of brands in September 2016, the Oatmega brand in April 2016 and the Paqui brand in April 2015.
(4) Represents the recognized expense associated with sign-on and retention bonuses for certain executive hires and certain recruiting fees. We are permitted to add back expenses of this type in determining Adjusted EBITDA under the Credit Agreement governing our term loan. Adjusted EBITDA (as defined therein) is used thereunder in determining our financial maintenance covenants and for calculating ratios in our debt incurrence covenants and is therefore an important measure of our financial performance and our ability to take certain actions in operating our business.
(5) Represents expenses we incurred in connection with a distribution paid in May 2015 to members of the former parent entity of the Company.

 

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