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Section 1: 8-K (8-K)

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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): December 6, 2018
 
 
BLUE BIRD CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-36267
 
46-3891989
(State or Other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
3920 Arkwright Road, 2nd Floor
Macon, Georgia
 
31210
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (478) 822-2801

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:
¨

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).





Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


ITEM 2.02        RESULTS OF OPERATIONS AND FINANCIAL CONDITION

In accordance with General Instruction B.2. to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The information regarding the results of operations and financial condition of Blue Bird Corporation (the “Company”) responsive to this Item 2.02, and contained in Exhibit 99.1 filed herewith, is incorporated into this Item 2.02 by reference.
 
ITEM 7.01        REGULATION FD DISCLOSURE

In accordance with General Instruction B.2. to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The Company, which is the leading independent designer and manufacturer of school buses, announced it will present via live web cast its fiscal 2018 full year and fourth quarter financial results on December 6, 2018. A live web cast is scheduled at approximately 4:30 p.m. Eastern Time. Speakers on the web cast will include: Phil Horlock, President and Chief Executive Officer; Phil Tighe, Chief Financial Officer and other company leaders.

The web cast can be accessed through a link on the investor relations page of Company’s web site at http://blue-bird.com. Investors are advised to log on to the website at least 15 minutes prior to the start of the web cast to allow sufficient time for downloading any necessary software. The web cast will be available for replay at the same address approximately three hours following its conclusion, and will remain available for a period of at least 12 months.

ITEM 9.01        FINANCIAL STATEMENTS AND EXHIBITS
(d)     Exhibits

Exhibit No.     Description
99.1        Press release of the Company, dated December 6, 2018.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
                    
                                    
 
 
Blue Bird Corporation
 
 
 
Dated:
December 6, 2018
/s/ Paul Yousif
 
 
Paul Yousif
 
 
General Counsel and Corporate Treasurer


Exhibit Index
 
Exhibit No.        Description
99.1            Press release of the Company, dated December 6, 2018.



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
396019361_capturea10.jpg

RECORD FOURTH QUARTER RESULTS;
EXCEEDED OR ACHIEVED FY2018 GUIDANCE;
ANNOUNCING FY2019 GUIDANCE WITH SUBSTANTIAL PROFIT GROWTH

Fiscal 2018 Full Year GAAP net income of $30.8 million, up $2.0 million,
Adjusted EBITDA of $70.4 million, Adjusted Diluted EPS of $1.77
and Adjusted Free Cash Flow of $40.2 million
FY2019 Guidance for Adj. EBITDA of $80-85M, up 14-21%


Macon, GA, December 6, 2018 – Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leading independent designer and manufacturer of school buses, announced today its fiscal 2018 full year and fourth quarter results. Compared with prior year, Blue Bird Corporation delivered higher net income, up $2.0 million and $0.4 million, respectively. Blue Bird improved Adjusted EBITDA by $1.5 million in the full year, to $70.4 million and by $4.1 million in the fourth quarter to $29.1 million, despite significant cost headwinds from steel and other commodities. Diluted Earnings per Share was significantly higher than last year, up 34 cents and 24 cents in the full year and fourth quarter, respectively. On an adjusted basis, diluted earnings per share was 70 cents and 40 cents higher, respectively.
    

Highlights
(in millions except EPS data)
Three Months Ended September 29, 2018
 
B/(W) 
 2017
 
Fiscal Year Ended September 29, 2018
 
B/(W) 
 2017
Unit Sales
3,757

 
149

 
11,649

 
332

GAAP Measures:
 
 
 
 
 
 
 
Revenue
$
331.6

 
$
18.9

 
$
1,025.0

 
$
34.4

Net Income
$
14.9

 
$
0.4

 
$
30.8

 
$
2.0

Diluted Earnings per Share
$
0.52

 
$
0.24

 
$
1.08

 
$
0.34

Non-GAAP Measures1:
 
 
 
 
 
 
 
Adjusted EBITDA
$
29.1

 
$
4.1

 
$
70.4

 
$
1.5

Adjusted Net Income
$
20.1

 
$
5.0

 
$
50.6

 
$
13.5

Adjusted Diluted Earnings per Share
$
0.70

 
$
0.40

 
$
1.77

 
$
0.70

1 Reconciliation to relevant GAAP metrics shown below

“We are pleased with our record fourth quarter and strong full year performance, as we were able to improve profitability over last year despite substantial steel cost headwinds," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “We achieved significant structural cost reductions through our Transformational Initiatives to improve quality, reduce costs, and increase capacity. We expect continued gains in FY2019 from the implementation of these initiatives as well as the pricing we took to offset rapidly-increasing commodity costs late in FY2018. We are on track to achieve our Adjusted EBITDA margin target of 10%+ by FY2020. In support of this target, we are pleased to announce our FY2019 full-year revenue guidance of $990 - $1,025 million and Adjusted EBITDA guidance of $80 - 85 million.

"Blue Bird is once again the first major OEM to offer new, industry-leading alternative-fuel products this year, with our all-electric school bus and our ultra-low NOx propane bus, and most recently, our ultra-low NOx CNG Type C bus. Our product leadership focus continues to be the design of differentiated and innovative products that customers want and value, as demonstrated by our continued growth in alternative-fuel bus sales. These buses accounted for 38% of our total sales this year, representing a 4 pt. increase over last year, and a 70% market share in the fastest growing segment of the school bus market.

1



"Despite the significant capital investments that we made this year, we continue to generate positive cash flow, with net cash provided by operating activities of $48.4 million and Adjusted Free Cash Flow of 40.2 million. As we look to fiscal 2019, we are projecting full year Adjusted Free Cash Flow of $24 - $28 million as we continue to invest in new products and our production facility, led by our all-new robotic paint shop, which we expect to complete in mid-2019."

Fourth Quarter 2018 Results

Net Sales
Net sales were $331.6 million for the fourth quarter of fiscal 2018, an increase of $18.9 million, or 6.1%, from prior year period. Bus unit sales were 3,757 units for the quarter compared with 3,608 units for the same period last year.

Gross Profit
Fourth quarter gross profit of $42.7 million represented an increase of $3.2 million from the fourth quarter of last year, with gross margins 30 basis points higher than a year ago, despite higher steel and other commodity prices.

Net Income
Net income was $14.9 million for the fourth quarter of fiscal 2018, an increase of $0.4 million compared with the same period last year.

Adjusted Net Income
Adjusted Net Income was $20.1 million, representing an increase of $5.0 million compared with the same period last year.

Adjusted EBITDA
Adjusted EBITDA was $29.1 million, representing an increase of $4.1 million compared with the fourth quarter of the prior year and our best fourth quarter result in more than ten years.

Full Year 2018 Results

Net Sales
Net sales were $1.025 billion for the fiscal year ended September 29, 2018, an increase of $34.4 million, or 3.5%, compared with the prior year. This was primarily driven by higher bus unit sales, which were 332 units above the same period last year. Achieving more than $1 billion in net sales was a new milestone for Blue Bird.

Gross Profit
Full year gross profit was $122.0 million, a decrease of $5.4 million from the prior year.

Net Income
Net income was $30.8 million for the fiscal year ended September 29, 2018, which was $2.0 million above the same period in the prior year. The increase was primarily driven by a decrease of $14.5 million in income taxes and a debt extinguishment charge of $10.1 million in the prior year that was not recurring. These were partially offset by an increase of $15.9 million in selling, general and administrative expenses, primarily reflecting non-recurring costs to deliver our Transformational Initiatives, and a decrease of $5.4 million in gross profit.

Adjusted Net Income
Adjusted Net Income was $50.6 million, representing an increase of $13.5 million compared with the prior year.

Adjusted EBITDA
Adjusted EBITDA was $70.4 million for the fiscal year ended September 29, 2018, an increase of $1.5 million from the prior year, despite major cost headwinds for steel and other commodities.

Conference Call Details

Blue Bird will discuss its fourth quarter 2018 results and other related matters in a conference call at 4:30 PM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird's website at www.blue-bird.com.


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Webcast participants should log on and register at least 15 minutes prior to the start time on the Investor Relations homepage of Blue Bird’s website at http://investors.blue-bird.com. Click the link in the events box on the Investor Relations landing page.

Participants desiring audio only should dial 1-866-548-4713 or 1-323-794-2093

A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.

About Blue Bird Corporation

Blue Bird is the leading independent designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and approximately 180,000 buses in operation today. Blue Bird’s longevity and reputation in the school bus industry have made it an iconic American brand. Blue Bird distinguishes itself from its principal competitors by its singular focus on the design, engineering, manufacture and sale of school buses and related parts. As the only manufacturer of chassis and body production specifically designed for school bus applications, Blue Bird is recognized as an industry leader for school bus innovation, safety, product quality/reliability/durability, operating costs and drivability. In addition, Blue Bird is the market leader in alternative fuel applications with its propane-powered and compressed natural gas-powered school buses. Blue Bird manufactures school buses at two facilities in Fort Valley, Georgia. Its Micro Bird joint venture operates a manufacturing facility in Drummondville, Quebec, Canada. Service and after-market parts are distributed from Blue Bird’s parts distribution center located in Delaware, Ohio.

Key Non-GAAP Financial Measures We Use to Evaluate Our Performance

This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” "Adjusted EBITDA Margin," "Adjusted Net Income," "Adjusted Diluted Earnings per Share," “Free Cash Flow” and “Adjusted Free Cash Flow” because management views these metrics as a useful way to look at the performance of our operations between periods and to exclude decisions on capital investment and financing that might otherwise impact the review of profitability of the business based on present market conditions.

Adjusted EBITDA is defined as net income prior to discontinued operations income or loss, interest income, interest expense, income taxes, and depreciation, amortization, and disposals, as adjusted to add back certain charges that we may record each year, such as stock-compensation expense, as well as non-recurring charges such as (i) significant product design changes; (ii) transaction related costs; or (iii) discrete expenses related to major cost cutting initiatives. We believe these expenses are non-recurring charges and not considered an indicator of ongoing company performance. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales. Adjusted Net Income is net income as adjusted to add back certain costs as mentioned above. Adjusted diluted earnings per share represents Adjusted Net Income available to common stockholders by diluted weighted average common shares outstanding (as if we had GAAP net income during the respective period). Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share are not measures of performance defined in accordance with GAAP. The measures are used as a supplement to GAAP results in evaluating certain aspects of our business, as described below.

We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our operations, excluding decisions made with respect to capital investment, financing, and other non-recurring charges as outlined in the preceding paragraph. We believe the non-GAAP metrics offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance an evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.


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We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measures of “Free Cash Flow” and "Adjusted Free Cash Flow" are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We define free cash flow as net cash provided by/used in operating activities minus cash paid for fixed assets. We define adjusted free cash flow as free cash flow minus cash paid for (i) significant product design changes; (ii) transaction related costs; or (iii) discrete expenses related to major cost cutting initiatives. We use free cash flow and adjusted free cash flow, and ratios based on both, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets are a necessary component of ongoing operations. In limited circumstances in which proceeds from sales of fixed assets exceed purchases, free cash flow would exceed cash flow from operating activities. However, since we do not anticipate being a net seller of fixed assets, we expect free cash flow to be less than cash flows from operating activities.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:

Inherent limitations of internal controls impacting financial statements
Growth opportunities
Future profitability
Ability to expand market share
Customer demand for certain products
Economic conditions (including tariffs) that could affect fuel costs, commodity costs, industry size and financial conditions of our dealers and suppliers
Labor or other constraints on the Company’s ability to maintain a competitive cost structure
Volatility in the tax base and other funding sources that support the purchase of buses by our end customers
Lower or higher than anticipated market acceptance for our products
Other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.

Forward-looking statements in this document also may include, but are not limited to, statements regarding the pricing of the share repurchase, the potential tender offer by Blue Bird for shares of its common stock, and the benefits and timing of any potential tender offer. Many risks, contingencies and uncertainties could cause actual results to differ materially from Blue Bird’s forward-looking statements. Among these factors are the risk that Blue Bird may decide not to commence the tender offer, and that if Blue Bird does commence a tender offer, that the offer may not be completed.



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Contact:
Mark Benfield
Investor Relations & Government Affairs
(478) 822-2315
Mark.Benfield@blue-bird.com

BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except for share data)
September 29, 2018
 
September 30, 2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
60,260

 
$
62,616

Accounts receivable, net
24,067

 
10,148

Inventories
57,333

 
76,155

Other current assets
8,183

 
11,528

Total current assets
$
149,843

 
$
160,447

Property, plant and equipment, net
66,054

 
34,708

Goodwill
18,825

 
18,825

Intangible assets, net
55,472

 
57,481

Equity investment in affiliate
11,123

 
11,625

Deferred tax asset
4,437

 
11,755

Other assets
1,676

 
975

Total assets
$
307,430

 
$
295,816

Liabilities and Stockholders' Deficit
 
 
 
Current liabilities
 
 
 
Accounts payable
$
95,780

 
$
87,331

Warranty
9,142

 
8,573

Accrued expenses
21,935

 
18,229

Deferred warranty income
8,159

 
6,776

Other current liabilities
3,941

 
9,847

Current portion of long-term debt
9,900

 
8,000

Total current liabilities
$
148,857

 
$
138,756

Long-term liabilities
 
 
 
Long-term debt
$
132,239

 
$
143,224

Warranty
13,504

 
12,337

Deferred warranty income
15,032

 
12,519

Deferred tax liabilities
197

 

Other liabilities
4,924

 
15,064

Pension
21,013

 
32,426

Total long-term liabilities
$
186,909

 
$
215,570

Stockholders' deficit
 
 
 
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 93,000 issued with liquidation preference of $9,300 at September 29, 2018 and 400,000 issued with liquidation preference of $40,000 at September 30, 2017
$
9,300

 
$
40,000

Common stock, $0.0001 par value, 100,000,000 shares authorized, 27,259,262 and 23,739,344 issued and outstanding at September 29, 2018 and September 30, 2017, respectively.
3

 
2

Additional paid-in capital
70,023

 
45,418

Accumulated deficit
(69,235
)
 
(100,055
)
Accumulated other comprehensive loss
(38,427
)
 
(43,875
)
Total stockholders' deficit
$
(28,336
)
 
$
(58,510
)
Total liabilities and stockholders' deficit
$
307,430

 
$
295,816



5



BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended
 
Fiscal Year Ended
(in thousands except for share data)
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Net sales
$
331,613

 
$
312,687

 
$
1,024,976

 
$
990,602

Cost of goods sold
288,914

 
273,176

 
902,988

 
863,234

Gross profit
$
42,699

 
$
39,511

 
$
121,988

 
$
127,368

Operating expenses
 
 
 
 
 
 
 
Selling, general and administrative expenses
23,146

 
19,049

 
88,755

 
72,831

Operating profit
$
19,553

 
$
20,462

 
$
33,233

 
$
54,537

Interest expense
(1,549
)
 
(1,450
)
 
(6,661
)
 
(7,251
)
Interest income
28

 
77

 
70

 
140

Other (expense) income, net
(753
)
 
275

 
231

 
66

Loss on debt extinguishment

 

 

 
(10,142
)
Income before income taxes
$
17,279

 
$
19,364

 
$
26,873

 
$
37,350

Income tax (expense) benefit
(3,042
)
 
(6,130
)
 
2,620

 
(11,856
)
Equity in net income of non-consolidated affiliate
695

 
1,310

 
1,327

 
3,307

Net income
$
14,932

 
$
14,544

 
$
30,820

 
$
28,801

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Net income (from above)
$
14,932

 
$
14,544

 
$
30,820

 
$
28,801

Less: preferred stock dividends
181

 
1,317

 
1,896

 
4,261

Less: preferred stock repurchase

 
6,091

 

 
6,091

Net income available to common stockholders
$
14,751

 
$
7,136

 
$
28,924

 
$
18,449

 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
27,029,354

 
24,070,033

 
25,259,595

 
23,343,772

Diluted weighted average shares outstanding
28,579,670

 
25,466,321

 
28,616,862

 
24,877,729

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.55

 
$
0.30

 
$
1.15

 
$
0.79

Diluted earnings per share
$
0.52

 
$
0.28

 
$
1.08

 
$
0.74



6


BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Fiscal Year Ended
(in thousands of dollars)
September 29, 2018
 
September 30, 2017
Cash flows from operating activities
 
 
 
Net income
$
30,820

 
$
28,801

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
9,042

 
8,180

Amortization of debt costs
771

 
1,107

Share-based compensation
2,628

 
1,270

Equity in net income of affiliate
(1,327
)
 
(3,307
)
Loss (gain) on disposal of fixed assets
114

 
(33
)
Deferred taxes
5,655

 
(1,202
)
Amortization of deferred actuarial pension losses
3,521

 
6,291

Loss on debt extinguishment

 
10,142

Unrealized gains on foreign currency hedges
(109
)
 

Changes in assets and liabilities:
 
 
 
Accounts receivable
(13,920
)
 
10,167

Inventories
17,786

 
(22,349
)
Other assets
2,755

 
(5,469
)
Accounts payable
3,096

 
8,404

Accrued expenses, pension and other liabilities
(14,307
)
 
1,013

Dividend from equity investment in affiliate
1,828

 
4,626

Total adjustments
$
17,533

 
$
18,840

Total cash provided by operating activities
$
48,353

 
$
47,641

Cash flows from investing activities
 
 
 
Cash paid for fixed assets
(32,118
)
 
(9,252
)
Proceeds from sale of fixed assets
14

 
48

Total cash used in investing activities
$
(32,104
)
 
$
(9,204
)
Cash flows from financing activities
 
 
 
Repayments under the former senior term loan
$

 
$
(161,500
)
Borrowings under new term loan

 
156,887

Repayments under the new term loan
(7,850
)
 
(6,000
)
Cash paid for capital leases
(158
)
 
(155
)
Cash paid for debt issuance costs
(2,006
)
 
(299
)
Cash paid to extinguish debt

 
(507
)
Payment of dividends on preferred stock
(1,896
)
 
(4,261
)
Cash paid for employee taxes on vested restricted shares and stock option exercises
(2,211
)
 
(1,013
)
Proceeds from exercises of warrants
22,102

 
23,045

Common stock, preferred stock, and warrant repurchases under the share repurchase program
(26,586
)
 
(34,327
)
Total cash used in financing activities
$
(18,605
)
 
$
(28,130
)
Change in cash and cash equivalents
(2,356
)
 
10,307

Cash and cash equivalents, beginning of year
62,616

 
52,309

Cash and cash equivalents, end of year
$
60,260

 
$
62,616

 
 
 
 
Supplemental disclosures of cash flow information
 
 
 
Cash paid during the period for:
 
 
 
Interest paid, net of interest received
$
5,782

 
$
6,081

Income tax paid, net of tax refunds
3,673

 
8,420

Non-cash investing and financing activities
 
 
 
Change in accounts payable for capital additions to property, plant and equipment
$
6,389

 
$
(1,719
)
Cashless exercise of stock options
3,570

 
4,216


7


Reconciliation of Net Income to Adjusted EBITDA
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Net income
$
14,932

 
$
14,544

 
$
30,820

 
$
28,801

Adjustments:
 
 
 
 
 
 
 
Discontinued operations income

 
(287
)
 
(81
)
 
(65
)
Interest expense, net
1,521

 
1,373

 
6,591

 
7,111

Income tax expense (benefit)
3,042

 
6,130

 
(2,620
)
 
11,856

Depreciation, amortization, and disposals
2,731

 
2,099

 
9,214

 
8,205

Loss on debt extinguishment

 

 

 
10,142

Operational transformation initiatives
4,161

 

 
17,708

 

Unrealized losses (gains) on foreign currency hedges
719

 

 
(109
)
 

Share-based compensation
248

 
366

 
2,628

 
1,270

Product redesign initiatives
1,727

 
828

 
6,253

 
1,758

Other
29

 

 
(25
)
 
(174
)
Adjusted EBITDA
$
29,110

 
$
25,053

 
$
70,379

 
$
68,904

Adjusted EBITDA margin (percentage of net sales)
8.8
%
 
8.0
%
 
6.9
%
 
7.0
%


Reconciliation of Free Cash Flow to Adjusted Free Cash Flow
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Net cash provided by operating activities
$
41,331

 
$
41,890

 
$
48,353

 
$
47,641

Cash paid for fixed assets
(16,546
)
 
(2,059
)
 
(32,118
)
 
(9,252
)
   Free cash flow
$
24,785

 
$
39,831

 
$
16,235

 
$
38,389

Cash paid for product redesign initiatives
(1,727
)
 
(828
)
 
(6,253
)
 
(1,758
)
Cash paid for operational transformation initiatives
(4,161
)
 

 
(17,708
)
 

Cash paid for other

 

 

 
(3,313
)
Adjusted free cash flow
30,673

 
40,659

 
40,196

 
43,460



8


Reconciliation of Net Income to Adjusted Net Income
 
Three Months Ended
 
Fiscal Year Ended
(in thousands of dollars)
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Net income
$
14,932

 
$
14,544

 
$
30,820

 
$
28,801

Adjustments, net of tax benefit or expense (1)
 
 
 
 
 
 
 
Operational transformation initiatives
3,121

 

 
13,281

 

Product initiatives
1,295

 
530

 
4,690

 
1,125

Loss on debt extinguishment

 

 

 
6,491

Unrealized losses (gains) on foreign currency hedges
539

 

 
(82
)
 

Share-based compensation
186

 
234

 
1,971

 
813

Discontinued operations income

 
(184
)
 
(61
)
 
(42
)
Other
22

 

 
(19
)
 
(111
)
Adjusted net income, non-GAAP
$
20,095

 
$
15,124

 
50,601

 
37,077

Less: preferred stock dividends
181

 
1,317

 
1,896

 
4,261

Less: premium paid on preferred stock

 
6,091

 

 
6,091

Adjusted net income available to common stockholders, non-GAAP
$
19,914

 
$
7,716

 
48,705

 
26,725

 
(1) Amounts are net of estimated statutory tax rates of 25% for the three months and fiscal year ended September 29, 2018 and 36% for the three months and fiscal year ended September 30, 2017.



Reconciliation of Diluted EPS to Adjusted Diluted EPS
 
Three Months Ended
 
Fiscal Year Ended
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Diluted earnings per share
$
0.52

 
$
0.28

 
$
1.08

 
$
0.74

One-time charge adjustments, net of tax benefit or expense
0.18

 
0.02

 
0.69

 
0.33

Adjusted diluted earnings per share, non-GAAP (1)
$
0.70

 
$
0.30

 
$
1.77

 
$
1.07

Weighted average dilutive shares outstanding
28,579,670

 
25,466,321

 
28,616,862

 
24,877,729

 
(1) Numerator is adjusted net income, non-GAAP for the three months and fiscal year ended 2018. Numerator is is net income available to common stockholders, non-GAAP for the three months and fiscal year ended 2017.












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