CHARLOTTE, N.C., Nov. 10, 2014 (GLOBE NEWSWIRE) -- Swisher Hygiene Inc. ("Swisher") (Nasdaq:SWSH), a leading service provider of essential hygiene and sanitizing solutions, announced today results for the three and nine months ended September 30, 2014. All amounts in this news release are in United States dollars.
Third Quarter 2014 Highlights
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Total revenue of $49.7 million for the third quarter of 2014, an 11% decrease compared to the third quarter of 2013. Excluding revenue related to non-core linen routes and businesses subsequently sold and held for sale, revenue for the third quarter of 2014 was down 6% from the prior-year period.
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Adjusted EBITDA loss of $2.3 million for the third quarter of 2014, based on a net loss from continuing operations of $7.8 million, as compared to an Adjusted EBITDA loss of $3.8 million for the third quarter of 2013, based on a net loss from continuing operations of $13.2 million. For a reconciliation of non-GAAP to GAAP measures, please review the disclosures and table included with this release.
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Basic and diluted loss per share of $0.44 for the third quarter of 2014, compared to basic and diluted loss per share of $0.75 in the third quarter of 2013.
- Executed a three-year $20 million revolving credit facility with Siena Lending Group LLC. Interest on borrowings under the credit facility will accrue at the Base Rate plus 2.00%.
"We continue to improve our margins on a year-over-year basis despite the decline in revenue, as our adjusted EBITDA loss saw improvement," said William M. Pierce, President and Chief Executive Officer of Swisher. "Challenges remain to turn the corner to sustained profitability, but we remain committed to that outcome in the near term."
Reclassification
In the first quarter of 2014, the Company began implementing a realignment of its field service and sales organization and as a result the primary function of certain job titles has shifted from primarily sales focused to service focused. Based on the change in the job functions, the related payroll expense will be classified within route expense, which the Company defines as employee costs incurred to provide service and deliver products to customers. To facilitate comparability between the periods, certain selling, general and administrative expenses for the three months ended September 30, 2013 have been reclassified to route expense to conform to the current year's presentation as follows: a $3.0 million increase in route expense and a $3.0 million decrease in selling, general and administrative expense. For the nine months ended September 30, 2013, the following amounts have been reclassified to route expense: an $8.6 million increase in route expense and an $8.6 million decrease in selling, general and administrative expense. There was no impact to loss from continuing operations, net loss or loss per share as a result of the reclassification.
Third Quarter 2014 Results
For the three months ended September 30, 2014, Swisher reported total revenue of $49.7 million, an 11% decrease from $55.9 million in the three months ended September 30, 2013. Excluding revenue related to non-core linen routes and businesses subsequently sold and held for sale, revenue for the third quarter of 2014 was down 6% from the prior-year period.
Total costs and expenses for the three months ended September 30, 2014 decreased 17% to $57.3 million, compared to $68.7 million in the three months ended September 30, 2013. Excluding $1.7 million of impairment expense related to assets held for sale in the three months ended September 30, 2013, total costs and expenses decreased 15%, or $9.7 million, compared to the three months ended September 30, 2013.
For the three months ended September 30, 2014 and 2013, respectively:
| Q3 2014 | Q3 2013 | |
| Cost of sales as a % of revenue | 45.7% | 45.1% |
| Route expense as a % of revenue1 | 26.7% | 25.2% |
| SG&A expense as a % of revenue | 32.9% | 39.7% |
| SG&A expense (excluding unusual expenses) as a % of revenue | 32.9% | 40.6% |
| 1 Represents route expenses as a percentage of total non-franchise revenue. | ||
Cost of sales declined $2.6 million, or 10%, from the prior-year period. Route expense declined $0.8 million, or 6%, from the prior-year period. SG&A expense (excluding non-routine professional fees) declined $6.3 million, or 28%, from the prior-year period.
The increase in cost of sales as a percentage of revenue from the prior-year period primarily reflects $0.5 million related to a realignment of freight costs previously classified in SG&A in 2013 as well as changes in Swisher's revenue mix. SG&A expenses as a percentage of revenue declined from the prior-year period, reflecting ongoing cost efficiencies, a reduction in stock-based compensation and the sale of non-core linen assets.
Net loss for the three months ended September 30, 2014 was $7.8 million, compared to net loss of $13.4 million in the three months ended September 30, 2013. Net loss for the three months ended September 30, 2013 included a $0.2 million loss from discontinued operations, net of tax.
Adjusted EBITDA loss for the three months ended September 30, 2014 was $2.3 million, compared to an Adjusted EBITDA loss of $3.8 million in the three months ended September 30, 2013.
Nine Months 2014 Results
For the nine months ended September 30, 2014, Swisher reported total revenue of $147.9 million, a 9% decrease from $163.3 million in the nine months ended September 30, 2013. Excluding revenue related to non-core linen routes and businesses subsequently sold and held for sale, revenue for the first nine months of 2014 was down 5% from the prior-year period.
Total costs and expenses for the nine months ended September 30, 2014 decreased 12% to $183.3 million, compared to $207.3 million in the nine months ended September 30, 2013. Excluding $9.0 million related to an impairment loss on goodwill, an impairment loss on assets held for sale and investigation and review-related expenses in the nine months ended September 30, 2014, and $8.3 million of impairment on assets held for sale, investigation and review-related expenses, and non-routine professional fees, in the nine months ended September 30, 2013, total costs and expenses decreased 12% compared to the nine months ended September 30, 2013.
For the nine months ended September 30, 2014 and 2013, respectively:
| YTD 2014 | YTD 2013 | |
| Cost of sales as a % of revenue | 45.6% | 44.2% |
| Route expense as a % of revenue1 | 26.0% | 25.5% |
| SG&A expense as a % of revenue | 36.0% | 45.1% |
| SG&A expense (excluding unusual expenses) as a % of revenue | 35.9% | 42.1% |
| 1 Represents route expenses as a percentage of total non-franchise revenue. | ||
Cost of sales declined $4.7 million, or 7%, from the prior-year period. Route expense declined $3.3 million, or 8%, from the prior-year period. SG&A expense (excluding unusual expenses) declined $15.0 million, or 23%, from the prior-year period.
The increase in cost of sales as a percentage of revenue from the prior-year period primarily reflects $1.5 million related to a realignment of freight costs previously classified in SG&A in 2013 as well as changes in Swisher's revenue mix. SG&A expenses (excluding investigation and review-related expenses and non-routine professional fees) as a percentage of revenue declined from the prior-year period, reflecting cost efficiencies, a reduction in stock-based compensation and the sale of linen assets.
Net loss for the nine months ended September 30, 2014 was $36.7 million, compared to net loss of $46.0 million in the nine months ended September 30, 2013. Net loss for the nine months ended September 30, 2013 included a $0.7 million loss from discontinued operations, net of tax.
Adjusted EBITDA loss for the nine months ended September 30, 2014 was $9.5 million, compared to an Adjusted EBITDA loss of $14.7 million in the nine months ended September 30, 2013.
Cash and Capital Resources
As of September 30, 2014, Swisher had $10.2 million of unrestricted cash and cash equivalents on its balance sheet and $3.0 million in outstanding debt, as well as $11.0 million in availability under its revolving credit facility. During the third quarter of 2014, Swisher Hygiene repaid $1.8 million of outstanding debt.
Conference Call
Swisher will host a conference call to discuss third quarter 2014 results on Tuesday, November 11 at 8:30 a.m. Eastern Time.
The conference call can be accessed over the phone by dialing 1-855-437-4412 or for international callers by dialing 1-484-756-4295; please dial-in 10 minutes before the start of the call. A replay will be available two hours after the call and can be accessed by dialing 1-855-859-2056 or for international callers by dialing 1-404-537-3406; the conference ID is 30668706. The replay will be available until Tuesday, November 18, 2014.
In order to access the live webcast, please go to the Investors section of Swisher's website at www.swsh.com and click on the webcast link that will be made available. A replay will be available shortly after the original webcast.
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures. In addition to net income determined in accordance with GAAP, we use certain non-GAAP measures such as "Adjusted EBITDA" in assessing Swisher's operating performance. Swisher believes this non-GAAP measure serves as an appropriate measure to be used in evaluating the performance of its business.
Swisher defines Adjusted EBITDA as net loss excluding the impact of income taxes, impairment on goodwill, impairment on assets held for sale, one-time exit fee, depreciation and amortization expense, investigation and review related expenses, non-routine professional fees, net interest expense, foreign currency, stock based compensation, and severance.
Swisher presents Adjusted EBITDA because the Company considers it an important supplemental measure of its operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of its results. Management uses this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives an additional indication of Swisher's core operating performance. Swisher includes this non-GAAP financial measure in its earnings announcement in order to provide transparency to its investors and enable investors to better compare its operating performance with the operating performance of its competitors. Adjusted EBITDA should not be considered in isolation from, and is not intended to represent an alternative measure of, revenue, operating results or cash flows from operating activities as determined in accordance with GAAP. Additionally, Swisher's definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Under SEC rules, Swisher is required to provide a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Accordingly, the following is a reconciliation of Adjusted EBITDA to Swisher's net losses for the three and nine months ended September 30, 2014 and 2013:
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net loss from continuing operations | $ (7,776) | $ (13,192) | $ (36,716) | $ (45,316) |
| Income tax (benefit) expense | (55) | 558 | (78) | 1,325 |
| Depreciation and amortization expense | 5,044 | 5,538 | 15,577 | 16,690 |
| Interest expense, net | 78 | 186 | 294 | 343 |
| Foreign currency | 4 | -- | 104 | 2 |
| Stock-based compensation | 395 | 1,237 | 1,406 | 2,956 |
| Severance | 59 | 235 | 857 | 520 |
| Investigation and review-related expenses | -- | -- | 225 | 4,423 |
| Non-routine professional fees | -- | (500) | -- | 517 |
| Impairment loss on assets held for sale | -- | 1,692 | 2,989 | 3,330 |
| Impairment loss on goodwill | -- | -- | 5,821 | -- |
| One-time exit fee | -- | 480 | -- | 480 |
| Adjusted EBITDA | $ (2,251) | $ (3,766) | $ (9,521) | $ (14,730) |
Cautionary Statement on Forward-Looking Information
All statements other than statements of historical fact contained in this press release and on the conference call constitute "forward-looking information" or "forward-looking statements" within the meaning of the U.S. federal securities laws and the Securities Act (Ontario) and are based on the expectations, estimates and projections of management as of the date of this press release unless otherwise stated. All statements other than historical facts are, or may be, deemed to be forward looking statements. The words "plans," "expects," "is expected," "scheduled," "estimates," or "believes," or similar words or variations of such words and phrases or statements that certain actions, events or results "may," "could," "would," "might," or "will be taken," "occur," and similar expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Swisher as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. All of these assumptions have been derived from information currently available to Swisher including information obtained by Swisher from third-party sources. These assumptions may prove to be incorrect in whole or in part. All of the forward-looking statements made in this press release and on the conference call are qualified by the above cautionary statements and those made in the "Risk Factors" section of Swisher's Annual Report on Form 10-K for the year ended December 31, 2013 and Swisher's quarterly report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission, available on www.sec.gov, and with Canadian securities regulators available on Swisher's SEDAR profile at www.sedar.com, and Swisher's other filings with the Securities and Exchange Commission and with Canadian securities regulators available on Swisher's SEDAR profile at www.sedar.com. The forward-looking information set forth in this press release and on the conference call is subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking information. Swisher disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events and circumstances, except to the extent required by applicable law.
About Swisher Hygiene Inc.
Swisher Hygiene Inc. is a NASDAQ listed service company delivering essential hygiene and sanitizing solutions to customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail and healthcare industries. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing Swisher's customers with consumable products such as detergents, cleaning chemicals, soap and hand sanitizers, paper and specialty products. Most of these offerings are coupled with the rental and servicing of dish machines, dispensing equipment and additional services such as the cleaning of restrooms and other facilities. EPA-registered disinfectants that meet the Centers for Disease Control and Prevention's guidelines are also offered to assist customers with their need to disinfect environmental surfaces that may harbor specific viruses. Swisher is committed to service excellence, as what Swisher does matters to thousands of customers on a daily basis, helping to create the cleanest and healthiest environments.
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SWISHER HYGIENE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (In thousands, except share and per share data) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |
| Revenue | ||||
| Products | $ 44,603 | $ 49,864 | $ 132,624 | $ 144,897 |
| Services | 4,749 | 5,728 | 14,252 | 17,381 |
| Franchise and other | 298 | 324 | 1,024 | 1,047 |
| Total revenue | 49,650 | 55,916 | 147,900 | 163,325 |
| Costs and expenses | ||||
| Cost of sales (exclusive of route expenses and related depreciation and amortization) | 22,671 | 25,234 | 67,456 | 72,199 |
| Route expenses | 13,191 | 14,033 | 38,153 | 41,416 |
| Selling, general, and administrative expenses | 16,357 | 22,197 | 53,261 | 73,666 |
| Depreciation and amortization | 5,044 | 5,538 | 15,577 | 16,690 |
| Impairment loss on assets held for sale | -- | 1,692 | 2,989 | 3,330 |
| Impairment loss on goodwill | -- | -- | 5,821 | -- |
| Total costs and expenses | 57,263 | 68,694 | 183,257 | 207,301 |
| Loss from continuing operations | (7,613) | (12,778) | (35,357) | (43,976) |
| Other (expense) income, net | (218) | 144 | (1,437) | (15) |
| Net loss from continuing operations before income taxes | (7,831) | (12,634) | (36,794) | (43,991) |
| Income tax benefit (expense) | 55 | (558) | 78 | (1,325) |
| Net loss from continuing operations | (7,776) | (13,192) | (36,716) | (45,316) |
| Loss from discontinued operations, net of tax | -- | (208) | -- | (707) |
| Net loss | (7,776) | (13,400) | (36,716) | (46,023) |
| Comprehensive loss | ||||
| Employee benefit plan adjustment, net of tax | -- | -- | -- | 3 |
| Foreign currency translation adjustment | (21) | 33 | (20) | (20) |
| Comprehensive loss | $ (7,797) | $ (13,367) | $ (36,736) | $ (46,040) |
| Loss per share (1) | ||||
| Basic and diluted (continuing operations) | $ (0.44) | $ (0.75) | $ (2.07) | $ (2.58) |
| Basic and diluted (discontinued operations) | -- | (0.00) | -- | (0.00) |
| Weighted-average common shares used in the computation of loss per share (1) | ||||
| Basic and diluted | 17,744,834 | 17,681,543 | 17,714,011 | 17,575,997 |
| (1) All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split. | ||||
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SWISHER HYGIENE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share data) |
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| September 30, | December 31, | |
| 2014 | 2013 | |
| (Unaudited) | ||
| Current assets | ||
| Cash and cash equivalents | $ 10,179 | $ 21,465 |
| Restricted cash | 231 | 3,558 |
| Accounts receivable (net of allowance for doubtful accounts of approximately $1.6 million at September 30, 2014 and $2.0 million at December 31, 2013) | 18,774 | 21,010 |
| Inventory, net | 15,864 | 14,032 |
| Deferred income taxes | 96 | 935 |
| Assets held for sale | 75 | 4,520 |
| Other assets | 3,366 | 5,782 |
| Total current assets | 48,585 | 71,302 |
| Restricted cash | -- | 2,117 |
| Property and equipment, net | 40,061 | 43,842 |
| Goodwill | -- | 5,821 |
| Other intangibles, net | 7,061 | 8,436 |
| Customer relationships and contracts, net | 24,183 | 28,575 |
| Other noncurrent assets | 1,946 | 1,624 |
| Total assets | $ 121,836 | $ 161,717 |
| Current liabilities | ||
| Accounts payable | $ 11,693 | $ 8,794 |
| Accrued payroll and benefits | 4,807 | 3,819 |
| Accrued expense | 7,096 | 8,132 |
| Long-term debt and obligations due within one year | 1,693 | 5,251 |
| Liabilities of discontinued operations | -- | 2,131 |
| Total current liabilities | 25,289 | 28,127 |
| Long-term debt and obligations | 1,295 | 2,003 |
| Deferred income taxes | 142 | 1,053 |
| Other long-term liabilities | 3,275 | 3,348 |
| Total noncurrent liabilities | 4,712 | 6,404 |
| Commitments and contingencies | ||
| Equity | ||
| Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued and outstanding at September 30, 2014 and December 31, 2013 | -- | -- |
| Common stock, par value $0.001, authorized 600,000,000 shares; 17,588,897 shares and 17,577,330 shares issued and outstanding at September 30, 2014 and December 31, 2013 (1) | 18 | 18 |
| Additional paid-in capital (1) | 389,637 | 388,252 |
| Accumulated deficit | (297,271) | (260,555) |
| Accumulated other comprehensive loss | (549) | (529) |
| Total equity | 91,835 | 127,186 |
| Total liabilities and equity | $ 121,836 | $ 161,717 |
| (1) All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split. | ||