Swisher Hygiene's Third Quarter Revenue Jumps 29% on Acquisitions
Date: November 14, 2011
Source: Swisher Hygiene Inc.
Swisher Hygiene Announces Results for the Three and Nine-Month Periods Ended
September 30, 2011
318% Increase in Revenue; 29% Organic Growth Rate Compared to Prior-Year Period
Swisher
Hygiene Inc. ("Swisher
Hygiene") (Nasdaq:SWSH) (TSX:SWI), a leading provider of essential
hygiene and sanitation products and services, today announced results for the
three and nine-month periods ended September 30, 2011. All amounts
in this news release are in United
States dollars.
Third Quarter 2011 Highlights
-
Total revenue for the three months ended September 30, 2011 increased by 318% to $67.2 million compared to $16.1 million for the same period in 2010, led by a 353% increase in product revenue and a 438% increase in service revenue.
-
Organic revenue growth for the quarter was 29% as compared with the same period in 2010.
-
Total revenue for the third quarter 2011 was up 30% sequentially from the second quarter of 2011, and up 280% from the fourth quarter of 2010.
-
Adjusted EBITDA for the third quarter 2011 was $5.3 million versus an Adjusted EBITDA loss of $1.1 million for the prior-year period and compared to Adjusted EBITDA of $3.0 million for the second quarter of 2011.
-
Adjusted EBITDA margin in the third quarter of 2011 was 7.8%, compared to Adjusted EBITDA margins of 5.8% in the second quarter of 2011, -3.5% in the first quarter of 2011 and -6.7% in the third quarter of 2010.
-
Revenue outlook for full year 2011 is expected to exceed $220 million, with annualized Run-Rate Revenue now in excess of $320 million.
-
Since June 30, 2011, completed 28 acquisitions, including 26 chemical, linen and dust control companies and two franchises.
-
Completed acquisition of Sanolite, the leading independent hygiene and chemical provider in the Northeast which enabled Swisher Hygiene to complete its regional operating structure while significantly strengthening its chemical sales and service capabilities in the region.
-
Acquired Daley International, one of the largest independent chemical manufacturers in the U.S. The acquisition will allow Swisher Hygiene to significantly increase its internal product manufacturing capability, while also enabling Swisher Hygiene to provide a broader array of products for its existing customers and those in additional vertical markets.
-
In August 2011, completed equipment and other financing agreements that will provide Swisher Hygiene with up to $62.5 million of additional available capital.
"We continued to move in the right direction in the third quarter of 2011,
with another quarter of triple-digit revenue growth, a 30% sequential improvement
in revenue from the second quarter, as well as reporting over $5 million
in positive Adjusted EBITDA," said Steven R. Berrard, Chief
Executive Officer of Swisher Hygiene. "Our Adjusted EBITDA margin rose once
again to 7.8% as we are realizing the efficiencies of our new regional operating
structure and we are approaching our 2011-2012 target Adjusted EBITDA margin
range of 10 to 18%. Organic revenue growth of 29% — a third consecutive
quarter of double-digit organic growth — shows once again that our cross-selling
and new account initiatives are working. We completed 22 additional acquisitions
during the quarter and were still able to maintain over $200 million
in liquidity available to fund additional acquisitions. As we move toward 2012,
we will focus our business development efforts toward broadening our product
offerings with an emphasis on our emerging linen and dust control businesses."
Mr. Berrard continued, "In the quarter, we completed the acquisition
of Daley International, which is a cornerstone in our strategy to
internally manufacture much of our chemical product offering. With our current
manufacturing plants, we now have the capacity to produce as much as 80% of
our chemical product requirements, thus significantly reducing our exposure
to unforeseen issues and further enabling us to limit our freight and product
costs. With our new operating structure in place and our materially increased
ability to manufacture our own products, we expect to see significant margin
expansion in the upcoming quarters, and ultimately, bottom-line profitability."
Third Quarter 2011 Results
For the three months ended September 30, 2011, Swisher
Hygiene reported total revenue of $67.2 million, a 318%
increase from $16.1 million in the prior-year period and a 30%
sequential increase from the second quarter of 2011. Product revenue increased
353% primarily due to the acquisitions of chemical, linen and waste companies
since the end of the third quarter of 2010, and service revenue increased 438%,
largely attributable to the March 2011 acquisition of Choice
Environmental Services, Inc. Excluding the impact of acquisitions, organic
revenue increased 29% from the same period of the prior year.
Total costs and expenses for the three months ended September 30, 2011
increased by 256% to $70.6 million, compared to $19.8
million in the prior-year period. Excluding acquisition and merger-related
costs of $0.6 million in the three months ended September
30, 2011 and $1.4 million in the prior-year period, total
costs and expenses increased 280% compared to the prior-year period.
Excluding the impact of acquisitions, for the three months ended September 30, 2011, June 30, 2011 and September 30, 2010, respectively:
|
Q3 2011 |
Q2 2011 |
Q3 2010 |
Cost of sales as a % of revenue |
37.6% |
34.0% |
34.3% |
Route expense as a % of revenue |
21.6% |
23.1% |
25.2% |
SG&A expense as a % of revenue |
50.2% |
59.4% |
46.8% |
The increase in cost of sales as a percentage of revenue primarily reflects
a change in sales mix towards the chemical product line while the favorable
change in route expenses as a percentage of revenue reflects the economies of
scale realized through route consolidation initiatives. SG&A expense as a percentage
of revenue has increased on a year-to-year basis largely due to increased public
company costs and infrastructure to facilitate business growth.
Net loss for the three months ended September 30, 2011 was
$3.8 million, compared to a net loss of $4.1 million
in the prior-year period. Excluding acquisition and merger-related costs of
$0.6 million in the third quarter of 2011, net loss for the three
months ended September 30, 2011 was $3.2 million.
Adjusted EBITDA for the three months ended September 30, 2011
was $5.3 million, compared to an Adjusted EBITDA loss of $1.1
million in the prior-year period. For a reconciliation of non-GAAP to
GAAP measures, please review the disclosures and table included with this release.
Nine Month 2011 Results
For the nine months ended September 30, 2011, Swisher
Hygiene reported total revenue of $146.3 million, a 218%
increase from $46.0 million in the prior-year period. Product
revenue increased 230%, primarily due to acquisitions made since August
2010 of 14 franchisees and 58 independent chemical, linen and waste
companies, and service revenue increased 330%, largely attributable to the March
2011 acquisition of Choice
Environmental Services, Inc. Excluding the impact of acquisitions, organic
revenue increased 22% from the prior-year period.
Total costs and expenses for the nine months ended September 30, 2011
increased by 209% to $162.3 million, compared to $52.5
million in the prior-year period.
Excluding the impact of acquisitions, for the nine months ended September 30, 2011 and 2010, respectively:
|
9 mos. 2011 |
9 mos. 2010 |
Cost of sales as a % of revenue |
36.0% |
32.8% |
Route expense as % of revenue |
24.5% |
25.0% |
SG&A expense as a % of revenue |
55.5% |
45.5% |
The increase in cost of sales as a percentage of revenue primarily reflects
a change in sales mix towards the Chemical product line while the favorable
change in route expenses as a percentage of revenue reflects the economies of
scale realized through route consolidation initiatives. SG&A expense as a percentage
of revenue has increased on a year to year basis largely due to increases public
company costs and infrastructure to facilitate business growth.
Net loss for the nine months ended September 30, 2011 was $14.1
million, compared to a net loss of $7.5 million in the
prior-year period. Excluding acquisition and merger-related costs of $4.7
million in the nine months ended September 30, 2011,
net loss was $9.4 million.
Adjusted EBITDA for the nine months ended September 30, 2011
was $7.3 million, compared to an Adjusted EBITDA loss of $1.7
million in the prior-year period. For a reconciliation of non-GAAP to
GAAP measures, please review the disclosures and table included with this release.
Liquidity and Capital Resources
As of September 30, 2011, Swisher
Hygiene had $84 million of cash on hand and approximately
$200 million in liquidity. Also as of September 30, 2011,
total capital was 15% debt and 85% equity, and the Company's weighted average
borrowing rate was 1.7%. During the three months ended September 30,
2011, the Company finalized its previously announced $62.5 million
of credit facilities which will be used for future capital expenditures.
2011 Revenue Outlook
Swisher Hygiene is adjusting
its revenue outlook for 2011, expecting revenue in excess of $220 million,
with current annualized Run-Rate Revenue now in excess of $320 million.
Run-Rate Revenue is defined as October 2011 estimated annualized
revenue and includes both acquisition and organic growth that have been added
since September 30, 2011.
Conference Call Information
Swisher Hygiene will
host a conference call and live webcast to discuss the results later today at
5:00 PM Eastern time. The conference call can be accessed live
over the phone by dialing 877-870-9226 or for international callers by dialing
1-973-890-8320; 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 855-859-2056
or for international callers by dialing 1-404-537-3406; the conference ID is
24458733. The replay will be available until Monday, November 21,
2011.
In order to access the live webcast, please go to the Investors section of
Swisher Hygiene's website
at www.swisherhygiene.com
and click on the webcast link that will be made available. A replay will be
available shortly after the original webcast.
A supplemental slide presentation will be available on the Investors section
of Swisher Hygiene's website
shortly before the conference call and live webcast begins.
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
our operating performance. We believe this non-GAAP measure serves as an appropriate
measure to be used in evaluating the performance of our business.
We define Adjusted EBITDA as net loss excluding the impact of income taxes,
depreciation and amortization expense, interest expense and income, gains on
foreign currency, unrealized loss, net, stock-based compensation expense, and
costs directly related to merger and acquisitions.
We present Adjusted EBITDA because we consider it an important supplemental
measure of our operating performance and believe it is frequently used by securities
analysts, investors and other interested parties in the evaluation of our results.
Management uses this non-GAAP financial measure frequently in our decision-making
because it provides supplemental information that facilitates internal comparisons
to the historical operating performance of prior periods and gives a better
indication of our core operating performance. We include this non-GAAP financial
measure in our earnings announcement in order to provide transparency to our
investors and enable investors to better compare our operating performance with
the operating performance of our competitors. Adjusted EBITDA should not be
considered in isolation from, and is not intended to represent an alternative
measure of, revenue, operating results or of cash flows from operating activities,
as determined in accordance with GAAP. Additionally, our definition of Adjusted
EBITDA may not be comparable to similarly titled measures reported by other
companies.
Under SEC rules, we are 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 our net losses for the
three months ended June 30, 2011 and the three and nine-month
periods ended September 30, 2011 and 2010:
|
Three Months Ended
Sept. 30, |
Three Months
Ended June 30, |
Nine Months Ended
Sept. 30, |
|
2011 |
2010 |
2011 |
2011 |
2010 |
Net loss |
$(3,756,534) |
$(4,135,080) |
$(7,127,159) |
$(14,098,271) |
$(7,500,159) |
Income tax expense (benefit) |
46,384 |
— |
(3,513,071) |
(8,176,480) |
— |
Depreciation and amortization expense |
6,879,607 |
1,272,266 |
6,084,424 |
15,671,983 |
3,399,004 |
Interest expense, net |
807,605 |
357,897 |
265,774 |
1,420,801 |
1,003,636 |
Foreign currency (gain)/loss |
106,079 |
— |
(128,064) |
(57,388) |
— |
Net gain/loss on debt-related fair value instruments |
(590,100) |
— |
3,554,900 |
4,925,900 |
— |
Stock-based compensation |
1,118,788 |
— |
1,097,597 |
2,881,227 |
— |
Acquisition and merger expenses |
644,092 |
1,425,855 |
2,775,258 |
4,735,328 |
1,425,855 |
|
|
|
|
|
|
Adjusted EBITDA |
$5,255,921 |
$(1,079,062) |
$3,009,859 |
$7,303,100 |
$(1,671,664) |
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
All statements, other than statements of historical fact, contained in this
news release, including any information as to the future financial or operating
performance of Swisher Hygiene,
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 news 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
Hygiene as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The estimates
and assumptions of Swisher Hygiene
contained in this news release, which may prove to be incorrect, include but
are not limited to, the various assumptions set forth herein as well as the
accuracy of management's assessment of the effects of the successful completion
and integration of the acquisitions. All of these assumptions have been derived
from information currently available to Swisher
Hygiene including information obtained by Swisher
Hygiene 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 news
release are qualified by the above cautionary statements and those made in the
"Risk Factors" section of Swisher
Hygiene's Annual Report on Form 10-K for the year ended December
31, 2010, Quarterly Report on Form 10-Q for the quarter ended June
30, 2011, and most recent registration statement on Form S-1 filed with
the Securities and Exchange Commission, available on www.sec.gov,
and with Canadian securities regulators available on Swisher Hygiene's SEDAR profile
at www.sedar.com,
and Swisher Hygiene's
other filings with the Securities and Exchange Commission and with
Canadian securities regulators available on Swisher
Hygiene's SEDAR profile at www.sedar.com.
The forward-looking information set forth in this news release 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 Hygiene 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 and TSX listed company that provides essential hygiene and sanitation
solutions to customers throughout much of North
America and internationally through its global network of company-owned
operations, franchises and master licensees operating in countries across Europe
and Asia. These essential solutions include cleaning and sanitizing chemicals,
foodservice and laundry products, restroom hygiene programs and a full range
of related products and services. The company's most recent program enhancement
is its introduction of solid waste management services to commercial and residential
customers in selected markets. Together, this broad set of offerings is designed
to promote superior cleanliness and sanitation in all commercial environments
from door to dumpster, enhancing the safety, satisfaction and well-being of
employees and patrons. Swisher
Hygiene's customers include a wide range of commercial enterprises, with
a particular emphasis on the foodservice, hospitality, retail, industrial and
healthcare industries.
SWISHER
HYGIENE INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (unaudited) |
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2011 |
2010 |
2011 |
2010 |
Revenue |
|
|
|
|
Product |
$43,424,055 |
$9,580,267 |
$86,827,789 |
$26,346,762 |
Service |
23,347,357 |
4,341,867 |
56,468,375 |
13,142,945 |
Franchise |
433,583 |
2,138,945 |
2,981,209 |
6,463,863 |
|
|
|
|
|
|
|
|
|
|
Total revenue |
67,204,995 |
16,061,079 |
146,277,373 |
45,953,570 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
Cost of sales |
25,817,824 |
6,107,686 |
53,116,139 |
16,870,196 |
Route expenses |
14,618,918 |
3,511,409 |
34,892,302 |
9,859,640 |
Selling, general, and administrative |
22,631,120 |
7,521,046 |
53,847,059 |
20,895,398 |
Acquisition and merger expenses |
644,092 |
1,425,855 |
4,735,328 |
1,425,855 |
Depreciation and amortization |
6,879,607 |
1,272,266 |
15,671,983 |
3,399,004 |
|
|
|
|
|
Total costs and expenses |
70,591,561 |
19,838,262 |
162,262,811 |
52,450,093 |
|
|
|
|
|
Loss from operations |
(3,386,566) |
(3,777,183) |
(15,985,438) |
(6,496,523) |
|
|
|
|
|
Other expense, net |
(323,584) |
(357,897) |
(6,289,313) |
(1,003,636) |
|
|
|
|
|
Net loss before income taxes |
(3,710,150) |
(4,135,080) |
(22,274,751) |
(7,500,159) |
|
|
|
|
|
Income tax expense (benefit) |
46,384 |
— |
(8,176,480) |
— |
|
|
|
|
|
Net loss |
$(3,756,534) |
$(4,135,080) |
$(14,098,271) |
$(7,500,159) |
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
Basic and diluted |
$(0.02) |
$(0.07) |
$(0.09) |
$(0.13) |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
used in the computation of loss per share |
|
|
|
|
Basic and diluted |
173,429,586 |
57,908,074 |
154,025,525 |
57,878,049 |
|
SWISHER
HYGIENE INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) |
|
|
|
|
|
|
|
Balance at |
|
September 30, |
December 31, |
|
2011 |
2010 |
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 83,785,303 |
$ 38,931,738 |
Restricted cash |
— |
5,193,333 |
Accounts receivable (net of allowance for doubtful
accounts of approximately
$447,000 at September 30, 2011 and $334,000
at December 31, 2010) |
32,204,831 |
7,068,629 |
Inventory |
15,839,729 |
2,968,076 |
Other assets |
2,951,952 |
894,719 |
Total current assets |
134,781,815 |
55,056,495 |
|
|
|
Property and equipment, net |
64,516,687 |
11,324,055 |
Goodwill |
165,992,839 |
29,660,309 |
Other intangibles, net |
81,610,895 |
7,668,805 |
Other noncurrent assets |
5,109,631 |
2,524,598 |
|
|
|
|
$ 452,011,867 |
$ 106,234,262 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current liabilities |
|
|
Accounts payable, accrued expenses, and other current
liabilities |
$ 29,904,662 |
$ 9,335,932 |
Short term obligations |
13,346,282 |
13,378,710 |
Advances from shareholder |
2,000,000 |
2,000,000 |
Total current liabilities |
45,250,944 |
24,714,642 |
|
|
|
Long term obligations |
47,899,501 |
31,028,992 |
Deferred income tax liabilities |
4,446,139 |
1,700,000 |
Other long term liabilities |
3,390,995 |
2,763,051 |
Total noncurrent liabilities |
55,736,635 |
35,492,043 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Equity |
|
|
Swisher
Hygiene Inc. stockholders' equity |
|
|
Preferred stock, par value $0.001,
authorized 10,000,000 shares; no shares
issued or outstanding at September 30, 2011 and December
31, 2010 |
— |
— |
Common stock, par value $0.001,
authorized 600,000,000 shares; 173,864,701
and 114,015,063 shares issued and outstanding at September 30, 2011
and
December 31, 2010, respectively |
173,865 |
114,015 |
Additional paid-in capital |
373,872,794 |
54,725,897 |
Accumulated deficit |
(23,088,295) |
(8,996,759) |
Accumulated other comprehensive income |
65,924 |
73,985 |
Total Swisher
Hygiene Inc. stockholders' equity |
351,024,288 |
45,917,138 |
Non-controlling interest |
— |
110,439 |
|
|
|
Total equity |
351,024,288 |
46,027,577 |
|
|
|
|
$ 452,011,867 |
$ 106,234,262 |
For more information, contact:
Swisher Hygiene Inc.
Investor Contact:
Amy Simpson
Phone: (704) 602-7116
Garrett Edson, ICR
Phone: (203) 682-8331
Media Contact:
Alecia Pulman, ICR
Phone: (203) 682-8224