Market Overview

Neebo, Inc. Reports Fiscal 2013 Second Quarter Financial Results

LINCOLN, Neb.--(BUSINESS WIRE)--

Neebo, Inc. (the “Company”) today announced financial results for the fiscal second quarter ended September 30, 2012. Neebo, Inc. is a holding company and the beneficial owner of Nebraska Book Company, Inc., an industry leader in solutions for the college bookstore marketplace.

Fiscal 2013 Financial Highlights (six months ended September 30, 2012)

  • Debt reduced by $56.8 million, from $218.3 million at June 30, 2012 to $161.5 million at September 30, 2012. The Company made a $25.0 million voluntary prepayment on its senior secured term loan, permanently reducing the outstanding principal amount under this facility. In addition, the Company has repaid the full $31.8 million balance on its Bridge loan.
  • Adjusted EBITDA** of $31.8 million for the six months ended September 30, 2012, an increase of $5.9 million over prior year period.
  • Gross profit of 40.7% for the six months ended September 30, 2012, up from 39.2% in prior year period.

“I am proud to say that our team has continued to execute on our key strategies for continued growth and profitability,” said Steve Clemente, President and Chief Executive Officer. “Our simple, yet effective approach focuses on best in class guest service, expanding textbook rental programs, growing our site Neebo.com and strengthening our balance sheet through disciplined working capital management, all of which contributed to significant improvements in gross profit and SG&A expenses during the past quarter.”

“We fully intend to remain focused on paying down debt with free cash flow and net working capital improvements as we demonstrate our commitment to disciplined capital management,” explains Alexi Wellman, Chief Financial Officer.

The following table presents selected financial data for continuing operations as of and for the six months ended September 30, 2012 and 2011 ($ in 000's).

 

Six months ended

 
     

September 30,
2012

 

September 30,
2011

 

Percent
Change

 

 
 
Total assets $ 377,389 $ 547,144 *
Long-term debt 161,472 452,073 *
 
Revenues, net of returns 264,065 283,601 -6.9 %
Adjusted EBITDA** 31,837 25,931 22.8 %
Adjusted EBITDA Margin 12.1 % 9.1 %
 
Net cash flows provided by (used in) operating activities 4,835 (45,615 ) -110.6 %
Net cash flows used in investing activities (4,769 ) (5,377 ) *
Net cash provided by (used in) financing activities (72,817 ) 117,131 *
 
Net income (loss) from operations $ 268,518 $ (115,370 ) -332.7 %
 

* Not Meaningful

** Adjusted EBITDA is a non-GAAP financial measure. See additional disclosure below.

Item Impacting the Six Months Ended September 30, 2012 Comparability

  • The Company recorded the impact of fresh start accounting as of June 30, 2012. As a result of fresh start accounting, Adjusted EBITDA was positively impacted by approximately $3.0 million related to the recording of overhead capitalization.

Conference Call

Management will hold a conference call on November 29, 2012 at 11:00AM Eastern Time (10:00AM Central Time) to review the Company's fiscal second quarter financial results. To participate in the call, please dial (800) 553-5275 or (888) 428-4470 (International). Interested parties are asked to dial in ten minutes prior to the start time of the call.

A digitized replay of the call will be available from November 29, 2012 through December 6, 2012. To access the replay, call (800) 475-6701 or (320) 365-3844 (International) and use the access code 271935.

The unaudited condensed consolidated financial statements as of and for the three and six months ended September 30, 2012 and 2011 are located on the Company's website at: http://www.nebook.com/financial/company_filings.asp.

About the Company

Neebo, Inc. is the beneficial owner of the Nebraska Book Company, Inc. Nebraska Book Company, Inc. began in 1915 with a single college store near the University of Nebraska campus and now operates nearly 250 stores serving colleges and universities with more than two million students. Nebraska Book Company, Inc. serves more than 2,500 bookstores, selling six million textbooks annually and installing more than 1,600 technology platforms and e-commerce sites. Additional information about Nebraska Book Company, Inc. can be found at the Company's website: www.nebook.com.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause the Company's business and results of operations to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements that discuss management's beliefs and assumptions and can be identified by the use of words such as “will,” “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. These forward-looking statements speak only as of the date on which the statements were made. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Additional information regarding forward-looking statements as well as risks and uncertainties is contained in Management's Discussion and Analysis.

Selected Financial Data

The information contained herein is more fully detailed and explained in the Company's Unaudited Condensed Consolidated Financial Statements and Management Discussion & Analysis, which is available at: http://www.nebook.com/financial/company_filings.asp.

Consolidated Statement of Operations ($ in 000's)

    Three months ended       Six months ended
      Successor       Predecessor    
three months three months
Successor Predecessor ended ended Predecessor

September 30,
2012

September 30,
2011

September 30,
2012

June 30,
2012

September 30,
2011

Revenues, net of returns $ 195,911 $ 217,744 $ 195,911 $ 68,153 $ 283,601
Costs of sales   113,468     133,453     113,468     43,027     172,547  
Gross profit   82,443     84,291     82,443     25,127     111,054  

 

Operating expenses:
Selling, general, and administrative 47,901 48,656 47,901 31,318 85,123
Depreciation 1,758 1,743 1,758 1,642 3,618
Amortization   2,224     1,979     2,224     2,067     3,972  
  51,884     52,378     51,884     35,027     92,712  
Income (loss) from operations   30,559     31,912     30,559     (9,900 )   18,342  
 
Operating expenses:
Interest expense 10,077 9,417 10,077 8,337 22,182
Interest income (17 ) - (17 ) - (14 )
Goodwill impairment   -     122,639     -     -     122,639  
  10,060     132,056     10,060     8,337     144,806  

Income (loss) before reorganization items and income taxes

20,499 (100,143 ) 20,499 (18,237 ) (126,464 )
Reorganization items   (679 )   8,749     (679 )   (274,817 )   15,266  

Income (loss) from continuing operations before income taxes

21,178 (108,892 ) 21,178 256,580 (141,731 )
Income tax expense (benefit)   7,785     (16,396 )   7,785     -     (26,353 )
Income (loss) from continuing operations 13,393 (92,496 ) 13,393 256,580 (115,378 )

Income (loss) from discontinuing operations, net of tax

  (514 )   823     (514 )   (941 )   8  
 
Net income (loss) $ 12,879   $ (91,674 ) $ 12,879   $ 255,639   $ (115,370 )
 

Net Revenues by Segment ($ in 000's)

    Three months ended     Six months ended
        Successor   Predecessor    
three months three months
Successor Predecessor ended ended Predecessor

September 30,

2012

Percent
of total

September 30,

2011

Percent
of total

September 30,

2012

June 30,

2012

September 30,

2011

Percent
of total

 
College Stores $ 141,760 72.4 % $ 167,497 76.9 % $ 141,760   $ 43,762 $ 209,919 74.0 %
Textbooks 58,145 29.7 % 55,463 25.5 % 58,145 25,885 81,426 28.7 %
Complementary Services 7,628 3.9 % 8,612 4.0 % 7,628 5,319 15,585 5.5 %
Intersegment   (11,621 ) -5.9 %   (13,829 ) -6.4 %   (11,621 )   (6,813 )   (23,330 ) -8.2 %

Total net revenues

$ 195,911   100.0 % $ 217,744   100.0 % $ 195,911   $ 68,153   $ 283,601   100.0 %
 

Gross Profit by Segment ($ in 000's)

    Three months ended       Six months ended
          Successor       Predecessor      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

three months

 

 

 

three months

 

 

 

 

Successor

Percent

Predecessor

Percent

ended ended Predecessor

Percent

September 30,
2012

 

of net
revenues

September 30,
2011

of net
revenues

 

September 30,
2012

June 30,
2012

 

 

September 30,
2011

 

of net
revenues

College Stores $ 45,590 32.2 % $ 54,998 32.8 % $ 45,590 $ 15,364 $ 71,414 34.0 %
Textbooks 33,928 58.3 % 24,821 44.8 % 33,928 9,055 34,560 42.4 %
Complementary Services 3,820 50.1 % 3,684 42.8 % 3,820 2,805 7,058 45.3 %
Intersegment   (894 ) 7.7 %   787 -5.7 %   (894 )   (2,098 )   (1,978 ) 8.5 %
Total gross profit $ 82,443   42.1 % $ 84,291 38.7 % $ 82,443   $ 25,127   $ 111,054   39.2 %
 

EBITDA and Adjusted EBITDA ($ in 000's)

    Three months ended       Six months ended
      Successor       Predecessor    
three months three months
Successor Predecessor ended ended Predecessor

September 30,

2012

September 30,

2011

September 30,

2012

June 30,

2012

September 30,

2011

EBITDA

Net income (loss) $ 12,879 $ (91,674 ) $ 12,879 $ 255,639 $ (115,370 )
Interest expense, net 10,060 9,417 10,060 8,337 22,167
Provision (benefit) for income taxes 7,785 (16,396 ) 7,785 - (26,353 )
Depreciation 1,758 1,743 1,758 1,642 3,618
Amortization   2,224     1,979     2,224     2,067     3,972  
EBITDA   34,706     (94,930 )   34,706     267,685     (111,966 )
 

Adjusted EBITDA

EBITDA 34,706 (94,930 ) 34,706 267,685 (111,966 )
Goodwill impairment - 122,639 - - 122,639
Reorganization of professional fees (679 ) 8,749 (679 ) 13,382 15,266
Gain on settlement of liabilities subject
to compromise
- - - (288,199 ) -
Discontinued operations 514 $ (822.73 ) 514 941 (8 )
Severance and voluntary costs 72 - 72 184 -
Site closures, settlements and other costs - - - 533 -
Other miscellaneous one-time costs   1,309     -     1,309     1,389     -  
Adjusted EBITDA $ 35,922   $ 35,635   $ 35,922   $ (4,085 ) $ 25,931  
 

The following table provides Adjusted EBITDA on a segment basis ($ in 000's).

    Three months ended     Six months ended
    Successor     Predecessor  
three months three months
Successor Predecessor ended ended Predecessor

September 30,

2012

September 30,

2011

September 30,

2012

June 30,

2012

September 30,

2011

College Stores $ 11,276 $ 17,660 $ 11,276 $ (3,319 ) $ 12,582
Textbooks 27,211 18,927 27,211 4,083 23,780
Complementary Services 708 667 708 (49 ) 1,273
Corporate Administration   (3,274 )   (1,619 )   (3,274 )   (4,801 )   (11,703 )
Total Adjusted EBITDA $ 35,922   $ 35,635   $ 35,922   $ (4,085 ) $ 25,931  

Non-GAAP Financial Information

The common definition of EBITDA is “Earnings before Interest Expense, Taxes, Depreciation and Amortization.” In evaluating financial performance, the Company uses Adjusted EBITDA to evaluate, assess and benchmark its operational results. The Company's definition of Adjusted EBITDA is EBITDA plus adjustments to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss.

Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”). Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) in accordance with GAAP. Adjusted EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. In addition, the Company's measure of Adjusted EBITDA, as presented in this press release, may not be comparable to similarly titled measures used by other companies.

However, Adjusted EBITDA is presented as management believes the measure is relevant and useful information widely used by analysts, investors and other interested parties in our industry. The Company understands certain investors use it to measure the Company's operating performance and its historical ability to meet financial obligations. Accordingly, management is disclosing this information to permit a more comprehensive analysis of the Company's operating performance, to provide an additional measure of performance and to provide additional information with respect to its ability to meet future debt service, capital expenditure and working capital requirements. Adjusted EBITDA financial information is comparable to net income (loss). Management's Discussion & Analysis contains a reconciliation of Adjusted EBITDA to the Company's GAAP disclosure of net income (loss).

Neebo, Inc.
Media Relations:
Karey Koehn, 402-421-0038
kkoehn@neebo.com
or
Investor Relations:
Alexi Wellman, Chief Financial Officer
awellman@nebook.com

 

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