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ALJ Regional Holdings, Inc. Announces Earnings For The Fourth Quarter And Year Ended September 30, 2017

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NEW YORK, Dec. 19, 2017 /PRNewswire/ -- ALJ Regional Holdings, Inc. (NASDAQ: ALJJ) ("ALJ") announced results today for its fourth quarter and year ended September 30, 2017. 

ALJ is a holding company, whose primary assets are its subsidiaries Faneuil, Inc. (including the customer management outsourcing business recently acquired from Vertex Business Services LLC, "Faneuil"), Floors-N-More, LLC, dba Carpets N' More ("Carpets"), and Phoenix Color Corp. (including the recently acquired Color Optics packaging division, "Phoenix").  Faneuil is a leading provider of call center services, back office operations, staffing services, and toll collection services to government and regulated commercial clients across the United States. Carpets is one of the largest floor covering retailers in Las Vegas, Nevada, and a provider of multiple products for the commercial, retail and home builder markets including all types of flooring, countertops, cabinets, window coverings and garage/closet organizers, with four retail locations, as well as a stone and solid surface fabrication facility. Phoenix is a leading manufacturer of book components, educational materials and related products producing value-added components, heavily illustrated books and specialty commercial products using a broad spectrum of materials and decorative technologies.

Our financial statements reflect the operations of Faneuil, Carpets and Phoenix throughout all periods presented, Color Optics from July 18, 2016, and our recently acquired customer management outsourcing business ("CMO Business") from May 26, 2017. On October 2, 2017, Phoenix completed the acquisition of certain assets and liabilities of Moore-Langen Printing Company, a division of LSC Communications, Inc.  Results from this acquisition are not included in this press release as the acquisition closed subsequent to the fourth quarter ended September 30, 2017.   

Investment Highlights – Three Months and Year Ended September 30, 2017

Consolidated Results for ALJ

  • ALJ recognized consolidated revenue of $86.3 million for the three months ended September 30, 2017, an increase of $13.9 million, or 19.2%, compared to $72.4 million for the three months ended September 30, 2016 due to an increase in business activity in the Faneuil and Carpets segments as well as the acquisitions of Color Optics by Phoenix and the CMO Business by Faneuil, which together accounted for $9.3 million of the total revenue increase. Excluding the impact of acquisitions, total revenue increased $4.6 million, or 6.4%. ALJ recognized consolidated revenue of $83.5 million for the three months ended June 30, 2017.
  • ALJ recognized net income of $13.8 million and earnings per share (EPS) of $0.37 (diluted) for the three months ended September 30, 2017, compared to net income of $8.8 million and EPS of $0.24 (diluted) for the three months ended September 30, 2016. Increased revenue was offset by higher cost of sales due to start-up costs of certain contracts, higher selling, general and administrative costs due to increased depreciation and amortization expenses related to acquisitions, and additional benefit from income taxes due to the reduction of the deferred taxes valuation allowance. Excluding such benefit from income taxes, ALJ recognized net income of $1.7 million and EPS of $0.04 (diluted) for the three months ended September 30, 2017, compared to net income of $4.9 million and EPS of $0.14 (diluted) for the three ended September 30, 2016. ALJ recognized net income of $1.0 million and EPS of $0.03 (diluted) for the three months ended June 30, 2017.
  • ALJ recognized adjusted EBITDA of $7.9 million for the three months ended September 30, 2017, a decrease of $0.3 million, or 4.1%, compared to $8.2 million for the three months ended September 30, 2016. Decreased adjusted EBITDA was primarily due to lower overall volumes and continued startup expenses related to the transition of the packaging business at Phoenix, offset somewhat by improved performance at Carpets. ALJ recognized adjusted EBITDA of $8.2 million for the three months ended June 30, 2017.
  • ALJ recognized consolidated revenue of $326.7 million for the year ended September 30, 2017, an increase of $58.3 million, or 21.7%, compared to $268.4 million for the year ended September 30, 2016 due to an increase in business activity in each of our segments as well as the acquisitions of Color Optics by Phoenix and the CMO Business by Faneuil, which together accounted for $27.2 million of the total revenue increase. Excluding the impact of acquisitions, total revenue increased $31.2 million, or 11.8%.
  • ALJ recognized net income of $15.7 million and earnings per share (EPS) of $0.43 (diluted) for the year ended September 30, 2017 compared to net income of $10.9 million and EPS of $0.30 (diluted) for the year ended September 30, 2016. Increased revenue was offset by higher cost of sales due to start-up costs of certain contracts, higher selling, general and administrative costs due to increased depreciation and amortization related to acquisitions, and additional benefit from income taxes due to the reduction of the deferred taxes valuation allowance. Excluding such benefit from income taxes, ALJ recognized net income of $3.6 million and EPS of $0.10 (diluted) for the year ended September 30, 2017, compared to net income of $7.0 million and EPS of $0.19 (diluted) for the year ended September 30, 2016.
  • ALJ recognized consolidated adjusted EBITDA of $31.0 million for the year ended September 30, 2017, an increase of $2.2 million, or 7.7%, compared to $28.8 million for the year ended September 30, 2016, due primarily to the acquisition of the CMO Business, contract renewals, and new contract awards at Faneuil and improved performance at Carpets.
  • ALJ estimates revenue for the three months ending December 31, 2017 to be in the range of $87.7 million to $97.0 million, as compared to $77.6 million for the three months ended December 31, 2016.

Jess Ravich, Executive Chairman of ALJ, said, "We continue to focus on balanced growth in each of our businesses to increase shareholder value."

Amounts in $000's, except per share amounts


Three Months 
Ended September 30,












2017



2016



$ Change



% Change




(unaudited)



(unaudited)










Net revenue


$

86,332



$

72,436



$

13,896




19.2%


Costs and expenses:

















Cost of revenue



66,011




54,689




11,322




20.7%


Selling, general, and administrative expense



17,583




13,373




4,210




31.5%


(Gain) loss on disposal of assets, net






(10)




10




NM


Total operating expenses



83,594




68,052




15,542




22.8%


Operating income



2,738




4,384




(1,646)




(37.5%)


Other expense:

















Interest expense, net



(2,724)




(2,428)




(296)




12.2%


Other income












Total other expense



(2,724)




(2,428)




(296)




12.2%


Income before income taxes



14




1,956




(1,942)




(99.3%)


Provision for (benefit from) income taxes



(13,756)




(6,794)




(6,962)




102.5%


Net income


$

13,770



$

8,750



$

5,020




57.4%


Basic earnings per share of common stock


$

0.38



$

0.25



$

0.13






Diluted earnings per share of common stock


$

0.37



$

0.24



$

0.13






Weighted average shares of common stock outstanding:

















Basic



36,530




34,738




1,792






Diluted



37,186




35,989




1,197









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