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ALJ Regional Holdings, Inc. Announces Earnings For The Second Quarter Ended March 31, 2018 And Revises Fiscal 2018 Guidance

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ALJ Regional Holdings, Inc. Announces Earnings For The Second Quarter Ended March 31, 2018 And Revises Fiscal 2018 Guidance

PR Newswire

NEW YORK, May 14, 2018 /PRNewswire/ -- ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) ("ALJ") announced results today for its second quarter ended March 31, 2018. 

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 printing components business, "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, Faneuil's customer management outsourcing business ("CMO Business") since May 26, 2017, and Phoenix's recent acquisition of certain assets and liabilities ("Printing Components Business") from Moore-Langen Printing Company, a division of LSC Communications, Inc., since October 2, 2017.

Investment Highlights – Three and Six Months Ended March 31, 2018

Consolidated Results for ALJ

  • ALJ recognized consolidated revenue of $95.1 million for the three months ended March 31, 2018, an increase of $15.8 million, or 19.9%, compared to $79.3 million for the three months ended March 31, 2017 due to the acquisitions of the CMO Business by Faneuil and the Printing Components Business by Phoenix, which together accounted for $12.1 million of the total revenue increase, and increases in business activity in the Faneuil and Carpets segments. Excluding the impact of acquisitions, total revenue increased $3.7 million, or 4.7%. ALJ recognized consolidated revenue of $95.0 million for the three months ended December 31, 2017.
  • ALJ recognized a net loss of $0.3 million and a loss per share of $0.01 (diluted) for the three months ended March 31, 2018, compared to net income of $0.4 million and earnings per share (EPS) of $0.01 (diluted) for the three months ended March 31, 2017. Increased revenue was offset by restructuring expenses to combine manufacturing facilities at Phoenix, higher start-up costs of certain contracts, and higher selling, general and administrative costs due to increased depreciation and amortization expenses related to acquisitions. ALJ recognized net loss of $5.3 million and loss per share of $0.14 (diluted) for the three months ended December 31, 2017, which included an increased provision for income taxes to reflect a one-time, non-cash deferred income tax expense of $4.1 million as a result of the Tax Cuts and Jobs Act of 2017. Excluding such deferred income tax expense, ALJ recognized net loss of $1.2 million and loss per share of $0.03 (diluted) for the three months ended December 31, 2017.
  • ALJ recognized adjusted EBITDA of $7.6 million for the three months ended March 31, 2018, a decrease of $0.1 million, or 0.9%, compared to $7.7 million for the three months ended March 31, 2017. Adjusted EBITDA was flat due to higher labor, material, and customer service costs at Carpets, and transition expenses associated with the CMO Business acquisition, which offset increased net revenue from acquisitions. ALJ recognized adjusted EBITDA of $6.6 million for the three months ended December 31, 2017.
  • ALJ recognized consolidated revenue of $190.1 million for the six months ended March 31, 2018, an increase of $33.1 million, or 21.1%, compared to $156.9 million for the six months ended March 31, 2017 due to the acquisitions of the CMO Business by Faneuil and the Printing Components Business by Phoenix, which together accounted for $25.1 million of the total revenue increase, and increases in business activity in the Faneuil and Carpets segments. Excluding the impact of acquisitions, total revenue increased $8.1 million, or 5.1%.
  • ALJ recognized a net loss of $5.7 million and loss per share of $0.15 (diluted) for the six months ended March 31, 2018, compared to net income of $0.9 million and earnings per share (EPS) of $0.03 (diluted) for the six months ended March 31, 2017. Increased revenue was offset by restructuring expenses to combine manufacturing facilities at Phoenix, higher start-up costs of certain contracts, higher selling, general and administrative costs due to increased depreciation and amortization expenses related to acquisitions, and increased provision for income taxes to reflect a one-time, non-cash deferred income tax expense of $4.1 million as a result of the Tax Cuts and Jobs Act of 2017. Excluding such deferred income tax expense, ALJ recognized net loss of $1.6 million and loss per share of $0.04 (diluted) for the six months ended March 31, 2018.
  • ALJ recognized adjusted EBITDA of $14.2 million for the six months ended March 31, 2018, a decrease of $0.7 million, or 4.8%, compared to $14.9 million for the six months ended March 31, 2017. The decrease was due to higher labor, material, and customer service costs at Carpets, lower volumes for books and packaging at Phoenix, and transition expenses associated with the CMO Business acquisition, which offset increased net revenue from acquisitions.
  • ALJ estimates consolidated revenue for the three months ending June 30, 2018 to be in the range of $80.2 million to $88.8 million, compared to $83.5 million for the three months ended June 30, 2017.

Jess Ravich, Executive Chairman of ALJ, said, "We continue to invest and support each of our businesses, with a focus on growing revenues and EBITDA while lowering our overall cost structure in order to increase shareholder value."

Amounts in $000's, except per share amounts


Three Months Ended
March 31,












2018



2017



$ Change



% Change




(unaudited)



(unaudited)










Net revenue


$

95,105



$

79,296



$

15,809




19.9%


Costs and expenses:

















Cost of revenue



74,239




61,007




13,232




21.7%


Selling, general, and administrative expense



18,822




14,914




3,908




26.2%


(Gain) loss on disposal of assets, net



(25)




4




(29)




NM


Total operating expenses

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