Market Overview

ALJ Regional Holdings, Inc. Announces Earnings For The First Quarter Ended December 31, 2018

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NEW YORK, Feb. 11, 2019 /PRNewswire/ -- ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) ("ALJ") announced results today for its first quarter ended December 31, 2018. 

ALJ is a holding company, whose primary assets are its subsidiaries Faneuil, Inc. ("Faneuil"), Floors-N-More, LLC, dba Carpets N' More ("Carpets"), and Phoenix Color Corp. ("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 two 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.

Investment Highlights – Three Months Ended December 31, 2018

Consolidated Results for ALJ

  • ALJ recognized consolidated net revenue of $93.8 million for the three months ended December 31, 2018, a decrease of $1.2 million, or 1.2%, compared to $95.0 million for the three months ended December 31, 2017. The decrease was driven by lower sales volumes in cabinets, flooring, and granite at Carpets, partially offset by higher volumes and new contracts at Faneuil. ALJ recognized consolidated net revenue of $90.1 million for the three months ended September 30, 2018.
  • ALJ recognized net income of $0.7 million and income per share of $0.02 (diluted) for the three months ended December 31, 2018, compared to net loss of $5.3 million and loss per share of $0.14 (diluted) for the three months ended December 31, 2017. Decreased net revenue was offset by reduced selling, general and administrative expenses that reflect the completion of combining manufacturing facilities at Phoenix and process improvements and cost reductions at Carpets, and decreased provision for income taxes. Net loss for the three months ended December 31, 2017 reflects 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 net income of $1.2 million and income per share of $0.03 (diluted) for the three months ended September 30, 2018.
  • ALJ recognized adjusted EBITDA of $8.6 million for the three months ended December 31, 2018, an increase of $2.0 million, or 30.6%, compared to $6.6 million for the three months ended December 31, 2017. The increase was driven by new contracts and volume increases at Faneuil, and process improvements and cost reductions at Carpets. ALJ recognized adjusted EBITDA of $9.3 million for the three months ended September 30, 2018.
  • ALJ estimates consolidated net revenue for the three months ending March 31, 2019 to be in the range of $84.1 million to $93.5 million, compared to $95.1 million for the three months ended March 31, 2018.

Jess Ravich, Executive Chairman of ALJ, said, "We are pleased with our first quarter results that are consistent with our expectations and significantly above prior year.  Faneuil results reflect improving fundamentals from the acquired customer management outsourcing business, and additional volume from existing and new customer contract awards.  We expect this trend for Faneuil to continue throughout fiscal 2019 driven by new customer contract awards.  We continue to focus on increasing adjusted EBITDA and improving adjusted EBITDA margins in all of our businesses to generate shareholder value." 



Three Months Ended
December 31,



Amounts in thousands, except per share amounts


2018


2017


$ Change


% Change



(unaudited)


(unaudited)






Net revenue


$

93,784


$

94,954


$

(1,170)


(1.2%)

Costs and expenses:












Cost of revenue



72,827



74,910



(2,083)


(2.8%)

Selling, general and administrative expense



17,466



19,538



(2,072)


(10.6%)

Disposal of assets and other gain



(223)



(207)



(16)


NM

Total operating expenses



90,070



94,241



(4,171)


(4.4%)

Operating income



3,714



713



3,001


420.9%

Other expense:












Interest expense, net



(2,715)



(2,660)



55


2.1%

Total other expense



(2,715)



(2,660)



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