Market Overview

Jason Industries Reports Fourth Quarter and Full-Year 2018 Results

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Delivers Full Year Guidance, Adjusted EBITDA Margin Improved 60 Basis
Points

Simplifies Operating Structure

Jason Industries, Inc. (NASDAQ:JASN, JASNW)) ("Jason" or "the Company")
today reported results for both fourth quarter and full-year 2018.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20190305005318/en/

Key financial results for the fourth quarter 2018 versus the year ago
period include:

  • Net sales of $132.0 million decreased 9.3 percent and included a
    negative 1.1 percent impact from the divestiture and planned exit of
    non-core businesses in the margin expansion program and a negative 0.9
    percent from foreign currency translation.
  • Operating loss of $0.4 million or 0.3 percent of net sales, increased
    $1.9 million, impacted by $1.4 million of accelerated depreciation
    related to the closure of the Richmond, Indiana Acoustics facility and
    a $1.3 million gain on the sale of the Nuneaton, United Kingdom
    Seating facility.
  • Net loss of $12.4 million, or $0.48 diluted loss per share, increased
    $14.8 million or $0.53 per share, significantly impacted by a discrete
    tax benefit in 2017 of $3.8 million from enactment of the Tax Cut and
    Jobs Act (the "Tax Act"), and incremental tax expense in 2018 of $6.0
    million resulting from provisions of the Tax Act.
  • Free cash flow was $5.6 million, an increase of $5.5 million, due to
    lower working capital and capital expenditures.

On an adjusted basis, fourth quarter 2018 results versus the year ago
period include:

  • Adjusted EBITDA of $10.9 million, or 8.3 percent of net sales,
    decreased $1.6 million from 8.6 percent of net sales, driven primarily
    by lower sales volumes with material inflation largely offset by
    operational improvements and price.
  • Adjusted net loss of $12.5 million, or $0.40 Adjusted loss per share,
    decreased $0.39 per share.

Key financial results for the full year 2018 versus the year ago period
include:

  • Net sales of $612.9 million decreased 5.5 percent and included a
    negative 2.9 percent impact from the divestiture and planned exit of
    non-core businesses and a positive 0.8 percent from foreign currency
    translation.
  • Adjusted EBITDA of $67.2 million, or 11.0 percent of net sales, with
    Adjusted EBITDA margins increasing from 10.4 percent of net sales.
    Adjusted EBITDA margin expansion was driven by improved operational
    efficiencies.
  • Free cash flow was $16.0 million, an increase of $1.8 million, due to
    lower capital expenditures, reduced working capital, partially offset
    by higher cash restructuring.

"We delivered our full year guidance on all key measures for a second
consecutive year," said Brian Kobylinski, chief executive officer of
Jason. "While our fourth quarter was impacted by select market headwinds
and input cost inflation, our team continues to pursue growth
opportunities and margin expansion plans to generate cash and drive
further leverage reduction."

Highlights during the quarter include:

  • Total Cost Reduction and Margin Expansion program savings were $0.4
    million in the fourth quarter with a total of $23 million since the
    inception of the program. Actions taken and announced to-date will
    achieve the three-year program goal of $25 million, and the Company
    will continue to evaluate cost reduction and footprint rationalization
    opportunities as part of its normal operating activities.
  • Completed the sale and consolidation of the Nuneaton, United Kingdom
    Seating facility. Net proceeds from the sale were $3.5 million.

Key financial results within the segments for the fourth quarter 2018
versus the year ago period include:

  • Finishing net sales of $47.2 million decreased $2.8 million, or 5.6
    percent, including a negative foreign currency translation impact of
    2.5 percent. Organic sales decreased 3.1 percent and were impacted by
    lower volumes in a weakening European industrial economy partially
    offset by growth in North America end markets. Adjusted EBITDA was
    $5.2 million, or 10.9 percent of net sales, a decrease of $0.6 million
    from 11.5 percent of net sales. Adjusted EBITDA decreased on lower
    volumes and investments in selling resources to drive targeted growth.
  • Components net sales of $14.7 million decreased $5.2 million, or 26.1
    percent, including a negative 8.1 percent impact from the exit of the
    non-core smart meter product line. Organic sales decreased 18.0
    percent due to decreased rail and expanded metals product volumes
    resulting from unfavorable content mix and heightened competitive
    pressures. Adjusted EBITDA was $0.6 million, or 3.7 percent of net
    sales, a decrease of $1.7 million from 11.4 percent of net sales, and
    was negatively impacted by lower volumes.
  • Seating net sales of $33.7 million decreased $0.2 million, or 0.5
    percent, including a negative foreign currency translation impact of
    0.2 percent. Organic sales were essentially flat with lower motorcycle
    volumes offset by growth in turf care and pricing actions. Adjusted
    EBITDA was $3.4 million, or 10.0 percent of net sales, an increase of
    $1.1 million from 6.8 percent of net sales. Adjusted EBITDA margin
    growth was driven by operational efficiencies resulting from
    continuous improvement projects.
  • Acoustics net sales of $36.4 million decreased $5.4 million, or 12.9
    percent, due to end-of-life platform changes. Adjusted EBITDA was $4.6
    million, or 12.6 percent of net sales, a decrease of $1.4 million from
    14.3 percent of net sales. Adjusted EBITDA margin decreased on
    contractual price decreases and input cost inflation, partially offset
    by savings related to the closure of the Richmond, Indiana facility.
  • Corporate expenses of $2.7 million decreased $1.1 million due to lower
    professional fees and incentive compensation.

Other Information:

  • Net debt to Adjusted EBITDA on a trailing twelve-month basis was 5.1x
    as of the end of the fourth quarter, a decrease from 5.5x as of the
    end of 2017. Total liquidity as of the end of the fourth quarter was
    $99.4 million, comprised of $58.2 million of cash and cash equivalents
    and $41.2 million of availability on revolving loan facilities
    globally.
  • In 2017 the income tax benefit of $10.4 million included $3.8 million
    of discrete net tax benefits related to the Tax Act, including $5.3
    million of tax expense for the deemed repatriation of foreign
    earnings, $11.1 million of tax benefit for the revaluation of net
    deferred tax liabilities, and $2.1 million of tax expense for other
    discrete items related to tax positions impacted by the Tax Act. In
    2018 the income tax expense of $4.1 million included incremental tax
    expense of $8.7 million resulting from the Tax Act, including $6.5
    million due to the disallowance of interest expense deductions for
    which a future tax benefit is not expected to be realized and $2.1
    million due to Global Intangible Low-Taxed Income ("GILTI") provisions.
  • During the first quarter of 2019, Mr. Kobylinski, Jason's chief
    operating decision maker, changed how he makes operating decisions,
    assesses performance of the business, and allocates resources in a
    manner that caused its operating segments to change. Consequently,
    effective for the first quarter of 2019, the Company will change the
    reporting of its financial results to reflect the simplified
    management structure with three reportable segments: Industrial,
    Engineered Components, and Fiber Solutions.

Industrial, formerly the Finishing segment, is a global provider
of solutions for surface preparation and finishing, cleaning and
containment, and material and structural positioning, with product lines
including brushes, polishing buffs and compounds, abrasives, and roller
technology serving diverse industrial end-markets.

Engineered Components, the combined former Seating and Components
segments, designs and engineers seating and safety products, serving
end-markets including heavy industry, turf care, power sports, rail, and
general industrial applications.

Fiber Solutions, formerly the Acoustics segment, is a North
American provider of technical, non-woven fiber-based acoustical,
thermal, and structural products serving automotive and other
end-markets.

2019 Guidance:

"We successfully completed the second year of our turnaround plan, a
year in which we improved our operations, upgraded our team, and
executed targeted growth initiatives. We continue to simplify our
business, generate cash and reduce leverage," added Kobylinski. "Despite
the presence of select end-market headwinds and input cost inflation
entering 2019, we remain focused on building upon recent successes."

For 2019, Jason expects net sales in the range of $565 to $585 million,
Adjusted EBITDA of $65 to $68 million and free cash flow of $12 to $16
million, which result in an implied net debt to Adjusted EBITDA range of
5.0 to 4.8 times.

Conference Call:

The Company will hold a conference call to discuss its fourth quarter
results today at 10:00 a.m. Eastern time. A live webcast of the call may
be accessed over the Internet from the Company's Investor Relations
website at investors.jasoninc.com. Participants should follow the
instructions provided on the website to download and install the
necessary audio applications. The conference call is also available by
dialing 877-451-6152 (domestic) or 201-389-0879 (international).
Participants should ask for the Jason Industries Fourth Quarter Earnings
conference call.

A replay of the live conference call will be available beginning
approximately one hour after the call. The replay will be available on
the Company's website or by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the replay passcode 13642137.
The telephonic replay will be available until 11:59 pm (Eastern Time),
March 12, 2019. The online replay will be available on the website
immediately following the call.

About Jason Industries, Inc.

The Company is the parent company to a global family of manufacturing
leaders within the finishing, components, seating and automotive
acoustics markets, including Osborn (Richmond, Ind. and Burgwald,
Germany), Metalex (Libertyville, Ill.), Milsco (Milwaukee, Wis.) and
Janesville Acoustics (Southfield, Mich.). Headquartered in Milwaukee,
Wis., Jason employs more than 3,600 people in 13 countries.

Forward Looking Statements

This press release includes "forward-looking statements" within the
meaning of the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements may
be identified by the use of words such as "anticipate," "believe,"
"expect," "estimate," "plan," "guidance," and "project" and other
similar expressions that predict or indicate future events or trends or
that are not statements of historical matters. Such forward-looking
statements include projected financial information. Such forward-looking
statements with respect to revenues, earnings, performance, strategies,
prospects and other aspects of the Company's businesses are based on
current expectations that are subject to risks and uncertainties. A
number of factors could cause actual results or outcomes to differ
materially from those indicated by such forward-looking statements. Such
factors include, but are not limited to, the level of demand for the
Company's products; competition in the Company's markets; the Company's
ability to grow and manage growth profitably; the Company's ability to
access additional capital; changes in applicable laws or regulations;
the Company's ability to attract and retain qualified personnel; the
possibility that the Company may be adversely affected by other
economic, business and/or competitive factors; and other risks and
uncertainties identified in the Company's most recent Annual Report on
Form 10-K, as such may be amended or supplemented by subsequent
Quarterly Reports on Form 10-Q or other reports filed with the
Securities and Exchange Commission.

The forward-looking statements contained in this press release are based
on assumptions that we have made in light of our industry experience and
our perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate under
the circumstances. As you review and consider this press release, you
should understand that these statements are not guarantees of
performance or results. They involve risks, uncertainties (some of which
are beyond our control) and assumptions. Although we believe that these
forward-looking statements are based on reasonable assumptions, you
should be aware that many factors could affect our actual results and
cause them to differ materially from those anticipated in the
forward-looking statements.

Any forward-looking statement made by us in this press release speaks
only as of the date on which we make it. We undertake no obligation to
publicly update any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be
required by law.

Non-GAAP and Other Company Information

Included in this press release are certain non-GAAP financial measures
designed to complement the financial information presented in accordance
with generally accepted accounting principles in the United States of
America because management believes such measures are useful to
investors. Because the Company's calculations of these measures may
differ from similar measures used by other companies, you should be
careful when comparing the Company's non-GAAP financial measures to
those of other companies. In this earnings release, we disclose the
following non-GAAP financial measures, and we reconcile these non-GAAP
financial measures to the most directly comparable GAAP financial
measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, Adjusted Earnings Per Share, Net Debt to Adjusted EBITDA, and
Free Cash Flow.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin - The Company
defines EBITDA as net income (loss) before interest expense, provision
(benefit) for income taxes, depreciation and amortization. The Company
defines Adjusted EBITDA as EBITDA, excluding the impact of operational
restructuring charges and non-cash or non-operational losses or gains,
including goodwill and long-lived asset impairment charges, gains or
losses on disposal of property, plant and equipment, divestitures and
extinguishment of debt, integration and other operational restructuring
charges, transactional legal fees, other professional fees, purchase
accounting adjustments, and non-cash share based compensation expense.
The Company defines Adjusted EBITDA Margin as Adjusted EBITDA as a
percentage of net sales.

Management believes that Adjusted EBITDA provides a more clear picture
of the Company's operating results by eliminating expenses and income
that are not reflective of the underlying business performance. The
Company uses this metric to facilitate a comparison of operating
performance on a consistent basis from period to period and to analyze
the factors and trends affecting its segments. The Company's internal
plans, budgets and forecasts use Adjusted EBITDA as a key metric and the
Company uses this measure to evaluate its operating performance and
segment operating performance and to determine the level of incentive
compensation paid to its employees.

Adjusted Net Income and Adjusted Earnings Per Share - The Company
defines Adjusted Net Income and Adjusted Earnings Per Share (calculated
on a diluted basis) as net income and earnings per share (as defined by
GAAP), excluding the impact of operational restructuring charges and
non-cash or non-operational losses or gains, including goodwill and
long-lived asset impairment charges, gains or losses on disposal of
property, plant and equipment, divestitures and extinguishment of debt,
integration and other operational restructuring charges, transactional
legal fees, other professional fees, purchase accounting adjustments,
and non-cash share based compensation expense, net of their income tax
impact. The tax rates used to calculate adjusted net income and adjusted
earnings per share are based on a transaction specific basis. Adjusted
earnings per share includes the impact of share based compensation to
the extent it is dilutive in each period. Adjusted earnings per share
includes the impact to Jason Industries common shares upon conversion of
JPHI Holdings Inc. rollover shares and conversion of preferred stock.
Management believes that Adjusted Net Income and Adjusted Earnings Per
Share are useful in assessing the Company's financial performance by
eliminating expenses and income that are not reflective of the
underlying business performance.

Net Debt to Adjusted EBITDA - The Company defines Net Debt to
Adjusted EBITDA as current and long-term debt plus debt discounts less
cash and cash equivalents, divided by pro forma Adjusted EBITDA for the
trailing twelve months. Pro forma Adjusted EBITDA is calculated as
Adjusted EBITDA as reported plus or minus Adjusted EBITDA of
acquisitions or divestitures prior to the date of the acquisition or
divestiture, respectively, during the trailing twelve months. Management
believes that Net Debt to Adjusted EBITDA is useful in assessing the
Company's financial leverage.

Free Cash Flow - The Company defines Free Cash Flow as net cash
flows from operating activities (as defined by GAAP) less capital
expenditures and cash dividends on preferred stock. Management believes
that Free Cash Flow is useful in assessing our ability to generate cash
from business operations that is available for strategic capital
decisions.

In addition to these non-GAAP financial measures, we also use the term
"organic sales" to refer to GAAP net sales from existing operations
excluding (i) sales from acquired businesses recorded prior to the first
anniversary of the acquisition, (ii) sales from divested businesses or
exited non-core businesses, and (iii) the impact of foreign currency
translation. The impact of foreign currency translation is calculated as
the difference between (a) the period-to-period change in results
(excluding acquisitions, divestitures, and exited non-core businesses)
and (b) the period-to-period change in results (excluding acquisitions,
divestitures, and exited non-core businesses) after applying current
period average foreign exchange rates to the prior year period. We use
the term "organic sales growth" to refer to the measure of comparing
current period organic sales with the corresponding prior year period
organic sales.

       
Jason Industries, Inc.
Condensed Consolidated Statements of Operations

(In thousands, except per share amounts) (Unaudited)

 
Three Months Ended Year Ended

December 31,
2018

December 31,
2017

December 31,
2018

December 31,
2017

Net sales $ 131,975 $ 145,516 $ 612,948 $ 648,616
Cost of goods sold 106,966   116,890   486,668   517,764  
Gross profit 25,009 28,626 126,280 130,852
Selling and administrative expenses 25,544 25,787 106,470 103,855
(Gain) loss on disposals of property, plant and equipment - net (1,296 ) 145 (1,142 ) (759 )
Restructuring 1,207   1,270   4,458   4,266  
Operating (loss) income (446 ) 1,424 16,494 23,490
Interest expense (8,659 ) (8,125 ) (33,437 ) (33,089 )
(Loss) gain on extinguishment of debt (182 ) 2,201
Equity income 121 237 1,024 952
Loss on divestiture (8,730 )
Other income - net 48   58   654   319  
Loss before income taxes (8,936 ) (6,588 ) (15,265 ) (14,857 )
Tax provision (benefit) 3,463   (8,946 ) 4,052   (10,384 )
Net (loss) income $ (12,399 ) $ 2,358 $ (19,317 ) $ (4,473 )
Less net gain attributable to noncontrolling interests       5  
Net (loss) gain attributable to Jason Industries $ (12,399 ) $ 2,358 $ (19,317 ) $ (4,478 )
Accretion of preferred stock dividends and redemption premium 796   974   4,070   3,783  
Net (loss) income available to common shareholders of Jason
Industries
$ (13,195 ) $ 1,384   $ (23,387 ) $ (8,261 )
 
Net (loss) income per share available to common shareholders of
Jason Industries:

Basic

$ (0.48 ) $ 0.05 $ (0.85 ) $ (0.32 )
Diluted (0.48 ) $ 0.05 (0.85 ) (0.32 )
Weighted average number of common shares outstanding:
Basic 27,683 26,255 27,595 26,082
Diluted 27,683 26,785 27,595 26,082
 
Jason Industries, Inc.
Condensed Consolidated Balance Sheets

(In thousands) (Unaudited)

 
December 31, 2018   December 31, 2017
Assets
Current assets
Cash and cash equivalents $ 58,169 $ 48,887
Accounts receivable - net 60,559 68,626
Inventories - net 63,747 70,819
Other current assets 13,664   15,655  
Total current assets 196,139 203,987
Property, plant and equipment - net 134,869 154,196
Goodwill 44,065 45,142
Other intangible assets - net 116,529 131,499
Other assets - net 11,995   11,499  
Total assets $ 503,597   $ 546,323  
Liabilities and Shareholders' (Deficit) Equity
Current liabilities
Current portion of long-term debt $ 6,544 $ 9,704
Accounts payable 47,497 53,668
Accrued compensation and employee benefits 14,452 17,433
Accrued interest 89 276
Other current liabilities 17,281   19,806  
Total current liabilities 85,863 100,887
Long-term debt 387,244 391,768
Deferred income taxes 23,882 25,699
Other long-term liabilities 20,548   22,285  
Total liabilities 517,537   540,639  
 
Shareholders' (Deficit) Equity
Preferred stock $ 40,612 $ 49,665
Jason Industries common stock 3 3
Additional paid-in capital 155,533 143,788
Retained deficit (186,517 ) (167,710 )
Accumulated other comprehensive loss (23,571 ) (20,062 )
Total shareholders' (deficit) equity (13,940 ) 5,684  
Total liabilities and shareholders' (deficit) equity $ 503,597   $ 546,323  
 
Jason Industries, Inc.
Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

Year Ended
December 31, 2018

 

Year Ended
December 31, 2017

 
Cash flows from operating activities
Net loss $ (19,317 ) $ (4,473 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 28,356 26,260
Amortization of intangible assets 14,248 12,674
Amortization of deferred financing costs and debt discount 2,937 2,943
Equity income (1,024 ) (952 )
Deferred income taxes (1,838 ) (17,345 )
Gain on disposals of property, plant and equipment - net (1,142 ) (759 )
Gain on extinguishment of debt (2,201 )
Loss on divestiture 8,730
Transaction fees on divestiture (932 )
Dividends from joint ventures 833
Share-based compensation 2,709 1,119
Net increase (decrease) in cash due to changes in:
Accounts receivable 7,454 6,997
Inventories 5,750 3,804
Other current assets 2,819 1,464
Accounts payable (6,015 ) (7,897 )
Accrued compensation and employee benefits (2,710 ) 5,946
Accrued interest (187 ) 98
Accrued income taxes (1,221 ) 473
Other - net (1,895 ) (5,858 )
Total adjustments 49,074   34,564  
Net cash provided by operating activities 29,757   30,091  
Cash flows from investing activities
Proceeds from disposals of property, plant and equipment 3,531 8,809
Payments for property, plant and equipment (13,753 ) (15,873 )
Proceeds from divestitures, net of cash divested and debt assumed by
buyer
7,883
Acquisitions of patents (152 ) (104 )
Net cash provided by (used in) investing activities (10,374 ) 715
Cash flows from financing activities
Payments of deferred financing costs (649 )
Payments of First and Second Lien term loans (5,600 ) (21,826 )
Proceeds from other long-term debt 3,387 8,596
Payments of other long-term debt (7,076 ) (10,816 )
Value added tax collected on building sale 694
Payments of preferred stock dividends (15 ) (12 )
Other financing activities - net (7 ) (220 )
Net cash used in financing activities (9,266 ) (24,278 )
Effect of exchange rate changes on cash and cash equivalents (835 ) 1,498  
Net increase in cash and cash equivalents 9,282 8,026
Cash and cash equivalents, beginning of period 48,887   40,861  
Cash and cash equivalents, end of period $ 58,169   $ 48,887  
     
Jason Industries, Inc.
Quarterly Financial Information by Segment

(In thousands) (Unaudited)

 
2017 2018
1Q   2Q   3Q   4Q   FY 1Q   2Q   3Q   4Q   FY
Finishing
Net sales $ 49,476 $ 49,757 $ 51,065 $ 49,986 $ 200,284 $ 53,978 $ 55,454 $ 51,016 $ 47,189 $ 207,637
Adjusted EBITDA 7,067 7,324 7,503 5,767 27,661 7,799 8,437 7,579 5,164 28,979
Adjusted EBITDA % net sales 14.3 % 14.7 % 14.7 % 11.5 % 13.8 % 14.4 % 15.2 % 14.9 % 10.9 % 14.0 %
 
Components
Net sales $ 21,117 $ 21,713 $ 19,945 $ 19,846 $ 82,621 $ 22,393 $ 24,559 $ 21,404 $ 14,672 $ 83,028
Adjusted EBITDA 2,720 2,451 2,445 2,272 9,888 3,070 3,563 2,563 550 9,746
Adjusted EBITDA % net sales 12.9 % 11.3 % 12.3 % 11.4 % 12.0 % 13.7 % 14.5 % 12.0 % 3.7 % 11.7 %
 
Seating
Net sales $ 47,373 $ 44,921 $ 32,963 $ 33,872 $ 159,129 $ 47,034 $ 44,993 $ 34,609 $ 33,686 $ 160,322
Adjusted EBITDA 5,530 5,897 2,621 2,300 16,348 5,933 6,870 3,588 3,356 19,747
Adjusted EBITDA % net sales 11.7 % 13.1 % 8.0 % 6.8 % 10.3 % 12.6 % 15.3 % 10.4 % 10.0 % 12.3 %
 
Acoustics
Net sales $ 57,227 $ 56,086 $ 51,457 $ 41,812 $ 206,582 $ 43,849 $ 43,418 $ 38,266 $ 36,428 $ 161,961
Adjusted EBITDA 6,721 7,983 6,640 5,997 27,341 5,778 6,044 4,465 4,581 20,868
Adjusted EBITDA % net sales 11.7 % 14.2 % 12.9 % 14.3 % 13.2 % 13.2 % 13.9 % 11.7 % 12.6 % 12.9 %
 
Corporate
Adjusted EBITDA $ (3,477 ) $ (3,075 ) $ (3,073 ) $ (3,861 ) $ (13,486 ) $ (2,867 ) $ (3,550 ) $ (2,965 ) $ (2,747 ) $ (12,129 )
 
Consolidated
Net sales $ 175,193 $ 172,477 $ 155,430 $ 145,516 $ 648,616 $ 167,254 $ 168,424 $ 145,295 $ 131,975 $ 612,948
Adjusted EBITDA 18,561 20,580 16,136 12,475 67,752 19,713 21,364 15,230 10,904 67,211
Adjusted EBITDA % net sales 10.6 % 11.9 % 10.4 % 8.6 % 10.4 % 11.8 % 12.7 % 10.5 % 8.3 % 11.0 %
 
Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures

(In thousands) (Unaudited)

 
Organic Sales Growth
 
4Q 2018

Finishing

 

Components

 

Seating

 

Acoustics

 

Jason
Consolidated

 

Net sales

Organic sales growth (3.1)% (18.0)% (0.3)% (12.9)% (7.3)%
Currency impact (2.5)% —% (0.2)% —% (0.9)%
Divestiture & Non-Core Exit —% (8.1)% —% —% (1.1)%
Growth as reported (5.6)% (26.1)% (0.5)% (12.9)% (9.3)%
                 
YTD 2018

Finishing

Components

Seating

Acoustics

Jason
Consolidated

Net sales

Organic sales growth 1.7% (4.7)% 0.4% (10.6)% (3.4)%
Currency impact 2.3% —% 0.3% —% 0.8%
Divestiture & Non-Core Exit (0.3)% 5.2% —% (11.0)% (2.9)%
Growth as reported 3.7% 0.5% 0.7% (21.6)% (5.5)%
         

Free Cash Flow

 

1Q 2Q 3Q 4Q YTD
2018 2018 2018   2018 2018
Operating Cash Flow $ 3,817 $ 7,323 $ 8,875 $ 9,742 $ 29,757
Less: Capital Expenditures (3,622 ) (3,317 ) (2,697 ) (4,117 ) (13,753 )
Free Cash Flow After Dividends $ 195 $ 4,006 $ 6,178 $ 5,625 $ 16,004  
 

Net Debt to Adjusted EBITDA

 
December 31, 2018
Current and long-term debt $ 393,788
Add: Debt discounts and deferred financing costs 6,721
Less: Cash and cash equivalents (58,169 )
Net Debt $ 342,340
 
Adjusted EBITDA
1Q18 19,713
2Q18 21,364
3Q18 15,230
4Q18 10,904  
TTM Adjusted EBITDA 67,211
 
Net Debt to Adjusted EBITDA* 5.1 x

*Note the consolidated first lien net leverage ratio under the Company's
senior secured credit facilities was 3.64x as of December 31, 2018. See
Form 10-K for further discussion of the Company's senior secured credit
facilities.

     
Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA

(In thousands) (Unaudited)

 
2017 2018
1Q   2Q   3Q   4Q   FY 1Q   2Q   3Q   4Q   FY
Net loss $ (493 ) $ (4,737 ) $ (1,601 ) $ 2,358 $ (4,473 ) $ (819 ) $ (587 ) $ (5,512 )   $ (12,399 ) $ (19,317 )
Tax provision (benefit) (15 ) 179 (1,602 ) (8,946 ) (10,384 ) 275 (238 ) 552 3,463 4,052
Interest expense 8,366 8,395 8,203 8,125 33,089 8,027 8,403 8,348 8,659 33,437
Depreciation and amortization 10,003   9,487   9,749   9,695   38,934   10,807   11,046   9,804   10,947   42,604  
EBITDA: 17,861   13,324   14,749   11,232   57,166   18,290   18,624   13,192     10,670   60,776  
Adjustments:
Restructuring(1) 681 543 1,772 1,270 4,266 602 1,464 1,185 1,207 4,458
Integration and other restructuring costs(2) (569 ) (569 ) 356 712 (658 ) 410
Share-based compensation(3) 349 324 231 215 1,119 231 553 944 981 2,709
(Gain) loss on disposals of fixed assets - net(4) (330 ) 65 (639 ) 145 (759 ) 234 11 (91 ) (1,296 ) (1,142 )
Gain on extinguishment of debt(5) (1,564 ) (819 ) 182 (2,201 )
Loss on divestitures(6)   7,888   842     8,730              
Total adjustments 700   7,256   1,387   1,243   10,586   1,423   2,740   2,038     234   6,435  
Adjusted EBITDA $ 18,561   $ 20,580   $ 16,136   $ 12,475   $ 67,752   $ 19,713   $ 21,364   $ 15,230     $ 10,904   $ 67,211  

(1)

  Restructuring includes costs associated with exit or disposal
activities as defined by GAAP related to facility consolidation,
including one-time employee termination benefits, costs to close
facilities and relocate employees, and costs to terminate contracts
other than capital leases.
 

(2)

During 2018, integration and other restructuring costs included $0.3
million for costs related to the exit of the non-core smart meter
product line in the components segment, $0.2 million for expected
settlement costs related to a legal claim in the former Assembled
Products business in the components segment associated with periods
prior to the Company's go public business combination, $0.1 million
related to legal entity restructuring activities and $0.1 million
associated with the insurance deductible related to a force majeure
incident at a supplier in the seating segment. The supplier incident
had resulted in incremental costs to maintain production throughout
2018, with such costs offset by insurance recoveries received during
the third and fourth quarters of 2018. These costs were partially
offset by $0.4 million of legal settlement income related to
proceeds from a supplier claim in the seating segment associated
with periods prior to the Company's go public business combination.
Such costs are not included in restructuring for GAAP purposes.
During 2017, integration and other restructuring costs includes a
$0.6 million reversal of a liability recorded in acquisition
accounting for the business combination in 2014.
 

(3)

Represents non-cash share based compensation expense (income) for
awards under the Company's 2014 Omnibus Incentive Plan.
 

(4)

During 2018, (gain) loss on disposals of property, plant and
equipment included for the fourth quarter of 2018 a gain of $1.3
million on the sale of a building related to the closure of the
seating segment's U.K. facility and for the first quarter of 2018
included a loss of $0.2 million from the disposition of equipment in
connection with the consolidation of the component segment's
Libertyville, Illinois facilities. During 2017, (gain) loss on
disposals of property, plant and equipment included for the third
quarter of 2017 a gain of $0.5 million on the sale of a building
related to the closure of the finishing segment's Richmond, Virginia
facility and for the first quarter of 2017 a gain of $0.4 million on
the sale of equipment related to the closure of the components
segment's Buffalo Grove, Illinois facility.
 

(5)

Represents a gain on extinguishment of Second Lien Term Loan debt in
both the second and third quarters of 2017 and a $0.2 million
prepayment fee to retire foreign debt in the fourth quarter of 2017.
 

(6)

Represents the completed divestiture of the Company's Acoustics
European operations. A pre-tax loss of $7.9 million was recorded in
the second quarter of 2017 when the business was classified as held
for sale and a pre-tax loss of $0.8 million was recorded in the
third quarter of 2017 upon closing of the divestiture.
     
Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income and Adjusted Earnings per Share

(In thousands, except per share amounts) (Unaudited)

 
2017 2018
1Q   2Q   3Q   4Q   FY 1Q   2Q   3Q   4Q   FY
GAAP Net income (loss) $ (493 ) $ (4,737 ) $ (1,601 ) $ 2,358 $ (4,473 ) $ (819 ) $ (587 ) $ (5,512 ) $ (12,399 ) $ (19,317 )
Adjustments:
Restructuring 681 543 1,772 1,270 4,266 602 1,464 1,185 1,207 4,458
Integration and other restructuring costs (569 ) (569 ) 356 712 (658 ) 410
Share based compensation 349 324 231 215 1,119 231 553 944 981 2,709
(Gain) loss on disposal of fixed assets - net (330 ) 65 (639 ) 145 (759 ) 234 11 (91 ) (1,296 ) (1,142 )
(Gain) loss on extinguishment of debt (1,564 ) (819 ) 182 (2,201 )
Loss on divestitures 7,888 842 8,730
Tax effect on adjustments(1) (55 ) (582 ) (214 ) (122 ) (973 ) (314 ) (697 ) (445 ) (285 ) (1,741 )
Tax Benefit (provision)(2)       (3,787 ) (3,787 ) 410     170     580  
Adjusted net income (loss) $ 152   $ 1,937   $ (428 ) $ (308 ) $ 1,353   $ 700   $ 1,456   $ (3,749 ) $ (12,450 ) $ (14,043 )
 
Effective tax rate on adjustments(1) 16 % 8 % 16 % 10 % 9 % 22 % 25 % 22 % 122 % 27 %
 
Diluted weighted average number of common shares outstanding (GAAP): 25,784 26,042 26,241 26,255 26,082 27,329 27,677 27,683 27,683 27,595
Plus: effect of dilutive share-based compensation (non-GAAP)(3) 530
Plus: effect of convertible preferred stock and rollover shares
(non-GAAP)(3)
3,967   3,815   3,889   3,982   3,917   3,309   3,147   3,212   3,274   3,235  
Diluted weighted average number of common shares outstanding
(non-GAAP)(3)
29,751   29,857   30,130   30,767   29,999   30,638   30,824   30,895   30,957   30,830  
 
Adjusted earnings (loss) per share $ 0.01   $ 0.06   $ (0.01 ) $ (0.01 ) $ 0.05   $ 0.02   $ 0.05   $ (0.12 ) $ (0.40 ) $ (0.46 )
 
GAAP Net (loss) income per share available to common shareholders
of Jason Industries
$ (0.05 ) $ (0.22 ) $ (0.10 ) $ 0.05 $ (0.32 ) $ (0.09 ) $ (0.05 ) $ (0.23 ) $ (0.48 ) $ (0.85 )
Adjustments net of income taxes:
Restructuring 0.02 0.01 0.04 0.04 0.13 0.02 0.04 0.03 0.03 0.12
Integration and other restructuring costs (0.02 ) (0.02 ) 0.01 0.02 (0.02 ) 0.01
Share based compensation 0.02 0.02 0.01 0.01 0.06 0.01 0.02 0.03 0.03 0.08
(Gain) loss on disposal of fixed assets - net (0.01 ) (0.01 ) (0.02 ) 0.01 (0.05 ) (0.04 )
Gain on extinguishment of debt (0.04 ) (0.02 ) 0.01 (0.06 )
Loss on divestitures 0.26 0.03 0.29
Tax Benefit (provision)(2) (0.12 ) (0.13 ) 0.02 0.01 0.02
Redemption premium on preferred stock conversion 0.04 0.04
GAAP to non-GAAP impact per share(3) 0.03   0.03   0.04   0.02   0.12     0.02   0.04   0.09   0.16  
Adjusted earnings (loss) per share $ 0.01   $ 0.06   $ (0.01 ) $ (0.01 ) $ 0.05   $ 0.02   $ 0.05   $ (0.12 ) $ (0.40 ) $ (0.46 )

(1)

  The effective tax rate on adjustments is impacted by nondeductible
foreign transaction and restructuring costs, nondeductible
impairment of goodwill, restructuring charges in foreign
jurisdictions at statutory tax rates, and discrete non-cash tax
expense related to the vesting of restricted stock units for which
no tax benefit will be realized.
 

(2)

Represents discrete income tax benefits associated with The Tax Cuts
and Jobs Act enacted in December 2017.
 

(3)

Adjusted earnings per share includes the impact of share-based
compensation to the extent it is dilutive in each period. Adjusted
earnings per share includes the impact to Jason Industries common
shares upon conversion of JPHI Holdings Inc. rollover shares and
conversion of preferred stock at the voluntary conversion ratio.

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