GREENVILLE, Wis., July 9, 2014 (GLOBE NEWSWIRE) -- School Specialty, Inc. (OTCQB:SCOO) ("School Specialty" or "the Company"), a leading distributor of supplies, furniture and both supplemental and curriculum products to the education marketplace, today announced its fiscal 2014 results for the period ended April 26, 2014.
Joseph M. Yorio, President and Chief Executive Officer of School Specialty stated, "We finished the year strong, meeting the projections we set and I'm pleased to report that during the fourth quarter, we returned School Specialty to growth. The Process Improvement Programs that were launched in fiscal 2014 have resulted in significant improvements and efficiencies in our operations and the desired cost-savings. These programs have also resulted in a more cohesive and aligned organization, a stronger infrastructure with greater accountability, and additional resources to invest in growth areas of our business. I am very confident in our ability to deliver for our customers and exceed their expectations in this upcoming peak season and beyond."
Fourth Quarter Financial Results
Process Improvement Program Update
In the second quarter of fiscal 2014, School Specialty began to implement companywide Process Improvement Programs to better align its operating groups, enhance systems and processes, and drive greater efficiency throughout the organization. The initial focus was to improve back-end functions and streamline operations, while also serving to enhance the customer experience. During fiscal 2014, the Company realized approximately $4 million of cost savings from the Process Improvement Programs and expects to realize $10-$12 million of savings from these various programs in FY15. The Company also believes that additional savings may be realized longer-term, as new programs are implemented.
Mr. Yorio continued, "We are now embarking on the next phase, taking a closer look at our Sales, Marketing and Merchandising alignment and how we go-to-market. While we're projecting modest growth this year, I believe the changes we have and continue to implement will enable us to drive better top-line performance and more meaningful returns for our stockholders, especially as the domestic economy and education market improve. One of the things that attracted me to School Specialty was the Company's industry reputation for high-quality products and services and our employees' commitment to our customers. In my brief time as CEO, this has resonated true, and I believe we have significant opportunities to improve our current assortment and distribution network, grow with our customers, and enter into new markets that will drive stockholder value."
Fiscal 2014 Financial Results
Non-GAAP combined results for the twelve months ended April 26, 2014 include results of operations for the Successor Company for the forty-six weeks ended April 26, 2014 and the Predecessor Company for the six weeks ended June 11, 2013. These results are compared to the Predecessor Company for the twelve months ended April 27, 2013.
Financial Outlook
School Specialty today provided guidance for fiscal 2015. The Company anticipates revenues will be approximately $640-$660 million, representing growth between 1.5 and 4.5 percent. The Company also expects a modest decline in its gross margins due to the anticipated product mix, which are expected to be offset by declines in SG&A expenses. Additionally, the Company projects that Adjusted EBITDA for fiscal 2015 will be approximately $48-$54 million. Capital expenditures are expected to be approximately $17-$19 million.
Mr. Yorio concluded, "Following our emergence from reorganization, the Board and management team set out on a journey to improve operations and ensure we meet customer expectations. Our goal was to stabilize our business while putting in place a more cohesive infrastructure that would support sustainable growth. I believe we delivered on our promises in fiscal 2014 and set the foundation for the future. In fiscal 2015, we intend to continue process reforms and upgrade our technology systems, in order to simplify and improve processes for our customers. We will continue to drive improvements in everything we do in order to deliver for our customers, our partners and our stockholders."
School Specialty intends to publish an accompanying presentation on its financial results shortly. The Company will not be hosting a teleconference, but management will be available to address questions after the filing of this supplemental information. This information will also be available on our website, www.schoolspecialty.com, in the Investor Relations section.
About School Specialty, Inc.
School Specialty is a leading distributor of innovative and proprietary products, programs and services to the education marketplace. The Company designs, develops, and provides educators with the latest and very best school supplies, furniture and both curriculum and supplemental learning resources. Working in collaboration with educators, School Specialty reaches beyond the scope of textbooks to help teachers, guidance counselors and school administrators ensure that every student reaches his or her full potential. For more information about School Specialty, visit www.schoolspecialty.com.
Statement Concerning Forward-Looking Information
Any statements made in this press release about School Specialty's future financial conditions, results of operations, expectations, plans, or prospects, including the information under the headings "Process Improvement Program Update" and "Financial Outlook", constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "projects," "should," "targets" and/or similar expressions. These forward-looking statements are based on School Specialty's current estimates and assumptions and, as such, involve uncertainty and risk. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward-looking statements because of a number of factors, including the factors described in Item 1A of School Specialty's Annual Report on Form 10-K for the fiscal year ended April 26, 2014, which factors are incorporated herein by reference. Any forward-looking statement in this release speaks only as of the date in which it is made. Except to the extent required under the federal securities laws, School Specialty does not intend to update or revise the forward-looking statements.
- Tables to Follow –
SCHOOL SPECIALTY, INC. | ||||||
CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS | ||||||
(In Thousands, Except Per Share Amounts) | ||||||
Unaudited / Non-GAAP | ||||||
Successor Company |
Predecessor Company |
Successor Company |
Predecessor Company |
Non-GAAP Combined |
Predecessor Company |
|
Three Months Ended April 26, 2014 |
Three Months Ended April 27, 2013 |
Forty-Six Weeks Ended April 26, 2014 |
Six Weeks Ended June 11, 2013 |
Twelve Months Ended April 26, 2014 |
Twelve Months Ended April 27, 2013 |
|
Revenues | $ 108,253 | $ 105,202 | $ 572,045 | $ 58,697 | $ 630,742 | $ 674,998 |
Cost of revenues | 65,464 | 67,025 | 349,845 | 35,079 | 384,924 | 411,118 |
Gross profit | 42,789 | 38,177 | 222,200 | 23,618 | 245,818 | 263,880 |
Selling, general and administrative expenses | 55,653 | 64,782 | 213,144 | 27,473 | 240,617 | 267,491 |
Restructuring charges | 518 | -- | 6,552 | -- | 6,552 | -- |
Impairment charge | -- | -- | -- | -- | -- | 45,789 |
Operating income (loss) | (13,382) | (26,605) | 2,504 | (3,855) | (1,351) | (49,400) |
Other expense: | ||||||
Impairment long-term asset | -- | -- | -- | -- | -- | 1,414 |
Interest expense | 4,741 | 1,291 | 16,882 | 3,235 | 20,117 | 28,600 |
Early termination of long-term indebtedness | -- | 1,193 | -- | -- | -- | 26,247 |
Loss on early extinguishment of debt | -- | 10,201 | -- | -- | -- | 10,201 |
Impairment of investment in unconsolidated affiliate | -- | 7,749 | -- | -- | -- | 7,749 |
Change in fair value of interest rate swap | (5) | -- | 483 | -- | 483 | -- |
Refund of early termination fee | -- | -- | (4,054) | -- | (4,054) | -- |
Reorganization items, net | 872 | 22,979 | 6,420 | (84,799) | (78,379) | 22,979 |
Income (loss) before provision for income taxes | (18,990) | (70,018) | (17,227) | 77,709 | 60,482 | (146,590) |
Provision for (benefit from) income taxes | -- | 249 | 258 | 1,641 | 1,899 | (334) |
Income (loss) before income of unconsolidated affiliate | (18,990) | (70,267) | (17,485) | 76,068 | 58,583 | (146,256) |
Loss of unconsolidated affiliate | -- | -- | -- | -- | -- | (1,436) |
Net income (loss) | $ (18,990) | $ (70,267) | $ (17,485) | $ 76,068 | $ 58,583 | $ (147,692) |
Adjusted Earnings before interest, taxes, depreciation, amortization, bankruptcy-related costs, restructuring and impairment charges (EBITDA) reconciliation: | ||||||
Net income (loss) | $ (18,990) | $ (70,267) | $ 58,583 | $ (147,692) | ||
Loss of unconsolidated affiliate | -- | -- | -- | 1,436 | ||
Provision for (benefit from) income taxes | -- | 249 | 1,899 | (334) | ||
Reorganization items, net | 872 | 22,979 | (78,379) | 22,979 | ||
Impairment long-term asset | -- | -- | -- | 1,414 | ||
Impairment charge | -- | -- | -- | 45,789 | ||
Bankruptcy-related restructuring costs | 518 | -- | 6,552 | -- | ||
Bankruptcy-related costs incl in SG&A | 2,907 | 1,118 | 8,276 | 5,851 | ||
Change in fair value of interest rate swap | (5) | -- | 483 | -- | ||
Early termination fee | -- | 1,193 | (4,054) | 26,247 | ||
Loss on early extinguishment of debt | -- | 10,201 | -- | 10,201 | ||
Impairment of investment in unconsolidated affiliate | -- | 7,749 | -- | 7,749 | ||
Depreciation and amortization expense | 4,586 | 12,186 | 21,859 | 33,220 | ||
Amortization of development costs | 1,370 | 2,043 | 7,224 | 7,179 | ||
Net interest expense | 4,741 | 1,291 | 20,117 | 28,600 | ||
Adjusted EBITDA | $ (4,001) | $ (11,258) | $ 42,560 | $ 42,639 | ||
SCHOOL SPECIALTY, INC. | ||
CONSOLIDATED BALANCE SHEETS | ||
(In Thousands, Except Share Data) | ||
Successor Company |
Predecessor Company |
|
April 26, 2014 |
April 27, 2013 |
|
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 9,008 | $ 20,769 |
Restricted cash | -- | 26,302 |
Accounts receivable, less allowance for doubtful accounts of $984 and $926, respectively | 62,631 | 58,942 |
Inventories, net | 93,387 | 92,582 |
Deferred catalog costs | 8,057 | 8,924 |
Prepaid expenses and other current assets | 18,043 | 29,901 |
Refundable income taxes | -- | 9,793 |
Deferred taxes | -- | -- |
Asset Held for Sale | 2,200 | -- |
Total current assets | 193,326 | 247,213 |
Property, plant and equipment, net | 39,045 | 39,209 |
Goodwill | 21,588 | -- |
Intangible assets, net | 48,251 | 110,306 |
Development costs and other, net | 36,646 | 30,079 |
Deferred taxes long-term | 48 | 51 |
Investment in unconsolidated affiliate | 715 | 715 |
Amortization of Debt Financing Fees | ||
Total assets | $ 339,619 | $ 427,573 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||
Current liabilities: | ||
Current maturities of long-term debt | $ 12,388 | $ 198,302 |
Accounts payable | 42,977 | 22,897 |
Accrued compensation | 8,966 | 7,197 |
Deferred revenue | 2,613 | 2,237 |
Accrued fee for early termination of long-term debt | -- | 25,000 |
Other accrued liabilities | 14,460 | 21,905 |
Total current liabilities | 81,404 | 277,538 |
Long-term debt less current maturities | 153,987 | -- |
Other liabilities | 1,171 | 925 |
Liabilities subject to compromise | -- | 228,302 |
Total liabilities | 236,562 | 506,765 |
Stockholders' equity (deficit): | ||
Predecessor preferred stock, $0.001 par value per share, 1,000,000 shares authorized; none outstanding | -- | -- |
Predecessor common stock, $0.001 par value per share, 150,000,000 shares authorized; 24,599,159 shares issued | -- | 24 |
Predecessor capital in excess of par value | -- | 446,232 |
Predecessor treasury stock, at cost, 5,420,210 shares | -- | (186,637) |
Successor preferred stock, $0.001 par value per share, 500,000 shares authorized; none outstanding | -- | -- |
Successor common stock, $0.001 par value per share, 2,000,000 shares authorized; 1,000,004 shares outstanding | 1 | -- |
Successor capital in excess of par value | 120,955 | -- |
Accumulated other comprehensive income (loss) | (414) | 22,381 |
Retained earnings (accumulated deficit) | (17,485) | (361,192) |
Total stockholders' equity (deficit) | 103,057 | (79,192) |
Total liabilities and stockholders' equity (deficit) | $ 339,619 | $ 427,573 |