WOODLAND HILLS, CA--(Marketwired - May 14, 2014) - Great American Group, Inc. (
For the first quarter ended March 31, 2014, the Company reported total revenues of $21.7 million, an increase from $21.0 million in the first quarter of 2013. The increase in revenues of $0.7 million in the first quarter of 2014 was primarily due to (a) an increase in revenues of $1.7 million in the auction and liquidation segment, and (b) an increase in revenues of $1.3 million in the valuation segment; offset by a decrease in revenues of $2.3 million in the UK retail store segment. Revenues from services and fees decreased to $5.1 million, compared to $12.7 million in the same period the prior year. Revenues from sale of goods increased to $9.3 million, compared to $2.3 million in the first quarter of 2013. The decrease in revenues from services and fees was primarily due to a decrease in revenues from retail liquidation engagements due to fact there were no large retail liquidation engagements in 2014 as compared to the first quarter of 2013 when we participated in the joint venture involving the liquidation of inventory for the going-out-of business sale of 568 stores of women's clothing retailer Fashion Bug in the United States. The increase in revenues from the sale of goods was primarily due to an increase in revenues from the sale of goods purchased and sold at auction in the wholesale and industrial auction business, offset by a decrease in revenues of $2.3 million in the UK retail store segment from the operations of Shoon that are no longer included in our operating results.
"Our results for the first quarter of 2014 were disappointing, as retail liquidations and other opportunities were not as prevalent in the marketplace. We incurred a net loss of $1.3 million or $(0.05) per diluted share compared to net income of $1.3 million or $0.04 per diluted share in the prior year's quarter," said Andrew Gumaer, Chief Executive Officer of Great American Group.
Direct cost of services were $5.9 million, compared to $6.2 million a year ago. Selling, general and administrative expenses were $8.0 million, compared to $10.9 million in the first quarter of 2013. The decrease in selling, general and administrative expenses was primarily attributed to (a) a decrease in expenses incurred in the auction and liquidation segment, (b) a decrease in expenses in corporate and other, and (c) a decrease in expenses in the UK retail store segment as a result of no longer operating Shoon; offset by an increase in expenses in the valuation and appraisal segment.
Interest expense during each of the first quarters in 2014 and 2013 was $0.6 million. Interest expense in both periods included $0.5 million of interest expense on the notes payable to the Great American Members and Phantom Equity holders, and $0.1 million of interest expense on our borrowings under the Company's asset based credit facility.
Operating loss for the first quarter of 2014 was $1.3 million, compared to operating income of $2.3 million during the first quarter of 2013.
Loss before income taxes was $1.9 million in the first quarter of 2014 compared to income before taxes of $1.7 million in the first quarter of 2013. Net loss in the first quarter of 2014 was $1.3 million compared to net income of $1.3 million for the first quarter of 2013. Diluted net loss per share was $0.05 in the first quarter of 2014 compared to net earnings of $0.04 in 2013.
Financial Position
At March 31, 2014, the Company had $16.9 million in cash and cash equivalents.
About Great American Group, Inc. (
Great American Group is a leading provider of asset disposition and auction solutions, advisory and valuation services, capital investment, and real estate advisory services for an extensive array of companies. A trusted strategic partner at every stage of the business lifecycle, Great American Group efficiently deploys resources with sector expertise to assist companies, lenders, capital providers, private equity investors and professional service firms in maximizing the value of their assets. The company has in-depth experience within the retail, industrial, real estate, healthcare, energy and technology industries. The corporate headquarters is located in Woodland Hills, Calif. with additional offices in Atlanta, Boston, Charlotte, N.C., Chicago, Dallas, New York, Norwalk, Conn., San Francisco, London, Milan and Munich. For more information, call (818) 884-3737 or visit www.greatamerican.com.
Forward-Looking Statements
This press release may contain forward-looking statements by Great American Group that are not based on historical fact, including, without limitation, statements containing the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions and statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in Great American Group's filings with the SEC, including, without limitation, the risks described in Great American Group's proxy statement/prospectus filed with the SEC on May 16, 2013, and its Annual Report on Form 10-K for the year ended December 31, 2013. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and Great American Group undertakes no duty to update this information.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including Adjusted EBITDA, may be considered non-GAAP financial measures. Great American Group believes this information is useful to investors because it provides a basis for measuring Great American Group's performance against the contingent share earnout provisions in the AAMAC transaction. In addition, Great American Group's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating Great American Group's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by Great American Group may not be comparable to similarly titled amounts reported by other companies.
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(Dollars in thousands, except par value) | ||||||||||
March 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 16,904 | $ | 18,867 | ||||||
Restricted cash | 80 | 325 | ||||||||
Accounts receivable, net | 10,153 | 8,858 | ||||||||
Lease finance receivable | 7,992 | 8,099 | ||||||||
Advances against customer contracts | 195 | 1,058 | ||||||||
Due from related party | 132 | - | ||||||||
Goods held for sale or auction | 4,906 | 13,964 | ||||||||
Note receivable related party - current portion | - | 703 | ||||||||
Deferred income taxes | 3,870 | 3,870 | ||||||||
Prepaid expenses and other current assets | 1,516 | 948 | ||||||||
Total current assets | 45,748 | 56,692 | ||||||||
Note receivable related party - net of current portion | - | 497 | ||||||||
Property and equipment, net | 995 | 1,090 | ||||||||
Goodwill | 5,688 | 5,688 | ||||||||
Other intangible assets, net | 140 | 140 | ||||||||
Deferred income taxes | 9,554 | 8,739 | ||||||||
Other assets | 780 | 831 | ||||||||
Total assets | $ | 62,905 | $ | 73,677 | ||||||
Liabilities and Equity (Deficit) | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 9,118 | $ | 11,578 | ||||||
Due from related party | - | 45 | ||||||||
Mandatorily redeemable noncontrolling interests | 2,613 | 2,823 | ||||||||
Asset based credit facility | - | 5,710 | ||||||||
Revolving credit facility | 4 | 333 | ||||||||
Current portion of long-term debt | 1,085 | 1,724 | ||||||||
Notes payable | 6,570 | 6,856 | ||||||||
Current portion of capital lease obligation | - | - | ||||||||
Total current liabilities | 19,390 | 29,069 | ||||||||
Long-term debt, net of current portion | 48,759 | 48,759 | ||||||||
Total liabilities | 68,149 | 77,828 | ||||||||
Commitments and contingencies | ||||||||||
Great American Group, Inc. stockholders' equity (deficit): | ||||||||||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued | - | - | ||||||||
Common stock, $0.0001 par value; 135,000,000 shares authorized; 30,002,975 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 4 | 4 | ||||||||
Additional paid-in capital | 3,082 | 3,082 | ||||||||
Retained earnings (deficit) | (7,945 | ) | (6,611 | ) | ||||||
Accumulated other comprehensive loss | (661 | ) | (638 | ) | ||||||
Total Great American Group, Inc. stockholders' equity (deficit) | (5,520 | ) | (4,163 | ) | ||||||
Noncontrolling interests | 276 | 12 | ||||||||
Total equity (deficit) | (5,244 | ) | (4,151 | ) | ||||||
Total liabilities and equity (deficit) | $ | 62,905 | $ | 73,677 | ||||||
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES | ||||||||||
Condensed Consolidated Statements of Operations | ||||||||||
(Unaudited) | ||||||||||
(Dollars in thousands, except share data) | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Revenues: | ||||||||||
Services and fees | $ | 12,385 | $ | 18,637 | ||||||
Sale of goods | 9,268 | 2,317 | ||||||||
Total revenues | 21,653 | 20,954 | ||||||||
Operating expenses: | ||||||||||
Direct cost of services | 5,863 | 6,152 | ||||||||
Cost of goods sold | 9,064 | 1,520 | ||||||||
Selling, general and administrative expenses | 7,984 | 10,937 | ||||||||
Total operating expenses | 22,911 | 18,609 | ||||||||
Operating income (loss) | (1,258 | ) | 2,345 | |||||||
Other income (expense): | ||||||||||
Interest income | 2 | 2 | ||||||||
Interest expense | (628 | ) | (634 | ) | ||||||
Income before income taxes | (1,884 | ) | 1,713 | |||||||
Benefit (provision) for income taxes | 814 | (778 | ) | |||||||
Net income (loss) | (1,070 | ) | 935 | |||||||
Net income (loss) attributable to noncontrolling interests | 264 | (354 | ) | |||||||
Net income (loss) attributable to Great American Group, Inc. | $ | (1,334 | ) | $ | 1,289 | |||||
Basic income per share | $ | (0.05 | ) | $ | 0.04 | |||||
Diluted income per share | $ | (0.05 | ) | $ | 0.04 | |||||
Weighted average basic shares outstanding | 28,682,975 | 28,682,975 | ||||||||
Weighted average diluted shares outstanding | 28,682,975 | 29,656,430 | ||||||||
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||
(Unaudited) | ||||||||||||
(Dollars in thousands) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | (1,070 | ) | $ | 935 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 131 | 707 | ||||||||||
Impairment of goods held for sale or auction | - | 22 | ||||||||||
Effect of foreign currency on operations | (212 | ) | (64 | ) | ||||||||
Deferred income taxes | (815 | ) | 1,007 | |||||||||
Income allocated to mandatorily redeemable noncontrolling interests | 333 | 291 | ||||||||||
Change in operating assets and liabilities: | ||||||||||||
Accounts receivable and advances against customer contracts | (415 | ) | 7,331 | |||||||||
Lease finance receivable | 107 | - | ||||||||||
Due from related party | (177 | ) | (373 | ) | ||||||||
Inventory | - | (588 | ) | |||||||||
Goods held for sale or auction | 9,058 | (589 | ) | |||||||||
Loan receivable | 1,206 | - | ||||||||||
Prepaid expenses and other assets | (384 | ) | (55 | ) | ||||||||
Accounts payable and accrued expenses | (2,470 | ) | (356 | ) | ||||||||
Auction and liquidation proceeds payable | - | (618 | ) | |||||||||
Net cash provided by operating activities | 5,292 | 7,650 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (36 | ) | (247 | ) | ||||||||
Decrease in note receivable - related party | - | 196 | ||||||||||
Decrease in restricted cash | 245 | 7,693 | ||||||||||
Net cash provided by investing activities | 209 | 7,642 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Repayments of capital lease obligations | - | (8 | ) | |||||||||
Repayment of revolving line of credit | (329 | ) | (576 | ) | ||||||||
Repayment of asset based credit facility | (5,710 | ) | - | |||||||||
Repayments of notes payable | (925 | ) | (1,170 | ) | ||||||||
Distribution to noncontrolling interests | (543 | ) | (612 | ) | ||||||||
Net cash used in financing activities | (7,507 | ) | (2,366 | ) | ||||||||
(Decrease) increase in cash and cash equivalents | (2,006 | ) | 12,926 | |||||||||
Effect of foreign currency on cash | 43 | (554 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (1,963 | ) | 12,372 | |||||||||
Cash and cash equivalents, beginning of period | 18,867 | 18,721 | ||||||||||
Cash and cash equivalents, end of period | $ | 16,904 | $ | 31,093 | ||||||||
Supplemental disclosures: | ||||||||||||
Interest paid | $ | 658 | $ | 57 | ||||||||
Taxes paid | $ | 2 | $ | 163 | ||||||||
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES | |||||||||
Adjusted EBITDA Reconciliation | |||||||||
(Dollars in thousands) | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Adjusted EBITDA Reconciliation: | |||||||||
Net income (loss) as reported | $ | (1,070 | ) | $ | 1,289 | ||||
Adjustments: | |||||||||
Provision (benefit) for income taxes | (814 | ) | 778 | ||||||
Interest expense | 628 | 634 | |||||||
Interest income | (2 | ) | (2 | ) | |||||
Depreciation and amortization | 131 | 707 | |||||||
Total EBITDA adjustments | (57 | ) | 2,117 | ||||||
Adjusted EBITDA | $ | (1,127 | ) | $ | 3,406 | ||||