Great American Group Announces Third Quarter 2012 Financial
Great American Group Announces Third Quarter 2012 Financial Results
WOODLAND HILLS, CA -- (Marketwire) -- 11/14/12 -- Great American Group, Inc.(R) (OTCBB: GAMR) ("Great American Group" or the "Company"), a leading provider of asset disposition, valuation and appraisal services, today announced financial results for its third quarter ended September 30, 2012.
-- Total revenues of $14.2 million, a decrease from $28.5 million a year
ago
-- Net loss of $0.5 million, versus net income of $4.0 million from a
year ago
-- Diluted loss per share of $0.02, versus a diluted earnings per share
of $0.14 from a year ago
Third Quarter Results
For the third quarter ended September 30, 2012, the Company reported total revenues of $14.2 million, a decrease from revenues of $28.5 million in the third quarter of 2011. Revenues from services and fees were $11.0 million, compared to $27.6 million in the same period the prior year. Revenues from sale of goods were $3.3 million, compared to $0.9 million in the third quarter of 2011. The decrease in total revenues during the quarter was primarily due to decreases in the auction and liquidation segment of $17.3 million, and a decrease in revenues in the valuation and appraisal services segment of $0.1 million, offset by an increase in revenues of $3.1 million from the UK Retail Stores segment.
"During the third quarter we experienced a slowdown in business activity in our auction and liquidation segment. In the prior year quarter, we generated revenues of $14.7 million from the TJ Hughes retail liquidation engagement in the United Kingdom and the Borders retail liquidation engagement in the United States and there were no similar large retail liquidation engagements in the third quarter of this year," said Andrew Gumaer, Chief Executive Officer of Great American Group. "Revenues from our auction and liquidation segment typically comprise a significant amount of our total revenues and thus can impact our operating results from quarter to quarter. I am happy to report that we are currently participating in the joint venture that is conducting the sale of all inventory for Fashion Bug, a 568 store women's apparel and accessories chain. The 568 Fashion Bug stores are located in 39 states and is part of Ascena's planned divestiture of the Fashion Bug brand and orderly wind down of the Fashion Bug operations. In addition, we were recently engaged to provide consulting services on the store closure for Comet, a 236 store electronics chain in the United Kingdom. We expect our engagement on Comet to be mostly completed by the end of 2012. We continue to be highly focused on the execution of our business initiatives and expanding our business outside the United States."
Direct cost of services was $4.8 million, compared to $7.6 million a year ago. The decrease in direct cost of services was primarily the result of a decrease in the number of fee and commission engagements in the third quarter of 2012, where the Company contractually bills fees, commissions and reimbursable expenses as compared to the third quarter of the prior year. Cost of goods sold was $2.2 million in the third quarter of 2012, compared to $1.0 million in the third quarter of the prior year.
Selling, general and administrative expenses decreased to $7.9 million, compared to $10.9 million in the third quarter of 2011. The decrease in selling, general and administrative expenses was primarily the result of a decrease of $2.0 million in the auction and liquidation segment, a decrease of $0.1 million in the valuation and appraisal segment, and a decrease of $2.6 million in corporate and other, offset by an increase of $1.6 million in the UK Retail Stores segment as a result of the consolidation of Shoon in May 2012.
Loss before the benefit of income taxes was $1.1 million during the third quarter of 2012, compared to income before the provision of income taxes of $6.0 million in the third quarter of 2011. During the third quarter of 2012, the Company recorded a benefit for income taxes of $0.4 million, compared with a provision for income taxes of $2.0 million in the third quarter of 2011. Net loss attributable to the Company was $0.6 million, or $0.02 per diluted share, compared to net income of $4.0 million, or $0.14 per diluted share in the third quarter of 2011.
Nine Month Results
For the first nine months of 2012, the Company reported total revenues of $53.2 million, compared to $52.2 million in the first nine months of 2011. Revenues from services and fees were $41.1 million, compared to $50.1 million a year ago. Sales of goods were $12.1 million compared to $2.0 million in the same period of 2011.
Total operating expenses were $50.7 million, compared to $45.0 million in 2011. Operating income was $2.5 million, compared to $7.1 million in the prior year. Income before provision for income taxes for the first nine months of 2012 was $2.2 million, compared to $3.1 million during the first nine months of 2011. The Company recorded a provision for income taxes of $0.4 million compared to $1.9 million in the same period of 2011. Net income attributable to the Company during the first nine months of 2012 was $1.1 million, or $0.04 per diluted share, compared with $1.3 million, or $0.04 in the same period of 2011.
Financial Position
At September 30, 2012, the Company had $19.0 million in cash and cash equivalents, an increase compared to $15.0 million at December 31, 2011. Working capital was $26.5 million at September 30, 2012.
Conference Call
The Company will host a conference call today at 4:30 p.m. EST, to discuss results for the third quarter ended September 30, 2012. To participate in the event by telephone, please dial (877) 407-0789 10 minutes prior to the start time (to allow time for registration) and use conference ID # 403231. International callers should dial (201) 689-8562. A digital replay will be available beginning November 14, 2012, at 7:30 p.m. EST, through November 21, 2012, at 11:59 p.m. EST. To access the replay, dial (877) 870-5176 (U.S.), and use passcode 403231. International callers should dial (858) 384-5517 and enter the same passcode.
The call will also be broadcast over the Internet and can be accessed on the Investor Relations section of the Company's website at www.greatamerican.com. To listen to the webcast, please visit the site at least 15 minutes prior to the start of the call in order to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the website.
About Great American Group, Inc. (OTCBB: GAMR)
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, San Francisco and London. For more information, call (818) 884-3737 or visit www.greatamerican.com.
Forward-Looking Stat ements
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 July 19, 2012, and its Annual Report on Form 10-K for the year ended December 31, 2011. 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)
September 30, December 31,
2012 2011
------------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 18,987 $ 15,034
Restricted cash 6,767 -
Accounts receivable, net 6,148 7,482
Advances against customer contracts 2,813 5,276
Inventory 2,686 -
Goods held for sale or auction 10,626 12,934
Loan receivable 537 8,306
Note receivable - related party 680 3,844
Deferred income taxes 4,765 4,460
Prepaid expenses and other current assets 1,175 1,110
------------- -------------
Total current assets 55,184 58,446
Property and equipment, net 897 916
Goodwill 5,688 5,688
Other intangible assets, net 140 140
Deferred income taxes 10,311 10,504
Other assets 642 664
------------- -------------
Total assets $ 72,862 $ 76,358
============= =============
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities $ 12,514 $ 13,718
Auction and liquidation proceeds payable 612 18
Mandatorily redeemable noncontrolling
interests 2,817 3,408
Revolving credit facility 1,266 1,942
Current portion of long-term debt 1,724 1,724
Notes payable 9,695 11,555
Current portion of capital lease obligation 20 29
------------- -------------
Total current liabilities 28,648 32,394
Capital lease obligation, net of current
portion - 13
Long-term debt, net of current portion 50,483 52,207
------------- -------------
Total liabilities 79,131 84,614
------------- -------------
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 and
31,001,609 issued and outstanding as of
September 30, 2012 and December 31, 2011,
respectively 4 4
Additional paid-in capital 3,082 3,177
Retained earnings (deficit) (10,051) (11,190)
Accumulated other comprehensive income
(loss) (36) (247)
------------- -------------
Total Great American Group, Inc.
stockholders' equity (deficit) (7,001) (8,256)
Noncontrolling interests 732 -
------------- -------------
Total equity (deficit) (6,269)
(8,256)
------------- -------------
Total liabilities and equity (deficit) $ 72,862 $ 76,358
============= =============
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Operations and Comprehensive Income
(Loss)
(Dollars in thousands, except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenues:
Services and fees $ 10,956 $ 27,575 $ 41,154 $ 50,147
Sale of goods 3,279 937 12,052 2,012
----------- ----------- ----------- -----------
Total revenues 14,235 28,512 53,206 52,159
----------- ----------- ----------- -----------
Operating expenses:
Direct cost of
services 4,844 7,613 16,097 15,904
Cost of goods sold 2,172 974 8,449 2,287
Selling, general and
administrative
expenses 7,878 10,897 26,155 26,848
----------- ----------- ----------- -----------
Total operating
expenses 14,894 19,484 50,701 45,039
----------- ----------- ----------- -----------
Operating income
(loss) (659) 9,028 2,505 7,120
Other income (expense):
Other expense - (3) - (13)
Interest income 30 119 186 409
Income (loss) from
equity investment in
Great American Real
Estate, LLC 165 (174) 45 (522)
Gain from bargain
purchase - - 1,366 -
Interest expense (678) (2,921) (1,951) (3,874)
----------- ----------- ----------- -----------
Income (loss) before
income taxes (1,142) 6,049 2,151 3,120
(Provision) benefit for
income taxes 375 (2,018) (387) (1,864)
----------- ----------- ----------- -----------
Net income (loss) (767) 4,031 1,764 1,256
Net income attributable
to noncontrolling
interests (220) - 625 -
----------- ----------- ----------- -----------
Net income (loss)
attributable to Great
American Group, Inc. $ (547) $ 4,031 $ 1,139 $ 1,256
=========== =========== =========== ===========
Basic income (loss) per
share $ (0.02) $ 0.14 $ 0.04 $ 0.04
Diluted income (loss)
per share $ (0.02) $ 0.14 $ 0.04 $ 0.04
Weighted average basic
shares outstanding 28,682,975 28,650,980 28,682,521 28,491,812
Weighted average diluted
shares outstanding 28,682,975 29,519,141 29,599,012 29,359,973
Comprehensive income
(loss):
Net income (loss) $ (767) $ 4,031 $ 1,764 $ 1,256
Other comprehensive
income (loss):
Change in cumulative
translation
adjustment (52) 36 211 (94)
----------- ----------- ----------- -----------
Other comprehensive
income (loss), net of
tax (52) 36 211 (94)
----------- ----------- ----------- -----------
Total comprehensive
income (loss) (819) 4,067 1,975 1,162
Comprehensive income
(loss) attributable to
noncontrolling
interests 220 - (625) -
----------- ----------- ----------- -----------
Comprehensive income
(loss) attributable to
Great American Group,
Inc. $ (599) $ 4,067 $ 1,350 $ 1,162
=========== =========== =========== ===========
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)
Nine Mont
hs Ended
September 30,
--------------------
2012 2011
--------- ---------
Cash flows from operating activities:
Net income $ 1,764 $ 1,256
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 611 625
Recoveries of bad debts (116) -
Impairment of goods held for sale or auction 127 -
Share-based payments - 431
Effect of foreign currency on operations (48) (85)
Non-cash interest (10) 1,148
Amortization of discount on note payable - 424
Loss (income) from equity investment in Great
American Real Estate, LLC (45) 522
Gain from bargain purchase (1,366) -
Loss on disposal of assets 3 3
Deferred income taxes (112) 1,735
Income allocated to mandatorily redeemable
noncontrolling interests 1,497 3,538
Change in operating assets and liabilities:
Accounts receivable and advances against
customer contracts 3,588 (11,208)
Inventory 1,050 -
Goods held for sale or auction 2,054 597
Loan receivable 7,769 (10,939)
Prepaid expenses and other assets 314 (507)
Accounts payable and accrued expenses (2,097) 8,482
Auction and liquidation proceeds payable 594 (1,712)
--------- ---------
Net cash provided by (used in) operating
activities 15,577 (5,690)
--------- ---------
Cash flows from investing activities:
Acquisition of business (1,246) -
Purchase of noncontrolling interest in subsidiary (95) -
Purchases of property and equipment (403) (237)
Proceeds from sale of property and equipment 21
Decrease in note receivable - related party 3,164 2,706
Equity investment in Great American Real Estate, LLC (120) (331)
Increase in restricted cash (6,767) (5,373)
--------- ---------
Net cash used in investing activities (5,446) (3,235)
--------- ---------
Cash flows from financing activities:
Repayments of capital lease obligations (22) (20)
Proceeds from (repayment of) revolving line of
credit (676) 1,694
Repayments of notes payable (2,042) (306)
Repayments of long term debt (1,724) -
Proceeds from notes payable - 7,000
Payment of employment taxes on vesting of restricted
stock - (132)
Proceeds from formation of noncontrolling interests 78 -
Distribution to noncontrolling interests (2,074) (2,962)
--------- ---------
Net cash (used in) provided by financing
activities (6,460) 5,274
--------- ---------
Increase (decrease) in cash and cash
equivalents 3,671 (3,651)
Effect of foreign currency on cash 282 (9)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 3,953 (3,660)
Cash and cash equivalents, beginning of period 15,034 20,080
--------- ---------
Cash and cash equivalents, end of period $ 18,987 $ 16,420
========= =========
Supplemental disclosures:
Interest paid $ 1,961 $ 887
Taxes paid 278 -
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Equity (Deficit)
(Dollars in thousands, except share data)
Additional
Preferred Stock Common Stock Paid-in
------------------ ------------------
Shares Amount Shares Amount Capital
-------- -------- ---------- ------ ----------
Balance, January 1,
2012 - $ - 31,001,609 $ 4 $ 3,177
Net income for the
nine months ended
September 30, 2012
Foreign currency
translation
adjustment
Formation of
noncontrolling
interests
Cancellation of
founders contingent
shares held in
escrow (1,000,000)
Purchase of
noncontrolling
interest in
subsidiary (95)
Changes in
noncontrolling
interests
Adjustment from
restricted stock
awards 1,366
--------------------------------------------------
Balance, September
30, 2012 - $ - 30,002,975 $ 4 $ 3,082
==================================================
Accumulated
Retained Other Total
Earnings Comprehensive Noncontrolling Equity
(Deficit) Loss Interests (Deficit)
--------- ------------- -------------- ---------
Balance, January 1,
2012 $ (11,190) $ (247) $ - $ (8,256)
Net income for the
nine months ended
September 30, 2012 1,139 625 1,764
Foreign currency
translation
adjustment 211 211
Formation of
noncontrolling
interests 78 78
Cancellation of
founders contingent
shares held in
escrow -
Purchase of
noncontrolling
interest in
subsidiary (95)
Changes in
noncontrolling
interests 29 29
Adjustment from
restricted stock
awards -
--------------------------------------------------------
Balance, September
30, 2012 $ (10,051) $ (36) $ 732 $ (6,269)
========================================================
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2012 2011 2012 2011
-------- -------- -------- --------
Adjusted EBITDA Reconciliation:
Net income (loss) as reported $ (547) $ 4,031 $ 1,139 $ 1,256
Adjustments:
Provision (benefit) for income
taxes (375) 2,018 387 1,864
Interest expense 678 2,921 1,951 3,874
Interest income (30) (119) (186) (409)
Depreciation and amortization 153 186 611 625
Share based compensation - 10 - 431
-------- -------- -------- --------
Total EBITDA adjustments 426 5,016 2,763 6,385
-------- -------- -------- --------
Adjusted EBITDA $ (121) $ 9,047 $ 3,902 $ 7,641
======== ======== ======== ========
Investor Contacts:
Great American Group Phil Ahn SVP, Strategy & Corporate Development 818-884-3737
Addo Communications Patricia Dolmatsky-Nir 310-829-5400
Rate this Page