Neff Corporation (the “Company”) (NYSE: NEFF) today reported its
financial results for the second quarter ended June 30, 2016.
Graham Hood, Chief Executive Officer of Neff Corporation, commented,
“The second quarter of 2016 was another solid quarter for Neff’s rental
business as we generated record second quarter results for rental
revenues, which increased by 7.8% year-over-year and for Adjusted
EBITDA, which increased by 7.6% year-over-year. We also delivered
impressive Adjusted EBITDA margins of 50.7%. Outside of our branches
directly affected by oil and gas activities, our rental revenues were up
11.7%, and Adjusted EBITDA increased by 12.6%, reflecting the ongoing
strength in the construction markets we serve. We expect this strength
to continue for the remainder of 2016.”
Second Quarter 2016 Highlights
-
Total revenues increased 5.8% year-over-year to $99.7 million in the
second quarter of 2016.
-
Rental revenues increased 7.8% year-over-year to $91.5 million in the
second quarter of 2016 from $84.8 million.
-
Time utilization increased to 68.0% from 67.1% in the prior year
period.
-
Rental rates decreased 1.1% year-over-year in the second quarter of
2016.
-
The average original equipment cost ("OEC") of our rental fleet
increased by 7.1% to $816.7 million year over year.
-
Adjusted EBITDA increased 7.6% to $50.6 million in the second quarter
of 2016 from $47.0 million in the prior year period.
-
Adjusted EBITDA margin was 50.7% compared with 49.9% in the prior year
period.
-
Adjusted EPS for the quarter was $0.35 per diluted share versus $0.29
per diluted share in the prior year period.
Second Quarter 2016 Financial Results
Revenue
Total revenues increased 5.8% to $99.7 million, up from $94.2 million in
the second quarter of 2015. Rental revenues increased 7.8% to $91.5
million, up from $84.8 million in the second quarter of 2015. Equipment
sales decreased to $4.9 million from $6.2 million in the second quarter
of 2015. Parts and service revenues remained consistent at $3.2 million
in the second quarter of 2016.
Adjusted EBITDA
Adjusted EBITDA, a non-US GAAP financial measure that includes the
adjustments noted in the reconciliation below, in the second quarter of
2016 was $50.6 million compared to $47.0 million in the second quarter
of 2015. Adjusted EBITDA, as a percentage of revenues, was 50.7%
compared to 49.9% in the second quarter of 2015.
Net Income
Net income for the quarter was $9.9 million compared to net income of
$14.7 million for the second quarter of 2015.
Return on Invested Capital ("ROIC")
ROIC was 10.3% for the twelve months ended June 30, 2016, a decrease of
120 basis points from the twelve months ended June 30, 2015. The
Company’s ROIC metric uses after-tax operating income for the trailing
12 months divided by average stockholders’ equity (deficit) and debt and
deferred taxes, net of average cash and debt issue costs. To mitigate
the volatility related to fluctuations in the Company’s tax rate from
period to period, a federal statutory tax rate of 35% is used to
calculate after-tax operating income.
Fleet Size
The size of the rental fleet was $826.5 million of OEC as of June 30,
2016, compared to $775.4 million at June 30, 2015.
Share Repurchase Program
During the second quarter of 2016, the Company repurchased 511,591
shares of Class A common stock for $4.2 million under the 2 year share
repurchase program authorized in November 2015. Since the authorization
of the share repurchase program, the Company has purchased 1,512,685
shares of Class A common stock for a total cost of $10.3 million,
including commissions.
Six Months 2016 Highlights
-
Total revenues increased 6.1% to $189.2 million from $178.3 million in
2015.
-
Rental revenues increased 8.6%, or $13.7 million, to $172.7 million in
2016 from $159.0 million in the prior year.
-
Time utilization increased to 66.6% compared to 65.4% in the prior
year period.
-
Rental rates decreased 1.2% as compared to the prior year.
-
The average OEC of our rental fleet increased by 7.4% to $797.4
million in the current year period.
-
Adjusted EBITDA increased 7.0% to $92.0 million as compared to $86.0
million in the prior year period.
-
Adjusted EBITDA margin was 48.6% compared with 48.2% in the same
period last year.
-
Adjusted EPS for the first six months was $0.47 per diluted share
versus $0.44 per diluted share in the prior year period.
2016 Financial Outlook
The Company's 2016 full year outlook is as follows:
-
Total revenue is forecast to be in the range of $390 million to $410
million.
-
Adjusted EBITDA is forecast to be in a range of $190 million to $200
million.
-
Year-over-year rental rate increase is expected to be approximately
-1.0% to 1.0%, compared to prior guidance of 0.0% to 2.0%.
-
Time utilization is forecast to be approximately 68.0%.
-
Net capital expenditures are expected to be in the range of $100
million to $110 million.
Conference Call
The Company’s management will hold a conference call to discuss the
second quarter 2016 results tomorrow, July 28, 2016, at 10:00 a.m.
(Eastern Daylight Time). To participate in the conference call,
participants should dial +1 866-393-4306 (domestic) or +1 734-385-2616
(international) and enter access code 50507106, a few minutes prior to
the start of the call. Those who wish to listen to the live conference
call and view the accompanying presentation slides should visit the
"Investor Relations" portion of the Neff Corporation website at: http://investor.neffrental.com.
A telephonic replay will be available from 1:00 p.m. ET on the day of
the conference call through Thursday, August 11, 2016. To listen to the
archived call, dial +1 855-859-2056 or +1 404-537-3406 and enter
conference ID number 50507106. The replay of the conference call will
also be available via webcast on the Company's website at: http://investor.neffrental.com,
where it will be archived for 12 months after the conference call.
Non-US GAAP Measures and Key Performance Measures
Earnings before interest, taxes, depreciation and amortization
("EBITDA"), Adjusted EBITDA and adjusted earnings per share are non-US
GAAP financial measures as defined under the rules of the Securities and
Exchange Commission ("SEC"). EBITDA represents the sum of net income,
interest expense, provision for income taxes, depreciation of rental
equipment, other depreciation and amortization and amortization of debt
issue costs. Adjusted EBITDA represents EBITDA further adjusted to give
effect to other items that we do not consider to be indicative of our
ongoing operations, including for the periods presented rental split
expense, equity-based compensation, adjustment to tax receivable
agreement and loss (gain) on interest rate swap. Adjusted earnings per
share ("EPS") represents the sum of diluted earnings per share of Class
A common stock, as reported, adjusted for the impact of items that we
believe are not indicative of our ongoing operations, including for the
periods presented loss (gain) on interest rate swap and non-cash
adjustment to tax receivable agreement. The Company believes that: (i)
EBITDA and Adjusted EBITDA and (ii) adjusted EPS provide useful
information about operating performance and period-over-period growth
and is useful to securities analysts, investors and other interested
parties in evaluating our operating performance compared to that of
other companies in the industry. However, none of these measures should
be considered as alternatives to net income, cash flows from operating
activities or diluted EPS under US GAAP as indicators of operating
performance or liquidity. Because EBITDA, Adjusted EBITDA and adjusted
EPS are not calculated in the same manner by all companies, they may not
be comparable to other similarly titled measures used by other companies.
OEC and rental rate are two of the key performance measures we use in
evaluating our business and results of operations.
We present OEC, defined as the first cost of acquiring the equipment, or
in the case of used equipment purchases and rental splits, an estimate
of the first cost that would have been paid to acquire the equipment if
it had been purchased new in its year of manufacture, as the daily
average OEC of equipment on rent, divided by the OEC of all equipment in
the rental fleet during the relevant period.
We define rental rates as the rates charged to our customers on rental
contracts that typically are for daily, weekly or monthly terms. Rental
rates change over time based on a combination of pricing, the mix of
equipment on rent and the mix of rental terms with customers. Period
over period changes in rental rates are calculated on a weighted average
with the weighting based on prior period revenue mix.
About Neff Corporation
Neff Corporation is a leading regional equipment rental company in the
United States, focused on the fast growing Sunbelt states. The Company
offers a broad array of equipment rental solutions for its diverse
customer base. Neff Corporation’s broad fleet of equipment includes
earthmoving, material handling, aerial and other rental equipment to
meet specific customer needs.
Forward-Looking Statements
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to matters
of historical facts should be considered forward-looking statements,
including statements regarding our 2016 outlook, including without
limitation, statements regarding our forecasted revenue and Adjusted
EBITDA and our expected rental rates, time utilization and net capital
expenditures; expectations regarding execution of our strategy;
expectations regarding seasonality and expectations regarding the
slowdown in oil and gas exploration and the Company’s ability to offset
such slowdown. We use words such as "could," "may," "should," "will,"
"expect," "believe," "continue," "anticipate," "estimate," "intend,"
"project," "plan," "forecast" and other similar expressions to identify
some but not all forward-looking statements. Forward-looking statements
involve estimates and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements.
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, current plans,
expected future developments and other important factors we believe are
appropriate under the circumstances. As you read and consider this press
release, you should understand that these statements are not guarantees
of performance or results. They involve risks, uncertainties (many 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 important factors could affect our actual
operating and financial performance and cause our performance to differ
materially from the performance anticipated in the forward-looking
statements. We believe these important factors include, but are not
limited to, the following: the fact that future economic downturns could
have a material adverse impact on our business; trends in oil and gas
prices and the impact on the level of exploration, development and
production activity of certain of the Company’s customers and the demand
for the Company’s services and products; the fact that the Company’s
revenues and operating results will fluctuate, which could affect the
volatility of the trading of its Class A common stock; the highly
cyclical nature of the equipment rental industry; decreases in
construction or industrial activities and resulting decreases in the
demand for the Company’s equipment or the rental rates or prices it can
charge; competition in the equipment rental industry which could lead to
a decrease in the Company’s market share or in rental rates and its
ability to sell equipment at favorable prices; Wayzata, the Company's
largest shareholder, as a result of its ownership stake in the Company,
may have the ability to exert substantial influence over actions to be
taken or approved by the Company's Board of Directors or shareholders;
the Company’s substantial indebtedness, its ability to generate cash to
meet its debt service obligations and the restrictions the Company's
indebtedness imposes on the Company's current and future operations; the
Company’s need to obtain additional capital, which may not be available,
to fund the capital outlays required for the success of its business,
including those relating to purchasing equipment, opening new rental
locations, making acquisitions and refinancing existing indebtedness;
significantly higher maintenance costs in connection with increases in
the weighted average age of the Company’s rental fleet; fluctuations in
the price of the Company's Class A common stock and its ability to
complete share repurchases under the Company's share repurchase program
on favorable terms, within the anticipated time frame, or at all;
environmental and health and safety laws and regulations that may result
in liabilities for the Company; termination of one or more of the
Company’s relationships with any of its equipment manufacturers;
residual value risk of the Company’s rental fleet upon disposition; the
rising cost of new equipment and supplier constraints; disruptions in
the Company’s information technology and customer relationship
management systems; potential acquisitions and expansions into new
markets; payments under our tax receivable agreement; the Company's
dependence on key personnel, any labor disputes, work stoppages and/or
slowdowns; and increased costs as a result of operating as a public
company. These and other important factors described under the
captions "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's annual
report on Form 10-K for the fiscal year ended December 31, 2015 and
similar disclosures in subsequent reports filed with the SEC could cause
actual results to differ materially from those indicated by the
forward-looking statements made in this press release. Should one or
more of these risks or uncertainties materialize, or should any of these
assumptions prove incorrect, our actual operating and financial
performance may vary in material respects from the performance projected
in these forward-looking statements.
Further, any forward-looking statement speaks only as of the date on
which it is made, and except as required by law, we undertake no
obligation to update any forward-looking statement contained in this
press release to reflect events or circumstances after the date on which
it is made or to reflect the occurrence of anticipated or unanticipated
events or circumstances. New important factors that could cause our
business not to develop as we expect emerge from time to time, and it is
not possible for us to predict all of them.
TABLE 1
NEFF CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
Rental revenues
|
|
$
|
91.5
|
|
|
$
|
84.8
|
|
|
$
|
172.7
|
|
|
$
|
159.0
|
|
Equipment sales
|
|
4.9
|
|
|
6.2
|
|
|
10.0
|
|
|
13.0
|
|
Parts and service
|
|
3.2
|
|
|
3.2
|
|
|
6.6
|
|
|
6.4
|
|
Total revenues
|
|
99.7
|
|
|
94.2
|
|
|
189.2
|
|
|
178.3
|
|
Cost of revenues
|
|
|
|
|
|
|
|
|
Cost of equipment sold
|
|
3.0
|
|
|
4.1
|
|
|
6.1
|
|
|
8.4
|
|
Depreciation of rental equipment
|
|
22.8
|
|
|
21.2
|
|
|
44.9
|
|
|
40.7
|
|
Cost of rental revenues
|
|
21.7
|
|
|
19.5
|
|
|
41.6
|
|
|
37.4
|
|
Cost of parts and service
|
|
1.8
|
|
|
1.8
|
|
|
3.6
|
|
|
3.6
|
|
Total cost of revenues
|
|
49.2
|
|
|
46.6
|
|
|
96.2
|
|
|
90.1
|
|
Gross profit
|
|
50.5
|
|
|
47.6
|
|
|
93.0
|
|
|
88.3
|
|
Other operating expenses
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
23.4
|
|
|
22.5
|
|
|
47.9
|
|
|
44.8
|
|
Other depreciation and amortization
|
|
2.6
|
|
|
2.7
|
|
|
5.3
|
|
|
5.1
|
|
Total other operating expenses
|
|
26.0
|
|
|
25.1
|
|
|
53.2
|
|
|
49.9
|
|
Income from operations
|
|
24.5
|
|
|
22.5
|
|
|
39.8
|
|
|
38.4
|
|
Other expenses (income)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
10.5
|
|
|
10.8
|
|
|
21.1
|
|
|
21.3
|
|
Adjustment to tax receivable agreement
|
|
0.3
|
|
|
(3.4
|
)
|
|
0.7
|
|
|
(2.9
|
)
|
Loss (gain) on interest rate swap
|
|
1.8
|
|
|
(1.0
|
)
|
|
6.5
|
|
|
(0.1
|
)
|
Amortization of debt issue costs
|
|
0.4
|
|
|
0.4
|
|
|
0.8
|
|
|
0.8
|
|
Total other expenses (income)
|
|
12.9
|
|
|
6.7
|
|
|
29.0
|
|
|
19.0
|
|
Income before income taxes
|
|
11.5
|
|
|
15.8
|
|
|
10.7
|
|
|
19.4
|
|
Provision for income taxes
|
|
(1.6
|
)
|
|
(1.1
|
)
|
|
(1.2
|
)
|
|
(1.3
|
)
|
Net income
|
|
9.9
|
|
|
14.7
|
|
|
9.5
|
|
|
18.0
|
|
Less: net income attributable to non-controlling
|
|
|
|
|
|
|
|
|
interest
|
|
7.3
|
|
|
7.3
|
|
|
7.1
|
|
|
9.7
|
|
Net income attributable to Neff Corporation
|
|
$
|
2.6
|
|
|
$
|
7.4
|
|
|
$
|
2.5
|
|
|
$
|
8.3
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Neff Corporation
|
|
|
|
|
|
|
|
|
per share of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.29
|
|
|
$
|
0.71
|
|
|
$
|
0.25
|
|
|
$
|
0.80
|
|
Diluted
|
|
$
|
0.28
|
|
|
$
|
0.62
|
|
|
$
|
0.25
|
|
|
$
|
0.69
|
|
Weighted average shares of Class A common stock
|
|
|
|
|
|
|
|
|
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
9.2
|
|
|
10.5
|
|
|
9.8
|
|
|
10.5
|
|
Diluted
|
|
9.5
|
|
|
12.0
|
|
|
9.9
|
|
|
12.0
|
|
TABLE 2
NEFF CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Accounts receivable, net
|
|
62.0
|
|
|
70.3
|
|
Inventories
|
|
2.1
|
|
|
1.8
|
|
Rental equipment, net
|
|
488.4
|
|
|
457.5
|
|
Property and equipment, net
|
|
36.8
|
|
|
33.5
|
|
Prepaid expenses and other assets
|
|
16.2
|
|
|
14.5
|
|
Goodwill
|
|
60.6
|
|
|
60.6
|
|
Intangible assets, net
|
|
14.8
|
|
|
15.3
|
|
Total assets
|
|
$
|
681.2
|
|
|
$
|
653.7
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
23.3
|
|
|
$
|
18.9
|
|
Accrued expenses and other liabilities
|
|
38.7
|
|
|
31.4
|
|
Revolving credit facility
|
|
269.7
|
|
|
253.6
|
|
Second lien loan, net
|
|
473.8
|
|
|
477.0
|
|
Payable pursuant to tax receivable agreement
|
|
29.8
|
|
|
29.1
|
|
Deferred tax liability, net
|
|
9.0
|
|
|
9.5
|
|
Total liabilities
|
|
844.2
|
|
|
819.5
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
Class A Common Stock
|
|
0.1
|
|
|
0.1
|
|
Class B Common Stock
|
|
0.2
|
|
|
0.2
|
|
Additional paid-in capital
|
|
(118.7
|
)
|
|
(112.1
|
)
|
Retained earnings
|
|
19.7
|
|
|
17.2
|
|
Total stockholders' deficit
|
|
(98.8
|
)
|
|
(94.6
|
)
|
Non-controlling interest
|
|
(64.3
|
)
|
|
(71.2
|
)
|
Total stockholders' deficit and non-controlling interest
|
|
(163.1
|
)
|
|
(165.8
|
)
|
Total liabilities and stockholders' deficit and non-controlling
interest
|
|
$
|
681.2
|
|
|
$
|
653.7
|
|
TABLE 3
NEFF CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
For the Six Months Ended
|
|
|
June 30, 2016
|
|
June 30, 2015
|
Cash Flows from Operating Activities
|
|
|
|
|
Net income
|
|
$
|
9.5
|
|
|
$
|
18.0
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
operating activities:
|
|
|
|
|
Depreciation
|
|
49.7
|
|
|
45.2
|
|
Amortization of debt issue costs
|
|
0.8
|
|
|
0.8
|
|
Amortization of intangible assets
|
|
0.5
|
|
|
0.6
|
|
Amortization of original issue discount
|
|
0.1
|
|
|
0.1
|
|
Gain on sale of equipment
|
|
(4.0
|
)
|
|
(4.6
|
)
|
Provision for bad debt
|
|
0.9
|
|
|
0.8
|
|
Equity-based compensation
|
|
1.1
|
|
|
0.7
|
|
Deferred income taxes
|
|
1.2
|
|
|
1.2
|
|
Adjustment to tax receivable agreement
|
|
0.7
|
|
|
(2.9
|
)
|
Unrealized loss (gain) on interest rate swap
|
|
6.2
|
|
|
(0.2
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
7.5
|
|
|
6.1
|
|
Inventories, prepaid expenses and other assets
|
|
(1.3
|
)
|
|
(1.0
|
)
|
Accounts payable
|
|
(0.3
|
)
|
|
(2.3
|
)
|
Accrued expenses and other liabilities
|
|
0.9
|
|
|
(1.9
|
)
|
Net cash provided by operating activities
|
|
73.5
|
|
|
60.7
|
|
Cash Flows from Investing Activities
|
|
|
|
|
Purchases of rental equipment
|
|
(76.6
|
)
|
|
(111.1
|
)
|
Proceeds from sale of equipment
|
|
10.0
|
|
|
13.0
|
|
Purchases of property and equipment
|
|
(8.6
|
)
|
|
(10.1
|
)
|
Net cash used in investing activities
|
|
(75.2
|
)
|
|
(108.2
|
)
|
Cash Flows from Financing Activities
|
|
|
|
|
Repayments under revolving credit facility
|
|
(66.4
|
)
|
|
(53.1
|
)
|
Borrowings under revolving credit facility
|
|
82.5
|
|
|
100.9
|
|
Debt issue costs
|
|
(1.6
|
)
|
|
—
|
|
Common stock repurchases
|
|
(9.4
|
)
|
|
—
|
|
Second Lien Loan prepayment
|
|
(3.3
|
)
|
|
—
|
|
Distribution to member
|
|
(0.1
|
)
|
|
—
|
|
Payment of costs directly associated with the issuance of
|
|
|
|
|
|
|
Class A common stock
|
|
—
|
|
|
(0.3
|
)
|
Net cash provided by financing activities
|
|
1.6
|
|
|
47.5
|
|
Net (decrease) increase in cash and cash equivalents
|
|
—
|
|
|
—
|
|
Cash and cash equivalents, beginning of period
|
|
0.3
|
|
|
0.2
|
|
Cash and cash equivalents, end of period
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
TABLE 4
NEFF CORPORATION AND SUBSIDIARIES
DILUTED EARNINGS PER SHARE CALCULATION
(in millions, except per share data)
|
|
|
|
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income attributable to Neff Corporation
|
|
$
|
2.6
|
|
|
$
|
7.4
|
|
|
$
|
2.5
|
|
|
$
|
8.3
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average shares of Class A
|
|
|
|
|
|
|
|
|
|
|
|
common stock outstanding, diluted
|
|
9.5
|
|
|
12.0
|
|
|
9.9
|
|
|
12.0
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share of Class A common stock
|
|
$
|
0.28
|
|
|
$
|
0.62
|
|
|
$
|
0.25
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive stock options representing a total of 0.7
million shares of Class A common stock for the
|
three and six months ended June 30, 2016 were excluded from the
computation of diluted weighted average
|
shares outstanding due to their anti-dilutive effect.
|
NEFF CORPORATION AND SUBSIDIARIES
ADJUSTED EARNINGS PER SHARE - US GAAP RECONCILIATION
We define “adjusted earnings per share” as the sum of diluted earnings
per share of Class A common stock, as reported, adjusted for the impact
of the items that we believe are not indicative of our ongoing
operations, including for the periods presented loss (gain) on interest
rate swap and non-cash adjustment to the tax receivable agreement.
Management believes that including adjusted EPS in this press release is
appropriate because securities analysts, investors and other interested
parties use this non-US GAAP financial measure as an important measure
to assess our operating performance compared to that of other companies
in the industry. However, adjusted EPS is not a measure of financial
performance under US GAAP. Accordingly, adjusted earnings per share
should not be considered an alternative to diluted EPS of Class A common
stock. The table below provides a reconciliation between diluted EPS of
Class A common stock, as reported, and adjusted EPS. Because adjusted
EPS is not calculated in the same manner by all companies, it may not be
comparable to other similarly titled measures used by other companies.
TABLE 5
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Diluted earnings per share of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock, as reported
|
|
$
|
0.28
|
|
|
$
|
0.62
|
|
|
$
|
0.25
|
|
|
$
|
0.69
|
|
Adjusted for:
|
|
|
|
|
|
|
|
|
Loss (gain) on interest rate swap(a)
|
|
0.04
|
|
|
(0.05
|
)
|
|
0.15
|
|
|
(0.01
|
)
|
Adjustment to tax receivable agreement(b)
|
|
0.03
|
|
|
(0.28
|
)
|
|
0.07
|
|
|
(0.24
|
)
|
Adjusted earnings per share
|
|
$
|
0.35
|
|
|
$
|
0.29
|
|
|
$
|
0.47
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents after tax impact of loss (gain) on interest rate swap
related to adjustments to fair value.
(b) Represents non-cash adjustment to tax receivable agreement related
to changes in estimates used in the calculation of the tax receivable
agreement.
NEFF CORPORATION AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA - US GAAP RECONCILIATION
(in millions)
EBITDA is defined as net income plus interest expense, provision for
income taxes, depreciation of rental equipment, other depreciation and
amortization and amortization of debt issue costs. Adjusted EBITDA is
defined as EBITDA further adjusted to give effect to other items that
management does not consider to be indicative of our ongoing operations,
including for the periods presented rental split expense, equity-based
compensation, adjustment to tax receivable agreement and loss (gain) on
interest rate swap. Adjusted EBITDA is not a measure of performance in
accordance with US GAAP and should not be considered as an alternative
to net income or operating cash flows determined in accordance with US
GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of
cash flow for management's discretionary use, as it excludes certain
cash requirements such as interest payments, tax payments and debt
service requirements. Management believes that including EBITDA and
Adjusted EBITDA in this press release is appropriate because securities
analysts, investors and other interested parties use these non-US GAAP
financial measures as important measures of assessing our operating
performance across periods on a consistent basis. Adjusted EBITDA has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for analysis of our results as reported
under US GAAP. The table below provides a reconciliation between net
income and EBITDA and Adjusted EBITDA. Because EBITDA and Adjusted
EBITDA are not calculated in the same manner by all companies, they may
not be comparable to other similarly titled measures used by other
companies.
TABLE 6
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(in millions of dollars)
|
Net income
|
|
$
|
9.9
|
|
|
$
|
14.7
|
|
|
$
|
9.5
|
|
|
$
|
18.0
|
|
Interest expense
|
|
10.5
|
|
|
10.8
|
|
|
21.1
|
|
|
21.3
|
|
Provision for income taxes
|
|
1.6
|
|
|
1.1
|
|
|
1.2
|
|
|
1.3
|
|
Depreciation of rental equipment
|
|
22.8
|
|
|
21.2
|
|
|
44.9
|
|
|
40.7
|
|
Other depreciation and amortization
|
|
2.6
|
|
|
2.7
|
|
|
5.3
|
|
|
5.1
|
|
Amortization of debt issue costs
|
|
0.4
|
|
|
0.4
|
|
|
0.8
|
|
|
0.8
|
|
EBITDA(e)
|
|
47.7
|
|
|
50.8
|
|
|
82.9
|
|
|
87.2
|
|
Rental split expense(a)
|
|
0.4
|
|
|
0.3
|
|
|
0.8
|
|
|
1.1
|
|
Equity-based compensation(b)
|
|
0.3
|
|
|
0.3
|
|
|
1.1
|
|
|
0.7
|
|
Adjustment to tax receivable agreement(c)
|
|
0.3
|
|
|
(3.4
|
)
|
|
0.7
|
|
|
(2.9
|
)
|
Loss (gain) on interest rate swap(d)
|
|
1.8
|
|
|
(1.0
|
)
|
|
6.5
|
|
|
(0.1
|
)
|
Adjusted EBITDA(f)
|
|
$
|
50.6
|
|
|
$
|
47.0
|
|
|
$
|
92.0
|
|
|
$
|
86.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents cash payments made to suppliers of equipment in
connection with rental split expense, which payments are credited
against the purchase price of the applicable equipment if Neff Holdings
elects to purchase that equipment.
(b) Represents non-cash equity-based compensation expense recorded in
the periods presented in accordance with US GAAP.
(c) Represents adjustment to tax receivable agreement related to changes
in estimates used in the calculation of the tax receivable agreement.
(d) Represents loss (gain) on interest rate swap related to adjustments
to fair value.
(e) Our EBITDA margin was 47.9% and 53.9% for the three months ended
June 30, 2016 and 2015, respectively. Our EBITDA margin was 43.8% and
48.9% for the six months ended June 30, 2016 and 2015, respectively.
(f) Our Adjusted EBITDA margin was 50.7% and 49.9% for the three months
ended June 30, 2016 and 2015, respectively. Our Adjusted EBITDA margin
was 48.6% and 48.2% for the six months ended June 30, 2016 and 2015,
respectively.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160727006637/en/
Copyright Business Wire 2016