ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) Q4 2018 Earnings Conference Call Transcript

Jan 10, 2019 • 04:30 pm ET

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ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the ALJ Regional Holdings Year-end Investor Call. At this time, all participants are in a listen-only mode. (Operator Instructions). As a reminder, this call is being recorded.

I'd now like to turn the conference over to Brian Hartman, Chief Financial Officer. You may begin.

Executive
Brian Hartman

Welcome, and thank you for participating in today's teleconference and for being investors in ALJ Regional Holdings. My name is Brian Hartman and I'm the CFO for ALJ. Before we begin, I'd ask everyone listening to this investor conference call to review the risk factors presented in our latest Form 10-K that was filed with the SEC on December 17, 2018.

(Forward-Looking Cautionary Statements) We will provide a financial update for the fiscal quarter and full-year ended September 30, 2018, and we'll provide high-level guidance for fiscal 2019.

ALJ recognized consolidated revenue of $90.1 million for the three months ended September 30, 2018, an increase of $3.7 million or 4.3% compared to $86.3 million for the three months ended September 30, 2017 due to the acquisition of the Printing Components business by Phoenix, which accounted for $4.5 million of the total net revenue increase. Excluding the impact of such acquisitions, total net revenue decreased $0.8 million or less than 1.0% due to lower volumes in granite and cabinet sales at Carpets.

ALJ recognized net income of $1.2 million and diluted earnings per share of $0.03 for the three months ended September 30, 2018, compared to net income of $13.8 million and diluted earnings per share of $0.37 for the three months ended September 30, 2017. Increased revenue was offset by restructuring expenses to combine manufacturing facilities at Phoenix and higher startup costs of certain contracts at Faneuil.. Additionally, net income for the three months ended September 30, 2017 reflects a non-recurring benefit from income taxes due to the reduction of deferred tax valuation allowance of $12.1 million in fiscal 2017. For the three months ended September 30, 2018, there were no such nonrecurring deferred income tax adjustments.

Excluding deferred tax benefit from income taxes for fiscal 2017, ALJ recognized net income of $1.7 million and diluted earnings per share of $0.04 for the three months ended September 30, 2017 versus net income of $1.2 million and diluted earnings per share of $0.03 for the three months ended September 30, 2018.

ALJ recognized adjusted EBITDA of $9.3 million for the three months ended September 30, 2018, an increase of $1.5 million or 18.5% compared to $7.9 million for the three months ended September 30, 2017. The increase was driven by the Printing Components business acquisition by Phoenix, partially offset by planned volume reduction in packaging at Phoenix.

For the year ended September 30, 2018, ALJ recognized consolidated revenue of $369.8 million, an increase of $43.1 million or 13.2% compared to $326.7 million for the year ended September 30, 2017 due to the acquisitions of the CMO Business by Faneuil and the Printing Components Business by Phoenix, which together accounted for