ASV Holdings, Inc. (NASDAQ:ASV) Q1 2019 Earnings Conference Call Transcript

May 02, 2019 • 04:30 pm ET

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ASV Holdings, Inc. (NASDAQ:ASV) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the ASV Holdings Incorporated First Quarter 2019 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Andrew Rooke, Chairman and CEO. Please go ahead, sir.

Executive
Andrew M. Rooke

Thank you, Jessica. Good afternoon, ladies and gentlemen. Thank you for your interest in ASV, and welcome to our first quarter 2019 earnings call. Joining me on the call today is Missi How, our Chief Financial Officer, who will take us through the financial results for the quarter, after the overview, markets and strategy update from me.

Today's call is supplemented by the press release issued earlier this afternoon and is also accompanied by a slide presentation, both of which are available on our website. Also available on the website and in the release are replay instructions for a recording of the call, which will be available until May 9th.

Please refer to the first slide regarding today's discussion that will include forward-looking statements and references to non-GAAP measures. We ask that you review this statement and refer to our Form 10-K for 2018 filed with the SEC for further guidance on the many risk factors associated with our company.

So I'll begin with slide number three of the presentation and an overview of the business. Today, we reported $27.3 million in sales, $1.1 million of adjusted EBITDA, and a net loss per share of $0.07 for the first quarter of 2019.

While we, of course, do not like reporting a loss, our industry experienced slowing demand in the latter portion of 2018, and that sluggishness did persist into the beginning of quarter one. Thankfully, despite the slow start in the early part of the year, we did see several positive events and factors in the quarter, particularly, evidenced in March that we believe are laying the groundwork for improvement.

Construction and rental forecasts remain positive and as the weather improves, we enter the busy season with a strong marketing plan, our dealer network is continuing to grow and become more productive and production schedules are beginning to improve.

On the margin side, we started to see the results from our price increases, which were necessary to respond to the much higher levels of material costs that impacted the industry in 2018. For us, this resulted in the positive price improvement that's offset the 2018 exit rates of material cost inflation and benefited gross margin.

Secondly, we exceeded our cost reduction plan for the quarter by 12.5% and generated a $0.3 million benefit for the projects we implemented, again, helping our gross margin. Missi will cover this again in a few moments, but these two factors helped improve our gross margin to 12.6%, a sequential improvement of 400 basis points.

Not the final resting point by any means, but a positive step in the right direction and indicative of the opportunity we have to move towards our longer-term strategic target of 18%. So returning to sales for the moment,