Third Quarter 2010 Results Compared to Third Quarter 2009
(See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)
- Sales were $180.4 million compared to $188.9 million last year, a decrease of $8.5 million, or 4.5 percent. We estimate that sales increased 5.6 percent due to commodity inflation, but decreased approximately 10 percent due to volume and competitive pricing pressure.
- Gross margin percentage was 19.7 percent, down from 20.9 percent, a 1.2 percentage point decline, which was primarily due to competitive pricing pressure on non-commodity products.
- Selling, general and administrative ("SG&A") expenses decreased $1.7 million, or 3.4 percent. We recorded the $1.2 million litigation settlement as a reduction to SG&A expenses. As a percentage of sales, SG&A expense, excluding stock-based compensation expense and the litigation settlement, increased from 25.8 percent in 2009 to 26.4 percent in 2010.
- We recorded asset impairment charges in the current quarter of $0.8 million related to fixed assets. There were no asset impairment charges in the third quarter of 2009.
- Interest expense was $6.9 million for the third quarter of 2010, an increase of $1.0 million from the third quarter of 2009, primarily due to higher interest rates in the current quarter and partially offset by lower average debt balances.
- We recorded an income tax benefit of $0.5 million during the quarter compared to expense of $0.1 million in the third quarter of 2009. We recorded an after-tax, non-cash valuation allowance of $7.2 million and $6.2 million in 2010 and 2009, respectively, related to our net deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 38.4 percent and 38.5 percent in 2010 and 2009, respectively.
- Loss from continuing operations for the third quarter of 2010 was $19.7 million, or $0.21 per diluted share, compared to $15.9 million, or $0.41 per diluted share, for the third quarter of 2009. Excluding the valuation allowance, our loss from continuing operations per diluted share was $0.13 and $0.25 for 2010 and 2009, respectively.
- Loss from discontinued operations was $0.8 million, or $0.01 per diluted share, compared to income of $0.7 million, or $0.02 per diluted share, for the third quarter of 2009.
- Net loss was $20.5 million, or $0.22 per diluted share, compared to net loss of $15.2 million, or $0.39 per diluted share.
- Diluted weighted average shares outstanding were 94.9 million compared to 39.2 million. Approximately 58.6 million additional shares were issued in the first quarter of 2010 as part of our rights offering and debt exchange.
- Adjusted EBITDA was a loss of $8.3 million compared to a loss of $4.8 million last year. See reconciliation attached.
Liquidity and Capital Resources
- Our total liquidity at quarter-end was approximately $126 million, which included $121.4 million in available cash and $4.2 million in borrowing availability under our revolver.
- Operating cash flow was ($1.8) million compared to ($16.1) million for the third quarter of 2009, the primary difference being the effect of changes in working capital.
- Capital expenditures were $1.6 million in the current quarter, relating primarily to buyouts of vehicle and equipment leases. Capital expenditures in the third quarter of 2009 were $0.0 million.