MAAX announces its Q3-07 Results and subsequent refinancing of its senior secured credit facility12 January 2007
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November 30, February 28, November 30,
2006 2006 2005
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Unaudited Audited Unaudited
Assets
Current assets:
Cash and cash equivalents $ 4,575 $ - $ 12,577
Accounts receivables, less
allowance for doubtful
accounts of $1,858; $1,467;
$1,662 55,249 57,061 63,714
Income taxes
receivable 1,049 2,506 3,864
Inventories 39,639 44,389 40,798
Prepaid expenses 4,826 4,736 5,475
Assets held for sale 910 1,296 -
Deferred income taxes 3,948 4,646 3,665
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Total current assets 110,196 114,634 130,093
Property, plant and equipment 71,985 85,676 91,258
Intangible assets 129,116 134,489 135,157
Goodwill 227,291 231,147 215,208
Derivative financial
instruments - 4 3,463
Other assets 18,168 18,572 18,792
Deferred income taxes 18,639 11,109 5,110
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Total assets $ 575,395 $ 595,631 $ 599,081
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Liabilities and Shareholders'
Equity (Deficit)
Current liabilities:
Bank overdraft $ - $ 173 $ -
Accounts payables 23,074 30,259 26,626
Accrued liabilities 40,619 33,474 41,781
Deferred income taxes - - 1,042
Current portion of
long-term debt 1,134 7,292 8,232
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Total current liabilities 64,827 71,198 77,681
Long-term debt 466,838 449,641 451,841
Deferred income taxes 58,104 58,524 56,582
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Total liabilities 589,769 579,363 586,104
Redeemable preferred stock 7,000 - -
Shareholders' equity (deficit)
Capital Stock 47,670 47,670 47,670
Additional paid-in capital 3,390 3,318 3,261
Deficit (87,078) (49,003) (34,705)
Accumulated other
comprehensive income
(loss), net of income taxes
of $824; $508; $846 14,644 14,283 (3,249)
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Total shareholders' equity
(deficit) (21,374) 16,268 12,977
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Total liabilities and
shareholders' equity
(deficit) $ 575,395 $ 595,631 $ 599,081
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MAAX HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(In thousands of US dollars)
Unaudited
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Nine-month Nine-month
period ended period ended
November 30, November 30,
2006 2005
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Net sales $ 376,302 $ 373,214
Operating costs and expenses
Cost of goods sold 274,610 264,601
Selling, general and administrative
expenses 71,388 70,043
Depreciation and amortization 15,136 13,983
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361,134 348,627
Operating income from continuing operations 15,168 24,587
Interest expense 35,240 31,749
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Loss before income taxes
from continuing operations (20,072) (7,162)
Income taxes (recovery)
Current (637) 586
Deferred (4,016) 3,172
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(4,653) 3,758
Loss from continuing operations (15,419) (10,920)
Loss from discontinued operations (22,656) (2,949)
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Net loss $ (38,075) $ (13,869)
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Three-month Three-month
period ended period ended
November 30, November 30,
2006 2005
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Net sales $ 113,222 $ 120,300
Operating costs and expenses
Cost of goods sold 83,498 85,848
Selling, general and
administrative expenses 23,583 22,839
Depreciation and amortization 5,182 4,935
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112,263 113,622
Operating income from continuing operations 959 6,678
Interest expense 11,891 10,759
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Loss before income taxes
from continuing operations (10,932) (4,081)
Income taxes (recovery)
Current 11 147
Deferred (1,687) 6,115
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(1,676) 6,262
Loss from continuing operations (9,256) (10,343)
Loss from discontinued operations (9,887) (2,640)
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Net loss $ (19,143) $ (12,983)
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MAAX HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands of US dollars)
Unaudited
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Nine-month Nine-month
period ended period ended
November 30, November 30,
2006 2005
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Cash flows related to operating activities :
Net loss $ (38,075) $ (13,869)
Items not affecting cash :
Discontinued operations 22,656 2,949
Depreciation and amortization 15,136 13,983
Amortization of financial expenses 1,946 1,812
Change in fair value of derivative
financial instrument - 4,262
Accreted interest on Senior discount
notes 10,729 9,641
Gain on disposal of property, plant
and equipment and other assets (491) (122)
Stock-based compensation 72 87
Deferred income taxes (4,016) 3,172
Net change in non-cash balances related
to operations
Accounts receivable (1,617) (3,670)
Income taxes receivable 615 8,948
Inventories 167 4,544
Prepaid expenses (267) (944)
Assets held for sale 1,296 -
Accounts payable 592 13,165
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Net cash from operating activities of
continuing operations 8,743 43,958
Net cash from operating activities of
discontinued operations (6,761) 1,069
Cash flows related to financing activities :
Proceeds of issuance of long-term debt 25,184 324
Repayment of long-term debt (26,833) (28,480)
Proceeds from issuance of shares 7,000 195
Redemption of common shares - (406)
Debt issuance cost (299) (673)
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Net cash from financing activities of
continuing operations 5,052 (29,040)
Cash flows related to investing activities :
Additions to property, plant and equipment (5,714) (5,115)
Additions to intangibles assets (16) (1,186)
Proceeds from disposal of property, plant
and equipment 2,491 1,133
Other assets (3,980) (2,574)
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Net cash from investing activities of
continuing operations (7,219) (7,742)
Net cash from investing activities of
discontinued operations 4,873 (1,016)
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Net increase in cash and cash equivalents 4,688 7,229
Translation adjustement on cash denominated
in foreign currencies 60 (174)
Cash and cash equivalents (bank overdraft),
beginning of period (173) 5,522
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Cash and cash equivalents, end of period $ 4,575 $ 12,577
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Three-month Three-month
period ended period ended
November 30, November 30,
2006 2005
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Cash flows related to operating activities :
Net loss $ (19,143) $ (12,983)
Items not affecting cash :
Discontinued operations 9,887 2,640
Depreciation and amortization 5,182 4,935
Amortization of financial expenses 655 625
Change in fair value of derivative
financial instrument - 1,723
Accreted interest on Senior discount
notes 3,651 3,283
Loss (gain) on disposal of property,
plant and equipment (557) 370
Stock-based compensation 44 60
Deferred income taxes (1,687) 6,115
Net change in non-cash balances related
to operations
Accounts receivable 15,270 4,792
Income taxes receivable 397 9,089
Inventories 1,803 (3,165)
Prepaid expenses 2,173 (1,520)
Accounts payable 1,500 (1,825)
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Net cash from operating activities of
continuing operations 19,175 14,139
Net cash from operating activities of
discontinued operations (295) 2,857
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Cash flows related to financing activities :
Proceeds from issuance of long-term debt 4,684 -
Repayment of long-term debt (10,923) (26,573)
Debt issuance cost - (505)
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Net cash from financing activities of
continuing operations (6,239) (27,078)
Cash flows related to investing activities :
Additions to property, plant and equipment (2,476) (1,732)
Additions to intangibles assets - (207)
Proceeds from disposal of property, plant
and equipment 2,354 231
Other assets (1,149) (1,699)
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Net cash from investing activities of
continuing operations (1,271) (3,407)
Net cash from investing activities of
discontinued operations 1,102 (315)
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Net increase (decrease) in cash and cash
equivalents 12,472 (13,804)
Translation adjustement on cash denominated
in foreign currencies 129 (27)
Cash and cash equivalents (bank overdraft),
beginning of period (8,026) 26,408
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Cash and cash equivalents, end of period $ 4,575 $ 12,577
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MAAX HOLDINGS, Inc.
Supplemental Disclosure
Third Quarter Fiscal Year 2007 Results
January 11, 2007
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Disclaimer:
PROSPECTIVE FINANCIAL INFORMATION
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This supplemental disclosure of our fiscal quarter ended November 30, 2006 results contains implicit or explicit forecasts and forward-looking statements about MAAX's objectives, strategies, financial position, operating results and business. These statements are forward-looking in that they are based on management's expectations for the markets in which MAAX does business as well as on various estimates and assumptions. These expectations seemed reasonable as of end of day on January 11, 2007, the date that this information is publicly released. However, actual results could differ materially from these expectations if known or unknown risks affect results or if management's estimates or assumptions prove inaccurate. Accordingly, management cannot guarantee the realization of the forward-looking statements.
NON GAAP FINANCIAL MEASURES
The operating results of MAAX account for unusual items affecting the comparability of its results. To measure its performance and that of its business sectors from one period to the next, without the variations caused by special or unusual items, management uses certain measures not consistent with U.S. GAAP such as EBITDA, free cash flow and net debt. These measures have no standardized meaning as prescribed by U.S. GAAP and may not be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation.
"EBITDA" is defined as income before income taxes plus interest expense, depreciation and amortization. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. Management believes that the presentation of EBITDA and Adjusted EBITDA included in this supplemental disclosure of our fiscal quarter ended November 30, 2006 results provides useful information to investors regarding our results of operations because such presentation assists in analyzing the operating performance of our business and our ability to service debt. Although we use EBITDA and Adjusted EBITDA as financial measures to assess the performance of our business, the use of EBITDA and Adjusted EBITDA is limited because these measures do not include certain material costs, such as interest and taxes, necessary to operate our business. The presentation of EBITDA and Adjusted EBITDA included in this supplemental disclosure of our fiscal quarter ended November 30, 2006 results should be considered in addition to, and not as a substitute for, net income in accordance with U.S. GAAP as a measure of performance or net cash provided by operating activities as determined in accordance with U.S. GAAP as a measure of liquidity.
FINANCIAL HIGHLIGHTS - MAAX Holdings, Inc.
(in millions of US $)
Maax Maax
Holdings Holdings
3-months 3-months
November November
30, 2006 30, 2005 Var. $ Var.%
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Net sales 113.2 120.3 (7.1) -5.9%
Bathroom 101.4 107.0 (5.6) -5.2%
Spa 11.8 13.3 (1.5) -11.3%
Adjusted EBITDA 7.0 16.3 (9.3) -57.1%
Bathroom 7.1 16.2 (9.1) -56.2%
7.0% 13.7%
Spas (0.1) 0.1 (0.2) -200.0%
-0.8% 5.6%
Free Cash flow 17.8 10.7 7.1 66.4%
Certain comparative figures have been reclassified to conform to the
financial statement presentation adopted in the current period. More
specifically, the results from the Cabinetry sector are presented as
discontinued operations and are excluded from the financial highlights.
Maax Maax
Holdings Holdings
9-months 9-months
November November
30, 2006 30, 2005 Var. $ Var.%
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Net sales 376.3 373.2 3.1 0.8%
Bathroom 339.7 329.7 10.0 3.0%
Spa 36.6 43.5 (6.9) -15.9%
Adjusted EBITDA 33.7 47.7 (14.0) -29.4%
Bathroom 34.2 46.1 (11.9) -25.8%
10.1% 13.7%
Spas (0.5) 1.5 (2.0) -133.3%
-1.4% 5.6%
Free Cash flow 1.5 36.7 (35.2) -95.9%
Certain comparative figures have been reclassified to conform to the
financial statement presentation adopted in the current period. More
specifically, the results from the Cabinetry sector are presented as
discontinued operations and are excluded from the financial highlights.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(in thousands of US $)
Maax Maax
Holdings Holdings
3-months 3-months
November November
30, 2006 30, 2005 Var. $
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Loss from continuing
operations (9,684) (10,343) 659
Provision for taxes (1,248) 6,262
Consolidated interest expense 11,891 10,759
Depreciation and amortization 5,182 4,935
Reported EBITDA 6,141 11,613 (5,472)
Non Cash Items 69 262
Non Recurring items 799 2,099
Cash Gains on F/X Contracts - 1,908
Other items 16 344
Adjusted EBITDA 7,025 16,226 (9,201)
Maax Maax
Holdings Holdings
9-months 9-months
November November
30, 2006 30, 2005 Var. $
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Loss from continuing
operations (15,847) (10,920) (4,927)
Provision for taxes (4,225) 3,758
Consolidated interest expense 35,240 31,749
Depreciation and amortization 15,136 13,983
Reported EBITDA 30,304 38,570 (8,266)
Non Cash Items (29) (248)
Non Recurring items 2,492 3,992
Cash Gains on F/X Contracts - 4,975
Other items 871 331
Adjusted EBITDA 33,638 47,620 (13,982)
LONG TERM DEBT SUMMARY
(in millions of US $)
Foreign
Interest ex- Novem-
June 4, Addi- accre- Repay- change ber 30,
Debt 2004 tions tion ments impact 2006
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Revolving credit 12.0 25.2 - (32.2) - 5.0
Term loan A 96.2 - - (35.1) 15.7 76.8
Term loan B 115.0 - - (18.4) - 96.6
Senior Subordinated
notes 150.0 - - - - 150.0
Others 0.5 3.5 - (1.0) - 3.0
Total MAAX
Corporation 373.7 28.7 - (86.7) 15.7 331.4
Cash Balances (4.6) - - - - (4.5)
Net Debt - MAAX
Corporation 369.1 - - - - 326.9
Senior discounted
notes - MAAX
Holdings, Inc. - 110.0 26.5 - - 136.5
Net Debt - MAAX
Holdings, Inc. 369.1 138.7 26.5 (86.7) 15.7 463.4
Financial Covenant Summary
Maax Corporation Senior Credit Facility
Required November 30,
Minimum 2006
Fixed charge coverage ratio 1.00 1.00
Interest coverage ratio 1.55 1.65
Maximum
Leverage ratio 6.85 6.64
On May 30, 2006, the Company obtained an amendment under the Company's senior secured credit facility to avoid a potential default of certain financial covenants set forth in the Company's senior secured credit facility. The result of the amendment was an increase of the applicable margin of the term loan A to 2.75%, based on a grid pricing. The amendment also incorporates a new provision that allows the Company in the future, under certain conditions, to utilize certain cash contributions to its common equity to cure a failure to satisfy the interest coverage ratio, fixed charge coverage ratio and/or leverage ratio financial covenants set forth in the Company's senior secured credit facility, on a ratio of 1:1 to the adjusted EBITDA, as defined in the Company's senior secured credit facility, and the financial covenants would then be recalculated using said increased adjusted EBITDA amount.
On December 12, 2006, the Company and its lenders entered into a new amendment under which the lenders accepted to waive the Company's failure to comply with the financial covenants set forth in the Company's senior secured credit facility for the quarter ended November 30, 2006. Pursuant to this amendment, the applicable margin on the term A loan and the revolving loans increased to 3.25% and the applicable margin on the term B loan increased to 3.50%. The amendment also limits the authorized revolving credit facility to C$30 million until the Company complies with the covenants set forth in the Company's senior secured credit facility.
On January 9, 2007, the Company refinanced the totality of its senior secured credit facility, which includes the Term loans A and B and the revolving credit facility with Brookfield Bridge Lending Fund Inc. The new credit facility provides a maximum amount of $215,000,000, of which $40,000,000 represents a senior secured revolving credit facility from which the Company may drawdown amounts for its normal operations. The proceeds from the issuance of this new debt will be used to repay the Term A and B and the revolving credit facility, which is totalling $178,411,000 as of November 30, 2006.
Source: prnewswire
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