Swisher Announces Results for the Three Months Ended March 31, 2014

CHARLOTTE, N.C., May 12, 2014 (GLOBE NEWSWIRE) -- Swisher Hygiene Inc. ("Swisher") (Nasdaq:SWSH), a leading service provider of essential hygiene and sanitizing solutions, announced today first quarter results for the period ended March 31, 2014. All amounts in this news release are in United States dollars.

First Quarter 2014 Highlights

• Total revenue of $48.3 million for the first quarter of 2014, a 7% decrease compared to the first quarter of 2013. Excluding first quarter 2013 revenue related to non-core linen routes and businesses subsequently sold, revenue for the first quarter of 2014 was down 3% from the prior-year period.
   
• Adjusted EBITDA loss of $5.2 million for the first quarter of 2014, based on a net loss of $13.8 million, as compared to an Adjusted EBITDA loss of $6.3 million for the first quarter of 2013, based on a net loss of $17.2 million.  For a reconciliation of non-GAAP to GAAP measures, please review the disclosures and table included with this release.
   
• Basic and diluted loss per share of $0.08 for the first quarter of 2014, compared to basic and diluted loss per share of $0.10 in the first quarter of 2013.

"While we have more work to do to get our revenue growing, we were pleased to see a significant improvement in our cost structure and cash flow during the first quarter," said William M. Pierce, President and Chief Executive Officer of Swisher. "Our route optimization efforts and the achievement of cost efficiencies were realized on a considerably larger scale in the quarter, and we expect to further realize savings from these efforts throughout the remainder of the year. Further, despite the softness in revenue, we were encouraged by the improvement in cash flow in the quarter. Our focus remains on growing our revenue through our philosophy of 'Sales Through Service,' maximizing customer satisfaction by providing best-in-class service and winning new business."

Reclassification

In the first quarter of 2014, the Company implemented a realignment of its field service and sales organization and as a result the primary function of certain job titles has shifted from primarily sales focused to service focused. Based on the change in the job functions, the related payroll expense will be classified within route expense, which the Company defines as employee costs incurred to provide service and deliver products to customers. To facilitate comparability between the periods, certain first quarter 2013 selling, general and administrative expenses have been reclassified to route expense to conform to the current year's presentation as follows: a $2.0 million increase in route expense and a $2.0 million decrease in selling, general and administrative expense. There was no impact to loss from continuing operations, net loss or loss per share as a result of the reclassification. 

First Quarter 2014 Results

For the three months ended March 31, 2014, Swisher reported total revenue of $48.3 million, a 7% decrease from $52.0 million in the three months ended March 31, 2013.  Excluding first quarter 2013 revenue related to non-core linen routes and businesses subsequently sold, revenue for the first quarter of 2014 was down 3% from the prior-year period. The remaining revenue decline was primarily due to weaker hospitality revenue in Swisher's northeastern geography and remaining linen customer turnover.

Total costs and expenses for the three months ended March 31, 2014 decreased 11% to $61.3 million, compared to $68.8 million in the three months ended March 31, 2013. Excluding $2.3 million related to both an impairment loss on assets held for sale and legal expenses in the three months ended March 31, 2014, and $3.9 million of investigation and review-related expenses in the three months ended March 31, 2013, total costs and expenses decreased 9% compared to the three months ended March 31, 2013.

For the three months ended March 31, 2014 and 2013, respectively:

Cost of sales declined $0.8 million, or 3%, from the prior-year period. Route expense declined $0.9 million, or 7%, from the prior-year period. SG&A expense (excluding unusual expenses) declined $3.9 million, or 16%, from the prior-year period. 

The increase in cost of sales as a percentage of revenue from the prior-year period primarily reflects $0.5 million related to a realignment of freight costs previously classified in SG&A in 2013 as well as changes in Swisher's revenue mix. The slight increase in route expenses as a percentage of revenue from the prior-year period primarily reflects the decline in first quarter 2014 revenue. SG&A expenses (excluding unusual expenses) as a percentage of revenue declined from the prior-year period, reflecting cost efficiencies, a reduction in stock-based compensation and the sale of linen assets.

Net loss for the three months ended March 31, 2014 was $13.8 million, compared to net loss of $17.2 million in the three months ended March 31, 2013.

Adjusted EBITDA loss for the three months ended March 31, 2014 was $5.2 million, compared to an Adjusted EBITDA loss of $6.3 million in the three months ended March 31, 2013. 

Cash and Capital Resources

As of March 31, 2014, Swisher had $17.5 million of cash and cash equivalents on its balance sheet and $6.1 million in outstanding debt. During the first quarter of 2014, Swisher Hygiene repaid $1.2 million of outstanding debt and made a one-time cash payment of $1.9 million related to a contractual dispute that Swisher accepted responsibility to resolve as a part of the sale of its Waste segment.

Conference Call

Swisher will host a conference call to discuss first quarter 2014 results on Tuesday, May 13 at 8:30 a.m. Eastern Time.

The conference call can be accessed over the phone by dialing 1-855-437-4412 or for international callers by dialing 1-484-756-4295; please dial-in 10 minutes before the start of the call. A replay will be available two hours after the call and can be accessed by dialing 1-855-859-2056 or for international callers by dialing 1-404-537-3406; the conference ID is 43388831. The replay will be available until Tuesday, May 20, 2014. 

In order to access the live webcast, please go to the Investors section of Swisher's website at www.swsh.com and click on the webcast link that will be made available. A replay will be available shortly after the original webcast. 

Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures. In addition to net income determined in accordance with GAAP, we use certain non-GAAP measures such as "Adjusted EBITDA" in assessing Swisher's operating performance. Swisher believes this non-GAAP measure serves as an appropriate measure to be used in evaluating the performance of its business.

Swisher defines Adjusted EBITDA as net loss excluding the impact of income taxes, goodwill impairment, depreciation and amortization expense, impairment on assets held for sale, investigation and review related expenses, net interest expense, foreign currency loss and other income, stock based compensation, severance, and litigation settlements.

Swisher presents Adjusted EBITDA because the company considers it an important supplemental measure of its operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of its results. Management uses this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives an additional indication of Swisher's core operating performance.  Swisher includes this non-GAAP financial measure in its earnings announcement in order to provide transparency to its investors and enable investors to better compare its operating performance with the operating performance of its competitors.  Adjusted EBITDA should not be considered in isolation from, and is not intended to represent an alternative measure of, revenue, operating results or cash flows from operating activities as determined in accordance with GAAP. Additionally, Swisher's definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Under SEC rules, Swisher is required to provide a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Accordingly, the following is a reconciliation of Adjusted EBITDA to Swisher's net losses for the three months ended March 31, 2014 and 2013:

Cautionary Statement on Forward-Looking Information

All statements other than statements of historical fact contained in this press release and on the conference call constitute "forward-looking information" or "forward-looking statements" within the meaning of the U.S. federal securities laws and the Securities Act (Ontario) and are based on the expectations, estimates and projections of management as of the date of this press release unless otherwise stated. All statements other than historical facts are, or may be, deemed to be forward looking statements. The words "plans," "expects," "is expected," "scheduled," "estimates," or "believes," or similar words or variations of such words and phrases or statements that certain actions, events or results "may," "could," "would," "might," or "will be taken," "occur," and similar expressions identify forward-looking statements.

Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Swisher as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. All of these assumptions have been derived from information currently available to Swisher including information obtained by Swisher from third-party sources. These assumptions may prove to be incorrect in whole or in part. All of the forward-looking statements made in this press release and on the conference call are qualified by the above cautionary statements and those made in the "Risk Factors" section of Swisher's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission, available on www.sec.gov, and with Canadian securities regulators available on Swisher's SEDAR profile at www.sedar.com, and Swisher's other filings with the Securities and Exchange Commission and with Canadian securities regulators available on Swisher's SEDAR profile at www.sedar.com. The forward-looking information set forth in this press release and on the conference call is subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking information. Swisher disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events and circumstances, except to the extent required by applicable law.

About Swisher Hygiene Inc.

Swisher Hygiene Inc. is a NASDAQ listed service company delivering essential hygiene and sanitizing solutions to customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail and healthcare industries.  These solutions are typically delivered by employees on a regularly scheduled basis and involve providing Swisher's customers with consumable products such as detergents, cleaning chemicals, soap, paper, water filters and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products, as well as additional services such as the cleaning of restrooms and other facilities. Swisher is committed to service excellence, as what Swisher does matters to thousands of customers on a daily basis, helping to create the cleanest and healthiest environments. 

CONTACT: For Further Information, Please Contact:
         
         Swisher Hygiene Inc.
         
         Investor Contact:
         Amy Simpson
         Phone: (704) 602-7116
         
         Garrett Edson, ICR
         Phone: (203) 682-8331