ARC Group Worldwide Reports Record Sales and Gross Profit

DELAND, Fla., Nov. 12, 2014 /PRNewswire/ -- For the quarter ended September 28, 2014, compared sequentially to the quarter ended June 30, 2014:

• Record Sales of $28.7 million, compared to $23.7 million, an increase of 21.1%;
• Record Gross Profit of $7.0 million, compared to $5.8 million, an increase of 20.7%; and
• Adjusted EBITDA of $4.0 million, compared to $2.2 million, an increase of 81.8%.

ARC Group Worldwide, Inc. ("ARC") (NASDAQ: ARCW), a leading global provider of advanced manufacturing and 3D printing solutions, today announced results for its 2015 fiscal first quarter ended September 28, 2014, including record sales and gross profit.

Fiscal Year First Quarter Operating Results

Revenue of $28.7 million during the first quarter exceeded all previous Company quarterly results, reflecting an increase of 56.0% compared to the prior year period.  Similarly, the Company also achieved record gross profit of $7.0 million, an increase of 22.8% compared to the prior year period.  Gross margins increased sequentially, from 20.6% in the fourth quarter (pro-forma for acquisitions during the full 90 day period) to 24.3% during the first quarter.  Plant-level EBITDA increased during the quarter to $5.1 million, from $3.7 million, representing sequential growth of 37.8%.  Overall, adjusted EBITDA was $4.0 million, an increase of 17.6% compared to the prior year period.  On a sequential basis, adjusted EBITDA grew 81.8% from the fiscal fourth quarter of 2014.  Adjusted EPS was $0.04 per share for the quarter, as compared with $0.14 for the prior year period, resulting primarily from higher depreciation and amortization and interest expense as a product of our recent acquisitions.

Jason Young, Chairman and CEO, commented, "In fiscal 2012, annual revenue for the Company was $30 million.  Two years later, quarterly revenue is now approaching what we previously achieved on an annual basis.  More importantly, we have assembled world-class advanced manufacturing capabilities to sell an enterprise-level product offering, as opposed to the single-solution capability of years past.  While our sales cycles are 9-12 months, early signs of our cross-selling efforts have resonated well with our customers.  Gross margins added close to four hundred basis points sequentially, on a pro-forma basis, bringing gross profit to a record level.  We remain focused on driving synergies, integration, automation, lean manufacturing, and cost saving initiatives which should provide margin expansion over time.  Adjusted EBITDA has improved, adding approximately five hundred basis points of margin on a sequential basis.  While ARC continues to invest in sales resources and technology, we still aim to improve EBITDA margins over time as well.  Technology is a big differentiator in our business model and a key driver to future growth, so our considerable investment in technology and world class sales platform should pay off in the long run."

GAAP to Non-GAAP Reconciliation

Adjusted Earnings, Adjusted EPS and Adjusted EBITDA are non-GAAP financial measures.  Adjusted Earnings represents the results of operations net of unusual expenses incurred during the period.  We have provided this non-GAAP financial information to aid in better understanding the company's performance absent these charges.  Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States.  The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

The reconciliation to GAAP is as follows (in thousands, except for share and per share amounts):

Merger expenses are costs incurred to effectuate our acquisitions, such as advisory, legal and accounting fees.  Other non-recurring expenses consist primarily of accounting and legal fees associated with our acquisitions and financing activities.  Share-based compensation consists of a non-recurring stock grant made to our Chief Executive Officer in fiscal 2014.

Adjusted EBITDA excludes interest expense, net and income taxes because these items are associated with our capitalization and tax structures.  Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the impact of prior capital expenditure decisions which may not be indicative of future capital expenditure requirements.

Plant-level EBITDA consists of net income from each of our operating facilities, but excludes corporate expenses.  We adjust the plant net income to exclude interest expense, net, income taxes and depreciation and amortization expense.  We have provided this non-GAAP financial measure to aid in better understanding the Company's plant-level operating performance.

Fourth quarter fiscal year 2014 pro-forma gross margin was calculated by combining the Company's historical fourth quarter gross profit with the fourth quarter gross profit of companies acquired for the period during the fourth quarter prior to their acquisition.  We believe this is a useful non-GAAP measure to provide a better understanding of the Company's sequential run-rate, gross margin performance.

About ARC Group Worldwide, Inc.

ARC Group Worldwide, Inc. is a leading global advanced manufacturing and 3D printing service provider.  Founded in 1987, the Company offers its customers a compelling portfolio of advanced manufacturing technologies and cutting-edge capabilities to improve the efficiency of traditional manufacturing processes and accelerate their time to market.  In addition to being a world leader in metal injection molding ("MIM"), ARC has significant expertise in 3D printing and imaging, materials science, advanced tooling, automation, machining, stamping, plastic injection molding, lean manufacturing, and robotics.  For more information about ARC Group Worldwide, Inc. please visit ARC Group Worldwide or its operating subsidiaries at 3D Material Technologies, Advanced Forming Technology, Advanced Forming Technology - Hungary, ARCMIM, ARC Wireless, Advance Tooling Concepts, FloMet, General Flange & Forge, Injectamax, Kecy Metal Technologies, Tekna Seal, and Thixoforming.

IMPORTANT INFORMATION

This press release may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995, which are based on ARC's current expectations, estimates and projections about future events.  These include, but are not limited to, statements, if any, regarding business plans, pro-forma statements and financial projections, ARC's ability to expand its services and realize growth.  These statements are not historical facts or guarantees of future performance, events or results.  Such statements involve potential risks and uncertainties, and the general effects of financial, economic, and regulatory conditions affecting our industries.  Accordingly, actual results may differ materially.  ARC does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  For additional factors that may affect future results, please see filings made by ARC with the Securities and Exchange Commission ("SEC"), including its Form 10-K for the fiscal year ended June 30, 2014 and Form 10-Q for the period ended September 28, 2014, as well as current reports on Form 8-K filed from time-to-time with the SEC.

CONTACT: Drew M. Kelley 
PHONE: (303) 467-5236
Email: InvestorRelations@ArcGroupWorldwide.com

SOURCE ARC Group Worldwide, Inc.