MORRISVILLE, N.C., Nov. 1, 2017 /PRNewswire/ -- Alliance One
International, Inc. (NYSE: AOI) today announced results for its fiscal quarter ended September 30,
2017.
Highlights
Second Quarter
- Sales increased 14.9% to $447.3 million primarily due to the larger South American crop and a
12.4% increase in average sales price due to favorable product mix.
- Gross profit increased 37.9% to $69.3 million and gross profit as a percentage of sales
improved to 15.5% from 12.9% last year.
- Net income was $1.0 million and Adjusted EBITDA improved 40.5% to $49.9 million.
Six Months Year-to-Date
- Sales increased 11.3% to $724.3 million mainly driven by the larger South American crop and a
9.5% increase in average sales price due to favorable product mix.
- Gross profit increased 16.2% to $98.0 million and gross profit as a percentage of sales
improved to 13.5% from 13.0% in the prior year.
- Selling, general and administrative expense ("SG&A") decreased 5.0% to $68.6 million
primarily due to lower legal and professional fees and incentive compensation costs.
- In April 2017, as previously reported, the Company purchased and cancelled $28.6 million of its senior secured second lien notes leaving a face value of $662.9
million outstanding.
Pieter Sikkel, President and Chief Executive Officer said, "Fiscal year 2018 is progressing
favorably and in line with our expectations. We achieved solid sales growth during the second quarter when compared to last
year and volume sold is increasing as crop sizes have returned to more normal levels in many key markets. Our sales are planned
to improve throughout the fiscal year, with each subsequent quarter building on the prior, based on the timing of crops and
processing in the growing regions where we source tobacco. As such, as we progress into the third and fourth quarters, we
anticipate that our results will further reflect improvement versus last year in both sales and profitability.
"Through the first half of this year total kilos sold increased 2.1% to 153.2 million kilos and sales increased 11.3% to
$724.3 million this year versus last year as a result of the larger South American crop, increased
customer demand primarily from Asia and Europe, and a 9.5%
increase in average sales price due to favorable product mix. Lamina as a percentage of total sales was 14.2% higher when
compared to last year. Additionally, the 2017 Brazilian crop now being sold is of higher quality than the El Niño-affected
2016 crop.
"Gross profit increased by 16.2% to $98.0 million for the first six months of this year and
gross profit as a percentage of sales improved to 13.5% from 13.0% last year. These improvements were driven by sales that
increased by 11.3% while total costs of goods and services sold only increased 10.6%.
"For the first six months of this year, SG&A decreased 5.0% mainly due to lower legal and professional fees and reduced
incentive compensation costs. In addition to lower costs, other income increased $7.3 million
driven by sales of intrastate trade tax credits and the receipt of funds previously held in escrow that are now covered by
bond.
"As previously reported and consistent with our plan, in April we utilized surplus cash to reduce long-term debt with the
purchase and cancellation of $28.6 million of our 9.875% senior secured second lien notes, leaving
$662.9 million outstanding at September 30, 2017. Our liquidity at
quarter-end was strong with available credit lines and cash of $517.1 million. In addition to an
improved second quarter we are forecasting fiscal year 2018 to improve, when compared to last year, with sales in a range of
$1,900.0-$2,000.0 million and Adjusted EBITDA in a range of $165.0-$185.0
million. By fiscal year-end we also expect good improvement in our net leverage ratio, defined as total debt minus cash
divided by Adjusted EBITDA.
"We are also implementing new initiatives that should grow our business platform, while we continue to enhance our
sustainability and track and trace capabilities. Sustainability is core to everything we do and central to our value proposition
with customers and suppliers. From the field, to our factories, to our customers' final products, every action we take is focused
on the future with emphasis on continuous improvement. Our focus on sustainability began many years ago, because it made sense
for our business. Recently regulation has begun to catch-up to standards we established for ourselves, in labor and environmental
impact, as well as the ability to track and trace crops through the supply chain.
"Our planning is consistent with our customers' that are focused on reducing costs, increasing efficiency and enhancing their
global supply chains, as well as driving positive change in consumption with increased reduced risk product offerings. As part of
plan execution, we recently made a further investment to expand our e-liquid capability and footprint established initially with
our investment in Purilum, a leader in e-liquids and flavoring, that enhances our core competencies. Purilum won the 2017 Golden
Leaf Award for the company most committed to quality, affirming our commitment to high quality next generation products and their
future.
Mr. Sikkel, concluded, "Future prospects for our business are bright and we are excited about developing and maximizing future
opportunities that should drive improved profitability and enhanced shareholder value. We are taking measured steps to strengthen
our preferred supplier role with customers, further developing our position as a key supplier for both traditional requirements
as well as next generation reduced risk products."
Performance Summary for the Fiscal Quarter Ended September 30,
2017
Volumes increased 3.6% to 92.0 million kilos this year versus last year due to the timing of shipments primarily from
Asia and Europe.
Total sales and other operating revenues increased 14.9% or $57.9 million to $447.3 million primarily due to the larger South American crop and a 12.4% increase in average sales price due
favorable product mix. Lamina as a percentage of total sales was 15.5% higher this year compared to last year.
Gross profit increased 37.9% to $69.3 million and gross profit as a percentage of sales improved
to 15.5% from 12.9% last year.
SG&A increased slightly to $34.8 million which was offset by higher other income primarily
related to the receipt of funds previously held in escrow in South America that are now covered
by bond.
Interest expense increased slightly to $32.8 million from the prior-year period, primarily due
to increased interest rates and higher average borrowings on seasonal lines related to increased tobacco purchases for
anticipated sales.
Cash income taxes paid for the quarter increased from $1.0 million in the prior year to
$9.2 million in the current year and the effective tax rate was 90.4% this year compared to (32.2)%
last year. The variance in the effective tax rate between this year and last year is the result of many factors including the
differences in forecasted income for the respective years; differences in year-to-date income for the quarters; certain losses
for which no tax benefit is recorded; and, differences in valuation allowances, net exchanges losses on income tax accounts and
net exchange gains related to liabilities for unrecognized tax benefits.
Performance Summary for the Six Months Ended September 30, 2017
Volumes increased 2.1% to 153.2 million kilos this year versus last year due to the timing of shipments primarily from
Asia and Europe.
Total sales and other operating revenues increased 11.3% to $724.3 million driven by a 9.5%
increase in average sales price due mainly to product mix. Lamina sales as a percentage of total sales were 14.2% higher
this year when compared to last year. The larger South America crop size increased revenue
by 6.3%, and decreased processing costs by 11.9%. The higher volume throughput significantly reduced conversion costs.
Average tobacco costs per kilo increased 9.9% from product mix and the impact of European currency movement which was
partially offset by lower conversion costs.
Gross profit increased 16.2% to $98.0 million and gross profit as a percentage of sales improved
to 13.5% from 13.0% last year. The increase in gross profit was driven by revenues increasing by 11.3% while total costs of
goods and services sold increased 10.6%. The larger South America crop size this year drove
increases in revenues and the higher volume decreased our processing and conversion costs.
SG&A decreased 5.0% to $68.6 million primarily from lower legal and professional fees and
incentive compensation costs.
Other income increased $7.3 million driven by sales of intrastate trade tax credits in
South America and the receipt of South American funds previously held in escrow that are now
covered by bond.
During the six months ended September 30, 2017, we purchased $28.6
million of our existing senior secured second lien notes due 2021 at a discount resulting in debt retirement income of
$3.0 million.
Interest expense increased 7.0% to $66.9 million, mainly due to increased interest rates and
higher average borrowings on seasonal lines related to increased tobacco purchases for anticipated sales.
Cash income taxes paid increased from $4.7 million to $10.0
million year over year and the effective tax rate was (29.4)% this year compared to 0.5% last year. The variance in the
effective tax rate between this year and last year is the result of many factors including the differences in forecasted income
for the respective years; differences in year-to-date income for the quarters; certain losses for which no tax benefit is
recorded; and, differences in valuation allowances, net exchanges losses on income tax accounts and net exchange gains related to
liabilities for unrecognized tax benefits.
Earnings Per Share
Second Quarter
For the second quarter ended September 30, 2017, the Company reported a net income of
$1.0 million, or $0.11 per basic share, compared to a net loss for
the second fiscal quarter last year of $15.7 million, or $1.75 per
basic share.
Six Months
For the first half of the year ended September 30, 2017, the Company reported a net loss of
$31.5 million, or $3.51 per basic share, compared to a net loss for
the first half of last year of $47.2 million, or $5.29 per basic
share.
Liquidity and Capital Resources
As of September 30, 2017, available credit lines and cash were $517.1
million, comprised of $188.9 million in cash and $328.2
million of credit lines, consisting of $60.0 million available under the U.S. ABL facility
for general corporate purposes (subject to limitations on borrowing if unrestricted cash and cash equivalents exceed $180.0 million), $261.2 million of notes payable to banks and $7.0 million of availability exclusively for letters of credit. In the future, the Company may elect to redeem,
repay, make open market purchases, retire or cancel indebtedness prior to stated maturity under its various global bank
facilities and outstanding public notes, as they may permit.
Financial Results Investor Call
The Company will hold a conference call to report financial results for the period ended September 30,
2017, on November 2, 2017 at 8:00 A.M. ET. The dial in number
for the call is (877) 260-1479 or outside the U.S. (334) 323-0522 and conference ID 1978237. Those seeking to listen to the call
may access a live broadcast on the Alliance One website. Please visit www.aointl.com 15 minutes in advance to register.
For those who are unable to listen to the live event, a replay will be available by telephone from 11:00 A.M. ET, November 2nd through 11:00 A.M. ET
November 7th. To access the replay, dial (888) 203-1112 within the U.S., or (719) 457-0820 outside
the U.S., and enter access code 1978237. Any replay, rebroadcast, transcript or other reproduction of this conference call, other
than the replay accessible by calling the number above, has not been authorized by Alliance One and is strictly prohibited.
Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its
contents.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations of future events. Such statements include, but are not limited to, statements
about future financial and operating results, plans, objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based on the current beliefs and expectations of management and are subject to
significant risks and uncertainties. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties
materialize, actual results may differ materially from those currently anticipated expected or projected. The following factors,
among others, could cause actual results to differ from those expressed or implied by the forward-looking statements:
changes in the timing of anticipated shipments, changes in anticipated geographic product sourcing, political instability,
currency and interest rate fluctuations, shifts in the global supply and demand position for tobacco products, changes in tax
laws and regulations or the interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions,
changes in costs incurred in supplying tobacco and related services and the impact of regulation and litigation. Additional
factors that could cause the Company's results to differ materially from those expressed or implied by forward-looking statements
can be found in the Company's most recent Annual Report on Form 10-K and the other filings with the Securities and Exchange
Commission (the "SEC") which are available at the SEC's Internet site (http://www.sec.gov).
Non-GAAP Financial Information
This press release contains financial measures that have not been prepared in accordance with generally accepted accounting
principles in the United States ("U.S. GAAP" or "GAAP"). They include EBITDA, Adjusted
EBITDA and Adjusted Net Debt. Tables showing the reconciliation of these non-GAAP financial measures are attached to the
release. Adjusted EBITDA anticipated for fiscal year 2018 is calculated in a manner consistent with the presentation of
Adjusted EBITDA in the attached tables. Because of the forward-looking nature of this estimate of Adjusted EBITDA, it is
impractical to present a quantitative reconciliation of such measure to a comparable GAAP measure, and accordingly no such GAAP
measure is being presented.
About Alliance One International, Inc.
Alliance One is a leading global independent leaf merchant. For more information on Alliance One, visit the Company's website
at www.aointl.com.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
September 30
|
|
September 30
|
|
(in thousands, except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues
|
$ 447,339
|
|
$ 389,423
|
|
$ 724,332
|
|
$ 650,524
|
|
Cost of goods and services sold
|
378,008
|
|
339,142
|
|
626,366
|
|
566,192
|
|
Gross profit
|
69,331
|
|
50,281
|
|
97,966
|
|
84,332
|
|
Selling, general and administrative expenses
|
34,806
|
|
33,362
|
|
68,649
|
|
72,167
|
|
Other income
|
4,587
|
|
2,104
|
|
8,889
|
|
1,624
|
|
Restructuring and asset impairment charges
|
-
|
|
577
|
|
-
|
|
619
|
|
Operating income
|
39,112
|
|
18,446
|
|
38,206
|
|
13,170
|
|
Debt retirement expense
|
-
|
|
-
|
|
(2,975)
|
|
-
|
|
Interest expense
|
32,756
|
|
31,904
|
|
66,856
|
|
62,507
|
|
Interest income
|
727
|
|
2,204
|
|
1,694
|
|
4,042
|
|
Income (loss) before income taxes and other items
|
7,083
|
|
(11,254)
|
|
(23,981)
|
|
(45,295)
|
|
Income tax expense (benefit)
|
6,404
|
|
3,627
|
|
7,049
|
|
(204)
|
|
Equity in net income (loss) of investee companies
|
276
|
|
(732)
|
|
(649)
|
|
(2,061)
|
|
Net income (loss)
|
192
|
|
(15,613)
|
|
(32,429)
|
|
(47,152)
|
|
Less: Net income (loss) attributable to noncontrolling
interests
|
(68)
|
|
44
|
|
(159)
|
|
11
|
|
Net income (loss) attributable to Alliance One International,
Inc.
|
$ 1,023
|
|
$ (15,657)
|
|
$ (31,519)
|
|
$ (47,163)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
$ 0.11
|
|
$ (1.75)
|
|
$ (3.51)
|
|
$ (5.29)
|
|
Diluted
|
$ 0.11
|
|
$ (1.75)
|
|
$ (3.51)
|
|
$ (5.29)
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
8,982
|
|
8,923
|
|
8,973
|
|
8,914
|
|
Diluted
|
9,010
|
|
8,923
|
|
8,973
|
|
8,914
|
|
RECONCILIATION OF ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION ("ADJUSTED EBITDA")(1) (Unaudited)
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(in thousands)
|
September 30, 2017
|
|
September 30, 2016
|
|
September 30, 2017
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Alliance One International,
Inc.
|
$ 1,023
|
|
$ (15,657)
|
|
$ (31,519)
|
|
$ (47,163)
|
|
|
|
|
|
|
|
|
|
Plus: Interest expense
|
32,756
|
|
31,904
|
|
66,857
|
|
62,507
|
|
Plus: Income tax expense
|
6,404
|
|
3,627
|
|
7,049
|
|
(204)
|
|
Plus: Depreciation and amortization expense
|
8,284
|
|
8,601
|
|
16,671
|
|
17,353
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
48,467
|
|
28,475
|
|
59,058
|
|
32,493
|
|
|
|
|
|
|
|
|
|
Plus: Abnormal unrecovered advances (recoveries) to suppliers(2)
|
-
|
|
-
|
|
-
|
|
-
|
|
Plus: Reserves for (recoveries on) doubtful customer receivables
|
(63)
|
|
100
|
|
(63)
|
|
143
|
|
Plus: Non-cash employee stock based compensation
|
253
|
|
453
|
|
544
|
|
845
|
|
Less: Other income (expense)
|
4,586
|
|
2,104
|
|
8,890
|
|
1,624
|
|
Plus: Fully reserved recovery of tax(3)
|
2,265
|
|
2,221
|
|
4,640
|
|
3,806
|
|
Plus: Restructuring and asset impairment charges
|
-
|
|
577
|
|
-
|
|
619
|
|
Plus: Debt retirement expense (income)
|
-
|
|
-
|
|
(2,975)
|
|
-
|
|
Plus: Amortization of basis difference - CBT investment(4)
|
335
|
|
318
|
|
653
|
|
625
|
|
Plus: Kenyan investigation legal & professional costs
|
214
|
|
1,578
|
|
1,770
|
|
5,129
|
|
Less: Kenyan green leaf operation Adjusted EBITDA(5)
|
(3,032)
|
|
(3,901)
|
|
(4,104)
|
|
(5,548)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
$ 49,917
|
|
$ 35,520
|
|
$ 58,841
|
|
$ 47,584
|
|
|
|
|
|
|
|
|
|
(1) Earnings before interest, taxes, depreciation and amortization
("EBITDA") and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") are not
measures of results of operations under generally accepted accounting principles in the United States ("U.S. GAAP") and
should not be considered as an alternative to other U.S. GAAP measurements. We have presented EBITDA and Adjusted
EBITDA to adjust for the items identified above because we believe that it would be helpful to the readers of our
financial information to understand the impact of these items on our reported results. This presentation enables readers
to better compare our results to similar companies that may not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that impact a company's reported results and this list is
not intended to present all items that may have impacted these results. EBITDA, Adjusted EBITDA and any ratios calculated
based on these measures are not necessarily comparable to similarly-titled measures used by other companies or appearing
in our debt obligations or agreements. EBITDA and Adjusted EBITDA as presented may not equal column or row totals due to
rounding.
|
|
|
|
|
|
|
|
|
|
(2) Unrecovered amounts expensed directly to cost of goods and services
sold in the income statement for abnormal yield adjustments or unrecovered amounts from prior crops. Normal yield
adjustments are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(3) Represents income (included in Other income (expense)) from cash
received in the period presented from the sale of Brazilian intrastate trade tax credits that had been generated by
intrastate purchases of tobacco primarily in prior crop years. The Brazilian states of Rio Grande do Sul and Santa
Catarina permit the sale or transfer of excess credits to third parties subject to approval by the related tax
authorities. The Company has long-term agreements with these Brazilian state governments regarding the amounts and
timing of credits that can be sold. Intrastate trade tax credits that are not able to be sold under existing
agreements are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(4) Related to a former Brazilian subsidiary that is now deconsolidated
following the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
|
(5) Adjusted EBITDA of our former green leaf sourcing operation in
Kenya is calculated on the same basis as Adjusted EBITDA presented in this table. In fiscal year 2016 we decided to
exit green leaf sourcing in the Kenyan market as part of our restructuring program.
|
|
RECONCILIATION OF ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION ("ADJUSTED EBITDA")(1) (Unaudited)
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(in thousands)
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Alliance One International,
Inc.
|
$ (15,657)
|
|
$ (21,065)
|
|
$ (47,163)
|
|
$ (47,015)
|
|
|
|
|
|
|
|
|
|
Plus: Interest expense
|
31,904
|
|
28,782
|
|
62,507
|
|
56,555
|
|
Plus: Income tax expense (benefit)
|
3,627
|
|
22,902
|
|
(204)
|
|
19,687
|
|
Plus: Depreciation and amortization expense
|
8,601
|
|
6,897
|
|
17,353
|
|
13,961
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
28,475
|
|
37,516
|
|
32,493
|
|
43,188
|
|
|
|
|
|
|
|
|
|
Plus: Abnormal unrecovered advances to suppliers(2)
|
-
|
|
-
|
|
-
|
|
430
|
|
Plus: Reserves for (recoveries on) doubtful customer receivables
|
100
|
|
(65)
|
|
143
|
|
(148)
|
|
Plus: Non-cash employee stock based compensation
|
453
|
|
661
|
|
845
|
|
1,474
|
|
Less: Other income (expense)
|
2,104
|
|
(1,029)
|
|
1,624
|
|
(469)
|
|
Plus: Fully reserved recovery of tax(3)
|
2,221
|
|
814
|
|
3,806
|
|
1,159
|
|
Plus: Restructuring and asset impairment charges
|
577
|
|
(386)
|
|
619
|
|
2,562
|
|
Plus: Debt retirement expense (income)
|
-
|
|
-
|
|
-
|
|
-
|
|
Plus: Amortization of basis difference - CBT investment(4)
|
318
|
|
446
|
|
625
|
|
768
|
|
Plus: Kenyan investigation legal & professional costs
|
1,578
|
|
-
|
|
5,129
|
|
-
|
|
Less: Kenyan green leaf operation Adjusted EBITDA(5)
|
(3,901)
|
|
(6,499)
|
|
(5,548)
|
|
(11,876)
|
|
Plus: Reconsolidated subsidiary incremental EBITDA after elimination of
related party transactions with AOI and its consolidated subsidiaries(6)
|
-
|
|
4,738
|
|
-
|
|
5,990
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
$ 35,520
|
|
$ 51,251
|
|
$ 47,584
|
|
$ 67,768
|
|
|
|
|
|
|
|
|
|
(1) Earnings before interest, taxes, depreciation and amortization
("EBITDA") and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") are not
measures of results of operations under generally accepted accounting principles in the United States ("U.S. GAAP") and
should not be considered as an alternative to other U.S. GAAP measurements. We have presented EBITDA and Adjusted
EBITDA to adjust for the items identified above because we believe that it would be helpful to the readers of our
financial information to understand the impact of these items on our reported results. This presentation enables readers
to better compare our results to similar companies that may not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that impact a company's reported results and this list is
not intended to present all items that may have impacted these results. EBITDA, Adjusted EBITDA and any ratios calculated
based on these measures are not necessarily comparable to similarly-titled measures used by other companies or appearing
in our debt obligations or agreements. EBITDA and Adjusted EBITDA as presented may not equal column or row totals due to
rounding.
|
|
|
|
|
|
|
|
|
|
(2) Unrecovered amounts expensed directly to cost of goods and services
sold in the income statement for abnormal yield adjustments or unrecovered amounts from prior crops. Normal yield
adjustments are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(3) Represents income (included in Other income (expense)) from cash
received in the period presented from the sale of Brazilian intrastate trade tax credits that had been generated by
intrastate purchases of tobacco primarily in prior crop years. The Brazilian states of Rio Grande do Sul and Santa
Catarina permit the sale or transfer of excess credits to third parties subject to approval by the related tax
authorities. The Company has long-term agreements with these Brazilian state governments regarding the amounts and
timing of credits that can be sold. Intrastate trade tax credits that are not able to be sold under existing
agreements are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(4) Related to a former Brazilian subsidiary that is now deconsolidated
following the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
|
(5) Adjusted EBITDA of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this table. In fiscal year 2016 we decided to exit green
leaf sourcing in the Kenyan market as part of our restructuring program.
|
|
|
|
|
|
|
|
|
|
(6) Adjusted EBITDA of the subsidiary reconsolidated at the end of the
fourth quarter of fiscal year 2016 is calculated on the same basis as Adjusted EBITDA as presented in this table,
with eliminations for related party transactions with AOI and its consolidated subsidiaries, and is included in
consolidated information thereafter.
|
|
RECONCILIATION OF ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION ("ADJUSTED EBITDA")(1) (Unaudited)
|
|
Fiscal Year Ended
|
|
LTM(8)
|
|
Fiscal Year Ended
|
|
LTM(8)
|
|
(in thousands)
|
March 31, 2017
|
|
September 30, 2017
|
|
March 31, 2016
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Alliance One International,
Inc.
|
$ (62,928)
|
|
$ (47,285)
|
|
$ 65,532
|
|
$ 65,385
|
|
|
|
|
|
|
|
|
|
Plus: Interest expense
|
132,667
|
|
137,017
|
|
117,190
|
|
123,142
|
|
Plus: Income tax expense
|
23,481
|
|
30,734
|
|
32,215
|
|
12,324
|
|
Plus: Depreciation and amortization expense
|
34,476
|
|
33,794
|
|
28,361
|
|
31,753
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
127,696
|
|
154,259
|
|
243,298
|
|
232,604
|
|
|
|
|
|
|
|
|
|
Plus: Abnormal unrecovered advances (recoveries) to suppliers(2)
|
-
|
|
-
|
|
-
|
|
(430)
|
|
Plus: Reserves for (recoveries on) doubtful customer receivables
|
(5,545)
|
|
(5,751)
|
|
(169)
|
|
122
|
|
Plus: Non-cash employee stock based compensation
|
1,551
|
|
1,251
|
|
2,425
|
|
1,796
|
|
Less: Other income (expense)
|
4,896
|
|
12,162
|
|
105,427
|
|
107,519
|
|
Plus: Fully reserved recovery of tax(3)
|
9,356
|
|
10,190
|
|
4,309
|
|
6,956
|
|
Plus: Restructuring and asset impairment charges
|
1,375
|
|
756
|
|
5,888
|
|
3,944
|
|
Plus: Debt retirement expense (income)
|
(300)
|
|
(3,275)
|
|
-
|
|
-
|
|
Plus: Amortization of basis difference - CBT investment(4)
|
1,518
|
|
1,546
|
|
1,554
|
|
1,410
|
|
Plus: Kenyan investigation legal & professional costs
|
7,171
|
|
3,812
|
|
8,579
|
|
13,708
|
|
Less: Kenyan green leaf operation Adjusted EBITDA(5)
|
(8,013)
|
|
(6,569)
|
|
(16,666)
|
|
(10,338)
|
|
Plus: Reconsolidated subsidiary incremental EBITDA after elimination of
related party transactions with AOI and its consolidated subsidiaries(6)
|
-
|
|
-
|
|
16,800
|
|
10,810
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
$ 145,938
|
|
$ 157,195
|
|
$ 193,923
|
|
$ 173,739
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
$ 1,466,678
|
|
|
|
$ 1,493,821
|
|
Less: Debt of reconsolidated subsidiary funded by
affiliate(7)
|
|
|
-
|
|
|
|
74,490
|
|
Total adjusted debt
|
|
|
$ 1,466,678
|
|
|
|
$ 1,419,331
|
|
Less: Cash
|
|
|
188,936
|
|
|
|
159,297
|
|
Total adjusted debt less cash
|
|
|
1,277,742
|
|
|
|
1,260,034
|
|
|
|
|
|
|
|
|
|
(Total adjusted debt less cash) /Adjusted EBITDA(1)(7)
|
|
|
8.13x
|
|
|
|
7.25x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings before interest, taxes, depreciation and amortization
("EBITDA") and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") are not
measures of results of operations under generally accepted accounting principles in the United States ("U.S. GAAP") and
should not be considered as an alternative to other U.S. GAAP measurements. We have presented EBITDA and Adjusted
EBITDA to adjust for the items identified above because we believe that it would be helpful to the readers of our
financial information to understand the impact of these items on our reported results. This presentation enables readers
to better compare our results to similar companies that may not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that impact a company's reported results and this list is
not intended to present all items that may have impacted these results. EBITDA, Adjusted EBITDA and any ratios calculated
based on these measures are not necessarily comparable to similarly-titled measures used by other companies or appearing
in our debt obligations or agreements. EBITDA and Adjusted EBITDA as presented may not equal column or row totals due to
rounding.
|
|
|
|
|
|
|
|
|
|
(2) Unrecovered amounts expensed directly to cost of goods and services
sold in the income statement for abnormal yield adjustments or unrecovered amounts from prior crops. Normal yield
adjustments are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(3) Represents income (included in Other income (expense)) from cash
received in the period presented from the sale of Brazilian intrastate trade tax credits that had been generated by
intrastate purchases of tobacco primarily in prior crop years. The Brazilian states of Rio Grande do Sul and Santa
Catarina permit the sale or transfer of excess credits to third parties subject to approval by the related tax
authorities. The Company has long-term agreements with these Brazilian state governments regarding the amounts and
timing of credits that can be sold. Intrastate trade tax credits that are not able to be sold under existing
agreements are capitalized into the cost of the current crop and are expensed as cost of goods and services sold as that
crop is sold.
|
|
|
|
|
|
|
|
|
|
(4) Related to a former Brazilian subsidiary that is now deconsolidated
following the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
|
(5) Adjusted EBITDA of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this table. In fiscal year 2016 we decided to exit green
leaf sourcing in the Kenyan market as part of our restructuring program.
|
|
|
|
|
|
|
|
|
|
(6) Adjusted EBITDA of the subsidiary reconsolidated at the end of the
fourth quarter of fiscal year 2016 is calculated on the same basis as Adjusted EBITDA as presented in this table, with
eliminations for related party transactions with AOI and its consolidated subsidiaries, and is included in consolidated
information thereafter.
|
|
|
|
|
|
|
|
|
|
(7) Represents the portion of outstanding debt of the subsidiary
reconsolidated at the end of the fourth quarter of the fiscal year ended March 31, 2016 under a credit facility
attributable to the participation interest of another AOI subsidiary funding that portion of the borrowing under the
facility. As a result of a direct assignment of the interest in such facility to such other AOI subsidiary on March
2, 2017, the amount of the debt attributable to the interest of such other AOI subsidiary is eliminated in the
determination of consolidated total debt on and after March 2, 2017.
|
|
|
|
|
|
|
|
|
|
(8) Items for the twelve months ended September 30, 2017 are derived by
adding the items for the six months ended September 30, 2017 and the fiscal year ended March 31, 2017 and subtracting the
items for the six months ended September 30, 2016. Items for the twelve months ended September 30, 2016 are derived
by adding the items for the six months ended September 30, 2016 and the fiscal year ended March 31, 2016 and subtracting
the items for the six months ended September 30, 2015.
|
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SOURCE Alliance One International, Inc.