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8-K - FORM 8-K - Swisher Hygiene Inc.d256228d8k.htm
EX-99.2 - SUPPLEMENTAL PRESENTATION - Swisher Hygiene Inc.d256228dex992.htm

Exhibit 99.1

SWISHER HYGIENE ANNOUNCES RESULTS FOR THE THREE AND NINE-MONTH

PERIODS ENDED SEPTEMBER 30, 2011

318% Increase in Revenue; 29% Organic Growth Rate Compared to Prior-Year Period

CHARLOTTE, NC – November 14, 2011 – Swisher Hygiene Inc. (“Swisher Hygiene”) (NASDAQ: SWSH, TSX: SWI), a leading provider of essential hygiene and sanitation products and services, today announced results for the three and nine-month periods ended September 30, 2011. All amounts in this news release are in United States dollars.

Third Quarter 2011 Highlights

 

   

Total revenue for the three months ended September 30, 2011 increased by 318% to $67.2 million compared to $16.1 million for the same period in 2010, led by a 353% increase in product revenue and a 438% increase in service revenue.

 

   

Organic revenue growth for the quarter was 29% as compared with the same period in 2010.

 

   

Total revenue for the third quarter 2011 was up 30% sequentially from the second quarter of 2011, and up 280% from the fourth quarter of 2010.

 

   

Adjusted EBITDA for the third quarter 2011 was $5.3 million versus an Adjusted EBITDA loss of $1.1 million for the prior-year period and compared to Adjusted EBITDA of $3.0 million for the second quarter of 2011.

 

   

Adjusted EBITDA margin in the third quarter of 2011 was 7.8%, compared to Adjusted EBITDA margins of 5.8% in the second quarter of 2011, -3.5% in the first quarter of 2011 and -6.7% in the third quarter of 2010.

 

   

Revenue outlook for full year 2011 is expected to exceed $220 million, with annualized Run-Rate Revenue now in excess of $320 million.

 

   

Since June 30, 2011, completed 28 acquisitions, including 26 chemical, linen and dust control companies and two franchises.

 

   

Completed acquisition of Sanolite, the leading independent hygiene and chemical provider in the Northeast which enabled Swisher Hygiene to complete its regional operating structure while significantly strengthening its chemical sales and service capabilities in the region.

 

   

Acquired Daley International, one of the largest independent chemical manufacturers in the U.S. The acquisition will allow Swisher Hygiene to significantly increase its internal product manufacturing capability, while also enabling Swisher Hygiene to provide a broader array of products for its existing customers and those in additional vertical markets.

 

   

In August 2011, completed equipment and other financing agreements that will provide Swisher Hygiene with up to $62.5 million of additional available capital.

“We continued to move in the right direction in the third quarter of 2011, with another quarter of triple-digit revenue growth, a 30% sequential improvement in revenue from the second quarter, as well as reporting over $5 million in positive Adjusted EBITDA,” said Steven R. Berrard, Chief


Executive Officer of Swisher Hygiene. “Our Adjusted EBITDA margin rose once again to 7.8% as we are realizing the efficiencies of our new regional operating structure and we are approaching our 2011-2012 target Adjusted EBITDA margin range of 10 to 18%. Organic revenue growth of 29% – a third consecutive quarter of double-digit organic growth – shows once again that our cross-selling and new account initiatives are working. We completed 22 additional acquisitions during the quarter and were still able to maintain over $200 million in liquidity available to fund additional acquisitions. As we move toward 2012, we will focus our business development efforts toward broadening our product offerings with an emphasis on our emerging linen and dust control businesses.”

Mr. Berrard continued, “In the quarter, we completed the acquisition of Daley International, which is a cornerstone in our strategy to internally manufacture much of our chemical product offering. With our current manufacturing plants, we now have the capacity to produce as much as 80% of our chemical product requirements, thus significantly reducing our exposure to unforeseen issues and further enabling us to limit our freight and product costs. With our new operating structure in place and our materially increased ability to manufacture our own products, we expect to see significant margin expansion in the upcoming quarters, and ultimately, bottom-line profitability.”

Third Quarter 2011 Results

For the three months ended September 30, 2011, Swisher Hygiene reported total revenue of $67.2 million, a 318% increase from $16.1 million in the prior-year period and a 30% sequential increase from the second quarter of 2011. Product revenue increased 353% primarily due to the acquisitions of chemical, linen and waste companies since the end of the third quarter of 2010, and service revenue, increased 438%, largely attributable to the March 2011 acquisition of Choice Environmental Services, Inc. Excluding the impact of acquisitions, organic revenue increased 29% from the same period of the prior year.

Total costs and expenses for the three months ended September 30, 2011 increased by 256% to $70.6 million, compared to $19.8 million in the prior-year period. Excluding acquisition and merger-related costs of $0.6 million in the three months ended September 30, 2011 and $1.4 million in the prior-year period, total costs and expenses increased 280% compared to the prior-year period.

Excluding the impact of acquisitions, for the three months ended September 30, 2011, June 30, 2011 and September 30, 2010, respectively:

 

     Q3 2011     Q2 2011     Q3 2010  

Cost of sales as a % of revenue

     37.6     34.0     34.3

Route expense as a % of revenue

     21.6     23.1     25.2

SG&A expense as a % of revenue

     50.2     59.4     46.8

The increase in cost of sales as a percentage of revenue primarily reflects a change in sales mix towards the Chemical product line while the favorable change in route expenses as a percentage of revenue reflects the economies of scale realized through route consolidation initiatives. SG&A expense as a percentage of revenue has increased on a year to year basis largely due to increased public company costs and infrastructure to facilitate business growth.

Net loss for the three months ended September 30, 2011 was $3.8 million, compared to a net loss of $4.1 million in the prior-year period. Excluding acquisition and merger-related costs of $0.6 million in the third quarter of 2011, net loss for the three months ended September 30, 2011 was $3.2 million.

 

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Adjusted EBITDA for the three months ended September 30, 2011 was $5.3 million, compared to an Adjusted EBITDA loss of $1.1 million in the prior-year period. For a reconciliation of non-GAAP to GAAP measures, please review the disclosures and table included with this release.

Nine Month 2011 Results

For the nine months ended September 30, 2011, Swisher Hygiene reported total revenue of $146.3 million, a 218% increase from $46.0 million in the prior-year period. Product revenue, increased 230% primarily due to acquisitions made since August 2010 of 14 franchisees and 58 independent chemical, linen and waste companies, and service revenue increased 330%, largely attributable to the March 2011 acquisition of Choice Environmental Services, Inc. Excluding the impact of acquisitions, organic revenue increased 22% from the prior-year period.

Total costs and expenses for the nine months ended September 30, 2011 increased by 209% to $162.3 million, compared to $52.5 million in the prior-year period.

Excluding the impact of acquisitions, for the nine months ended September 30, 2011 and 2010, respectively:

 

     9 mos. 2011     9 mos. 2010  

Cost of sales as a % of revenue

     36.0     32.8

Route expense as % of revenue

     24.5     25.0

SG&A expense as a % of revenue

     55.5     45.5

The increase in cost of sales as a percentage of revenue primarily reflects a change in sales mix towards the Chemical product line while the favorable change in route expenses as a percentage of revenue reflects the economies of scale realized through route consolidation initiatives. SG&A expense as a percentage of revenue has increased on a year to year basis largely due to increases in public company costs and infrastructure to facilitate business growth.

Net loss for the nine months ended September 30, 2011 was $14.1 million, compared to a net loss of $7.5 million in the prior-year period. Excluding acquisition and merger-related costs of $4.7 million in the nine months ended September 30, 2011, net loss was $9.4 million.

Adjusted EBITDA for the nine months ended September 30, 2011 was $7.3 million, compared to an adjusted EBITDA loss of $1.7 million in the prior-year period. For a reconciliation of non-GAAP to GAAP measures, please review the disclosures and table included with this release.

Liquidity and Capital Resources

As of September 30, 2011 Swisher Hygiene had $84 million of cash on hand and approximately $200 million in liquidity. Also as of September 30, 2011, total capital was 15% debt and 85% equity, and the Company’s weighted average borrowing rate was 1.7%. During the three months ended September 30, 2011, the Company finalized its previously announced $62.5 million of credit facilities which will be used for future capital expenditures

2011 Revenue Outlook

Swisher Hygiene is adjusting its revenue outlook for 2011 expecting revenue in excess of $220 million, with current annualized Run-Rate Revenue now in excess of $320 million. Run-Rate Revenue is defined as October 2011 estimated annualized revenue and includes both acquisition and organic growth that have been added since September 30, 2011.

 

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Conference Call Information

Swisher Hygiene will host a conference call and live webcast to discuss the results later today at 5:00 PM Eastern time. The conference call can be accessed live over the phone by dialing 877-870-9226 or for international callers by dialing 1-973-890-8320; 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 855-859-2056 or for international callers by dialing 1-404-537-3406; the conference ID is 24458733. The replay will be available until Monday, November 21, 2011.

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

A supplemental slide presentation will be available on the Investors section of Swisher Hygiene’s website shortly before the conference call and live webcast begins.

 

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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 our operating performance. We believe this non-GAAP measure serves as an appropriate measure to be used in evaluating the performance of our business.

We define Adjusted EBITDA as net loss excluding the impact of income taxes, depreciation and amortization expense, interest expense and income, gains on foreign currency, unrealized loss, net, stock-based compensation expense, and costs directly related to merger and acquisitions.

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

Under SEC rules, we are 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 our net losses for the three months ended June 30, 2011 and the three and nine-month periods ended September 30, 2011 and 2010:

 

     Three Months Ended Sept. 30,     Three
Months
ended
June 30,
    Nine Months Ended Sept. 30,  
     2011     2010     2011     2011     2010  

Net loss

   $ (3,756,534   $ (4,135,080   $ (7,127,159     (14,098,271   $ (7,500,159

Income tax expense (benefit)

     46,384        —          (3,513,071     (8,176,480     —     

Depreciation and amortization expense

     6,879,607        1,272,266        6,084,424        15,671,983        3,399,004   

Interest expense, net

     807,605        357,897        265,774        1,420,801        1,003,636   

Foreign currency (gain)/loss

     106,079        —          (128,064     (57,388     —     

Net gain/loss on debt-related fair value instruments

     (590,100     —          3,554,900        4,925,900        —     

Stock-based compensation

     1,118,788        —          1,097,597        2,881,227        —     

Acquisition and merger expenses

     644,092        1,425,855        2,775,258        4,735,328        1,425,855   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 5,255,921      $ (1,079,062   $ 3,009,659      $ 7,303,100      $ (1,671,664
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

All statements, other than statements of historical fact, contained in this news release, including any information as to the future financial or operating performance of Swisher Hygiene, 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 news 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 Hygiene as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Swisher Hygiene contained in this news release, which may prove to be incorrect, include but are not limited to, the various assumptions set forth herein as well as the accuracy of management’s assessment of the effects of the successful completion and integration of the acquisitions. All of these assumptions have been derived from information currently available to Swisher Hygiene including information obtained by Swisher Hygiene 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 news release are qualified by the above cautionary statements and those made in the “Risk Factors” section of Swisher Hygiene’s Annual Report on Form 10-K for the year ended December 31, 2010, Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and most recent registration statement on Form S-1 filed with the Securities and Exchange Commission, available on www.sec.gov, and with Canadian securities regulators available on Swisher Hygiene’s SEDAR profile at www.sedar.com, and Swisher Hygiene’s other filings with the Securities and Exchange Commission and with Canadian securities regulators available on Swisher Hygiene’s SEDAR profile at www.sedar.com. The forward-looking information set forth in this news release 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 Hygiene 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.

 

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About Swisher Hygiene Inc.

Swisher Hygiene Inc. is a NASDAQ and TSX listed company that provides essential hygiene and sanitation solutions to customers throughout much of North America and internationally through its global network of company-owned operations, franchises and master licensees operating in countries across Europe and Asia. These essential solutions include cleaning and sanitizing chemicals, foodservice and laundry products, restroom hygiene programs and a full range of related products and services. The company’s most recent program enhancement is its introduction of solid waste management services to commercial and residential customers in selected markets. Together, this broad set of offerings is designed to promote superior cleanliness and sanitation in all commercial environments from door to dumpster, enhancing the safety, satisfaction and well-being of employees and patrons. Swisher Hygiene’s customers include a wide range of commercial enterprises, with a particular emphasis on the foodservice, hospitality, retail, industrial and healthcare industries.

For Further Information, Please Contact:

Swisher Hygiene Inc.

Investor Contact:

Amy Simpson

Phone: (704) 602-7116

Garrett Edson, ICR

Phone: (203) 682-8331

Media Contact:

Alecia Pulman, ICR

Phone: (203) 682-8224

 

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SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2011     2010     2011     2010  

Revenue

        

Product

   $ 43,424,055      $ 9,580,267      $ 86,827,789      $ 26,346,762   

Service

     23,347,357        4,341,867        56,468,375        13,142,945   

Franchise

     433,583        2,138,945        2,981,209        6,463,863   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     67,204,995        16,061,079        146,277,373        45,953,570   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses

        

Cost of sales

     25,817,824        6,107,686        53,116,139        16,870,196   

Route expenses

     14,618,918        3,511,409        34,892,302        9,859,640   

Selling, general, and administrative

     22,631,120        7,521,046        53,847,059        20,895,398   

Acquisition and merger expenses

     644,092        1,425,855        4,735,328        1,425,855   

Depreciation and amortization

     6,879,607        1,272,266        15,671,983        3,399,004   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     70,591,561        19,838,262        162,262,811        52,450,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (3,386,566     (3,777,183     (15,985,438     (6,496,523
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net

     (323,584     (357,897     (6,289,313     (1,003,636
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss before income taxes

     (3,710,150     (4,135,080     (22,274,751     (7,500,159
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense (benefit)

     46,384        —          (8,176,480 )     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (3,756,534   $ (4,135,080   $ (14,098,271   $ (7,500,159
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share

        

Basic and diluted

   $ (0.02   $ (0.07   $ (0.09   $ (0.13
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares used in the computation of loss per share

        

Basic and diluted

     173,429,586        57,908,074        154,025,525        57,878,049   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

     Balance at  
     September 30,
2011
    December 31,
2010
 
ASSETS     

Current assets

    

Cash and cash equivalents

   $ 83,785,303      $ 38,931,738   

Restricted cash

     —          5,193,333   

Accounts receivable (net of allowance for doubtful accounts of approximately $447,000 at September 30, 2011 and $334,000 at December 31, 2010)

     32,204,831        7,068,629   

Inventory

     15,839,729        2,968,076   

Other assets

     2,951,952        894,719   
  

 

 

   

 

 

 

Total current assets

     134,781,815        55,056,495   

Property and equipment, net

     64,516,687        11,324,055   

Goodwill

     165,992,839        29,660,309   

Other intangibles, net

     81,610,895        7,668,805   

Other noncurrent assets

     5,109,631        2,524,598   
  

 

 

   

 

 

 
   $ 452,011,867      $ 106,234,262   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities

    

Accounts payable, accrued expenses, and other current liabilities

   $ 29,904,662      $ 9,335,932   

Short term obligations

     13,346,282        13,378,710   

Advances from shareholder

     2,000,000        2,000,000   
  

 

 

   

 

 

 

Total current liabilities

     45,250,944        24,714,642   

Long term obligations

     47,899,501        31,028,992   

Deferred income tax liabilities

     4,446,139        1,700,000   

Other long term liabilities

     3,390,995        2,763,051   
  

 

 

   

 

 

 

Total noncurrent liabilities

     55,736,635        35,492,043   

Commitments and contingencies

    

Equity

    

Swisher Hygiene Inc. stockholders’ equity

    

Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued or outstanding at September 30, 2011 and December 31, 2010

     —          —     

Common stock, par value $0.001, authorized 600,000,000 shares; 173,864,701 and 114,015,063 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively

     173,865        114,015   

Additional paid-in capital

     373,872,794        54,725,897   

Accumulated deficit

     (23,088,295     (8,996,759

Accumulated other comprehensive income

     65,924        73,985   
  

 

 

   

 

 

 

Total Swisher Hygiene Inc. stockholders’ equity

     351,024,288        45,917,138   

Non-controlling interest

     —          110,439   
  

 

 

   

 

 

 

Total equity

     351,024,288        46,027,577   
  

 

 

   

 

 

 
   $ 452,011,867      $ 106,234,262   
  

 

 

   

 

 

 

 

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