Attached files
| file | filename |
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| 8-K - FORM 8-K - Swisher Hygiene Inc. | d256228d8k.htm |
| EX-99.1 - EX-99.1 - Swisher Hygiene Inc. | d256228dex991.htm |
 1
SWISHER HYGIENE
Third Quarter 2011 Conference Call
November 14, 2011
Exhibit 99.2 |
 Safe Harbor
Statement Our
discussion
today
may
include
forward-looking
statements
which
are
based
on
the
expectations,
estimates
and
projections
of
management
as
of
today.
The
forward
looking
statements
in
our
discussion
are
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
statements.
These
statements
are
not
guarantees
of
future
performance,
and
therefore,
undue
reliance
should
not
be
placed
upon
them.
We
refer
all
of
you
to
our
recent
filings
with
the
SEC
for
a
more
detailed
discussion
of
the
risks
that
could
impact
the
future
operating
results
and
financial
condition
of
Swisher
Hygiene
Inc.
We
disclaim
any
intentions
or
obligations
to
update
or
revise
any
forward
looking
statements,
except
to
the
extent
required
by
applicable
law.
Also
our
discussion
today
will
include
references
to
certain
non-GAAP
measures.
A
reconciliation
of
these
measures
to
the
most
comparable
GAAP
measure
can
be
found
on
our
website
at
swisherhygiene.com
under
the
investor
relations
section.
Non-GAAP Disclosures
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
the
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,
foreign
currency
gain,
net
gain/loss
on
debt
related
fair
value
measurements,
stock
based
compensation,
and
third
party
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
and
guidance
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,
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.
2
Important Disclosures |
 Consolidated Highlights
3
Goals
Results
1. Achieve significant revenue growth
Revenue of $67.2 million; up 318% from the
prior year
2. Sustainable double-digit organic
growth
Organic growth of 28.6%
3. Complete quality acquisitions
Current revenue run rate exceeds $320 million
4. Efficiently and effectively integrate
acquisitions
Acquired 22 businesses generating $64 million in
revenue
5. Aggressively pursue cost efficiencies
Expanded our manufacturing capacity
6. Reduce our reliance on third party
manufacturing
Strengthened/increase our ability to process
linens and dust control
7. Generate steady margin improvement
Achieved Adjusted EBITDA of $5.3 million as
compared to a loss of $1.1 million in the same
period last year. |
 Profit Drivers
•
Strong operating performance
•
Strength of our capital structure and liquidity
•
Continued aggressive acquisition strategy
•
Strategically driven business development
•
Focused integration efforts
4 |
 Performance Versus Plan
•
Triple-digit revenue growth and double-digit organic revenue
growth
•
Cross-selling initiatives are gaining traction
•
Continued successful integration of acquired businesses
5 |
 Consolidated Highlights
6
34% improvement in Q3 2011 Adjusted EBITDA compared to Q2 2011
Performance driven by:
Performance impacted by:
1. Growth in new and existing accounts
Overall revenue mix shift to lower margin
chemical products
2. Performance of our acquisitions
Addition of non-service product offering
3. Cost saving from regional consolidation
Delayed chemical product cost
improvement initiatives as a result of
the Daley acquisition
Excluding the effect of the mix shift and the introduction of non-service
products and redirection of purchases to Daley, Adjusted EBITDA
margin would have been 10% versus the reported 7.8% |
 Field
Reorganization 7
Benefits
•
Leverage the skills and deep experience of our regional leadership;
•
Provide
more
efficient
distribution
of
products
for
each
region,
lowering
product costs and enhancing customer service;
•
Consolidate routes and operations, simplify operating processes and
eliminate redundant costs, and;
•
Focus our selling effort toward adding new customers and cross-selling
additional products and services into existing customers
Impact
•
$5.0 million of annual labor savings; $0.5 million realized in the third
quarter
•
Reductions in route costs and G&A expense as a percentage of revenue
•
Full effect of the reductions on route expense, SG&A and adjusted EBITDA
margin in Q4 2011 |
 Financial Liquidity
•
$84 million of cash on hand with approximately $200 million in
liquidity
•
Finalized $62.5 million of previously announced credit facilities
to be used for capital expenditures
•
Current capital structure is 15% debt and 85% equity
•
Weighted borrowing average interest rate currently 1.7%
•
This, combined with our operating cash flow, leaves us
essentially unencumbered to continue our rapid growth and
acquisition strategy
•
Ongoing focus on working capital management
8 |
 Acquisition Strategy
•
Acquisition Recap
Franchises
Independent Businesses
Q3 2011
2
20
Year-to-date 2011
9
45
Since September 2011
-
6
•
Daley is a cornerstone in our manufacturing strategy,
providing the capacity to produce as much as 80% of our
chemical product requirements
•
Our pipeline of potential targeted acquisitions exceeds $750
million in annualized revenue
•
Our acquisition focus has shifted toward linen and dust
control businesses
9 |
 Business Development
•
Completed strategic acquisition of Daley International
-
Provides greater control over our supply chain
-
Reduces exposure to the unforeseen limitations of our current partners
-
Provides an ability to enhance margins
-
Enables better control of our raw material and logistics costs
-
Secures the capacity needed to support future growth
-
Eliminates potential customer conflicts with third-party manufacturers
-
Gives access to new vertical opportunities including manufacturing,
food processing, industrial and jan-san distribution
-
Enhances product line with floor care, processing and specialty
products
•
Addressing demand for a linen and dust control offering
•
Continued development of hand-held device technology
10 |
 Consolidated Highlights
11
Accomplishments
•
Annualized run rate revenue in excess of $320 million, up 433%
•
Acquired and integrated 69 businesses with $255 million of annualized
revenue for a combined purchase price of $288 million
•
Believe
we
are
the
second
largest
institutional
chemical
service
provider
in
North America
•
Developed into recognized participant in the linen and dust control market
•
Generated double-digit organic growth of 14.6% in the first quarter, 22.4% in
the second quarter and 28.6% in the third quarter
•
Raised $195 million in total equity
•
Closed on $162.5 million of credit facilities |
 Consolidated Highlights
12
Accomplishments
•
Joined the Russell 3000 index
•
Expanded our employee base from 600 to more than 2,100
•
Maintained a robust capital structure
-
Cash on hand of $84 million
-
Working capital increased by $62 million
-
Debt-to-equity ratio of 15%
-
$200 million of capital currently available for acquisitions and the continued
growth of our business
•
Became a chemical manufacturer with seven plants
•
Entered partnerships with 5 of America’s 20 largest foodservice
distributors |
 Financial Results
•
Revenue
$67.2 million
-
Up 318% from prior year
-
Up 280% from Q4 2010
-
Organic growth of 28.6%
•
Cost of sales
$25.8 million
-
Up 323% from prior year
-
Excluding acquisitions, Cost of Sales is up 16.4%
•
Route expenses
$14.6 million
-
Up 316% from the prior year
-
Excluding acquisitions, Route expense is up 12.9%
13 |
 Financial Results
•
SG&A expense
$22.6 million
-
Up 201% from prior year
-
Excluding acquisitions, SG&A is up 37.7%
•
Adjusted EBITDA
$5.3 million
-
Compares favorably to $(1.1) million in Q3 2010
•
Net loss
$3.8 million
-
$(0.02)/ share versus $(0.07)/share in Q3 2011
14 |
 Our
Goals •
Full year 2011 revenue outlook in excess of $220 million, up
250% from 2010
-
Organic growth
20-30%
-
Gross margin
60-63%
-
Route margin
40-43%
-
Adjusted EBITDA margin
10-18%
15 |
 Restroom
Services Hygiene Expertise
Soap and Paper Products
National Infrastructure
Transforming Industry Thinking
Facility Service Companies
Back-of-House Services
Chemical Expertise
Distributor Partnerships
Legacy Swisher Business
16
Chemical Companies
Front-of-House Services
Rental Products
Route Model |