Acosta, Inc.
EARNINGS: Acosta Q1 Revenue Drops 13.1% on Client Losses, Volume Softness; Q1 Adjusted EBITDA Falls 19.3% YoY
Fri 03/15/2019 18:52 PM
Sales and marketing agency Acosta Inc. reported today a 13.1%, or $61.2 million, year-over-year revenue decline to $404.78 million for the fiscal first quarter ended Jan. 31. Management attributed the decline in revenue to “lower sales services revenues as the quarter reflects service level reductions from certain clients, recent client losses and continued volume softness,” according to the company’s quarterly report reviewed by Reorg.
For the first quarter, company-reported adjusted EBITDA declined 19.3% year over year to $58.88 million due to lower revenue partially being offset by lower selling, general and administrative expenses. LTM adjusted EBITDA through Jan. 31 was $263.3 million, excluding $86.7 million of net cost savings relating to cost-savings programs that have been implemented or will be implemented within the next 24 months, according to the report.
Selling, general and administrative expenses decreased 11.4% to $358.8 million, as compared with the same period in 2018. The decrease was primarily due to the realization of productivity initiatives and lower operating costs tied to lower revenue. The report indicates that SG&A included “$12.1 million in severance, investments in system infrastructure projects and other non-recurring expenses.”
Acosta generated $20.1 million in cash from operations during the first quarter of 2019, down from $21.6 million in the prior-year period. The company spent $2.4 million on capital expenditures during the quarter, down from $3.2 million in the first quarter of 2018. Free cash flow declined 3.6% year over year to $17.7 million.
As of Jan. 31, total liquidity was $91.4 million, including $49.6 million of availability under the $215.3 million revolver (after $30.7 million in outstanding standby letters of credit used primarily to support insurance obligations) and $41.8 million of cash and cash equivalents. According to the report, $135 million was outstanding on the company’s revolving credit facility at quarter-end; the company “intends to repay the outstanding amount on the credit facility within twelve months of the current period end, and as such, the borrowing is classified as short-term borrowings” on its balance sheet.
Management said on the last earnings call that they are looking at “several different paths” to optimize the company’s capital structure but would not comment on whether options would include debt buybacks. As previously reported, Acosta is working with PJT Partners as financial advisor.
The company will hold a conference call next week to discuss the first-quarter results, according to sources.
For the first quarter, company-reported adjusted EBITDA declined 19.3% year over year to $58.88 million due to lower revenue partially being offset by lower selling, general and administrative expenses. LTM adjusted EBITDA through Jan. 31 was $263.3 million, excluding $86.7 million of net cost savings relating to cost-savings programs that have been implemented or will be implemented within the next 24 months, according to the report.
Selling, general and administrative expenses decreased 11.4% to $358.8 million, as compared with the same period in 2018. The decrease was primarily due to the realization of productivity initiatives and lower operating costs tied to lower revenue. The report indicates that SG&A included “$12.1 million in severance, investments in system infrastructure projects and other non-recurring expenses.”
Acosta generated $20.1 million in cash from operations during the first quarter of 2019, down from $21.6 million in the prior-year period. The company spent $2.4 million on capital expenditures during the quarter, down from $3.2 million in the first quarter of 2018. Free cash flow declined 3.6% year over year to $17.7 million.
As of Jan. 31, total liquidity was $91.4 million, including $49.6 million of availability under the $215.3 million revolver (after $30.7 million in outstanding standby letters of credit used primarily to support insurance obligations) and $41.8 million of cash and cash equivalents. According to the report, $135 million was outstanding on the company’s revolving credit facility at quarter-end; the company “intends to repay the outstanding amount on the credit facility within twelve months of the current period end, and as such, the borrowing is classified as short-term borrowings” on its balance sheet.
Management said on the last earnings call that they are looking at “several different paths” to optimize the company’s capital structure but would not comment on whether options would include debt buybacks. As previously reported, Acosta is working with PJT Partners as financial advisor.
The company will hold a conference call next week to discuss the first-quarter results, according to sources.
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