March 15, 2013

Swisher Hygiene Announces Results for the Three and Six-Month Periods Ended June 30, 2012

CHARLOTTE, N.C., March 15, 2013 (GLOBE NEWSWIRE) -- Swisher Hygiene Inc. ("Swisher Hygiene") (Nasdaq:SWSH) (TSX:SWI), a leading provider of essential hygiene and sanitizing products and services, announced today that it has filed its Form 10-Q for the three and six-month periods ended June 30, 2012. All amounts in this news release are in United States dollars.

Second Quarter 2012 Highlights

  • The Waste segment, which was sold on November 15, 2012, is reported as discontinued operations for 2012.
     
  • Total revenue from continuing operations of $60.2 million for the second quarter of 2012, a 76% increase compared to the second quarter of 2011. Hygiene revenue from company-owned operations for the second quarter of 2012, excluding acquisitions, increased 9% compared to the second quarter of 2011.
     
  • Adjusted EBITDA loss of $1.8 million for the second quarter of 2012 based on a net loss from continuing operations of $18.0 million. For a reconciliation of non-GAAP to GAAP measures, please review the disclosures and table included with this release.
     
  • Basic and diluted loss per share from continuing operations of $0.10 for the second quarter of 2012, compared to basic and diluted loss per share from continuing operations of $0.05 in the second quarter of 2011.

"Results during the second quarter of 2012 were materially affected by the investigation and review process, impacting our overall operations and contributing to significantly higher SG&A costs in the quarter," said Thomas Byrne, President and Chief Executive Officer of Swisher Hygiene. "Despite the ongoing review process, we continued to see improvement in our route expense as a percentage of revenue through our initial route consolidation initiatives and, excluding expenses related to the investigation and review, we reduced our SG&A expense as a percentage of revenue by 740 basis points. We remain dedicated to serving our customers nationwide on a day-to-day basis with our comprehensive core chemical program as well as our complementary hygiene and sanitizing services."

"We are nearing the end of filing our outstanding financials, with only one more 2012 Form 10-Q remaining," continued Mr. Byrne. "We aim to complete the filing of our third quarter 2012 Form 10-Q within the next few days, which will position us to file our 2012 Form 10-K during the month of April."

Second Quarter 2012 Results

For the three months ended June 30, 2012, Swisher Hygiene reported total revenue from continuing operations of $60.2 million, a 76% increase from $34.2 million in the three months ended June 30, 2011. Hygiene revenue from company-owned operations, excluding acquisitions, increased 9% compared to the three months ended June 30, 2011.

Total costs and expenses for the three months ended June 30, 2012 increased by 80% to $77.8 million, compared to $43.3 million in the three months ended June 30, 2011. Excluding the impact of acquisition and merger expenses in both periods, and $9.5 million of investigation and review-related expenses in the three months ended June 30, 2012, total costs and expenses increased 9% compared to the three months ended June 30, 2011.

For the three months ended June 30, 2012 and 2011, respectively:

  Q2 2012 Q2 2011
Cost of sales as a % of revenue  44.6% 38.4%
Route expense as a % of revenue 16.9% 22.2%
SG&A expense as a % of revenue 59.1% 50.7%
SG&A expense (excluding investigation and review-related expenses) as a % of revenue 43.3% 50.7%

The increase in cost of sales as a percentage of revenue primarily reflects a change in sales mix towards the chemical product line and entering the wholesale chemical business through Swisher Hygiene's acquisition of Daley International, Cavalier and Kitter in the third quarter of 2011, while the favorable change in route expense as a percentage of revenue reflects the economies of scale realized through route consolidation initiatives. 

Net loss from continuing operations for the three months ended June 30, 2012 was $18.0 million, compared to net loss from continuing operations of $8.4 million in the three months ended June 30, 2011.

Adjusted EBITDA loss for the three months ended June 30, 2012 was $1.8 million, compared to an Adjusted EBITDA loss of $2.8 million in the three months ended June 30, 2011. 

Six Months 2012 Results

For the six months ended June 30, 2012, Swisher Hygiene reported total revenue from continuing operations of $118.3 million, a 112% increase from $55.7 million in the six months ended June 30, 2011. Hygiene revenue from company-owned operations, excluding acquisitions, increased 11% compared to the six months ended June 30, 2011.

Total costs and expenses for the six months ended June 30, 2012 increased by 102% to $148.7 million, compared to $73.7 million in the six months ended June 30, 2011. Excluding the impact of acquisition and merger expenses in both periods, and $11.4 million of investigation and review-related expenses in the six months ended June 30, 2012, total costs and expenses increased 19% compared to the six months ended June 30, 2011.

For the six months ended June 30, 2012 and 2011, respectively:

  H1 2012 H1 2011
Cost of sales as a % of revenue  44.0% 38.4%
Route expense as a % of revenue 17.5% 22.9%
SG&A expense as a % of revenue 55.4% 55.5%
SG&A expense (excluding investigation and review-related expenses) as a % of revenue 45.8% 55.5%

The increase in cost of sales as a percentage of revenue primarily reflects a change in sales mix towards the chemical product line and entering the wholesale chemical business through Swisher Hygiene's acquisition of Daley International, Cavalier and Kitter in the third quarter of 2011, while the favorable change in route expense as a percentage of revenue reflects the economies of scale realized through route consolidation initiatives. 

Net loss from continuing operations for the six months ended June 30, 2012 was $31.3 million, compared to net loss from continuing operations of $13.7 million in the six months ended June 30, 2011.

Adjusted EBITDA loss for the six months ended June 30, 2012 was $5.9 million, compared to an Adjusted EBITDA loss of $7.4 million in the six months ended June 30, 2011. 

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 Swisher Hygiene's operating performance. Swisher Hygiene believes this non-GAAP measure serves as an appropriate measure to be used in evaluating the performance of its business.

Swisher Hygiene defines Adjusted EBITDA as net loss excluding the impact of income taxes, depreciation and amortization expense, investigation and review related expenses, net interest expense, foreign currency gain and other income, net loss on debt related fair value measurements, stock based compensation, third party costs directly related to merger and acquisitions, including the debt prepayment penalty, and a gain from bargain purchase related to mergers and acquisitions.

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

Under SEC rules, Swisher Hygiene is 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 Swisher Hygiene's net losses for the three and six months ended June 30, 2012 and 2011:

  Three Months Ended June 30, Six Months Ended June 30,
  2012 2011 2012 2011
  (In thousands)
Net loss from continuing operations $ (18,029) $ (8,366) $ (31,289) $ (13,740)
Income tax benefit (expense) 8  (4,403)  87   (10,133)
Depreciation and amortization expense  5,188  2,482 10,165  4,604
Interest expense, net 531  253 1,112   587
Loss (gain) on foreign currency  43  (128) 40  (163)
Unrealized (gain) loss on convertible debt (170)  3,625 (199)  5,586 
Stock-based compensation  1,034  1,044 2,617  1,846
Investigation and review-related expenses  9,511  -- 11,385  --
Acquisition and merger expenses 42  2,734 162   3,998
         
Adjusted EBITDA $ (1,842) $ (2,759) $ (5,920) $ (7,415)

Cautionary Statement on Forward-Looking Information

All statements other than statements of historical fact contained in this press release 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 press 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.

Certain information in this press release is forward-looking information. 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. 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 press 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, 2011, 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 press 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.

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. This broad set of offerings is designed to promote superior cleanliness and sanitation in all commercial environments, 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.

SWISHER HYGIENE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)
 
  Three Months Ended June 30, Six Months Ended June 30,
  2012 2011 2012 2011
Revenue        
Products $ 53,169 $ 26,350 $ 104,019 $ 41,063
Services 6,744 6,618 13,753 11,986
Franchise and other 269 1,276 563 2,669
Total revenue 60,182 34,244 118,335 55,718
         
Costs and expenses        
Cost of sales 26,832 13,152 52,079 21,394
Route expenses 10,171 7,603 20,766 12,758
Selling, general, and administrative expenses 35,597 17,366 65,566 30,901
Acquisition and merger expenses 42 2,734 162 3,998
Depreciation and amortization 5,188 2,482 10,165 4,604
Total costs and expenses 77,830 43,337 148,738 73,655
Loss from continuing operations (17,648) (9,093) (30,403) (17,937)
         
Other expense, net (373) (3,676) (799) (5,936)
Net loss from continuing operations before income taxes (18,021) (12,769) (31,202) (23,873)
         
Income tax (expense) benefit (8) 4,403 (87) 10,133
Net loss from continuing operations (18,029) (8,366) (31,289) (13,740)
 
(Loss) Income from discontinued operations, net of tax
(882) 275 (883) (350)
Net loss (18,911) (8,091) (32,172) (14,090)
Net income attributable to non-controlling interest -- (1) -- (1)
Net loss attributable to Swisher Hygiene Inc. (18,911) (8,092) (32,172) (14,091)
Comprehensive loss        
Foreign currency translation adjustment (13) (270) (17) (28)
Comprehensive loss $ (18,924) $ (8,362) $ (32,189) $ (14,119)
         
Loss per share from continuing operations        
Basic and diluted $ (0.10) $ (0.05) $ (0.18) $ (0.10)
         
         
Weighted-average common shares used in the computation of loss per share        
Basic and diluted 174,996,323 164,972,640 174,913,264 144,097,478
CONTACT: 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
Source: Swisher Hygiene Inc.

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