Presidio, Inc. (NASDAQ:PSDO) (together with its subsidiaries,
“Presidio” or the “Company”), a leading North American IT solutions
provider delivering Digital Infrastructure, Cloud and Security
solutions to create agile, secure infrastructure platforms for its
customers, today announced its financial results for its fiscal
third quarter ended March 31, 2019.
|
|
Three months ended |
|
|
|
Nine months ended |
|
|
(in $
millions, except per share data) |
|
March 31, 2018 |
|
March 31, 2019 |
|
% Chg |
|
March 31, 2018 |
|
March 31, 2019 |
|
% Chg |
|
|
(as adjusted)1 |
|
|
|
|
|
(as adjusted)1 |
|
|
|
|
Total revenue |
|
$ |
653.4 |
|
|
$ |
705.2 |
|
|
7.9 |
% |
|
$ |
2,033.9 |
|
|
$ |
2,222.9 |
|
|
9.3 |
% |
Gross margin |
|
$ |
139.6 |
|
|
$ |
156.7 |
|
|
12.2 |
% |
|
$ |
433.6 |
|
|
$ |
470.4 |
|
|
8.5 |
% |
Gross margin % |
|
21.4 |
% |
|
22.2 |
% |
|
|
|
21.3 |
% |
|
21.2 |
% |
|
|
Net income |
|
$ |
0.5 |
|
|
$ |
5.0 |
|
|
n.m. |
|
|
$ |
119.7 |
|
|
$ |
25.4 |
|
|
(78.8 |
)% |
Diluted EPS |
|
$ |
0.01 |
|
|
$ |
0.06 |
|
|
n.m. |
|
|
$ |
1.24 |
|
|
$ |
0.28 |
|
|
(77.4 |
)% |
Adjusted EBITDA2 |
|
$ |
48.9 |
|
|
$ |
52.7 |
|
|
7.8 |
% |
|
$ |
166.2 |
|
|
$ |
173.1 |
|
|
4.2 |
% |
Adj. EBITDA margin %2 |
|
7.5 |
% |
|
7.5 |
% |
|
|
|
8.2 |
% |
|
7.8 |
% |
|
|
Adjusted Net Income2 |
|
$ |
26.7 |
|
|
$ |
29.0 |
|
|
8.6 |
% |
|
$ |
90.1 |
|
|
$ |
100.0 |
|
|
11.0 |
% |
Pro Forma Adjusted Net
Income3 |
|
$ |
26.8 |
|
|
$ |
29.0 |
|
|
8.2 |
% |
|
$ |
93.4 |
|
|
$ |
98.8 |
|
|
5.8 |
% |
Pro Forma Diluted EPS3 |
|
$ |
0.28 |
|
|
$ |
0.34 |
|
|
21.4 |
% |
|
$ |
0.97 |
|
|
$ |
1.14 |
|
|
17.5 |
% |
1 Amounts shown “as adjusted” throughout this
release reflect the full retrospective adoption of ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606).
2 This financial measure is not based on U.S.
GAAP. Please refer to the section of this press release entitled
“About Non-GAAP and Pro Forma Financial Measures” for additional
information and to the section entitled “Non-GAAP Reconciliations”
for reconciliation to the most directly comparable U.S. GAAP
measure.
3 This non-GAAP financial measure adjusts
certain historical data on a pro forma basis following certain
transactions. Please refer to the section of this press
release entitled “About Non-GAAP and Pro Forma Financial Measures”
for additional information and to the section entitled “Non-GAAP
Reconciliations” for reconciliation to the most directly comparable
U.S. GAAP measure.
“We are extremely pleased with our third quarter
results, where we delivered revenue growth of 7.9%. The growth in
revenue was broad-based across all three of our solution areas
reflecting our clients' increasing demand for Presidio's assistance
to digitally transform their businesses. In addition, our strong
cash flow allowed us to prepay an additional $25.0 million of our
outstanding term loans, bringing year-to-date voluntary prepayments
to $75.0 million. We continue to evaluate all accretive uses for
the capital we generate, including investing in new business
offerings organically and continuing our strategic program of
M&A inorganically,” said Bob Cagnazzi, Chief Executive Officer
of Presidio. “We believe these results highlight the effectiveness
of our multi-cloud, multi-vendor strategy, which drives deep
relationships with our clients. We have successfully leveraged
these relationships into our new offerings including: public cloud,
managed security services and software-defined networking projects.
Based on our strong performance in the third quarter, we have
raised our revenue outlook for Fiscal 2019, as we now expect total
revenue growth of 6% to 8% for the full year. Furthermore, we are
pleased to announce our Board of Directors has declared a quarterly
cash dividend of $0.04 per share to be paid in July 2019. We
believe our 9.3% total revenue growth for the year-to-date period
demonstrates the execution of our strategic growth initiatives as
we continue to capitalize on our favorable free cash flow profile
to drive shareholder value creation,” Cagnazzi continued.
Financial Highlights for the Fiscal Third
Quarter Ended March 31, 2019
- Revenue - Total revenue was $705.2 million, up 7.9%, with
product revenue up 8.7% and service revenue up 4.8%. Total revenue
growth in the quarter was driven by 29.5% growth in Cloud
solutions, which included strong revenue performance from our
public cloud offerings. In addition, we experienced growth in
Security revenue, up 16.3% driven by an increase in managed
security services especially around security incident and event
management along with security architecture and technology
solutions, and Digital Infrastructure revenue grew 2.2%. The
investments in our public cloud initiative, as well as growth in
our managed services offerings, drove our recurring revenue in the
third quarter up 52.4% over the prior year, and recurring revenue
now represents 8.5% of our Total revenue. We continued to
experience accelerating growth in our backlog orders believed to be
firm which totaled $674.4 million as of March 31, 2019, an increase
of 33% compared to the prior year period. We saw our backlog of
contracted recurring revenue more than double over the prior year
period.
- Gross margin - Our Gross margin percentage, Product gross
margin percentage, and Service gross margin percentage were 22.2%,
22.9%, and 19.1%, respectively, as compared to 21.4%, 21.8%, and
19.3% in the prior year. Product revenue led by cloud solutions and
a higher revenue mix of software grew faster than services revenue
growth for the quarter. Strong revenue growth of software
recognized on a net basis led to the overall increase in Gross
margin percentage for the quarter.
- Provision for Income Taxes - The GAAP tax provision rate was
27.5%, and the non-GAAP tax provision rate was 21.0%.
- Net income and Diluted EPS - Net income was $5.0 million and
diluted EPS was $0.06. Pro Forma Adjusted Net Income was $29.0
million, an increase of 8.2% over the prior year and Pro Forma
Adjusted Diluted EPS was $0.34, an increase of 21.4% over the prior
year driven by our strong revenue growth and the accretive impact
of the Share Repurchase (as defined below).
- Adjusted EBITDA - Adjusted EBITDA was $52.7 million, up 7.8%
due to Gross margin growth of 12.2% partly offset by increases in
Selling, General and Administrative expenses (“SG&A”) as a
percentage of revenue in the third quarter associated with the
investments in cloud and security sales resources. Adjusted EBITDA
margin was 7.5% which was flat compared to the prior year.
Financial Highlights for the Nine Months Ended
March 31, 2019
- Revenue - Total revenue was $2,222.9 million, up 9.3%, with
product revenue up 11.0% and service revenue up 1.6%. Total revenue
growth in the period was driven by strong growth in all three of
our solution areas. Digital Infrastructure solutions grew 9.8%,
Security revenue increased 8.9%, and Cloud revenue increased 7.4%.
Service revenue growth was impacted by the extension of several
large projects, reducing revenue recognition in the year to date
period. However, our clients continue to engage us for new service
projects as evidenced by the 14% growth in our services revenue
backlog compared to the prior year. The success of our public
cloud initiative, as well as growth in managed services, drove our
recurring revenue up 35% over the prior year. Recurring revenue now
represents 6.8% of our Total revenue compared to 5.5% of our Total
revenue for the prior year.
- Gross margin - Our Gross margin percentage, Product gross
margin percentage, and Service gross margin percentage were 21.2%,
21.5%, and 19.5%, respectively, as compared to 21.3%, 21.4%, and
21.0% in the prior year. The increase in Product gross margins
resulted from a higher revenue mix of software recognized on a net
basis, mostly offset by investments in public cloud offerings that
drove lower margins. The decline in service margins was primarily
caused by the lengthening of client projects resulting in lower
revenue recognition.
- Provision for Income Taxes - The GAAP tax provision rate was
27.0%, and the non-GAAP tax provision rate was 21.2%.
- Net income and Diluted EPS - Net income was $25.4 million and
diluted EPS was $0.28; both metrics were below the prior year
results, primarily due to the favorable impact of $92.4 million
revaluation of deferred income tax assets and liabilities recorded
in the prior year as a result of tax reform. Pro Forma Adjusted Net
Income was $98.8 million, an increase of 5.8% over the prior year
and Pro Forma Adjusted Diluted EPS was $1.14, an increase of 17.5%
over the prior year driven by our strong revenue growth and the
accretive impact of the Share Repurchase.
- Adjusted EBITDA - Adjusted EBITDA was $173.1 million, up 4.2%
due to the 8.5% growth in Gross margin, partly offset by the
increase in SG&A associated with investment in cloud and
security sales resources and the additional SG&A related to
acquisitions completed during the prior fiscal year. Adjusted
EBITDA margin was 7.8% compared to 8.2% in the prior year. The
investments we have made in our public cloud offerings impacted our
margins by approximately 20 basis points, with the remainder
relating to lower services margins due to the lengthening of
service engagements and investments in sales resources.
Capital Resources and Free Cash Flow
- Debt - As of March 31, 2019, cash and cash equivalents were
$29.0 million, total long-term debt was $771.6 million comprised
entirely of our term loan facility (excluding debt issuance costs),
and total net debt was $742.6 million defined as total long-term
debt less cash and cash equivalents, representing 3.2x net total
leverage. During the nine months ended March 31, 2019, the Company
voluntarily prepaid an aggregate of $75.0 million in principal
amount of its term loans.
- GAAP Cash flow from operating activities and Free Cash Flow -
GAAP Cash flow from operating activities was $30.5 million in the
third quarter, an increase of 69% over the prior year. Free Cash
Flow increased 3% in the third quarter to $26.6 million, after $9.2
million of cash outflows for public cloud resale investments. GAAP
Cash flow from operating activities was $106.6 million in the nine
months ended March 31, 2019. Free Cash flow for the nine months
ended March 31, 2019 was $73.1 million, after $26.9 million of cash
outflows for public cloud resale investments.
- September 2018 Share Repurchase - On September 13, 2018, the
Company completed the repurchase of 10,750,000 of its shares from
an affiliate of investment funds managed by affiliates of Apollo
Global Management, LLC (the “Share Repurchase”) for approximately
$160 million, funded with the net proceeds of incremental term
loans. The Share Repurchase is expected to deliver EPS accretion of
7% for the fiscal year.
- Backlog - As of March 31, 2019, we had firm, executed backlog
of $674 million, up 33% over the prior year, driven by strong
growth in both product and service backlog.
- Dividend - On February 6, 2019, the Company declared a
quarterly cash dividend of $0.04 per share of Common Stock.
The dividend was paid on April 5, 2019 to stockholders of record as
of March 27, 2019. Dividends paid for the quarter to stockholders
of record totaled $3.3 million.
Quarterly Cash Dividend
Presidio announced today that its Board of
Directors approved a quarterly cash dividend of $0.04 per
share to stockholders. The dividend will be paid on July 5, 2019 to
stockholders of record as of the close of business on June 26,
2019. The declaration and payment of future dividends will continue
to be subject to the discretion and approval of the Company’s Board
of Directors and will be dependent upon, among other things, the
Company’s financial position, results of operations and cash
flow.
Business Outlook
Our revised outlook for the fiscal year ending June 30, 2019 is
as follows:
- Total revenue: $2,940 million to $2,980 million, representing
Total revenue growth of 6% to 8%;
- Adjusted EBITDA margin: approximately 8% prior to investments
in public cloud offerings and approximately 7.8% after investments
in public cloud offerings;
- Pro Forma Diluted EPS: growth in the mid to high teens
including the impact of the Share Repurchase;
- Free Cash Flow is expected to average $35 million per quarter
before public cloud resale and managed services investments, as
well as any tuck-in acquisitions funded through free cash flow;
and
- Total net leverage is expected to be in the low-3x range at the
end of fiscal 2019, excluding any strategic acquisitions.
The Company has not reconciled forward looking
non-GAAP financial measures which includes Adjusted EBITDA margin,
Pro Forma Diluted EPS and net total leverage ratio to their most
directly comparable GAAP measures because certain items that impact
these measures are not within its control and are subject to
constant change. The company is unable to predict with reasonable
certainty the ultimate timing or amount of items such as income
taxes, unusual gains and losses, transaction costs and purchase
accounting fair value adjustments and their impact on its financial
statements without unreasonable effort. These items are uncertain,
depend on various factors, and could materially impact the
Company’s forward-looking guidance on GAAP measures.
The above forward-looking statements reflect
Presidio’s expectations as of today’s date. Given the number of
risk factors, uncertainties and assumptions discussed below, actual
results may differ materially. Presidio does not intend to update
its forward-looking statements until its next quarterly results
announcement, other than in publicly available statements.
Refer to the Safe Harbor Statement below for additional information
regarding forward-looking statements.
About Non-GAAP and Pro Forma Financial
Measures
Our management regularly monitors certain
financial measures to track the progress of our business against
internal goals and targets. In addition to financial information
presented in accordance with GAAP, management uses Adjusted EBITDA,
Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma
Diluted EPS and Free Cash Flow (collectively, “non-GAAP measures”,
as further described below) in its evaluation of past performance
and prospects for the future. These non-GAAP measures should be
considered in addition to, not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. They are not
measurements of our financial performance under GAAP and should not
be considered as alternatives to net income or revenue, as
applicable, or any other performance measures derived in accordance
with GAAP and may not be comparable to other similarly titled
measures of other businesses. These non-GAAP measures have
limitations as analytical tools and you should not consider them in
isolation or as a substitute for analysis of our operating results
as reported under GAAP and they include adjustments for items that
may occur in future periods. However, we believe these adjustments
are appropriate because the amounts recognized can vary
significantly from period to period, do not directly relate to the
ongoing operations of our business and complicate comparisons of
our internal operating results and operating results of other peer
companies over time.
We also adjust certain historical data on a pro
forma basis following certain significant transactions.
Specifically, we have provided a calculation of Pro Forma Adjusted
Net Income to adjust our reported results for the three and nine
months ended March 31, 2018 for:
- the net after-tax interest savings associated with the
borrowing of incremental term loans used for the redemption of the
senior notes in January 2018, as if the transaction occurred on
July 1, 2017; and
- lower after-tax interest expense associated with the term loan
repricing completed in January 2018 as if it occurred on July 1,
2017.
We have also provided a calculation of Pro Forma Adjusted Net
Income to adjust our reported results for the three and nine months
ended March 31, 2019 for higher after-tax interest expense
associated with the incremental term loans used to fund the Share
Repurchase that occurred in September 2018, as if the transaction
occurred on July 1, 2018.
Pro Forma Adjusted Net Income is for
illustrative and informational purposes and is not intended to
represent or be indicative of what our financial condition or
results of operations would have been had the transactions occurred
on the dates indicated. Pro Forma Adjusted Net Income should not be
considered representative of our future financial condition or
results of operations.
Conference Call Information
We have scheduled a conference call
for Wednesday, May 8, 2019, at 5:00 p.m. Eastern Time to
discuss our financial results for the fiscal third quarter ended
March 31, 2019. Financial results will be released after the
close of the U.S. financial markets on May 8, 2019.
Those wishing to participate via webcast should access the call
through Presidio's Investor Relations website
at http://investors.presidio.com. Those wishing to participate
via telephone may dial in at 1-877-407-4018 (USA) or 1-201-689-8471
(International). The conference call replay will be available via
webcast through Presidio's Investor Relations website. The
telephone replay will be available from 8:00 p.m. Eastern
Time on May 8, 2019, through May 15, 2019, by
dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The
replay passcode will be 13689661.
About Presidio
Presidio is a leading North American IT solutions provider
focused on Digital Infrastructure, Cloud and Security solutions to
create agile, secure infrastructure platforms for its customers. We
deliver this technology expertise through a full life cycle model
of professional, managed, and support services including strategy,
consulting, implementation and design. By taking the time to deeply
understand how our clients define success, we help them harness
technology advances, simplify IT complexity and optimize their
environments today while enabling future applications, user
experiences, and revenue models. As of June 30, 2018, we serve
approximately 8,000 middle-market, large, and government
organizations across a diverse range of industries. Approximately
2,900 Presidio professionals, including more than 1,600 technical
engineers, are based in 60+ offices across the United States in a
unique, local delivery model combined with the national scale of a
$2.8 billion dollar industry leader. We are passionate about
driving results for our clients and delivering the highest quality
of service in the industry. Presidio is majority owned by
investment funds managed by affiliates of Apollo Global Management,
LLC (NYSE:APO). For more information visit: www.presidio.com.
Source: Presidio, Inc.
Contact Information
Investor Relations Contact:Ed
Yuen866-232-3762investors@presidio.com
Media Contact:Dori WhiteVice President of Corporate
Marketing212-324-4301doriwhite@presidio.com
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995
This press release contains “forward looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. The use of words such as “anticipates,”
“expects,” “intends,” “plans” and “believes,” among others,
generally identify forward-looking statements. These
forward-looking statements include statements relating to: future
financial performance, business prospects and strategy, anticipated
trends, prospects in the industries in which our businesses operate
and other similar matters. These forward looking statements are
based on management’s current expectations and assumptions about
future events, which are inherently subject to uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
results could differ materially from those contained in these
forward looking statements for a variety of reasons, including,
among others: risks and uncertainties related to the capital
markets, changes in senior management at Presidio, changes in our
relationship with our vendor partners, adverse changes in economic
conditions, risks resulting from a decreased demand for Presidio’s
information technology solutions, risks relating to rapid
technological change in Presidio’s industry, risks relating to the
inability to realize the full amount of our backlog and risks
relating to acquisitions or regulatory changes. Certain of these
and other risks and uncertainties are discussed in Presidio’s
filings with the Securities and Exchange Commission. Other unknown
or unpredictable factors that could also adversely affect our
business, financial condition and results of operations may arise
from time to time. In light of these risks and uncertainties, these
forward looking statements may not prove to be accurate.
Accordingly, you should not place undue reliance on these forward
looking statements, which only reflect the views of our management
as of the date of this press release. We do not undertake to update
these forward-looking statements.
Non-GAAP Reconciliations
The reconciliation of Adjusted EBITDA from Net
income for each of the periods presented is as follows:
|
|
|
|
|
Three months ended March 31, |
|
Nine months ended March 31, |
(in
millions) |
2018 |
|
2019 |
|
2018 |
|
2019 |
Adjusted EBITDA
reconciliation: |
(as adjusted) |
|
|
|
(as adjusted) |
|
|
Net income |
$ |
0.5 |
|
|
$ |
5.0 |
|
|
$ |
119.7 |
|
|
$ |
25.4 |
|
Total depreciation and amortization (1) |
22.1 |
|
|
22.9 |
|
|
66.6 |
|
|
68.1 |
|
Interest and other (income) expense |
23.3 |
|
|
13.3 |
|
|
49.8 |
|
|
38.5 |
|
Income tax expense (benefit) |
(5.6 |
) |
|
1.9 |
|
|
(83.3 |
) |
|
9.4 |
|
EBITDA |
40.3 |
|
|
43.1 |
|
|
152.8 |
|
|
141.4 |
|
Adjustments: |
|
|
|
|
|
|
|
Share-based compensation expense |
3.1 |
|
|
2.3 |
|
|
5.6 |
|
|
6.9 |
|
Purchase accounting adjustments (2) |
0.1 |
|
|
— |
|
|
0.3 |
|
|
0.2 |
|
Transaction costs (3) |
4.2 |
|
|
4.7 |
|
|
6.3 |
|
|
19.2 |
|
Other costs (4) |
1.2 |
|
|
2.6 |
|
|
1.2 |
|
|
5.4 |
|
Total adjustments |
8.6 |
|
|
9.6 |
|
|
13.4 |
|
|
31.7 |
|
Adjusted EBITDA |
$ |
48.9 |
|
|
$ |
52.7 |
|
|
$ |
166.2 |
|
|
$ |
173.1 |
|
Adjusted EBITDA % (5) |
7.5 |
% |
|
7.5 |
% |
|
8.2 |
% |
|
7.8 |
% |
(1) Includes depreciation and amortization
included within total operating expenses and cost of
revenue. (2)
Includes noncash adjustments associated with purchase
accounting.
(3) Includes transaction-related expenses such
as: stay, retention and earnout bonuses, transaction-related
advisory and diligence fees and transaction-related legal,
accounting and tax fees.
(4) Includes a one-time inventory write-off, and
non-recurring sales transformation and business optimization
expenses.
(5) Adjusted EBITDA % represents the ratio of
Adjusted EBITDA to total revenue.
The reconciliation of Adjusted Net Income and
Pro Forma Adjusted Net Income from Net income for each of the
periods presented is as follows:
|
|
|
|
|
Three months ended March 31, |
|
Nine months ended March 31, |
(in
millions) |
2018 |
|
2019 |
|
2018 |
|
2019 |
Adjusted Net Income
reconciliation: |
(as adjusted) |
|
|
|
(as adjusted) |
|
|
Net income |
$ |
0.5 |
|
|
$ |
5.0 |
|
|
$ |
119.7 |
|
|
$ |
25.4 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of intangible assets |
18.3 |
|
|
18.8 |
|
|
55.5 |
|
|
56.4 |
|
Amortization of debt issuance costs |
1.0 |
|
|
0.9 |
|
|
3.6 |
|
|
2.7 |
|
Loss on extinguishment of debt |
13.3 |
|
|
0.5 |
|
|
14.8 |
|
|
1.5 |
|
Share-based compensation expense |
3.1 |
|
|
2.3 |
|
|
5.6 |
|
|
6.9 |
|
Purchase accounting adjustments |
0.1 |
|
|
— |
|
|
0.3 |
|
|
0.2 |
|
Transaction costs |
4.2 |
|
|
4.7 |
|
|
6.3 |
|
|
19.2 |
|
Other costs |
1.2 |
|
|
2.6 |
|
|
1.2 |
|
|
5.4 |
|
Revaluation of federal deferred taxes |
(3.2 |
) |
|
— |
|
|
(92.4 |
) |
|
— |
|
Income tax impact of adjustments (1) |
(11.8 |
) |
|
(5.8 |
) |
|
(24.5 |
) |
|
(17.7 |
) |
Total adjustments |
26.2 |
|
|
24.0 |
|
|
(29.6 |
) |
|
74.6 |
|
Adjusted Net Income |
26.7 |
|
|
29.0 |
|
|
90.1 |
|
|
100.0 |
|
Pro Forma Adjustments: |
|
|
|
|
|
|
|
Interest on notes redeemed, net savings |
0.1 |
|
|
— |
|
|
3.3 |
|
|
— |
|
Interest savings on January 2018 term loan repricing |
0.1 |
|
|
— |
|
|
1.7 |
|
|
— |
|
Interest expense on September 2018 term loan borrowing |
— |
|
|
— |
|
|
— |
|
|
(1.7 |
) |
Income tax impact of adjustments |
(0.1 |
) |
|
— |
|
|
(1.7 |
) |
|
0.5 |
|
Total Pro Forma adjustments |
0.1 |
|
|
— |
|
|
3.3 |
|
|
(1.2 |
) |
Pro Forma Adjusted Net Income |
$ |
26.8 |
|
|
$ |
29.0 |
|
|
$ |
93.4 |
|
|
$ |
98.8 |
|
(1) Includes an estimated tax impact of the
adjustments to Net income at our average statutory rate to arrive
at an appropriate effective tax rate on Adjusted Net Income, except
for (i) the adjustment of certain transaction costs that are
permanently nondeductible for tax purposes and (ii) the impact
of tax-deductible goodwill and intangible assets resulting from
certain historical acquisitions and further adjusted for discrete
tax items such as: the tax benefit associated with excess stock
compensation deductions and the remeasurement of deferred tax
liabilities due to tax rate
changes.
The reconciliation of Pro Forma weighted-average shares - diluted
and Pro Forma Diluted EPS from GAAP weighted-average shares for
each of the periods presented is as follows:
|
|
|
|
|
Three months ended March 31, |
|
Nine months ended March 31, |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
Share count: |
|
|
|
|
|
|
|
Weighted-average shares –
basic |
92,015,710 |
|
|
82,551,383 |
|
|
91,629,703 |
|
|
85,263,588 |
|
Dilutive effect of stock options |
4,901,072 |
|
|
3,932,965 |
|
|
4,938,180 |
|
|
3,989,006 |
|
Weighted-average shares –
diluted |
96,916,782 |
|
|
86,484,348 |
|
|
96,567,883 |
|
|
89,252,594 |
|
Pro Forma share adjustment for share repurchase (1) |
— |
|
|
— |
|
|
— |
|
|
(2,903,285 |
) |
Pro Forma weighted-average shares
– diluted |
96,916,782 |
|
|
86,484,348 |
|
|
96,567,883 |
|
|
86,349,309 |
|
|
|
|
|
|
|
|
|
|
(as adjusted) |
|
|
|
(as adjusted) |
|
|
Diluted EPS |
$ |
0.01 |
|
|
$ |
0.06 |
|
|
$ |
1.24 |
|
|
$ |
0.28 |
|
Pro Forma Diluted EPS |
$ |
0.28 |
|
|
$ |
0.34 |
|
|
$ |
0.97 |
|
|
$ |
1.14 |
|
(1) Includes an adjustment to reflect the
10,750,000 shares repurchased during the period as if the
repurchase had occurred at the beginning of the period that are not
already reflected in the basic weighted-average shares
presented.
We define free cash flow as our net cash provided by operating
activities adjusted to: (i) include the net change in accounts
payable - floor plan, (ii) include the aggregate net cash impact of
our leasing business, (iii) include purchases of property and
equipment, and (iv) exclude cash payments for acquisition-related
earnout bonuses.
The following table presents the Aggregate net
cash impact of our leasing business for the three and nine months
ended March 31, 2019 and 2018:
|
Three months ended March 31, |
|
Nine months ended March 31, |
(in
millions) |
2018 |
|
2019 |
|
2018 |
|
2019 |
Additions of equipment under
sales-type and direct financing leases |
$ |
(30.9 |
) |
|
$ |
(39.9 |
) |
|
$ |
(80.6 |
) |
|
$ |
(122.8 |
) |
Proceeds from collection of
financing receivables |
0.8 |
|
|
4.1 |
|
|
3.0 |
|
|
6.8 |
|
Additions to equipment under
operating leases |
(0.3 |
) |
|
(0.1 |
) |
|
(1.5 |
) |
|
(0.3 |
) |
Proceeds from disposition of
equipment under operating leases |
— |
|
|
0.5 |
|
|
0.7 |
|
|
0.6 |
|
Proceeds from the discounting
of financing receivables |
34.5 |
|
|
50.1 |
|
|
81.5 |
|
|
141.4 |
|
Retirements of discounted
financing receivables |
(3.2 |
) |
|
(4.1 |
) |
|
(5.7 |
) |
|
(21.6 |
) |
Aggregate net cash impact of leasing business |
$ |
0.9 |
|
|
$ |
10.6 |
|
|
$ |
(2.6 |
) |
|
$ |
4.1 |
|
|
The following table presents reconciliation of
Free Cash Flow from Net cash provided by operating activities for
three and nine months ended March 31, 2019 and 2018:
|
Three months ended March 31, |
|
Nine months ended March 31, |
(in
millions) |
2018 |
|
2019 |
|
2018 |
|
2019 |
Net cash provided by operating
activities |
$ |
18.1 |
|
|
$ |
30.5 |
|
|
$ |
142.7 |
|
|
$ |
106.6 |
|
Adjustments to reconcile to
Free Cash Flow: |
|
|
|
|
|
|
|
Net change in accounts payable - floor plan |
10.2 |
|
|
(13.5 |
) |
|
(55.1 |
) |
|
(28.3 |
) |
Aggregate net cash impact of leasing business |
0.9 |
|
|
10.6 |
|
|
(2.6 |
) |
|
4.1 |
|
Purchases of property and equipment |
(3.3 |
) |
|
(3.0 |
) |
|
(10.5 |
) |
|
(11.3 |
) |
Payments of acquisition-related earnout bonuses |
— |
|
|
2.0 |
|
|
— |
|
|
2.0 |
|
Total adjustments |
7.8 |
|
|
(3.9 |
) |
|
(68.2 |
) |
|
(33.5 |
) |
Free Cash Flow |
$ |
25.9 |
|
|
$ |
26.6 |
|
|
$ |
74.5 |
|
|
$ |
73.1 |
|
|
|
PRESIDIO, INC.
Consolidated Balance Sheets (in millions,
except share data)
|
|
|
|
|
As of June 30, 2018 |
|
As of March 31, 2019 |
Assets |
(as adjusted) |
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
37.0 |
|
|
$ |
29.0 |
|
Accounts receivable, net |
608.7 |
|
|
600.5 |
|
Unbilled accounts receivable, net |
171.5 |
|
|
210.2 |
|
Financing receivables, current portion |
88.3 |
|
|
97.0 |
|
Inventory |
27.7 |
|
|
27.4 |
|
Prepaid expenses and other current assets |
112.5 |
|
|
112.8 |
|
Total current assets |
1,045.7 |
|
|
1,076.9 |
|
Property and equipment, net |
35.9 |
|
|
36.4 |
|
Financing receivables, less
current portion |
116.8 |
|
|
148.4 |
|
Goodwill |
803.7 |
|
|
803.7 |
|
Identifiable intangible assets,
net |
700.3 |
|
|
643.8 |
|
Other assets |
33.9 |
|
|
92.9 |
|
Total assets |
$ |
2,736.3 |
|
|
$ |
2,802.1 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current Liabilities |
|
|
|
Current maturities of long-term debt |
$ |
— |
|
|
$ |
— |
|
Accounts payable – trade |
457.7 |
|
|
493.0 |
|
Accounts payable – floor plan |
210.6 |
|
|
182.4 |
|
Accrued expenses and other current liabilities |
228.2 |
|
|
255.9 |
|
Discounted financing receivables, current portion |
85.2 |
|
|
95.1 |
|
Total current liabilities |
981.7 |
|
|
1,026.4 |
|
Long-term debt, net of debt
issuance costs and current maturities |
671.2 |
|
|
757.7 |
|
Discounted financing receivables,
less current portion |
108.6 |
|
|
138.9 |
|
Deferred income tax
liabilities |
180.5 |
|
|
179.6 |
|
Other liabilities |
34.0 |
|
|
71.6 |
|
Total liabilities |
1,976.0 |
|
|
2,174.2 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ Equity |
|
|
|
Preferred stock: |
|
|
|
$0.01 par value; 100 shares authorized and zero shares issued and
outstanding at March 31, 2019 and June 30, 2018 |
— |
|
|
— |
|
Common stock: |
|
|
|
$0.01 par value; 250,000,000 shares authorized, 82,661,122 shares
issued and outstanding at March 31, 2019 and 92,853,983 shares
issued and outstanding at June 30, 2018 |
0.9 |
|
|
0.8 |
|
Additional paid-in capital |
644.3 |
|
|
496.5 |
|
Retained earnings |
115.1 |
|
|
130.6 |
|
Total stockholders’ equity |
760.3 |
|
|
627.9 |
|
Total liabilities and stockholders’ equity |
$ |
2,736.3 |
|
|
$ |
2,802.1 |
|
|
PRESIDIO, INC.
Consolidated Statements of Operations (in
millions, except share and per-share data)
|
|
|
|
|
Three months ended March 31, |
|
Nine months ended March 31, |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
Revenue |
(as adjusted) |
|
|
|
(as adjusted) |
|
|
Product |
$ |
528.8 |
|
|
$ |
574.6 |
|
|
$ |
1,658.5 |
|
|
$ |
1,841.4 |
|
Service |
124.6 |
|
|
130.6 |
|
|
375.4 |
|
|
381.5 |
|
Total revenue |
653.4 |
|
|
705.2 |
|
|
2,033.9 |
|
|
2,222.9 |
|
Cost of revenue |
|
|
|
|
|
|
|
Product |
413.3 |
|
|
442.9 |
|
|
1,303.7 |
|
|
1,445.5 |
|
Service |
100.5 |
|
|
105.6 |
|
|
296.6 |
|
|
307.0 |
|
Total cost of revenue |
513.8 |
|
|
548.5 |
|
|
1,600.3 |
|
|
1,752.5 |
|
Gross
margin |
139.6 |
|
|
156.7 |
|
|
433.6 |
|
|
470.4 |
|
Operating expenses |
|
|
|
|
|
|
|
Selling expenses |
70.5 |
|
|
79.8 |
|
|
201.0 |
|
|
225.9 |
|
General and administrative expenses |
26.1 |
|
|
30.3 |
|
|
77.8 |
|
|
87.4 |
|
Transaction costs |
4.2 |
|
|
4.7 |
|
|
6.3 |
|
|
19.2 |
|
Depreciation and amortization |
20.6 |
|
|
21.7 |
|
|
62.3 |
|
|
64.6 |
|
Total operating expenses |
121.4 |
|
|
136.5 |
|
|
347.4 |
|
|
397.1 |
|
Operating
income |
18.2 |
|
|
20.2 |
|
|
86.2 |
|
|
73.3 |
|
Interest and other (income)
expense |
|
|
|
|
|
|
|
Interest expense |
10.1 |
|
|
13.1 |
|
|
35.3 |
|
|
37.4 |
|
Loss on extinguishment of debt |
13.3 |
|
|
0.5 |
|
|
14.8 |
|
|
1.5 |
|
Other (income) expense, net |
(0.1 |
) |
|
(0.3 |
) |
|
(0.3 |
) |
|
(0.4 |
) |
Total interest and other (income) expense |
23.3 |
|
|
13.3 |
|
|
49.8 |
|
|
38.5 |
|
Income (loss) before
income taxes |
(5.1 |
) |
|
6.9 |
|
|
36.4 |
|
|
34.8 |
|
Income tax expense (benefit) |
(5.6 |
) |
|
1.9 |
|
|
(83.3 |
) |
|
9.4 |
|
Net income |
$ |
0.5 |
|
|
$ |
5.0 |
|
|
$ |
119.7 |
|
|
$ |
25.4 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.06 |
|
|
$ |
1.31 |
|
|
$ |
0.30 |
|
Diluted |
$ |
0.01 |
|
|
$ |
0.06 |
|
|
$ |
1.24 |
|
|
$ |
0.28 |
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
92,015,710 |
|
|
82,551,383 |
|
|
91,629,703 |
|
|
85,263,588 |
|
Diluted |
96,916,782 |
|
|
86,484,348 |
|
|
96,567,883 |
|
|
89,252,594 |
|
|
|
|
|
|
|
|
|
Cash dividends per common share |
$ |
— |
|
|
$ |
0.04 |
|
|
$ |
— |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRESIDIO, INC.
Consolidated Statements of Cash Flows (in
millions)
|
|
|
|
|
Three months ended March 31, |
|
Nine months ended March 31, |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
Net cash provided by operating activities |
$ |
18.1 |
|
|
$ |
30.5 |
|
|
$ |
142.7 |
|
|
$ |
106.6 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Acquisition of businesses, net of cash and cash equivalents
acquired |
— |
|
|
— |
|
|
(9.5 |
) |
|
— |
|
Proceeds from collection of escrow related to acquisition of
business |
— |
|
|
— |
|
|
0.2 |
|
|
— |
|
Additions of equipment under sales-type and direct financing
leases |
(30.9 |
) |
|
(39.9 |
) |
|
(80.6 |
) |
|
(122.8 |
) |
Proceeds from collection of financing receivables |
0.8 |
|
|
4.1 |
|
|
3.0 |
|
|
6.8 |
|
Additions to equipment under operating leases |
(0.3 |
) |
|
(0.1 |
) |
|
(1.5 |
) |
|
(0.3 |
) |
Proceeds from disposition of equipment under operating leases |
— |
|
|
0.5 |
|
|
0.7 |
|
|
0.6 |
|
Purchases of property and equipment |
(3.3 |
) |
|
(3.0 |
) |
|
(10.5 |
) |
|
(11.3 |
) |
Net cash used in investing activities |
(33.7 |
) |
|
(38.4 |
) |
|
(98.2 |
) |
|
(127.0 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock under share-based
compensation plans |
1.4 |
|
|
2.3 |
|
|
5.9 |
|
|
3.8 |
|
Common stock repurchased |
— |
|
|
— |
|
|
— |
|
|
(158.6 |
) |
Dividends paid |
— |
|
|
(3.3 |
) |
|
— |
|
|
(6.6 |
) |
Proceeds from the discounting of financing receivables |
34.5 |
|
|
50.1 |
|
|
81.5 |
|
|
141.4 |
|
Retirements of discounted financing receivables |
(3.2 |
) |
|
(4.1 |
) |
|
(5.7 |
) |
|
(21.6 |
) |
Deferred financing costs |
(0.6 |
) |
|
(0.5 |
) |
|
(1.2 |
) |
|
(0.8 |
) |
Repayments of senior and subordinated notes |
(135.7 |
) |
|
— |
|
|
(135.7 |
) |
|
— |
|
Borrowings of term loans, net of original issue discount |
138.2 |
|
|
— |
|
|
138.2 |
|
|
158.1 |
|
Repayments of term loans |
(25.0 |
) |
|
(25.0 |
) |
|
(75.0 |
) |
|
(75.0 |
) |
Net change in accounts payable — floor plan |
10.2 |
|
|
(13.5 |
) |
|
(55.1 |
) |
|
(28.3 |
) |
Net cash provided by (used in) financing activities |
19.8 |
|
|
6.0 |
|
|
(47.1 |
) |
|
12.4 |
|
Net decrease in cash and cash equivalents |
4.2 |
|
|
(1.9 |
) |
|
(2.6 |
) |
|
(8.0 |
) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
Beginning of the period |
20.7 |
|
|
30.9 |
|
|
27.5 |
|
|
37.0 |
|
End of the period |
$ |
24.9 |
|
|
$ |
29.0 |
|
|
$ |
24.9 |
|
|
$ |
29.0 |
|
Supplemental disclosures of cash
flow information |
|
|
|
|
|
|
|
Cash paid during the period
for: |
|
|
|
|
|
|
|
Interest |
$ |
13.4 |
|
|
$ |
12.0 |
|
|
$ |
36.0 |
|
|
$ |
32.3 |
|
Income taxes, net of refunds |
$ |
7.0 |
|
|
$ |
1.6 |
|
|
$ |
29.9 |
|
|
$ |
15.9 |
|
Reduction of discounted lease
assets and liabilities |
$ |
26.6 |
|
|
$ |
29.8 |
|
|
$ |
80.2 |
|
|
$ |
87.1 |
|
Presidio (NASDAQ:PSDO)
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