ARC Group Worldwide, Inc. Reports Fiscal Year First Quarter 2017 Results

DELAND, FL--(Marketwired - November 10, 2016) - ARC Group Worldwide, Inc. ("ARC" and the "Company") (NASDAQ: ARCW), a leading global provider of advanced manufacturing and 3D printing solutions, today reported its results for its fiscal first quarter 2017, for the period ending October 2, 2016.

Highlights for the first quarter fiscal year 2017, compared to the first quarter fiscal year 2016:

• Sales from continuing operations of $26.8 million, an increase of 13.5% and the Company's fourth consecutive quarter of sequential revenue growth;
• Gross profit of $5.0 million, an increase of 21.9%; and
• Adjusted EBITDA of $2.9 million, an increase of 11.4%.

Quarterly Summary

Fiscal first quarter 2017 revenue from continuing operations was $26.8 million, a 13.5% increase compared to the fiscal first quarter of 2016. The increase, the Company's fourth consecutive quarter of sequential organic sales growth, was driven by continued momentum from ARC's new sales efforts.

Gross profit for the period was $5.0 million, an increase of 21.9%, while gross margins were 18.6%, an improvement of 128 basis points compared to the prior year period.

Adjusted EBITDA increased 11.4% during the fiscal first quarter to $2.9 million, compared to $2.6 million in the prior comparable period. Similar to the prior sequential quarter, Adjusted EBITDA growth was muted, the product of increased costs primarily attributable to new product programs in the process of launching.

Net income for the fiscal first quarter increased to $3.6 million compared to a net loss of $0.5 million in the prior year period as a result of a gain on the sale of our non-core subsidiary and income from the discontinued operations, net of tax, of $4.2 million.

Management Commentary

Jason Young, CEO, commented, "Similar to last quarter, we saw increased progress in growing our organic sales, which is primarily a product of our new customer driven culture. We also continue to make headway in growing our market share, as we focus on building strategic relationships with key customers. While margins continue to be muted due to the start-up costs and drag associated with the launch of new programs, we expect margins to improve as these programs move to full production. The biggest opportunity for us now, is to increase capacity in our new product development, so we can more quickly and efficiently launch the new opportunities that have resulted from our customer driven approach. At this point, given the sales pipeline we have built, a key driver of our increased growth will be our ability to accelerate and expand new product launches, a challenge we are committed to solving."

GAAP to Non-GAAP Reconciliation

EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings and Adjusted Earnings Per Share are non-GAAP financial measures. EBITDA Margin and Adjusted EBITDA Margin are calculated by dividing EBITDA and Adjusted EBITDA, respectively, by sales. The Company has provided non-GAAP financial information to provide additional, meaningful comparisons of current results to prior periods' results by excluding items that the Company does not believe are representative or indicative of its results of operations. Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

The reconciliation to GAAP is as follows (dollars in thousands):

EBITDA excludes interest expense, net and income taxes because these items are associated with our capitalization and tax structures. EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the impact of prior capital expenditure decisions which may not be indicative of future capital expenditure requirements.

The Company defines Adjusted EBITDA as EBITDA excluding the impact of share-based compensation expense and reorganization/transaction expenses, which is in accordance with the Company's bank debt covenants. Shared-based compensation expense relates to the Company's grant of stock options to employees. Reorganization expenses are primarily labor and labor related costs associated with the termination of employees and inventory write-downs as allowed by the Company's bank debt covenants. Transaction expenses are primarily professional fees related to the refinancing of debt and the sale of non-core assets.

Adjusted Earnings removes the impact of share-based compensation expense and reorganization/transaction related expenses.

About ARC Group Worldwide, Inc.

ARC Group Worldwide, Inc. is a global advanced manufacturing and 3D printing service provider focused on accelerating speed-to-market for its customers. ARC utilizes technology to improve automation in manufacturing through robotics, software, and process automation, as well as lean manufacturing to improve efficiency. ARC provides a holistic set of precision manufacturing solutions, from design and prototyping, through full run production. These solutions include metal injection molding, plastic and metal 3D printing, metal stamping, plastic injection molding, clean room injection molding, rapid tooling, thixomolding, antennas, and flanges and forges.

Forward Looking Statements

This press release may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995, which are based on ARC's current expectations, estimates and projections about future events. These include, but are not limited to, statements, if any, regarding business plans, pro-forma statements and financial projections, ARC's ability to expand its services and realize growth. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties, and the general effects of financial, economic, and regulatory conditions affecting our industries. Accordingly, actual results may differ materially. ARC does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information on risks and uncertainties that could affect ARC's business, financial condition and results of operations, readers are encouraged to review Item 1A. - Risk Factors and all other disclosures appearing in ARC's Form 10-K for the fiscal year ended June 30, 2016, as well as other documents ARC files from time to time with the Securities and Exchange Commission.