SOURCE: Great American Group, Inc.

Great American Group, Inc.

May 14, 2013 16:00 ET

Great American Group Announces First Quarter 2013 Financial Results

WOODLAND HILLS, CA--(Marketwired - May 14, 2013) - Great American Group, Inc.® (OTCBB: GAMR) ("Great American Group" or the "Company"), a leading provider of asset disposition, valuation and appraisal services, today announced financial results for its first quarter ended March 31, 2013.

For the first quarter ended March 31, 2013, the Company reported total revenues of $21.0 million, an increase from $19.3 million in the first quarter of 2012. Revenues from services and fees increased to $18.6 million, compared to $16.9 million in the same period the prior year. Revenues from sale of goods were $2.3 million, compared to $2.4 million in the first quarter of 2012. The increase in total revenues during the quarter was primarily due to an increase in revenues of $2.3 million in the Company's UK retail store segment resulting from the May 2012 investments in Shoon and consolidation of Shoon's operating results. This was offset by a decrease in revenues in the auction and liquidation segment of $0.5 million and a decrease in revenues in the valuation and appraisal services segment of $0.1 million as compared to the prior year period.

"Our first quarter 2013 revenues increased 8.5% to $21.0 million and net income increased to $1.3 million, from $1.1 million in the prior year's quarter," said Andrew Gumaer, Chief Executive Officer of Great American Group. "During the first quarter, our results of operations were favorably impacted from our participation in the joint venture involving the liquidation of inventory for the going-out-of-business sale of Fashion Bug, a 568 store women's apparel retailer."

Direct cost of services were $6.2 million, compared to $6.3 million a year ago. Selling, general and administrative expenses were $10.9 million, compared to $8.5 million in the first quarter of 2012. The increase in selling, general and administrative expenses was primarily attributed to an increase in expenses incurred as a result of the consolidation of Shoon's operations from our investment in May 2012. The increase in selling, general and administrative was also impacted by an increase in headcount in our valuation and appraisal segment, and the ongoing expansion of our UK operations.

Interest expense during each of the first quarters in 2013 and 2012 was $0.6 million. Interest expense included $0.5 million of interest expense on the notes payable to the Great American Members and Phantom Equity holders, and $0.1 million of interest expense on our borrowings under the Company's revolving credit facility and letter of credit fees and amortization of deferred loan fees on our asset based credit facility.

Operating income for the first quarter of 2013 was $2.3 million, compared to $2.4 million during the first quarter of 2012.

Pretax income was $1.7 million compared to pretax income of $1.8 million in the first quarter of 2012. Net income in the first quarter of 2013 was $1.3 million compared to net income of $1.1 million for the first quarter of 2012. Diluted net earnings per share was $0.04 in the first quarter of 2013 and 2012. 

Financial Position
At March 31, 2013, the Company had $31.1 million in cash and cash equivalents and $0.2 million of restricted cash. 

Conference Call
The Company will host a conference call today at 4:30 p.m. ET, to discuss results for the first quarter ended March 31, 2013. To participate in the event by telephone, please dial (877) 407-0789, 10 minutes prior to the start time (to allow time for registration) and use conference ID # 413447. International callers should dial (201) 689-8562. A digital replay will be available beginning May 14, 2013, at 7:30 p.m. ET, through May 21, 2013, at 11:59 p.m. ET. To access the replay, dial (877) 870-5176 (U.S.), and use passcode 413447. International callers should dial (858) 384-5517 and enter the same passcode.

The call will also be broadcast over the Internet and can be accessed on the Investor Relations section of the Company's website at www.greatamerican.com. A replay of the call will also be available for 90 days on the website.

About Great American Group, Inc. (OTCBB: GAMR)
Great American Group is a leading provider of asset disposition and auction solutions, advisory and valuation services, capital investment, and real estate advisory services for an extensive array of companies. A trusted strategic partner at every stage of the business lifecycle, Great American Group efficiently deploys resources with sector expertise to assist companies, lenders, capital providers, private equity investors and professional service firms in maximizing the value of their assets. The company has in-depth experience within the retail, industrial, real estate, healthcare, energy and technology industries. The corporate headquarters is located in Woodland Hills, Calif. with additional offices in Atlanta, Boston, Charlotte, N.C., Chicago, Dallas, New York, San Francisco, London and Milan. For more information, call (818) 884-3737 or visit www.greatamerican.com.

Forward-Looking Statements
This press release may contain forward-looking statements by Great American Group that are not based on historical fact, including, without limitation, statements containing the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions and statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in Great American Group's filings with the SEC, including, without limitation, the risks described in Great American Group's proxy statement/prospectus filed with the SEC on July 19, 2012, and its Annual Report on Form 10-K for the year ended December 31, 2012. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and Great American Group undertakes no duty to update this information.

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including Adjusted EBITDA, may be considered non-GAAP financial measures. Great American Group believes this information is useful to investors because it provides a basis for measuring Great American Group's performance against the contingent share earnout provisions in the AAMAC transaction. In addition, Great American Group's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating Great American Group's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by Great American Group may not be comparable to similarly titled amounts reported by other companies.

   
   
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES  
Condensed Consolidated Balance Sheets  
(Dollars in thousands, except par value)  
   
                 
      March 31,       December 31,  
      2013       2012  
      (Unaudited)          
Assets                
Current assets:                
  Cash and cash equivalents   $ 31,093     $ 18,721  
  Restricted cash     230       7,923  
  Accounts receivable, net     9,050       16,591  
  Advances against customer contracts     2,218       2,441  
  Inventory     2,638       2,216  
  Goods held for sale or auction     10,239       10,196  
  Due from related party     373       -  
  Note receivable - related party     415       611  
  Deferred income taxes     3,339       4,114  
  Prepaid expenses and other current assets     1,608       1,145  
    Total current assets     61,203       63,958  
Property and equipment, net     1,036       970  
Goodwill     5,688       5,688  
Other intangible assets, net     140       140  
Deferred income taxes     9,252       9,484  
Other assets     275       343  
    Total assets   $ 77,594     $ 80,583  
Liabilities and Equity (Deficit)                
Current liabilities:                
  Accounts payable and accrued liabilities   $ 16,058     $ 16,886  
  Auction and liquidation proceeds payable     246       864  
  Mandatorily redeemable noncontrolling interests     2,535       2,856  
  Revolving credit facility     1,728       2,304  
  Current portion of long-term debt     1,724       1,724  
  Notes payable     8,458       9,628  
  Current portion of capital lease obligation     5       13  
    Total current liabilities     30,754       34,275  
Long-term debt, net of current portion     50,483       50,483  
    Total liabilities     81,237       84,758  
Commitments and contingencies                
Great American Group, Inc. stockholders' equity (deficit):                
  Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued     -       -  
  Common stock, $0.0001 par value; 135,000,000 shares authorized; 30,002,975 issued and outstanding as of March 31, 2013 and December 31, 2012, respectively     4       4  
  Additional paid-in capital     3,082       3,082  
  Retained earnings (deficit)     (6,380 )     (7,669 )
  Accumulated other comprehensive loss     (875 )     (520 )
    Total Great American Group, Inc. stockholders' equity (deficit)     (4,169 )     (5,103 )
Noncontrolling interests     526       928  
    Total equity (deficit)     (3,643 )     (4,175 )
    Total liabilities and equity (deficit)   $ 77,594     $ 80,583  
                 
                 
   
   
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES  
Condensed Consolidated Statements of Operations  
(Unaudited)  
(Dollars in thousands, except share data)  
                 
      Three Months Ended
March 31,
 
      2013       2012  
                 
Revenues:                
  Services and fees   $ 18,637     $ 16,900  
  Sale of goods     2,317       2,420  
    Total revenues     20,954       19,320  
Operating expenses:                
  Direct cost of services     6,152       6,252  
  Cost of goods sold     1,520       2,149  
  Selling, general and administrative expenses     10,937       8,519  
    Total operating expenses     18,609       16,920  
    Operating income     2,345       2,400  
Other income (expense):                
  Interest income     2       79  
  Loss from equity investment in Great American Real Estate, LLC     -       (80 )
  Interest expense     (634 )     (627 )
    Income before income taxes     1,713       1,772  
Provision for income taxes     (778 )     (705 )
    Net income     935       1,067  
Net loss attributable to noncontrolling interests     (354 )     -  
    Net income attributable to Great American Group, Inc.   $ 1,289     $ 1,067  
                 
Basic income per share   $ 0.04     $ 0.04  
Diluted income per share   $ 0.04     $ 0.04  
                 
Weighted average basic shares outstanding     28,682,975       28,681,609  
Weighted average diluted shares outstanding     29,656,430       29,534,610  
                 
                 
   
   
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
(Dollars in thousands)  
                 
      Three Months Ended
March 31,
 
      2013       2012  
Cash flows from operating activities:                
  Net income   $ 935     $ 1,067  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation and amortization     707       201  
    Impairment of goods held for sale or auction     22       21  
    Effect of foreign currency on operations     (64 )     64  
    Non-cash interest     -       (77 )
    Loss from equity investment in Great American Real Estate, LLC     -       80  
    Deferred income taxes     1,007       578  
    Income allocated to mandatorily redeemable noncontrolling interests     291       369  
    Change in operating assets and liabilities:                
      Accounts receivable and advances against customer contracts     7,331       (394 )
      Due from related party     (373 )     -  
      Inventory     (588 )     -  
      Goods held for sale or auction     (589 )     399  
      Loan receivable     -       3,279  
      Prepaid expenses and other assets     (55 )     (371 )
      Accounts payable and accrued expenses     (356 )     1,886  
      Auction and liquidation proceeds payable     (618 )     406  
        Net cash provided by operating activities     7,650       7,508  
Cash flows from investing activities:                
  Purchases of property and equipment     (247 )     (65 )
  Decrease in note receivable - related party     196       -  
  Equity investment in Great American Real Estate, LLC     -       (80 )
  Decrease (increase) in restricted cash     7,693       (256 )
         Net cash provided by (used in) investing activities     7,642       (401 )
Cash flows from financing activities:                
  Repayments of capital lease obligations     (8 )     (7 )
  Repayment of revolving line of credit     (576 )     (327 )
  Repayments of notes payable     (1,170 )     (106 )
  Distribution to noncontrolling interests     (612 )     (1,039 )
        Net cash used in financing activities     (2,366 )     (1,479 )
        Increase in cash and cash equivalents     12,926       5,628  
        Effect of foreign currency on cash     (554 )     144  
        Net increase in cash and cash equivalents     12,372       5,772  
Cash and cash equivalents, beginning of period     18,721       15,034  
Cash and cash equivalents, end of period   $ 31,093     $ 20,806  
Supplemental disclosures:                
  Interest paid   $ 57     $ 704  
  Taxes paid   $ 163     $ -  
                 
                 
   
   
GREAT AMERICAN GROUP, INC. AND SUBSIDIARIES  
Adjusted EBITDA Reconciliation  
(Dollars in thousands)  
             
    Three Months Ended  
    March 31,  
    2013     2012  
Adjusted EBITDA Reconciliation:            
             
Net income (loss) as reported $ 1,289   $ 1,067  
             
Adjustments:            
  Provision (benefit) for income taxes   778     705  
  Interest expense   634     627  
  Interest income   (2 )   (79 )
  Depreciation and amortization   707     201  
             
  Total EBITDA adjustments   2,117     1,454  
             
Adjusted EBITDA $ 3,406   $ 2,521  
             
             

Contact Information

  • Investor Contacts:
    Great American Group
    Phil Ahn
    Chief Financial Officer & Chief Operating Officer
    818-884-3737

    Addo Communications
    Patricia Nir
    310-829-5400