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Jason Industries Reports Second Quarter 2015 Results

Operational improvements drive margin expansion

Strong cash generation

Reaffirms full year guidance

MILWAUKEE, July 31, 2015 (GLOBE NEWSWIRE) -- Jason Industries, Inc. (NASDAQ:JASN) (NASDAQ:JASNW) today reported second quarter 2015 net sales of $187.6 million, net loss of $0.9 million and diluted loss per share of $0.07. These results included pre-tax restructuring, integration and transaction costs of $2.8 million and pre-tax share based compensation expense of $2.9 million. For the second quarter of 2015 adjusted net income was $3.4 million and adjusted earnings per share was $0.12.

"We achieved solid performance in the second quarter driven by volume strength and margin expansion in Acoustics and Components. Our focus on strong operational execution helped us overcome market softness in Seating and Finishing and continued foreign currency headwinds," commented David Westgate, Jason's Chief Executive Officer. "We also successfully completed our strategic DRONCO acquisition, and our integration efforts are well underway."

Second Quarter 2015 Financial Results (versus the year ago period):

Net sales growth in Acoustics and Components offset market softness in Seating and Finishing, excluding the impact of foreign currency. Net sales of $187.6 million decreased $3.0 million, or 1.6 percent. Net sales were negatively impacted by $7.8 million, or 4.1 percent, of foreign currency translation. Net sales includes $3.5 million, or 1.8 percent, of acquisition growth from our recent acquisition of DRONCO within Finishing. Excluding the impact of foreign currency and acquisitions, organic sales growth was 0.7 percent.

Adjusted EBITDA was $24.9 million, or 13.3 percent of net sales, compared with $23.8 million, or 12.5 percent of net sales. Adjusted EBITDA margin expansion of 80 bps was driven by significant operational improvements in Acoustics and lower input costs on metals products in Components. The Adjusted EBITDA increase of $1.1 million was negatively impacted by $1.0 million, or 4.2 percent, of foreign currency translation.

Net loss was $0.9 million compared with net income of $5.2 million. Adjusted net income was $3.4 million, or 1.8 percent of net sales, compared with $9.9 million, or 5.2 percent of net sales. The Business Combination increased depreciation and amortization due to fair value accounting and interest due to the higher level of debt assumed. Adjusted net income was negatively impacted by higher pre-tax depreciation of $2.7 million, amortization of $2.1 million and interest expense of $4.2 million.

For the six months ended June 26, 2015, net cash provided by operating activities was $21.3 million compared with $4.2 million in the prior year. Operating cash flow improvements were due to lower working capital requirements, timing of quarterly interest payments and lower incentive compensation payments. Capital expenditures were $15.3 million, an increase of $4.3 million, due to higher investment in Acoustics, supporting automotive underbody platform awards and long-term organic growth. Net debt to Adjusted EBITDA on a pro forma trailing twelve-month basis was 5.0x as of the end of the second quarter. Total liquidity as of the end of the second quarter was $78.6 million, comprised of $33.0 million of cash and cash equivalents and $45.6 million of availability on revolving loan facilities globally.

Second Quarter 2015 Segment Results (versus the year ago period):

Seating

Seating net sales of $51.9 million decreased $0.7 million, or 1.3 percent, negatively impacted by foreign currency translation of $0.4 million, or 0.7 percent. Lower volumes in motorcycle and turf care seats were partially offset by volume growth in heavy industry and power sports seating. Adjusted EBITDA was $9.3 million, or 17.9 percent of net sales, compared with $9.6 million, or 18.2 percent of net sales.

Finishing

Finishing net sales of $46.6 million decreased $3.4 million, or 6.9 percent, with a significant negative foreign currency translation impact of $5.9 million, or 11.7 percent. Excluding the impact of foreign currency and acquisitions, organic sales were 2.1 percent lower driven by softer industrial demand in Europe amid economic uncertainty. Adjusted EBITDA was $6.7 million, or 14.4 percent of net sales, compared with $7.5 million, or 15.0 percent of net sales, and was negatively impacted by foreign currency translation of approximately $0.8 million.

Acoustics

Acoustics net sales of $56.0 million decreased $0.9 million, or 1.5 percent, and were negatively impacted by foreign currency translation of $1.5 million, or 2.7 percent. Organic sales growth of 1.2 percent resulted from higher volumes on new platform awards. Adjusted EBITDA was $7.3 million, or 13.1 percent of net sales, compared with $5.2 million, or 9.2 percent of net sales. Adjusted EBITDA growth and margin improvement resulted from continuing operational efficiencies and lower raw material pricing.

Components

Net sales in Components of $33.0 million increased 6.4 percent with strong volume growth in metal rail freight car products. Adjusted EBITDA was $5.5 million, or 16.8 percent of net sales, compared with $4.5 million, or 14.4 percent of net sales, with margin expansion driven by favorable mix of higher margin metals components and lower steel prices.

Fiscal 2015 Outlook:

"We remain focused on execution, cash flow generation and strengthening our balance sheet," Westgate continued. "Our initiatives on growth, operational excellence, and achieving synergies with the integration of DRONCO remain on-track."

For 2015, Jason reaffirms its previous outlook of net sales in the range of $708 to $723 million and Adjusted EBITDA in the range of $87 to $91 million. On a constant currency basis, expected organic sales growth would be in the range of 2 to 4 percent.

Conference Call:

The Company will hold a conference call to discuss its second quarter results today at 10:00 a.m. Eastern time. A live webcast of the call may be accessed over the Internet from the Company's Investor Relations website at investors.jasoninc.com. Participants should follow the instructions provided on the website to download and install the necessary audio applications. The conference call is also available by dialing 877-407-3982 (domestic) or 201-493-6780 (international). Participants should ask for the Jason Industries second quarter earnings conference call.

A replay of the live conference call will be available beginning approximately one hour after the call. The replay will be available on the Company's website or by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the replay passcode 13614934. The telephonic replay will be available until 11:59 pm (Eastern Time), August 7, 2015. The online replay will be available on the website immediately following the call.

About Jason Industries

The Company is the parent company to a global family of manufacturing leaders within the seating, finishing, components and automotive acoustics markets, including Assembled Products (Buffalo Grove, Ill.), Janesville Acoustics (Southfield, Mich.), Metalex (Libertyville, Ill.), Milsco (Milwaukee, Wis.), Osborn (Richmond, Ind. and Burgwald, Germany) and Sealeze (Richmond, Va.). All Jason companies utilize the Jason Business System, a collaborative manufacturing strategy applicable to a diverse group of companies that includes business principles and processes to ensure best-in-class results and collective strength. Headquartered in Milwaukee, Wisconsin, Jason employs more than 4,400 individuals in 14 countries.

Forward Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "expect," "estimate," "plan," "outlook," and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include projected financial information. Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the Company's businesses are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements.

The forward-looking statements contained in this press release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results and cause them to differ materially from those anticipated in the forward-looking statements.

More information on potential factors that could affect the Company's financial condition and operating results is included in the "Risk Factors" section and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and in the Company's other filings with the Securities and Exchange Commission. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP and Other Company Information

Included in this press release are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. Because the Company's calculations of these measures may differ from similar measures used by other companies, you should be careful when comparing the Company's non-GAAP financial measures to those of other companies. In this earnings release, we disclose the following non-GAAP financial measures, and we reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin - The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization and (gain)/loss on disposal of property, plant and equipment. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including long-lived asset impairment charges, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, sponsor fees and expenses, and non-cash share based compensation expense. The Company defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net sales.

Management believes that Adjusted EBITDA provides a clear picture of the Company's operating results by eliminating expenses and income that are not reflective of the underlying business performance. The Company uses this metric to facilitate a comparison of operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company's internal plans, budgets and forecasts use Adjusted EBITDA as a key metric and the Company uses this measure to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.

Adjusted Net Income and Adjusted Earnings Per Share - The Company defines Adjusted Net Income and Adjusted Earnings Per Share (calculated on a diluted basis) as net income and earnings per share (as defined by GAAP), excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including long-lived asset impairment charges, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, sponsor fees and expenses, and non-cash share based compensation expense, net of their income tax impact. The tax rates used to calculate adjusted net income and adjusted earnings per share are based on a transaction specific basis. Adjusted earnings per share includes the impact of share-based compensation to the extent it is dilutive in each period. Adjusted earnings per share includes the impact to Jason Industries common shares upon conversion of JPHI Holdings Inc. rollover shares and conversion of preferred stock. Management believes that Adjusted Net Income and Adjusted Earnings Per Share are useful in assessing the Company's financial performance by eliminating expenses and income that are not reflective of the underlying business performance.

Net Debt to Adjusted EBITDA - The Company defines Net Debt to Adjusted EBITDA as current and long-term debt plus debt discounts less cash and cash equivalents, divided by pro forma Adjusted EBITDA for the trailing twelve months. Pro forma Adjusted EBITDA is calculated as Adjusted EBITDA as reported plus Adjusted EBITDA of acquisitions prior to the date of the acquisition during the trailing twelve months. Management believes that Net Debt to Adjusted EBITDA is useful in assessing the Company's financial leverage.

In addition to these non-GAAP financial measures, we also use the term "organic sales" to refer to GAAP net sales from existing operations excluding (i) sales from acquired businesses recorded prior to the first anniversary of the acquisition ("acquisition sales"), and (ii) the impact of foreign currency translation. The impact of foreign currency translation is calculated as the difference between (a) the period-to-period change in results (excluding acquisitions) and (b) the period-to-period change in results (excluding acquisitions) after applying current period average foreign exchange rates to the prior year period. We use the term "organic sales growth" to refer to the measure of comparing current period organic sales with the corresponding period of the prior year.

On June 30, 2014, the Company completed its acquisition of Jason Partners Holdings Inc. (the "Predecessor") (the "Business Combination"), at which point Jason, the Successor, became a new entity for financial reporting purposes. Accordingly, the consolidated financial statements of the Successor on or after June 30, 2014 are not comparable to the consolidated financial statements of the Predecessor prior to that date. However, for the readers' convenience the Company has combined net sales and Adjusted EBITDA in the period June 30, 2014 through December 31, 2014 with Jason's predecessor net sales and Adjusted EBITDA in the period January 1, 2014 through June 29, 2014. Net sales and Adjusted EBITDA were not significantly affected by acquisition accounting.

Jason Industries, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
Successor Predecessor
Three Months
Ended
Six Months
Ended
Three Months
Ended
Six Months
Ended
June 26, 2015 June 26, 2015 June 27, 2014 June 27, 2014
Net sales $ 187,578 $ 363,414 $ 190,615 $ 377,151
Cost of goods sold 145,954 282,843 148,993 293,485
Gross profit 41,624 80,571 41,622 83,666
Selling and administrative expenses 32,521 64,014 27,263 55,175
(Gain) loss on disposals of property, plant and equipment -- net (4) 22 215 338
Restructuring 1,010 2,714 1,907 2,554
Transaction-related expenses 710 886 3,233 4,774
Operating income 7,387 12,935 9,004 20,825
Interest expense (7,918) (15,424) (3,724) (7,219)
Equity income 260 542 516 831
Gain from sale of joint ventures 3,508
Other income - net 50 85 29 107
(Loss) income before income taxes (221) (1,862) 5,825 18,052
Tax provision (benefit) 644 (103) 588 5,080
Net (loss) income $ (865) $ (1,759) $ 5,237 $ 12,972
Less net loss attributable to noncontrolling interests (146) (297)
Net (loss) income attributable to Jason Industries $ (719) $ (1,462) $ 5,237 $ 12,972
Accretion of preferred stock dividends 900 1,800
Net (loss) income available to common shareholders of Jason Industries $ (1,619) $ (3,262) $ 5,237 $ 12,972
Net (loss) income per share available to common shareholders of Jason Industries:
Basic and diluted $ (0.07) $ (0.15) $ 5,237 $ 12,972
Weighted average number of common shares outstanding:
Basic and diluted 22,011 22,001 1 1
Jason Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
Successor
June 26, 2015 December 31, 2014
Assets
Current assets
Cash and cash equivalents $ 32,967 $ 62,279
Accounts receivable - net 102,418 80,080
Inventories - net 82,994 80,546
Deferred income taxes 10,750 11,105
Other current assets 24,199 23,087
Total current assets 253,328 257,097
Property, plant and equipment - net 197,799 176,478
Goodwill 163,586 156,106
Other intangible assets - net 202,871 198,683
Other assets - net 20,810 21,040
Total assets $ 838,394 $ 809,404
Liabilities and Equity
Current liabilities
Current portion of long-term debt $ 6,259 $ 5,375
Accounts payable 62,925 57,704
Accrued compensation and employee benefits 21,718 14,035
Accrued interest 6,724 199
Other current liabilities 24,850 21,759
Total current liabilities 122,476 99,072
Long-term debt 428,443 415,306
Deferred income taxes 92,223 91,205
Other long-term liabilities 19,474 21,146
Total liabilities 662,616 626,729
Commitments and contingencies
Equity
Preferred stock, $0.0001 par value (5,000,000 shares authorized, 45,000 shares issued and outstanding at June 26, 2015 and December 31, 2014) 45,000 45,000
Jason Industries common stock, $0.0001 par value (120,000,000 shares authorized; issued and outstanding: 22,058,399 shares at June 26, 2015 and 21,990,666 shares at December 31, 2014) 2 2
Additional paid-in capital 143,216 140,312
Retained (deficit) earnings (23,001) (21,539)
Accumulated other comprehensive (loss) income (18,748) (12,065)
Shareholders' equity attributable to Jason Industries 146,469 151,710
Noncontrolling interests 29,309 30,965
Total equity 175,778 182,675
Total liabilities and equity $ 838,394 $ 809,404
Jason Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Successor Predecessor
Six Months Ended Six Months Ended
June 26, 2015 June 27, 2014
Cash flows from operating activities
Net (loss) income $ (1,759) $ 12,972
Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities:
Depreciation 14,659 10,125
Amortization of intangible assets 7,228 2,727
Amortization of deferred financing costs and debt discount 1,504 426
Equity income (542) (831)
Deferred income taxes (4,692) (4,476)
Loss on disposals of property, plant and equipment - net 22 338
Gain from sale of joint ventures (3,508)
Non-cash stock compensation 4,952 97
Net increase (decrease) in cash due to changes in:
Accounts receivable (20,031) (20,632)
Inventories 3,755 (5,602)
Other current assets (3,085) 1,249
Accounts payable 4,173 6,498
Accrued compensation and employee benefits 6,638 1,141
Accrued interest 6,526 (2,716)
Accrued income taxes 2,521 4,398
Other - net (614) 2,035
Total adjustments 23,014 (8,731)
Net cash provided by operating activities 21,255 4,241
Cash flows from investing activities
Proceeds from disposals of property, plant and equipment and other assets 78 159
Proceeds from sale of joint ventures 11,500
Payments for property, plant and equipment (15,318) (10,998)
Acquisition of business, net of cash acquired (34,763)
Acquisitions of patents (105) (33)
Other investing activities (490)
Net cash (used) provided by investing activities (50,108) 138
Cash flows from financing activities
Payment of capitalized debt issuance costs (444)
Payments of 2013 U.S. term loan (1,175)
Payments of First Lien term loan (775)
Proceeds from U.S. revolving loans 64,725
Payments of U.S. revolving loans (53,725)
Proceeds from other long-term debt 5,031 1,383
Payments of other long-term debt (1,378) (3,868)
Payments of preferred stock dividends (1,800)
Net cash provided by financing activities 1,078 6,896
Effect of exchange rate changes on cash and cash equivalents (1,537) (122)
Net (decrease) increase in cash and cash equivalents (29,312) 11,153
Cash and cash equivalents, beginning of period 62,279 16,318
Cash and cash equivalents, end of period $ 32,967 $ 27,471
Supplemental disclosure of cash flow information
Non-cash financing activities:
Accretion of preferred stock dividends $ 900 $ —
Jason Industries, Inc.
Quarterly Financial Information by Segment
(In thousands) (Unaudited)
Predecessor Combined* Successor Combined* Successor
1Q 2Q 3Q 4Q Full Year 1Q 2Q YTD
2014 2014 2014 2014 2014 2015 2015 2015
Seating
Net sales $ 52,291 $ 52,587 $ 32,385 $ 34,648 $ 171,911 $ 50,960 $ 51,909 $ 102,869
Adjusted EBITDA 8,111 9,557 3,568 4,769 26,005 7,960 9,311 17,271
Adjusted EBITDA % net sales 15.5% 18.2% 11.0% 13.8% 15.1% 15.6% 17.9% 16.8%
Finishing
Net sales $ 46,583 $ 50,109 $ 45,181 $ 45,714 $ 187,587 $ 42,850 $ 46,646 $ 89,496
Adjusted EBITDA 6,003 7,529 5,697 7,045 26,274 6,311 6,727 13,038
Adjusted EBITDA % net sales 12.9% 15.0% 12.6% 15.4% 14.0% 14.7% 14.4% 14.6%
Acoustics
Net sales $ 53,007 $ 56,923 $ 54,033 $ 54,774 $ 218,737 $ 50,921 $ 56,052 $ 106,973
Adjusted EBITDA 4,439 5,237 4,287 4,625 18,588 4,854 7,338 12,192
Adjusted EBITDA % net sales 8.4% 9.2% 7.9% 8.4% 8.5% 9.5% 13.1% 11.4%
Components
Net sales $ 34,655 $ 30,996 $ 29,569 $ 29,031 $ 124,251 $ 31,105 $ 32,971 $ 64,076
Adjusted EBITDA 6,539 4,474 1,026 5,206 17,245 5,173 5,529 10,702
Adjusted EBITDA % net sales 18.9% 14.4% 3.5% 17.9% 13.9% 16.6% 16.8% 16.7%
Corporate
Adjusted EBITDA $ (2,964) $ (3,037) $ (1,489) $ (2,774) $ (10,264) $ (3,295) $ (4,005) $ (7,300)
Consolidated
Net sales $ 186,536 $ 190,615 $ 161,168 $ 164,167 $ 702,486 $ 175,836 $ 187,578 $ 363,414
Adjusted EBITDA 22,128 23,760 13,089 18,871 77,848 21,003 24,900 45,903
Adjusted EBITDA % net sales 11.9% 12.5% 8.1% 11.5% 11.1% 11.9% 13.3% 12.6%
*Note: The application of acquisition accounting for the Business Combination significantly affected certain assets, liabilities, and expenses. As a result, financial information in the period June 30, 2014 through December 31, 2014 is not comparable to Jason's predecessor financial information. Therefore, we did not combine certain financial information in the period June 30, 2014 through December 31, 2014 with Jason's predecessor financial information in the period January 1, 2014 through June 29, 2014 for comparison to prior periods. We have combined our net sales and Adjusted EBITDA in (1) the period June 30, 2014 through September 26, 2014 with Jason's predecessor net sales and Adjusted EBITDA in the period June 28, 2014 through June 29, 2014, which comprises Jason's fiscal third quarter, and (2) in the period June 30, 2014 through December 31, 2014 with Jason's predecessor net sales and Adjusted EBITDA in the period January 1, 2014 through June 29, 2014, which comprises Jason's fiscal full year 2014. Net sales and Adjusted EBITDA were not affected by acquisition accounting.

Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands) (Unaudited)
Organic Sales Growth
2Q 2015

Seating

Finishing

Acoustics

Components
Jason
Consolidated
Net sales
Organic sales growth (0.6)% (2.1)% 1.2% 6.4% 0.7%
Currency impact (0.7)% (11.7)% (2.7)% —% (4.1)%
Acquisitions —% 6.9% —% —% 1.8%
Growth as reported (1.3)% (6.9)% (1.5)% 6.4% (1.6)%
YTD 2015
Net sales
Organic sales growth (1.2)% (0.1)% —% (2.4)% (0.7)%
Currency impact (0.7)% (10.9)% (2.7)% —% (3.8)%
Acquisitions —% 3.6% —% —% 0.9%
Growth as reported (1.9)% (7.4)% (2.7)% (2.4)% (3.6)%

Net Debt to Adjusted EBITDA
June 26, 2015
Current and long-term debt $ 434,702
Add: Debt discounts 6,514
Less: Cash and cash equivalents (32,967)
Net Debt $ 408,249
Adjusted EBITDA
3Q14 $ 13,089
4Q14 18,871
1Q15 21,003
2Q15 24,900
TTM Adjusted EBITDA $ 77,863
Acquisitions TTM Adjusted EBITDA* 3,478
Pro Forma TTM Adjusted EBITDA $ 81,341
Net Debt to Adjusted EBITDA 5.0x
*Acquisitions TTM Adjusted EBITDA includes Adjusted EBITDA prior to the date of the acquisition during the trailing twelve months.
Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA
(In thousands) (Unaudited)
Predecessor Successor Combined Successor
June 28, 2014
Through
June 30, 2014 Through
June 29, 2014 September 26,
2014
1Q 2Q 3Q 3Q 4Q Full Year 1Q 2Q YTD
2014 2014 2014 2014 2014 2014 2015 2015 2015
Net income (loss) $ 7,735 $ 5,237 $ (17,928) $ (9,789) $ (4,191) $ (18,936) $ (894) $ (865) $ (1,759)
Tax provision 4,492 588 (5,652) (5,976) (1,913) (8,461) (747) 644 (103)
Interest expense 3,495 3,724 82 7,809 8,363 23,473 7,506 7,918 15,424
Depreciation and amortization 6,324 6,528 10,377 9,998 33,227 10,411 11,476 21,887
Loss (gain) on disposals of fixed assets—net 123 215 57 395 26 (4) 22
EBITDA 22,169 16,292 (23,498) 2,421 12,314 29,698 16,302 19,169 35,471
Adjustments:
Restructuring(1) 647 1,907 103 1,028 3,685 1,704 1,010 2,714
Transaction-related expenses(2) 1,541 3,233 23,009 1,404 1,129 30,316 176 710 886
Integration and other restructuring costs(3) 993 2,047 7,587 2,334 12,961 758 1,122 1,880
Sponsor fees(4) 286 281 567
Gain from sale of joint ventures(5) (3,508) (3,508)
Share-based compensation(6) 2,063 2,066 4,129 2,063 2,889 4,952
Total adjustments (41) 7,468 23,009 11,157 6,557 48,150 4,701 5,731 10,432
Adjusted EBITDA $ 22,128 $ 23,760 $ (489) $ 13,578 $ 18,871 $ 77,848 $ 21,003 $ 24,900 $ 45,903
(1) Restructuring includes costs associated with exit or disposal activities as defined by US GAAP related to facility consolidation, including one-time employee termination benefits, costs to close facilities and relocate employees, and costs to terminate contracts other than capital leases.
(2) Transaction-related expenses primarily consist of professional service fees related to the Business Combination and other related transactions, as well as the Company's acquisition and divestiture activities.
(3) Integration and other restructuring costs primarily includes equipment move costs and incremental facility preparation and related costs incurred in connection with the closure of the Norwalk, Ohio facility and the start-up of new acoustics segment facilities in Warrensburg, Missouri and Richmond, Indiana. Such costs are not included in restructuring for US GAAP purposes. During the three months ended June 26, 2015, integration and other restructuring costs also include $1.4 million of severance and expenses related to the transition of the Company's Chief Financial Officer (CFO), partially offset by a $0.8 million gain resulting from termination of an unfavorable lease recorded in acquisition accounting for the Business Combination.
(4) Represents fees and expenses paid by Jason to Saw Mill Capital LLC and Falcon Investment Advisors, LLC under the Management Services Agreement dated September 21, 2010, which terminated upon consummation of the Business Combination.
(5) Represents the gain on sale of the 50% equity interests in two joint ventures that was completed during the first quarter of 2014.
(6) Represents non-cash share based compensation expense for awards under the Company's 2014 Omnibus Incentive Plan. During the three months ended June 26, 2015, share based compensation includes $0.9 million of expense due to accelerated vesting of RSU's related to the transition of the Company's CFO.
Jason Industries, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income and Adjusted Earnings per Share
(In thousands, except per share amounts) (Unaudited)
Predecessor Successor Successor Successor
June 28, 2014 Through June 30, 2014 Through
June 29, 2014 September 26, 2014
1Q 2Q 3Q 3Q 4Q 1Q 2Q YTD
2014 2014 2014 2014 2014 2015 2015 2015
GAAP Net income (loss) $ 7,735 $ 5,237 $ (17,928) $ (9,789) $ (4,191) $ (894) $ (865) $ (1,759)
Adjustments:
Restructuring 647 1,907 103 1,028 1,704 1,010 2,714
Transaction-related expenses 1,541 3,233 23,009 1,404 1,129 176 710 886
Integration and other restructuring costs 993 2,047 7,587 2,334 758 1,122 1,880
Sponsor fees 286 281
Gain from sale of joint ventures (3,508)
Share based compensation 2,063 2,066 2,063 2,889 4,952
Tax effect on adjustments(1) 16 (2,838) (5,515) (4,240) (2,492) (1,786) (1,505) (3,291)
Adjusted net income (loss) $ 7,710 $ 9,867 $ (434) $ (2,872) $ (126) $ 2,021 $ 3,361 $ 5,382
Diluted weighted average number of common shares outstanding (GAAP): 21,991 21,991 21,991 22,011 22,001
Plus: effect of dilutive share-based compensation (non-GAAP)(2)
Plus: effect of convertible preferred stock and rollover shares (non-GAAP)(2) 7,139 7,139 7,139 7,139 7,139
Diluted weighted average number of common shares outstanding (non-GAAP)(2) 29,130 29,130 29,130 29,150 29,140
Adjusted (loss) earnings per share $ (0.10) $ — $ 0.07 $ 0.12 $ 0.18
GAAP Net (loss) income per share available to common shareholders of Jason Industries $ (0.41) $ (0.20) $ (0.07) $ (0.07) $ (0.15)
Adjustments net of income taxes:
Restructuring 0.03 0.05 0.04 0.09
Transaction-related expenses 0.04 0.03 0.03 0.03
Integration and other restructuring costs 0.21 0.07 0.02 0.03 0.05
Share based compensation 0.06 0.06 0.06 0.09 0.15
GAAP to non-GAAP impact per share(2) 0.01 0.01 0.01
Adjusted (loss) earnings per share $ (0.10) $ — $ 0.07 $ 0.12 $ 0.18
(1) The tax impact of adjustments is calculated using a tax rate of 38 percent, except for 1) the second quarter and year to date successor periods in 2015, which use tax rates of 26 percent and 31 percent, respectively, due to nondeductible foreign transaction and restructuring costs, and are impacted by discrete non-cash tax expense related to the vesting of restricted stock units for which no tax benefit will be realized, and 2) the predecessor period June 28, 2014 through June 29, 2014 which uses a tax rate of 24 percent due to nondeductible transaction costs.
(2) Adjusted earnings per share includes the impact of share-based compensation to the extent it is dilutive in each period. Adjusted earnings per share includes the impact to Jason Industries common shares upon conversion of JPHI Holdings Inc. rollover shares and conversion of preferred stock.

CONTACT: Investor Relations Chad Paris investors@jasoninc.com 414.277.2007

Source:Jason Industries Inc.