News Buzz: Select Interior Concepts (NASDAQ: SIC)

On Wednesday, Shares of Select Interior Concepts (NASDAQ: SIC) inclined 1.62% to $8.14. The stock grabbed the investor’s attention and traded 1 share as compared to its average daily volume of 57.37K shares. The stock’s institutional ownership stands at 77.00%.

Select Interior Concepts, Inc. (SIC), a diversified building products and services company focused on home interior products, recently declared its financial results for the second quarter ended June 30, 2018.

Second Quarter Results:

Net sales for the second quarter of 2018 were $124.90M, contrast to net sales of $90.40M for the second quarter of 2017. The increase was driven by the impact of organic growth and acquisitions in both the Residential Design Services and Architectural Surfaces Group operating segments of the Company.

Gross profit for the second quarter of 2018 was $34.40M, contrast to $26.50M for the second quarter of 2017. Gross profit as a percentage of net sales was 27.6% for the second quarter of 2018, contrast to 29.3% for the second quarter of 2017. The increase in gross profit was because of higher net sales. The decrease in gross profit margin was mainly because of opportunistic acquisitions by Architectural Surfaces Group at slightly lower gross margin than base business, higher depreciation in cost of goods sold, and a shift in product price/mix.

Operating expenses for the second quarter of 2018 were $30.80M, or 24.7% of net sales, contrast to $19.50M, or 21.5% of net sales, for the second quarter of 2017. The increase in operating expenses was mainly because of Selling, general and administrative (“SG&A”) expenses from attained businesses, the Company’s incentive compensation plan, one-time nonrecurring costs for concluding acquisitions, investments in the Company as its transitions to a public company, and higher depreciation.

The income tax benefit for the second quarter of 2018 was $.040M on a pre-tax loss of $0.10M, resulting in an effective tax rate of 28.9%. The income tax benefit for the second quarter of 2017 was $0.20M on pretax income of $3.20M, resulting in an effective tax rate of 5.2%. The change in effective tax rate is because of the Company’s Architectural Surfaces Group operating segment being a pass-through entity during the second quarter of 2017, which resulted in a lower effective rate for the consolidated Company.

For the second quarter of 2018, the Company stated a net loss of $0.10M, and earnings per share of $0.00, contrast to net income of $3.40M in the second quarter of 2017. There was no per share calculation for the second quarter of 2017 because the Company was a private entity during that period.

Adjusted EBITDA rose to $13.80M, or 11.1% of net sales, for the second quarter of 2018, contrast to Adjusted EBITDA of $11.90M, or 13.1% of net sales, for the second quarter of 2017. The increase in Adjusted EBITDA was mainly the result of organic growth and acquisitions, partially offset by inflation and investments in the Company, as it transitions to a public company, and M&A resources.

The Company stated cash generated from operating activities of $1.40M for the second quarter of 2018, contrast to $0.50M for the second quarter of 2017.

Year-to-Date Results:

Net sales for the first half of 2018 were $229.30M, contrast to net sales of $158.10M for the first half of 2017. The increase in net sales was mainly because of organic growth and acquisitions in both the Residential Design Services and Architectural Surfaces Group operating segments of the Company.

Gross profit for the first half of 2018 was $62.40M, contrast to $47.00M for the first half of 2017. Gross profit as a percentage of net sales was 27.2% for the first half of 2018, contrast to 29.7% for the first half of 2017. The increase in gross profit was because of higher net sales. The decrease in gross profit margin was mainly because of opportunistic acquisitions by Architectural Surfaces Group at slightly lower gross margin than base business, higher depreciation in cost of goods sold, and a shift in product price/mix.

Operating expenses for the first half of 2018 were $57.80M, or 25.2% of net sales, contrast to $39.20M, or 24.8% of net sales, for the first half of 2017. The increase in operating expenses was mainly because of SG&A expenses from attained businesses, the Company’s incentive compensation plan, one-time nonrecurring costs for concluding acquisitions, investments in the Company as it transitions to a public company, and higher depreciation.

The income tax benefit for the first half of 2018 was $0.50M, resulting in an effective tax rate of 27.8%, contrast to an income provision of $0.10M and an effective tax rate of 14.8% for the first half of 2017. During the first half of 2017, our Architectural Surfaces Group operating segment was a pass-through entity for tax purposes.

For the first half of 2018, the Company stated a net loss of $1.40M, or a loss of $0.05 per basic and diluted share, contrast to a net profit of $0.80M for the first half of 2017. There was no per share calculation for first half of 2017 because the Company was a private entity during that period.

Adjusted EBITDA rose to $24.50M, or 10.7% of net sales, for the first half of 2018, contrast to Adjusted EBITDA of $20.00M, or 12.6% of net sales, for the first half of 2017. The increase in Adjusted EBITDA was mainly the result of organic growth and acquisitions, partially offset by inflation and investments in the Company, as it transitions to a public company, and M&A resources.

SIC has a market value of $205.46M while its EPS was booked as $-0.18 in the last 12 months. The stock has 25.65M shares outstanding. In the profitability analysis, the company has gross profit margin of 27.90%. Analyst recommendation for this stock stands at 2.00.

Grover Beam

Grover Beam has over 14 years experience in the financial services industry giving him a vast understanding of how news affects the financial markets. He is an active day trader spending the majority of her time analyzing earnings reports and watching commodities and derivatives. He has a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

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