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SELECT INTERIOR CONCEPTS ANNOUNCES 2018 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

Atlanta, Georgia – March 15, 2019 – Select Interior Concepts, Inc. (NASDAQ: SIC), a premier installer and nationwide distributor of interior building products, today announced its financial results for the fourth quarter and full year ended December 31, 2018.

Tyrone Johnson, Chief Executive Officer of Select Interior Concepts, stated, “We achieved significant growth in our business during 2018. We delivered over 8% organic sales growth, completed five highly complementary acquisitions and continued to produce above-industry average margins. This progress and profitability were in line with our objectives to expand market share and diversify across geography, product and channel while investing in our public company infrastructure to support the next chapter of our growth.”

Mr. Johnson continued, “With the addition of Intown Design, annual net sales on a run-rate basis including acquisitions are approximately $600 million. This positions us as a key industry player in both our installation and distribution businesses. In 2019, we plan to drive additional growth through our deep pipeline of acquisition targets and organic growth initiatives, which are providing strong momentum. We are excited for the year ahead and remain focused on improving our margins on acquired revenues as we integrate and ramp up cross selling-efforts across our network. With our scalable platform and strong balance sheet, we are on solid footing to achieve our objectives in 2019 and beyond.”

Net sales for the fourth quarter of 2018 increased by 32.6% to $133.0 million, compared to net sales of $100.3 million for the fourth quarter of 2017. Residential Design Services (“RDS”) segment sales increased 35.3% and Architectural Surfaces Group (“ASG”) segment sales increased 30.9%, compared to the fourth quarter of 2017. Net sales increased on an organic basis by $4.5 million or 4.5%, driven by volume and price/mix. Acquisitions added $28.2 million to net sales.

Gross profit for the fourth quarter of 2018 increased by 20.3% to $34.6 million, compared to $28.8 million for the fourth quarter of 2017. The increase in gross profit was due to higher net sales from organic and acquisition initiatives. Gross margin for the fourth quarter of 2018 was 26.0%, compared to 28.7% for the fourth quarter of 2017. Approximately 90% of the gross margin decrease is related to non-recurring inventory adjustments in the ASG segment. The remainder of the decrease is primarily as a result of opportunistic acquisitions in the ASG segment that generated lower gross margin than the legacy business and higher depreciation.

Operating expenses for the fourth quarter of 2018 were $31.1 million, or 23.4% of net sales, compared to $37.5 million, or 37.4% of net sales, for the fourth quarter of 2017. Operating expenses for the fourth quarter of 2018 and fourth quarter of 2017 included $3.4 million and $18.2 million, respectively, of nonrecurring costs, primarily for professional fees, and equity-based compensation. Excluding the impact of these costs, operating expenses as a percent of net sales increased year-over-year to 20.8% for the fourth quarter of 2018, from 19.3% for the fourth quarter of 2017. The percentage increase reflects additional M&A resources and incremental operating expenses from recently acquired businesses ahead of anticipated synergy realization. The percentage increase also reflects investments in the Company’s public company infrastructure and higher depreciation.

For the fourth quarter of 2018, the Company reported a net loss of $1.8 million, or a loss of $0.07 per diluted share, compared to a net loss (including net loss of predecessor) of $15.0 million for the fourth quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2018 increased by 7.1% to $14.9 million, compared to Adjusted EBITDA of $13.9 million for the fourth quarter of 2017. For the fourth quarter of 2018, adjusted EBITDA as a percent of net sales was 11.2%, compared to 13.8% for the prior year quarter, primarily attributable to the factors discussed in gross margin and operating expenses.

Net sales for the full year 2018 increased by 38.8% to $489.8 million, compared to net sales of $353.0 for the full year 2017. RDS segment sales increased 38.9% and ASG segment sales increased 39.0%, compared to the prior year. Net sales increased on an organic basis by $28.7 million or 8.1%, driven by volume and price/mix. Acquisitions added $108.1 million to net sales.

Gross profit for the full year 2018 increased by 28.5% to $133.5 million, compared to $103.9 million for the full year 2017. The increase in gross profit was due to higher net sales from organic and acquisition initiatives. Gross margin for the full year 2018 was 27.2%, compared to 29.4% for the prior year, primarily due to the opportunistic acquisitions in the ASG segment, fourth quarter non-recurring inventory adjustments and higher depreciation.

Operating expenses for the full year 2018 were $121.4 million, or 24.8% of net sales, compared to $97.7 million, or 27.7% of net sales, for the full year 2017. Operating expenses for the full years 2018 and 2017 included $18.4 million and $22.5 million, respectively, of nonrecurring costs, primarily for professional fees and equity-based compensation. Excluding the impact of these costs, operating expenses as a percent of net sales decreased year-over-year to 21.0% in 2018, from 21.3% in 2017.

For the full year 2018, the Company reported a net loss of $2.5 million, or a loss of $0.10 per diluted share, compared to a net loss (including net loss of predecessor) of $11.3 million for the prior year.

Adjusted EBITDA for the full year 2018 increased by 15.8% to $54.4 million, or 11.1% of net sales, compared to Adjusted EBITDA of $47.0 million, or 13.3% of net sales, for the prior year. For the full year 2018, adjusted EBITDA as a percent of net sales was 11.1%, compared to 13.3% for the full year 2017, primarily attributable to the factors discussed in gross margin and operating expenses.

As of December 31, 2018, the Company had unrestricted cash on hand of $6.4 million and available borrowing capacity under its revolving credit facility of $52.5 million.

The Company will host a conference call today at 9:00 a.m. EDT to discuss results for the fourth quarter and full year ended December 31, 2018. To participate in the conference call, dial 1-877-705-6003 from the United States, and international callers may dial 1-201-493-6725, approximately 15 minutes before the call. A webcast and presentation will also be available at www.selectinteriorconcepts.com under the investor relations section.

A replay of the call and webcast will be available on the Company's website approximately 4 hours after the completion of the call.

Select Interior Concepts is a premier installer and nationwide distributor of interior building products with leading market positions in highly attractive markets. The Residential Design Services segment provides integrated design, sourcing and installation solutions to customers, in the selection of a broad array of interior products and finishes, including flooring, countertops, cabinets, and related interior items. The Architectural Surfaces Group segment distributes natural and engineered stone through a national network of distribution centers and showrooms under proprietary brand names such as AG&M, Modul, Pental, Bedrock International and Cosmic. For more information, visit: www.selectinteriorconcepts.com.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue,” and other forms of these words or similar words or expressions or the negatives thereof. Forward-looking statements are based on historical information available at the time the statements are made and are based on management’s reasonable belief or expectations with respect to future events. Forward-looking statements are subject to risks, uncertainties, and other factors that may cause the Company’s actual results, level of activity, performance or achievement to be materially different from the results or plans expressed or implied by such forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law.

(Dollars in thousands)
ASSETS	Dec 31, 2018		Dec 31, 2017

Cash and cash equivalents	$	6,362	$	2,547
Restricted cash		3,000		3,000
Accounts receivable, net		63,601		45,284
Inventory		108,270		87,629
Prepaid expenses and other current assets		2,809		2,625
Federal Income taxes receivables		1,263		1,520
Total Current Assets	$	185,305	$	142,605
Property and equipment, net		19,798		13,226
Deferred tax assets, net		9,355		11,569
Goodwill		94,593		66,326
Intangibles assets, net		100,715		82,263
Other assets		6,248		4,257
Total Assets	$	416,014	$	320,246

LIABILITIES AND EQUITY
Accounts payable	$	37,265	$	38,491
Accrued expenses		27,620		19,840
Current portion of long-term debt		1,368		1,449
Current portion of capital leases		500		229
State taxes payable		984		-
Customer deposits		9,908		5,320
Total Current Liabilities	$	77,645	$	65,329
Long-term debt (less current portion)		142,442		86,897
Long-term capital leases		1,544		664
Line of credit		36,706		19,269
Other long-term liabilities		8,983		-
Total Liabilities	$	267,320	$	172,159
Stockholders' equity		148,694		148,087
Total Liabilities and Stockholders' Equity	$	416,014	$	320,246

(in thousands, except share data)	3 Months Ended Dec 31,						12 Months Ended Dec 31,
Consolidated Statement of Operations	2018			2017			2018			2017

Net revenue	$	132,957		$	100,261		$	489,757		$	352,952
Cost of revenue		98,329			71,468			356,303			249,063
Gross profit	$	34,628		$	28,793		$	133,454		$	103,889

Selling, general and administrative expenses		31,095			37,509			121,357			97,727
Interest expense		3,265			3,364			11,426			12,761
Loss on extinguishment of debt		-			240			42			988
Other expense, net		532			16			2,115			439

(Loss) income before tax expense	$	(264	)	$	(12,336	)	$	(1,486	)	$	(8,026	)
Income tax (benefit) expense		1,569			2,633			989			3,320
Consolidated net (loss) income	$	(1,833	)	$	(14,969	)	$	(2,475	)	$	(11,346	)
Less: net (loss) income of Predecessor					(9,280	)					(5,657	)
Net (loss) attributable to SIC	$	(1,833	)	$	(5,689	)	$	(2,475	)	$	(5,689	)

Loss per common share ⁽¹⁾
Basic Class B common	$	(0.07	)	$	(0.22	)	$	(0.10	)	$	(0.22	)
Basic Class B common	$	-		$	(0.22	)	$	-		$	(0.22	)
Weighted average shares outstanding
Basic Class A common		25,667,043			19,650,000			25,634,342			19,650,000
Basic Class B common		-			5,964,626			-			5,964,626

(1) EPS calculated based on net loss attributable to SIC




(Dollars in thousands)	3 Months Ended Dec 31,						12 Months Ended Dec 31,
Condensed Statement of Cash flows	2018			2017			2018			2017
Operating Activities
Net cash provided by (used in) operating activities		9,454			(7,821	)		12,212			(8,367	)
Purchase of property and equipment, net		(1,439	)		(1,553	)		(8,501	)		(4,074	)
Acquisitions		(39,871	)		(26,763	)		(72,123	)		(114,763	)
Net cash used in investing activities	$	(41,310	)	$	(28,316	)	$	(80,624	)	$	(118,837	)
Distributions		-			(354	)		-			(35,421	)
Repurchase of member units					(62,725	)		-			(62,725	)
Repurchase and retirement of Class B Common Stock					(60,035	)		-			(60,035	)
Proceeds from November 2017 Private Offering and Private Placement, net of issuance costs of $18.0 million					240,501						240,501
Proceeds from issuance of equity		10			-			553			30
Proceeds on line of credit, net		(7,477	)		(22,524	)		17,886			8,242
Proceeds from Term Loan		43,000			13,500			57,250			130,000
Principal payments on Term Loan		(263	)		(67,573	)		(1,050	)		(88,949	)
Deferred debt issuance costs		(441	)		(127	)		(958	)		(2,952	)
Payments on notes payable		(502	)		101			(1,454	)		(667	)
Net cash provided by financing activities	$	34,328		$	40,765		$	72,227		$	128,024
Net increase (decrease) in cash		2,471			4,628			3,815			820
Cash and restricted cash, beginning of period	$	6,891		$	919		$	5,547		$	4,727
Cash and restricted cash, end of period	$	9,362		$	5,547		$	9,362		$	5,547

(in thousands)	Three Months Ended December 31,						Twelve Months Ended December 31,
Revenue by Business Segment:	2018			2017			2018			2017
Residential Design Services	$	74,773		$	55,299		$	268,362		$	193,204
Architectural Surfaces Group		59,446			45,415			223,971			161,114
Eliminations		(1,262	)		(452	)		(2,576	)		(1,366	)
Total net revenues	$	132,957		$	100,262		$	489,757		$	352,952

(in thousands)	Three Months Ended December 31,						Twelve Months Ended December 31,
Reconciliation of net income to Adj. EBITDA	2018			2017			2018			2017

Consolidated net (loss) income	$	(1,833	)	$	(14,969	)	$	(2,475	)	$	(11,346	)
Income tax (benefit) expense		1,569			2,633			989			3,320
Interest expense		3,265			3,604			11,468			13,749
Depreciation and amortization		5,710			4,434			20,487			14,816
EBITDA	$	8,711		$	(4,298	)	$	30,469		$	20,539

Consulting fees to Trive Capital		-			83			-			1,008
Equity-based and transaction incentive compensation		(2,309	)		16,413			2,626			16,794
Nonrecurring Costs		8,454			1,675			21,326			8,656
Adjusted EBITDA	$	14,856		$	13,873		$	54,421		$	46,997

elect Interior Concepts, Inc. For the Three Months Ended September 30, (in thousands) 2018 2017 Consolidated net income $ 753 $ 2,812 Income tax (benefit) expense (42 ) 545 Interest expense 2,881 3,667 Depreciation and amortization 5,108 3,830 EBITDA 8,700 10,854 Consulting Fees to Trive Capital — 409 Share Based and Transaction Incentive Compensation 1,254 — Nonrecurring Costs 5,116 1,945 Adjusted EBITDA $ 15,070 $ 13,208 For the Nine Months Ended September 30, 2018 2017 $ (642 ) $ 3,623 (580 ) 687 8,203 10,145 14,777 10,381 21,758 24,836 — 925 4,935 381 12,872 6,981 $ 39,565 $ 33,123

EBITDA is defined as consolidated net income before interest, taxes and depreciation and amortization.

Adjusted EBITDA is defined as consolidated net income before (i) income tax expense, (ii) interest expense, (iii) depreciation and amortization expense, and (iv) adjustments for costs that are deemed to be transitional in nature or not related to our core operations, such as severance, facility closure costs, and professional and legal fees related to business acquisitions, or similar transitional costs and expenses related to integrating acquired businesses into our Company. Adjusted EBITDA is a non-GAAP financial measure used by us as supplemental measure in evaluating our operating performance.