United states securities and exchange commission

In evaluating EBITDA and adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments noted in this presentation. Our presentations of EBITDA and adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider EBITDA and adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP measures.

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Free cash f low

We define free cash flow as net cash provided by operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding business acquisitions.

Net cash (debt)

We define net cash (debt) as total unrestricted cash and cash equivalents less the total principal amount of debt outstanding. The total principal amount of debt outstanding is comprised of the long-term debt and current maturities of long-term debt as presented in our consolidated balance sheets adding back any debt issuance costs and discounts. We believe that the presentation of net cash (debt) provides useful information to investors because our management reviews net cash (debt) as part of our oversight of overall liquidity, financial flexibility and leverage. Net cash (debt) is important when we consider opening new plants and expanding existing plants, as well as for capital expenditure requirements.

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measures:

 

		Year Ended December 31,
		2017				2016				2015
		(in thousands)
Net sales		$	930,281			$	754,877			$	585,852
Change in deferred revenue:
Blade-related deferred revenue at beginning of period (1)			(69,568	)			(65,520	)			(59,476	)
Blade-related deferred revenue at end of period (1)			81,048				69,568				65,520
Foreign exchange impact (2)			(196	)			5,499				8,211
Change in deferred revenue			11,284				9,547				14,255
Total billings		$	941,565			$	764,424			$	600,107
Net income		$	43,690			$	13,842			$	7,682
Adjustments:
Depreciation and amortization			20,878				12,897				11,416
Interest expense (net of interest income)			12,286				17,270				14,404
Loss on extinguishment of debt			—				4,487				—
Income tax provision			13,080				6,995				3,977
EBITDA			89,934				55,491				37,479
Realized loss on foreign currency remeasurement			4,471				757				1,802
Share-based compensation expense			7,124				9,902				—
Adjusted EBITDA		$	101,529			$	66,150			$	39,281

 

(1)	Total billings is reconciled using the blade-related deferred revenue amounts at the beginning and the end of the period as follows:

 

		Year Ended December 31,
		2017				2016				2015
		(in thousands)
Blade-related deferred revenue at beginning of period		$	69,568			$	65,520			$	59,476
Non-blade related deferred revenue at beginning of period			—				—				—
Total current and noncurrent deferred revenue at beginning of    period		$	69,568			$	65,520			$	59,476
Blade-related deferred revenue at end of period		$	81,048			$	69,568			$	65,520
Non-blade related deferred revenue at end of period			—				—				—
Total current and noncurrent deferred revenue at end of period		$	81,048			$	69,568			$	65,520

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(2)	Represents the effect of the difference the exchange rate used by our various foreign subsidiaries on the invoice date versus the exchange rate used at the period-end balance sheet date.