Allied Holdings Reports First Quarter
Results
DECATUR, Ga., April 24 Allied
Holdings, Inc. today reported results for the first quarter ended
March 31, 2001. Revenues for the first quarter of 2001 were $218.2 million,
compared with revenues of $282.9 million for the first quarter last year. The
Company experienced a net loss of $18.9 million, or $2.35 per share, during
the first quarter of 2001, versus a loss of $1.0 million, or $0.13 per share,
during the first quarter last year. Excluding severance and debt amendment
costs expensed during the first quarter of 2001, the net loss was
$15.2 million, or $1.90 per share.
Revenues and operating results for the Allied Automotive Group (AAG) are
seasonally lower in the first quarter due to manufacturing plant downtime.
However, new vehicle production in the United States and Canada in the first
quarter of 2001 was at its lowest level since 1993 in a first quarter without
labor disputes. Production for the Big Three automakers -- all major
customers of AAG -- declined by 23 percent. The production cuts helped new
vehicle inventories decline from 77 days at year-end to 63 days at the end of
the first quarter. New vehicle inventories are now just slightly higher than
the 61-day supply at the end of the first quarter in 2000.
Allied Automotive Group's vehicle deliveries declined 26 percent for the
first quarter. Lost revenue from this decline was partially offset by an
increase in the revenue generated per vehicle delivered, primarily through
fuel surcharges. The Company estimates that the volume decline in the first
quarter of 2001, at an average margin per unit, reduced net earnings by
$15.4 million.
Due to the significant volume decline, Allied Holdings and its
subsidiaries have implemented a program to achieve a $25 million reduction in
overhead expenses. During the first quarter of 2001, the Company recorded an
after-tax charge of $3.2 million, or $0.40 per share, for severance and
workforce reduction expenses relating to its overhead reduction program.
"We continue to aggressively implement cost savings measures through
reductions in our employee base and elimination of discretionary spending,"
said Robert J. Rutland, chairman and CEO of Allied Holdings, Inc. "We
currently have achieved more than 80 percent of our overhead reduction goal
and will pursue additional savings until our goal is achieved."
The Company recently amended its revolving credit facility and its senior
subordinated notes to avoid potential defaults relating to its financial
covenants. The maturity date of the amended revolving credit facility has
been accelerated from September 30, 2002 to January 31, 2002. The Company is
engaged in serious discussions with a number of lenders to replace its
revolving credit facility, and completion of the financing is anticipated by
year-end. The Company expensed approximately $0.5 million, or $0.06 per
share, of administrative costs related to the amendments during the first
quarter of 2001.
"Certain of the financial covenants contained in our revolving credit
facility and senior subordinated notes were based on operating earnings. The
unexpected volume decline of 18.5 percent in the fourth quarter of 2000
followed by a 26 percent decline in the first quarter of 2001 -- the largest
volume decline in the Company's history -- resulted in a significant reduction
in our operating earnings, which required us to amend these debt agreements,"
Rutland said. "Even though operating earnings declined, we immediately cut
capital spending, reduced operating costs, and focused on managing working
capital. As a result, long-term debt only increased by $7 million during the
past six months."
Revenues for the Axis Group in the first quarter of 2001 were up 5 percent
to $6.2 million and earnings before interest and taxes, including the earnings
of joint ventures, increased $0.2 million to $0.8 million. The business of
Axis is not as dependent on North American new vehicle production, so Axis was
able to continue to grow revenues and earnings from its secondary market
activities and its international ventures.
2001 Outlook
The Company expects to continue being impacted by the ongoing weakness in
the automotive marketplace. The Company expects vehicle deliveries to decline
approximately 15 percent in the second quarter followed by an approximate
10 percent decline in the third quarter. Deliveries are expected to stabilize
by the fourth quarter, increasing approximately 2 percent. Based on these
estimates, the Company expects to post an additional net loss in the range of
$5 to $10 million for the last three quarters of 2001. This includes
approximately $5 million of additional interest and other costs related to the
recently negotiated debt amendments.
The Company will continue limiting capital expenditures with anticipated
spending for 2001 reduced to between $20 to $25 million. This should enable
the Company to generate positive cash flow in 2001 of up to $10 million.
"While manufacturing plant downtime started to stabilize in March, we
expect market conditions to continue to be depressed for the next six months,"
Rutland said. "The Automotive Group currently has approximately 15 percent of
its drivers on layoff and will continue to implement manpower and utilization
plans that respond to market conditions. Allied Holdings and each of its
subsidiaries are focused on operating in a manner that minimizes the impact of
reduced volumes until more favorable economic conditions occur."
About Allied Holdings, Inc.
Allied Holdings, Inc. is the parent company of several subsidiaries
engaged in providing logistics, distribution and transportation services to
the automotive industry. The services of Allied's subsidiaries span the
entire finished vehicle distribution continuum, and include logistics, car-
hauling, intramodal transport, inspection, accessorization, and dealer prep.
Allied, through its subsidiaries, is the largest company in North America
specializing in the delivery of new and used vehicles in the global
marketplace.
Allied Automotive Group operates approximately 4,300 modern tractor-
trailers out of 102 terminal locations that crisscross the United States and
Canada. The Company partners with all major manufacturers, domestic and
import, to deliver more than 11 million vehicles a year. This includes
transporting vehicles to dealers from plants, rail ramps, ports, and auctions,
and providing vehicle rail-car loading and unloading services.
Axis Group is the global management arm of Allied Holdings. With its
international service capabilities, Axis currently has operations in the
United States, Canada, Mexico, Brazil, South Africa, Europe, and the United
Kingdom. Axis Group provides logistics solutions and services to the
automotive industry, with a primary focus on outbound finished vehicle
distribution and related activities.
Statements in this press release that are not strictly historical are
"forward-looking" statements. Such statements include, without limitations,
any statements containing the words "believe," "anticipate," "estimate,"
"expect," "intend," "plan," "seek," and similar expressions. Investors are
cautioned that such statements are subject to certain risks and uncertainties
that could cause actual results to differ materially. Without limitation,
these risks and uncertainties include economic recessions or extended or more
severe downturns in new vehicle production or sales, the highly competitive
nature of the automotive distribution industry, the ability to comply with the
terms of its debt agreements, the ability of the Company to obtain financing
in the future, the company's highly leveraged financial position, dependence
on the automotive industry, labor disputes involving the Company or its
significant customers, the dependence on key personnel who have been hired or
retained by the Company, the availability of strategic acquisitions or joint
venture partners, changes in regulatory requirements which are applicable to
the Company's business, risks associated with conducting business in foreign
countries, and changes in vehicle sizes and weights which may impact vehicle
deliveries per load. Investors are urged to carefully review and consider the
various disclosures made by the Company in this press release and in the
Company's reports filed with the Securities and Exchange Commission.
NOTE: The information in this press release will be discussed by
management today on a conference call that can be accessed at the following
links: http://www.streetevents.com or http://www.alliedholdings.com beginning at
10:30 a.m. EST.
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2001 FIRST QUARTER EARNINGS RELEASE
(In Thousands, Except Per Share Data)
For the Three Months Ended
March 31
2001 2000
Revenues $218,179 $282,884
Net loss ($18,862) ($1,035)
Loss per share - basic and diluted ($2.35) ($0.13)
Weighted average common shares
outstanding - basic and diluted 8,020 7,898
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31 December 31
2001 2000
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $7,869 $2,373
Short-term investments 68,885 59,892
Receivables, net of allowance
for doubtful accounts 97,874 114,266
Inventories 7,099 7,415
Deferred tax assets 9,616 10,191
Prepayments and other current
assets 18,712 19,355
Total current assets 210,055 213,492
PROPERTY AND EQUIPMENT, NET 250,592 259,362
OTHER ASSETS:
Goodwill, net 93,075 95,159
Other 44,961 42,526
Total other assets 138,036 137,685
Total assets $598,683 $610,539
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $148,170 $109
Trade accounts payable 41,320 45,975
Accrued liabilities 90,469 79,487
Total current liabilities 279,959 125,571
LONG-TERM DEBT, less current maturities 190,008 324,876
POSTRETIREMENT BENEFITS OTHER THAN
PENSIONS 9,768 9,943
DEFERRED INCOME TAXES 7,885 21,414
OTHER LONG-TERM LIABILITIES 74,344 69,594
STOCKHOLDERS' EQUITY:
Common stock, no par value;
20,000 shares authorized,
8,210 and 8,187 shares
outstanding at March 31,
2001 and December 31,
2000, respectively 0 0
Additional paid-in capital 46,144 45,990
Retained earnings 1,740 20,602
Cumulative other comprehensive
income, net of tax (10,458) (6,744)
Common stock in treasury, at
cost, 139 shares at March 31,
2001 and December 31, 2000 (707) (707)
Total stockholders' equity 36,719 59,141
Total liabilities and
stockholders' equity $598,683 $610,539
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
For the Three Months Ended
March 31
2001 2000
(Unaudited) (Unaudited)
REVENUES $218,179 $282,884
OPERATING EXPENSES:
Salaries, wages and fringe
benefits 131,717 154,838
Operating supplies and expenses 41,442 51,582
Purchased transportation 23,296 27,153
Insurance and claims 13,289 12,056
Operating taxes and licenses 8,626 10,859
Depreciation and amortization 15,024 15,242
Rents 2,070 2,326
Communications and utilities 2,038 2,209
Other operating expenses 3,856 2,658
Total operating expenses 241,358 278,923
Operating (loss) income (23,179) 3,961
OTHER INCOME (EXPENSE):
Equity in earnings of joint
ventures, net of tax 1,209 901
Interest expense (8,466) (8,401)
Interest income 964 1,320
(6,293) (6,180)
LOSS BEFORE INCOME TAXES (29,472) (2,219)
INCOME TAX BENEFIT 10,610 1,184
NET LOSS ($18,862) ($1,035)
PER COMMON SHARE - BASIC AND DILUTED ($2.35) ($0.13)
COMMON SHARES OUTSTANDING - BASIC AND
DILUTED 8,020 7,898
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
For the Three Months Ended
March 31
2001 2000
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($18,862) ($1,035)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 15,024 15,242
(Gain) loss on sale of
property and equipment (168) 103
Deferred income taxes (10,593) (374)
Compensation expense related
to stock options and grants 69 237
Equity in earnings of joint
ventures (1,209) (901)
Amortization of Teamsters
Union signing bonus 600 606
Change in operating assets and
liabilities excluding
effect of businesses
acquired:
Receivables, net of
allowance for doubtful accounts 15,161 (8,007)
Inventories 232 5
Prepayments and other
current assets 504 (4,059)
Trade accounts payable (4,348) (215)
Accrued liabilities 15,856 8,553
Total adjustments 31,128 11,190
Net cash provided by
operating activities 12,266 10,155
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,579) (3,241)
Proceeds from sale of property and
equipment 436 44
Purchase of business, net of cash acquired 0 (8,185)
Investment in joint ventures (464) 0
Increase in short-term investments (8,993) (9,267)
Increase in the cash surrender
value of life insurance (120) (120)
Net cash used in
investing activities (16,720) (20,769)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from
issuance of long-term debt, net 13,193 (79)
Proceeds from issuance of common stock 85 218
Repurchase of common stock 0 (282)
Other, net (2,260) 1,653
Net cash provided by
financing activities 11,018 1,510
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (1,068) (545)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,496 (9,649)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 2,373 13,984
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $7,869 $4,335
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2001 FIRST QUARTER EARNINGS RELEASE
OPERATING DATA
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
2001 2000
ALLIED HOLDINGS, EXCLUDING AAG -
CANADA & AXIS GROUP:
REVENUES $175,143,000 $229,045,000
OPERATING (LOSS) INCOME ($20,923,000) $1,383,000
OPERATING RATIO 111.95% 99.40%
VEHICLES DELIVERED 1,829,222 2,512,650
LOADS DELIVERED 226,307 311,812
VEHICLES PER LOAD 8.08 8.06
REVENUE PER VEHICLE $95.75 $91.16
PERCENT DAMAGE FREE DELIVERY 99.6% 99.6%
NUMBER OF
AVERAGE ACTIVE RIGS 3,415 4,253
AVERAGE EMPLOYEES
DRIVERS 3,892 5,242
OTHERS 2,373 2,483
ALLIED AUTOMOTIVE GROUP - CANADA:
REVENUES $36,881,000 $47,946,000
OPERATING (LOSS) INCOME ($1,804,000) $2,881,000
OPERATING RATIO 104.89% 93.99%
VEHICLES DELIVERED 534,231 688,100
LOADS DELIVERED 70,293 87,322
VEHICLES PER LOAD 7.60 7.88
REVENUE PER VEHICLE $69.04 $69.68
PERCENT DAMAGE FREE DELIVERY 99.7% 99.7%
NUMBER OF
AVERAGE ACTIVE RIGS 862 832
AVERAGE EMPLOYEES
DRIVERS 1,223 1,267
OTHERS 422 573
AXIS GROUP:
REVENUES $6,155,000 $5,893,000
OPERATING LOSS ($452,000) ($303,000)
Equity in earnings of joint ventures $1,726,000 $1,289,000
Income taxes on joint ventures ($517,000) ($388,000)
EQUITY IN EARNINGS OF JOINT VENTURES,
NET OF TAX $1,209,000 $901,000
EARNINGS BEFORE INTEREST AND TAXES $757,000 $598,000
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