Prestolite Electric Announces Third Quarter 2001 Results
ANN ARBOR, Mich.--Oct. 29, 2001--Prestolite Electric Holding, Inc. and its wholly-owned operating subsidiary, Prestolite Electric Incorporated, today announced results for the third quarter of 2001.Prestolite sales for the third quarter of 2001 fell 8.3% from the third quarter of 2000, to $39.1 million. EBITDA (earnings before severance, interest, minority interest, taxes, depreciation and amortization) before special charges, $4.7 million for the quarter, declined 9.6% from the $5.2 million reported for the third quarter of 2000. Excluding results in Argentina, EBITDA increased 17% (to $4.8 million) from the third quarter of last year on a 2.1% sales decline.
Nine month sales, $123.3 million, fell 6.0% from the same period of 2000 while EBITDA before special charges rose 27.2% to $14.8 million. Outside Argentina, sales for the nine months dropped 6.2%, but EBITDA grew 29.0%.
"The monetary crisis in Argentina hurt our third quarter performance," said P. Kim Packard, company president and CEO. "However, we are convinced that our Argentina strategy of cost reduction and export emphasis will soon produce improved results. Outside Argentina we were generally pleased with our performance. Although our original equipment markets continue to be very soft, our strategies of cost reduction and new product development are bearing fruit. We are also very proud of the results posted by our majority-owned subsidiary in China. Launched April 1, we were able to report net sales of $2.4 million and EBITDA of $0.7 million from the joint venture in our third quarter."
The company recorded a $1.5 million special charge in third quarter of 2001 to cover anticipated bad debt losses in Argentina. In the third quarter of 2000 Prestolite recorded a $3,450,000 special charge related to two specialty alternator projects, including $3.1 million to write down its investment in and license from Ecoair Corp.
Following the end of the quarter, Prestolite and Comerica Bank agreed to increase Prestolite's line of credit. Subject to collateral limitations based on the level of North American accounts receivable and inventory, the company's credit limit will increase to $13.5 million from $8.5 million. The limit applies to the total of borrowing and letters of credit. At September 29, 2001, Prestolite borrowings and letters of credit from Comerica Bank totaled $0.9 million and $1.8 million, respectively.
Prestolite Electric Incorporated manufactures alternators and starter motors. These are supplied under the Prestolite, Leece-Neville, and Indiel brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. Genstar Capital Corporation and Prestolite management own the equity of the company.
EBITDA is a widely accepted financial indicator of a company's ability to service debt, but is not calculated the same by all companies. EBITDA should not be considered by an investor as an alternative to net income as an indicator of a company's operating performance or as an alternative to cash flow as a measure of liquidity. This release contains forward-looking statements that involve risks and uncertainties regarding the anticipated financial and operating results of the Company. The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company.
Prestolite Electric Holding, Inc.
Consolidated Unaudited Statement of Operations
(In thousands of dollars)
Three months ending Nine months ending
-----------------------------------------------
Sep 29 Sep 30 Sep 29 Sep 30
2001 2000 2001 2000
---------- ---------- ---------- ----------
Net sales from
continuing operations $39,144 $42,709 $123,326 $131,173
Cost of goods sold 31,080 34,326 98,721 107,300
---------- ---------- ---------- ----------
Gross profit 8,064 8,383 24,605 23,873
Selling, general
& administrative 5,623 5,571 16,200 19,658
Costs associated
with option repurchase - 168 - 168
Special charges(a) 1,500 3,450 1,500 3,450
Severance 2,127 419 3,237 2,119
---------- ---------- ---------- ----------
Operating income
(loss) (1,186) (1,225) 3,668 (1,522)
Other (income) (46) (73) (11) (419)
Loss on foreign exchange (13) 106 19 720
Interest expense 3,501 3,656 9,844 11,958
Minority interest
expense 398 - 398 -
---------- ---------- ---------- ----------
Sub-total (5,026) (4,914) (6,582) (13,781)
Income tax (benefit) (398) (2,315) (491) (4,241)
---------- ---------- ---------- ----------
(Loss) from
continuing
operations (4,628) (2,599) (6,091) (9,540)
Income (loss) from
discontinued
operations, net - (52) - 2,299
Gain on sale of
discontinued
operations, net - 15,096 - 15,096
Extraordinary Item -
Note purchase gain,
net - 3,667 391 3,667
---------- ---------- ---------- ----------
Net income (loss) $(4,628) $16,112 $(5,700) $11,522
========== ========== ========== ==========
Operating income (loss) $(1,186) $(1,225) $ 3,668 $(1,522)
Other income 46 73 11 419
Costs associated with
option repurchase - 168 - 168
Severance 2,127 419 3,237 2,119
Depreciation 1,888 1,960 5,415 5,913
Amortization 306 347 931 1,054
---------- ---------- ---------- ----------
EBITDA from
continuing
operations 3,181 1,742 13,262 8,151
Special charges 1,500 3,450 1,500 3,450
---------- ---------- ---------- ----------
EBITDA before
special charges $ 4,681 $ 5,192 $14,762 $11,601
========== ========== ========== ==========
(a) Special charges result from: in 2001, additional provision for bad
debts in Argentina, and in 2000, charge and write-down related to
two specialty alternator projects.
Prestolite Electric Holding, Inc.
Consolidated Unaudited Balance Sheet Highlights
(in thousands of dollars)
Sept. 29 June 30, Dec. 31,
2001 2001 2000
--------- ---------- ---------
Cash $ 818 $ 3,741 $ 10,181
Accounts receivable, net 32,396 34,593 31,098
Inventory, net 41,586 41,512 42,293
Prepaid and other current assets 4,303 3,641 2,938
--------- ---------- ---------
Total current assets 79,103 83,487 86,510
Property, plant and
equipment, net 36,381 35,472 37,517
Investments 577 577 577
Intangible assets, net 7,310 7,195 7,970
Long-term receivables
and pension assets 5,830 5,382 5,752
Net assets of
discontinued operations 5,952 8,069 5,993
--------- ---------- ---------
Total assets $ 135,153 $ 140,182 $ 144,319
========= ========== =========
Current debt $ 8,977 $ 7,683 $ 6,302
Accounts payable 16,088 18,881 18,744
Accrued liabilities 11,650 13,686 14,835
--------- ---------- ---------
Total Current liabilities 36,715 40,250 39,881
Long-term debt 106,567 105,660 106,733
Other non-current liabilities 2,442 1,942 2,321
Deferred tax liabilities 1,930 1,930 2,467
--------- ---------- ---------
Total liabilities 147,654 149,782 151,402
Minority interest 1,108 - -
Shareholders equity (13,609) (9,600) (7,083)
--------- ---------- ---------
Total liabilities and equity $ 135,153 $ 140,182 $ 144,319
========= ========== =========
Debt Summary
------------
Bank debt
U.S. Float $ 270 $ - $ -
U.S. : Comerica 880 - -
United Kingdom 9,225 8,711 7,064
Argentina 1,350 2,082 1,356
South Africa 1,060 897 1,126
--------- ---------- ---------
Sub-total 12,785 11,690 9,546
Senior notes 100,108 100,108 101,883
Capital leases 2,454 1,340 1,376
Other 197 205 230
--------- ---------- ---------
Total debt 115,544 113,343 113,035
Less: cash 818 3,741 10,181
--------- ---------- ---------
Net debt $ 114,726 $ 109,602 $ 102,854
========= ========== =========
Prestolite Electric Incorporated
Sales and Profit by Quarter
$ Millions
2000
----------------------------------
Q1 Q2 Q3 Q4
------- ------- ------- -------
Sales (a)
-----
United States $ 21.4 $ 19.6 $ 19.9 $ 18.8
United Kingdom 11.8 10.9 10.2 11.2
Argentina 8.6 10.1 9.8 9.0
South Africa 3.1 2.9 2.8 1.7
China (net) -- -- -- --
------- ------- ------- -------
Continuing $ 44.9 $ 43.5 $ 42.7 $ 40.7
======= ======= ======= =======
EBITDA before special items
---------------------------
United States $ 2.6 $ 2.4 $ 3.5 $ 3.7
United Kingdom 1.7 1.2 1.3 1.4
Argentina -- 0.5 1.1 0.8
South Africa 0.3 0.2 0.4 (0.2)
China (net) (b) -- -- -- --
Corporate & Other (1.2) (1.3) (1.1) (0.4)
------- ------- ------- -------
Continuing $ 3.4 $ 3.0 $ 5.2 $ 5.3
======= ======= ======= =======
Net Income
----------
EBITDA from above $ 3.4 $ 3.0 $ 5.2 $ 5.3
Depreciation & Amort (2.3) (2.4) (2.3) (1.7)
Redundancy -- (1.7) (0.4) (0.1)
Currency/Subs (0.1) (0.5) (0.1) (0.4)
Special (c) -- -- (3.6) (0.1)
------- ------- ------- -------
EBIT 1.0 (1.6) (1.2) 3.0
Interest (4.1) (4.2) (3.7) (3.0)
Minority Interest Expense -- -- -- --
Tax benefit (expense) 0.5 1.4 2.3 0.3
Discontinued Opns (d) 0.8 1.6 (0.1) --
Gain (Loss) on Discon. (d) -- -- 15.1 (0.6)
Bond Repurchase (d) -- -- 3.7 0.3
------- ------- ------- -------
Net Income $ (1.8) $ (2.8) $ 16.1 $ (0.0)
======= ======= ======= =======
2001
----------------------------------
00-Q1 00-Q2 00-Q3 9 Mos.
------- ------- ------- -------
Sales (a)
-----
United States $ 19.9 $ 19.9 $ 19.3 $ 59.1
United Kingdom 11.1 8.9 9.0 29.0
Argentina 8.7 11.5 6.9 27.1
South Africa 2.3 1.9 1.5 5.7
China (net) -- -- 2.4 2.4
------- ------- ------- --------
Continuing $ 42.0 $ 42.2 $ 39.1 $ 123.3
======= ======= ======= ========
EBITDA before special items
---------------------------
United States $ 3.1 $ 3.3 $ 3.6 $ 10.0
United Kingdom 1.7 1.5 1.4 4.6
Argentina 0.7 1.3 (0.1) 1.9
South Africa 0.1 0.2 -- 0.3
China (net) (b) -- -- 0.7 0.7
Corporate & Other (0.8) (1.0) (0.9) (2.7)
------- ------- ------- --------
Continuing $ 4.8 $ 5.3 $ 4.7 $ 14.8
======= ======= ======= ========
Net Income
----------
EBITDA from above $ 4.8 $ 5.3 $ 4.7 $ 14.8
Depreciation & Amort (2.2) (1.9) (2.3) (6.4)
Redundancy (0.3) (0.8) (2.1) (3.2)
Currency/Subs (0.1) 0.1 -- --
Special (c) -- -- (1.5) (1.5)
------- ------- ------- --------
EBIT 2.2 2.7 (1.2) 3.7
Interest (3.1) (3.2) (3.4) (9.7)
Minority Interest Expense -- -- (0.4) (0.4)
Tax benefit (expense) -- (0.1) 0.4 0.3
Discontinued Opns (d) -- -- -- --
Gain (Loss) on Discon. (d) -- --
Bond Repurchase (d) 0.4 -- 0.4
------- ------- ------- --------
Net Income $ (0.9) $ (0.2) $ (4.6) $ (5.7)
======= ======= ======= ========
(a) Sales to end-customers. Includes sales to Prestolite Electric
Beijing, Ltd., but does not include any other intercompany sales.
(b) Net of intercompany profit elimination but before minority
interest provision.
(c) Includes the following items:
3Q 2000: Write off of investment in Ecoair and other charges
related to a discontinued specialty alternator project.
4Q 2000: Charge associated with repurchase of management stock
options from departing employees.
3Q 2001: Charge for bad debts in Argentina.
(d) Amounts shown are net of provision for taxes.