Prestolite Electric Reports Third Quarter 2002 Results
ANN ARBOR, Mich.--Nov. 12, 2002--Prestolite Electric Incorporated and its parent, Prestolite Electric Holding, Inc., announced on Nov. 7 financial results for the third quarter of 2002. Third-quarter sales of $43.2 million generated earnings before interest, taxes, depreciation and certain non-recurring costs (EBITDA) of $7.1 million, 16% of sales. Sales grew 6% and EBITDA grew 13% from the second quarter of 2002. Compared to the third quarter of 2001 sales rose 10% while EBITDA increased 51%. Prestolite recorded a severance charge of $1.7 million during the quarter, primarily to cover the elimination of 62 jobs in the United Kingdom, generating annual savings of $1.8 million. Net income was $1.0 million in the third quarter of 2002 compared to a net loss of $4.6 million in the third quarter last year.Nine-month sales declined 2% from the equivalent period of 2001 to $120.5 million, while nine-month EBITDA rose 22% to $18.0 million. Year-to-date net income was $0.1 million in 2002 versus a $5.7 million net loss in 2001.
"We were pleased with our third consecutive quarter of sequential sales growth and with our 16% EBITDA performance," said P. Kim Packard, company president and CEO. "Our full-line capabilities and new product introductions are enhancing sales while our cost reduction efforts have improved our profitability. During the third quarter in North America we continued to see strong aftermarket demand, good military volume and increasing commercial original-equipment sales. Although sales in Argentina have declined from last year due to the devaluation of the peso, our profit in Argentina (both for the quarter and nine-month periods) is up significantly. Sales growth and profitability in China continues to be excellent. Going forward we will continue to pursue new products and markets. We will also make use of low-cost sources, both internal and external, as an important part of our on-going cost reduction program."
Driven by the twice-a-year $4.8 million senior note interest payment made August 1, net debt increased by $3.0 million during the quarter, to $114.4 million. At the end of September Prestolite had an unused U.S. line of credit of $10.7 million. Capital spending of $1.1 million during the quarter brought nine-month spending to $3.1 million. During the quarter the company recorded a benefit of $647,000 for the decline in the fair value, relative to the related exercise price, of certain stock options whose terms were extended in the previous year.
Prestolite Electric Incorporated manufactures alternators and starter motors. These are supplied under the Prestolite Electric, Leece-Neville, and Indiel brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. Genstar Investment Corporation controls 97% of the outstanding shares; management owns the balance.
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 Income Statement
(in thousands of dollars)
Three months ending Nine months ending
-------------------- -------------------
Sep 28 Sep 29 Sep 28 Sep 29
2002 2001 2002 2001
---------- --------- --------- ---------
Net sales $43,152 $39,144 $120,535 $123,326
Cost of goods sold 32,789 31,080 91,506 98,721
---------- --------- --------- ---------
Gross profit 10,363 8,064 29,029 24,605
Selling, general &
administrative 5,047 5,623 16,143 16,200
Costs associated with option
repricing (647) - (647) -
Additional Argentina bad debt
provision - 1,500 - 1,500
Severance 1,700 2,127 1,880 3,237
---------- --------- --------- ---------
Operating income (loss) 4,263 (1,186) 11,653 3,668
Lease guarantee charge - - 400 -
Other (income) (94) (46) (132) (11)
Loss (gain) on foreign
exchange 62 (13) 1,025 19
Interest expense 2,816 3,501 8,432 9,844
Minority interest expense 741 398 1,641 398
---------- --------- --------- ---------
Sub-total 738 (5,026) 287 (6,582)
Income tax expense (benefit) (238) (398) 228 (491)
---------- --------- --------- ---------
Income (loss) before
extraordinary item 976 (4,628) 59 (6,091)
Extraordinary item - note
purchase gain, net - - - 391
---------- --------- --------- ---------
Net income (loss) $976 $(4,628) $59 $(5,700)
========== ========= ========= =========
Operating income (loss) $4,263 $(1,186) $11,653 $3,668
Other income 94 46 132 11
Costs associated with option
repurchase (647) - (647) -
Severance 1,700 2,127 1,880 3,237
Depreciation 1,459 1,888 4,424 5,415
Amortization 198 306 537 931
Additional Argentina bad debt
provision - 1,500 - 1,500
---------- --------- --------- ---------
EBITDA $7,067 $4,681 $17,979 $14,762
========== ========= ========= =========
EBITDA percent of sales 16.4% 12.0% 14.9% 12.0%
Prestolite Electric Holding, Inc.
Consolidated Unaudited Balance Sheet
(in thousands of dollars)
September 28, June 29, December 31,
2002 2002 2001
------------- ---------- ------------
Cash $1,738 $2,093 $2,907
Accounts receivable, net 30,424 28,100 24,900
Inventories, net 39,556 38,914 40,889
Prepaid and other current assets 3,788 3,187 4,280
------------- ---------- ------------
Total current assets 75,506 72,294 72,976
Property, plant and equipment,
net 32,274 32,229 33,831
Investments 577 577 577
Intangible assets, net 7,437 7,544 7,091
Other long term assets 3,255 2,961 4,184
Net assets of discontinued
operations 2,441 2,389 5,714
------------- ---------- ------------
Total assets $121,490 $117,994 $124,373
============= ========== ============
Current debt $11,682 $8,286 $7,236
Accounts payable 16,392 17,001 18,351
Accrued liabilities 12,860 13,137 14,007
------------- ---------- ------------
Total current liabilities 40,934 38,424 39,594
Long-term debt 104,426 105,008 105,008
Other non-current liabilities 748 802 1,754
------------- ---------- ------------
Total liabilities 146,108 144,234 146,356
Minority interest 5,007 4,255 3,367
Cumulative translation adjustment (15,158) (15,698) (11,470)
Other shareholders' equity (14,467) (14,797) (13,880)
------------- ---------- ------------
Total liabilities and equity $121,490 $117,994 $124,373
============= ========== ============
Debt Summary:
Bank debt
U.S. float $578 $717 $319
U.S. revolver 2,314 230 470
United Kingdom 9,763 9,018 9,140
Argentina - - 125
South Africa 1,041 851 747
China 362 362 -
------------- ---------- ------------
Sub-total - bank debt 14,058 11,178 10,801
Senior notes 100,108 100,108 100,108
Argentina - Mosal 941 909 -
Capital leases & other 1,001 1,099 1,335
------------- ---------- ------------
Total debt 116,108 113,294 112,244
Less: cash (1,738) (2,093) (2,907)
------------- ---------- ------------
Net debt 114,370 111,201 109,337
Argentina - discounted
receivables - - 263
------------- ---------- ------------
Total $114,370 $111,201 $109,600
============= ========== ============
Prestolite Electric Holding, Inc.
Sales and EBITDA by Country by Quarter
(Millions of Dollars)
2 0 0 1
--------------------------------------
Sales 2000 Q1 Q2 Q3 Q4 Total
------- ------ ------ -------- ------- -------
United States $80.6 $19.2 $19.8 $19.3 $19.4 $77.7
United Kingdom 44.2 11.1 8.9 9.0 9.0 38.0
Argentina 40.8 9.4 12.2 7.7 4.6 33.9
South Africa 12.9 2.8 2.5 2.2 1.9 9.4
China (net) - - - 2.3 3.0 5.3
Eliminations &
Adjustments (6.6) (0.5) (1.2) (1.4) (1.9) (5.0)
------- ------ ------ -------- ------- -------
Continuing $171.9 $42.0 $42.2 $39.1 $36.0 $159.3
======= ====== ====== ======== ======= =======
EBITDA
United States $12.2 $3.1 $3.3 $3.6 $3.3 $13.3
United Kingdom 5.6 1.7 1.5 1.4 1.2 5.8
Argentina 2.4 0.7 1.3 (0.1) (0.9) 1.0
South Africa 0.7 0.1 0.2 - 0.2 0.5
China (net) - - - 0.7 1.3 2.0
Corporate & Other (4.0) (0.8) (1.0) (0.9) (0.8) (3.5)
------- ------ ------ -------- ------- -------
Continuing $16.9 $4.8 $5.3 $4.7 $4.3 $19.1
======= ====== ====== ======== ======= =======
EBITDA Percentage
United States 15.1% 16.1% 16.7% 18.7% 17.0% 17.1%
United Kingdom 12.7% 15.3% 16.9% 15.6% 13.3% 15.3%
Argentina 5.9% 7.4% 10.7% (1.3%) (19.6%) 2.9%
South Africa 5.4% 3.6% 8.0% - 10.5% 5.3%
China (net) - - - 30.4% 43.3% 37.7%
Total 9.8% 11.4% 12.6% 12.0% 11.9% 12.0%
2 0 0 2
-------------------------------------------
Sales 1Q Q2 Q3 Total
----------- ---------- ---------- ---------
United States $22.2 $23.7 $25.4 $71.3
United Kingdom 8.5 9.0 9.0 26.5
Argentina 3.8 3.8 4.0 11.6
South Africa 1.5 2.1 2.1 5.7
China (net) 2.8 4.1 4.2 11.1
Eliminations &
Adjustments (2.2) (2.0) (1.5) (5.7)
----------- ---------- ---------- ---------
Continuing $36.6 $40.7 $43.2 $120.5
=========== ========== ========== =========
EBITDA
United States $3.6 $4.0 $4.5 $12.1
United Kingdom 1.2 1.4 1.3 3.9
Argentina 0.5 0.9 1.0 2.4
South Africa 0.1 0.2 0.2 0.5
China (net) 0.7 1.4 1.5 3.6
Corporate & Other (1.5) (1.6) (1.4) (4.5)
----------- ---------- ---------- ---------
Continuing $4.6 $6.3 $7.1 $18.0
=========== ========== ========== =========
EBITDA Percentage
United States 16.2% 16.9% 17.7% 17.0%
United Kingdom 14.1% 15.6% 14.4% 14.7%
Argentina 13.2% 23.7% 25.0% 20.7%
South Africa 6.7% 9.5% 9.5% 8.8%
China (net) 25.0% 34.1% 35.7% 32.4%
Total 12.6% 15.5% 16.4% 14.9%
Sales above include intercompany sales for Argentina and South Africa
and include sales to China (PEBL) for the United States and the United
Kingdom. Certain sales adjustments allocated to country for 10-Q
segment reporting are here included in "Eliminations & Adjustments."