Allied Holdings Reports Profitable Fourth Quarter
DECATUR, Ga., Feb. 18 -- Allied Holdings, Inc. (AMEX:AHI) today reported results for the fourth quarter ended December 31, 2002. The Company reported net income of $2.1 million, or $0.25 per basic share and $0.24 per diluted share, in the fourth quarter of 2002, versus a net loss of $2.3 million, or $0.28 per basic and diluted share, in the fourth quarter of 2001, an improvement of $4.4 million. In addition, the Company continued to aggressively reduce debt, repaying $12.7 million of debt during the fourth quarter of 2002. The Company's total debt repayment for calendar 2002 was $40.7 million, a 14 percent reduction in long-term debt.
Net income for the fourth quarter of 2002 includes an after-tax loss of $0.8 million from the disposal of assets. The net loss for the fourth quarter of 2001 includes an after-tax gain of $11.9 million from the sale of Axis Group's joint venture in the United Kingdom and a $9.5 million after-tax impairment write-down of Axis Group's investment in a joint venture in Brazil.
Revenues for the fourth quarter of 2002 were $232.8 million compared to revenues of $224.4 million for the fourth quarter of 2001, an increase of 3.7 percent. Earnings before interest, taxes, depreciation and amortization, and gains and losses on disposal of assets (EBITDA) for the fourth quarter of 2002 were $24.6 million, 89 percent higher than the $13.0 million of EBITDA reported during the fourth quarter last year.
Commenting on the results, Hugh E. Sawyer, Allied's President and Chief Executive Officer, said, "I am pleased to report that our fourth quarter and full year results exceeded our expectations and the guidance we had previously provided as we continue to gain traction in our initiatives to improve core competencies related to execution. In particular, we have seen a significant improvement in risk management where AAG's professional drivers and management have reduced cargo damage, worker injuries and traffic accidents. This benefits all of our key constituents -- customers, lenders, shareholders, and employees. Also, our Axis subsidiary significantly improved its performance with EBITDA increasing 17 percent to $2.1 million in the fourth quarter this year from $1.8 million last year."
Full Year Results
Revenues for the year ended December 31, 2002 were $898.1 million versus $896.8 million in 2001, an increase of $1.3 million. Calendar 2002 was the first time the Company's revenues had increased from the prior year since 1999. EBITDA for calendar 2002 was $76.6 million, 285 percent higher than the $19.9 million of EBITDA reported last year. Allied experienced a net loss of $7.5 million in 2002, compared to a net loss of $39.5 million in 2001, an 81 percent reduction in the net loss.
Results for calendar 2002 include a $1.7 million after-tax gain on the early extinguishment of the Company's subordinated notes, a $4.1 million after-tax charge related to the impairment of goodwill at the Company's Axis Group subsidiary, and a $0.6 million after-tax loss on the disposal of assets. Results for calendar 2001 include an after-tax charge of $4.6 million for severance and workforce reduction expenses, an after-tax gain of $1.5 million on the disposition of excess real estate and other assets in Canada, an after-tax gain of $11.9 million from the sale of Axis Group's joint venture in the United Kingdom, and a $9.5 million after-tax impairment write-down of Axis Group's investment in its Brazilian joint venture.
Total debt as of December 31, 2002 was $248.5 million versus total debt of $289.2 million at December 31, 2001, a reduction of $40.7 million. Capital expenditures were $21.8 million during calendar 2002, versus $21.5 million in calendar 2001.
The following are key events from 2002:
-- The Company refinanced its credit facility, which expired in February
2002
-- Revenues from new business exceeded revenues from lost business for the
first time since the Ryder acquisition, which the Company considers to
be progress in organic growth
-- Significantly improved overall customer service and quality by
increasing damage free deliveries and reducing transit times
-- Obtained a three-year renewal of the Ford contract
-- Reached a strategic decision to exit substantially all business with
Nissan in the US
-- Implemented a fleet remanufacturing program
-- Established a Business Process Engineering Team
2003 Outlook
"Our aspiration for 2002 was to fully stabilize our operating platform, and I believe our results demonstrate significant signs of progress. However, Allied is still a turnaround and it is too early to declare an economic victory. We recognize there is much work left to be done at Allied," Sawyer said. "Further, there are a number of external factors that could adversely impact our 2003 results, including but not limited to a potential war with Iraq, issues related to fuel prices and the crises in Venezuela, U.S. economic conditions and new vehicle production levels. At this point, we have very limited visibility and we are therefore not yet prepared to issue guidance for 2003.
We have established the following key priorities for 2003:
-- Our objective is to achieve wage/benefit stability and work-rule
flexibility from the Teamsters Union and our bargaining unit employees.
Wage/benefit stability should facilitate Allied's economic viability.
Work-rule flexibility is needed to meet client expectations and to grow
our business.
-- Increase the pace of organic sales growth in the Allied Automotive
Group
-- Increase the organic growth opportunity at Axis
-- Execute key initiatives related to driver productivity and reducing
cargo damage, worker injuries and traffic accidents
-- Nurture and strengthen our existing customer relationships
-- Continue to eliminate costs in an uncertain economic environment
"We sincerely appreciate the support we received from our customers, lenders and shareholders during 2002," said Hugh Sawyer. "We are particularly proud of the outstanding employees at Allied who have worked tirelessly under challenging conditions to improve our performance. Our aspiration is to continue to build an industry-leading company of choice for customers, shareholders and employees."
About Allied Holdings
Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle distribution continuum, and include car-hauling, intramodal transport, inspection, accessorization, and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles.
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, including statements regarding improvement of the Company's operating performance, the ability of the Company to execute key initiatives, and the ability of the Company to increase sales growth in AAG and Axis, and the amount of capital expenditures for 2003, 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 ability of the Company to seek economic flexibility from the Teamsters Union, the highly competitive nature of the automotive distribution industry, the ability of the Company to comply with the terms of its current debt agreements, the ability of the Company to obtain financing in the future and the Company's highly leveraged financial position. 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: www.companyboardroom.com or www.alliedholdings.com beginning at 10:30 a.m. EST.
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2002 FOURTH QUARTER EARNINGS RELEASE
(In Thousands, Except Per Share Data)
For the Three Months Ended
December 31,
2002 2001
(Unaudited) (Unaudited)
Revenues $232,832 $224,383
Net income (loss) $2,095 ($2,272)
Earnings (loss) per share:
Basic $0.25 ($0.28)
Diluted $0.24 ($0.28)
Weighted average common shares
outstanding:
Basic 8,360 8,167
Diluted 8,646 8,167
For the Twelve Months Ended
December 31,
2002 2001
(Unaudited)
Revenues $898,060 $896,767
Loss before cumulative effect of
change in accounting principle ($3,434) ($39,496)
Loss per share before cumulative
effect of change in accounting
principle:
Basic ($0.41) ($4.86)
Diluted ($0.41) ($4.86)
Net loss ($7,526) ($39,496)
Net loss per share:
Basic ($0.91) ($4.86)
Diluted ($0.91) ($4.86)
Weighted average common shares
outstanding:
Basic 8,301 8,128
Diluted 8,301 8,128
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, December 31,
2002 2001
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $10,253 $10,543
Short-term investments 60,732 64,794
Receivables, net of allowance
for doubtful accounts of
$5,587 and $11,058,
respectively 58,512 72,292
Inventories 5,071 5,349
Deferred tax assets 39,826 32,403
Prepayments and other current
assets 28,685 18,921
Total current assets 203,079 204,302
PROPERTY AND EQUIPMENT, NET 176,663 214,641
OTHER ASSETS:
Goodwill, net 85,241 90,230
Other 20,525 24,219
Total other assets 105,766 114,449
Total assets $485,508 $533,392
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $10,785 $2,625
Trade accounts payable 36,585 40,232
Accrued liabilities 92,881 82,963
Total current liabilities 140,251 125,820
LONG-TERM DEBT, less current maturities 237,690 286,533
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 7,467 9,363
DEFERRED INCOME TAXES 27,746 21,383
OTHER LONG-TERM LIABILITIES 62,040 72,296
STOCKHOLDERS' EQUITY:
Common stock, no par value; 20,000
shares authorized, 8,421 and 8,274
shares outstanding at December 31, 2002
and 2001, respectively -- --
Additional paid-in capital 46,801 46,520
Treasury stock at cost, 139 shares at
December 31, 2002 and 2001 (707) (707)
Retained deficit (26,420) (18,894)
Accumulated other comprehensive loss,
net of tax (9,360) (8,922)
Total stockholders' equity 10,314 17,997
Total liabilities and
stockholders' equity $485,508 $533,392
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
2002 2001 2002 2001
(Unaudited) (Unaudited) (Unaudited)
REVENUES $232,832 $224,383 $898,060 $896,767
OPERATING EXPENSES:
Salaries, wages and fringe
benefits 119,692 124,910 483,545 515,916
Operating supplies and
expenses 38,474 33,964 138,542 149,111
Purchased transportation 26,671 22,566 99,109 97,756
Insurance and claims 9,156 13,249 43,500 50,837
Operating taxes and licenses 8,852 8,272 33,583 33,262
Depreciation and amortization 14,793 14,908 54,880 60,358
Rents 1,447 1,460 6,342 6,813
Communications and utilities 1,129 1,770 6,419 7,022
Other operating expenses 2,777 5,218 10,384 16,126
Loss (gain) on disposal of
operating assets, net 1,095 (6) 748 (2,725)
Total operating
expenses 224,086 226,311 877,052 934,476
Operating income
(loss) 8,746 (1,928) 21,008 (37,709)
OTHER INCOME (EXPENSE):
Equity in earnings of UK and
Brazil joint ventures, net
of tax -- 479 -- 4,072
Gain on sale of joint venture -- 16,230 -- 16,230
Write down of joint venture -- (10,042) -- (10,042)
Interest expense (7,284) (10,580) (30,627) (37,574)
Interest income 1,373 1,860 2,463 3,874
Gain on early extinguishment
of debt -- -- 2,750 --
Other, net (50) 360 (157) 360
(5,961) (1,693) (25,571) (23,080)
INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 2,785 (3,621) (4,563) (60,789)
INCOME TAX (EXPENSE) BENEFIT (690) 1,349 1,129 21,293
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 2,095 (2,272) (3,434) (39,496)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX -- -- (4,092) --
NET INCOME (LOSS) $2,095 ($2,272) ($7,526) ($39,496)
BASIC & DILUTED EARNINGS (LOSS)
PER COMMON SHARE:
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE :
BASIC $0.25 ($0.28) ($0.41) ($4.86)
DILUTED $0.24 ($0.28) ($0.41) ($4.86)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX:
BASIC -- -- ($0.50) --
DILUTED -- -- ($0.50) --
NET INCOME (LOSS):
BASIC $0.25 ($0.28) ($0.91) ($4.86)
DILUTED $0.24 ($0.28) ($0.91) ($4.86)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
BASIC 8,360 8,167 8,301 8,128
DILUTED 8,646 8,167 8,301 8,128
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
For the Twelve Months Ended
December 31,
2002 2001
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($7,526) ($39,496)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Gain on early extinguishment
of debt (2,750) --
Interest expense paid in kind 1,115 248
Amortization of deferred
financing costs 4,004 4,795
Depreciation and amortization 54,880 60,358
Gain on disposal of assets and
other, net 905 (3,890)
Gain on sale of joint ventures -- (16,230)
Write down of joint ventures -- 10,042
Cumulative effect of change in
accounting principle 5,194 --
Deferred income taxes (1,279) (21,703)
Compensation expense related
to stock options and grants (65) 181
Equity in earnings of joint
ventures -- (4,072)
Amortization of Teamsters
Union contract costs 2,400 2,403
Change in operating assets and
liabilities:
Receivables, net of allowance
for doubtful accounts 13,667 40,679
Inventories 270 1,980
Prepayments and other
current assets (9,786) 293
Short-term investments 4,062 (4,902)
Trade accounts payable (3,603) (5,430)
Accrued liabilities (3,003) 2,776
Net cash provided by
operating activities 58,485 28,032
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (21,786) (21,463)
Proceeds from sale of property and
equipment 4,725 11,762
Investment in joint ventures -- (464)
Cash received from joint ventures -- 8,624
Proceeds from sale of equity
investment in joint venture 3,000 20,560
Decrease in the cash surrender
value of life insurance 2,641 420
Net cash (used in) provided by
investing activities (11,420) 19,439
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to revolving credit facilities,
net (74,263) (35,966)
Additions to long-term debt 82,750 --
Repayment of long-term debt (47,535) (109)
Payment of deferred financing
costs (9,262) (3,574)
Proceeds from issuance of common
stock 338 349
Other, net 434 (612)
Net cash used in
financing activities (47,538) (39,912)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 183 611
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (290) 8,170
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 10,543 2,373
CASH AND CASH EQUIVALENTS AT END OF YEAR $10,253 $10,543
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2002 FOURTH QUARTER EARNINGS RELEASE
OPERATING DATA
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DEC 31 DEC 31
2002 2001 2002 2001
ALLIED HOLDINGS,
EXCLUDING AAG -
CANADA & AXIS:
REVENUES $187,090,000 $180,186,000 $716,758,000 $718,473,000
OPERATING INCOME
(LOSS) $6,212,000 ($4,020,000) $4,224,000 ($43,318,000)
OPERATING RATIO 96.68% 102.23% 99.41% 106.03%
VEHICLES DELIVERED 1,885,306 1,802,639 7,191,971 7,335,170
LOADS DELIVERED 239,123 220,608 900,044 897,423
VEHICLES PER LOAD 7.88 8.17 7.99 8.17
REVENUE PER VEHICLE $99.24 $99.96 $99.66 $97.95
PERCENT DAMAGE FREE
DELIVERY 99.6% 99.6% 99.6% 99.6%
NUMBER OF
AVERAGE ACTIVE RIGS 3,044 3,127 3,043 3,311
AVERAGE EMPLOYEES
DRIVERS 3,356 3,349 3,234 3,414
OTHERS 1,650 2,082 1,767 2,241
ALLIED AUTOMOTIVE GROUP
- CANADA:
REVENUES $37,182,000 $36,078,000 $151,283,000 $149,749,000
OPERATING INCOME $1,185,000 $1,322,000 $12,472,000 $3,740,000
OPERATING RATIO 96.81% 96.34% 91.76% 97.50%
VEHICLES DELIVERED 533,627 563,612 2,201,468 2,296,456
LOADS DELIVERED 69,938 73,867 287,023 306,603
VEHICLES PER LOAD 7.63 7.63 7.67 7.49
REVENUE PER VEHICLE $69.68 $64.01 $68.72 $65.21
PERCENT DAMAGE FREE
DELIVERY 99.6% 99.7% 99.7% 99.7%
NUMBER OF
AVERAGE ACTIVE RIGS 771 761 749 812
AVERAGE EMPLOYEES
DRIVERS 1,102 1,107 1,105 1,187
OTHERS 454 504 481 505
AXIS GROUP:
REVENUES $8,560,000 $8,119,000 $30,019,000 $28,545,000
OPERATING INCOME $1,349,000 $770,000 $4,312,000 $1,869,000
LOSS (GAIN) ON
DISPOSAL OF
OPERATING ASSETS 2,000 1,000 -- (198,000)
DEPRECIATION AND
AMORTIZATION 750,000 986,000 2,956,000 3,754,000
AXIS EBITDA $2,101,000 $1,757,000 $7,268,000 $5,425,000
RECONCILIATION OF
OPERATING INCOME
TO EBITDA:
CONSOLIDATED
OPERATING (LOSS)
INCOME $8,746,000 ($1,928,000) $21,008,000 ($37,709,000)
LOSS (GAIN) ON
DISPOSAL OF
OPERATING ASSETS 1,095,000 (6,000) 748,000 (2,725,000)
DEPRECIATION AND
AMORTIZATION 14,793,000 14,908,000 54,880,000 60,358,000
CONSOLIDATED
EBITDA $24,634,000 $12,974,000 $76,636,000 $19,924,000