Veltri Metal Products, Inc. Reports Loss for 2003 Substantially Lower Than 2002
TROY, Mich., April 1 -- Automotive parts supplier Veltri Metal Products, Inc. ("Veltri") reported a net loss for its latest quarter. For the full year, the loss before an extraordinary gain is sharply reduced from that of the prior year.
For the quarter ended December 31, 2002, Veltri reported a net loss of $4.5 million, compared to a loss before extraordinary gain of $37.4 million during the year-earlier period. As summarized in the table below, the operating results for both periods included certain items that impact comparability between periods. Excluding the effects of these items, adjusted net loss for the quarter ended December 31, 2002, was $2.4 million compared to an adjusted net income of $0.5 million during the year-earlier period. Quarterly net sales were $55.2 million as compared to $62.4 million for the year-earlier period, due to customer in sourcing of certain parts and selling price reductions.
For the full year ended December 31, 2002, Veltri reported a net loss of $0.2 million compared to a loss before extraordinary gain of $49.7 million in the prior year. As summarized in the table below, the operating results for both periods included certain items that impact comparability between periods. Excluding the effects of these items, adjusted net loss for the year ended December 31, 2002, was $0.2 million compared to an adjusted net loss of $8.1 million during the prior year. Results in 2002 benefited from $6.5 million in lower interest costs primarily due to the conversion of debt to common stock in connection with the Company's emergence from bankruptcy in December 2001. Net sales for the full year were $254.0 million as compared to $258.3 million for prior year.
The Company also announced earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of $3.2 million, compared to $9.5 million during the year-earlier period. The year-earlier period benefited from the $2.5 million non-recurring credit. EBITDA for the full year was $21.7 million as compared to $21.4 million for the prior year.
Outstanding indebtedness and net of cash at the end of the year was $72.5 million, compared to $67.9 million at the end of the prior year.
Michael Veltri, President and CEO, said, "The results for 2002 demonstrate the continued success of the efforts initiated in 2001. During the fourth quarter, the Company received long-term annual sales awards and continued to quote on prospective awards to fill unused capacity." Mr. Veltri stated, "Despite continuing price-down pressure and some in-sourcing by the vehicle manufacturers, we were able to improve our results through new business awards, continuous improvement and cost reduction initiatives. We are also most excited about the continued success in all our new product launches such as the Honda Pilot and Element, and the successful launch of our product on the new Chrysler Pacifica arriving in dealer showrooms now. In early March, we broke ground on a new 110,000 sq. ft. manufacturing and office facility in Lakeshore, Ontario to support new business from our vehicle manufacturing customers."
In early March 2003, the Company decided to close the J&R Manufacturing division ("J&R"), in Harrison Township, Michigan, which had sales of $7.5 million and negative EBITDA in 2002. J&R produces prototype parts and low- volume production stampings. In addition to the $2.1 million impairment loss recognized in the fourth quarter of 2002 (as shown in the table), the Company expects to record a charge for the closure of J&R in the first quarter of 2003. The Company does not expect this closure to have any material effect on its remaining business.
On March 13, 2003, the Company received notification from the State of Michigan Department of Consumer and Industry Services, General Industry Safety Division, of three claims against its Royal Oak, Michigan facility: (a) a reversion of a previous settlement agreement; (b) failure to abate violations, and (c) a citation of penalties relating to alleged violations of Michigan OSHA regulations. Included in the notification was the imposition of penalties amounting to $690,500. The Company has begun an investigation into the allegations, but at this time believes the facility is in material compliance and, accordingly, has appealed the notification. Moreover, the Company believes strongly that the Royal Oak facility is a safe workplace, as evidenced by its below-average injury rate compared to all metal stampers.
Looking ahead, 2003 will be a challenging year for the Company. Of particular importance to Veltri is the extended model changeover at the DaimlerChrysler Brampton, Ontario plant from the "LH" vehicle platform to the new "LX" platform in the second half of 2003. This will result in underutilized capacity during this period. The market facing the vehicle manufacturers could be difficult this year and this will translate into a challenge for the automotive supplier industry. The vehicle manufacturers' emphasis on cost-downs and continuous improvement, coupled with the weak market, the potential for labor disruption and the impact of the situation in the Middle East, all will negatively impact earnings. These factors are amplified by the capital-intensive nature of the metal stamping sector. The Company also must refinance its debt by June 30, 2003, in a tight capital market.
The steps taken by Veltri in 2001 and 2002 have positioned the Company in a positive posture to respond to the challenges of 2003.
As indicated above, the periods presented include certain restructuring, reorganization, impairment and other items related to the Company's emergence from bankruptcy in December 2001, that affect comparability. Adjusted net income excludes the impairment loss discussed above and other previously disclosed items. The following table reconciles reported net income (loss) to adjusted net income for the periods presented:
(In Millions of $s) Quarter ended Dec. 31 Year ended Dec. 31
2002 2001 2002 2001
Reported net income (loss) ($4.5) $63.3 ($0.2) $51.0
Extraordinary gain - (100.7) - (100.7)
Loss before
extraordinary gain (4.5) (37.4) (0.2) (49.7)
Legal settlement - - (1.7) -
Fresh start adjustments - 38.5 - 42.2
Deferred compensation credit - (2.5) - (2.5)
Impairment loss 2.1 - 2.1 -
Restructuring charge (credit) - 1.9 (0.4) 1.9
Adjusted net income (loss) ($2.4) $0.5 ($0.2) ($8.1)
VELTRI METAL PRODUCTS, INC. is a leading full-service Tier One designer and manufacturer of high quality, stamped metal components and complex assemblies used by North American automotive vehicle manufacturers including DaimlerChrysler, General Motors Corporation, Honda Motors Co., Ltd., Ford Motor Company and other Tier One suppliers. The Company specializes in underbody/chassis and unexposed body structure assemblies for passenger cars, light trucks and full-size vans. Veltri's products include frame rail assemblies, inner quarter panels, rear ladder modules, cross member assemblies and trailer hitch assemblies. The Company operates nine facilities throughout North America and generates sales of approximately US$250 million. The Company and its management team are highly respected within the automotive industry for their expertise in supplying multi-component, complex stamping assemblies, an outstanding new program launch record and strong customer and employee relationships. The Company employs over 1,600 people at manufacturing facilities in the United States and Canada and is headquartered in Troy, Michigan.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the anticipated results as a consequence of certain risks and uncertainties, including but not limited to general economic conditions in the markets in which Veltri Metal Products, Inc. operates, and other risks. The Company disclaims any intention and undertakes no obligation to update or revise any forward-looking statements to reflect subsequent information, events or circumstances or otherwise.