J.L. French Automotive Castings, Inc., Announces First-Quarter Results
MINNEAPOLIS--May 5, 2003--J.L. French Automotive Castings, Inc., today announced results for its first quarter ended March 31, 2003. For the quarter, revenues were $143.6 million, an increase of 6.6 percent compared with revenues of $134.7 million in the 2002 period. Operating income was $14.6 million compared to $12.8 million in the prior-year quarter, a 14.1 percent increase. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 6.1 percent to $26.2 million from $24.7 million in the first quarter of 2002. EBITDA before the impact of loss contract reserves increased 18.0 percent to $25.5 million in the 2003 first quarter compared to $21.6 million in the 2002 period.In commenting on first-quarter results, David S. Hoyte, president and chief executive officer, said, "While our sales increased approximately 6.6 percent, we were able to increase cash EBITDA by 18.0 percent. The improvement is the result of new business at our foreign operations and aggressive cost reductions at all of our facilities. All of our cost reduction initiatives continue to be on target, including the closure of our Grandville, Michigan facility. In addition, the progress on our backlog of new business awards continues to be on schedule."
Beginning in 2003, the company began classifying certain plant related expenses as a cost of sales. Previously, these costs were classified as selling, general and administrative expenses. Results for the three months ended March 31, 2002 have been reclassified to conform to the new presentation. The reclassification had no impact on previously reported operating income, EBITDA or net income.
Cash interest expense increased from $12.0 million in the first quarter of 2002 to $15.2 million in 2003. The increase is the result of higher weighted average interest rates in the 2003 period. Non-cash deferred interest and amortization of debt costs increased from $0.6 million in 2002 to $3.2 million in 2003, primarily as a result of the December 2002 financing transactions.
During the three months ended March 31, 2003, the company recorded a non-cash charge of $1.7 million related to exchange rates on debt denominated in foreign currencies.
The following table reconciles operating income to EBITDA and EBITDA before the impact of loss contract reserves for the three months March 31, 2003 and 2002 (in thousands):
Three Months Ended
March 31,
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2003 2002
--------- --------
Operating income $14,582 $12,815
Depreciation and amortization 11,597 11,846
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EBITDA(1) 26,179 24,661
Loss contract reserve reversals (663) (3,033)
--------- --------
EBITDA before the impact
of loss contract reserve
reversals $25,516 $21,628
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(1) The company presents EBITDA and EBITDA before the impact of loss
contract reserve reversals as management believes that these financial
measures are more useful given the nature of the business, recent
acquisitions, and investors analysis of the business.
About J.L. French Automotive Castings, Inc.
J.L. French Automotive Castings, Inc., is a leading global designer and manufacturer of highly engineered aluminum die cast automotive parts including oil pans, engine front covers and transmission cases. The company has manufacturing facilities in Sheboygan, Wis.; Benton Harbor, Mich.; Glasgow, Ky.; San Andres de Echevarria, Spain; Saltillo, Mexico; as well as five plants in the United Kingdom. The company is based in Sheboygan, Wis., and has its corporate office in Minneapolis, Minn.
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or similar expressions. These statements are based on certain assumptions that the company has made in light of its experience in the industry as well as its perspective of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to (i) expected synergies, economies of scale and cost savings from the company's acquisitions not being fully realized or realized within the expected time frames; (ii) unanticipated difficulties servicing the level of indebtedness at the company, (iii) costs or operational difficulties related to integrating the operations of the acquired entities with those of the company being greater than expected; (iv) labor disputes involving the company or its significant customers, (v) risks associated with conducting business in foreign countries, and (vi) general economic or business conditions affecting the automotive industry, either nationally or regionally, being less favorable than expected.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands - unaudited)
Three Months Ended
March 31,
-----------------------
2003 2002
----------- -----------
Sales $143,621 $134,714
Cost of sales 124,961 118,207
----------- -----------
Gross profit 18,660 16,507
Selling, general and administrative expenses 4,078 3,692
----------- -----------
Operating income 14,582 12,815
Interest expense, net:
Cash interest expense, net 15,179 11,980
Deferred interest and exit fees 2,253 --
Amortization of debt issuance costs and
discount 947 577
----------- -----------
Total interest expense, net 18,379 12,557
Other expense, non cash foreign currency charge 1,695 --
----------- -----------
(Loss) income before provision for income
taxes and cumulative effect of change in
accounting principle (5,492) 258
Provision for income taxes 68 363
----------- -----------
Loss before cumulative effect of change in
accounting principle (5,560) (105)
Cumulative effective of change in accounting
principle, writeoff of goodwill -- (202,622)
----------- -----------
Net loss $(5,560) $(202,727)
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J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
March 31, December 31,
Assets 2003 2002
------ ----------- ------------
(unaudited)
Current assets:
Cash and cash equivalents $2,060 $3,337
Accounts receivable, net 53,478 49,574
Inventories 36,954 35,357
Other current assets 15,739 13,437
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Total current assets 108,231 101,705
Property, plant and equipment, net 249,033 250,969
Goodwill 95,477 95,171
Intangible and other assets, net 16,640 17,094
----------- ------------
$469,381 $464,939
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Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current maturities of long-term debt $13,542 $12,342
Accounts payable 61,283 56,187
Accrued liabilities 42,010 31,107
----------- ------------
Total current liabilities 116,835 99,636
Long-term debt, net of current maturities 389,543 398,221
Subordinated notes 175,000 175,000
Other noncurrent liabilities 27,361 26,593
----------- ------------
Total liabilities 708,739 699,450
----------- ------------
Redeemable common stock 60,000 60,000
Stockholders' deficit:
Common stock -- --
Additional paid-in capital 87,538 87,538
Accumulated deficit (376,893) (371,333)
Accumulated other comprehensive loss (10,003) (10,716)
----------- ------------
Total stockholders' deficit (299,358) (294,511)
----------- ------------
$469,381 $464,939
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