Prestolite Electric Reports Third Quarter 2003 Results
ANN ARBOR, Mich.--Nov. 7, 2003--Prestolite Electric Incorporated and its parent, Prestolite Electric Holding, Inc., today announced financial results for the period ended September 27, 2003. Third quarter sales of $50.9 million generated adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and certain other items) of $8.0 million. From the third quarter of 2002 sales increased 18% while adjusted EBITDA increased 13%. Compared to the second quarter of 2003 sales increased 11% and adjusted EBITDA increased 5%. Nine month 2003 sales of $139.3 million represented growth of 16% from the equivalent period of 2002, while adjusted EBITDA for the nine months grew 28%, to $23.1 million."We were pleased to produce our seventh consecutive quarter of adjusted EBITDA growth," said P. Kim Packard, Prestolite President and CEO. "China, where our business rebounded from the adverse impact of the SARS virus, was largely responsible for the increase in sales and profit from the second to the third quarter of 2003. Adjusted EBITDA increased from the second quarter but declined as a percent of sales because of operating difficulties in South Africa and adverse sales mix in North America. Compared to the third quarter of 2002, we enjoyed sales growth on every continent and EBITDA growth on every continent except Africa."
Prestolite recorded a stock option charge of $2.1 million during the quarter, reflecting an increase in the estimated fair market value of the Company's equity. In the third quarter of 2002 the company recorded an option benefit of $0.6 million because of a decline in the estimated equity fair market value. Net loss for the 2003 third quarter was $0.4 million, compared to $1.0 million net income in the corresponding quarter of 2002. Excluding the non-cash stock option charge and benefit, third quarter net income would have been $1.7 million in 2003 compared to $0.3 million in 2002. For the nine-month period, 2003 net income was $3.0 million compared to $0.1 million in 2002. Excluding the stock option charge and benefit, equivalent nine-month figures would be net income of $5.7 million in 2003 compared to a net loss of $0.6 million in 2002.
Debt, net of cash, increased $0.7 million during the quarter, to $107.9 million. Third-quarter capital spending of $1.1 million brought year-to-date capital spending to $3.5 million. At September 27, 2003 the Company had unborrowed bank loan commitments totaling $11.0 million in the United States and $2.4 million in the United Kingdom.
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 Capital Corporation controls 97.5% of the outstanding shares; management owns the balance.
EBITDA is a widely accepted financial indicator of a company's operating performance, but is not calculated the same by all companies. EBITDA should not be considered by an investor or lender 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. A reconciliation of adjusted EBITDA to operating income is provided at the bottom of the accompanying income statement.
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 ended Nine months ended
-------------------- --------------------
Sept 28, Sept 27, Sept 28, Sept 28,
2002 2003 2002 2003
---------- --------- ---------- ---------
Income Statement
----------------
Net sales $43,152 $50,865 $120,535 $139,279
Cost of goods sold 32,789 39,367 91,506 105,079
---------- --------- ---------- ---------
Gross profit 10,363 11,498 29,029 34,200
Percent to sales 24.0% 22.6% 24.1% 24.6%
Selling, general &
administrative 5,047 5,573 16,143 17,067
Costs from sale-of-company
efforts - 189 - 189
Stock option charges (647) 2,106 (647) 2,687
Severance 1,700 35 1,880 118
---------- --------- ---------- ---------
Operating income 4,263 3,595 11,653 14,139
Other income (94) (90) (132) (261)
Lease guarantee charge - - 400 -
Loss on foreign exchange 62 286 1,025 364
Interest expense 2,816 2,673 8,432 8,217
Minority interest expense 741 718 1,641 1,548
---------- --------- ---------- ---------
Pretax income 738 8 287 4,271
Income tax provision
(benefit) (238) 407 228 1,299
---------- --------- ---------- ---------
Net income (loss) 976 (399) 59 2,972
Foreign currency
translation adjustment 540 49 (3,688) 2,063
---------- --------- ---------- ---------
Net comprehensive income
(loss) $ 1,516 $ (350) $ (3,629) $ 5,035
========== ========= ========== =========
Income Statement Reconciliation
-------------------------------
Operating income $ 4,263 $ 3,595 $ 11,653 $ 14,139
Other income 94 90 132 261
Costs from sale-of-company
efforts - 189 - 189
Stock option charges (647) 2,106 (647) 2,687
-
Severance 1,700 35 1,880 118
Depreciation 1,459 1,763 4,424 5,132
Amortization 198 191 537 567
---------- --------- ---------- ---------
Adjusted EBITDA $ 7,067 $ 7,969 $ 17,979 $ 23,093
========== ========= ========== =========
Percent to sales 16.4% 15.7% 14.9% 16.6%
Prestolite Electric Holding, Inc.
Consolidated Unaudited Balance Sheet Highlights
(In thousands of dollars)
Dec 31 March 29 June 28 Sept 27
2002 2003 2003 2003
-------- -------- -------- --------
Cash $ 4,386 $ 3,400 $ 3,668 $ 996
Accounts receivable, net 28,264 30,279 29,987 34,858
Inventory, net 38,699 43,237 46,850 44,243
Prepaid and other current
assets 2,675 2,914 3,209 3,203
-------- -------- -------- --------
Total current assets 74,024 79,830 83,714 83,300
Property, plant and equipment,
net 33,032 31,686 31,515 30,914
Investments 577 577 577 577
Intangible assets, net 7,441 7,479 7,505 7,329
Other long term assets 3,435 3,872 3,941 4,162
Net assets of discontinued
operations 1,976 2,151 2,073 2,208
-------- -------- -------- --------
Total assets $120,485 $125,595 $129,325 $128,490
======== ======== ======== ========
Current debt $ 4,315 $ 8,398 $ 6,628 $ 5,143
Accounts payable 16,118 17,849 17,893 18,315
Accrued liabilities 15,006 11,756 15,921 14,420
-------- -------- -------- --------
Total current liabilities 35,439 38,003 40,442 37,878
Long-term debt 105,125 104,535 104,189 103,734
Other non-current liabilities 9,955 10,084 9,954 9,664
-------- -------- -------- --------
Total liabilities 150,519 152,622 154,585 151,276
Minority interest 5,908 6,462 4,716 5,434
Cumulative translation
adjustment (13,589) (13,326) (11,575) (11,526)
Minimum pension liability (9,156) (9,156) (9,156) (9,156)
Other shareholders equity (13,197) (11,007) (9,245) (7,538)
-------- -------- -------- --------
Total liabilities and
equity $120,485 $125,595 $129,325 $128,490
======== ======== ======== ========
Debt Summary:
Bank debt
U.S. float $ 130 $ 963 $ 371 $ 339
U.S. revolver - 3,585 2,484 451
United Kingdom 7,177 5,931 5,822 6,606
South Africa 990 1,498 1,489 1,142
-------- -------- -------- --------
Sub-total 8,297 11,977 10,166 8,538
Senior notes 98,533 98,533 98,533 98,533
Argentina - Mosal 1,040 1,010 982 774
Capital leases & other 1,570 1,413 1,136 1,032
-------- -------- -------- --------
Total debt 109,440 112,933 110,817 108,877
Less: cash (4,386) (3,400) (3,668) (996)
-------- -------- -------- --------
Net debt $105,054 $109,533 $107,149 $107,881
======== ======== ======== ========
Sales and EBITDA by Country by Quarter
(Millions of Dollars)
2002
2001 --------------------------------------
Sales Total 1Q Q2 Q3 Q4 Total
------- ------- ------- ------- ------- -------
United States $ 77.8 $ 22.2 $ 23.8 $ 25.4 $ 26.1 $ 97.5
United Kingdom 38.0 8.5 8.9 9.0 9.8 36.2
Argentina 33.9 3.8 3.8 4.0 4.3 15.9
South Africa 9.4 1.5 2.1 2.1 1.6 7.3
China 8.9 3.3 5.0 6.3 7.8 22.4
Elim & Adj (8.7) (2.6) (2.9) (3.6) (2.9) (12.0)
------- ------- ------- ------- ------- -------
Continuing $159.3 $ 36.7 $ 40.7 $ 43.2 $ 46.7 $167.3
======= ======= ======= ======= ======= =======
EBITDA
United States $ 13.3 $ 3.6 $ 4.0 $ 4.5 $ 4.8 $ 16.9
United Kingdom 5.8 1.2 1.4 1.3 0.8 4.7
Argentina 1.0 0.5 0.9 1.0 1.2 3.6
South Africa 0.5 0.1 0.2 0.2 (0.4) 0.1
China 2.3 0.8 1.4 1.4 2.3 5.9
Corp & Other (3.5) (1.4) (1.7) (1.4) (1.0) (5.5)
Inter Co Elimination (0.3) (0.2) 0.1 0.1 (0.3) (0.3)
------- ------- ------- ------- ------- -------
Continuing $ 19.1 $ 4.6 $ 6.3 $ 7.1 $ 7.4 $ 25.4
======= ======= ======= ======= ======= =======
EBITDA Percentage
United States 17.1% 16.2% 16.8% 17.7% 18.4% 17.3%
United Kingdom 15.3% 14.1% 15.7% 14.4% 8.2% 13.0%
Argentina 2.9% 13.2% 23.7% 25.0% 27.9% 22.6%
South Africa 5.3% 6.7% 9.5% 9.5% (25.0%) 1.4%
China 25.8% 24.2% 28.0% 22.2% 29.5% 26.3%
Total 12.0% 12.5% 15.5% 16.4% 15.8% 15.2%
2003
-------------------------------
Sales 1Q Q2 Q3 YTD LTM
------- ------- ------- ------- -------
United States $ 26.3 $ 27.2 $ 26.9 $ 80.4 $ 106.5
United Kingdom 9.4 9.8 10.1 29.3 39.1
Argentina 4.5 7.1 7.1 18.7 23.0
South Africa 2.1 2.4 2.6 7.1 8.7
China 5.3 4.1 6.9 16.3 24.1
Elim & Adj (5.2) (4.6) (2.7) (12.5) (15.4)
------- ------- ------- ------- -------
Continuing $ 42.4 $ 46.0 $ 50.9 $139.3 $ 186.0
======= ======= ======= ======= =======
EBITDA
United States $ 5.3 $ 5.4 $ 4.9 $ 15.6 $ 20.4
United Kingdom 1.5 1.5 1.4 4.4 5.2
Argentina 1.0 1.4 1.4 3.8 5.0
South Africa - - (0.5) (0.5) (0.9)
China 1.3 0.8 1.7 3.8 6.1
Corp & Other (1.3) (1.4) (1.1) (3.8) (4.8)
Inter Co Elimination (0.3) (0.1) 0.2 (0.2) (0.5)
------- ------- ------- ------- -------
Continuing $ 7.5 $ 7.6 $ 8.0 $ 23.1 $ 30.5
======= ======= ======= ======= =======
EBITDA Percentage
United States 20.2% 19.9% 18.2% 19.4% 19.2%
United Kingdom 16.0% 15.3% 13.9% 15.0% 13.3%
Argentina 22.2% 19.7% 19.7% 20.3% 21.7%
South Africa - - (19.2%) (7.0%) (10.3%)
China 24.5% 19.5% 24.6% 23.3% 25.3%
Total 17.7% 16.5% 15.7% 16.6% 16.4%
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."