Prestolite Electric Reports Net Loss of $5.8 million for 2003
ANN ARBOR, Mich.--March 10, 2004--Prestolite Electric Incorporated and its parent, Prestolite Electric Holding, Inc., today announced financial results for the year ended December 31, 2003. Sales of $195.2 million in 2003 generated adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and the special items discussed below) of $31.2 million. Sales increased 17% from 2002; EBITDA grew 23%. The Company reported a net loss of $5.8 million in 2003 compared to net income in 2002 of $1.0 million."We enjoyed excellent performance in 2003 from our operations in North America, China and Argentina," said P. Kim Packard, Prestolite President and CEO. "We are especially pleased to report fourth quarter sales of $55.9 million and EBITDA of $8.1 million, our eighth quarter in a row of sequential growth in both sales and EBITDA."
The $55.9 million of fourth quarter sales represented an increase of 10% from the third quarter of 2003 and an increase of 20% from the fourth quarter of 2002. Adjusted EBITDA as a percent of sales declined slightly in the quarter because of losses in South Africa and both product and customer mix in North America. Orders received by the company during the fourth quarter of 2003 exceeded sales by 34%, largely because of strong U.S. military demand.
Prestolite ended 2003 with net debt of $99.1 million ($107.8 million of debt and $8.7 million of cash), down from $105.1 million at the end of 2002. At year-end 2003 the company had unborrowed loan commitments of $11.5 million in the United States and $3.3 million in the United Kingdom. The proceeds of the previously announced January 2004 sale of the company's facility in Acton, England for GBP 25.2 million have further reduced debt in 2004.
For the total year, personnel reductions, principally in the United Kingdom and a South Africa, caused a severance charge of $1.8 million. The previously announced decision to close the company's South African operation resulted in a non-severance charge of $5.2 million. Because the company uses variable accounting to record stock option expense, it recorded a $5.0 million stock option charge. The company recognized foreign exchange losses of $0.5 million but favorable translation adjustments of $5.4 million. The translation adjustments, generally due to the weakening of the U.S. dollar, were recorded as an element of net comprehensive income, below net income, as was a $2.1 million net-of-tax credit to reflect the company's minimum pension liability. The company recognized expense of $1.1 million resulting from efforts to sell the company. As previously announced, those efforts resulted in an agreement to sell the company to an affiliate of First Atlantic Capital, Ltd. Upon the closing of that sale, which is expected to occur in April 2004, Prestolite Electric Incorporated will call its 9.625% Senior Notes for redemption.
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.
Prestolite Electric Holding, Inc.
Consolidated Unaudited Balance Sheet Highlights
(In thousands of dollars)
Dec. 31 Dec. 31
2002 2003
---------- ----------
Balance Sheet
-------------
Cash $ 4,386 $ 8,657
Accounts receivable, net 28,264 34,797
Inventory, net 38,699 41,854
Prepaid and other current assets 2,675 2,601
--------- ---------
Total current assets 74,024 87,909
Property, plant and equipment, net 33,032 30,587
Deferred tax asset - 2,982
Investments 577 577
Intangible assets, net 7,441 7,471
Other long term assets 3,435 2,102
Assets held for sale - 368
Net assets of discontinued operations 1,976 2,457
--------- ---------
Total assets $ 120,485 $ 134,453
========= =========
Current debt $ 4,315 $ 4,193
Accounts payable 16,118 20,581
Accrued liabilities 15,006 16,925
--------- ---------
Total current liabilities 35,439 41,699
Long-term debt 105,125 103,573
Other non-current liabilities 9,955 10,574
Deferred tax liabilities - 1,263
--------- ---------
Total liabilities 150,519 157,109
Minority interest 5,908 6,497
Cumulative translation adjustment (13,589) (8,147)
Minimum pension liability (9,156) (7,058)
Other shareholders equity (13,197) (13,948)
--------- ---------
Total liabilities and equity $ 120,485 $ 134,453
========= =========
Debt Summary:
-------------
U.S. float $ 130 $ 372
United Kingdom 7,177 6,091
South Africa 990 1,096
--------- ---------
Bank debt 8,297 7,559
Senior notes 98,533 98,533
Argentina - Mosal 1,040 641
Capital leases & other 1,570 1,033
--------- ---------
Total debt 109,440 107,766
Less cash (4,386) (8,657)
--------- ---------
Net debt $ 105,054 $ 99,109
========= =========
Prestolite Electric Holding, Inc.
Consolidated Unaudited Statement of Operations
(In thousands of dollars)
Years ended
--------------------------------
Dec. 31 Dec. 31 Dec. 31
2001 2002 2003
---------- ---------- ----------
Income Statement
----------------
Net sales $ 159,295 $ 167,261 $ 195,150
Cost of goods sold 127,025 126,543 148,141
--------- --------- ---------
Gross profit 32,270 40,718 47,009
Percent to sales 20.3% 24.3% 24.1%
Selling, general & administrative 22,253 22,171 23,995
Writedown of South Africa - - 5,192
Stock option charges 647 (313) 4,997
Severance 4,599 2,853 1,765
Costs incurred to sell company - - 1,130
Gain on senior note transactions (660) (431) -
Additional Argentina bad debt
provision 1,500 - -
--------- --------- ---------
Operating income 3,931 16,438 9,930
Other (income) expense 78 (62) (292)
Real estate provision - 1,000 -
Loss on foreign exchange 461 1,017 501
Interest expense 13,241 11,252 11,046
Minority interest expense 950 2,541 2,611
--------- --------- ---------
Pretax income (loss) (10,799) 690 (3,936)
Income taxes (benefit) (1,378) (290) 1,880
--------- --------- ---------
Net income (loss) from
continuing operations (9,421) 980 (5,816)
Gain (loss) on sale of
discontinued operations (1,600) - -
--------- --------- ---------
Net Income (loss) (11,021) 980 (5,816)
Foreign currency
translation adjustment (7,943) (2,119) 5,442
Minimum pension liability - (9,156) 2,098
--------- --------- ---------
Net comprehensive
income (loss) $ (18,964) $ (10,295) $ 1,724
========= ========= =========
Income Statement Reconciliation
-------------------------------
Operating income $ 3,931 $ 16,438 $ 9,930
Other income (78) 62 292
Writedown of South Africa - - 5,192
Stock option charges 647 (313) 4,997
Severance 4,599 2,853 1,765
Costs incurred to sell company - - 1,130
Gain on senior note transactions (660) (431) -
Additional Argentina bad debt
provision 1,500 - -
U K inventory reserve change 520 - -
Depreciation 7,385 6,044 7,171
Amortization 1,235 745 704
--------- --------- ---------
Adjusted EBITDA $ 19,079 $ 25,398 $ 31,181
========= ========= =========
Percent to sales 12.0% 15.2% 16.0%
Sales and EBITDA by Country by Quarter
(Millions of Dollars)
2000 2001
Sales Total Total
-------- --------
United States $ 80.6 $ 77.8
United Kingdom 44.2 38.0
Argentina 40.8 33.9
South Africa 12.9 9.4
China - 8.9
Elim & Adj (6.6) (8.7)
------- -------
Consol. $ 171.9 $ 159.3
======= =======
EBITDA
United States $ 12.2 $ 13.3
United Kingdom 5.6 5.8
Argentina 2.4 1.0
South Africa 0.7 0.5
China - 2.3
Corp & Other (4.0) (3.5)
Inter Co Elimination - (0.3)
------- -------
Consol. $ 16.9 $ 19.1
======= =======
EBITDA Percentage
United States 15.1% 17.1%
United Kingdom 12.7% 15.3%
Argentina 5.9% 2.9%
South Africa 5.4% 5.3%
China - 25.8%
Total 9.8% 12.0%
2 0 0 2
----------------------------------------
Sales Q1 Q2 Q3 Q4 Total
-------- -------- -------- -------- --------
United States $ 22.2 $ 23.8 $ 25.4 $ 26.1 $ 97.5
United Kingdom 8.5 8.9 9.0 9.8 36.2
Argentina 3.8 3.8 4.0 4.3 15.9
South Africa 1.5 2.1 2.1 1.6 7.3
China 3.3 5.0 6.3 7.8 22.4
Elim & Adj (2.6) (2.9) (3.6) (2.9) (12.0)
------- ------- ------- ------- -------
Consol. $ 36.7 $ 40.7 $ 43.2 $ 46.7 $ 167.3
======= ======= ======= ======= =======
EBITDA
United States $ 3.6 $ 4.0 $ 4.5 $ 4.8 $ 16.9
United Kingdom 1.2 1.4 1.3 0.8 4.7
Argentina 0.5 0.9 1.0 1.2 3.6
South Africa 0.1 0.2 0.2 (0.4) 0.1
China 0.8 1.4 1.4 2.3 5.9
Corp & Other (1.4) (1.7) (1.4) (1.0) (5.5)
Inter Co Elimination (0.2) 0.1 0.1 (0.3) (0.3)
------- ------- ------- ------- -------
Consol. $ 4.6 $ 6.3 $ 7.1 $ 7.4 $ 25.4
======= ======= ======= ======= =======
EBITDA Percentage
United States 16.2% 16.8% 17.7% 18.4% 17.3%
United Kingdom 14.1% 15.7% 14.4% 8.2% 13.0%
Argentina 13.2% 23.7% 25.0% 27.9% 22.6%
South Africa 6.7% 9.5% 9.5% (25.0%) 1.4%
China 24.2% 28.0% 22.2% 29.5% 26.3%
Total 12.5% 15.5% 16.4% 15.8% 15.2%
2 0 0 3
--------------------------------------------
Sales Q1 Q2 Q3 Q4 Total
-------- -------- -------- -------- --------
United States $ 26.3 $ 27.2 $ 26.9 $ 28.6 $109.0
United Kingdom 9.4 9.8 10.1 12.3 41.6
Argentina 4.5 7.1 7.1 6.0 24.7
South Africa 2.1 2.4 2.6 2.4 9.5
China 5.3 4.1 6.9 8.7 25.0
Elim & Adj (5.2) (4.6) (2.7) (2.1) (14.6)
------- ------- ------- ------- ------
Consol. $ 42.4 $ 46.0 $ 50.9 $ 55.9 $195.2
======= ======= ======= ======= ======
EBITDA
United States $ 5.3 $ 5.4 $ 4.9 $ 4.5 $ 20.1
United Kingdom 1.5 1.5 1.4 2.6 7.0
Argentina 1.0 1.4 1.4 1.0 4.8
South Africa - - (0.5) (0.3) (0.8)
China 1.3 0.8 1.7 2.4 6.2
Corp & Other (1.3) (1.4) (1.1) (2.4) (6.2)
Inter Co Elimination (0.3) (0.1) 0.2 0.3 0.1
------- ------- ------- ------- ------
Consol. $ 7.5 $ 7.6 $ 8.0 $ 8.1 $ 31.2
======= ======= ======= ======= ======
EBITDA Percentage
United States 20.2% 19.9% 18.2% 15.7% 18.4%
United Kingdom 16.0% 15.3% 13.9% 21.1% 16.8%
Argentina 22.2% 19.7% 19.7% 16.7% 19.4%
South Africa - - (19.2%) (12.5%) (8.4%)
China 24.5% 19.5% 24.6% 27.6% 24.8%
Total 17.7% 16.5% 15.7% 14.5% 16.0%
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."