Remy International Grows Revenue and Improves Operating Income
ANDERSON, Ind., Nov. 4, 2004 -- Remy International, Inc. ("Remy International" or the "Company" and formerly Delco Remy International, Inc.), a leading worldwide manufacturer and remanufacturer of automotive electrical and powertrain products, today announced net sales from continuing operations of $254.3 million and Adjusted EBITDA of $27.7 million in the third quarter ended September 30, 2004. Net sales increased $7.6 million, or 3.1%, and Adjusted EBITDA decreased $0.8 million, or 2.8%, compared with the third quarter of 2003. Operating income of $22.2 million in the third quarter of 2004 increased $1.1 million, or 5.3%, over the comparable period of 2003.
Third Quarter Highlights:
- Continued improvement in sales and gross margins.
- Completion of significant acquisition payments.
- Transmission Business disposition -- net cash proceeds of approximately
$103 million.
- Substantial improvement in debt leverage.
Commenting on the third quarter results, Thomas J. Snyder, President and CEO, stated, "Our third quarter performance was in line with our expectations and reflects the continuing improvement in gross margins. This improvement comes in an environment of higher commodity costs, customer price reductions and the adverse effect of weak retail electrical sales. Our ability to offset these negatives reflects the substantial operating cost reductions we have put in place over the last 15 months."
Net sales of $795.3 million in the first nine months of 2004 increased $66.6 million, or 9.1%, over the comparable period in 2003. Adjusted EBITDA for the nine months ended September 30, 2004 increased 12.0% to $87.3 million as compared to the same period last year and operating income of $69.1 million increased $55.0 million as compared to the same period in 2003. Included in operating income are restructuring charges of $1.5 million and $47.3 million that were recorded in the first nine months of 2004 and 2003, respectively.
For the nine months ended September 30, 2004, continued strong customer demand in the heavy-duty and industrial sectors, higher Automotive OEM volume from new alternator business awards and improved remanufactured diesel engine and parts volume all contributed to the year over year sales growth.
Savings resulting from the restructuring and other cost reduction actions taken in 2003, combined with strong sales growth, generated the year over year gross margin improvement.
Cash used in operating activities increased $2.7 million in the first nine months of 2004 due primarily to payments of approximately $14 million made in connection with the service award portion of the arbitration settlement. An additional payment of approximately $5 million made to the minority shareholders of our Mexican operations for the purchase of their shares is reported as an acquisition payment in investing activities. These payments complete the significant cash payments for prior acquisitions.
Recent Developments:
As previously announced the Company completed a stock sale of its wholly- owned domestic transmission remanufacturing unit. The Company realized net cash proceeds on the sale of $102.7 million and recorded a gain of $44.2 million.
Future Outlook:
Commenting on the remainder of 2004, Snyder said, "In the second half of the year we are experiencing softer industry sales and additional cost pressures. With our market wins and continued strong sales in the heavy duty class 8 and industrial markets, we expect that our fourth quarter sales, while lower than previously expected, will still be similar to the third quarter and will reflect an increase over the prior year."
Reconciliation to GAAP:
For a reconciliation of GAAP financial information to the non-GAAP financial information appearing in this release, please refer to the table following the accompanying Condensed Consolidated Statements of Operations.
Third Quarter Conference Call:
Remy International's executive management team will conduct a live conference call on Thursday November 4 at 11:00 a.m. Eastern Standard Time to discuss additional details regarding the Company's performance for the third quarter and the outlook for 2004. The call may be accessed by dialing 800-762-4758 ten minutes prior to the start of the presentation. A replay of the conference will be archived for two weeks, and may be accessed by dialing 800-475-6701 (USA), 320-365-3844 (International), Access Code 753634.
About Remy International, Inc.:
Remy International, Inc., headquartered in Anderson, Indiana, is a leading designer, manufacturer, remanufacturer and distributor of electrical, powertrain and related products for automobiles, light-duty trucks, heavy-duty trucks and other heavy-duty off-road and industrial applications. Products include starter motors, alternators, engines and fuel systems. The Company also provides exchange services for used components, commonly known as cores, for remanufacturers. Remy International, Inc. was formed in 1994 as a partial divestiture by General Motors Corporation of the former Delco Remy division, which traces its roots to Remy Electric, founded in 1896.
Remy International Web Site: http://www.remyinc.com/
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
IN THOUSANDS, For the three and Three Months Nine Months
nine months ended September 30, 2004 2003 2004 2003
Net sales $254,271 $246,677 $795,331 $728,698
Cost of goods sold 204,239 199,015 640,736 592,815
Gross profit 50,032 47,662 154,595 135,883
Selling, general and
administrative expenses 27,731 23,947 83,974 74,551
Restructuring charges 142 2,663 1,516 47,263
Operating income 22,159 21,052 69,105 14,069
Interest expense, net 14,208 13,845 44,378 41,426
Loss on early extinguishment
of debt - - 7,939 -
Income (loss) from continuing
operations before income taxes,
minority interest and loss
(income) from unconsolidated
joint ventures 7,951 7,207 16,788 (27,357)
Income tax expense 3,364 2,085 4,448 11,494
Minority interest 769 1,466 2,139 2,225
Loss (income) from
unconsolidated joint ventures (67) 182 701 5,909
Net income (loss) from
continuing operations 3,885 3,474 9,500 (46,985)
Discontinued operations:
Income (loss) from discontinued
operations, net of tax (25) (833) 966 (3,881)
Gain on disposal of
discontinued operations,
net of tax 43,162 - 43,377 2,417
Net income (loss) from
discontinued operations,
net of tax 43,137 (833) 44,343 (1,464)
Net income (loss) 47,022 2,641 53,843 (48,449)
Accretion for redemption
of preferred stock 9,459 8,477 27,367 24,418
Net income (loss) attributable
to common stockholders $37,563 $(5,836) $26,476 $(72,867)
Adjusted EBITDA:
Operating income $22,159 $21,052 $69,105 $14,069
Depreciation and amortization 5,371 4,746 16,641 16,546
Restructuring charges 142 2,663 1,516 47,263
Adjusted EBITDA $27,672 $28,461 $87,262 $77,878
Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
IN THOUSANDS, At 2004 2003
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $72,987 $21,207
Trade accounts receivable, net 155,912 143,439
Inventories 214,466 198,400
Assets of discontinued operations 1,283 67,397
Other current assets 34,825 28,518
Total current assets 479,473 458,961
Property, plant and equipment, net 127,568 124,803
Goodwill, net 106,364 100,862
Other assets 39,523 39,350
Total assets $752,928 $723,976
Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable $155,211 $154,350
Accrued restructuring 6,074 10,402
Liabilities of discontinued
operations 3,467 11,453
Other liabilities and
accrued expenses 110,808 131,336
Current maturities of
long-term debt 26,015 31,397
Total current liabilities 301,575 338,938
Long-term debt, net of current portion 612,136 593,003
Accrued restructuring 6,582 8,801
Other non-current liabilities 36,300 37,066
Minority interest 9,839 15,193
Redeemable preferred stock - 306,969
Total stockholders' deficit (213,504) (575,994)
Total liabilities and
stockholders' deficit $752,928 $723,976
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
IN THOUSANDS, For the nine months
ended September 30, 2004 2003
Cash Flows from Operating Activities:
Net income (loss) attributable to
common stockholders $26,476 $(72,867)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Loss (income) from discontinued
operations (966) 3,881
Gain on disposal of
discontinued operations (43,377) (2,417)
Depreciation and amortization 16,641 16,546
Non-cash interest expense 2,939 3,770
Loss on early extinguishment
of debt 7,939 -
Accretion for redemption of
preferred stock 27,367 24,418
Restructuring charges 1,516 47,263
Cash payments for
restructuring charges (7,798) (14,392)
Changes in net working capital,
net of acquisitions
and restructuring charges (44,304) (25,542)
Other, net (2,365) 6,101
Net cash used in operating activities
of continuing operations (15,932) (13,239)
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (24,751) (9,546)
Net proceeds on sale of businesses 102,987 27,876
Purchases of property, plant
and equipment (15,429) (11,986)
Net cash provided by
investing activities
of continuing operations 62,807 6,344
Cash Flows From Financing Activities:
Proceeds from issuance of
long-term debt 275,000 6,521
Retirement of long-term debt (200,000) -
Net (repayments) borrowings under
revolving line of credit and other (56,464) 4,621
Financing costs (12,456) -
Distributions to minority interests (1,010) -
Net cash provided by financing
activities of continuing operations 5,070 11,142
Effect of exchange rate changes
on cash 335 341
Cash flows of discontinued operations (500) (4,975)
Net increase (decrease) in cash and
cash equivalents 51,780 (387)
Cash and cash equivalents at
beginning of year 21,207 12,315
Cash and cash equivalents at
end of period $72,987 $11,928