GenTek Reports Third-Quarter Results
PARSIPPANY, N.J.--Nov. 15, 2004--GenTek Inc. (OTC Bulletin Board: GETI) today announced results for the third quarter ended September 30, 2004. GenTek's results reflect the classification of its KRONE communications operating unit as a discontinued operation due to the sale of that business on May 1, 20058, 2004. In addition, GenTek has applied fresh-start accounting in conjunction with its emergence from bankruptcy protection on November 10, 2003, causing the results from the prior-year period to not be comparable to current period results.For the third quarter of 2004, GenTek had revenues totaling $231.3 million compared with $191.3 million in the corresponding quarter of 2003. The company had operating profit of $9.1 million for the third quarter of 2004, compared with $14.0 million for the same period last year. Also for the quarter, including earnings from discontinued operations, the company had a net loss totaling $5.3 million, or 53 cents per diluted share, compared with a net loss of $4.8 million, or 19 cents per share, for the same period in 2003.
For the nine months ended September 30, 2004, GenTek had revenues and operating profit totaling $625.8 million and $32.2 million, respectively, compared with revenues of $593.3 million and an operating profit of $7.2 million for the same period of 2003. Also for the nine-month period, net income was $194.6 million, or $19.44 per diluted share, compared with a net loss of $43.5 million, or $1.70 per diluted share, for the same period last year.
As of September 30, 2004, GenTek had cash totaling $50.7 million, reflecting a $11.7 million improvement for the quarter, with total debt at the end of the quarter of $5.5 million.
Adjusted EBITDA
The company has presented adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) as a measure of operating results. Adjusted EBITDA reflects removing the impact of any restructuring, impairment, reorganization, income from discontinued operations and certain one-time items. Adjusted EBITDA is a non-GAAP (Generally Accepted Accounting Principles) measure, and as such, a reconciliation of adjusted EBITDA to net income is provided in Schedule 2. GenTek has presented adjusted EBITDA as a supplemental financial measure to evaluate performance of the company's business that, when viewed with GAAP results and the accompanying reconciliation, provides a more complete understanding of factors and trends affecting the company's business than the GAAP results alone. In addition, the company understands that adjusted EBITDA is also a measure commonly used to value businesses by its investors and lenders.
During the third quarter of 2004, adjusted EBITDA was $25.3 million compared with $21.2 million in the third quarter of 2003. For the first nine months of 2004, adjusted EBITDA was $60.0 million compared with $60.5 million for the same period in 2003.
"We are extremely pleased with the strong third-quarter results, which reflect a 19% year-over-year improvement in adjusted EBITDA, despite continued raw material cost pressure," said Richard R. Russell, GenTek's president & CEO. "These results, along with our strong cash-flow generation during the quarter, are a testament to our team's consistent focus on controlling costs and improving working capital."
"The integration of the Reynosa wire-harness business, acquired from Whirlpool in June 2004, has gone very well and is now substantially complete," Russell noted.
About GenTek Inc.
GenTek provides specialty inorganic chemical products and services for petroleum refining, treating water and wastewater, and the manufacture of personal-care products. The company also produces valve-train systems and components for automotive engines and wire harnesses for large home appliance and automotive suppliers, as well as other cable products. GenTek operates over 60 manufacturing facilities and technical centers and has more than 6,900 employees.
GenTek's 1,000-plus customers include many of the world's leading manufacturers of cars and trucks, heavy equipment, appliances and office equipment, in addition to global energy companies and makers of personal-care products. Additional information about the company is available at www.gentek-global.com.
Non-GAAP Financial Measures
This release contains a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this release is a reconciliation of the differences between this non-GAAP financial measure and the most directly comparable financial measure calculated in accordance with GAAP.
Forward-looking statements
Schedule 1
GenTek Inc.
Consolidated Statement of Operations
(In Millions except per share amounts)
(Unaudited) (1)
Successor Predecessor Successor Predecessor
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2004 30, 2003 30, 2004 30, 2003
------- ------- ------- -------
Revenues $ 231.3 $ 191.3 $ 625.8 $ 593.3
Cost of Sales 199.4 154.0 534.9 494.3
Selling, general and
administrative expense 20.5 22.8 64.2 66.8
Restructuring and
impairment charges 2.3 0.4 9.3 25.1
Pension curtailment gain - - 14.8 -
------- ------- ------- -------
Operating profit (loss) 9.1 14.0 32.2 7.2
Interest expense, net 0.5 0.2 7.4 0.5
Reorganization items - 20.7 - 54.6
Other (income) expense,
net 12.4 0.8 11.4 (4.2)
------- ------- ------- -------
Income (loss) from
continuing operations
before income taxes (3.8) (7.7) 13.4 (43.7)
Income tax provision
(benefit) 0.5 1.0 8.5 6.2
------- ------- ------- -------
Income (loss) from
continuing operations (4.2) (8.6) 4.9 (49.9)
Income (loss) from
discontinued operations
(net of tax of $2.0,
$87.5, $0.0 and $(1.4) for
the three and nine month
periods ended September
30, 2004 and 2003,
respectively) (1.1) 3.8 189.7 6.4
------- ------- ------- -------
Net income (loss) $ (5.3) $ (4.8) $ 194.6 $ (43.5)
======= ======= ======= =======
Weighted average common
shares 10.0 25.6 10.0 25.6
Weighted average common
and equivalent shares 10.0 25.6 10.0 25.6
Income (loss) per common
share - basic:
Income (loss) from
continuing operations $ (0.42) $ (0.34) $ 0.49 $ (1.95)
Income (loss) from
discontinued operations (0.11) 0.15 18.97 0.25
------- ------- ------- -------
Net income (loss) $ (0.53) $ (0.19) $ 19.46 $ (1.70)
Income (loss) per common
share - assuming
dilution:
Income (loss) from
continuing operations $ (0.42) $ (0.34) $ 0.49 $ (1.95)
Income (loss) from
discontinued operations (0.11) 0.15 18.95 0.25
------- ------- ------- -------
Net income (loss) $ (0.53) $ (0.19) $ 19.44 $ (1.70)
(1) Totals may differ slightly from the sum of the respective line
items due to rounding.
Schedule 2
GenTek Inc.
Reconciliation of Net Income to Adjusted EBITDA
(In Millions)
(Unaudited) (1)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- ----------------
2004 2003 2004 2003
----- ----- ------- ------
Net income (loss) $(5.3) $(4.8) $ 194.6 $(43.5)
Plus: Restructuring and impairment
charges 2.3 0.4 9.3 25.1
Plus: Reorganization items - 20.7 - 54.6
Plus: Tax 0.5 1.0 8.5 6.2
Plus: Net Interest 0.5 0.2 7.4 0.5
Plus: Depreciation & amortization (2) 13.7 7.6 34.9 24.1
Plus: (Gain) loss on sale of equity
interest in joint ventures 12.7 - 9.7 -
Less: Pension curtailment gain - - (14.8) -
Less: Income from discontinued
operations 1.1 (3.8) (189.7) (6.4)
----- ----- ------- ------
Adjusted EBITDA $25.3 $21.2 $ 60.0 $ 60.5
===== ===== ======= ======
(1) Totals may differ slightly from the sum of the respective line
items due to rounding.
(2) Depreciation and amortization excludes amortization of
financing costs which are included in interest expense.