Remy International, Inc. Announces 4th Quarter Results
ANDERSON, Ind., March 29 -- Remy International, Inc. ("Remy International" or the "Company" and formerly Delco Remy International, Inc.), a leading worldwide manufacturer and remanufacturer of automotive electrical, powertrain products and hybrid drive technologies, today announced net sales of $255.8 million and Adjusted EBITDA of $23.0 million in the fourth quarter ended December 31, 2004. Net sales increased $11.7 million, or 4.8%, and Adjusted EBITDA decreased $6.4 million, or 21.7%, compared with the fourth quarter of 2003. Operating income of $17.2 million in the fourth quarter of 2004 compares with an operating loss of $96.6 million in the same period of 2003. The fourth quarter of 2003 reflects the special charges associated with the core inventory valuation of $103.9 million and the Mexico Arbitration award of $14.3 million, along with restructuring charges of $1.7 million.
Fourth Quarter Highlights:
* Significant net sales increases over fourth quarter 2003:
- 31% increase in Powertrain Sales.
- 14% increase in Heavy-Duty OEM Sales.
- 12% increase in Automotive OEM Sales.
* Strong Gross Margins maintained in difficult industry environment.
* Continued investments in technology and global footprint for recently
awarded programs.
Commenting on the fourth quarter results, Thomas J. Snyder, President and CEO, stated, "We were pleased with our fourth quarter year over year sales improvements in the face of challenging industry-wide conditions. Our Automotive and Heavy-Duty OEM and Powertrain groups posted strong sales improvements for the quarter. Our cost reduction efforts enabled us to maintain our gross margin despite pricing pressures, higher commodity costs and adverse currency fluctuations."
Adjusted EBITDA in the fourth quarter of 2004 decreased over the same period in 2003 partly due to product mix and also due to higher product engineering and other costs for the approximately $250 million in new business awards received over the past 24 months that are being launched through 2007.
Net sales of $1,051.2 million for 2004 increased $78.4 million, or 8.1%, over the comparable period in 2003. Adjusted EBITDA for 2004 increased 2.8% to $110.3 million as compared to 2003. Operating income of $86.3 million compares with an operating loss of $82.5 million in 2003. The loss in 2003 reflects the special charges associated with the core inventory valuation of $103.9 million and the Mexico Arbitration award of $14.3 million, along with restructuring charges of $49.0 million.
For the year ended December 31, 2004, 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, partially offset by lower sales in the electrical aftermarket.
The Company's year over year gross margin improvement was the result of cost reductions achieved and strong sales growth. Higher year over year selling, general and administrative expenses primarily reflect increased spending on product engineering, systems and marketing related to the new alternator product lines and recent sales awards.
Cash used in operating activities of $9.4 million in 2004 primarily reflects the $13.6 million Mexico Arbitration payment. Excluding this payment, $4.2 million of cash was generated from operating activities.
Recent Developments:
On March 18, 2005, the Company completed the acquisition of substantially all of the assets and the assumption of certain liabilities of Unit Parts Company ("UPC"), based in Oklahoma City. UPC is a major supplier to the automotive aftermarket for new and remanufactured starters and alternators, offering custom branding, packaging and logistics solutions as well as complete engineering and support services.
Also in March 2005, the Company amended its Senior Credit Facility to reflect, among other matters, the acquisition of UPC discussed above. Additionally, the amendment increases the maximum draw under the asset based revolving credit facility from $120 million to $145 million, eliminates the EBITDA and Fixed Charge covenants from the facility and extends the maturity of the facility to June 30, 2008.
Future Outlook:
Commenting on 2005, Snyder said, "We expect our near term results to be impacted by the difficult industry environment and the adverse cost impact of the significant weakening of the U.S. dollar. However, with cost reductions, new global business awards and the recent acquisition of UPC, our full year 2005 and long-term outlook remains positive."
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.
Fourth Quarter Conference Call:
Remy International's executive management team will conduct a live conference call on Tuesday, March 29 at 10:00 a.m. Eastern Standard Time to discuss additional details regarding the Company's performance for the fourth quarter and the outlook for 2005. The call may be accessed by dialing 800-553-0327 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 775425.
About Remy International, Inc.:
Remy International, Inc., headquartered in Anderson, Indiana, is a leading manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brand starters and alternators, diesel engines and hybrid power technology. The Company also provides a worldwide components core- exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy 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 Three Months Twelve Months IN THOUSANDS, For the three and twelve months ended December 31, 2004 2003 2004 2003 (unaudited) Net sales $255,834 $244,096 $1,051,165 $972,794 Cost of goods sold 209,936 198,507 850,672 791,322 Cost of goods sold - special charges: Core inventory valuation - 103,930 - 103,930 Mexico arbitration award - 14,310 - 14,310 Gross profit (loss) 45,898 (72,651) 200,493 63,232 Selling, general and administrative expenses 29,289 22,219 113,263 96,770 Restructuring (credits) charges (574) 1,705 942 48,968 Operating income (loss) 17,183 (96,575) 86,288 (82,506) Interest expense, net 13,859 14,028 58,237 55,454 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 3,324 (110,603) 20,112 (137,960) Income tax expense 919 25,188 5,367 36,682 Minority interest 659 (2,368) 2,798 (143) Loss (income) from unconsolidated joint ventures (113) 518 588 6,427 Net income (loss) from continuing operations 1,859 (133,941) 11,359 (180,926) Discontinued operations: Income (loss) from discontinued operations, net of tax 188 (4,138) 1,154 (8,019) Gain (loss) on disposal of discontinued operations, net of tax 534 (97) 43,911 2,320 Net income (loss) from discontinued operations, net of tax 722 (4,235) 45,065 (5,699) Net income (loss) 2,581 (138,176) 56,424 (186,625) Accretion for redemption of preferred stock - 8,477 27,367 32,895 Net income (loss) attributable to common stockholders $2,581 $(146,653) $29,057 $(219,520) Adjusted EBITDA: Operating income (loss) $17,183 $(96,575) $86,288 $(82,506) Depreciation and amortization 6,405 6,035 23,046 22,581 Restructuring (credits) charges (574) 1,705 942 48,968 Special charges - 118,240 - 118,240 Adjusted EBITDA $23,014 $29,405 $110,276 $107,283 Remy International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets December 31, December 31, IN THOUSANDS, At 2004 2003 Assets: Current assets: Cash and cash equivalents $ 62,545 $ 21,207 Trade accounts receivable, net 154,333 143,439 Inventories 217,912 198,400 Assets of discontinued operations 356 67,397 Other current assets 30,311 28,518 Total current assets 465,457 458,961 Property, plant and equipment, net 137,293 124,803 Goodwill, net 106,400 100,862 Other assets 46,608 39,350 Total assets $ 755,758 $ 723,976 Liabilities and Stockholders' Deficit: Current liabilities: Accounts payable $ 170,776 $ 154,350 Accrued restructuring 6,451 10,402 Liabilities of discontinued operations 2,799 11,453 Deferred income taxes 3,065 644 Other liabilities and accrued expenses 92,367 131,336 Current maturities of long-term debt 22,890 31,397 Total current liabilities 298,348 339,582 Long-term debt, net of current portion 610,330 593,003 Accrued restructuring 4,407 8,801 Other non-current liabilities 34,775 36,422 Minority interest 10,498 15,193 Redeemable preferred stock - 306,969 Total stockholders' deficit (202,600) (575,994) Total liabilities and stockholders' deficit $ 755,758 $ 723,976 Remy International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows IN THOUSANDS, For the twelve months ended December 31, 2004 2003 Cash Flows from Operating Activities: Net income (loss) attributable to common stockholders $ 29,057 $ (219,520) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Discontinued operations (45,065) 5,699 Depreciation and amortization 23,046 22,581 Non-cash interest expense 3,855 4,473 Loss on early extinguishment of debt 7,939 - Accretion for redemption of preferred stock 27,367 32,895 Minority interest and loss from unconsolidated joint ventures, net 3,386 6,284 Deferred income taxes 2,592 28,085 Restructuring charges 942 48,968 Cash payments for restructuring charges (9,027) (15,333) Special charges - 118,240 Mexico arbitration settlement (13,622) - Changes in accounts receivable, inventory and accounts payable, net (14,986) (12,321) Other, net (24,835) 5,038 Net cash (used in) provided by operating activities of continuing operations (9,351) 25,089 Cash Flows from Investing Activities: Acquisitions, net of cash acquired (25,517) (18,919) Net proceeds on sale of businesses 104,653 30,058 Purchases of property, plant and equipment (25,347) (16,305) Investments in joint ventures - (115) Net cash provided by (used in) investing activities of continuing operations 53,789 (5,281) Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 275,000 10,297 Retirement of long-term debt (200,000) - Net repayments under revolving line of credit and other (62,654) (12,547) Deferred financing costs (15,032) (1,980) Distributions to minority interests (1,010) - Net cash used in financing activities of continuing operations (3,696) (4,230) Effect of exchange rate changes on cash 1,510 967 Cash flows of discontinued operations (914) (7,653) Net increase in cash and cash equivalents 41,338 8,892 Cash and cash equivalents at beginning of year 21,207 12,315 Cash and cash equivalents at end of year $ 62,545 $ 21,207