United Components Reports Results of Operations for First Quarter 2005
EVANSVILLE, Ind.--May 11, 2005--United Components, Inc. ("UCI") today announced results for the quarter ended March 31, 2005. Revenue of $245.5 million declined 4.4 percent compared to the year-ago quarter, with increases in the heavy duty and original equipment sales and service channels which did not offset declines in the retail and traditional channels. Net income for the quarter was $2.7 million, compared to $7.5 million for the first quarter of 2004.Earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted pursuant to the company's credit agreement for its senior credit facilities, was $24.6 million for the first quarter, compared with $34.1 million for the year-ago quarter.
"This was a challenging quarter, with lower sales volumes in our retail and traditional channels and higher operating costs impacting our overall performance," said Bruce Zorich, Chief Executive Officer of UCI. "In this environment, we are increasing our focus on revenue generation, while continuing work on our cost reduction initiatives, which we expect to provide benefits in the quarters ahead."
Despite the environment, UCI generated $15.5 million of cash in the quarter, ending the quarter with $26.8 million in cash. Since the June 20, 2003 acquisition date, UCI has used cash flow from operations to reduce debt, net of cash, from $569 to $431 million. The cash flow has come from reductions in working capital, as well as operating profits.
Conference Call
The company will host a conference call to discuss its results and performance on Thursday, May 12, at 1:00 p.m. Eastern Daylight Time (EDT). Interested parties are invited to listen to the call by telephone. Domestic callers can dial (800) 936-4602. International callers can dial (507) 726-3418.
A replay of the call will be available from May 1, 20053, 2005, for a thirty day period, at www.champlabs.com. Click on the UCINC 2005 1st Quarter Results button.
About United Components, Inc
United Components, Inc. is among North America's largest and most diversified companies servicing the vehicle replacement parts market. We supply a broad range of products to the automotive, trucking, marine, mining, construction, agricultural and industrial vehicle markets. Our customer base includes leading aftermarket companies as well as a diverse group of original equipment manufacturers.
Forward Looking Statements
All statements, other than statements of historical facts, included in this press release and the attached report that address activities, events or developments that UCI expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements give UCI's current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of UCI and its subsidiaries. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They are subject to uncertainties and factors relating to UCI's operations and business environment, all of which are difficult to predict and many of which are beyond UCI's control. UCI cautions that investors should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, UCI undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
United Components, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
March 31, 2005 December 31, 2004
--------------- -----------------
Assets
-------
Current assets
Cash and cash equivalents $ 26,756 $ 11,291
Accounts receivable, net 243,935 238,581
Inventories, net 193,214 188,212
Deferred tax assets 19,981 18,578
Other current assets 14,106 12,188
--------------- -----------------
Total current assets 497,992 468,850
Property, plant and equipment, net 213,778 216,849
Goodwill 166,559 166,559
Other intangible assets, net 96,097 94,229
Deferred financing costs, net 7,351 7,686
Pension and other assets 12,307 12,772
--------------- -----------------
Total assets $ 994,084 $ 966,945
=============== =================
Liabilities and shareholder's equity
-------------------------------------
Current liabilities
Accounts payable $ 111,174 $ 91,505
Short-term borrowings 806 1,267
Current maturities of long-term
debt 151 228
Accrued expenses and other current
liabilities 70,397 67,808
--------------- -----------------
Total current liabilities 182,528 160,808
Long-term debt, less current
maturities 456,826 456,674
Pension and other postretirement
liabilities 54,413 53,141
Deferred tax liabilities 8,073 6,430
Other liabilities 2,019 1,972
--------------- -----------------
Total liabilities 703,859 679,025
--------------- -----------------
Shareholder's equity 290,225 287,920
--------------- -----------------
Total liabilities and
shareholder's equity $ 994,084 $ 966,945
=============== =================
United Components, Inc.
Condensed Consolidated Income Statements (unaudited)
(in thousands)
Three Months ended March 31,
----------------------------
2005 2004
-------------- -------------
Net sales $ 245,506 $ 256,811
Cost of sales 199,420 201,264
-------------- -------------
Gross profit 46,086 55,547
Operating expenses
Selling and warehousing 18,263 19,045
General and administrative 12,419 12,072
Amortization of intangible assets 1,532 1,851
-------------- -------------
Operating income 13,872 22,579
Other income (expense)
Interest income 24 65
Interest expense (8,796) (9,631)
Management fee expense (500) (500)
Miscellaneous, net (52) 85
-------------- -------------
Income before income taxes 4,548 12,598
Income tax expense 1,819 5,063
-------------- -------------
Net income $ 2,729 $ 7,535
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United Components, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Three Months ended March 31,
-----------------------------
2005 2004
--------------- -------------
Net cash provided by operating
activities $ 25,111 $ 41,853
--------------- -------------
Cash flows from investing activities:
Final Acquisition purchase price
payment -- (8,000)
Capital expenditures (9,687) (8,931)
Proceeds from sale of property, plant
and equipment 112 129
--------------- -------------
Net cash used in investing
activities (9,575) (16,802)
--------------- -------------
Cash flows from financing activities:
Issuances of debt 8,039 --
Debt repayments (8,583) (40,015)
Shareholder's equity contribution 600 (28)
--------------- -------------
Net cash provided by (used in)
financing activities 56 (40,043)
--------------- -------------
Effect of exchange rate changes on cash (127) 110
--------------- -------------
Net increase (decrease) in cash and cash
equivalents 15,465 (14,882)
Cash and cash equivalents at beginning of
year 11,291 46,130
--------------- -------------
Cash and cash equivalents at end of
period $ 26,756 $ 31,248
=============== =============
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are presented because they are believed to
be frequently used by parties interested in United Components, Inc.
("UCI"). Management believes that EBITDA and Adjusted EBITDA provide
useful information to investors because they facilitate an investor's
comparison of UCI's operating results to that of companies with
different capital structures and with cost basis in assets that have
not been revalued and written-up in an allocation of a recent
acquisition's purchase price.
The calculation of Adjusted EBITDA, presented below, reflects the
calculation of EBITDA as used in the credit agreement for UCI's senior
credit facilities. This Adjusted EBITDA is used to measure compliance
with covenants of that agreement such as interest coverage. (The
amounts presented below are for all of UCI. The actual amounts used to
measure compliance to the credit agreement covenants may differ in
that under certain circumstances the results of certain foreign
subsidiaries are excluded.)
EBITDA and Adjusted EBITDA are not measures of financial performance
under United States generally accepted accounting principles ("US
GAAP") and should not be considered as alternatives to net income,
operating income or any other performance measures derived in
accordance with US GAAP or as an alternative to cash flow from
operating activities as a measure of liquidity.
Schedule A
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(dollars in millions)
2005 2004
--------- ---------
Q1 Q1
--------- ---------
Net income $ 2.7 $ 7.5
Interest, net 8.8 9.6
Income tax expense 1.8 5.1
Depreciation 8.3 9.0
Amortization of intangibles 1.5 1.9
--------- ---------
EBITDA 23.1 33.1
One-time or unusual items:
-- Sale of inventory that was written-up to
market from historical cost per US GAAP
acquisition rules -- 0.5
-- Facilities consolidations and severance
costs 0.8 --
Non-cash charges (primarily pension) 0.2 --
Management fee 0.5 0.5
--------- ---------
ADJUSTED EBITDA $ 24.6 $ 34.1
========= =========
Schedule B
Reconciliation of Net Income to EBITDA and Adjusted EBITDA for 2004
(dollars in millions)
2004
-----------------------------------
Full
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
Net income $ 7.5 $10.2 $10.3 $ 2.8 $ 30.8
Interest, net 9.6 9.0 8.1 9.3 36.0
Income tax expense 5.1 6.8 6.8 2.4 21.1
Depreciation 9.0 8.7 8.9 8.7 35.3
Amortization of intangibles 1.9 1.8 1.6 1.6 6.9
------ ------ ------ ------ -------
EBITDA 33.1 36.5 35.7 24.8 130.1
One-time or unusual items:
-- Sale of inventory that was
written-up to market from
historical cost per US GAAP
acquisition rules 0.5 -- -- -- 0.5
-- Slow moving / obsolete
inventory reserve -- -- -- 2.8 2.8
-- Product line relocations,
facilities upgrades
and consolidations, patent
disputes, other -- -- -- 1.7 1.7
Non-cash charges (primarily
pension) -- 0.7 0.3 0.4 1.4
Management fee 0.5 0.5 0.5 0.5 2.0
------ ------ ------ ------ -------
ADJUSTED EBITDA $34.1 $37.7 $36.5 $30.2 $138.5
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