Allied Holdings Reports First Quarter 2005 Results
DECATUR, Ga., May 24, 2005 -- Allied Holdings, Inc. (AMEX:AHI) reported results for first quarter ended March 31, 2005. The Company reported revenues of $221.0 million in the first quarter of 2005 compared to revenues of $212.2 million in the first quarter of 2004, an increase of 4.1%, or $8.8 million. The Company also reported a net loss of $10.1 million, or $1.13 per share, for the three months ended March 31, 2005 compared to a net loss of $9.0 million, or $1.03 per share, for the three months ended March 31, 2004.
The increase in revenues was due primarily to an increase in revenue per vehicle delivered, partially offset by a 2.7% decrease in the volume of vehicles that we delivered during the three months ended March 31, 2005 compared to the three months ended March 31, 2004. The reduction in our volume was less than the reported 4.6% decline in OEM production for the comparable periods. During the first quarter of 2005, revenue per vehicle delivered increased by $6.88, or 7.3%, over the first quarter of 2004. The increase in revenue per unit is primarily the result of an increase per unit of $2.56 due to the increase in fuel surcharges, an increase of $1.32 per unit due to the strengthening of the Canadian dollar and an increase of $1.30 per unit due to certain rate increases.
The increase in the net loss for the three months ended March 31, 2005 compared to the three months ended March 31, 2004 was the result of higher pension expense for our employees subject to collective bargaining agreements and workers' compensation expenses in the first quarter of 2005, an adjustment that reduced operating taxes and licenses in the first quarter of 2004 related to a 2001 licensing fee, an increase in interest expense in the first quarter of 2005 compared to 2004 and a gain on disposal of operating assets in the first quarter of 2004. The effect of these items was partially offset by the favorable impacts of the revenue increases and lower depreciation expense in the first quarter of 2005 compared to the same period in 2004.
Benefits related to our employees subject to collective bargaining agreements were higher for the first quarter of 2005 compared to the first quarter of 2004 due to provisions of the master agreement with the International Brotherhood of Teamsters that went into effect during the second quarter of 2004. We estimate that this increased our expenses by approximately $1.5 million in the first quarter of 2005 compared to the first quarter of 2004. Workers' compensation expense was also approximately $0.7 million higher during the first quarter of 2005 compared to the first quarter of 2004 due primarily to a change in accounting estimate related to retrospective adjustments to the workers' compensation claims liability in Canada. In the first quarter of 2004 a change in estimate related to licensing fees in 2001 resulted in an expense reversal of approximately $1.1 million in operating taxes and licenses.
Interest expense was $0.8 million higher in the first quarter of 2005 compared to the first quarter of 2004 due to additional borrowings, higher interest rates and certain financing fees. In the first quarter of 2004, the Company recorded a gain of $1.1 million related to the sale of excess land in Canada. The increases in revenues had only a slight positive offsetting effect on operating income since most of the revenue increase had corresponding cost increases, including fuel costs and the costs in Canada due to the strengthening of the Canadian dollar. The decrease in depreciation and amortization expense of $2.2 million in the first quarter of 2005 compared to the first quarter of 2004 was due primarily to a decrease in the depreciable asset base, which has been reduced due to certain aged equipment becoming fully depreciated and our decision to upgrade and extend our fleet through our remanufacturing program.
Earnings before interest, taxes, depreciation, amortization, gains and losses on disposal of assets, other non-operating income and expense items and special charges ("Adjusted EBITDA")(1) for the first quarter of 2005 were $6.4 million compared to $7.8 million for the first quarter of 2004, a decline of $1.4 million. The decline in Adjusted EBITDA in the first quarter of 2005 compared to the first quarter of 2004 was a result of higher union pension and workers' compensation expenses and higher license fees that were partially offset by the impact of the increase in revenues.
About Allied Holdings
Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle distribution continuum and include car-hauling, intramodal transport, inspection, accessorization and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles.
(1) Adjusted EBITDA is a non-GAAP financial measure; reconciliations to the most directly comparable GAAP measures are attached.
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2005 2004
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $3,922 $2,516
Restricted cash and cash equivalents 30,799 27,378
Receivables, net of allowances of
$2,338 and $2,156 as of March 31, 2005
and December 31, 2004, respectively 56,255 57,309
Inventories 4,797 4,649
Deferred income taxes 4,775 4,632
Prepayments and other current assets 24,175 12,414
Total current assets 124,723 108,898
Property and equipment, net of
accumulated depreciation 131,697 135,635
Goodwill, net 83,680 83,977
Other assets:
Restricted cash and cash equivalents 62,434 55,502
Other noncurrent assets 36,515 37,520
Total other assets 98,949 93,022
Total assets $439,049 $421,532
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt $13,500 $13,500
Borrowings under revolving credit facilities 16,815 2,972
Accounts and notes payable 38,778 34,690
Accrued liabilities 99,254 85,463
Total current liabilities 168,347 136,625
Long-term debt, less current maturities 230,601 234,766
Postretirement benefits other than pensions 4,868 5,082
Deferred income taxes 16,214 16,164
Other long-term liabilities 70,888 70,444
Commitments and contingencies
Stockholders' deficit:
Preferred stock, no par value.
Authorized 5,000 shares; none outstanding - -
Common stock, no par value.
Authorized 20,000 shares; 8,940 and 8,919
shares outstanding at March 31, 2005
and December 31, 2004, respectively - -
Additional paid-in capital 48,464 48,421
Treasury stock, 139 shares at cost (707) (707)
Accumulated deficit (98,965) (88,907)
Accumulated other comprehensive loss, net
of tax (661) (356)
Total stockholders' deficit (51,869) (41,549)
Total liabilities and
stockholders' deficit $439,049 $421,532
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
2005 2004
Revenues $220,950 $212,244
Operating expenses:
Salaries, wages, and fringe benefits 121,228 119,947
Operating supplies and expenses 41,509 37,046
Purchased transportation 28,861 25,906
Insurance and claims 8,883 9,163
Operating taxes and licenses 7,774 6,559
Depreciation and amortization 8,192 10,386
Rents 1,849 1,716
Communications and utilities 1,911 1,954
Other operating expenses 2,580 2,186
Loss (gain) on disposal of operating
assets, net 44 (1,137)
Total operating expenses 222,831 213,726
Operating loss (1,881) (1,482)
Other income (expense):
Interest expense (8,212) (7,368)
Investment income 438 57
Foreign exchange loss, net (199) (155)
Other, net - (100)
(7,973) (7,566)
Loss before income taxes (9,854) (9,048)
Income tax expense (204) -
Net loss $(10,058) $(9,048)
Basic and diluted loss per common share:
Net loss:
Basic and diluted $(1.13) $(1.03)
Weighted average common shares outstanding:
Basic and diluted 8,940 8,789
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
2005 2004
Cash flows from operating activities:
Net loss $(10,058) $(9,048)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Amortization of deferred financing costs 747 704
Depreciation and amortization 8,192 10,386
Loss (gain) on disposal of assets and
other, net 44 (1,137)
Foreign exchange loss, net 199 155
Deferred income taxes (104) -
Compensation expense related to stock
options and grants - 195
Change in operating assets and liabilities:
Receivables, net of allowance for doubtful
accounts 959 (4,422)
Inventories (159) (74)
Prepayments and other assets (5,895) (8,106)
Accounts and notes payable (1,298) (7,481)
Accrued liabilities 14,124 7,646
Net cash provided by (used in)
operating activities 6,751 (11,182)
Cash flows from investing activities:
Purchases of property and equipment (4,825) (4,847)
Proceeds from sales of property and equipment 252 1,826
Increase in restricted cash and cash
equivalents (10,353) (8,234)
Funds deposited with insurance carriers (7,357) (32,024)
Funds returned from insurance carriers 1,609 27,516
Net cash used in investing activities (20,674) (15,763)
Cash flows from financing activities:
Additions to revolving credit facility, net 13,843 16,870
Repayment of long-term debt (4,165) (5,167)
Proceeds from insurance financing arrangements 8,031 28,141
Repayments of insurance financing arrangements (2,601) (7,041)
Proceeds from issuance of common stock 43 303
Net cash provided by financing
activities 15,151 33,106
Effect of exchange rate changes on cash and
cash equivalents 178 132
Net change in cash and cash equivalents 1,406 6,293
Cash and cash equivalents at beginning of period 2,516 2,148
Cash and cash equivalents at end of period $3,922 $8,441
Supplemental cash flow information:
Cash paid during the period for:
Interest $4,401 $3,712
Income taxes, net of refunds $80 $134
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2005 FIRST QUARTER EARNINGS RELEASE
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
2005 2004
AAG, including Allied Holdings:
Revenues $214,615,000 $205,667,000
Operating loss $(2,303,000) $(2,138,000)
Operating ratio 101.08% 101.04%
Vehicles delivered 2,117,342 2,176,748
Loads delivered 276,157 283,064
Vehicles per load 7.67 7.69
Revenue per vehicle delivered $101.36 $94.48
Percent damage free delivery 99.81% 99.75%
Rigs Managed:
Company-owned 3,438 3,704
Leased 451 402
Owner-operated 691 602
4,580 4,708
Average number of drivers 3,762 3,761
Axis Group:
Revenues $6,335,000 $6,577,000
Operating income $422,000 $656,000
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2005 FIRST QUARTER EARNINGS RELEASE
NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2005 2004
Reconciliation of net loss to
Adjusted EBITDA:
Net loss $(10,058) $(9,048)
Income tax expense 204 -
Interest expense 8,212 7,368
Investment income (438) (57)
Foreign exchange loss, net 199 155
Other, net - 100
Loss (gain) on disposal of operating assets 44 (1,137)
Depreciation and amortization 8,192 10,386
Adjusted EBITDA $6,355 $7,767
Reconciliation of net cash provided by
(used in) operating activities to Adjusted
EBITDA:
Net cash provided by (used in) operating
activities $6,751 $(11,182)
Adjustments to reconcile net cash provided by
(used in) operating activities to Adjusted
EBITDA :
Interest expense 8,212 7,368
Investment income (438) (57)
Amortization of deferred financing costs (747) (704)
Income tax expense 204 -
Deferred income taxes 104 -
Compensation expense related to stock options
and grants - (195)
Other, net 100
Net change in operating assets and
liabilities (7,731) 12,437
Adjusted EBITDA $6,355 $7,767
The Company uses Adjusted EBITDA as a measure of liquidity and operating performance. The Company believes that this measure provides useful information to investors regarding the Company's ability to generate cash flows that can be used to service debt and invest in capital expenditures and also provides useful information to investors with regard to operating performance. Management uses Adjusted EBITDA as earnings measures, adjusted to exclude certain items, as part of its evaluation of the performance of the Company. The Company believes that this measure provides useful information to investors because the items excluded are related to nonoperating items or unusual items that resulted in a significant impact and are not likely to recur regularly or in predictable amounts. Consequently, presenting Adjusted EBITDA, which excludes such items, is meaningful supplemental information to investors. Adjusted EBITDA, with certain additional modifications, is also a component of certain financial covenants in the Company's debt agreements.
The Company considers net loss to be the most directly comparable measure of operating performance in the Company's consolidated financial statements prepared in conformity with GAAP and net cash provided by operating activities in the consolidated statements of cash flows to be the most directly comparable measure of liquidity. The Company has presented reconciling information in the table above.