Remy International, Inc. Announces 2005 2nd Quarter Results
ANDERSON, Ind., July 29 -- Remy International, Inc. ("Remy International" or the "Company"), a leading manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brand starters and alternators, diesel engines, locomotive products and hybrid power technology, today announced net sales of $312.3 million and Adjusted EBITDA of $6.2 million for the quarter ending June 30, 2005. Net sales increased $40.3 million, or 14.8%, and Adjusted EBITDA decreased $24.7 million, or 80.0%, compared with the second quarter of 2004. An operating loss of $3.1 million in the second quarter of 2005 compares with operating income of $24.4 million in the same period of 2004.
The net sales increase of $40.3 million in the second quarter mainly reflects a full quarter of results from our recent acquisition of Unit Parts Company ("UPC") in March 2005 and continued strong Powertrain Diesel Product sales.
In the second quarter of 2005, the Company notified U.S. Customs of a probable underpayment of a U.S. duty and recorded a charge of $6.0 million for the periods 2000-2004 on remanufactured starters and alternators imported into the U.S. The Company intends to appeal any assessment.
Additionally in the quarter, the Company incurred significant costs in its Mexican operations arising from the insourcing of components for its Original Equipment Manufacturing operations, the implementation of a new ERP system and the integration costs relating to the UPC acquisition. Costs in the quarter were substantially higher than anticipated.
Commenting on the second quarter results, Tom Snyder, President and CEO, stated, "Market softness in our North American automotive and electrical aftermarket businesses continue to adversely impact our results. As we have previously indicated, commodity price pressures and the weak dollar have reduced our gross margins. Moreover, the second quarter performance was impacted by the startup and integration cost discussed above. We do believe, however, that the majority of issues we faced, particularly with respect to the systems implementation, are behind us and the majority of insourcing projects are now complete."
Adjusted EBITDA in the second quarter of 2005 decreased over the same period in 2004 mainly due to lower gross margins as discussed above and higher selling, general and administrative costs as previously announced.
Net sales of $593.9 million in the first six months of 2005 increased $52.8 million, or 9.8%, over the comparable period in 2004. Adjusted EBITDA for the six months ended June 30, 2005 of $26.8 million declined $32.8 million and operating income of $11.8 million declined $35.2 million compared with the same period of 2004.
Cash used in operating activities of $38.0 million in the first six months of 2005 represents a $27.6 million increase over the comparable period in 2004, reflecting lower earnings and the discontinuance of one of our accelerated receivable programs. At June 30, 2005, the Company had approximately $66.0 million of availability on its senior credit facility in addition to $21.7 million in cash on the balance sheet.
Recent Developments:
The Company has announced a realignment of management responsibilities. This realignment will enable the Company to increase its focus on improving operational and financial performance.
Additionally, the Company has commenced new actions to reduce overhead and other costs and expects to record a restructuring charge related to these actions of approximately $4.0 million in the third quarter of 2005.
Future Outlook:
Commenting on 2005, Snyder said, "Clearly we are disappointed with our second quarter results. We continue to be affected by the difficult conditions in the automotive industry. We believe that the actions taken in the second and early third quarter combined with the synergies from the UPC integration will generate significant improvements in the third quarter compared with our second quarter results."
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.
Second Quarter Conference Call:
Remy International's executive management team will conduct a live conference call on Friday, July 29 at 11:00 a.m. Eastern Daylight Time to discuss additional details regarding the Company's performance for the second quarter and the outlook for the remainder of 2005. The call may be accessed by dialing 888-428-4474 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 790887.
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, locomotive products 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 (Unaudited) Three Months Six Months IN THOUSANDS, For the three and six months ended June 30, 2005 2004 2005 2004 Net sales $312,341 $272,032 $593,909 $541,060 Cost of goods sold 281,831 217,739 518,040 436,497 Gross profit 30,510 54,293 75,869 104,563 Selling, general and administrative expenses 32,336 29,329 63,593 56,243 Restructuring charges 1,299 561 500 1,374 Operating (loss) income (3,125) 24,403 11,776 46,946 Interest expense 17,495 15,569 32,887 30,170 Loss on early extinguishment of debt - 7,939 - 7,939 Income (loss) from continuing operations before income taxes, minority interest and loss (income) from unconsolidated joint ventures (20,620) 895 (21,111) 8,837 Income tax expense (benefit) 221 (156) 1,571 1,084 Minority interest 1,025 822 2,118 1,370 Loss (income) from unconsolidated joint ventures (48) 314 (131) 768 Net (loss) income from continuing operations (21,818) (85) (24,669) 5,615 Discontinued operations: Income (loss) from discontinued operations, net of tax (93) 1,543 (294) 991 Gain on disposal of discontinued operations, net of tax 524 107 679 215 Net income from discontinued operations, net of tax 431 1,650 385 1,206 Net (loss) income (21,387) 1,565 (24,284) 6,821 Accretion for redemption of preferred stock - 9,356 - 17,908 Net loss attributable to common stockholders $(21,387) $(7,791) $(24,284) $(11,087) Adjusted EBITDA: Operating (loss) income $(3,125) $24,403 $11,776 $46,946 Depreciation and amortization 7,985 5,879 14,519 11,272 Restructuring charges 1,299 561 500 1,374 Adjusted EBITDA $6,159 $30,843 $26,795 $59,592 Remy International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets June 30, December 31, IN THOUSANDS, At 2005 2004 (unaudited) Assets: Current assets: Cash and cash equivalents $21,648 $62,545 Trade accounts receivable, net 187,053 154,333 Inventories 281,270 217,912 Other current assets 23,753 30,667 Total current assets 513,724 465,457 Property, plant and equipment, net 161,031 137,293 Goodwill, net 169,071 106,400 Other assets 55,835 46,608 Total assets $899,661 $755,758 Liabilities and Stockholders' Deficit: Current liabilities: Accounts payable $188,178 $170,776 Accrued restructuring 11,816 6,451 Deferred income taxes 2,535 3,065 Other liabilities and accrued expenses 129,111 95,166 Current maturities of long-term debt 27,525 22,890 Total current liabilities 359,165 298,348 Long-term debt, net of current portion 680,220 610,330 Accrued restructuring 3,006 4,407 Other non-current liabilities 78,506 34,775 Minority interest 12,491 10,498 Total stockholders' deficit (233,727) (202,600) Total liabilities and stockholders' deficit $899,661 $755,758 Remy International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) IN THOUSANDS, For the six months ended June 30, 2005 2004 Cash Flows from Operating Activities: Net loss attributable to common stockholders $(24,284) $(11,087) Adjustments to reconcile net loss to net cash used in operating activities: Discontinued operations (385) (1,206) Depreciation and amortization 14,519 11,272 Non-cash interest expense 2,510 2,263 Loss on early extinguishment of debt - 7,939 Accretion for redemption of preferred stock - 17,908 Minority interest and loss from unconsolidated joint ventures, net 1,987 2,138 Deferred income taxes (526) (2,545) Restructuring charges 500 1,374 Cash payments for restructuring charges (1,618) (7,234) Changes in accounts receivable, inventory and accounts payable, net (22,813) (22,153) Other, net (7,846) (8,996) Net cash used in operating activities of continuing operations (37,956) (10,327) Cash Flows from Investing Activities: Acquisitions, net of cash acquired (56,994) (19,263) Net proceeds on sale of businesses 503 216 Purchases of property, plant and equipment (19,764) (9,296) Net cash used in investing activities of continuing operations (76,255) (28,343) Cash Flows from Financing Activities: Proceeds from issuance of long-term debt - 275,000 Retirement of long-term debt - (200,000) Net borrowings (repayments) under revolving line of credit and other 74,497 (23,241) Financing costs (325) (11,491) Distributions to minority interests - (1,010) Net cash provided by financing activities of continuing operations 74,172 39,258 Effect of exchange rate changes on cash (678) 193 Cash flows of discontinued operations (180) 1,035 Net (decrease) increase in cash and cash equivalents (40,897) 1,816 Cash and cash equivalents at beginning of year 62,545 21,207 Cash and cash equivalents at end of period $21,648 $23,023
Company News On-Call: http://www.prnewswire.com/comp/111635.html