Accuride Corporation Reports Second Quarter Results for 2005; Pro Forma Revenue increased by 29.2% to $342.8 million; Pro Forma Adjusted EBITDA rises by 35.3% to $56.4 million; Pro Forma Net Income rises by 112.5%
EVANSVILLE, Ind.--Aug. 3, 2005--Accuride Corporation today announced net sales of $342.8 million for the second quarter ended June 30, 2005. This compares to net sales of $120.6 million for the second quarter of 2004. For the six months ended June 30, 2005, net sales were $615.4 million compared to net sales of $232.0 million for the same six-month period in 2004. Net income was $17.0 million, or $0.54 per diluted share, for the quarter compared to $4.3 million, or $0.28 per diluted share, for the second quarter of 2004. For the first six months of 2005, net income was $17.2 million, or $0.66 per diluted share, compared to $8.9 million, or $0.59 per diluted share, for the first six months of 2004. The results reflect continuing strength in the commercial vehicle industry with Class 5-8 builds up 23.3% over the prior year second quarter and the acquisition of Transportation Technologies Industries, Inc. ("TTI") on January 31, 2005.Pro Forma Results for the Acquisition of TTI and Initial Public Offering ("IPO")
The Company's net sales were $342.8 million for the second quarter of 2005 compared to pro forma net sales of $265.4 million for the prior year, an increase of 29.2%. For the first six months ended June 30, 2005, pro forma net sales were $669.8 million compared to $511.6 million for the same six-month period in 2004, an increase of 30.9%.
Adjusted EBITDA was $56.4 million for the second quarter of 2005 compared to pro forma Adjusted EBITDA of $41.7 million for the prior year, an increase of 35.3%. For the first six months of 2005, pro forma Adjusted EBITDA was $103.4 million compared to $77.8 million for the same six-month period in 2004, an increase of 32.9%. The purpose and reconciliation of Adjusted EBITDA for the Company to the most directly comparable GAAP measure is set forth in the accompanying schedules.
Net income was $17.0 million for the second quarter of 2005 compared to pro forma net income of $8.0 million for the second quarter of 2004, an increase of 112.5%. For the first six months of 2005, pro forma net income was $19.3 million compared to $14.7 million for the first six months of 2004, an increase of 31.3%.
Net income adjusted for the initial public offering and other non-operating/non-recurring items, (Pro Forma As Adjusted Operating Earnings or "Operating Earnings"), was $19.1 million, or $0.56 per diluted share, for the quarter ended June 30, 2005, compared to $8.6 million, or $0.25 per diluted share, in 2004, an increase of 122.1%. Operating Earnings for the quarter exclude $1.6 million in unrealized losses related to the mark-to-market of interest rate swaps and $0.3 million in refinancing costs. For the first six months of 2005, Operating Earnings were $33.0 million, or $0.96 per diluted share, compared to $16.0 million, or $0.47 per diluted share, in 2004. For the first six months of 2005, Operating Earnings exclude $0.7 million in unrealized losses related to the mark-to-market of interest rate swaps and $12.2 million in refinancing costs and loss on extinguishment of debt. The reconciliation of Operating Earnings for the Company to the most directly comparable GAAP measure is set forth in the accompanying schedules.
Liquidity and Cash Flow
At June 30, 2005, the Company had $747.7 million of total debt and $50.9 million of cash for net debt of $696.8 million, which declined by $127.1 million in the quarter. Included in the decline was $89.6 million in net cash proceeds from the Company's initial public offering on April 26, 2005. The Company's leverage ratio or net debt to pro forma Adjusted EBITDA on June 30, 2005, was 3.8 times. Furthermore, the Company repaid additional debt of $20 million on August 3, 2005.
For the second quarter of 2005, cash from operating activities was $42.5 million and capital expenditures totaled $5.0 million, producing free cash flow of $37.5 million.
Review and Outlook
"We are very pleased with the strong results in the quarter," said Terry Keating, Accuride's President and CEO. "The Company's strong performance was due primarily to the continuing favorable demand from our customers and by the improved performance in our component business. It is expected that demand will remain strong in the second half of 2005. As such, we remain committed to our previous guidance of $205 million in pro forma EBITDA and expect continuing margin improvement from the realization of synergies and the integration of our component business."
The Company will conduct a conference call to review and discuss its second quarter results on Wednesday, August 3, 2005, at 1:30 p.m. CDT. The phone number to access the conference call is (800) 291-9234 in the United States, or (617) 614-3923 internationally, access code 63226925. A replay will be available beginning August 3, 2005, at 3:30 p.m. CDT, through August 10, 2005, by calling (888) 286-8010 in the United States, or (617) 801-6888 internationally, access code 80883378. The financial results for the three-month and six-month period ended June 30, 2005, will also be archived at http://www.accuridecorp.com.
Accuride Corporation is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Accuride's products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. Accuride's products are marketed under its brand names, which include Accuride, Gunite, Imperial, Bostrom, Fabco and Brillion. For more information, visit Accuride's website at http://www.accuridecorp.com.
Forward-looking statements
Statements contained in this news release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's expectations, hopes, beliefs and intentions on strategies regarding the future and statements related to the effect of the TTI acquisition on Accuride's future results. It is important to note that the Company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including but not limited to, the ability to successfully integrate the above described acquisition, market demand in the commercial vehicle industry, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Accuride assumes no obligation to update the information included in this release.
The unaudited pro forma consolidated statement of operations have been adjusted to give effect to acquisition of TTI and related financings as if these events occurred on January 1, 2004 and 2005. The unaudited pro forma financial data are for informational purposes only and does not purport to present what our results of operations and financial condition would have been had the acquisition and related financing actually occurred on these earlier dates, nor do they project our results of operations for any future period or our financial condition in the future. In addition, the pro forma adjustments, as described herein, may differ from preliminary estimates when the respective transactions occur or the purchase accounting analysis is complete.
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Historical Results (Restated)(1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET SALES $342,815 $120,631 $615,431 $232,032
COST OF GOODS SOLD 278,092 96,213 504,455 185,996
--------- --------- --------- ---------
GROSS PROFIT 64,723 24,418 110,976 46,036
OPERATING EXPENSES:
Selling, General &
Administrative 18,854 6,418 34,199 12,789
--------- --------- --------- ---------
INCOME FROM OPERATIONS 45,869 18,000 76,777 33,247
OTHER INCOME (EXPENSE):
Interest Income 186 30 267 55
Interest (Expense) (16,418) (9,063) (28,966) (18,276)
Refinancing Costs and Loss on
Extinguishment of Debt (549) - (19,987) -
Equity in Earnings of
Affiliates 207 155 386 293
Other Income (Expense), Net (745) (1,676) (878) (1,537)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 28,550 7,446 27,599 13,782
INCOME TAX PROVISION 11,531 3,117 10,391 4,889
--------- --------- --------- ---------
NET INCOME $ 17,019 $ 4,329 $ 17,208 $ 8,893
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 30,601 14,656 25,284 14,656
Basic income per share $ 0.56 $ 0.30 $ 0.68 $ 0.61
Weighted average common shares
outstanding - Diluted 31,377 15,418 26,026 15,037
Diluted income per share $ 0.54 $ 0.28 $ 0.66 $ 0.59
Note:
(1) Effective January 1, 2005, the Company changed its inventory
costing method from the last-in, first-out ("LIFO") method to the
first-in, first-out ("FIFO") method at several business units. In
accordance with generally accepted accounting principles ("GAAP"),
the change has been applied by restating the prior year's
consolidated financial statements.
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Pro Forma Results(1,2)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET SALES $342,815 $265,419 $669,761 $511,600
COST OF GOODS SOLD 278,092 218,121 551,628 423,584
--------- --------- --------- ---------
GROSS PROFIT 64,723 47,298 118,133 88,016
OPERATING EXPENSES:
Selling, General &
Administrative 18,854 20,218 38,643 38,386
--------- --------- --------- ---------
INCOME FROM OPERATIONS 45,869 27,080 79,490 49,630
OTHER INCOME (EXPENSE):
Interest Income 186 30 267 55
Interest (Expense) (16,418) (12,925) (28,508) (25,847)
Refinancing Costs and Loss on
Extinguishment of Debt (549) - (19,987) -
Equity in Earnings of
Affiliates 207 155 386 293
Other Income (Expense), Net (745) (1,678) (882) (1,537)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 28,550 12,662 30,766 22,594
INCOME TAX PROVISION 11,531 4,700 11,495 7,857
--------- --------- --------- ---------
NET INCOME $ 17,019 $ 7,962 $ 19,271 $ 14,737
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 30,601 22,621 26,612 22,621
Basic income per share $ 0.56 $ 0.35 $ 0.72 $ 0.65
Weighted average common shares
outstanding - Diluted 31,377 23,334 27,354 23,334
Diluted income per share $ 0.54 $ 0.34 $ 0.70 $ 0.63
Note:
(1) Effective January 1, 2005, the Company changed its inventory
costing method from the last-in, first-out ("LIFO") method to the
first-in, first-out ("FIFO") method at several business units. In
accordance with generally accepted accounting principles ("GAAP"),
the change has been applied by restating the prior year's
consolidated financial statements.
(2) Pro forma results have been adjusted to give effect to the
acquisition of TTI and related financings as if these events
occurred on January 1, 2004 and 2005.
ACCURIDE CORPORATION
CONSOLIDATED ADJUSTED EBITDA
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Results (Restated)(1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET INCOME $ 17,019 $ 4,329 $ 17,208 $ 8,893
Net Interest Expense 16,781 9,033 48,686 18,221
Income Tax Expense 11,531 3,117 10,391 4,889
Depreciation and Amortization 11,279 7,476 21,196 13,772
--------- --------- --------- ---------
EBITDA 56,610 23,955 97,481 45,775
Restructuring, severance and
other charges(3) (995) - 758 240
Items related to our credit
agreement(4) 745 1,676 878 1,537
--------- --------- --------- ---------
ADJUSTED EBITDA $ 56,360 $ 25,631 $ 99,117 $ 47,552
========= ========= ========= =========
Pro Forma Results(1,2)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA NET INCOME $ 17,019 $ 7,962 $ 19,271 $ 14,737
Net Interest Expense 16,781 12,895 48,228 25,792
Income Tax Expense 11,531 4,700 11,495 7,857
Depreciation and Amortization 11,279 12,288 22,800 23,396
--------- --------- --------- ---------
PRO FORMA EBITDA 56,610 37,845 101,794 71,782
Restructuring, severance and
other charges(3) (995) 2,203 758 4,476
Items related to our credit
agreement(4) 745 1,678 882 1,537
--------- --------- --------- ---------
PRO FORMA ADJUSTED EBITDA $ 56,360 $ 41,726 $103,434 $ 77,795
========= ========= ========= =========
Note:
(1) Effective January 1, 2005, the Company changed its inventory
costing method from the last-in, first-out ("LIFO") method to the
first-in, first-out ("FIFO") method at several business units. In
accordance with generally accepted accounting principles ("GAAP"),
the change has been applied by restating the prior year's
consolidated financial statements.
(2) Pro forma results have been adjusted to give effect to the
acquisition of TTI and related financings as if these events
occurred on January 1, 2004 and 2005.
(3) For the three months ended June 30, 2005, Adjusted EBITDA and pro
forma Adjusted EBITDA represent net income before net interest
expense, income tax expense, depreciation and amortization, plus
(i) ($1.0) million for the insurance proceeds related to the
business interruption sustained at our facility in Cuyahoga Falls,
Ohio. Item (i) affected gross profit. For the three months ended
June 30, 2004, pro forma Adjusted EBITDA represents net income
before net interest expense, income tax expense, depreciation and
amortization, plus (i) $2.2 million for costs recorded by TTI
related to an impairment loss for certain assets held for sale
below carrying value. Item (i) affected SG&A. For the six months
ended June 30, 2005, Adjusted EBITDA and pro forma Adjusted EBITDA
represent net income before net interest expense, income tax
expense, depreciation and amortization, plus (i) $1.8 million for
costs related to the sale of inventory that has been adjusted to
fair value, (ii) ($1.0) million for the insurance proceeds related
to the business interruption sustained at our facility in Cuyahoga
Falls, Ohio. Items (i) and (ii) affected gross profit. For the six
months ended June 30, 2004, Adjusted EBITDA represents net income
before net interest expense, income tax expense, depreciation and
amortization, plus (i) $0.2 million for costs associated with the
fire damage and resulting business interruption sustained at our
facility in Cuyahoga Falls, Ohio. Item (i) affected gross profit.
For the six months ended June 30, 2004, pro forma Adjusted EBITDA
represents net income before net interest expense, income tax
expense, depreciation and amortization, plus (i) $0.2 million for
costs associated with the fire damage and resulting business
interruption sustained at our facility in Cuyahoga Falls, Ohio,
(ii) $1.8 million for costs related to the sale of inventory that
has been adjusted to fair value, (iii) $0.3 million for costs
related to professional fees for the 2001 TTI proposed initial
public offering, (iv) $2.2 million for costs recorded by TTI
related to an impairment loss for certain assets held for sale
below carrying value. Items (i) and (ii) affected gross profit.
Items (iii) and (iv) affected SG&A.
(4) Items related to our credit agreement refer to amounts utilized in
the calculation of financial covenants in Accuride's senior credit
facility. For the three months ended June 30, 2005, items related
to our credit agreement consist of foreign currency losses and
other income or expenses of $0.7 million. For the three months
ended June 30, 2004, items related to our credit agreement consist
of foreign currency losses and other income or expenses of
$1.7 million. For the six months ended June 30, 2005, items
related to our credit agreement consist of foreign currency losses
and other income or expenses of $0.9 million. For the six months
ended June 30, 2004, items related to our credit agreement consist
of foreign currency losses and other income or expenses of
$1.5 million.
ACCURIDE CORPORATION
CONSOLIDATED PRO FORMA AS ADJUSTED OPERATING EARNINGS
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA NET INCOME $ 17,019 $ 7,962 $ 19,271 $ 14,737
Plus: Adjustment for IPO(1) 208 646 854 1,292
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED NET
INCOME 17,227 8,608 20,125 16,029
Unrealized Loss from Interest
Rate Swap(2) 1,586 - 676
Excluding Refinancing Costs
and Loss on Extinguishment
of Debt(2) 335 - 12,192 -
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED OPERATING
EARNINGS $ 19,148 $ 8,608 $ 32,993 $ 16,029
========= ========= ========= =========
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED NET
INCOME PER SHARE $ 0.50 $ 0.25 $ 0.59 $ 0.47
Unrealized Loss from Interest
Rate Swap(2) 0.05 - 0.02 -
Excluding Refinancing Costs
and Loss on Extinguishment
of Debt(2) 0.01 - 0.35 -
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED OPERATING
EARNINGS PER SHARE $ 0.56 $ 0.25 $ 0.96 $ 0.47
========= ========= ========= =========
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 34,399 34,334 34,365 34,334
========= ========= ========= =========
Note:
(1) Adjustment for IPO assumes completion of the initial public
offering on January 1, 2004 and 2005 with net proceeds of $89.6
million used to pay down term loan debt at 4.65%. Net impact is an
after-tax reduction in interest costs including amortization of
deferred financing costs assuming an effective tax rate of 39%.
(2) Net impact is after-tax assuming an effective tax rate of 39%.
Adjusted EBITDA is not intended to represent cash flow as defined
by generally accepted accounting principles ("GAAP") and should not be
considered as an indicator of cash flow from operations. Adjusted
EBITDA represents net income (loss) before net interest expense,
income tax (expense) benefit, depreciation and amortization plus
non-recurring items. However, other companies may calculate Adjusted
EBITDA differently. Accuride has included information concerning
Adjusted EBITDA in this press release because Accuride's management
and our board of directors use it as a measure of our performance to
internal business plans to which a significant portion of management
incentive programs are based. In addition, future investment and
capital allocation decisions are based on Adjusted EBITDA. Investors
and industry analysts use Adjusted EBITDA to measure the Company's
performance to historic results and to the Company's peer group. The
Company has historically provided the measure in previous press
releases and believes it provides transparency and continuity to
investors for comparable purposes. Certain financial covenants in our
borrowing arrangements are tied to similar measures.
Pro forma as adjusted operating earnings and pro forma as adjusted
operating earnings per share differ from the most directly comparable
measure calculated in accordance with GAAP. A reconciliation of each
of these measures to the most directly comparable GAAP measure is
included in this earnings release. Management believes that these
measures are useful to investors because they exclude transactions of
an unusual nature, allowing investors to more easily compare the
Company's performance from period to period.