Accuride Corporation Reports Solid Third Quarter Results for 2005; Revenue Increased by 13.2% on a Pro Forma Basis to $316.1 Million; Net Income Rises by 151.3% on a Pro Forma Basis to $19.1 Million; Senior Debt Reduced by $35 Million
EVANSVILLE, Ind.--Oct. 3, 20051, 2005--Accuride Corporation today announced net sales of $316.1 million for the third quarter ended September 30, 2005. This compares to net sales of $123.5 million for the third quarter of 2004. For the nine months ended September 30, 2005, net sales were $931.6 million compared to net sales of $355.5 million for the same nine-month period in 2004. Net income was $19.1 million, or $0.55 per diluted share, for the quarter compared to $7.1 million, or $0.46 per diluted share, for the third quarter of 2004. For the first nine months of 2005, net income was $36.3 million, or $1.25 per diluted share, compared to $16.0 million, or $1.05 per diluted share, for the first nine months of 2004. The results reflect continuing strength in the commercial vehicle industry with Class 5-8 and trailer builds up 12.0% over the prior year third 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 $316.1 million for the third quarter of 2005 compared to pro forma net sales of $279.2 million for the third quarter in the prior year, an increase of 13.2%. For the first nine months ended September 30, 2005, pro forma net sales were $985.9 million compared to $790.8 million for the same nine-month period in 2004, an increase of 24.7%.
Adjusted EBITDA was $51.7 million for the third quarter of 2005 compared to pro forma Adjusted EBITDA of $42.6 million for the prior year, an increase of 21.4%. For the first nine months of 2005, pro forma Adjusted EBITDA was $155.1 million compared to $120.3 million for the same nine-month period in 2004, an increase of 28.9%. 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 $19.1 million for the third quarter of 2005 compared to pro forma net income of $7.6 million for the third quarter of 2004, an increase of 151.3%. For the first nine months of 2005, pro forma net income was $37.9 million compared to $19.4 million for the first nine months of 2004, an increase of 95.4%.
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 $18.1 million, or $0.52 per diluted share, for the quarter ended September 30, 2005, compared to $8.4 million, or $0.25 per diluted share, in 2004, an increase of 115.5%. Operating Earnings for the quarter exclude $1.4 million in unrealized gains related to the mark-to-market of interest rate swaps and $0.4 million in transaction costs related to our recently completed secondary stock offering. For the first nine months of 2005, Operating Earnings were $50.9 million, or $1.47 per diluted share, compared to $22.0 million, or $0.64 per diluted share, in 2004. For the first nine months of 2005, Operating Earnings exclude $0.7 million in unrealized gains related to the mark-to-market of interest rate swaps and $12.6 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 September 30, 2005, the Company had $40.1 million of cash and $712.7 million of total debt for net debt of $672.6 million, which declined by $24.3 million in the quarter. The Company's leverage ratio or net debt to pro forma Adjusted EBITDA on September 30, 2005, was 3.5 times, a reduction from approximately 4.3 at the time of the IPO in April. In the third quarter, the Company reduced senior debt by $35.0 million. For the first nine months of 2005, the Company has reduced its senior debt by $50.8 million excluding proceeds of $89.6 million from the IPO.
For the third quarter of 2005, cash from operating activities was $37.0 million and capital expenditures totaled $13.3 million, producing free cash flow of $23.7 million.
Review and Outlook
"Overall, we are pleased with the results from the quarter as we continue to focus on improving margins and generating strong cash flow," said Terry Keating, Accuride's President and CEO. "We are progressing well with our integration of the former TTI businesses and the rapid deleveraging of our balance sheet as evidenced by the $35 million debt reduction in the quarter. We continue to see strong industry fundamentals supported by freight growth and replacement demand. However, high fuel prices that have been further aggravated by the recent hurricanes remain a concern. Despite this we remain committed to our previous guidance of $205 million in pro forma adjusted EBITDA for the full year."
The Company will conduct a conference call to review and discuss its third quarter results on Tuesday, November 1, 2005, at 10:30 a.m. CST. The phone number to access the conference call is (866) 825-3308 in the United States, or (617) 213-8062 internationally, access code 90884977. A replay will be available beginning November 1, 2005, at 1:30 p.m. CST, through November 8, 2005, by calling (888) 286-8010 in the United States, or (617) 801-6888 internationally, access code 57402779. The financial results for the three-month and nine-month period ended September 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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET SALES $316,136 $123,463 $931,567 $355,495
COST OF GOODS SOLD 259,678 97,183 764,133 283,179
--------- --------- --------- ---------
GROSS PROFIT 56,458 26,280 167,434 72,316
OPERATING EXPENSES:
Selling, General &
Administrative 17,101 5,758 51,300 18,547
--------- --------- --------- ---------
INCOME FROM OPERATIONS 39,357 20,522 116,134 53,769
OTHER INCOME (EXPENSE):
Interest Income 155 55 422 110
Interest (Expense) (11,083) (9,214) (40,049) (27,490)
Refinancing Costs and Loss
on Extinguishment of Debt - - (19,987) -
Equity in Earnings of
Affiliates (8) 148 378 441
Other Income (Expense), Net 1,137 595 259 (942)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 29,558 12,106 57,157 25,888
INCOME TAX PROVISION 10,418 5,044 20,809 9,933
--------- --------- --------- ---------
NET INCOME $19,140 $7,062 $36,348 $15,955
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 33,624 14,656 28,064 14,656
Basic income per share $0.57 $0.48 $1.30 $1.09
Weighted average common shares
outstanding - Diluted 34,856 15,414 28,971 15,161
Diluted income per share $0.55 $0.46 $1.25 $1.05
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 period's
consolidated financial statements.
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Pro Forma Results(1,2)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET SALES $316,136 $279,205 $985,897 $790,805
COST OF GOODS SOLD 259,678 232,228 811,306 655,812
--------- --------- --------- ---------
GROSS PROFIT 56,458 46,977 174,591 134,993
OPERATING EXPENSES:
Selling, General &
Administrative 17,101 19,554 55,744 57,990
--------- --------- --------- ---------
INCOME FROM OPERATIONS 39,357 27,423 118,847 77,003
OTHER INCOME (EXPENSE):
Interest Income 155 55 422 110
Interest (Expense) (11,083) (15,301) (40,384) (45,905)
Refinancing Costs and Loss
on Extinguishment of Debt - - (19,987) -
Equity in Earnings of
Affiliates (8) 148 378 441
Other Income (Expense), Net 1,137 595 255 (942)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 29,558 12,920 59,531 30,707
INCOME TAX PROVISION 10,418 5,358 21,603 11,340
--------- --------- --------- ---------
NET INCOME $19,140 $7,562 $37,928 $19,367
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 33,624 22,621 28,949 22,621
Basic income per share $0.57 $0.33 $1.31 $0.86
Weighted average common shares
outstanding - Diluted 34,856 23,330 29,852 23,331
Diluted income per share $0.55 $0.32 $1.27 $0.83
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 period'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 Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET INCOME $19,140 $7,062 $36,348 $15,955
Net Interest Expense 10,928 9,159 59,614 27,380
Income Tax Expense 10,418 5,044 20,809 9,933
Depreciation and Amortization 11,711 6,164 32,907 19,936
--------- --------- --------- ---------
EBITDA 52,197 27,429 149,678 73,204
Restructuring, severance and
other charges(3) 615 593 1,373 833
Items related to our credit
agreement(4) (1,137) (595) (259) 942
--------- --------- --------- ---------
ADJUSTED EBITDA $51,675 $27,427 $150,792 $74,979
========= ========= ========= =========
Pro Forma Results(1,2)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA NET INCOME $19,140 $7,562 $37,928 $19,367
Net Interest Expense 10,928 15,246 59,949 45,795
Income Tax Expense 10,418 5,358 21,603 11,340
Depreciation and Amortization 11,711 10,968 34,511 34,364
--------- --------- --------- ---------
PRO FORMA EBITDA 52,197 39,134 153,991 110,866
Restructuring, severance and
other charges(3) 615 4,053 1,373 8,529
Items related to our credit
agreement(4) (1,137) (595) (255) 942
--------- --------- --------- ---------
PRO FORMA ADJUSTED EBITDA $51,675 $42,592 $155,109 $120,337
========= ========= ========= =========
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 period'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 September 30, 2005, Adjusted EBITDA and
pro forma Adjusted EBITDA represent net income before net interest
expense, income tax expense, depreciation and amortization, plus
(i) $0.6 million for fees related to the secondary stock offering
completed in October 2005. Item (i) affected SG&A. For the three
months ended September 30, 2004, Adjusted EBITDA represents net
income before net interest expense, income tax expense,
depreciation and amortization, plus (i) $0.1 million for costs
associated with the fire damage and resulting business interruption
sustained at our facility in Cuyahoga Falls, Ohio in August 2003,
and (ii) $0.5 for costs associated with roof damage and resulting
business interruption sustained at our facility in Cuyahoga Falls,
Ohio. Items (i) and (ii) affected gross profit in 2004. For the
three months ended September 30, 2004, pro forma Adjusted EBITDA
represents net income before net interest expense, income tax
expense, depreciation and amortization, plus (i) $0.1 million for
costs associated with the fire damage and resulting business
interruption sustained at our facility in Cuyahoga Falls, Ohio in
August 2003, and (ii) $0.5 for costs associated with roof damage
and resulting business interruption sustained at our facility in
Cuyahoga Falls, Ohio, (iii) $3.5 million related to severance
expense in connection with the retirement of TTI's former CEO.
Items (i) and (ii) affected gross profit in 2004. Item (iii)
affected SG&A. For the nine months ended September 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, (iii) $0.6 million for fees related to the secondary stock
offering completed in October 2005. Items (i) and (ii) affected
gross profit. Item (iii) affected SG&A. For the nine months ended
September 30, 2004, Adjusted EBITDA represents net income before
net interest expense, income tax expense, depreciation and
amortization, plus (i) $0.3 million for costs associated with the
fire damage and resulting business interruption sustained at our
facility in Cuyahoga Falls, Ohio, (ii) $0.5 for costs associated
with roof damage and resulting business interruption sustained at
our facility in Cuyahoga Falls, Ohio. Items (i) and (ii) affected
gross profit. For the nine months ended September 30, 2004, pro
forma Adjusted EBITDA represents net income before net interest
expense, income tax expense, depreciation and amortization, plus
(i) $0.3 million for costs associated with the fire damage and
resulting business interruption sustained at our facility in
Cuyahoga Falls, Ohio, (ii) $0.5 for costs associated with roof
damage and resulting business interruption sustained at our
facility in Cuyahoga Falls, Ohio, (iii) $1.8 million for costs
related to the sale of inventory that has been adjusted to fair
value, (iv) $0.3 million for costs related to professional fees for
the 2001 TTI proposed initial public offering, (v) $2.2 million for
costs recorded by TTI related to an impairment loss for certain
assets held for sale below carrying value, (vi) $3.5 million
related to severance expense in connection with the retirement of
TTI"s former CEO. Items (i), (ii) and (iii) affected gross profit.
Items (iv), (v) and (vi) 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 September 30, 2005,
items related to our credit agreement consist of foreign currency
income and other income or expenses of $1.1 million. For the three
months ended September 30, 2004, items related to our credit
agreement consist of foreign currency income and other income or
expenses of $0.6 million. For the nine months ended
September 30, 2005, items related to our credit agreement consist
of foreign currency income and other income or expenses of
$0.3 million. For the nine months ended September 30, 2004, items
related to our credit agreement consist of foreign currency losses
and other income or expenses of $0.9 million.
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 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.
ACCURIDE CORPORATION
CONSOLIDATED PRO FORMA AS ADJUSTED OPERATING EARNINGS
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA NET INCOME $19,140 $7,562 $37,928 $19,367
Plus: Adjustment for IPO(1) - 875 1,125 2,625
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED NET
INCOME 19,140 8,437 39,053 21,992
Unrealized Gain from
Interest Rate Swap(2) (1,401) - (725)
Excluding Refinancing Costs
and Loss on Extinguishment
of Debt(2) 375 - 12,567 -
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED
OPERATING EARNINGS $18,114 $8,437 $50,895 $21,992
========= ========= ========= =========
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED NET
INCOME PER SHARE $0.55 $0.25 $1.13 $0.64
Unrealized Gain from
Interest Rate Swap(2) (0.04) - (0.02) -
Excluding Refinancing Costs
and Loss on Extinguishment
of Debt(2) 0.01 - 0.36 -
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED
OPERATING EARNINGS PER SHARE $0.52 $0.25 $1.47 $0.64
========= ========= ========= =========
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
PRO FORMA AS ADJUSTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 34,856 34,332 34,530 34,333
========= ========= ========= =========
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 6.32%. 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%.
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.
ACCURIDE CORPORATION
CONSOLIDATED BALANCE SHEETS
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
September 30, December 31,
ASSETS 2005 2004
(Restated)(1)
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $40,142 $71,843
Customer and other receivable, net 170,363 59,075
Inventories, net 110,394 45,443
Supplies 15,913 13,027
Other current assets 27,603 8,520
-------------- --------------
TOTAL CURRENT ASSETS 364,415 197,908
PROPERTY, PLANT AND EQUIPMENT, NET 310,940 205,369
Goodwill and other intangible assets 534,312 123,197
Investment in affiliates 3,130 3,752
Other assets 23,238 33,071
-------------- --------------
TOTAL $1,236,035 $563,297
============== ==============
LIABILITIES
CURRENT LIABILITIES
Accounts payable $117,802 $54,952
Current portion of long-term debt - 1,900
Other current liabilities 81,147 35,269
-------------- --------------
TOTAL CURRENT LIABILITIES 198,949 92,121
LONG-TERM DEBT, less current portion 712,725 486,780
OTHER LIABILITIES 151,065 30,177
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 173,296 (45,781)
-------------- --------------
TOTAL $1,236,035 $563,297
============== ==============
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 period's
consolidated financial statements.