Remy Announces 3rd Quarter Results
ANDERSON, Ind., Nov. 14, 2005 -- 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 $316.0 million and Adjusted EBITDA of $11.5 million for the quarter ended September 30, 2005. Net sales increased $61.7 million, or 24.3%, and Adjusted EBITDA decreased $16.1 million, or 58.3%, compared with the third quarter of 2004. Operating income amounted to $1.5 million in the third quarter of 2005 compared to $22.2 million reported in the corresponding period last year.
The net sales increase of $61.7 million in the third quarter primarily reflects the impact of the Unit Parts Company ("UPC") acquisition in March 2005, as well as a 45% increase in Powertrain sales and a 10% increase in OEM sales.
Commenting on the third quarter results, Tom Snyder, President and CEO, stated, "Market softness in our North American automotive and electrical aftermarket business, pricing pressure and unfavorable foreign exchange continue to adversely impact our results. Clearly, our third quarter results did not meet our internal expectations. The initial benefits of our cost reduction actions were offset by a worsening in industry conditions, a higher than expected increase in selling, general and administrative expenses, and the effects of Hurricanes Katrina and Rita. Profitability in our Original Equipment business, despite higher revenue in the quarter, was adversely affected by higher raw material and fuel costs, and expenditures related to product launch costs."
He continued, "Although we faced a tough operating environment, our successful efforts to lower working capital enabled the Company to generate $10.7 million in cash from operating activities during the quarter."
The increase in selling, general and administrative expenses in the third quarter versus last year primarily reflects the impact of the UPC acquisition, unfavorable foreign exchange, a provision for bad debt expense, and certain severance costs.
Net sales of $909.9 million in the first nine months of 2005 increased $114.5 million, or 14.4%, over the comparable period in 2004. Adjusted EBITDA for the nine months ended September 30, 2005 of $38.3 million declined $48.9 million and operating income of $13.2 million declined $55.9 million compared with the same period of 2004.
Cash used in operating activities of $27.3 million in the first nine months of 2005 represents an $11.4 million increase over the comparable period in 2004, reflecting lower earnings and payments for customer obligations, partially offset by lower working capital. Cash flow in 2004 was negatively affected by approximately $14 million paid in connection with a Mexican arbitration settlement. The Company's liquidity at September 30, 2005 amounted to approximately $92 million, consisting of $65.6 million of availability on its senior credit facility in addition to $26.3 million in cash on the balance sheet.
Future Outlook:
Commenting on 2005, Raj Shah, Chief Operating Officer, stated, "The balance of the year will be challenging. We remain focused on supporting our customers' requirements while we continue our efforts to boost productivity, reduce costs and improve our cash flow from operations. In each of our products, we are taking substantial steps to lower variable and fixed costs. We expect the benefits of these actions to accelerate through 2006."
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.
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 Nine Months
IN THOUSANDS, For the three and
nine months ended September 30, 2005 2004 2005 2004
Net sales $315,963 $254,271 $909,872 $795,331
Cost of goods sold 271,470 204,239 789,510 640,736
Gross profit 44,493 50,032 120,362 154,595
Selling, general and
administrative expenses 40,938 27,731 104,531 83,974
Restructuring charges 2,095 142 2,595 1,516
Operating income 1,460 22,159 13,236 69,105
Interest expense 18,025 14,208 50,912 44,378
Loss on early extinguishment
of debt - - - 7,939
Income (loss) from continuing
operations before income taxes,
minority interest and loss
(income) from unconsolidated
joint ventures (16,565) 7,951 (37,676) 16,788
Income tax expense 10,799 3,364 12,370 4,448
Minority interest 563 769 2,681 2,139
Loss (income) from
unconsolidated joint ventures (32) (67) (163) 701
Net (loss) income from
continuing operations (27,895) 3,885 (52,564) 9,500
Discontinued operations:
Income (loss) from
discontinued operations,
net of tax (190) (25) (484) 966
Gain on disposal of
discontinued operations,
net of tax 107 43,162 786 43,377
Net (loss) income from
discontinued operations,
net of tax (83) 43,137 302 44,343
Net (loss) income (27,978) 47,022 (52,262) 53,843
Accretion for redemption
of preferred stock - 9,459 - 27,367
Net (loss) income attributable
to common stockholders $(27,978) $37,563 $(52,262) $26,476
Adjusted EBITDA:
Operating income $1,460 $22,159 $13,236 $69,105
Depreciation and amortization 7,980 5,369 22,499 16,641
Restructuring charges 2,095 142 2,595 1,516
Adjusted EBITDA $11,535 $27,670 $38,330 $87,262
Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
IN THOUSANDS, At 2005 2004
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $26,267 $62,545
Trade accounts receivable, net 179,720 154,333
Inventories 269,648 217,912
Other current assets 20,168 30,667
Total current assets 495,803 465,457
Property, plant and equipment, net 162,480 137,293
Goodwill, net 170,339 106,400
Other assets 53,494 46,608
Total assets $882,116 $755,758
Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable $185,378 $170,776
Accrued restructuring 11,426 6,451
Deferred income taxes 2,354 3,065
Other liabilities and
accrued expenses 137,436 95,166
Current maturities of
long-term debt 29,648 22,890
Total current liabilities 366,242 298,348
Long-term debt, net of current portion 680,829 610,330
Accrued restructuring 2,838 4,407
Other non-current liabilities 80,749 34,775
Minority interest 13,165 10,498
Total stockholders' deficit (261,707) (202,600)
Total liabilities and
stockholders' deficit $882,116 $755,758
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
IN THOUSANDS, For the nine months
ended September 30, 2005 2004
Cash Flows from Operating Activities:
Net (loss) income attributable to
common stockholders $(52,262) $26,476
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Discontinued operations (302) (44,343)
Depreciation and amortization 22,499 16,641
Non-cash interest expense 4,360 2,939
Loss on early extinguishment of debt - 7,939
Accretion for redemption of preferred stock - 27,367
Minority interest and loss from
unconsolidated joint ventures, net 2,518 2,840
Deferred income taxes 6,032 (145)
Restructuring charges 2,595 1,516
Cash payments for restructuring charges (4,211) (7,798)
Changes in accounts receivable, inventory
and accounts payable, net (7,928) (28,683)
Other, net (604) (20,681)
Net cash used in operating activities of
continuing operations (27,303) (15,932)
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (57,273) (24,751)
Net proceeds on sale of businesses 611 102,987
Purchases of property, plant and equipment (27,770) (15,429)
Net cash (used in) provided by investing
activities of continuing operations (84,432) 62,807
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 77,176 (56,464)
Financing costs (325) (12,456)
Distributions to minority interests - (1,010)
Net cash provided by financing activities
of continuing operations 76,851 5,070
Effect of exchange rate changes on cash (757) 335
Cash flows of discontinued operations (637) (500)
Net (decrease) increase in cash and
cash equivalents (36,278) 51,780
Cash and cash equivalents at beginning of year 62,545 21,207
Cash and cash equivalents at end of period $26,267 $72,987