Remy International, Inc. Announces 2005 Results
ANDERSON, Ind., March 24 -- 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 reported its financial results for the three and twelve-month periods ended December 31, 2005.
Net sales for the fourth quarter increased $63.3 million to $319.1 million, a 24.7% increase, compared with $255.8 million reported in the corresponding period last year. The increase reflects the impact of the Unit Parts Company acquisition in March 2005, as well as a 51.1% increase in Powertrain sales and a 10.4% increase in OEM sales. For the year ended December 31, 2005, net sales amounted to $1,229.0 million, a 16.9% increase, compared to $1,051.2 million in the same period last year.
The Company reported an adjusted EBITDA (loss) for the fourth quarter of $(0.2) million, a $23.2 decrease, compared to adjusted EBITDA of $23.0 million in the fourth quarter 2004. The decline in adjusted EBITDA primarily reflects lower selling prices and higher raw material costs. The decline also reflects charges associated with the write-down of certain assets, an increase in the reserve for an environmental matter and the costs associated with an organizational realignment. For the full year 2005 the Company reported adjusted EBITDA of $38.1 million compared to $110.3 million reported in the corresponding period last year.
The Company reported an operating loss of $(24.0) million in the fourth quarter 2005, compared with operating income of $17.2 million in the fourth quarter 2004. For the year ended December 31, 2005, the Company reported an operating loss of $(10.7) million compared with operating income of $86.3 million last year. The operating loss for the fourth quarter and the full year 2005 includes a goodwill impairment charge of $13.9 million relating to its core services business.
Net cash used in operating activities for the year ended December 31, 2005 was $(46.9) million, compared with $(9.4) million for the corresponding period last year. The Company's liquidity at December 31, 2005 amounted to approximately $118.0 million, consisting of $99.8 million of availability on its senior credit facility in addition to unrestricted cash of $18.2 million on the balance sheet.
The Company's results for the fourth quarter and the calendar year are preliminary and may be revised prior to the filing of the Company's 2005 annual report on Form 10K.
Recent Developments:
The Company successfully completed an $80 million term loan financing as part of an amendment to the Company's senior secured credit facility. The net proceeds from the term loan were used to pay down existing loans under the Company's existing revolving credit facility. The term loan matures on June 30, 2008.
Future Outlook:
Commenting on the 2005 results, John H. Weber, President and Chief Executive Officer, stated "The financial results of 2005 do not reflect key actions underway to reduce costs and dramatically improve profitability in 2006. Well defined action plans are in place and are yielding results. I am pleased we ended the year with a strong liquidity position giving us the flexibility and ability to compete effectively."
The Company believes that 2006 sales and adjusted EBITDA will be in the ranges of $1,275 to $1,300 million and $90-$110 million, respectively, with adjusted EBITDA comprised of $60 - $80 million of operating income and about $30 million of depreciation and amortization. The Company expects net cash provided by operating activities for 2006 will be in the range of $10 to $20 million including cash usage for restructuring payments. Capital expenditures for 2006 are expected to be approximately $35 million.
For the first quarter of 2006, the Company believes sales will be in the range of $335-$340 million with an adjusted EBITDA of roughly $22-$24 million consisting of operating income of approximately $15-$17 million and depreciation and amortization of approximately $7 million. The Company expects cash usage will be approximately $15-$20 million, principally driven by seasonal working capital and restructuring payouts. Capital expenditures are expected to be $8 to $10 million for the quarter. The Company believes it is on track to deliver these results.
Fourth Quarter Conference Call:
Remy International's executive management team will host its fourth quarter conference call on Friday, March 24 at 10:00 a.m. Eastern Standard Time to discuss the Company's performance for the fourth quarter and full year 2005, its liquidity, the outlook for 2006, and other matters. The call may be accessed by dialing 800-762-6067 ten minutes prior to the start of the call. A replay of the conference call will be archived for two weeks, and may be accessed by dialing 800-475-6701 (USA), 320-365-3844 (International), Access Code 822103. A copy of the Company's Fourth Quarter Conference Call Opening Commentary will be available on the Remy International Website at http://www.remyinc.com/ under Investor Relations, for approximately 2 weeks.
Use of Non-GAAP Financial Information:
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this news release, the Company has provided information regarding "Adjusted EBITDA" (a Non-GAAP financial measure). Adjusted EBITDA represents operating income (loss), plus depreciation and amortization, restructuring charges (credits) and impairment charges. The Company believes Adjusted EBITDA is a meaningful measure of performance that is commonly utilized in the industry to analyze operating performance and liquidity. Adjusted EBITDA should not be construed as income from operations, net income or net cash flow from operating activities as determined by GAAP. For a reconciliation of historical adjusted EBITDA to GAAP financial information, please refer to the table following the accompanying condensed 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 Website: http://www.remyinc.com/
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Twelve Months
IN THOUSANDS, For the
three and twelve months Unaudited Unaudited
ended December 31, 2005 2004 2005 2004
Net sales $319,078 $255,834 $1,228,950 $1,051,165
Cost of goods sold 292,233 209,936 1,081,743 850,672
Gross profit 26,845 45,898 147,207 200,493
Selling, general and
administrative expenses 34,658 29,289 139,189 113,263
Impairment charge 13,917 - 13,917 -
Restructuring charges
(credits) 2,255 (574) 4,850 942
Operating (loss) income (23,985) 17,183 (10,749) 86,288
Interest expense 18,497 13,859 69,409 58,237
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 (42,482) 3,324 (80,158) 20,112
Income tax expense 817 919 13,187 5,367
Minority interest 761 659 3,442 2,798
Loss (income) from
unconsolidated joint ventures (45) (113) (208) 588
Net (loss) income from
continuing operations (44,015) 1,859 (96,579) 11,359
Discontinued operations:
Income (loss) from
discontinued operations,
net of tax (847) 188 (1,331) 1,154
Gain on disposal of
discontinued operations,
net of tax 140 534 926 43,911
Net (loss) income from
discontinued operations,
net of tax (707) 722 (405) 45,065
Net (loss) income (44,722) 2,581 (96,984) 56,424
Accretion for redemption
of preferred stock - - - 27,367
Net (loss) income
attributable to
common stockholders $(44,722) $2,581 $(96,984) $29,057
Adjusted EBITDA:
Operating (loss) income $(23,985) $17,183 $(10,749) $86,288
Depreciation and
amortization 7,587 6,405 30,086 23,046
Restructuring charges
(credits) 2,255 (574) 4,850 942
Impairment charge 13,917 - 13,917 -
Adjusted EBITDA $(226) $23,014 $38,104 $110,276
Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, December 31,
IN THOUSANDS, At 2005 2004
Unaudited
Assets:
Current assets:
Cash and cash equivalents $20,022 $62,545
Trade accounts receivable, net 184,818 154,333
Inventories 261,821 217,912
Other current assets 20,492 30,927
Total current assets 487,153 465,717
Property, plant and equipment, net 174,531 137,293
Goodwill, net 156,650 106,400
Other assets 51,441 46,608
Total assets $869,775 $756,018
Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable $194,123 $170,776
Accrued restructuring 12,669 6,451
Other liabilities and accrued expenses 124,173 95,166
Current maturities of long-term debt 27,501 22,890
Total current liabilities 358,466 295,283
Long-term debt, net of current portion 714,181 610,330
Accrued restructuring 481 4,407
Other non-current liabilities 87,834 38,100
Minority interest 11,558 10,498
Total stockholders' deficit (302,745) (202,600)
Total liabilities and
stockholders' deficit $869,775 $756,018
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
IN THOUSANDS, For the twelve months
ended December 31, 2005 2004
Unaudited
Cash Flows from Operating Activities:
Net (loss) income attributable to
common stockholders $(96,984) $29,057
Adjustments to reconcile net (loss)
income to net cash
used in operating activities:
Discontinued operations 405 (45,065)
Depreciation and amortization 30,086 23,046
Non-cash interest expense 3,438 3,855
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 3,234 3,386
Deferred income taxes 6,203 2,592
Restructuring charges 4,850 942
Cash payments for restructuring charges (7,457) (9,027)
Impairment charges 13,917 -
Litigation settlement - (13,622)
Changes in accounts receivable,
inventory and accounts payable, net (1,432) (14,986)
Other, net (3,147) (24,835)
Net cash used in operating activities
of continuing operations (46,887) (9,351)
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (57,641) (25,517)
Net proceeds on sale of businesses 10,693 104,653
Purchases of property,
plant and equipment (41,382) (25,347)
Net cash (used in) provided by
investing activities
of continuing operations (88,330) 53,789
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 77,600 275,000
Retirement of long-term debt (12,500) (200,000)
Net borrowings (repayments)
under revolving line of credit and other 33,986 (62,654)
Financing costs (2,476) (15,032)
Distributions to minority interests (2,382) (1,010)
Net cash provided by (used in)
financing activities
of continuing operations 94,228 (3,696)
Effect of exchange rate changes on cash (367) 1,510
Cash flows of discontinued operations (1,167) (914)
Net (decrease) increase in cash
and cash equivalents (42,523) 41,338
Cash and cash equivalents at
beginning of year 62,545 21,207
Cash and cash equivalents at
end of period $20,022 $62,545