Accuride Corporation Reports Second Quarter Results for 2006; Revenue Increased by 5.5%; Net Income up 7.6%; Net Debt Reduced by $58.2 Million
EVANSVILLE, Ind.--Aug. 10, 2006--Accuride Corporation , a leading manufacturer and supplier of commercial vehicle components, today announced its financial results for the second quarter ended June 30, 2006.The Company reported results of $361.7 million in net sales for the second quarter of 2006 compared to $342.8 million for the second quarter of 2005, an increase of 5.5%. This expansion was primarily the result of robust demand in the commercial vehicle industry and the pass-through of rising raw material costs. These factors were partially offset by the unexpected breakdown of two aluminum forging presses for six weeks during the quarter, and unrecovered rising raw material costs.
For the six months ended June 30, 2006, net sales were $721.7 million compared to $615.4 million for the same six-month period in 2005, an increase of 17.3%. For the first six months ended June 30, 2006, pro forma net sales were $721.7 million compared to $669.8 million for the same six-month period in 2005, an increase of 7.7%. The Company acquired Transportation Technologies Industries, Inc. ("TTI") in late January 2005, and pro forma results give effect to the Company's acquisition as if it occurred on January 1, 2005.
Net income increased 7.6% to $18.3 million, or $0.53 per diluted share, for the second quarter of 2006 compared to $17.0 million, or $0.54 per diluted share, for the second quarter of 2005. Net income for the second quarter of 2006 benefited from realized cost synergies related to the integration of the TTI companies, cost savings associated with the refinancing of senior debt and senior-subordinated notes in 2005 and reduced interest expense due to aggressive debt reduction. Those benefits were partially offset by pre-tax costs of $0.6 million related to SFAS No. 123R, $1.4 million in losses from the sale of the facility in Columbia, Tennessee and $2.3 million in an impairment of tooling assets at the Piedmont, Alabama facility. Net income for second quarter of 2005 included $0.5 million in pre-tax refinancing costs and loss on extinguishment of debt as well as a $1.0 million benefit from other non-operating/non-recurring items.
Net income was $38.4 million, or $1.11 per diluted share, for the first six months of 2006. For the first six months of 2005, net income was $17.2 million, or $0.66 per diluted share, or $18.4 million on a pro forma basis, or $0.67 per diluted share. Net income for the first six months of 2006 included pre-tax costs of $0.7 million related to SFAS No. 123R, $1.4 million in losses from the sale of the facility in Columbia, Tennessee and $2.3 million in an impairment of tooling assets at the Piedmont, Alabama facility. Pro forma net income for the first six months of 2005 included $20.0 million in pre-tax refinancing costs and loss on extinguishment of debt as well as $0.8 million in other non-operating/non-recurring expenses.
Adjusted EBITDA was $56.3 million for the second quarter of 2006, compared to an Adjusted EBITDA of $56.4 million for the prior year. For the first six months of 2006, Adjusted EBITDA was $110.8 million compared to $103.4 million of pro forma Adjusted EBITDA for the same six-month period in 2005, an increase of 7.2%. The purpose and reconciliation of Adjusted EBITDA for the Company to the most directly comparable GAAP measure is set forth in the accompanying schedules.
Liquidity and Cash Flow
At June 30, 2006, the Company had $53.6 million of cash and $667.7 million of total debt for net debt of $614.1 million, a reduction of $58.2 million in the second quarter. For the second quarter of 2006, cash from operating activities was $64.1 million and capital expenditures totaled $8.7 million, resulting in free cash flow of $55.4 million. This compared to free cash flow of $37.5 million in the second quarter of 2005.
Review and Outlook
"Demand remained robust through the second quarter, and we continued to focus on maximizing cash flow. Accordingly, results were in line with our expectations outside of the unforeseen operational issues at our Erie, Pennsylvania facility and the lag impact of raw material price increases," said Terry Keating, Accuride's CEO. "We were able to return our aluminum wheel production back to normal levels in July, but the outages as well as the lag impact affected both sales and earnings during the quarter."
"For the remainder of the year we expect overall industry demand to remain strong but our earnings will be impacted by raw material costs and lost sales in aluminum wheels," said Keating. "Therefore, we are revising our full year guidance to $210 to $220 million of Adjusted EBITDA from approximately $225 million. Despite the tempered outlook on earnings, we expect free cash flow to remain strong and exceed our expectations of $70 to $75 million."
The Company will conduct a conference call to review its second quarter results and preview the remainder of 2006 on Friday, August 11, 2006, at 8:00 a.m. Central Time. The phone number to access the conference call is (800) 573-4842 in the United States, or (617) 224-4327 internationally, access code 19743393. A replay will be available beginning August 11, 2006, at 5:00 p.m. Central Time, through August 18, 2006, by calling (888) 286-8010 in the United States, or (617) 801-6888 internationally, access code 91171873. The financial results for the three-month and six-month period ended June 30, 2006, will be also 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. With respect to the disruption in production at the Company's Erie, Pennsylvania, facility, the following risks and uncertainties should also be taken into consideration: the timely resumption of production at the facility, the adequacy and timing of insurance recoveries, the ability of the Company to procure forgings, the timely repair of equipment and the ability to maintain market share and future customer orders. Accuride assumes no obligation to update the information included in this release.
The unaudited pro forma consolidated statement of operations has been adjusted to give effect to acquisition of TTI and related financings as if these events occurred on January 1, 2005. The unaudited pro forma financial data is for informational purposes only and do 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
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005(1) 2006 2005(2)
--------- --------- --------- ---------
NET SALES $361,733 $342,815 $721,658 $615,431
COST OF GOODS SOLD 308,613 282,845 612,524 512,578
--------- --------- --------- ---------
GROSS PROFIT 53,120 59,970 109,134 102,853
OPERATING EXPENSES:
Selling, General &
Administrative 13,087 14,101 26,776 26,077
--------- --------- --------- ---------
INCOME FROM OPERATIONS 40,033 45,869 82,358 76,776
OTHER INCOME (EXPENSE):
Interest Income 343 186 392 267
Interest (Expense) (12,622) (16,418) (24,301) (28,966)
Refinancing Costs and Loss
on Extinguishment of Debt - (549) - (19,987)
Equity in Earnings of
Affiliates 176 207 391 386
Other Income (Expense), Net 394 (745) 996 (878)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 28,324 28,550 59,836 27,598
INCOME TAX PROVISION 9,981 11,531 21,458 10,391
--------- --------- --------- ---------
NET INCOME $18,343 $17,019 $38,378 $17,207
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 34,146 30,601 34,064 25,284
Basic income per share $0.54 $0.56 $1.13 $0.68
Weighted average common shares
outstanding - Diluted 34,564 31,377 34,524 26,026
Diluted income per share $0.53 $0.54 $1.11 $0.66
Note:
(1) Certain amounts in the second quarter of 2005 consolidated
financial statements have been reclassified to conform to the 2006
presentation. Included in these reclassifications are certain
costs totaling $4.8 million for the three months ended June, 2005
that have been reclassified from selling, general, and
administrative expenses to cost of goods sold. These
reclassifications do not have any impact on net income and are
immaterial to the consolidated statements of income.
(2) Certain amounts in the first and second quarter of 2005
consolidated financial statements have been reclassified to
conform to the 2006 presentation. Included in these
reclassifications are certain costs totaling $8.1 million for the
six months ended June 30, 2005 that have been reclassified from
selling, general, and administrative expenses to cost of goods
sold. These reclassifications do not have any impact on net income
and are immaterial to the consolidated statements of income.
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Pro Forma Results(1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005(2) 2006 2005(3)
--------- --------- --------- ---------
NET SALES $361,733 $342,815 $721,658 $669,761
COST OF GOODS SOLD 308,613 282,845 612,524 561,388
--------- --------- --------- ---------
GROSS PROFIT 53,120 59,970 109,134 108,373
OPERATING EXPENSES:
Selling, General &
Administrative 13,087 14,101 26,776 28,887
--------- --------- --------- ---------
INCOME FROM OPERATIONS 40,033 45,869 82,358 79,486
OTHER INCOME (EXPENSE):
Interest Income 343 186 392 267
Interest (Expense) (12,622) (16,418) (24,301) (29,979)
Refinancing Costs and Loss
on Extinguishment of Debt - (549) - (19,987)
Equity in Earnings of
Affiliates 176 207 391 386
Other Income (Expense), Net 394 (745) 996 (883)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 28,324 28,550 59,836 29,290
INCOME TAX PROVISION 9,981 11,531 21,458 10,921
--------- --------- --------- ---------
NET INCOME $18,343 $17,019 $38,378 $18,369
========= ========= ========= =========
Weighted average common shares
outstanding - Basic 34,146 30,601 34,064 26,612
Basic income per share $0.54 $0.56 $1.13 $0.69
Weighted average common shares
outstanding - Diluted 34,564 31,377 34,524 27,354
Diluted income per share $0.53 $0.54 $1.11 $0.67
Note:
(1) 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, 2005.
(2) Certain amounts in the second quarter of 2005 pro forma
consolidated financial statements have been reclassified to
conform to the 2006 presentation. Included in these
reclassifications are certain costs totaling $4.8 million for the
three months ended June 30, 2005 that have been reclassified from
selling, general, and administrative expenses to cost of goods
sold. These reclassifications do not have any impact on net income
and are immaterial to the consolidated statements of income.
(3) Certain amounts in the first and second quarter of 2005 pro forma
consolidated financial statements have been reclassified to
conform to the 2006 presentation. Included in these
reclassifications are certain costs totaling $9.8 million for the
six months ended June 30, 2005 that have been reclassified from
selling, general, and administrative expenses to cost of goods
sold. These reclassifications do not have any impact on pro forma
net income and are immaterial to the pro forma consolidated
statements of income.
ACCURIDE CORPORATION
CONSOLIDATED ADJUSTED EBITDA
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Results
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
NET INCOME $18,343 $17,019 $38,378 $17,207
Net Interest Expense 12,279 16,781 23,909 48,686
Income Tax Expense 9,981 11,531 21,458 10,391
Depreciation and Amortization 14,492 11,279 26,302 21,196
--------- -------- --------- ---------
EBITDA 55,095 56,610 110,047 97,480
Restructuring, severance and
other charges(2) 1,436 (995) 1,436 758
Items related to our credit
agreement(3) (272) 745 (697) 878
--------- -------- --------- ---------
ADJUSTED EBITDA $56,259 $56,360 $110,786 $99,116
========= ======== ========= =========
Pro Forma Results(1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
PRO FORMA NET INCOME $18,343 $17,019 $38,378 $18,369
Net Interest Expense 12,279 16,781 23,909 49,699
Income Tax Expense 9,981 11,531 21,458 10,921
Depreciation and Amortization 14,492 11,279 26,302 22,800
--------- -------- --------- ---------
PRO FORMA EBITDA 55,095 56,610 110,047 101,789
Restructuring, severance and
other charges(2) 1,436 (995) 1,436 758
Items related to our credit
agreement(3) (272) 745 (697) 883
--------- -------- --------- ---------
PRO FORMA ADJUSTED EBITDA $56,259 $56,360 $110,786 $103,430
========= ======== ========= =========
Note:
(1) 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, 2005.
(2) For the three months ended June 30, 2006, Adjusted EBITDA and pro
forma Adjusted EBITDA represent net income before net interest
expense, income tax expense, depreciation and amortization, plus
(i) $1.4 million in losses from the sale of the facility in
Columbia, TN. Item (i) affected gross profit. 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 the facility in Cuyahoga Falls, Ohio. Item (i)
affected gross profit. For the six months ended June 30, 2006,
Adjusted EBITDA and pro forma Adjusted EBITDA represent net income
before net interest expense, income tax expense, depreciation and
amortization, plus (i) $1.4 million in losses from the sale of the
facility in Columbia, TN. Item (i) affected gross profit. 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) ($1.0)
million for the insurance proceeds related to the business
interruption sustained at the facility in Cuyahoga Falls, Ohio,
and (ii) $1.8 million for costs related to the sale of inventory
that has been adjusted to fair value. Item (i) and (ii) affected
gross profit.
(3) 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, 2006, items related
to our credit agreement consist of foreign currency gains and
other income or expenses of $0.3 million. 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 six months ended June 30, 2006, items related to
our credit agreement consist of foreign currency gains and other
income or expenses of $0.7 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.
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
June 30, December 31,
ASSETS 2006 2005
------------- -------------
CURRENT ASSETS
Cash and cash equivalents $53,628 $48,415
Customer and other receivables, net 183,243 141,921
Inventories, net 113,038 118,896
Supplies 20,242 17,426
Other current assets 29,313 25,599
------------- -------------
TOTAL CURRENT ASSETS 399,464 352,257
PROPERTY, PLANT AND EQUIPMENT, NET 306,184 317,972
Goodwill and other assets 547,176 550,125
------------- -------------
TOTAL $1,252,824 $1,220,354
============= =============
LIABILITIES
CURRENT LIABILITIES
Accounts payable $122,201 $114,990
Current portion of long-term debt - -
Other current liabilities 90,678 82,596
------------- -------------
TOTAL CURRENT LIABILITIES 212,879 197,586
LONG-TERM DEBT, less current portion 667,725 697,725
OTHER LIABILITIES 156,111 149,300
TOTAL STOCKHOLDERS' EQUITY 216,109 175,743
------------- -------------
TOTAL $1,252,824 $1,220,354
============= =============