Prestolite Electric Reports Second Quarter Results
5 August 1998
Prestolite Electric Reports Second Quarter Results
ANN ARBOR, Mich., Aug. 4 -- Prestolite Electric Incorporated
and its parent, PEI Holding, Inc., today announced that consolidated second
quarter net sales of $72.8 million had generated earnings before interest,
taxes, depreciation, and amortization (EBITDA) of $8.4 million. Operating
income for the quarter was $5.1 million, producing net income of $1.4 million.
Net sales increased 68.6% from the second quarter of 1997; EBITDA, operating
income and net income more than doubled.
The sales increase resulted from the January 1998 acquisition of three
business units (located in the United Kingdom, Argentina, and South Africa)
from LucasVarity plc. With the acquired operations included on a pro forma
basis, second quarter 1997 net sales, EBITDA, and net income would have been
$78.7 million, $7.2 million, and $0.5 million respectively. Net sales
declined 7.5% from the pro forma second quarter of 1997; EBITDA increased
17.8%; net income increased 167%. An improved gross margin and reduced
selling, general and administrative expense both contributed to the profit
improvement.
First half net sales of $147.4 million, 68.4% above the first half of
1997, produced EBITDA of $13.1 million. Adjusting 1997 to include the
acquired businesses, sales declined 3.8% while EBITDA rose 1.9%. EBITDA was
adversely affected in the first quarter by restructuring charges of $1.0
million and costs related to a repurchase of options of $2.1 million.
Excluding those charges first half EBITDA was $16.2 million, 21.6% above the
equivalent pro forma figure for 1997. The Company reported a net loss for the
first half of $0.8 million after first-quarter charges that totaled $3.3
million (on an after tax basis) for the restructuring and option repurchase
costs mentioned above plus other one time items related to the first quarter
refinancing, repurchase of securities, and acquisition.
Company President Kim Packard said, "We have been concentrating on
integrating the business units acquired from LucasVarity and improving their
profitability. The improvement in profit experienced in the second quarter
shows that our efforts are beginning to succeed. Our challenge in the second
half will be to continue the integration process while increasing sales."
Prestolite Electric Incorporated manufactures alternators, starter motors,
direct current motors, battery chargers and switching devices. These are
supplied under the Prestolite, Leece-Neville, and Butec brand names for
original equipment and aftermarket application on a variety of vehicles and
industrial equipment. The equity of the company is owned by Genstar Capital
Corporation and management.
EBITDA is a widely accepted financial indicator of a company's ability to
service debt, but is not calculated the same by all companies. EBITDA should
not be considered by an investor as an alternative to net income as an
indicator of a company's operating performance or as an alternative to cash
flow as a measure of liquidity. This release contains forward-looking
statements that involve risks and uncertainties regarding the anticipated
financial and operating results of the Company. The Company undertakes no
obligation to publicly release any revisions to any forward-looking statements
contained herein to reflect events or circumstances occurring after the date
of this release. The Company's actual results may differ materially from
those projected in forward-looking statements made by, or on behalf of, the
Company.
PEI Holding, Inc.
(including Prestolite Electric Incorporated)
Consolidated Unaudited Financial Highlights
(in thousands of dollars)
For the three months ended For the six months ended
July 5 July 5
July 4 July 5 1997* July 4 July 5 1997*
1998 1997 Pro Forma 1998 1997 Pro Forma
Net sales $72,848 $43,216 $78,734 $147,373 $87,518 $153,255
Cost of goods
sold 57,888 34,944 64,160 117,919 70,290 124,626
Gross profit 14,960 8,272 14,574 29,454 17,228 28,629
Selling,
general and
administrative 9,832 5,832 10,355 19,638 11,461 21,154
Costs associated
with option
repurchase - - - 2,101 - -
Restructuring and
redundancy - - 194 980 - 455
Operating
income 5,128 2,440 4,025 6,735 5,767 7,020
Other (income)
expenses (436) (41) (120) (522) (21) (240)
Interest expense 3,245 1,403 3,211 6,526 2,836 6,371
Income from
continuing operations
before income taxes and
extraordinary
item 2,319 1,078 934 731 2,952 889
Provision for
income taxes 869 474 467 263 1,221 880
Income from
continuing
operations 1,450 604 467 468 1,731 9
Income from
discontinued
operation, net - 73 73 - 99 97
Extraordinary item - - - 1,275 - -
Net income
(loss) $1,450 $677 $540 $(807) $1,830 $106
Operating
income $5,128 $2,440 $4,025 $6,735 $5,767 $7,020
Other income
(expense) 436 41 120 522 21 240
Depreciation 2,607 1,236 2,883 5,391 2,437 5,366
Amortization 278 151 144 486 304 260
EBITDA $8,449 $3,868 $7,172 $13,134 $8,529 $12,886
Costs associated
with option
repurchase - - - 2,101 - -
Restructuring and
redundancy - - 194 980 - 455
EBITDA before
redundancy and
option
repurchase $8,449 $3,868 $7,366 $16,215 $8,529 $13,341
* Pro Forma as though the acquisition of the three businesses from Lucas
Industries had occurred at the beginning of 1997.