Prestolite Electric Reports Third Quarter Results
12 November 1998
Prestolite Electric Reports Third Quarter Results
ANN ARBOR, Mich., Nov. 11 -- Prestolite Electric Incorporated
and its parent, PEI Holding, Inc., today announced that consolidated third
quarter net sales of $70.4 million had generated earnings before interest,
taxes, depreciation, and amortization (EBITDA) of $7.6 million. Operating
income for the quarter was $4.5 million, producing net income of $0.7 million.
Net sales increased 69.7% from the third quarter of 1997; EBITDA, operating
income and net income also show similar improvements.
The sales increase primarily 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, third quarter 1997 net sales and EBITDA would have been $75.3
million and $4.5 million respectively, and a net loss of $3.0 million would
have been recorded. Net sales declined 6.4% from the pro forma third quarter
of 1997; EBITDA increased 71.1%; net income improved 122.8% over the pro forma
loss. An improved gross margin and reduced selling, general and
administrative expense both contributed to the profit improvement from the
comparable pro forma period in 1997.
Net sales of $217.8 million in the first nine months of 1998, 68.8% above
the first nine months of 1997, produced EBITDA of $20.7 million. Adjusting
1997 to include the acquired businesses, sales declined 4.7% while EBITDA rose
19.6%. 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, EBITDA in the first nine months of 1998 was
$23.8 million, 18.5% above the equivalent pro forma figure for 1997. The
Company reported a net loss for the first nine months of 1998 of $0.1 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 commented on results for the third quarter.
"The Company faced difficult economic conditions during the third quarter,
especially in South Africa and Argentina. By focusing on cost control we were
able to meet our financial targets despite those conditions."
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. For financial reporting, Prestolite Electric is
included in the reports of the parent company, PEI Holding Inc. 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 nine months ended
Oct 4 Oct 4
Oct 3 Oct 4 1997* Oct 3 Oct 4 1997*
1998 1997 Pro Forma 1998 1997 Pro Forma
Net sales $70,450 $41,516 $75,284 $217,823 $129,034 $228,539
Cost of goods sold 56,198 33,802 62,143 174,117 104,092 186,769
Gross profit 14,252 7,714 13,141 43,706 24,942 41,770
Selling, general
and administrative 9,732 6,112 11,043 29,370 17,573 32,197
Costs associated with
option repurchase -- -- -- 2,101 -- --
Restructuring and
redundancy -- -- 522 980 -- 977
Operating income 4,520 1,602 1,576 11,255 7,369 8,596
Other (income)
expenses 47 338 210 (475) 317 (30)
Interest expense 3,425 1,378 3,265 9,951 4,214 9,636
Income from
continuing
operations before
income taxes and
extraordinary item 1,048 (114) (1,899) 1,779 2,838 (1,010)
Provision for income
taxes 369 (240) (691) 632 981 189
Income from
continuing
operations 679 126 (1,208) 1,147 1,857 (1,199)
Income from
discontinued
operation, net -- (1,771) (1,771) -- (1,672) (1,672)
Extraordinary item -- -- -- 1,275 -- --
Net income (loss) $679 $(1,645) $(2,979) $(128) $185 $(2,871)
Operating income $4,520 $1,602 $1,576 $11,255 $7,369 $8,596
Other income
(expense) (47) (338) (210) 475 (317) 30
Depreciation 2,824 1,207 2,951 8,215 3,644 8,317
Amortization 314 146 145 800 450 405
EBITDA $7,611 $2,617 $4,462 $20,745 $11,146 $17,348
Costs associated with
option repurchase -- -- -- 2,101 -- --
Restructuring and
redundancy -- -- 522 980 -- 977
EBITDA before
redundancy
and option
repurchase $7,611 $2,617 $4,984 $23,826 $11,146 $18,325
*Pro Forma as though the acquisition of three businesses from Lucas
Industries had occurred at the beginning of 1997.