- Operating income doubles year-over year; first half is positive
net income for first time since 2007
- Second Quarter 2014 results from continuing operations
included:
- Net sales of $181.6 million, up 0.9 percent from Q2 2013
- Operating income of $12.3 million, up from $6.0 million in Q2
2013
- Net income of $5.1 million, or $0.11 per share, up from a loss
of $5.1 million, or $0.11 per share, in Q2 2013
- Adjusted EBITDA of $23.2 million, up 30.3 percent from Q2
2013
- On improving results and outlook, Company raises full-year 2014
estimates for:
- Revenues of $675 million – $700 million, representing an
increase of $25 million
- Adjusted EBITDA of $70 million – $80 million, representing an
increase of $10 million
Accuride Corporation (NYSE:ACW) – a leading supplier of components
to the North American commercial vehicle industry – today reported
strong financial results for the second quarter ended June 30,
2014, as its Fix & Grow strategy supports delivery of continued
margin and profitability improvement.
Second Quarter 2014 Results
Second quarter 2014 net sales from continuing operations were
$181.6 million, compared with $179.9 million in the same period in
2013, an increase of 0.9 percent. The Company achieved operating
income of $12.3 million for the quarter, compared to operating
income of $6.0 million in the second quarter of 2013. The Company
reported net income from continuing operations of $5.1 million, or
$0.11 per share, during the quarter, compared to a 2013
second-quarter net loss of $5.1 million, or $0.11 per share. Net
income in second quarter of 2014 included a benefit of $2.2
million, or 0.04 per share, related to Mexico tax reform and a
reduction in our long-term income tax payable. Second quarter
Adjusted EBITDA improved year-over-year to $23.2 million, or 12.8
percent of net sales, compared to $17.8 million, or 9.9 percent of
net sales, in the same quarter of 2013. As of June 30, 2014,
Accuride had $31.9 million of cash plus $40.1 million in
availability under its ABL Credit Facility, for total liquidity of
$72.0 million.
Commenting on Accuride's second quarter results and business
conditions, President and CEO Rick Dauch said, "We are pleased with
our overall results for the quarter, which again demonstrated the
return on our strategic investments to 'Fix & Grow' Accuride in
anticipation of the commercial vehicle industry recovery now
underway. Equipment orders were higher each month this quarter over
the prior year, extending backlogs and filling build schedules in
the segments we serve, while freight demand and the aftermarket
stayed healthy. As the industry outlook solidified this quarter, so
did Accuride's profit-generation power. We doubled operating
income, aiding further expansion of net income and Adjusted EBITDA
margins. Accuride was net income positive on a year-to-date basis
through June for the first time since the onset of the industry
recession in 2007. Wheels and, particularly, Gunite saw continued
incremental margin expansion in the quarter due to reduced costs
and improved operating efficiency."
Industry Conditions
Commercial vehicle OEMs further increased production in the
second quarter in line with net order growth within each segment
Accuride serves. Carriers continue to replace older equipment and
expand fleets to meet rising freight demand. Class 8 net orders for
the entire quarter increased 19 percent year-over-year for the
strongest showing in eight years. Class 5-7 and Trailer net orders
also improved, with year-over-year increases of 7 percent and 35
percent, respectively. Production also grew at a healthy pace in
the quarter, with Class 8 and 5-7 truck builds both increasing 10
percent, and Trailers up by 11 percent year over year. Based on
continued order strength, we anticipate strong, steady equipment
builds across all segments in the second half of 2014. Demand in
Brillion's core industrial end markets remains essentially flat
this year due to global economic forces, with a sustained recovery
not expected until 2015-16.
Second Quarter Business Segment Results
Accuride Wheels
Accuride Wheels segment net sales were $101.2 million, up $1.7
million, or 1.7 percent, from the same period in 2013, primarily
due to stronger OEM truck and trailer demand that was partially
offset by market share changes between truck OEMs and lower OEM
light duty and military demand. Wheels' Adjusted EBITDA was $20.9
million, an increase of $0.2 million, or 1.0 percent, from the
second quarter of 2013. Wheels continued its pace of product
innovation by introducing its new Accu-FlangeTM treatment to limit
flange wear in aluminum wheels. Also during the quarter, we reached
a new four-year collective bargaining agreement with the UAW Local
1186 at our Erie, Pa., plant.
Gunite
Gunite segment net sales were $48.3 million, down $2.9 million,
or 5.7 percent, from the second quarter of 2013, primarily due to
weaker-than-expected aftermarket demand for brake drums. Gunite's
Adjusted EBITDA was $8.3 million, or 17.2 percent of net sales, up
from $4.6 million in the second quarter of 2013. Gunite's continued
margin expansion reflects its normal seasonally higher mix of
aftermarket business and reduced breakeven point, and supports our
target for Gunite to become a 10 to 12 percent Adjusted EBITDA
business in 2014.
Brillion Iron Works
Brillion Iron Works' second quarter net sales were $32.1
million, up $2.8 million, or 9.6 percent, from the second quarter
of 2013. Brillion's Adjusted EBITDA was $1.6 million, a decrease of
$1.7 million from the second quarter of 2013. Brillion's results
were impacted by $1.0 million in non-cash inventory adjustments and
higher-than-expected maintenance costs.
Liquidity and Debt
As of June 30, 2014, total debt was $340.7 million, consisting
of $305.7 million of our outstanding 9.5% senior secured notes, net
of discount, and a $35.0 million draw on our ABL Credit Facility.
Accuride had $31.9 million of cash plus $40.1 million in
availability under its ABL Credit Facility, for total liquidity of
$72.0 million.
Business and Market Outlook
"Our 'Fix & Grow' strategy has repositioned Accuride as an
agile, competitive and more operationally disciplined supplier
today, with a reduced cost structure that drives higher
profitability," Rick Dauch said. "We are providing products
that provide real value to customers, whether by extending service
life and reducing maintenance costs, or lowering weight and
improving fuel economy. Nearly all of our facilities are
supplying these products at world-class levels on the metrics that
matter most to our customers: quality, warranty, lead times,
competitive pricing and on-time delivery. This dependability
and value is restoring customer confidence and enabling us to
secure additional new business. As the economy and industry
continue to strengthen, we have adequate and competitive capacity
to meet customer demand and recapture additional share in the
process."
2014 Financial Guidance
Accuride Chief Financial Officer Greg Risch stated, "Based on
the expectation of continued strengthening in our commercial
vehicle end markets and additional incremental new business, we are
increasing our guidance range for 2014 net sales to $675 million to
$700 million. We also are increasing our full-year Adjusted
EBITDA guidance range by $10 million to $70 million to $80 million,
due primarily to the impact of expected increase in net sales and
business unit operating improvements."
This revised 2014 guidance is based on projected North American
Class 8 production levels in the range of 280,000 to 290,000 units,
North American Class 5-7 production levels in the range of 210,000
to 215,000 units and North American Trailer production in the range
of 250,000 to 260,000 units. Accuride expects net sales for
its Brillion business unit to be approximately five percent higher
than 2013, while its end markets are still not expected to recover
until 2015-16.
Second Quarter Earnings Conference Call
Accuride will host a conference call to discuss the financial
and operational results of its Second Quarter 2014 on Monday, July
28, 2014, beginning at 9:00 a.m. Central Time. Analysts and
investors may participate on the conference call by dialing (800)
708-4539 in the United States, or (847) 619-6396 internationally,
and using participant code 37693480. A live webcast of the
conference call can be accessed via the Investors section of the
company's website – www.AccurideCorp.com/investors. Digital
playback of the call will be available from July 28, 2014, at 11:30
a.m. CDT until 11:59 p.m. CDT, August 4, 2014, by calling (888)
843-7419 in the United States, or (630) 652-3042 internationally,
using access code 37693480.
About Accuride Corporation
With headquarters in Evansville, Ind., USA, Accuride Corporation
is a leading supplier of components to the North American
commercial vehicle industry. The company's products include
commercial vehicle wheels; wheel-end components and assemblies; and
specialty cast-iron components for a range of agricultural,
construction and mining, and oil and gas equipment
applications. The company's products are marketed under its
brand names, which include Accuride®, Accuride Wheel End
SolutionsTM, Gunite®, and
BrillionTM. Accuride's common stock trades
on the New York Stock Exchange under the ticker symbol ACW.
For more information, visit the Company'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
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including
statements regarding Accuride's expectations, hopes, beliefs, and
intentions with respect to future results. Such statements are
subject to the impact on Accuride's business and prospects
generally of, among other factors, 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 Accuride's Securities and Exchange Commission
filings, including those described in Item 1A of Accuride's Annual
Report on Form 10-K for the fiscal year ended December 31, 2013.
Any forward-looking statement reflects only Accuride's belief at
the time the statement is made. Although Accuride believes that the
expectations reflected in these forward-looking statements are
reasonable, it cannot guarantee its future results, levels of
activity, performance or achievements. Except as required by law,
Accuride undertakes no obligation to update any forward-looking
statements to reflect events or developments after the date of this
news release.
Three
Months Operating Results |
(UNAUDITED) |
|
Three Months
Ended June 30, |
(Dollars in
thousands) |
2014 |
2013 |
|
|
|
|
|
Net sales: |
|
|
|
|
Wheels |
$ 101,155 |
55.7% |
$ 99,468 |
55.3% |
Gunite |
48,304 |
26.6% |
51,207 |
28.4% |
Brillion Iron Works |
32,116 |
17.7% |
29,266 |
16.3% |
Total net sales |
$ 181,575 |
100.0% |
$ 179,941 |
100.0% |
|
|
|
|
|
Gross Profit |
$ 22,422 |
12.3% |
$ 18,706 |
10.4% |
|
|
|
|
|
Income (Loss) from Operations: |
|
|
|
|
Wheels |
$ 11,857 |
11.7% |
$ 11,751 |
11.8% |
Gunite |
7,243 |
15.0% |
3,323 |
6.5% |
Brillion Iron Works |
489 |
1.5% |
1,855 |
6.3% |
Corporate / Other |
(7,285) |
— |
(10,970) |
— |
Consolidated Total |
$ 12,304 |
6.8% |
$ 5,959 |
3.3% |
|
|
|
|
|
Net Income (Loss) |
$ 5,295 |
2.9% |
$ (5,362) |
(3.0)% |
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
Wheels |
$ 20,934 |
20.7% |
$ 20,686 |
20.8% |
Gunite |
8,304 |
17.2% |
4,588 |
9.0% |
Brillion Iron Works |
1,605 |
5.0% |
3,289 |
11.2% |
Corporate / Other |
(7,609) |
— |
(10,778) |
— |
Continuing Operations |
$ 23,234 |
12.8% |
$ 17,785 |
9.9% |
|
|
|
|
|
Imperial Group |
— |
— |
117 |
0.4% |
Consolidated Total |
$ 23,234 |
12.8% |
$ 17,902 |
8.5% |
|
Six Months Operating
Results |
(UNAUDITED) |
|
Six Months Ended
June 30, |
(Dollars in
thousands) |
2014 |
2013 |
|
|
|
|
|
Net sales: |
|
|
|
|
Wheels |
$ 193,373 |
55.5% |
$ 192,630 |
56.2% |
Gunite |
92,277 |
26.5% |
90,603 |
26.4% |
Brillion Iron Works |
62,709 |
18.0% |
59,695 |
17.4% |
Total net sales |
$ 348,359 |
100.0% |
$ 342,928 |
100.0% |
|
|
|
|
|
Gross Profit |
$ 39,445 |
11.3% |
$ 24,984 |
7.3% |
|
|
|
|
|
Income (Loss) from Operations: |
|
|
|
|
Wheels |
$ 21,599 |
11.2% |
$ 17,494 |
9.1% |
Gunite |
10,521 |
11.4% |
1,546 |
1.7% |
Brillion Iron Works |
1,764 |
2.8% |
2,430 |
4.1% |
Corporate / Other |
(15,011) |
— |
(20,308) |
— |
Consolidated Total |
$ 18,873 |
5.4% |
$ 1,162 |
0.3% |
|
|
|
|
|
Net Income (Loss) |
$ 1,722 |
0.5% |
$ (21,309) |
(6.2)% |
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
Wheels |
$ 40,130 |
20.8% |
$ 36,726 |
19.1% |
Gunite |
12,621 |
13.7% |
4,024 |
4.4% |
Brillion Iron Works |
4,019 |
6.4% |
5,009 |
8.4% |
Corporate / Other |
(15,580) |
— |
(19,747) |
— |
Continuing Operations |
$ 41,190 |
11.8% |
$ 26,012 |
7.6% |
|
|
|
|
|
Imperial Group |
— |
— |
(704) |
(1.2)% |
Consolidated Total |
$ 41,190 |
11.8% |
$ 25,308 |
6.3% |
|
|
|
|
|
ACCURIDE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS |
(UNAUDITED) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June
30, |
June
30, |
(In thousands except per share
data) |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
NET SALES |
$ 181,575 |
$ 179,941 |
$ 348,359 |
$ 342,928 |
COST OF GOODS SOLD |
159,153 |
161,235 |
308,914 |
317,944 |
GROSS PROFIT |
22,422 |
18,706 |
39,445 |
24,984 |
OPERATING EXPENSES: |
|
|
|
|
Selling, general and
administrative |
10,118 |
12,747 |
20,572 |
23,822 |
INCOME FROM OPERATIONS |
12,304 |
5,959 |
18,873 |
1,162 |
OTHER INCOME (EXPENSE): |
|
|
|
|
Interest expense, net |
(8,487) |
(9,157) |
(16,907) |
(17,851) |
Other income (loss), net |
(169) |
(441) |
(699) |
(296) |
INCOME (LOSS) BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS |
3,648 |
(3,639) |
1,267 |
(16,985) |
INCOME TAX (BENEFIT) PROVISION |
(1,461) |
1,464 |
(557) |
2,873 |
INCOME (LOSS) FROM CONTINUING
OPERATIONS |
5,109 |
(5,103) |
1,824 |
(19,858) |
DISCONTINUED OPERATIONS, NET OF
TAX |
186 |
(259) |
(102) |
(1,451) |
NET INCOME (LOSS) |
$ 5,295 |
$ (5,362) |
$ 1,722 |
$ (21,309) |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF
TAX: |
|
|
|
|
Defined benefit plans |
140 |
417 |
473 |
748 |
COMPREHENSIVE INCOME (LOSS) |
$ 5,435 |
$ (4,945) |
$ 2,195 |
$ (20,561) |
Weighted average common shares
outstanding—basic |
47,737 |
47,563 |
47,667 |
47,508 |
Basic income (loss) per share-continuing
operations |
0.11 |
(0.11) |
0.04 |
(0.42) |
Basic income (loss) per
share-discontinued operations |
— |
— |
— |
(0.03) |
Basic income (loss) per share |
$ 0.11 |
$ (0.11) |
$ 0.04 |
$ (0.45) |
Weighted average common shares
outstanding—diluted |
49,003 |
47,563 |
48,299 |
47,508 |
Diluted income (loss) per
share-continuing operations |
0.11 |
(0.11) |
0.04 |
(0.42) |
Diluted income (loss) per
share-discontinued operations |
— |
— |
— |
(0.03) |
Diluted income (loss) per share |
$ 0.11 |
$ (0.11) |
$ 0.04 |
$ (0.45) |
|
ACCURIDE
CORPORATION |
CONSOLIDATED ADJUSTED
EBITDA |
(UNAUDITED) |
|
|
Three Months
Ended June 30, |
(In thousands) |
2014 |
2013 |
|
|
|
Net income (loss) |
$ 5,295 |
$ (5,362) |
Income tax (benefit) expense |
(1,461) |
1,464 |
Interest expense, net |
8,487 |
9,157 |
Depreciation and amortization |
10,230 |
10,952 |
Restructuring, severance and other
charges1 |
— |
591 |
Other items related to our credit
agreement2 |
683 |
1,100 |
Adjusted EBITDA |
$ 23,234 |
$ 17,902 |
Note:
1) For the three months ended June 30, 2014, Adjusted
EBITDA represents net income before net interest expense, income
tax expense, depreciation and amortization. For the three
months ended June 30, 2013, Adjusted EBITDA represents net income
before net interest expense, income tax benefit, depreciation and
amortization, plus $0.6 million in costs associated with
restructuring items.
2) 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,
2014, items related to our credit agreement consisted of foreign
currency losses and other income or expenses of $0.7
million. For the three months ended June 30, 2013, items
related to our credit agreement consisted of foreign currency
income and other income or expenses of $1.1 million.
|
Six Months Ended
June 30, |
(In thousands) |
2014 |
2013 |
|
|
|
Net income (loss) |
$1,722 |
$ (21,309) |
Income tax (benefit) expense |
(557) |
2,873 |
Interest expense, net |
16,907 |
17,851 |
Depreciation and amortization |
20,502 |
22,383 |
Restructuring, severance and other
charges1 |
627 |
1,002 |
Other items related to our credit
agreement2 |
1,989 |
2,508 |
Adjusted EBITDA |
$41,190 |
$ 25,308 |
Note:
1) For the six months ended June 30, 2014, Adjusted EBITDA
represents net income before net interest expense, income tax
expense, depreciation and amortization, plus $0.6 million in costs
associated with restructuring items. For the six months ended
June 30, 2013, Adjusted EBITDA represents net income before net
interest expense, income tax benefit, depreciation and
amortization, plus $1.0 million in costs associated with
restructuring items.
2) Items related to our credit agreement refer to amounts
utilized in the calculation of financial covenants in Accuride's
senior credit facility. For the six months ended June 30,
2014, items related to our credit agreement consisted of foreign
currency losses and other income or expenses of $2.0
million. For the six months ended June 30, 2013, items related
to our credit agreement consisted of foreign currency income and
other income or expenses of $2.5 million.
ACCURIDE
CORPORATION |
SEGMENT ADJUSTED EBITDA
RECONCILIATION |
(UNAUDITED) |
|
|
Three Months
Ended June 30, 2014 |
(In thousands) |
Income (loss) from
Operations |
Depreciation and
Amortization |
Other |
Adjusted EBITDA |
Wheels |
$ 11,857 |
$ 7,877 |
$ 1,200 |
$ 20,934 |
Gunite |
7,243 |
811 |
250 |
8,304 |
Brillion Iron Works |
489 |
1,086 |
30 |
1,605 |
Corporate / Other |
(7,285) |
446 |
(770) |
(7,609) |
Continuing Operations |
$ 12,304 |
$ 10,220 |
$ 710 |
$ 23,234 |
|
|
|
|
|
Imperial Group |
(10) |
10 |
— |
— |
Consolidated Total |
$ 12,294 |
$ 10,230 |
$ 710 |
$ 23,234 |
|
|
|
Three Months
Ended June 30, 2013 |
(In thousands) |
Income (loss) from
Operations |
Depreciation and
Amortization |
Other |
Adjusted EBITDA |
Wheels |
$ 11,751 |
$ 7,735 |
$1,200 |
$ 20,686 |
Gunite |
3,323 |
1,015 |
250 |
4,588 |
Brillion Iron Works |
1,855 |
1,068 |
366 |
3,289 |
Corporate / Other |
(10,970) |
758 |
(566) |
(10,778) |
Continuing Operations |
$ 5,959 |
$ 10,576 |
$1,250 |
$ 17,785 |
|
|
|
|
|
Imperial Group |
(259) |
376 |
— |
117 |
Consolidated Total |
$ 5,700 |
$ 10,952 |
$1,250 |
$ 17,902 |
|
|
|
Six Months Ended
June 30, 2014 |
(In thousands) |
Income (loss) from
Operations |
Depreciation and
Amortization |
Other |
Adjusted EBITDA |
Wheels |
$ 21,599 |
$ 15,784 |
$ 2,747 |
$ 40,130 |
Gunite |
10,521 |
1,600 |
500 |
12,621 |
Brillion Iron Works |
1,764 |
2,195 |
60 |
4,019 |
Corporate / Other |
(15,011) |
902 |
(1,471) |
(15,580) |
Continuing Operations |
$ 18,873 |
$ 20,481 |
$ 1,836 |
$ 41,190 |
|
|
|
|
|
Imperial Group |
(21) |
21 |
— |
— |
Consolidated Total |
$ 18,852 |
$ 20,502 |
$ 1,836 |
$ 41,190 |
|
|
|
Six Months Ended
June 30, 2013 |
(In thousands) |
Income (loss) from
Operations |
Depreciation and
Amortization |
Other |
Adjusted EBITDA |
Wheels |
$ 17,494 |
$ 15,973 |
$ 3,259 |
$ 36,726 |
Gunite |
1,546 |
1,978 |
500 |
4,024 |
Brillion Iron Works |
2,430 |
2,183 |
396 |
5,009 |
Corporate / Other |
(20,308) |
1,502 |
(941) |
(19,747) |
Continuing Operations |
$ 1,162 |
$ 21,636 |
$3,214 |
$ 26,012 |
|
|
|
|
|
Imperial Group |
(1,451) |
747 |
— |
(704) |
Consolidated Total |
$ (289) |
$ 22,383 |
$ 3,214 |
$ 25,308 |
We define Adjusted EBITDA as our net income or loss before
income tax expense or benefit, interest expense, net, depreciation
and amortization, restructuring, severance, and other charges,
impairment, and currency losses, net. Adjusted EBITDA has been
included because we believe that it is useful for us and our
investors to measure our ability to provide cash flows to meet debt
service. Adjusted EBITDA should not be considered an
alternative to net income (loss) or other traditional indicators of
operating performance and cash flows determined in accordance with
accounting principles generally accepted in the United States
("GAAP"). We present the table of Adjusted EBITDA because
covenants in the agreements governing our material indebtedness
contain ratios based on this measure on a quarterly
basis. While Adjusted EBITDA is used as a measure of liquidity
and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other
companies due to differences in methods of calculations.
ACCURIDE
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(UNAUDITED) |
|
|
June 30, |
December 31, |
(In thousands) |
2014 |
2013 |
|
|
|
ASSETS |
|
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ 31,903 |
$ 33,426 |
Customer and other receivables |
81,171 |
59,520 |
Inventories |
46,216 |
39,329 |
Other current assets |
15,773 |
16,993 |
Total current assets |
175,063 |
149,268 |
PROPERTY, PLANT AND EQUIPMENT, net |
217,741 |
219,624 |
OTHER ASSETS: |
|
|
Goodwill and other assets |
243,764 |
242,885 |
TOTAL |
$ 636,568 |
$ 611,777 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
CURRENT LIABILITIES: |
|
|
Accounts payable |
$ 63,786 |
$ 47,527 |
Other current liabilities |
41,895 |
42,472 |
Total current liabilities |
105,681 |
89,999 |
LONG-TERM DEBT |
340,709 |
330,183 |
OTHER LIABILITIES |
125,194 |
129,711 |
STOCKHOLDERS' EQUITY: |
|
|
Total stockholders' equity |
64,984 |
61,884 |
TOTAL |
$ 636,568 |
$ 611,777 |
CONTACT: Investor Relations: Todd Taylor
Email: ttaylor@accuridecorp.com
Phone: (812) 962-5105
Media Relations: Timothy G. Weir, APR
Email: tweir@accuridecorp.com
Phone: (812) 962-5128
Accuride (NYSE:ACW)
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