ACW Accuride Corp.

• Second Quarter 2016 Results:
  • Net income of $2.5 million, or $0.05 per share
  • Net sales of $164.1 million, down 11.5 percent from the second quarter of 2015
  • Adjusted EBITDA of $23.9 million, down 7.6 percent from the second quarter of 2015
• Lowering guidance range for revenue and narrowing guidance range for Adjusted EBITDA for the full year

Accuride Corporation (NYSE:ACW) – a leading supplier of components to the North American and European commercial vehicle industries – today reported financial results for the second quarter ended June 30, 2016.

“Accuride delivered another solid quarter, as our core Wheels and Gunite business units continued to perform at world class operating levels and generate strong profitability,” Accuride President and CEO Rick Dauch said. “During the second quarter, our top line was impacted by significantly lower demand at Brillion, lower Class 8 production and lower pricing related to raw material pass through mechanisms. Our strong operating performance and cost reduction initiatives enabled us to offset the revenue declines and expand EBITDA margins at Wheels and Gunite from 2015 levels.

“Looking at the second half of 2016, we expect to face headwinds from continued weak demand in Brillion’s end markets and lower North American Class 8 truck demand, which should be somewhat offset by healthy Class 5-7 and Trailer market segments. In addition, we expect to partially offset the impact of rising steel prices on margins by continuing to deliver strong operational performance across our business units.

“Due to these factors, we are lowering our full-year guidance for revenue to the range of $625 million to $650 million. We are narrowing our full-year guidance for Adjusted EBITDA to the range of $65 million to $75 million, as we continue to manage performance across all of our business units. We’ll continue to take pre-emptive actions to maintain margins and profitability in order to achieve break-even or better free cash flow and protect our liquidity during this period of lower demand," Dauch added.

Second Quarter 2016 Results

Second quarter 2016 net sales were $164.1 million, which was a decrease of $21.3 million, or 11.5 percent, compared to net sales of $185.4 million for the three months ended June 30, 2015. The decrease was driven by $6.3 million related to the continued softness in demand at our Brillion business unit, $12.0 million in pricing related to the pass-through of lower raw material costs and $13.8 million due to lower demand in North American wheels and brake drums. Partially offsetting those decreases were $10.8 million in net sales related to our majority investment in Gianetti Ruote.

Accuride’s operating income was $11.5 million, down $2.7 million, compared to operating income of $14.2 million in the second quarter of 2015. This was primarily due to the incremental margin loss on the lower product demand which was partially offset by lower corporate spending. The Company reported net income from continuing operations attributable to shareholders of $2.5 million, or $0.05 per share, compared to net income of $6.3 million, or $0.13 per share, in the second quarter of 2015. Second quarter Adjusted EBITDA was $23.9 million, or 14.6 percent of net sales, compared to $25.9 million, or 14.0 percent of net sales, in the same quarter of 2015.

Second Quarter Business Segment Results

Wheels

Wheels segment net sales were $104.4 million, down $9.9 million, or 8.7 percent, from the same period in 2015. The second quarter of 2016 included $10.8 million in net sales related to our majority investment in Gianetti Ruote that occurred in November 2015. Excluding the net sales from Gianetti Ruote, the Wheels segment net sales were down $20.7 million, or 18.2 percent, from the same period in 2015. The decrease is primarily related to the pass-through of lower material costs of $9.2 million, coupled with a decrease in production volume from our OEM customers and reduced demand from our aftermarket customers of $11.5 million. Wheels’ Adjusted EBITDA was $24.7 million which was a decrease of $1.4 million, or 5.3 percent, from the second quarter of 2015. Despite the decline in net sales, Adjusted EBITDA as a percentage of net sales improved to 23.7% in the second quarter of 2016.

Gunite

Gunite segment net sales of $43.5 million were down $3.5 million, or 7.4 percent, from the second quarter of 2015. This decrease is largely attributable to the pass-through of lower material costs of $1.3 million, coupled with lower OEM production and slightly less aftermarket demand of $2.2 million. Gunite’s Adjusted EBITDA was $8.3 million, which was a decrease of $0.4 million, or 4.9 percent from the second quarter of 2015. Despite the decline in net sales, Adjusted EBITDA as a percentage of net sales improved to 19.0% in the second quarter of 2016.

Brillion Iron Works

Brillion Iron Works segment net sales of $16.2 million were down $7.8 million, or 32.6 percent, from the second quarter of 2015. This was primarily due to lower demand in industrial manufacturing, agriculture, mining, and oil and gas markets of $6.3 million, as well as $1.5 million related to the pass-through of lower material costs during the period. Brillion’s Adjusted EBITDA was a negative $1.7 million, a decrease of $1.4 million, from the second quarter of 2015.

Liquidity and Debt

As of June 30, 2016, total debt was $315.5 million, consisting of $305.3 million of the outstanding 9.5% senior secured notes, net of discount and debt issuance costs, and $10.2 million in short term obligations related to the majority interest in Gianetti. As of June 30, 2016, Accuride had $27.8 million of cash plus $49.9 million in availability under its ABL Credit Facility for total liquidity of $77.7 million.

2016 Financial Guidance

Accuride expects 2016 revenue to be in the range of $625 million to $650 million, with Adjusted EBITDA in the range of $65 million to $75 million. Accuride also expects free cash flow for 2016 to be roughly breakeven. The Company is basing these expectations for 2016 guidance on the following projections for North American commercial vehicle production and other key assumptions for the year:

• North American Class 8 production levels in the range of 220,000 to 235,000 units
• North American Class 5-7 production levels in the range of 220,000 to 240,000 units
• North American Trailer production in the range of 270,000 to 290,000 units
• European heavy- and medium-duty truck builds in the range of 510,000 to 530,000 units
• Commercial vehicle aftermarket generally flat versus prior year
• Brillion business unit net sales down 25 percent to 30 percent versus prior year
• Full year consolidation of Gianetti Ruote

Earnings Conference Call Information

Accuride will host a conference call to discuss the financial and operational results of its Second Quarter Fiscal Year 2016 on Tuesday, July 26, 2016, beginning at 9:00 a.m. CDT. Analysts and investors may access the conference call by dialing (877) 543-8122 in the United States, or (615) 247-0091 internationally, and using participant code 48742818. A live webcast of the call will be available at the Accuride website Investors section: www.AccurideCorp.com/investors. A replay will be available from noon CDT on July 26, 2016 until 11:59 p.m. CDT, August 2, 2016, by calling (855) 859-2056 in the United States, or (404) 537-3406 internationally, using access code 48742818.

About Accuride Corporation

With headquarters in Evansville, Ind., USA, Accuride Corporation is a leading supplier of components to the North American and European commercial vehicle industries. 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 Solutions™, Gunite®, Gianetti Ruote™ and Brillion™. 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, 2015. 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) 2016     2015         Net sales: Wheels $ 104,407 63.6 % $ 114,356 61.7 % Gunite 43,525 26.5 % 47,006 25.4 % Brillion Iron Works   16,184 9.9 %   24,018 12.9 % Total net sales $ 164,116 100.0 % $ 185,380 100.0 %   Gross Profit $ 23,258 14.2 % $ 25,906 14.0 %   Income (Loss) from Operations: Wheels $ 14,965 14.3 % $ 17,405 15.2 % Gunite 6,827 15.7 % 7,338 15.6 % Brillion Iron Works (2,824) (17.4) % (1,470) (6.1) % Corporate / Other   (7,477) —   (9,089) — Consolidated Total $ 11,491 7.0 % $ 14,184 7.7 %   Net Income $ 2,462 1.5 % $ 6,339 3.4 %   Adjusted EBITDA: Wheels $ 24,709 23.7 % $ 26,090 22.8 % Gunite 8,268 19.0 % 8,694 18.5 % Brillion Iron Works (1,669) (10.3) % (256) (1.1) % Corporate / Other   (7,380) —   (8,625) — Consolidated Total     $ 23,928     14.6 %     $ 25,903     14.0 %      

Six Months Operating Results

(UNAUDITED)

   

Six Months Ended June 30,

(Dollars in thousands) 2016     2015         Net sales: Wheels $ 209,790 64.5 % $ 222,692 60.3 % Gunite 82,238 25.3 % 84,746 23.0 % Brillion Iron Works   33,030 10.2 %   61,601 16.7 % Total net sales $ 325,058 100.0 % $ 369,039 100.0 %   Gross Profit $ 38,557 11.9 % $ 46,837 12.7 %   Income (Loss) from Operations: Wheels $ 26,115 12.4 % $ 30,657 13.8 % Gunite 9,886 12.0 % 10,079 11.9 % Brillion Iron Works (6,193) (18.7) % 726 1.2 % Corporate / Other   (15,899) —   (17,950) — Consolidated Total $ 13,909 4.3 % $ 23,512 6.4 %   Net Income (Loss) $ (2,282) (0.7) % $ 5,751 1.6 %   Adjusted EBITDA: Wheels $ 45,439 21.7 % $ 48,319 21.7 % Gunite 12,736 15.5 % 12,770 15.1 % Brillion Iron Works (3,897) (11.8) % 3,125 5.1 % Corporate / Other   (15,365) —   (17,026) — Consolidated Total     $ 38,913     12.0 %     $ 47,188     12.8 %          

ACCURIDE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

   

Three Months Ended June 30,

Six Months Ended June 30, (In thousands except per share data) 2016   2015 2016   2015   NET SALES $ 164,116 $ 185,380 $ 325,058 $ 369,039 COST OF GOODS SOLD   140,858   159,474   286,501   322,202 GROSS PROFIT 23,258 25,906 38,557 46,837 OPERATING EXPENSES: Selling, general and administrative   11,767   11,722   24,648   23,325 INCOME FROM OPERATIONS 11,491 14,184 13,909 23,512 OTHER INCOME (EXPENSE): Interest expense, net (8,405) (8,354) (16,806) (16,704) Other income (loss), net   (497)   (84)   564   (1,256) INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS 2,589 5,746 (2,333) 5,552 INCOME TAX PROVISION (BENEFIT)   455   (378)   756   8 INCOME (LOSS) FROM CONTINUING OPERATIONS 2,134 6,124 (3,089) 5,544 DISCONTINUED OPERATIONS, NET OF TAX   —   215   —   207 NET INCOME (LOSS) 2,134 6,339 (3,089) 5,751 NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST   (328)   —   (807)   — NET INCOME (LOSS) ATTRIBUTABLE TO STOCKHOLDERS $ 2,462 $ 6,339 $ (2,282) $ 5,751 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Defined benefit plans and foreign currency   (305)   17,566   (1,054)   18,840 COMPREHENSIVE INCOME (LOSS) $ 2,157 $ 23,905 $ (3,336) $ 24,591   EARNINGS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS Weighted average common shares outstanding—basic 48,307 47,991 48,204 47,907 Basic income (loss) per share-continuing operations 0.05 0.13 (0.05) 0.12 Basic income per share-discontinued operations   —   —   —   — Basic income (loss) per share $ 0.05 $ 0.13 $ (0.05) $ 0.12 Weighted average common shares outstanding—diluted 49,189 49,286 48,644 48,554 Diluted income (loss) per share-continuing operations 0.05 0.13 (0.05) 0.12 Diluted income per share-discontinued operations   —   —   —   — Diluted income (loss) per share $ 0.05 $ 0.13 $ (0.05) $ 0.12      

ACCURIDE CORPORATION

CONSOLIDATED ADJUSTED EBITDA

(UNAUDITED)

   

Three Months Ended June 30,

(In thousands) 2016   2015   Net income $ 2,134 $ 6,339 Income tax provision (benefit) 455 (378) Interest expense, net 8,405 8,354 Depreciation and amortization 11,342 10,413 Noncontrolling interest 215 — Restructuring, severance and other charges1 425 531 Other items related to our credit agreement2   952   644 Adjusted EBITDA $ 23,928 $ 25,903  

Note:

1)     For the three months ended June 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $0.4 million in costs associated with restructuring items. For the three months ended June 30, 2015, Adjusted EBITDA represents net income before net interest expense, income tax benefit, depreciation and amortization, plus $0.5 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, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $1.0 million. For the three months ended June 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $0.6 million.      

Six Months Ended June 30,

(In thousands) 2016   2015   Net income (loss) $ (3,089) $ 5,751 Income tax provision 756 8 Interest expense, net 16,806 16,704 Depreciation and amortization 22,357 21,009 Noncontrolling interest 569 — Restructuring, severance and other charges1 1,009 1,239 Other items related to our credit agreement2   505   2,477 Adjusted EBITDA $ 38,913 $ 47,188  

Note:

3)     For the six months ended June 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $1.0 million in costs associated with restructuring items. For the six months ended June 30, 2015, Adjusted EBITDA represents net income before net interest expense, income tax benefit, depreciation and amortization, plus $1.2 million in costs associated with restructuring items. 4) 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, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $0.5 million. For the six months ended June 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $2.5 million.      

ACCURIDE CORPORATION

SEGMENT ADJUSTED EBITDA RECONCILIATION

(UNAUDITED)

   

Three Months Ended June 30, 2016

(In thousands)

Income (loss) from Operations

   

Depreciation and Amortization

    Other    

Adjusted EBITDA

Wheels $ 14,965 $ 8,329 $ 1,415 $ 24,709 Gunite 6,827 1,191 250 8,268 Brillion Iron Works (2,824) 1,125 30 (1,669) Corporate / Other (7,477) 685 (588) (7,380) Discontinued Operations   —   —   —   — Consolidated Total $ 11,491 $ 11,330 $ 1,107 $ 23,928      

Three Months Ended June 30, 2015

(In thousands)

Income (loss) from Operations

   

Depreciation and Amortization

    Other    

Adjusted EBITDA

Wheels $ 17,405 $ 7,485 $ 1,200 $ 26,090 Gunite 7,338 1,106 250 8,694 Brillion Iron Works (1,470) 1,184 30 (256) Corporate / Other (9,089) 627 (163) (8,625) Discontinued Operations   (11)   11   —   — Consolidated Total $ 14,173 $ 10,413 $ 1,317 $ 25,903      

Six Months Ended June 30, 2016

(In thousands)

Income (loss) from Operations

   

Depreciation and Amortization

    Other    

Adjusted EBITDA

Wheels $ 26,115 $ 16,355 $ 2,969 $ 45,439 Gunite 9,886 2,350 500 12,736 Brillion Iron Works (6,193) 2,236 60 (3,897) Corporate / Other (15,899) 1,404 (870) (15,365) Discontinued Operations   —   —   —   — Consolidated Total $ 13,909 $ 22,345 $ 2,659 $ 38,913      

Six Months Ended June 30, 2015

(In thousands)

Income (loss) from Operations

   

Depreciation and Amortization

    Other    

Adjusted EBITDA

Wheels $ 30,657 $ 30,856 $ (13,194) $ 48,319 Gunite 10,079 4,567 (1,876) 12,770 Brillion Iron Works 726 9,159 (6,760) 3,125 Corporate / Other (17,950) 2,583 (1,659) (17,026) Discontinued Operations   (21)   21   -   - Consolidated Total $ 23,491 $ 47,186 $ (23,489) $ 47,188  

We define Adjusted EBITDA as our net income or loss before income tax expense or benefit, interest expense, net, depreciation and amortization, noncontrolling interest in subsidiaries, 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,

2016

December 31,2015

(In thousands)   ASSETS CURRENT ASSETS: Cash and cash equivalents $ 27,831 $ 29,759 Customer and other receivables 70,525 65,980 Inventories 39,744 47,792 Other current assets   8,387   8,399 Total current assets 146,487 151,930 PROPERTY, PLANT AND EQUIPMENT, net 216,211 224,762 OTHER ASSETS: Goodwill and other assets   225,522   226,927 TOTAL $ 588,220 $ 603,619 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 61,958 $ 71,782 Short term debt obligations 10,192 10,286 Other current liabilities   39,347   39,830 Total current liabilities 111,497 121,898 LONG-TERM DEBT 305,354 304,254 OTHER LIABILITIES 103,805 106,613 STOCKHOLDERS’ EQUITY: Total stockholders’ equity   67,564   70,854 TOTAL $ 588,220 $ 603,619  

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Accuride CorporationMEDIA RELATIONSTimothy G. Weir, APR, 812-962-5128Director of Public Affairs, Communications & Marketingtweir@accuridecorp.comorINVESTOR RELATIONSTodd Taylor, 812-962-5105Vice President and Treasurerttaylor@accuridecorp.com