Tuesday, November 01, 2016 11:20:18 AM
• Net loss of $28.6 million, or a negative $0.59 per share
• Net loss from continuing operations of $6.8 million, or a negative $0.14 per share
• Net sales from continuing operations of $125.2 million, down 14.0 percent from the third quarter of 2015
EVANSVILLE, Ind.--(BUSINESS WIRE)-- Accuride Corporation (NYSE:ACW) (“Accuride” or the “Company”) – a leading supplier of components to the North American and European commercial vehicle industries – today reported financial results for the third quarter ended September 30, 2016.
Third Quarter 2016 Results
Third quarter 2016 net sales were $125.2 million, which represented a decrease of $20.5 million, or 14.0 percent, compared with net sales of $145.7 million for the third quarter of 2015. The decrease was driven by $24.5 million from lower-than-anticipated demand for wheels and brake drums in North America, and $4.3 million in pricing that was primarily related to the pass-through of lower raw material costs. Partially offsetting the decrease was an $8.3 million increase in net sales from Gianetti Ruote, in which Accuride took a majority stake in November 2015.
Accuride’s operating income was $1.5 million, down $9.6 million compared to operating income of $11.1 million in the third 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 a net loss of $28.6 million, or a negative $0.59 per share, including a loss from discontinued operations, net of tax, of $21.9 million related to the sale of the Brillion Iron Works subsidiary during the third quarter. The Company’s net loss from continuing operations attributable to shareholders was $6.8 million, or a negative $0.14 per share, compared to net income of $5.4 million, or $0.11 per share, in the third quarter of 2015. Third quarter Adjusted EBITDA from continuing operations was $13.5 million, or 10.8 percent of net sales, compared to $21.6 million, or 14.8 percent of net sales, in the same quarter of 2015.
Third Quarter Business Segment Results
Wheels
Wheels segment net sales were $90.9 million, down $10.9 million, or 10.7 percent, from the same period in 2015. The third quarter of 2016 included $8.3 million in net sales from Gianetti. Excluding Gianetti, Wheels segment net sales were down $19.2 million, or 18.9 percent, from the same period in 2015. This decrease was primarily related to lower production volume from North American OEM customers and reduced aftermarket customer demand totaling $15.3 million, plus the pass-through of lower material costs of $3.9 million. Wheels’ Adjusted EBITDA was $14.7 million, a decrease of $7.7 million, or 34.3 percent, from the third quarter of 2015.
Gunite
Gunite segment net sales were $34.3 million, down $9.5 million, or 21.7 percent, from the third quarter of 2015. This decrease is largely attributable to lower North American Class 8 OEM production and reduced aftermarket demand totaling $9.1 million, coupled with the pass-through of lower material costs of $0.4 million. Gunite’s Adjusted EBITDA was $4.9 million, a decrease of $1.6 million, or 24.7 percent, from the third quarter of 2015.
Liquidity and Debt
As of September 30, 2016, total debt was $318.1 million, consisting of $305.8 million of the outstanding 9.5% senior secured notes, net of discount and debt issuance costs, and $12.3 million in debt obligations related to the Company’s majority stake in Gianetti. As of September 30, 2016, Accuride had $27.0 million of cash and $37.0 million in availability under its ABL Credit Facility for total liquidity of $64.0 million. Cash included $11.7 million in net proceeds from the sale of Brillion.
In light of the previously announced merger agreement pursuant to which Accuride is to be acquired by affiliates of Crestview Partners, Accuride will not be hosting a conference call to discuss its third quarter 2016 financial results.
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 and wheel-end components and assemblies. The company’s products are marketed under its brand names, which include Accuride®, Accuride Wheel End Solutions™, Gunite® and Gianetti Ruote™. Accuride’s common stock trades on the New York Stock Exchange under the ticker symbol ACW. For more information:www.AccurideCorp.com.
Forward-Looking Statements
Certain statements contained in this document may be considered forward-looking statements within the meaning of the U.S. securities laws, including 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 the proposed merger contemplated by the Agreement and Plan of Merger, dated September 2, 2016, by and among the Company, Armor Parent Corp. and Armor Merger Sub Corp. (such merger, the “proposed transaction” and such agreement, the “Merger Agreement”)and the ability to consummate the proposed transaction. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: (1) Accuride may be unable to obtain shareholder approval for the proposed transaction; (2) the conditions to the closing of the proposed transaction may not be satisfied and required regulatory approvals may not be obtained; (3) the proposed transaction may involve unexpected costs, liabilities or delays; (4) the business of Accuride may suffer as a result of uncertainty surrounding the proposed transaction; (5) the outcome of any legal proceedings related to the proposed transaction; (6) Accuride may be adversely affected by other economic, business, legislative, regulatory and/or competitive factors; (7) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (8) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; (9) the failure by Armor Parent Corp. or Armor Merger Sub Corp. to obtain the necessary debt and equity financing arrangements set forth in the commitment letters received in connection with the proposed transaction; and (10) other risks to consummation of the proposed transaction, including the risk that the proposed transaction will not be consummated within the expected time period or at all. If the proposed transaction is consummated, Accuride’s shareholders will cease to have any equity interest in Accuride and will have no right to participate in its earnings and future growth. The foregoing review of important factors that could cause actual results to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including Accuride’s filings with the Securities and Exchange Commission (the “SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2015 and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, which are available on the SEC’s website at www.sec.gov. Except as required by applicable law, Accuride undertakes no obligation to update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. Accuride does not intend, and assumes no obligation, to update any forward-looking statements. Accuride’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2015, its definitive proxy statement for its 2016 Annual Meeting of Stockholders, which was filed with the SEC on March 18, 2016, and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, are available on the SEC’s website at www.sec.gov.
Important Additional Information
In connection with the proposed transaction, on October 17, 2016, the Company filed with the SEC and sent to its stockholders a definitive proxy statement. INVESTORS OF THE COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, ARMOR PARENT CORP., ARMOR MERGER SUB CORP. AND THE PROPOSED TRANSACTION. Investors may obtain a free copy of these materials and other documents filed by the Company with the SEC at the SEC’s website at www.sec.gov, at the Company’s website at www.accuridecorp.com or by sending a written request to the Company at 7140 Office Circle, Evansville, Indiana 47715, Attention: General Counsel and Corporate Secretary.
Participants in the Solicitation
The Company and its directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of the Company’s stockholders in connection with the proposed transaction, as well as any direct or indirect interests such persons may have in the proposed transaction, is set forth in the annual proxy statement for the Company’s 2016 Annual Meeting of Stockholders and the definitive proxy statement filed in connection with the proposed transaction.
Three Months Operating Results
(UNAUDITED)
Three Months Ended September 30,
(Dollars in thousands)
2016
2015
Net Sales:
Wheels
$
90,923
72.6
%
$
101,833
69.9
%
Gunite
34,279
27.4
%
43,823
30.1
%
Total Net Sales from Continuing Operations
$
125,202
100.0
%
$
145,656
100.0
%
Gross Profit from Continuing Operations
$
11,943
9.5
%
$
21,623
14.8
%
Income (Loss) from Continuing Operations:
Wheels
$
4,658
5.1
%
$
13,715
13.5
%
Gunite
3,435
10.0
%
5,061
11.5
%
Corporate / Other
(6,610)
—
(7,658)
—
Consolidated Total
$
1,483
1.2
%
$
11,118
7.6
%
Net Income (Loss) from Continuing Operations – Attributable to Stockholders
$
(6,751)
(5.4)
%
$
5,398
3.7
%
Adjusted EBITDA:
Wheels
$
14,698
16.2
%
$
22,384
22.0
%
Gunite
4,870
14.2
%
6,468
14.8
%
Corporate / Other
(6,051)
—
(7,256)
—
Adjusted EBITDA from Continuing Operations
13,517
10.8
%
21,596
14.8
%
Discontinued Operations
(1,791)
—
(2,443)
—
Consolidated Total
$
11,726
9.4
%
$
19,153
13.1
%
Nine Months Operating Results
(UNAUDITED)
Nine Months Ended September 30,
(Dollars in thousands)
2016
2015
Net Sales:
Wheels
$
300,713
72.1
%
$
324,525
71.6
%
Gunite
116,517
27.9
%
128,569
28.4
%
Total Net Sales from Continuing Operations
$
417,230
100.0
%
$
453,094
100.0
%
Gross Profit from Continuing Operations
$
56,111
13.4
%
$
67,088
14.8
%
Income (Loss) from Continuing Operations:
Wheels
$
30,773
10.2
%
$
44,372
13.7
%
Gunite
13,321
11.4
%
15,140
11.8
%
Corporate / Other
(22,548)
—
(25,668)
—
Consolidated Total
$
21,546
5.2
%
$
33,844
7.5
%
Net Income (Loss) from Continuing Operations – Attributable to Stockholders
$
(2,852)
(0.7)
%
$
10,156
2.2
%
Adjusted EBITDA:
Wheels
$
60,136
20.0
%
$
70,703
21.8
%
Gunite
17,606
15.0
%
19,238
15.0
%
Corporate / Other
(21,416)
—
(24,282)
—
Adjusted EBITDA from Continuing Operations
$
56,326
14.0
%
$
65,659
14.5
%
Discontinued Operations
(5,688)
—
682
0.1
%
Consolidated Total
$
50,638
12.0
%
$
66,341
14.6
%
ACCURIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended?September 30,
Nine Months Ended?September 30,
(In thousands except per share data)
2016
2015
2016
2015
NET SALES
$
125,202
$
145,656
$
417,230
$
453,094
COST OF GOODS SOLD
113,259
124,033
361,119
386,006
GROSS PROFIT
11,943
21,623
56,111
67,088
OPERATING EXPENSES:
Selling, general and administrative
10,460
10,505
34,565
33,244
INCOME FROM OPERATIONS
1,483
11,118
21,546
33,844
OTHER INCOME (EXPENSE):
Interest expense, net
(8,442)
(8,249)
(25,248)
(24,953)
Other income (loss), net
(9)
(1,142)
582
(2,398)
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
(6,968)
1,727
(3,120)
6,493
INCOME TAX EXPENSE (BENEFIT)
410
(3,671)
1,166
(3,663)
INCOME (LOSS) FROM CONTINUING OPERATIONS
(7,378)
5,398
(4,286)
10,156
DISCONTINUED OPERATIONS, NET OF TAX
(21,861)
(3,578)
(28,042)
(2,585)
NET INCOME (LOSS)
(29,239)
1,820
(32,328)
7,571
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
(627)
—
(1,434)
—
NET INCOME (LOSS) ATTRIBUTABLE TO STOCKHOLDERS
$
(28,612)
$
1,820
$
(30,894)
$
7,571
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Defined benefit plans and foreign currency
(2,128)
(3,259)
(3,182)
15,581
COMPREHENSIVE INCOME (LOSS)
$
(30,740)
$
(1,439)
$
(34,076)
$
23,152
EARNINGS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
Weighted average common shares outstanding—basic
48,332
48,015
48,247
47,943
Basic income (loss) per share-continuing operations
(0.14)
0.11
(0.06)
0.21
Basic loss per share-discontinued operations
(0.45)
(0.07)
(0.58)
(0.05)
Basic income (loss) per share
$
(0.59)
$
0.04
$
(0.64)
$
0.16
Weighted average common shares outstanding—diluted
48,332
49,422
48,247
48,844
Diluted income (loss) per share-continuing operations
(0.14)
0.11
(0.06)
0.21
Diluted loss per share-discontinued operations
(0.45)
(0.07)
(0.58)
(0.05)
Diluted income (loss) per share
$
(0.59)
$
0.04
$
(0.64)
$
0.16
ACCURIDE CORPORATION
CONSOLIDATED ADJUSTED EBITDA
(UNAUDITED)
Three Months Ended September 30,
(In thousands)
2016
2015
Net income
$
(29,239)
$
1,820
Income tax expense (benefit)
410
(3,671)
Interest expense, net
8,442
8,249
Depreciation and amortization
10,536
10,491
Loss on disposal of discontinued operation
19,280
—
Noncontrolling interest
504
—
Restructuring, severance and other charges1
1,063
476
Other items related to our credit agreement2
730
1,788
Adjusted EBITDA
$
11,726
$
19,153
Note:
1) For the three months ended September 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $1.1 million in costs associated with restructuring items. For the three months ended September 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 September 30, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $0.7 million. For the three months ended September 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $1.8 million.
Nine Months Ended September 30,
(In thousands)
2016
2015
Net income (loss)
$
(32,328)
$
7,571
Income tax expense (benefit)
1,166
(3,663)
Interest expense, net
25,248
24,953
Depreciation and amortization
32,893
31,500
Loss on disposal of discontinued operation
19,280
—
Noncontrolling interest
1,073
—
Restructuring, severance and other charges1
2,072
1,715
Other items related to our credit agreement2
1,234
4,265
Adjusted EBITDA
$
50,638
$
66,341
Note:
3) For the nine months ended September 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $2.1 million in costs associated with restructuring items. For the nine months ended September 30, 2015, Adjusted EBITDA represents net income before net interest expense, income tax benefit, depreciation and amortization, plus $1.7 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 nine months ended September 30, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $1.2 million. For the nine months ended September 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $4.3 million.
ACCURIDE CORPORATION
SEGMENT ADJUSTED EBITDA RECONCILIATION
(UNAUDITED)
Three Months Ended September 30, 2016
(In thousands)
Income (loss)?from?Operations
Depreciation and?Amortization
Other
Adjusted?EBITDA
Wheels
$
4,658
$
7,890
$
2,150
$
14,698
Gunite
3,435
1,185
250
4,870
Corporate / Other
(6,610)
711
(152)
(6,051)
Discontinued Operations
(2,530)
750
(11)
(1,791)
Consolidated Total
$
(1,047)
$
10,536
$
2,237
$
11,726
Three Months Ended September 30, 2015
(In thousands)
Income (loss)?from?Operations
Depreciation and?Amortization
Other
Adjusted?EBITDA
Wheels
$
13,715
$
7,469
$
1,200
$
22,384
Gunite
5,061
1,157
250
6,468
Corporate / Other
(7,658)
678
(276)
(7,256)
Discontinued Operations
(3,630)
1,187
—
(2,443)
Consolidated Total
$
7,488
$
10,491
$
1,174
$
19,153
Nine Months Ended September 30, 2016
(In thousands)
Income (loss)?from?Operations
Depreciation and?Amortization
Other
Adjusted?EBITDA
Wheels
$
30,773
$
24,245
$
5,118
$
60,136
Gunite
13,321
3,535
750
17,606
Corporate / Other
(22,548)
2,115
(983)
(21,416)
Discontinued Operations
(8,672)
2,988
(4)
(5,688)
Consolidated Total
$
12,874
$
32,883
$
4,881
$
50,638
Nine Months Ended September 30, 2015
(In thousands)
Income (loss)?from?Operations
Depreciation and?Amortization
Other
Adjusted?EBITDA
Wheels
$
44,372
$
22,731
$
3,600
$
70,703
Gunite
15,140
3,348
750
19,238
Corporate / Other
(25,668)
1,874
(488)
(24,282)
Discontinued Operations
(2,865)
3,547
—
682
Consolidated Total
$
30,979
$
31,500
$
3,862
$
66,341
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)
September 30,
December 31,
(In thousands)
2016
2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
26,954
$
29,759
Customer and other receivables
56,383
60,075
Inventories
35,213
41,761
Other current assets
8,180
7,347
Current assets of discontinued operations
—
12,988
Total current assets
126,730
151,930
PROPERTY, PLANT AND EQUIPMENT, net
184,814
194,821
OTHER ASSETS:
Goodwill and other assets
221,674
224,597
Non-current assets of discontinued operations
—
32,271
TOTAL
$
533,218
$
603,619
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
51,089
$
63,870
Short term debt obligations
10,635
10,286
Other current liabilities
26,172
34,690
Current liabilities of discontinued operations
—
13,052
Total current liabilities
87,896
121,898
LONG-TERM DEBT
307,435
304,254
OTHER LIABILITIES
101,009
105,680
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
—
933
STOCKHOLDERS’ EQUITY:
Total stockholders’ equity
36,878
70,854
TOTAL
$
533,218
$
603,619
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20161101005863r1&sid=acqr7&distro=nx&lang=en
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101005863/en/
Accuride Corporation?Media Relations?Timothy G. Weir, APR, 812-962-5128?Director of Public Affairs, Communications & Marketing?tweir@accuridecorp.com?or?Investor Relations?Todd Taylor, 812-962-5105?Vice President and Treasurer?ttaylor@accuridecorp.com
Source: Accuride Corporation
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