GenTek Inc. Reports Third Quarter 2007 Results
PARSIPPANY, N.J., Nov. 9, 2007 (PRIME NEWSWIRE) -- GenTek Inc. (Nasdaq:GETI) today announced results for the third quarter ended September 30, 2007. For the third quarter of 2007, GenTek had revenues totaling $151.3 million and operating profit of $20.4 million, after a $10.1 million gain on disposition of long term assets, a $1.7 million restructuring and impairment charge and a $2.6 million gain from curtailment of post retirement benefits. This compares to revenues of $158.5 million and operating profit of $13.8 million in the prior-year period, after a $0.2 million gain on disposition of long term assets and restructuring and impairment charges of $0.2 million. The increase in year over year operating profit is due to gains on the sale of surplus real estate combined with continued strong performance from the chemicals segment. The Company recorded income from continuing operations of $8.6 million, or $0.75 per diluted share, compared to income from continuing operations of $4.3 million, or $0.38 income per diluted share, in the third quarter of 2006.
For the nine months ended September 30, 2007, GenTek had revenues totaling $465.7 million and operating profit of $47.6 million. This compares to revenues of $445.5 million and operating profit of $42.9 million for 2006. The Company had income from continuing operations of $17.7 million, or $1.52 per diluted share in 2007, compared to income from continuing operations of $11.6 million, or $1.07 per diluted share, in the comparable prior-year period. The increase in revenues in 2007 is due in large part to the impact of the acquisitions made in 2006 which benefit both the manufacturing and performance chemicals segments. The increase in operating profit is the result of the gains on real estate sales combined with the favorable results within the performance chemicals segment which more than offset results within the manufacturing segment driven by reduced volumes and unfavorable product mix in the automotive market.
The Company had $12.9 million of cash and $249.0 million of debt outstanding as of September 30, 2007. The Company had no balance outstanding under its revolving credit facility.
For the third quarter of 2007, adjusted EBITDA was $18.2 million which was down $3.7 million from the prior year. EBITDA in the quarter was impacted by the manufacturing segment resulting from weakness in automotive market demand, reduced heavy equipment volumes as a result of recent emission standards changes and inefficiencies associated with the reconfiguration of the automotive manufacturing footprint to the lower cost, non union, Tallahassee, Fl facility. These trends offset continued strength in the company's Performance Chemicals segment.
For the nine months ended September 30, 2007, adjusted EBITDA was $65.3 million which is down $1.8 million from the prior-year period. Adjusted EBITDA was driven by similar trends identified for the most recent quarter in the manufacturing segment and a non recurring warranty charge for one of our key automotive customers.
"We continue to be pleased with the momentum in our performance chemicals segment and are focused on continuing to expand that momentum through the key strategic investments currently being made in our Augusta, GA facility on product and market expansion. Our manufacturing segment had a difficult quarter of transition inefficiencies to our expanded Tallahassee, Fl facility compounded by both auto and heavy equipment revenue softness. We are focused on completing the manufacturing transition into Tallahassee by year end '07, then engineering for an expected start ship of over $93 Million in new auto business in January '09. The quarter was also highly successful in generating cash from the disposition of non core and unproductive assets which were utilized to pre pay term debt and repurchase common shares," said William E. Redmond, Jr. GenTek's President and CEO.
Adjusted EBITDA
The Company has presented adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) as a measure of operating results. Adjusted EBITDA reflects removing the impact of any restructuring, impairment, income from discontinued operations and certain one-time items. Adjusted EBITDA is a non-GAAP (Generally Accepted Accounting Principles) measure, and, as such, a reconciliation of adjusted EBITDA to net income is provided in the attached Schedule 2. GenTek has presented adjusted EBITDA as a supplemental financial measure as a means to evaluate performance of the Company's business. GenTek believes that, when viewed with GAAP results and the accompanying reconciliation, it provides a more complete understanding of factors and trends affecting the Company's business than the GAAP results alone. In addition, the Company understands that adjusted EBITDA is also a measure commonly used to value businesses by its investors and lenders.
