EVANSVILLE, Ind. – November 2, 2015 – Accuride Corporation (NYSE: ACW) – a leading supplier of components to the North American commercial vehicle industry – today reported financial results for the third quarter ended September 30, 2015.
Third quarter 2015 net sales were $163.4 million, compared with $184.0 million in the same period in 2014, a decrease of 11.2 percent, primarily due to lower pricing related to lower raw material costs in Wheels and Gunite and weaker end-market conditions at Brillion Iron Works during the quarter. Accuride’s operating income was $7.5 million for the quarter, compared to operating income of $10.0 million in the third quarter of 2014. The Company reported income from continuing operations of $1.8 million, or $0.04 per share, during the quarter, compared to income from continuing operations of $1.2 million, or $0.02 per share, in 2014. Income from continuing operations in 2015 included a tax benefit of $3.7 million, or $0.07 per share, related to a change in postretirement benefits. Third quarter Adjusted EBITDA decreased by 9.5 percent year-over-year to $19.2 million, or 11.7 percent of net sales, compared to $21.2 million, or 11.5 percent of net sales, in the same quarter of 2014. As of September 30, 2015, Accuride had $39.1 million of cash plus $42.1 million in availability under its ABL Credit Facility, for total liquidity of $81.2 million.
North American commercial vehicle industry conditions remained robust in the third quarter, with Class 8 truck and Trailer production increasing by 4 percent and 12 percent, respectively, over 2014. Class 5-7 truck production slipped by 5 percent versus 2014, but the backlog remains healthy at 7 percent above 2014 levels. The Class 8 backlog also remains strong at 20 percent above year-ago levels, while the Trailer backlog is 33 percent above last year. Class 8 truck and Trailer net orders returned to more seasonal levels through the quarter and, as a result, Class 8 OEM production has begun to moderate. Demand in the medium duty segment is steady. Fleets are generally optimistic about current industry conditions, despite some driver-shortage constraints, as U.S. freight tonnage is forecasted to steadily increase over the next several years.
Accuride Wheels segment net sales were $101.8 million, down $4.9 million, or 4.5 percent, from the same period in 2014, primarily due to lower pricing related to lower raw material costs. Despite lower sales, Wheels’ Adjusted EBITDA was $22.4 million, an increase of $1.4 million, or 6.7 percent, from the third quarter of 2014.
Gunite segment net sales of $43.8 million were up $1.5 million, or 3.5 percent, from the third quarter of 2014, primarily due to increased demand for brake drums which was partially offset by lower year-over-year pricing related to lower raw material costs. Gunite’s Adjusted EBITDA increased by $1.1 million to $6.5 million from $5.4 million in the third quarter of 2014.
Brillion Iron Works’ third quarter net sales were $17.8 million, down $17.2 million, or 49.2 percent, from the third quarter of 2014 due to lower customer demand. Brillion’s Adjusted EBITDA was a negative $2.4 million, a decrease of $5.2 million, from the third quarter of 2014. The Company currently expects Brillion’s 2015 net sales to be 25 percent to 30 percent lower year-over-year. This primarily reflects the impact of global commodity prices on demand in Brillion’s oil and gas, agricultural and mining end markets.
As of September 30, 2015, total debt was $322.0 million, consisting of $307.0 million of our outstanding 9.5% senior secured notes, net of discount, and a $15.0 million draw on our ABL Credit Facility. As of September 30, 2015, Accuride had $39.1 million of cash plus $42.1 million in availability under its ABL Credit Facility, for total liquidity of $81.2 million.
On July 2, 2015, the Company entered into an agreement to acquire substantially all of the assets of Century-3 Plus, L.L.C., a designer and manufacturer of advanced lightweight metal matrix composite brake components for the military and commercial vehicles. Pursuant to the agreement, the Company purchased the acquired assets for $2.0 million in cash paid at closing and $8.0 million in contingent consideration. The contingent purchase price maximum of $8.0 million can be earned based on the achievement of certain technological and commercial milestones.
“We are pleased with our profitable performance in the quarter which keeps us on track to achieve positive free cash flow and profitability for the first time in nearly a decade,” Accuride President and CEO Rick Dauch said. “We acted quickly to restructure Brillion in response to the sharp decline in revenue it experienced due to recessionary conditions in its primary markets. This response limited the impact to Accuride’s overall results and helped improve our EBITDA margins for the quarter. Our near-term focus remains squarely on improving our cost structure while gaining market share through new products and favorable renewals of long-term contracts with our customers. Looking ahead, we are excited about the growth opportunities inherent in our acquisition of the lightweight metal matrix composite brake drum technology. The technology’s ability to significantly reduce component weight without sacrificing performance or durability will enable Gunite to deliver real value to its commercial vehicle and military customers’ ongoing efforts to reduce weight and improve fuel efficiency.”
Accuride management expects the Company’s 2015 net sales to be in the range of $675 million to $700 million, and Adjusted EBITDA to be in the range of $80 million to $85 million. The midpoints of the Company’s revenue and Adjusted EBITDA ranges represent a decrease of 3 percent and an increase of 9 percent, respectively, over Accuride’s 2014 results. The Company has based its 2015 guidance on the following projections for the North American commercial vehicle industry: Class 8 production in the range of 310,000 to 330,000 units, Class 5-7 production in the range of 220,000 to 225,000 units and Trailer segment production in the range of 280,000 to 300,000 units. In addition, management expects net sales for the Brillion business unit to be down by 25 percent to 30 percent versus 2014 due to continued softness in its oil and gas, agricultural and mining end markets.
Accuride will host a conference call to discuss the financial and operational results of its Third Quarter 2015 on Monday, November 2, 2015, beginning at 9:00 a.m. CST. Analysts and investors may participate on the conference call by dialing (855) 542-4217 in the United States, or (412) 455-6081 internationally, and using participant code 71474897. A live webcast of the call can be accessed at the Accuride website Investors section: www.AccurideCorp.com/investors. A replay will be available from November 2, 2015, at Noon CST until 10:59 p.m. CST, November 9, 2015, by calling (855) 859-2056 in the United States, or (404) 537-3406 internationally, using access code 71474897.
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 Solutions™, Gunite®, 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 https://www.accuridecorp.com.
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, 2014. 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.
Phone: (812) 962-5105
Timothy G. Weir, APR
Director of Public Affairs, Communications and Marketing
Phone: (812) 962-5128