EVANSVILLE, Ind. – April 24, 2012 – Accuride Corporation (NYSE: ACW), a leading supplier of components to the commercial vehicle industry, today reported financial results for the first quarter ended March 31, 2012.
Accuride achieved first quarter 2012 net sales from continuing operations of $269.5 million, compared with $210.9 million in the same period in 2011, an increase of 27.8 percent, with all business segments posting double-digit revenue growth. The Company delivered operating income for the quarter of $7.2 million, up from $1.4 million in the first quarter of 2011. The Company reported a net loss of $2.9 million, or $0.06 per share during the quarter. First quarter Adjusted EBITDA was $21.6 million, resulting in an Adjusted EBITDA margin of 8.0 percent, compared to 7.8 percent in the same quarter of 2011. As of March 31, 2012, the Company had $36.6 million of cash, plus $67.2 million in availability under its ABL credit facility for total liquidity of $103.8 million.
“Our first-quarter performance benefitted from continued commercial vehicle production strength and aftermarket order volumes – driven by healthy Class 8 truck and trailer demand – together with higher pricing and productivity gains coming from the solid execution of our ‘Fix and Grow’ operational improvement plans,” said Accuride President and CEO Rick Dauch. “We are engaged in nothing less than the complete operational turnaround of our core businesses. These efforts include expanding our aluminum wheel production capacity in response to strong demand, boosting performance and efficiencies at Gunite while upgrading its manufacturing capabilities, completing the consolidation of Imperial, and instituting common LEAN systems across the company. We have solid action plans in place to accomplish this and continue to execute them on schedule. In addition, our margins are beginning to reflect the impact of greater operating efficiencies and working capital performance as we execute our ‘Fix and Grow’ strategy.”
Although the commercial vehicle industry’s underlying equipment replacement fundamentals are still strong, we are seeing some slowdown within the Class 8 truck segment. Net orders in the first quarter were lower than expected, and, in turn, order backlogs have become less robust. OEMs have begun to respond by adjusting their build schedules. The industry appears to be experiencing a pullback from the stronger order levels seen in the fourth quarter of 2011, and we will continue to monitor customer build plans. The medium-duty truck and trailer markets continue to perform in line with industry expectations. Medium-duty production continues to improve at a modest pace, while trailer backlogs are the strongest they have been since 2007 and continue to increase.
Accuride Wheels segment net sales were $116.9 million, up $25.4 million, or 27.8 percent, from the same period in 2011. Wheels Adjusted EBITDA was $28.3 million, an increase of $6.1 million, or 27.7 percent from the first quarter of 2011. In addition to higher year-over-year build rates, we continue to see strong demand for aluminum wheels being driven by the need for fleets to reduce fuel and maintenance costs, along with total vehicle weight. Increasing demand for aluminum wheels validates the aluminum wheel capacity investments Accuride made during 2011. The Company plans further aluminum wheel capacity investments in 2012 and 2013.
Gunite segment net sales were $68.6 million, up $9.4 million, or 15.8 percent, from the first quarter of 2011 on higher industry volumes. Gunite’s Adjusted EBITDA was $0.5 million, compared to $1.0 million in the first quarter of 2011. Gunite’s first-quarter results benefitted from steadily improving operational performance and higher pricing, as well as the elimination of customer-required on-site inspections stemming from Gunite’s quality issue in 2011. These were offset by softening aftermarket demand for Gunite products and the impact of low-cost imports from competitors.
Brillion Iron Works
Brillion Iron Works’ first quarter net sales were $43.8 million, up $8.5 million, or 24.2 percent, from the first quarter of 2011, while Adjusted EBITDA was $4.4 million, an increase of $1.7 million, or 61.7 percent year-over-year. The business continued to see higher demand in the industrial and agricultural markets and benefit from increased pricing as capacity remains tight in the North American casting industry. We are currently assessing strategic options for Brillion, including its potential divestiture under appropriate financial conditions.
Imperial segment first quarter net sales were $40.2 million, an increase of $15.3 million, or 61.5 percent, over the same period in 2011 due to higher OEM customer production volumes. Adjusted EBITDA for the business was a negative $0.3 million, off from a positive $0.9 million in the first quarter of 2011. Although other Imperial operations performed well during the quarter, the Decatur, Texas plant continued to experience operational inefficiencies stemming from its expanded production volume and product portfolio. A new leadership team is instituting changes to optimize Decatur’s operational and financial performance during the first half of 2012.
As of March 31, 2012, total debt was $323.3 million consisting of $303.3 million of our outstanding 9.5% senior secured notes, net of discount, and a $20.0 million draw on our ABL facility. As of March 31, 2012, we had $36.6 million of cash plus $67.2 million in availability under our ABL credit facility for total liquidity of $103.8 million. The Company’s operating use of cash was an outflow of $10.8 million for the quarter and capital spending for the quarter was $10.4 million, resulting in negative free cash flow of $21.3 million. Accuride’s cash flow typically is seasonal, with the first quarter being a net use of cash due to increases in working capital exiting the fourth quarter holiday period and payment of cash interest expense in February.
“We continue to make solid progress at Accuride in moving the company toward more reasonable and sustainable levels of financial and operational excellence,” Dauch said. “To accomplish this turnaround in performance and capitalize on the peak in the market cycle, we are focusing our efforts on our highest priorities, including completing Gunite’s operational turnaround, successfully launching additional aluminum wheel capacity, restoring Imperial to acceptable operating performance, and implementing common LEAN Manufacturing systems companywide. Given the relative strength of the North American commercial vehicle market and supportive economic indicators, we remain confident that we can capitalize on the benefits of our ‘Fix and Grow’ strategy by the fourth quarter of 2012 as we continue to execute our plans.”
Chief Financial Officer Greg Risch expressed the Company’s confidence in the full-year guidance it issued in March 2012, stating, “Despite somewhat softer market demand, we continue to expect to deliver 2012 net sales in the range of $1,000 to $1,025 million, fully diluted earnings per share between $0.07 and $0.15, and Adjusted EBITDA ranging from $100 to $105 million for the year. The actions we are taking as part of our ‘Fix and Grow’ strategy are yielding the sustainable improvements in quality, delivery and cost necessary to make Accuride a more dependable supplier to our customers and profitable investment for our shareholders.”
Accuride will hold a conference call to discuss its First Quarter 2012 financial and operational results on Tuesday, April 24, 2012, beginning at 3:00 p.m. Eastern Time. Analysts and investors may participate on the conference call by dialing (800) 299-9086 in the United States, or (617) 786-2903 internationally, and using participant code 97253597. A live webcast of the conference call can be accessed via the Investor Information section of the Company’s website at www.accuridecorp.com. A replay will be available from April 24, 2012, at 5:00 p.m. Eastern Time until midnight, May 1, 2012, by calling (888) 286-8010 in the United States, or (617) 801-6888 internationally, using access code 50313845.
With headquarters in Evansville, Ind., Accuride Corporation is a leading supplier of components to the commercial vehicle industry. The company’s products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, and other commercial vehicle components. The company’s products are marketed under its brand names, which include Accuride®, Gunite®, ImperialTM 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 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, 2011. 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.
Director of Corporate Development
Phone: (812) 962-5041
Timothy Weir, APR
Director of Public Affairs, Communications and Marketing
Phone: (812) 962-5128