EVANSVILLE, Ind. – November 1, 2012 – 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, 2012 and revised its full-year guidance to reflect the impact of near-term market changes and customer developments.
Accuride achieved third quarter 2012 net sales from continuing operations of $215.2 million, compared with $240.8 million in the same period in 2011, a decline of 10.6 percent, primarily reflecting the impact of weakening industry conditions during the quarter. The Company experienced a $9.7 million operating loss for the quarter, as compared to $4.5 million of operating income in the third quarter of 2011. The Company reported a net loss of $17.7 million, or $0.37 per share during the quarter, which included Elkhart closure costs and other one-time severance-related costs totaling $0.11 per share. Third quarter Adjusted EBITDA declined 44.4 percent year-over-year to $10.7 million, resulting in an Adjusted EBITDA margin of 5.0 percent, compared to 8.0 percent in the same quarter of 2011. As of September 30, 2012, the Company had $20.3 million of cash plus $59.4 million in availability under its ABL credit facility, for total liquidity of $79.7 million.
Commenting on Accuride’s third-quarter results and business outlook, President & CEO Rick Dauch said, “The third quarter was a real challenge for Accuride, primarily due to rapidly declining Class 8 vehicle production schedules, continued weak aftermarket demand and customer decisions regarding our Gunite business. Broadening economic uncertainty caused Class 8 truck orders to remain weak, which forced OEMs to make significant cuts to their build schedules, often with very short notice to suppliers. Global economic softness also impacted Brillion’s industrial customer base, causing a dramatic and rapid reduction in the unit’s monthly revenue. We responded to these conditions by aggressively lowering our cost structure. We reduced our corporate salaried staff, eliminated production shifts, resized the workforce at our business units, and accelerated the consolidation of Gunite’s Elkhart and Brillion machining operations. These actions are being implemented without jeopardizing our long-term ‘Fix & Grow’ strategy. Maintaining our focus on project execution and improving operational performance will enable us to improve cash flow, liquidity and shareholder value as industry conditions stabilize and improve.”
North American truck fleets have scaled back their rate of equipment replacement from historic patterns and are managing their businesses more conservatively in a weak economic environment. Truck fleets’ conservatism translated into weak Class 8 truck orders in the third quarter, leading OEMs to abruptly reduce their production schedules as they depleted their order backlogs. Equipment orders are expected to improve in the fourth quarter as the industry’s traditional peak order season arrives; however, overall Class 8 production will likely remain lower into the first half of 2013. Medium-duty truck production continues improving at a modest pace, while trailer builds are expected to remain stable through year-end.
Accuride Wheels segment net sales were $98.3 million, down $7.7 million, or 7.3 percent, from the same period in 2011, due to lower year-over-year build rates and declining aftermarket orders in the face of increased offshore competition. Wheels’ Adjusted EBITDA was $19.4 million, a decrease of $6.1 million, or 24.1 percent from the third quarter of 2011. Year-over-year, earnings were impacted by increased material costs and pricing of $4.5 million. Installation of additional aluminum wheel capacity at our Camden and Monterrey plants remained on schedule in the quarter, which will position the company to gain share in this growing segment. The abrupt decline in customer orders created a challenging operating environment, requiring us to take aggressive cost reduction measures in response.
Gunite segment net sales were $49.6 million, down $13.8 million, or 21.8 percent, from the third quarter of 2011, attributable primarily to the impact of low-cost offshore competitors, customer schedule changes and recent business losses. Gunite’s Adjusted EBITDA was negative $1.7 million, compared to negative $1.4 million in the third quarter of 2011. Gunite’s major capital investment program to install efficient machining and assembly equipment, upgrade casting operations and consolidate manufacturing operations is on schedule to conclude before year-end. In response to industry weakness and Navistar’s and Paccar’s decisions to no longer offer Gunite hub and drum assemblies as standard equipment, Gunite eliminated shifts, resized its workforce and will accelerate the consolidation of machining operations from the Elkhart and Brillion facilities into the Rockford operation by the end of November. We continue to discuss opportunities with Navistar and Paccar to minimize the impact of these decisions.
Brillion Iron Works’ third quarter net sales were $39.4 million, up $2.7 million, or 7.2 percent, from the third quarter of 2011, while Adjusted EBITDA was $3.8 million, an increase of $2.1 million, or 129.6 percent, from the third quarter of 2011. After strong first-half demand, conditions quickly declined during the quarter due to weakness in Brillion’s core industrial, construction, and oil and gas markets. Brillion responded by resizing its workforce in early September to the new level of demand.
Imperial segment’s third quarter net sales were $28.0 million, a decline of $6.7 million, or 19.4 percent, over the same period in 2011 due to the drop in OEM customer production volumes. Imperial’s Adjusted EBITDA declined to negative $1.6 million in the current quarter from a positive $2.0 million in last year’s third quarter. We continue to work through operational challenges in our Decatur, Texas facility, which have delayed the consolidation of the Portland, Tenn. facility during the first half of 2012. We now expect to complete the repair and transfer of the remaining equipment in the first quarter of 2013.
As of September 30, 2012, total debt was $323.9 million, consisting of $303.9 million of our outstanding 9.5% senior secured notes, net of discount, and a $20.0 million draw on our ABL facility. As of September 30, 2012, the Company had $20.3 million of cash plus $59.4 million in availability under its ABL credit facility for total liquidity of $79.7 million. Despite lower earnings in the quarter, the Company’s positive operating cash flow partially offset its capital spending of $18.6 million in the quarter.
“Although current and near-term North American Class 8 production is weaker than we originally anticipated, long-term industry fundamentals remain positive,” Dauch said. “That is why we’re confident that our strategic investments to streamline and fix our core operations will serve us well when the industry cycle strengthens. We are responding aggressively to the near-term weakness and customer decisions by taking cost out of the business, but not at the expense of jeopardizing our efforts to fundamentally fix our business. As we plan for 2013, we expect Class 8 builds to be in the range of 220,000 to 230,000 units. Capital spending will be reduced by approximately 40 to 50 percent year-over-year, primarily reflecting the completion of our recent capital investment projects. We remain focused on ensuring Accuride’s long-term success. Our 2011-2012 actions to fix the business will make us much stronger and more dependable for our customers and shareholders in the future.”
Based on our first nine months’ results and projections for the remainder of the year, Accuride management now expects its 2012 net sales to be in the range of $900 to $925 million, and a fully diluted loss per share of between $1.00 and $0.89 – including Elkhart closure costs and other one-time severance-related costs totaling $0.11 per share – and Adjusted EBITDA now ranging from $60 to $65 million for the year. The revised guidance reflects the likelihood of continued weakness in North American Class 8 truck orders and the resulting impact on customer production schedules during the fourth quarter.
Accuride will hold a conference call to discuss its Third Quarter 2012 financial and operational results on Friday, November 2, 2012, beginning at 9:00 a.m. Central Time. Analysts and investors may participate on the live conference call by dialing (877) 261-8992 in the United States, or (847) 619-6548 internationally, and using participant code 33645018. A live webcast of the conference call can be accessed via the Investors section of the Company’s website at Accuridecorp.com/investors. A replay of the call will be available from November 2, 2012 at 11:30 a.m. to November 9, 2012 at 11:59 p.m. Central Time by calling (888) 843-7419 in the United States, or (630) 652-3042 internationally, and using access code 33645018.
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, truck body and chassis parts, and other commercial vehicle components. The company’s products are marketed under its brand names, which include Accuride®, Accuride Wheel End SolutionsTM, 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.
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