EVANSVILLE, Ind. – May 3, 2016 – Accuride Corporation (NYSE: ACW) – a leading supplier of components to the North American and European commercial vehicle industries – today reported financial results for the first quarter ended March 31, 2016.
“Overall, our first quarter results were within our expectations,” said Rick Dauch, Accuride President and CEO. “Our North American facilities continued to operate at world-class levels producing industry-leading products at superior lead times, while we carefully managed working capital and cash. This was a challenging task, as the team dealt with several headwinds including the onset of lower North American Class 8 truck demand and ongoing weakness in Brillion’s end markets, as well as the anticipated results of our Gianetti Ruote business now in the early stages of its ‘Fix & Grow’ turnaround plan.
“Looking ahead, production in the medium-duty segment is expected to remain healthy while the trailer segment is projected to be flat to slightly down compared to 2015. The overall stability of these two market segments, along with our increased share position in the aftermarket, should help mitigate some of the 27 percent decline expected in North American Class 8 production this year. To proactively address the forecasted decline in volumes in both our commercial vehicle and industrial end markets, we took aggressive actions in the first quarter to align our cost run-rate to the anticipated lower volumes by adjusting our plant schedules and staffing levels. In addition, we reduced corporate headcount, are aggressively managing corporate spending for 2016 and are lowering capital expenditures by $5 million. The combined strength in the North American medium-duty and trailer markets, in conjunction with these corrective actions, are the primary reason we are maintaining our key financial guidance ranges for 2016. Within this context, we will continue to pursue opportunities to expand share and drive profitable growth in 2016 and beyond.”
First quarter 2016 net sales were $160.9 million, down $22.7 million or 12.4 percent, from the same period a year ago. The decrease was driven by $19.4 million related to the continued softness in demand at our Brillion business unit, $12.8 million in pricing related to the pass-through of lower raw material costs and $4.9 million due to lower demand in North America wheels. Partially offsetting those decreases were $10.4 million in net sales related to our majority investment in Gianetti Ruote and $4.0 million from increased market share at Gunite.
Accuride’s operating income was $2.4 million for the quarter, compared to operating income of $9.3 million in the first quarter of 2015. This was primarily due to the incremental margin loss on the lower demand in our Wheels and Brillion business units and the planned negative operating margin in the Gianetti business. The Company reported a net loss from continuing operations attributable to shareholders of $4.7 million, or a negative $0.10 per share, compared to a net loss of $0.6 million, or a negative $0.01 per share, in the first quarter of 2015. First quarter Adjusted EBITDA was $15.0 million, or 9.3 percent of net sales, compared to $21.3 million, or 11.6 percent of net sales, in the same quarter of 2015.
Wheels segment net sales were $105.4 million, down $3.0 million, or 2.7 percent, from the same period in 2015. The first quarter of 2016 included $10.4 million in net sales related to our majority investment in Gianetti that occurred in November 2015. Excluding the net sales from Gianetti, the Wheels segment net sales were down $13.4 million, or 12.4 percent, from the same period in 2015. The decrease in net sales was primarily due to price decreases related to the pass-through of lower raw material costs and weaker demand within the Class 8 market segment in North America. The Wheels segment Adjusted EBITDA was $20.7 million which was a decrease of $1.5 million, or 6.7 percent, from the first quarter of 2015.
Gunite segment net sales of $38.7 million were up $1.0 million, or 2.6 percent, from the first quarter of 2015. This increase is attributable primarily to increased market share in aftermarket brake drums, partially offset by price decreases related to the pass-through of lower raw material costs. Gunite’s Adjusted EBITDA was $4.5 million, which was an increase of $0.4 million, or 9.8 percent from the first quarter of 2015.
Brillion Iron Works segment net sales of $16.8 million were down $20.8 million, or 55.2 percent, from the first quarter of 2015. This was primarily due to reduced end market demand from customers in the oil and gas, agricultural and mining markets. Brillion’s Adjusted EBITDA was a negative $2.2 million, a decrease of $5.6 million, from the first quarter of 2015. Brillion’s lower cost structure and recent capital investments have allowed it to earn additional new business that is scheduled to ramp up in the second half of 2016 and will help offset continued weakness in end market demand.
As of March 31, 2016, total debt was $323.8 million, consisting of $304.7 million of our outstanding 9.5% senior secured notes, net of discount and debt issuance costs, $8.7 million in short term obligations related to our majority interest in Gianetti and $10.3 million drawn on our ABL Credit Facility. As of March 31, 2016, Accuride had $18.5 million of cash plus $43.3 million in availability under its ABL Credit Facility for total liquidity of $61.8 million.
As previously communicated, Accuride expects 2016 revenue to be in the range of $650 million to $700 million, with Adjusted EBITDA in the range of $65 million to $80 million. Accuride also expects free cash flow for 2016 to be roughly break even. The Company is basing these expectations for its 2016 guidance on the following projections for North American commercial vehicle production and other key assumptions for the year:
Accuride will host a conference call to discuss the financial and operational results of its First Quarter Fiscal Year 2016 on Tuesday, May 3, 2016, beginning at 9:00 a.m. CDT. Analysts and investors may access the conference call by dialing (877) 543-8122 in the United States, or (615) 247-0091 internationally, and using participant code 96162725. A live webcast of the call will be available at the Accuride website Investors section: www.AccurideCorp.com/investors. A replay will be available from noon CDT on May 3, 2016 until 11:59 p.m. CDT, May 10, 2016, by calling (855) 859-2056 in the United States, or (404) 537-3406 internationally, using access code 96162725.
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; 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®, Gianetti Ruote™ 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, 2015. 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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