EVANSVILLE, Ind. – March 6, 2013 – Accuride Corporation (NYSE: ACW) – a leading supplier of components to the North American commercial vehicle industry – today reported financial results for the fourth quarter and fiscal year 2012 ended December 31, 2012.
Fourth quarter 2012 net sales from continuing operations were $176.3 million, compared with $242.5 million in the same period in 2011, a decline of 27.3 percent, primarily reflecting the impact of weaker economic and industry conditions during the quarter. The Company experienced a $150.4 million operating loss for the quarter, as compared to $9.5 million of operating income in the fourth quarter of 2011. The 2012 operating loss included $139.6 million in one-time impairment charges related to goodwill and other assets related to Gunite and other one-time charges (as detailed below). The Company reported a net loss of $156.5 million, or $3.30 per share during the quarter, including one-time charges. Fourth quarter Adjusted EBITDA declined year-over-year to $5.1 million, resulting in an Adjusted EBITDA margin of 2.9 percent, compared to 10.0 percent in the same quarter of 2011. As of December 31, 2012, the Company had $26.8 million of cash plus $37.2 million in availability under its ABL credit facility for total liquidity of $64.0 million.
Net sales from continuing operations for the fiscal year ended December 31, 2012 were $929.8 million, compared with $936.1 million in the prior year, a decrease of 0.7 percent. The decline in net sales resulted from weak second-half industry conditions that saw commercial vehicle manufacturers cut production schedules, previously announced OEM customer decisions for Gunite, and aftermarket demand fall. In addition, Brillion’s industrial end-markets were weak during the second half of 2012. The Company believes the industry cycle is at or near the bottom, with a market recovery expected in the second half of 2013. Accuride reported a fully diluted loss per share of $3.76 for the year ended December 31, 2012, which includes the impact from the one-time impairment charges for Gunite of approximately $2.78 per share and other one-time charges of approximately $0.17 per share. Adjusted EBITDA from continuing operations for fiscal-year 2012 was $62.8 million, compared to $86.1 million in the prior year, a 27.1 percent decrease. Cash was $26.8 million at year end, while free cash flow was negative $31.2 million for the year which included $59.2 million of capital expenditures to selectively expand capacity and improve facilities and operations.
Commenting on Accuride’s results and business outlook, President and CEO Rick Dauch said, “We continue to take the tough, necessary actions to “FIX” Accuride and restore our reputation as an industry leading supplier. The majority of our capital investments and restructuring activities are now complete, positioning our business units to compete aggressively in the marketplace now and during the expected industry upturn in the second half of 2013.
“Operational performance over the past six months in the areas of on-time delivery, lead-time reduction, quality and warranty are at significantly improved levels. However, we continue to face challenging, near-term market conditions. The good news is that most key economic indicators point to a recovery in Class 5-8 Truck and Trailer builds in the back half of 2013,” Dauch added.
Accuride’s results were impacted by $131.6 million in one-time, non-cash impairment charges related to goodwill and other assets related to Gunite, representing $2.78 per diluted share. The impairment charges included $99.6 million for goodwill and intangible assets, $34.1 million for property, plant and equipment; and $2.1 million for the associated benefit on income taxes. Accuride also recognized non-cash charges during the quarter of $4.7 million and $3.2 million to write-off certain idle assets in our Wheels and Brillion businesses, respectively.
“These impairment and other non-cash charges do not affect Accuride’s liquidity or debt covenant ratios, and do not impact Gunite’s ability to return to profitability,” said Greg Risch, Accuride’s Vice President and CFO.
Net orders for all commercial vehicle segments Accuride supplies improved in the fourth quarter with the arrival of the industry’s traditional peak order season. Class 8 net orders increased 42.2 percent from the third quarter, with medium-duty and trailer order levels increasing 22.9 percent and 64.3 percent, respectively. However, fourth-quarter production fell for both the Class 8 and trailer segments as the industry sought to work off excess inventory. Overall Class 8 production levels are expected to stay subdued through the first half of 2013. The medium-duty segment is expected to improve modestly, while the trailer segment is projected to remain stable throughout 2013. Although economic uncertainty has kept fleet purchases conservative, current forecasts continue to show the industry growing, starting in the second half of 2013 and continuing in 2014-2015.
Accuride Wheels segment net sales were $86.2 million, down $19.9 million, or 18.8 percent, from the same period in 2011, due to lower year-over-year commercial vehicle build rates and aftermarket demand. Wheels’ Adjusted EBITDA was $16.1 million, a decrease of $13.6 million, or 45.8 percent from the fourth quarter of 2011. During the quarter, key projects to install additional aluminum wheel capacity at Accuride’s Camden and Monterrey facilities were completed on schedule, and the new equipment is commercialized and performing at anticipated levels. The actions taken to increase aluminum wheel capacity have positioned Accuride to gain share in this growing market segment.
Gunite segment net sales were $36.5 million, down $24.8 million, or 40.5 percent, from the fourth quarter of 2011, attributable primarily to the impact of low-cost offshore competitors and the loss of primary position on drums and hubs at two OEM customers. Gunite’s Adjusted EBITDA was negative $4.2 million, compared to positive $1.2 million in the fourth quarter of 2011. During the quarter, Gunite completed its installation of efficient machining and assembly equipment and improved its casting operations. It also consolidated machining activity from its Elkhart and Brillion machining facilities into its Rockford operation, which enabled it to cease Elkhart and Brillion machining production at the end of November. These actions took Gunite’s quality, delivery and lead-time performance to industry-leading levels, while significantly lowering its cost structure. The Company is still targeting Gunite to become a 10-12 percent EBITDA business and is pursuing additional cost-reductions in supply chain, logistics and other areas to achieve that level of performance.
Brillion Iron Works’ fourth quarter net sales were $25.8 million, down $10.9 million, or 29.6 percent, from the fourth quarter of 2011, while Adjusted EBITDA was $3.2 million, an increase of $1.3 million, or 67.1 percent, from the fourth quarter of 2011. After a strong first half, weak economic conditions continued to dampen demand in Brillion’s core industrial, construction, and oil and gas markets in the fourth quarter.
Imperial segment’s fourth quarter net sales were $27.7 million, a decline of $10.6 million, or 27.7 percent, from the same period in 2011 due to the drop in OEM customer production volumes. Imperial’s Adjusted EBITDA declined to negative $1.2 million in the fourth quarter of 2012 from a positive $0.6 million in last year’s fourth quarter. Performance at Imperial’s Decatur, Texas, operation continues to improve. Consolidation of Imperial’s Tennessee operations is anticipated to be completed by March 31, 2013.
As of December 31, 2012, total debt was $324.1 million, consisting of $304.1 million of our outstanding 9.5% senior secured notes, net of discount, and a $20.0 million draw on our ABL facility. As of December 31, 2012, the Company had $26.8 million of cash plus $37.2 million in availability under its ABL credit facility for total liquidity of $64.0 million. The Company’s positive operating cash flow, driven primarily by the seasonal reduction in working capital, offset its capital spending of $15.0 million in the quarter.
“The heavy lifting to restructure our operations is largely complete,” said Dauch. “The resulting gains in quality, delivery, and lead time have restored confidence, helped us renew important long-term customer agreements, and gave us the opportunity to win up to $30 million in new aluminum wheel business. With our improving performance and reduced cost structure, we are confident that Accuride is well-positioned to capitalize on the growth in demand expected when the industry cycle strengthens in the second half of this year. Accuride now has the process capability and capacity in place at all locations – coupled with a reduced cost structure and commercial discipline – to profitably “GROW” our company here in North America. As we return to profitability, we will look for strategic opportunities to expand our wheel-end business globally.
“We expect Class 8 builds will be in the range of 230,000 to 250,000 units in 2013. Current forecasts project a weak first half followed by growth in the second half of the year. Capital spending will return to a normalized rate of 3.5-4.0 percent of sales in 2013, which will be primarily focused on our steel wheel business. Other 2013 priorities include implementing a common ERP system and improving our scheduling system in order to achieve even higher levels of performance for customers,” Dauch added.
Accuride will host a conference call to discuss the financial and operational results of its Fourth Quarter and Full-Year Fiscal 2012 on Thursday, March 7, 2013, beginning at 8:00 a.m. Central Time. Analysts and investors may participate on the conference call by dialing (877) 261-8992 in the United States, or (847) 619-6548 internationally, and using participant code 34324637. A live webcast of the conference call can be accessed via the Investors section of Accuride’s website – https://www.accuridecorp.com/investors. A replay will be available from March 7, 2012, at 10:30 a.m. CDT until 11:59 p.m. CDT, March 14, 2013, by calling (888) 843-7419 in the United States, or (630) 652-3042 internationally, using access code 34324637.
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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