EVANSVILLE, Ind. – August 1, 2013 – Accuride Corporation (NYSE: ACW) – a leading supplier of components to the North American commercial vehicle industry – today reported financial results for the second quarter ended June 30, 2013. These results demonstrate the beneficial impact of recent operational improvements, capital investments, trade working capital management and improved liquidity.
Accuride second quarter 2013 net sales from continuing operations were $211.3 million, compared with $268.8 million in the same period in 2012, a decline of 21.4 percent, reflecting the impact of macro-economic and industry conditions on its businesses. Second quarter net sales from continuing operations increased $18.8 million, or 9.8 percent, over Q1 2013. The Company achieved operating income of $5.7 million for the second quarter, as compared to $9.6 million of operating income in the second quarter of 2012. The Company reported a net loss of $5.4 million, or $0.11 per share during the quarter, as compared to a net loss of $0.8 million, or $0.02 per share in the prior-year quarter. Second quarter Adjusted EBITDA declined 29.4 percent year-over-year to $17.9 million, resulting in an Adjusted EBITDA margin of 8.5 percent, compared to 9.4 percent in the same quarter of 2012. This compares to an Adjusted EBITDA of $7.4 million and an Adjusted EBITDA margin of 3.8 percent in Q1 2013. As of June 30, 2013, Accuride had $32.9 million of cash plus $41.2 million in availability under its ABL Credit Facility, for total liquidity of $74.1 million.
Commenting on Accuride’s second-quarter results, President and Chief Executive Officer Rick Dauch said, “Second quarter revenues were stronger, as the North American commercial vehicle industry began to return to healthier volumes. Results in our core businesses reflected higher OEM production and a strong spring selling season in the aftermarket. The streamlining of our manufacturing footprint and investments to restore Accuride’s position as a dependable supplier to customers are substantially complete and aiding the performance of each business unit. Our performance during the quarter also benefitted from targeted actions to reduce our cost structure in line with current conditions and more effectively manage our trade working capital, which now represents 8.2 percent of annualized sales. In addition, we will enter the second half with a healthier balance sheet and improved liquidity due to the securing of our new $100 million ABL Credit Facility in July. This, together with our reduced cost structure and stronger operational metrics, positions us to profitably convert on our share of volume during the expected second-half upturn in the North American commercial vehicle industry.”
North American commercial vehicle production increased during the second quarter by 12.9 percent compared to the first quarter. The Class 8 and Trailer segments remained lower on a year-over-year basis due to the slow pace of economic growth, while medium-duty builds were slightly higher. Class 8 and Trailer segments declined by 13.8 percent and 2.2 percent, respectively, while Class 5-7 grew by 7.4 percent compared to the second quarter of 2012. The North American commercial vehicle industry is expected to improve in the second half of 2013 compared to both the first half of 2013 and the second half of 2012. Freight tonnage is projected to steadily increase over the next several years, fueling growth in demand for trucks and trailers.
Accuride Wheels segment net sales were $99.5 million, down $13.4 million, or 11.9 percent, from the same period in 2012, as improved aftermarket sales helped to temper some of the softness in the OEM market segment. Wheels’ Adjusted EBITDA was $20.7 million, a decrease of $5.1 million, or 19.8 percent from the second quarter of 2012. With our aluminum capacity expansion complete, we are shifting our investment focus to coating technologies. We have begun installation of a new $5.8 million, state-of-the-art coating line at our Henderson, Ky. plant that will launch in Q1 2014.
Gunite segment net sales were $51.2 million, down $16.1 million, or 23.9 percent, from the second quarter of 2012. Although low-cost offshore competition continued to impact sales, revenues expanded in the quarter, compared to the first quarter, due to strong seasonal demand. Gunite’s Adjusted EBITDA was $4.6 million, compared to $1.1 million in the second quarter of 2012, and negative $0.6 million in Q1 2013. Accuride’s recent $35 million capital investments in Gunite are beginning to bear fruit. The business achieved four straight months of operating income improvement spanning the first and second quarters. This resulted from consistent performance from its new drum and hub machining and slack adjuster assembly equipment and the actions Gunite has taken to consolidate and reduce its cost structure. Although Gunite’s second quarter benefited from a strong spring selling season in the aftermarket, ongoing actions to lower material, logistics and distribution costs will aid future profitability.
Brillion Iron Works’ second quarter net sales were $29.3 million, down $20.0 million, or 40.6 percent, from the second quarter of 2012, while Adjusted EBITDA was $3.3 million, a drop of $5.5 million, or 62.5 percent, from the second quarter of 2012. Brillion’s core construction and mining equipment markets remain weakened by global economic forces and are not expected to begin to recover until the fourth quarter of 2014. To mitigate the impact of these negative industry conditions, Brillion took further steps to lower its breakeven level and realign its fixed cost structure during the quarter.
Imperial segment’s second quarter net sales were $31.4 million, a decline of $7.9 million, or 20.1 percent, from the same period in 2012 due to continued low customer production volumes. Imperial’s Adjusted EBITDA slightly improved to $0.1 million in the second quarter of 2012 from break-even performance in last year’s second quarter. Imperial results were aided by improving OEM and bus volumes, but reflected the above-normal operating costs associated with major press repairs and consolidation of its Tennessee operations that were successfully completed during the quarter.
As of June 30, 2013, total debt was $349.7 million, consisting of $304.7 million of our outstanding 9.5% senior secured notes, net of discount, and a $45.0 million draw on our ABL Credit Facility. As of June 30, 2013, the Company had $32.9 million of cash plus $41.2 million in availability under its ABL Credit Facility for total liquidity of $74.1 million. On July 11, 2013, Accuride closed on a new $100 million ABL Credit Facility that replaced its previous $100 million Senior Secured Credit Facility. Greg Risch, Accuride’s Vice President and Chief Financial Officer, commented, “Securing our new ABL gives Accuride greater financial flexibility to operate our business through the current North American commercial vehicle industry cycle. In addition to increasing liquidity, as compared to our previous credit facility, the new ABL secures lower interest rates for revolving debt.”
“For the past two years, Accuride has focused the majority of our investments and operational restructuring efforts on the ‘Fix’ portion of our ‘Fix & Grow’ strategy,” said Rick Dauch. “The resulting improvements in our operating performance are restoring Accuride’s reputation as a dependable supplier to our OEM and aftermarket customers. Quality, delivery and lead-time performance as measured by our customers are fast approaching world-class levels – particularly on higher-volume parts – thanks to our investments in new equipment and implementation of LEAN systems across our manufacturing, distribution and supply chain. With our actions to ’Fix’ Accuride’s operational performance substantially complete, we are well-positioned to achieve profitable growth and continue to improve our performance as the industry recovers. We have begun focusing on ways to ‘Grow’ our core business in order to capitalize on the expected growth of the global commercial vehicle industry.”
Based on the Company’s first-half results and the lower end of industry estimates for the projected North American commercial vehicle market recovery in the second half of the year, Accuride management expects the Company’s 2013 net sales to be in the range of $775 to $800 million, and Adjusted EBITDA ranging from $60 to $65 million for the year. This guidance also reflects continued weakness in Brillion’s core construction and mining equipment markets.
Accuride will hold a conference call to discuss its Second Quarter 2013 financial and operational results on Thursday, August 1, 2013, beginning at 1:00 p.m. Central Time. Analysts and investors may participate on the live conference call (866) 638-3013 in the United States, or (630) 691-2761 internationally, using participant code 35338923. 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 August 1, 2013, at 3:30 p.m. Central Time until August 7, 2013, at 11:59 p.m. Central Time by calling (888) 843-7419 in the United States, or (630) 652-3042 internationally, using access code 35338923.
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 Solutions™, Gunite®, Imperial™ 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, 2012. 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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