EVANSVILLE, Ind. – July 26, 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 second quarter ended June 30, 2016.
“Accuride delivered another solid quarter, as our core Wheels and Gunite business units continued to perform at world class operating levels and generate strong profitability,” Accuride President and CEO Rick Dauch said. “During the second quarter, our top line was impacted by significantly lower demand at Brillion, lower Class 8 production and lower pricing related to raw material pass through mechanisms. Our strong operating performance and cost reduction initiatives enabled us to offset the revenue declines and expand EBITDA margins at Wheels and Gunite from 2015 levels.
“Looking at the second half of 2016, we expect to face headwinds from continued weak demand in Brillion’s end markets and lower North American Class 8 truck demand, which should be somewhat offset by healthy Class 5-7 and Trailer market segments. In addition, we expect to partially offset the impact of rising steel prices on margins by continuing to deliver strong operational performance across our business units.
“Due to these factors, we are lowering our full-year guidance for revenue to the range of $625 million to $650 million. We are narrowing our full-year guidance for Adjusted EBITDA to the range of $65 million to $75 million, as we continue to manage performance across all of our business units. We’ll continue to take pre-emptive actions to maintain margins and profitability in order to achieve break-even or better free cash flow and protect our liquidity during this period of lower demand,” Dauch added.
Second quarter 2016 net sales were $164.1 million, which was a decrease of $21.3 million, or 11.5 percent, compared to net sales of $185.4 million for the three months ended June 30, 2015. The decrease was driven by $6.3 million related to the continued softness in demand at our Brillion business unit, $12.0 million in pricing related to the pass-through of lower raw material costs and $13.8 million due to lower demand in North American wheels and brake drums. Partially offsetting those decreases were $10.8 million in net sales related to our majority investment in Gianetti Ruote.
Accuride’s operating income was $11.5 million, down $2.7 million, compared to operating income of $14.2 million in the second quarter of 2015. This was primarily due to the incremental margin loss on the lower product demand which was partially offset by lower corporate spending. The Company reported net income from continuing operations attributable to shareholders of $2.5 million, or $0.05 per share, compared to net income of $6.3 million, or $0.13 per share, in the second quarter of 2015. Second quarter Adjusted EBITDA was $23.9 million, or 14.6 percent of net sales, compared to $25.9 million, or 14.0 percent of net sales, in the same quarter of 2015.
Wheels segment net sales were $104.4 million, down $9.9 million, or 8.7 percent, from the same period in 2015. The second quarter of 2016 included $10.8 million in net sales related to our majority investment in Gianetti Ruote that occurred in November 2015. Excluding the net sales from Gianetti Ruote, the Wheels segment net sales were down $20.7 million, or 18.2 percent, from the same period in 2015. The decrease is primarily related to the pass-through of lower material costs of $9.2 million, coupled with a decrease in production volume from our OEM customers and reduced demand from our aftermarket customers of $11.5 million. Wheels’ Adjusted EBITDA was $24.7 million which was a decrease of $1.4 million, or 5.3 percent, from the second quarter of 2015. Despite the decline in net sales, Adjusted EBITDA as a percentage of net sales improved to 23.7% in the second quarter of 2016.
Gunite segment net sales of $43.5 million were down $3.5 million, or 7.4 percent, from the second quarter of 2015. This decrease is largely attributable to the pass-through of lower material costs of $1.3 million, coupled with lower OEM production and slightly less aftermarket demand of $2.2 million. Gunite’s Adjusted EBITDA was $8.3 million, which was a decrease of $0.4 million, or 4.9 percent from the second quarter of 2015. Despite the decline in net sales, Adjusted EBITDA as a percentage of net sales improved to 19.0% in the second quarter of 2016.
Brillion Iron Works segment net sales of $16.2 million were down $7.8 million, or 32.6 percent, from the second quarter of 2015. This was primarily due to lower demand in industrial manufacturing, agriculture, mining, and oil and gas markets of $6.3 million, as well as $1.5 million related to the pass-through of lower material costs during the period.
Brillion’s Adjusted EBITDA was a negative $1.7 million, a decrease of $1.4 million, from the second quarter of 2015.
As of June 30, 2016, total debt was $315.5 million, consisting of $305.3 million of the outstanding 9.5% senior secured notes, net of discount and debt issuance costs, and $10.2 million in short term obligations related to the majority interest in Gianetti. As of June 30, 2016, Accuride had $27.8 million of cash plus $49.9 million in availability under its ABL Credit Facility for total liquidity of $77.7 million.
Accuride expects 2016 revenue to be in the range of $625 million to $650 million, with Adjusted EBITDA in the range of $65 million to $75 million. Accuride also expects free cash flow for 2016 to be roughly breakeven. The Company is basing these expectations for 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 Second Quarter Fiscal Year 2016 on Tuesday, July 26, 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 48742818. 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 July 26, 2016 until 11:59 p.m. CDT, August 2, 2016, by calling (855) 859-2056 in the United States, or (404) 537-3406 internationally, using access code 48742818.
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.
Phone: (812) 962-5105
Timothy G. Weir, APR
Director of Public Affairs, Communications and Marketing
Phone: (812) 962-5128