EVANSVILLE, Ind. – November 1, 2013 – 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, 2013.
Accuride third quarter 2013 net sales from continuing operations were $155.3 million, compared with $187.3 million in the same period in 2012, a decline of 17.1 percent, reflecting the impact of macro-economic and industry conditions on its businesses. Third quarter net sales from continuing operations decreased $24.6 million, or 13.7 percent, from Q2 2013. The Company experienced an operating loss of $0.7 million for the third quarter, as compared to an operating loss of $7.8 million in the third quarter of 2012. The Company reported a net loss of $8.4 million, or ($0.18) per share during the quarter, as compared to a net loss of $15.8 million, or ($0.33) per share in the prior-year quarter. Third quarter Adjusted EBITDA from continuing operations declined 8.9 percent year-over-year to $11.2 million, resulting in an Adjusted EBITDA margin of 7.2 percent, compared to 6.6 percent in the same quarter of 2012. This compares to an Adjusted EBITDA of $17.8 million and an Adjusted EBITDA margin of 9.9 percent in Q2 2013. The $10.2 million loss from Discontinued Operations for Q3 2013 included a loss on the sale of the Imperial business of $12.2 million, and income recognized of $2.0 million from an earn-out associated with the sale of Fabco in 2011. As of September 30, 2013, Accuride had $28.0 million of cash plus $34.4 million in availability under its ABL Credit Facility, for total liquidity of $62.4 million.
Commenting on Accuride’s third-quarter results, President and Chief Executive Officer Rick Dauch said, “Weaker-than-expected North American commercial vehicle industry demand challenged us this quarter as the pick-up in volumes the industry had expected failed to materialize. Results in our core business reflected headwinds from sluggish OEM production and aftermarket conditions in a market that grew increasingly competitive. Continued weakness in Brillion’s construction, mining equipment and oil and gas markets further restrained its recovery. We continue to take aggressive actions to reduce costs, improve liquidity and strengthen our core business:
“The resulting improvements in our financial flexibility, cost structure, operational performance and competitiveness position us to weather the commercial vehicle and industrial market headwinds as we work to add profitable additional volume across our more capable and efficient North American production assets,” Dauch added.
North American commercial vehicle production was mixed during the quarter. Class 8 vehicle production declined 1.8 percent from the third quarter of 2012, instead of growing as had been projected, while Trailer builds rose 4.6 percent. Medium-duty truck production grew 20.3 percent year-over-year due to the strengthening U.S. housing market and pent-up replacement demand. Industry analysts lowered their full-year projections for the NAFTA Class 8 market to reflect OEMs reducing their second-half build schedules to align production with incoming demand. Most fleets are sufficiently profitable to replace aging equipment; however, the economy’s slow-growth pace is preventing them from adding the capacity that would drive production growth at this time. The core construction, mining equipment and oil and gas markets Brillion serves remain weak and are not expected to recover before the fourth quarter of 2014.
Accuride Wheels segment net sales were $88.0 million, down $10.3 million, or 10.5 percent, from the same period in 2012. A combination of OEM market share changes, continued competitive pressure in the segment and a decline in military volume and pricing account for this change. Wheels’ Adjusted EBITDA was $17.0 million, a decrease of $2.4 million, or 12.2 percent from the third quarter of 2012.
Gunite segment net sales were $40.8 million, down $8.8 million, or 17.7 percent, from the third quarter of 2012. Low-cost offshore competition continued to impact sales, with OEM sales down and aftermarket sales essentially flat year-over-year. Gunite’s Adjusted EBITDA was $1.5 million, compared to negative $1.7 million in the third quarter of 2012, and positive $4.6 million in Q2 2013. Gunite continued to lower its breakeven point during the quarter.
Brillion Iron Works’ third quarter net sales were $26.5 million, down $12.9 million, or 32.7 percent, from the third quarter of 2012 due to market weakness and customer inventory reductions, while its Adjusted EBITDA was $1.4 million, a drop of $2.4 million, or 63.2 percent, from the third quarter of 2012, and down 57.6 percent from $3.3 million in Q2 2013. Global economic forces continued to impact Brillion’s core construction, mining equipment and oil and gas markets, which are not expected to recover before the fourth quarter of 2014. To mitigate the impact of continued weakness in its core markets, Brillion continued to take actions to lower its breakeven level and realign its cost structure consistent with market demand.
As of September 30, 2013, total debt was $339.9 million, consisting of $304.9 million of our outstanding 9.5% senior secured notes, net of discount, and a $35.0 million draw on its ABL Credit Facility, which is a reduction of $10 million from the previous quarter. As of September 30, 2013, Accuride had $28.0 million of cash plus $34.4 million in availability under its ABL Credit Facility, for total liquidity of $62.4 million. Two key developments improved liquidity. On July 11, 2013, Accuride closed on a new $100 million ABL Credit Facility that replaced its previous $100 million Senior Secured Credit Facility. On August 1, 2013, Accuride sold its non-core Imperial Group business for $30 million in cash plus a contingent earn-out of up to $2.25 million. On October 25, 2013, we received the $2.0 million earn-out from our sale of the Fabco business unit. Greg Risch, Vice President and Chief Financial Officer, commented, “These two actions – combined with disciplined trade working capital management and reduced capital spending – give Accuride the financial flexibility and cash resources needed to operate our business through industry and economic headwinds until our core markets recover.”
“With our major investments and operational restructuring now substantially complete, we are transitioning from the ‘Fix’ to the ‘Grow’ portion of our business strategy here at Accuride,” said Rick Dauch. “Our upgraded capabilities are restoring our reputation as a dependable supplier to customers. However, market conditions for commercial vehicle and industrial equipment remain weak. We are focused on managing the things within our control – including tightly managing trade working capital, optimizing our cost structure and selectively reducing capital spending – to lower our breakeven point and improve cash flow. We are pursuing opportunities to leverage our operational competitiveness to win additional OEM and aftermarket business in North America. We are strategically positioning Accuride to capitalize on the global commercial vehicle market’s expected recovery and deliver profitable performance when headwinds lift.”
Based on the Company’s year-to-date results, expected slow-to-no-growth near-term conditions in the North American commercial vehicle market and continued weakness in Brillion’s end markets, Accuride management now expects the Company’s 2013 net sales to be in the range of $625 million to $650 million, and Adjusted EBITDA ranging from $45 to $50 million for the year. Looking forward to 2014, Accuride management expects the North American commercial vehicle industry to be up between zero to five percent, and the industrial end markets Brillion serves to be flat year-over-year.
Accuride will hold a conference call to discuss the financial and operational results of its 2013 Third Quarter on Friday, November 1, 2013, beginning at 2:30 p.m. CDT. Analysts and investors may participate by dialing (800) 708-4540 in the United States, or (847) 619-6397 internationally, and using participant code 35957427. 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 1, 2013, at 5:00 p.m. Central Time until November 8, 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 35957427.
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; 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 SolutionsTM, Gunite®, 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, 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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