Remy International, Inc. Announces Second Quarter 2013 Results

05 Aug, 2013, 16:53 ET from Remy International, Inc.

PENDLETON, Ind., Aug. 5, 2013 /PRNewswire/ -- Remy International, Inc. (NASDAQ: REMY), a leading worldwide manufacturer, remanufacturer, and distributor of starters and alternators for light vehicle and commercial vehicle applications, locomotive products and hybrid electric motors, today announced its financial results for the second quarter ended June 30, 2013.  

Second Quarter Highlights

  • Net sales of $282.3 million for the second quarter of 2013, a decline of 4% compared to $294.8 million for the second quarter of 2012.  The decline is due to unfavorable volume / mix in original equipment and hybrid partially offset by favorable aftermarket volume.  The second quarter of 2012 benefited from a very strong North American commercial vehicle market and robust aftermarket orders.
  • Adjusted EBITDA of $33.2 million for the second quarter of 2013 compared to $39.7 million for the second quarter of 2012.  Second quarter 2013 results were impacted by planned investments in China and aftermarket businesses plus higher operating costs.
  • Net income attributable to common stockholders was $11.4 million for the second quarter of 2013 compared to $17.4 million for the second quarter of 2012.
  • In the second quarter, Remy completed the acquisition of the remaining 49% of its Remy Hubei Electric Joint venture from its Chinese joint venture partner thereby giving Remy 100% control of the entity.  This action as well as our Wuhan plant launch more than double our capacity of alternators and significantly expands our starter capacity in China.
  • New business awarded and launched during the quarter:
    • China: Shanghai GM, Dongfeng Peugeot, Chongqing Yuan Huaihai Power Co.
    • North America: hybrid contract with Odyne
    • Japan: alternators at ISM Japan (Perkins Shibaura/IHI JV)
    • India: starter business with CAT India
    • Global: new 35MT starter launched for Cummins Engine
  • On August 2, 2013, the Board of Directors declared a quarterly dividend of $0.10 per share payable on August 30, 2013 to shareholders of record as of August 16, 2013.

First Half Highlights

  • Net sales of $564.1 million for the six months ended June 30, 2013, a decline of 4% compared to $587.9 million for the six months ended June 30, 2012.  The decline is due to unfavorable volume / mix in original equipment and hybrid partially offset by favorable aftermarket volume.
  • Adjusted EBITDA of $64.5 million for the six months ended June 30, 2013, compared to $78.1 million for the six months ended June 30, 2012.
  • Net income attributable to common stockholders was $12.6 million for the six months ended June 30, 2013 compared to $26.2 million for the six months ended June 30, 2012:
    • 2013 results include $9.8 million in non-recurring restructuring and separation cost, and $4.3 million in loss on extinguishment of debt and refinancing fees
    • 2012 results include $3.6 million in restructuring and other charges
  • Successfully refinanced our Term B Loan with a new $300 million 7-year Term B Loan resulting in 2013 annualized interest savings of $6 million.

Financial Results

Three Months Ended

Three Months Ended

June 30, 2013

June 30, 2012

Net sales

$282.3 million

$294.8 million

Net income attributable to common stockholders

$11.4 million

$17.4 million

Diluted earnings per share

$0.36

$0.56

Adjusted EBITDA

$33.2 million

$39.7 million

Six Months Ended

Six Months Ended

June 30, 2013

June 30, 2012

Net sales

$564.1 million

$587.9 million

Net income attributable to common stockholders

$12.6 million

$26.2 million

Diluted earnings per share

$0.40

$0.85

Adjusted EBITDA

$64.5 million

$78.1 million

Fred Knechtel, Remy International, Inc. Chief Financial Officer, added, "First half financial performance was in line with our expectations.  The year-over-year decline was due to lower light duty original equipment and hybrid volumes, softer North American commercial vehicle demand, growth investments, one-time refinancing, restructuring and separation costs.  Our operational restructuring and refinancing actions are expected to improve our cost structure for the second half of 2013."

Jay Pittas, Remy International, Inc. President and CEO commented, "In the second quarter of 2013, we made significant progress executing our business plan to achieve future growth.  Our investments to support the aftermarket helped drive increased sales.  We completed the acquisition of the outstanding shares of our China Hubei joint venture and started production at our Wuhan facility.  These provide increased control over our business, more than double existing alternator capacity and significantly expand our starter capacity in China.  During the quarter, we realized the benefits of these investments with several new business awards with key Chinese customers.  We remain confident that we have the right strategies in place to achieve long-term success for the Company." 

About Remy

Founded by the Remy Brothers in 1896, Remy International, Inc. is a leading global manufacturer and remanufacturer of alternators, starter motors and electric traction motors.  Headquartered in Pendleton, IN, with global operations across five continents and 10 countries, Remy International markets products under the Delco Remy®, Remy® and World Wide Automotive® brands.  Known for innovation, efficiency, quality, and best-in-class customer service and support, Remy International's products are integrated by leading industrial, specialty, automotive and heavy-duty OEMs, and aftermarket providers worldwide.  We Start the World & Keep It Running.

Conference Call

Remy will host a call with investors and analysts to discuss second quarter 2013 results on Tuesday, August 6, 2013 beginning at 9 a.m. Eastern Time.  A live webcast of the conference call will be available on the Remy Investor Relations website at http://www.remyinc.com.  The conference call replay will also be available via webcast through the Remy Investor Relations website at http://www.remyinc.com

Use of Non-U.S. GAAP Financial Information

Accounting principles generally accepted in the United States (U.S. GAAP) is the standard framework of guidelines for financial accounting. U.S. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with U.S. GAAP, Remy has provided Adjusted EBITDA, a non-U.S. GAAP financial measure, which is frequently used by management, analysts, investors and other interested parties.  Management believes that the non-U.S. GAAP financial measure presented provides a useful measure of Remy's financial performance since it excludes certain items which do not reflect ongoing operations including costs associated with restructuring costs, impairment of assets related to capital investments, interest on our debt and non-cash stock-based compensation charges.  Adjusted EBITDA is defined by the Company as net income attributable to common stockholders before (i) interest expense–net, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) net income attributable to noncontrolling interest, (vi) restructuring, other charges and other impairment charges, (vii) loss on extinguishment of debt and refinancing fees, (viii) executive officer separation cost and (ix) other adjustments.   Adjusted EBITDA as defined by the Company may differ from non-U.S. GAAP measures used by other companies and is not a measurement under U.S. GAAP.  There are limitations inherent in non-U.S. GAAP financial measures in that they exclude a variety of charges and credits that are required to be included in a U.S. GAAP presentation, and therefore do not present the full measure of the Company's recorded costs against its revenue.  Accordingly, in analyzing Remy's future financial performance, non-U.S. GAAP results presented should be considered together with U.S. GAAP results, rather than as an alternative to U.S. GAAP basis financial measures. Reconciliations of non-U.S. GAAP measures to related U.S. GAAP measures are presented in the financial schedules which accompany this release.

Forward Looking Statements

This press release contains forward-looking statements.  Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts.  Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results.  We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events to reflect the new information, future events, or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, future financial results and liquidity, development of new products and services, the effect of competitive products or pricing, the effect of commodity and raw material prices, the impact of supply chain cost management initiatives, restructuring risks, customs duty claims, litigation uncertainties and warranty claims, conditions in the automotive industry, foreign currency fluctuations, costs related to re-sourcing and outsourcing products, the effect of economic conditions, and other risks identified in the "Special note regarding forward-looking statements", "Risk Factors" and other sections of the Company's previously filed most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

A copy of the second quarter 2013 Form 10-Q will be available on the Remy International Website at: http://www.remyinc.com under Investor Relations.

Investor Contact:  Eric Struik, Vice President of Finance Struik.Eric@remyinc.com (765) 778-6749

 

Remy International, Inc.

Index of consolidated financial information

Consolidated balance sheets as of June 30, 2013 (unaudited) and December 31, 2012

A-2

Consolidated statements of operations (unaudited) for the three and six months ended June 30, 2013 and June 30, 2012

A-3

Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2013 and June 30, 2012

A-4

Reconciliation of non-U.S. GAAP financial measures (unaudited) for the three and six months ended June 30, 2013 and June 30, 2012

A-5

The accompanying unaudited consolidated financial information and reconciliation schedules should be read in conjunction with the Remy International, Inc Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the period ended June 30, 2013, which were filed with the United States Securities and Exchange Commission.

 

 

Remy International, Inc. Consolidated balance sheets

June 30,

December 31,

(In thousands, except share information)

2013

2012

Assets:

 (unaudited)

Current assets:

Cash and cash equivalents

$

61,046

$

111,733

Trade accounts receivable (less allowances of $1,738 and $1,931)

188,957

170,637

Other receivables

23,495

17,203

Inventories

166,083

158,936

Deferred income taxes

37,982

36,315

Prepaid expenses and other current assets

7,207

15,431

Total current assets

484,770

510,255

Property, plant and equipment

236,494

227,955

Less accumulated depreciation and amortization

(93,371)

(86,072)

Property, plant and equipment, net

143,123

141,883

Deferred financing costs, net of amortization

4,142

4,867

Goodwill

271,418

271,418

Intangibles, net

96,321

99,329

Other noncurrent assets

80,937

73,463

Total assets

$

1,080,711

$

1,101,215

Liabilities and Equity:

Current liabilities:

Short-term debt

$

3,044

$

9,098

Current maturities of long-term debt

3,704

3,470

Accounts payable

146,205

155,407

Accrued interest

89

112

Accrued restructuring

1,539

3,679

Other current liabilities and accrued expenses

119,448

108,157

Total current liabilities

274,029

279,923

Long-term debt, net of current maturities

295,353

284,475

Postretirement benefits other than pensions

1,819

1,969

Accrued pension benefits

30,699

31,762

Deferred income taxes

1,964

2,390

Other noncurrent liabilities

30,401

29,188

Equity:

Remy International, Inc. stockholders' equity:

Common stock, Par value of $0.0001; 32,013,810 shares outstanding at June 30, 2013, and 31,865,008 shares outstanding at December 31, 2012

3

3

Treasury stock, at cost; 235,658 treasury shares at June 30, 2013, and 133,467 treasury shares at December 31, 2012

(1,477)

(229)

Additional paid-in capital

317,833

323,912

Retained earnings

192,743

186,483

Accumulated other comprehensive loss

(62,656)

(50,307)

Total Remy International, Inc. stockholders' equity

446,446

459,862

Noncontrolling interest

11,646

Total equity

446,446

471,508

Total liabilities and equity

$

1,080,711

$

1,101,215

 

 

Remy International, Inc. Consolidated statements of operations (Unaudited)

Three months ended June 30,

Six months ended June 30,

(In thousands, except per share amounts)

2013

2012

2013

2012

Net sales

$

282,349

$

294,819

$

564,076

$

587,881

Cost of goods sold

227,648

233,325

454,396

464,350

Gross profit

54,701

61,494

109,680

123,531

Selling, general, and administrative expenses

32,415

33,516

72,565

67,789

Restructuring and other charges

2,128

1,892

2,809

3,589

Operating income

20,158

26,086

34,306

52,153

Interest expense–net

3,731

6,788

10,068

13,764

Loss on extinguishment of debt and refinancing fees

4,256

Income before income taxes

16,427

19,298

19,982

38,389

Income tax expense

4,963

1,334

6,675

10,899

Net income

11,464

17,964

13,307

27,490

Less net income attributable to noncontrolling interest

96

523

659

1,337

Net income attributable to common stockholders

$

11,368

$

17,441

$

12,648

$

26,153

Basic earnings per share:

Earnings per share

$

0.36

$

0.57

$

0.41

$

0.86

Weighted average shares outstanding

31,239

30,637

31,173

30,574

Diluted earnings per share:

Earnings per share

$

0.36

$

0.56

$

0.40

$

0.85

Weighted average shares outstanding

31,364

30,892

31,314

30,774

Dividends declared per common share

$

0.10

$

0.10

$

0.20

$

0.10

 

 

Remy International, Inc. Consolidated statements of cash flows (Unaudited)

Six months ended June 30,

(In thousands)

2013

2012

Cash flows from operating activities:

Net income

$

13,307

$

27,490

Adjustments to reconcile net income to cash (used in) provided by operating activities:

Depreciation and amortization

17,022

18,799

Amortization of debt issuance costs

613

882

Loss on extinguishment of debt and refinancing fees

4,256

Stock-based compensation

3,246

3,536

Deferred income taxes

(3,409)

424

Accrued pension and postretirement benefits, net

(416)

(1,259)

Restructuring and other charges

2,809

3,589

Cash payments for restructuring charges

(4,949)

(5,059)

Other

(801)

(908)

Changes in operating assets and liabilities, net of restructuring charges:

Accounts receivable

(27,010)

(20,882)

Inventories

(9,187)

1,169

Accounts payable

(6,206)

883

Other current assets and liabilities, net

7,231

(15,691)

Other noncurrent assets and liabilities, net

(6,446)

(8,818)

Net cash (used in) provided by operating activities

(9,940)

4,155

Cash flows from investing activities:

Purchases of property, plant and equipment

(13,239)

(13,222)

Net proceeds on sale of assets

303

268

Government grant proceeds related to capital expenditures

562

Net cash used in investing activities

(12,936)

(12,392)

Cash flows from financing activities:

Change in short-term debt and revolver

(5,750)

1,758

Payments made on long-term debt, including capital leases

(288,874)

(8,717)

Proceeds from issuance of long-term debt

299,250

Dividend payments on common stock

(6,331)

(3,064)

Purchase of treasury stock

(1,248)

(23)

Debt issuance costs

(3,476)

Purchase of and distributions to noncontrolling interest

(18,902)

Other

565

Net cash used in financing activities

(25,331)

(9,481)

Effect of exchange rate changes on cash and cash equivalents

(2,480)

(369)

Net decrease in cash and cash equivalents

(50,687)

(18,087)

Cash and cash equivalents at beginning of period

111,733

91,684

Cash and cash equivalents at end of period

$

61,046

$

73,597

Supplemental information:

Noncash investing and financing activities:

Purchases of property, plant and equipment in accounts payable

$

1,825

$

1,649

 

 

Remy International, Inc. Reconciliation of non-U.S. GAAP financial measures (Unaudited)

Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. We use adjusted EBITDA as a supplement to our U.S. GAAP results in evaluating our business. Other companies in our industry define adjusted EBITDA differently from us and, as a result, our measure is not comparable to similarly titled measures used by other companies in our industry.

We define adjusted EBITDA as net income attributable to common stockholders before interest expense–net, income tax expense, depreciation and amortization, stock-based compensation expense, net income attributable to noncontrolling interest, restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive officer separation and other adjustments as set forth in the reconciliations provided below.

Adjusted EBITDA is one of the key factors upon which we assess performance. As an analytical tool, adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed by U.S. GAAP. There are limitations to using non-U.S. GAAP measures such as adjusted EBITDA. Although we believe that adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not reflect our ongoing operations, adjusted EBITDA excludes certain financial information that some may consider important in evaluating our performance.

The following table sets forth a reconciliation of adjusted EBITDA to its most directly comparable U.S. GAAP measure, net income attributable to common stockholders.

 

Three months ended June 30,

Six months ended June 30,

 (in thousands)

2013

2012

2013

2012

Net income attributable to common stockholders

$

11,368

$

17,441

$

12,648

$

26,153

Adjustments:

Interest expense–net

3,731

6,788

10,068

13,764

Income tax expense

4,963

1,334

6,675

10,899

Depreciation and amortization

8,809

9,771

17,022

18,799

Stock-based compensation expense

1,749

1,964

3,246

3,536

Net income attributable to noncontrolling interest

96

523

659

1,337

Restructuring and other charges

2,128

1,892

2,809

3,589

Loss on extinguishment of debt and refinancing fees

4,256

Executive officer separation

7,000

Other

368

104

Total adjustments

21,844

22,272

51,839

51,924

Adjusted EBITDA

$

33,212

$

39,713

$

64,487

$

78,077

 

SOURCE Remy International, Inc.



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