Remy International, Inc. Announces Third Quarter 2013 Results

Oct 29, 2013, 16:50 ET from Remy International, Inc.

PENDLETON, Ind., Oct. 29, 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 third quarter ended September 30, 2013.  

Third Quarter Highlights

  • Net sales of $262.8 million for the third quarter of 2013, a decline of 5% compared to $277.4 million for the third quarter of 2012. Prior year results included high inventory stock builds by North American retail aftermarket customers and light duty original equipment sales on customer programs ended per schedule in 2013.
  • Adjusted EBITDA of $33.0 million for the third quarter of 2013 compared to $35.7 million for the third quarter of 2012. Third quarter 2013 results were impacted by lower volume, mix, price and investments in inventory for increased light duty aftermarket availability and China ramp up costs. Cost reductions and operational efficiencies partially offset these impacts.
  • Net income attributable to common stockholders was $10.4 million for the third quarter of 2013 compared to $96.5 million for the third quarter of 2012.
    • Third quarter 2013 results included $1.5 million in restructuring charges
    • Third quarter 2012 results included the reversal of an $84.7 million valuation allowance on our deferred tax asset balance, as well as $5.4 million of charges primarily related to restructuring activities and actions to improve future operating performance.
  • New business awarded and launched during the quarter:
    • Awarded several light duty OE starter programs with key customers
    • Launched first alternator with LIN regulator in China
    • Awarded heavy duty alternator and starter business at Yunnei Power Engine
    • Awarded additional hybrid business with Via and Scania
    • Secured agreements with multiple North American and European aftermarket customers
    • Released new part numbers to expand late model product portfolio
  • On October 29, 2013, the Board of Directors declared a quarterly dividend of $0.10 per share payable on November 27, 2013 to shareholders of record as of November 13, 2013.

 

Financial Results

Three Months Ended

Three Months Ended

September 30, 2013

September 30, 2012

Net sales

$262.8 million

$277.4 million

Net income attributable to common stockholders

$10.4 million

$96.5 million

Diluted earnings per share

$0.33

$3.11

Adjusted EBITDA

$33.0 million

$35.7 million

 

Fred Knechtel, Remy International, Inc. Sr. Vice President, CFO and Treasurer, added, "Sales pressures continued in the third quarter, as sales were lower than both the previous quarter and prior year quarter.  Despite this pressure, Remy was able to deliver greater operating income results in the third quarter compared to both of these periods.  These achievements are due to our continued efforts to drive for sustainable operational improvements and aggressively control spending."

Jay Pittas, Remy International, Inc. President and CEO commented, "We took aggressive cost actions as a short term response to general market conditions.  For the long term we continued to make necessary investments in our business to grow revenue and increase operating efficiencies.  We strive to have a balanced portfolio between North America and the rest of the world and between the aftermarket and OE, with a flexible cost structure to support all market conditions.  The Remy team will continue to be focused on driving superior long-term value for shareholders.  I am excited about the future and believe that we are well positioned with our portfolio of products to achieve our goals."

About Remy International, Inc. 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 RunningTM.

Conference Call Remy will host a call with investors and analysts to discuss third quarter 2013 results on Wednesday, October 30, 2013 beginning at 9:00 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 (benefit), (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 third quarter 2013 Form 10-Q will be available on the Remy International Website at: http://www.remyinc.com under Investor Relations.

Investor Contact:  Fred Knechtel, Sr. Vice President, CFO and Treasurer Knechtel.Fred@remyinc.com (765) 778-6871

 

Remy International, Inc. Index of consolidated financial information

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

A-2

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

A-3

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

A-4

Reconciliation of non-U.S. GAAP financial measures (unaudited) for the three and nine months ended September 30, 2013 and September 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 September 30, 2013, which were filed with the United States Securities and Exchange Commission.

 

 

Remy International, Inc. Consolidated balance sheets

September 30,

December 31,

(In thousands, except share information)

2013

2012

Assets:

 (unaudited)

Current assets:

Cash and cash equivalents

$

81,033

$

111,733

Trade accounts receivable (less allowances of $1,608 and $1,931)

191,133

170,637

Other receivables

22,063

17,203

Inventories

164,417

158,936

Deferred income taxes

43,887

36,315

Prepaid expenses and other current assets

10,358

15,431

Total current assets

512,891

510,255

Property, plant and equipment

242,841

227,955

Less accumulated depreciation and amortization

(99,369)

(86,072)

Property, plant and equipment, net

143,472

141,883

Deferred financing costs, net of amortization

3,972

4,867

Goodwill

271,418

271,418

Intangibles, net

93,129

99,329

Other noncurrent assets

69,096

73,463

Total assets

$

1,093,978

$

1,101,215

Liabilities and Equity:

Current liabilities:

Short-term debt

$

3,272

$

9,098

Current maturities of long-term debt

3,542

3,470

Accounts payable

147,192

155,407

Accrued interest

89

112

Accrued restructuring

1,849

3,679

Other current liabilities and accrued expenses

116,089

108,157

Total current liabilities

272,033

279,923

Long-term debt, net of current maturities

294,604

284,475

Postretirement benefits other than pensions

1,744

1,969

Accrued pension benefits

30,140

31,762

Deferred income taxes

1,250

2,390

Other noncurrent liabilities

29,463

29,188

Equity:

Remy International, Inc. stockholders' equity:

Common stock, Par value of $0.0001; 32,006,216 shares outstanding at September 30, 2013, and 31,865,008 shares outstanding at December 31, 2012

3

3

Treasury stock, at cost; 243,252 treasury shares at September 30, 2013, and 133,467 treasury shares at December 31, 2012

(1,477)

(229)

Additional paid-in capital

318,721

323,912

Retained earnings

199,915

186,483

Accumulated other comprehensive loss

(52,418)

(50,307)

Total Remy International, Inc. stockholders' equity

464,744

459,862

Noncontrolling interest

11,646

Total equity

464,744

471,508

Total liabilities and equity

$

1,093,978

$

1,101,215

 

 

 

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

Three months ended September 30,

Nine months ended September 30,

(In thousands, except per share amounts)

2013

2012

2013

2012

Net sales

$

262,832

$

277,401

$

826,908

$

865,282

Cost of goods sold

210,600

222,592

664,996

686,943

Gross profit

52,232

54,809

161,912

178,339

Selling, general, and administrative expenses

29,760

30,103

102,325

97,891

Restructuring and other charges

1,454

5,374

4,263

8,964

Operating income

21,018

19,332

55,324

71,484

Interest expense–net

5,370

7,283

15,438

21,047

Loss on extinguishment of debt and refinancing fees

4,256

Income before income taxes

15,648

12,049

35,630

50,437

Income tax expense (benefit)

5,292

(85,310)

11,967

(74,410)

Net income

10,356

97,359

23,663

124,847

Less net income attributable to noncontrolling interest

827

659

2,164

Net income attributable to common stockholders

$

10,356

$

96,532

$

23,004

$

122,683

Basic earnings per share:

Earnings per share

$

0.33

$

3.15

$

0.74

$

4.01

Weighted average shares outstanding

31,240

30,638

31,196

30,595

Diluted earnings per share:

Earnings per share

$

0.33

$

3.11

$

0.73

$

3.97

Weighted average shares outstanding

31,383

30,993

31,338

30,864

Dividends declared per common share

$

0.10

$

0.10

$

0.30

$

0.20

 

 

 

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

Nine months ended September 30,

(In thousands)

2013

2012

Cash flows from operating activities:

Net income

$

23,663

$

124,847

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

Depreciation and amortization

25,767

28,010

Amortization of debt issuance costs

868

1,326

Loss on extinguishment of debt and refinancing fees

4,256

Stock-based compensation

4,894

5,419

Deferred income taxes

766

(83,537)

Accrued pension and postretirement benefits, net

(992)

(2,515)

Restructuring and other charges

4,263

8,964

Cash payments for restructuring charges

(6,093)

(5,671)

Other

(1,732)

(2,000)

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

Accounts receivable

(24,546)

(2,980)

Inventories

(5,300)

5,247

Accounts payable

(8,402)

(6,693)

Other current assets and liabilities, net

8,842

(16,493)

Other noncurrent assets and liabilities, net

(10,917)

(14,932)

Net cash provided by operating activities

15,337

38,992

Cash flows from investing activities:

Purchases of property, plant and equipment

(17,394)

(18,160)

Net proceeds on sale of assets

585

268

Government grant proceeds related to capital expenditures

941

Net cash used in investing activities

(16,809)

(16,951)

Cash flows from financing activities:

Change in short-term debt and revolver

(5,724)

(4,030)

Payments made on long-term debt, including capital leases

(289,861)

(9,572)

Proceeds from issuance of long-term debt

299,250

Dividend payments on common stock

(9,462)

(6,128)

Purchase of treasury stock

(1,248)

(23)

Debt issuance costs

(3,476)

Purchase of and distributions to noncontrolling interest

(18,961)

Other

565

Net cash used in financing activities

(29,482)

(19,188)

Effect of exchange rate changes on cash and cash equivalents

254

840

Net increase (decrease) in cash and cash equivalents

(30,700)

3,693

Cash and cash equivalents at beginning of period

111,733

91,684

Cash and cash equivalents at end of period

$

81,033

$

95,377

Supplemental information:

Noncash investing and financing activities:

Purchases of property, plant and equipment in accounts payable

$

1,678

$

2,670

  

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 (benefit), 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 September 30,

Nine months ended September 30,

 (In thousands)

2013

2012

2013

2012

Net income attributable to common stockholders

$

10,356

$

96,532

$

23,004

$

122,683

Adjustments:

Interest expense–net

5,370

7,283

15,438

21,047

Income tax expense (benefit)

5,292

(85,310)

11,967

(74,410)

Depreciation and amortization

8,745

9,211

25,767

28,010

Stock-based compensation expense

1,648

1,883

4,894

5,419

Net income attributable to noncontrolling interest

827

659

2,164

Restructuring and other charges

1,454

5,374

4,263

8,964

Loss on extinguishment of debt and refinancing fees

4,256

Executive officer separation

7,000

Other

147

(76)

251

(75)

Total adjustments

22,656

(60,808)

74,495

(8,881)

Adjusted EBITDA

$

33,012

$

35,724

$

97,499

$

113,802

 

 

SOURCE Remy International, Inc.



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