Associated Materials, LLC Reports First Quarter Results

CUYAHOGA FALLS, Ohio, May 16, 2011 /PRNewswire/ -- Associated Materials, LLC (the "Company") today announced results for the first quarter ended April 2, 2011. Financial highlights are as follows:

• Net sales for the first quarter ended April 2, 2011 were $196.7 million, a 3.7% decrease from net sales of $204.2 million for the same period in 2010.  

• Adjusted EBITDA was negative $4.2 million for the first quarter of 2011 compared to positive $8.8 million for the same period in 2010.  

Tom Chieffe, President and Chief Executive Officer, commented, "While we have seen a slight decrease in sales during the first quarter of 2011, there is still expected improvement to be achieved in our end markets based on industry and economic forecasts.  We also believe that the long-term demand for our products will continue to be driven by the increasing age of the existing housing stock, the eventual return to normal levels of new home construction, the continued investment by homeowners and builders in energy efficient products, and the maintenance and price advantages of our vinyl products. As we move forward, we continue to focus on growing the business, controlling costs in all areas of the business and realizing operational improvements in order to permanently improve our cost structure and margins.  We believe that these actions, along with other growth initiatives, are positioning the Company for sustainable and profitable growth once the housing market fully recovers."

Operating results for the period ended April 3, 2010 have been presented to reflect the financial results of the Company and its former direct and indirect parent companies, Associated Materials Holdings, LLC, AMH and AMH II (together, the "Predecessor"). The operating results and financial position for the period ended April 2, 2011 and January 1, 2011 have been presented to reflect the financial results of the Company subsequent to the Merger (the "Successor"). The Company's results of operations prior to the date of the Merger include the activity and results of its former direct and indirect parent companies, which principally consisted of borrowings and related interest expense, and are presented as the results of the Predecessor. The results of operations, including the Merger and results thereafter, are presented as the results of the Successor.

Earnings Conference Call

Management will host its first quarter earnings conference call on Monday, May 16th at 11 a.m. Eastern Time.  The toll free dial-in number for the call is (866) 469-0038 and the conference call identification number is 65633387.  A replay of the call will be available through May 23rd by dialing (800) 642-1687 and entering the above conference call identification number.  The conference call and replay will also be available via webcast, which along with this news release can be accessed via the Company's web site at http://www.associatedmaterials.com.

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(1)    EBITDA is calculated as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to reflect certain adjustments that are used in calculating covenant compliance under our revolving credit agreement and the indenture governing the 9.125% Senior Secured Notes due 2017  (the “9.125% notes”). We consider EBITDA and Adjusted EBITDA to be important indicators of our operational strength and performance of our business. We have included Adjusted EBITDA because it is a key financial measure used by our management to (i) assess our ability to service our debt or incur debt and meet our capital expenditure requirements; (ii) internally measure our operating performance; and (iii) determine our incentive compensation programs. In addition, our senior secured asset-based revolving credit facilities (the “ABL facilities”) and the indenture governing the 9.125% notes have certain covenants that apply ratios utilizing this measure of Adjusted EBITDA. EBITDA and Adjusted EBITDA have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA as presented by us may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA are not measures determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our liquidity.

Prior year Adjusted EBITDA amounts are presented to conform to the current year’s presentation of the computation of Adjusted EBITDA, which is in conformity with the Adjusted EBITDA as defined in our revolving credit agreement and the indenture governing the 9.125% notes.

(a)  Represents professional fees incurred in connection with the Merger.

(b)  Represents the elimination of the impact of adjustments related to purchase accounting recorded as a result of the Merger, which include the following: $0.7 million of reduced pension expense as a result of purchase accounting adjustments and amortization related to net liabilities recorded in purchase accounting for the fair value of certain of our leased facilities and warranty liabilities of $0.1 million and $0.2 million, respectively.

(c)  Represents annual management fees paid to Harvest Partners, L.P. (one of our sponsors prior to the Merger).

(d)  Represents legal and accounting fees incurred in connection with tax restructuring projects.

(e)  Represents bank audit fees incurred under our prior ABL Facility and our ABL facilities.

(f)  Represents stock compensation related to restricted share units issued to certain Board members.

(g)  Represents the following (in thousands):

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(h)  Represents currency transaction/translation (gains)/losses, including on currency exchange hedging agreements.

(i)  For the quarter ended April 3, 2010, the amounts represent management’s estimates of cost savings that could have resulted from producing glass in-house at our Cuyahoga Falls, Ohio window facility had such production started on January 4, 2009 of $0.5 million and cost savings that could have resulted from entering into our leveraged procurement program with an outside consulting firm had such program been entered into on January 4, 2009 of $0.1 million.

Company Description

Associated Materials, LLC is a leading, vertically integrated manufacturer and distributor of exterior residential building products in the United States and Canada.  The Company produces a comprehensive offering of exterior building products, including vinyl windows, vinyl siding, aluminum trim coil, and aluminum and steel siding and accessories, which are produced at the Company's 11 manufacturing facilities. The Company also sells complementary products that are manufactured by third parties, such as roofing materials, insulation, exterior doors, vinyl siding in a shake and scallop design and installation equipment and tools that are primarily distributed through its company-operated supply centers. The Company's products are sold primarily through its extensive dual-distribution network, consisting of 120 company-operated supply centers, through which it sells directly to its contractor customers, and the Company's direct sales channel, through which it sells to approximately 250 independent distributors and dealers, who then sell to their customers. For more information, please visit the Company's website at http://www.associatedmaterials.com.

Forward-Looking Statements

This press release contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the Company that are based on the beliefs of the Company's management.  When used in this press release, the words "may," "will," "should," "expect," "intend," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or similar expressions identify forward-looking statements.  These statements are subject to certain risks and uncertainties.  Such statements reflect the current views of the Company's management.  The following factors, and others which are discussed in the Company's filings with the Securities and Exchange Commission, are among those that may cause actual results to differ materially from the forward-looking statements: changes in the home building and remodeling industries, general economic conditions, interest rates, foreign currency exchange rates, changes in the availability of consumer credit, employment trends, levels of consumer confidence and spending, consumer preferences, changes in raw material costs and availability, market acceptance of price increases, changes in national and regional trends in home remodeling and new housing starts, changes in weather conditions, the Company's ability to comply with certain financial covenants in its ABL facilities and indentures governing its 9.125% notes, increases in levels of competition within its market, availability of alternative building products, increases in its level of indebtedness, increases in costs of environmental compliance, unanticipated warranty or product liability claims, increases in capital expenditure requirements and shifts in market demand.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as expected, intended, estimated, anticipated, believed or predicted.  For further information, refer to the Company's most recent Annual Report on Form 10-K (particularly the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections) and to any subsequent Quarterly Reports on Form 10-Q, all of which are on file with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Associated Materials, LLC