Euramax Holdings, Inc. Fourth Quarter and Full Year 2011 Financial Results

NORCROSS, Ga., March 23, 2012 /PRNewswire/ -- Euramax Holdings, Inc., a leading international producer of metal and vinyl products sold to the residential repair and remodel, non-residential construction and recreational vehicle (RV) markets primarily in North America and Europe, today announced financial results for the fourth quarter of 2011. Net sales, operating loss, and adjusted EBITDA for the quarter were $219.7 million, $(2.9) million, and $11.0 million, respectively.  Net sales, operating income, and adjusted EBITDA for the year ended December 30, 2011 were $933.7 million, $10.3 million, and $62.1 million, respectively.

President and CEO Mitchell B. Lewis commented, "Our performance in 2011 reflects a continuation of the lower end market demand environment that emerged following the recession of 2008 and 2009. In response to market challenges we have continued with initiatives to change and improve our business to adapt to the current demand environment. In 2011, we further rationalized our manufacturing and distribution foot print and continued to pursue production efficiency gains and procurement savings. These initiatives, while undertaken in response to continued relative softness in demand, are expected to contribute to higher levels of operating performance as markets recover.  Additionally, in 2011 we improved our capital structure through the issuance of high-yield notes and a senior secured loan facility, proceeds of which were used to repay higher cost debt. This refinancing relieved the Company of restrictive financial covenants, significantly reduced interest costs, and provides financial flexibility needed to grow our business in future periods."

Full Year 2011 Financial Summary

• Net sales for 2011 increased $50.0 million, or 5.7%, to $933.7 million compared to $883.7 million for 2010.  Net sales increased primarily as a result of higher selling prices due to increases in aluminum and steel raw material costs. The strengthening of foreign currencies, primarily the euro and British pound sterling against the U.S. dollar, also resulted in a $15.0 million increase in net sales during 2011. These increases were partially offset by a decline in demand for industrial and architectural construction in the U.S. Non-Residential Building Products segment.  

• Income from operations for 2011 declined $8.7 million, or 45.8%, to $10.3 million compared to $19.0 million for 2010. Declines in operating income were partially related to declines in sales volumes to distributors in our U.S. Residential Building Products Segment and to customers in our U.S. Non-Residential Building Products Segment and due to higher selling and general administrative costs in our European Engineered Product and European Roll Coated Aluminum segments. Although we were able to effectively manage sales prices to cover increased raw material costs in the majority of our end markets, we were only able to recover a portion of raw material increases in the U.S. RV and Specialty Coated Products market. Operating results for the year reflect continuing challenges in residential and commercial construction end markets in both the United States and Europe. Operating income for the year was also negatively impacted by restructuring and refinancing initiatives from which the Company expects to benefit in future periods.  
  
  The Company incurred approximately $4.1 million related to restructuring initiatives including facility closures, relocation, and severance costs intended to reduce overhead and streamline operations. Additionally, the Company incurred a $1.2 million charge related to an early withdrawal from a multiemployer pension plan benefiting hourly employees.  This early withdrawal was the result of consolidation of operations at a facility in Romeoville, IL to an existing facility in Nappanee and was intended to reduce the Company's fixed overhead costs.
  
  Approximately $2.9 million of tax consulting and legal and professional fees were incurred related to the Company's debt refinancing, registration of Notes with the SEC and other capital market activities.  Additionally, tax consulting and legal and professional fees of $1.2 million were incurred for the restructuring and simplification of the Company's legal entity structure in Europe.

• Adjusted EBITDA is a significant operating measure used by the Company to measure its operating performance and liquidity. Adjusted EBITDA was $62.1 million for 2011 compared to $63.6 million for 2010.

Conference Call

The Company will host an investor conference call regarding its fourth quarter 2011 financial results at 10:00 a.m. Eastern Time on Tuesday, March 27, 2012. The call can be accessed through the following dial-in numbers: US/Canada: 800-895-1549; International: 785-424-1057: Conference ID: "Euramax Financial Results Call."  A replay of the conference call will be available through April 3, 2012.  The replay may be accessed using the following dial-in information: US/Canada: 800-688-4915; International: 402-220-1319.

Forward Looking Statements

Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements related to plans for future business development activities, anticipated costs of revenues, product mix, research and development and selling, general and administrative activities, and liquidity and capital needs and resources. When used in this report, the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and similar expressions are generally intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which only speak as of the date of this press release. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.

GAAP Versus Non-GAAP Presentation

The Company presents adjusted EBITDA in this press release as additional information regarding the Company's operating results. Adjusted EBITDA is defined as net loss plus (i) benefit for income taxes, (ii) interest expense and (iii) depreciation and amortization, as further adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company's actual operating performance. The Company's calculation of adjusted EBITDA is consistent with the calculation of Consolidated Cash Flow in the indenture governing the Notes, excluding certain pro forma items. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the U.S., and should not be considered an alternative to net income as a measure of operating performance or cash flows from operating, investing and financing activities as a measure of liquidity.

The Company believes adjusted EBITDA is helpful to investors in highlighting trends because adjusted EBITDA excludes the results of certain decisions of operating management that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. The Company also believes adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Investors use adjusted EBITDA, among other things, to assess the Company's period-to-period operating performance and to gain insight into the manner in which management analyzes operating performance.

A reconciliation of the Company's adjusted EBITDA to net income (loss) is included in the supplemental information attached to this release.

(a)  Includes amortization attributable to royalty payments under a fiveyear minimum purchase agreement entered into in connection with our acquisition of a product line in 2005, which is being recognized in net sales.

(b)  Other loss for the three months ended December 30, 2011 is primarily comprised of translation gains on intercompany obligations. Other loss for the year ended December 30, 2011 include translation losses on intercompany obligations of $13.0 million and a $1.5 million loss on extinguishment of the first lien credit agreement.

(c)  Debt offering and refinancing fees include indirect tax consulting and legal fees related to the Company's debt offering and other financing transactions and certain legal and professional fees incurred for capital market activities.

(d)  Adjusted EBITDA excludes certain pro forma adjustments allowable under the definition of Consolidated Cash Flow in the Indenture to the Company's Notes. If included, these items would represent additional net benefits to Adjusted EBITDA of approximately $1.3 million and $5.7 million for the years ended December 30, 2011 and December 31, 2010, respectively, and consist primarily of the pro forma effect of restructurings (i.e., plant closures and consolidations) and other operating changes.

SOURCE Euramax Holdings, Inc.