Exhibit 99.1
For Immediate Release
November 4, 2004
Remy International Grows Revenue and Improves Operating Income
Anderson, Indiana, November 4, 2004/PRNewswire/ — Remy International, Inc. (“Remy International” or the “Company” and formerly Delco Remy International, Inc.), a leading worldwide manufacturer and remanufacturer of automotive electrical and powertrain products, today announced net sales from continuing operations of $254.3 million and Adjusted EBITDA of $27.7 million in the third quarter ended September 30, 2004. Net sales increased $7.6 million, or 3.1%, and Adjusted EBITDA decreased $0.8 million, or 2.8%, compared with the third quarter of 2003. Operating income of $22.2 million in the third quarter of 2004 increased $1.1 million, or 5.3%, over the comparable period of 2003.
Third Quarter Highlights:
• | Continued improvement in sales and gross margins. |
• | Completion of significant acquisition payments. |
• | Transmission Business disposition – net cash proceeds of approximately $103 million. |
• | Substantial improvement in debt leverage. |
Commenting on the third quarter results, Thomas J. Snyder, President and CEO, stated, “Our third quarter performance was in line with our expectations and reflects the continuing improvement in gross margins. This improvement comes in an environment of higher commodity costs, customer price reductions and the adverse effect of weak retail electrical sales. Our ability to offset these negatives reflects the substantial operating cost reductions we have put in place over the last 15 months.”
Net sales of $795.3 million in the first nine months of 2004 increased $66.6 million, or 9.1%, over the comparable period in 2003. Adjusted EBITDA for the nine months ended September 30, 2004 increased 12.0% to $87.3 million as compared to the same period last year and operating income of $69.1 million increased $55.0 million as compared to the same period in 2003. Included in operating income are restructuring charges of $1.5 million and $47.3 million that were recorded in the first nine months of 2004 and 2003, respectively.
For the nine months ended September 30, 2004, continued strong customer demand in the heavy-duty and industrial sectors, higher Automotive OEM volume from new alternator business awards and improved remanufactured diesel engine and parts volume all contributed to the year over year sales growth.
Savings resulting from the restructuring and other cost reduction actions taken in 2003, combined with strong sales growth, generated the year over year gross margin improvement.
Cash used in operating activities increased $2.7 million in the first nine months of 2004 due primarily to payments of approximately $14 million made in connection with the service
award portion of the arbitration settlement. An additional payment of approximately $5 million made to the minority shareholders of our Mexican operations for the purchase of their shares is reported as an acquisition payment in investing activities. These payments complete the significant cash payments for prior acquisitions.
Recent Developments:
As previously announced the Company completed a stock sale of its wholly-owned domestic transmission remanufacturing unit. The Company realized net cash proceeds on the sale of $102.7 million and recorded a gain of $44.2 million.
Future Outlook:
Commenting on the remainder of 2004, Snyder said, “In the second half of the year we are experiencing softer industry sales and additional cost pressures. With our market wins and continued strong sales in the heavy duty class 8 and industrial markets, we expect that our fourth quarter sales, while lower than previously expected, will still be similar to the third quarter and will reflect an increase over the prior year.”
Reconciliation to GAAP:
For a reconciliation of GAAP financial information to the non-GAAP financial information appearing in this release, please refer to the table following the accompanying Condensed Consolidated Statements of Operations.
Third Quarter Conference Call:
Remy International’s executive management team will conduct a live conference call on Thursday November 4 at 11:00 a.m. Eastern Standard Time to discuss additional details regarding the Company’s performance for the third quarter and the outlook for 2004. The call may be accessed by dialing 800-762-4758 ten minutes prior to the start of the presentation. A replay of the conference will be archived for two weeks, and may be accessed by dialing 800-475-6701 (USA), 320-365-3844 (International), Access Code 753634.
About Remy International, Inc.:
Remy International, Inc., headquartered in Anderson, Indiana, is a leading designer, manufacturer, remanufacturer and distributor of electrical, powertrain and related products for automobiles, light-duty trucks, heavy-duty trucks and other heavy-duty off-road and industrial applications. Products include starter motors, alternators, engines and fuel systems. The Company also provides exchange services for used components, commonly known as cores, for remanufacturers. Remy International, Inc. was formed in 1994 as a partial divestiture by General Motors Corporation of the former Delco Remy division, which traces its roots to Remy Electric, founded in 1896.
Caution Regarding Forward-Looking Statements:
This press announcement contains statements relating to future results of the Company that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”) or by the Securities and Exchange Commission (“SEC”) in its rules, regulations and releases. The Company desires to take advantage of the “safe harbor” provisions in the Act for forward-looking statements made in this press announcement. Any statements set forth in this press announcement with regard to its expectations as to financial results and other aspects of its business may constitute forward-looking statements. These statements relate to the Company’s future plans, objectives, expectations and intentions and may be identified by words like “believe,” “expect,” “may,” “will,” “should,” “seek,” or “anticipate,” and similar expressions. The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks including, but not limited to, risks associated with the uncertainty of future financial results, acquisitions, additional financing requirements, development of new products and services, the effect of competitive products or pricing, the effect of commodity prices, the effect of economic conditions and other uncertainties detailed from time to time in the Company’s filings with the SEC. Due to these uncertainties, the Company cannot assure readers that any forward-looking statements will prove to have been correct.
Investor Relations: | Carol Mineart | 765-778-6445 | ||
Keri Webb | 765-778-6602 |
Remy International Web Site: http://www.RemyInc.com
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months | Nine Months | ||||||||||||||
IN THOUSANDS,For the three and nine months ended September 30, | 2004 | 2003 | 2004 | 2003 | |||||||||||
Net sales | $ | 254,271 | $ | 246,677 | $ | 795,331 | $ | 728,698 | |||||||
Cost of goods sold | 204,239 | 199,015 | 640,736 | 592,815 | |||||||||||
Gross profit | 50,032 | 47,662 | 154,595 | 135,883 | |||||||||||
Selling, general and administrative expenses | 27,731 | 23,947 | 83,974 | 74,551 | |||||||||||
Restructuring charges | 142 | 2,663 | 1,516 | 47,263 | |||||||||||
Operating income | 22,159 | 21,052 | 69,105 | 14,069 | |||||||||||
Interest expense, net | 14,208 | 13,845 | 44,378 | 41,426 | |||||||||||
Loss on early extinguishment of debt | — | — | 7,939 | — | |||||||||||
Income (loss) from continuing operations before income taxes, minority interest and loss (income) from unconsolidated joint ventures | 7,951 | 7,207 | 16,788 | (27,357 | ) | ||||||||||
Income tax expense | 3,364 | 2,085 | 4,448 | 11,494 | |||||||||||
Minority interest | 769 | 1,466 | 2,139 | 2,225 | |||||||||||
Loss (income) from unconsolidated joint ventures | (67 | ) | 182 | 701 | 5,909 | ||||||||||
Net income (loss) from continuing operations | 3,885 | 3,474 | 9,500 | (46,985 | ) | ||||||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations, net of tax | (25 | ) | (833 | ) | 966 | (3,881 | ) | ||||||||
Gain on disposal of discontinued operations, net of tax | 43,162 | — | 43,377 | 2,417 | |||||||||||
Net income (loss) from discontinued operations, net of tax | 43,137 | (833 | ) | 44,343 | (1,464 | ) | |||||||||
Net income (loss) | 47,022 | 2,641 | 53,843 | (48,449 | ) | ||||||||||
Accretion for redemption of preferred stock | 9,459 | 8,477 | 27,367 | 24,418 | |||||||||||
Net income (loss) attributable to common stockholders | $ | 37,563 | $ | (5,836 | ) | $ | 26,476 | $ | (72,867 | ) | |||||
Adjusted EBITDA: | |||||||||||||||
Operating income | $ | 22,159 | $ | 21,052 | $ | 69,105 | $ | 14,069 | |||||||
Depreciation and amortization | 5,371 | 4,746 | 16,641 | 16,546 | |||||||||||
Restructuring charges | 142 | 2,663 | 1,516 | 47,263 | |||||||||||
Adjusted EBITDA | $ | 27,672 | $ | 28,461 | $ | 87,262 | $ | 77,878 | |||||||
Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
IN THOUSANDS,At | September 30, 2004 | December 31, 2003 | ||||||
(unaudited) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 72,987 | $ | 21,207 | ||||
Trade accounts receivable, net | 155,912 | 143,439 | ||||||
Inventories | 214,466 | 198,400 | ||||||
Assets of discontinued operations | 1,283 | 67,397 | ||||||
Other current assets | 34,825 | 28,518 | ||||||
Total current assets | 479,473 | 458,961 | ||||||
Property, plant and equipment, net | 127,568 | 124,803 | ||||||
Goodwill, net | 106,364 | 100,862 | ||||||
Other assets | 39,523 | 39,350 | ||||||
Total assets | $ | 752,928 | $ | 723,976 | ||||
Liabilities and Stockholders’ Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 155,211 | $ | 154,350 | ||||
Accrued restructuring | 6,074 | 10,402 | ||||||
Liabilities of discontinued operations | 3,467 | 11,453 | ||||||
Other liabilities and accrued expenses | 110,808 | 131,336 | ||||||
Current maturities of long-term debt | 26,015 | 31,397 | ||||||
Total current liabilities | 301,575 | 338,938 | ||||||
Long-term debt, net of current portion | 612,136 | 593,003 | ||||||
Accrued restructuring | 6,582 | 8,801 | ||||||
Other non-current liabilities | 36,300 | 37,066 | ||||||
Minority interest | 9,839 | 15,193 | ||||||
Redeemable preferred stock | — | 306,969 | ||||||
Total stockholders’ deficit | (213,504 | ) | (575,994 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 752,928 | $ | 723,976 | ||||
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
IN THOUSANDS,For the nine months ended September 30, | 2004 | 2003 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) attributable to common stockholders | $ | 26,476 | $ | (72,867 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Loss (income) from discontinued operations | (966 | ) | 3,881 | |||||
Gain on disposal of discontinued operations | (43,377 | ) | (2,417 | ) | ||||
Depreciation and amortization | 16,641 | 16,546 | ||||||
Non-cash interest expense | 2,939 | 3,770 | ||||||
Loss on early extinguishment of debt | 7,939 | — | ||||||
Accretion for redemption of preferred stock | 27,367 | 24,418 | ||||||
Restructuring charges | 1,516 | 47,263 | ||||||
Cash payments for restructuring charges | (7,798 | ) | (14,392 | ) | ||||
Changes in net working capital, net of acquisitions and restructuring charges | (44,304 | ) | (25,542 | ) | ||||
Other, net | (2,365 | ) | 6,101 | |||||
Net cash used in operating activities of continuing operations | (15,932 | ) | (13,239 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Acquisitions, net of cash acquired | (24,751 | ) | (9,546 | ) | ||||
Net proceeds on sale of businesses | 102,987 | 27,876 | ||||||
Purchases of property, plant and equipment | (15,429 | ) | (11,986 | ) | ||||
Net cash provided by investing activities of continuing operations | 62,807 | 6,344 | ||||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from issuance of long-term debt | 275,000 | 6,521 | ||||||
Retirement of long-term debt | (200,000 | ) | — | |||||
Net (repayments) borrowings under revolving line of credit and other | (56,464 | ) | 4,621 | |||||
Financing costs | (12,456 | ) | — | |||||
Distributions to minority interests | (1,010 | ) | — | |||||
Net cash provided by financing activities of continuing operations | 5,070 | 11,142 | ||||||
Effect of exchange rate changes on cash | 335 | 341 | ||||||
Cash flows of discontinued operations | (500 | ) | (4,975 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 51,780 | (387 | ) | |||||
Cash and cash equivalents at beginning of year | 21,207 | 12,315 | ||||||
Cash and cash equivalents at end of period | $ | 72,987 | $ | 11,928 | ||||