Exhibit 99.1
For Immediate Release
Contact: Steven Klueg
Senior Vice President and Chief Financial Officer
704-864-6711
AFFINIA REPORTS FINANCIAL RESULTS FOR THE
THIRD QUARTER 2014
Record third quarter sales for the Filtration segment of $248 million
GASTONIA, NORTH CAROLINA, November 12, 2014 – Affinia Group Intermediate Holdings Inc. (“Affinia”), an innovative global leader in the design, manufacture, distribution and marketing of industrial grade products and services, today reported net sales of $364 million for the third quarter of 2014 compared to $351 million in the third quarter of 2013, an increase of $13 million or 3.7%. Adjusted EBITDA improved to $48 million in the third quarter of 2014 compared to $40 million in the same period in the prior year, an increase of 20.0%.
Keith Wilson, President and Chief Executive Officer, commented, “We are extremely proud of the performance of our global businesses. For the third consecutive quarter in 2014, our Filtration segment achieved record quarterly sales, led by strong volumes of premium products in North America as a result of the continuing rebound within the commercial and industrial end markets. Overall, the trends in our industry are positive, as we see continued growth in the markets we serve. I am pleased with the continued success and dedication of our team, and we remain committed to delivering superior quality and innovation, while improving the value we provide to our customers.”
Filtration segment net sales were $248 million, which is a record for the third quarter, resulting in a 6.0% improvement over the third quarter of 2013. Adjusted EBITDA for the Filtration segment was $46 million in the third quarter of 2014, an increase of $8 million or 21.1% compared to the corresponding period in the prior year. Affinia South America segment net sales were $116 million, which is $1 million or 0.9% lower than the third quarter of 2013. On a currency adjusted basis, Affinia South America segment net sales were $119 million, a $2 million or 1.7% increase over the third quarter of 2013.
“Our businesses achieved 20 percent adjusted EBITDA growth in the third quarter of 2014 compared to the prior year. The operational success of our businesses has allowed for continued debt reduction in the third quarter and further improvement in our leverage ratios. We will continue to remain diligent in our efforts to right size our corporate cost structure with the needs of the business,” stated Steven Klueg, Senior Vice President and Chief Financial Officer.
Net Sales
Net sales were $364 million for the third quarter of 2014 compared with $351 million for the same period last year. On a currency adjusted basis, net sales for the third quarter of 2014 improved by 8.8% or $31 million over the same period in 2013. The Filtration segment achieved record third quarter net sales of $248 million in 2014, a 6.0% increase over the prior year, driven primarily by the North America operations due to higher volumes of premium heavy duty and light duty products, as well as growth through new product introductions and capturing new business. Net sales in the Affinia South America segment were $116 million in the third quarter of 2014, a 0.9% decrease compared to the same period in the prior year, due to the decline in value of the Argentine Peso. On a currency adjusted basis, net sales for the third quarter of 2014 improved by 1.7% over the same period in 2013 as a result of increases in our Brazilian and Argentine distribution companies.
Operating Profit
Operating profit for the third quarter of 2014 was $42 million, an $11 million increase over the prior year. Operating profit in the Filtration segment was $43 million in the third quarter of 2014, an $8 million increase over the prior year, primarily due to improved gross profit in North America as a result of higher volumes of premium products, which carry better margins, and execution of cost savings initiatives. Operating profit in the Affinia South America segment was $9 million in both the third quarter of 2014 and 2013 due largely to unfavorable currency impacts in 2014. On a currency adjusted basis, operating profit in the Affinia South America segment was up 11.1% in the third quarter of 2014 compared to the prior year largely due to price increases and higher volumes.
Adjusted EBITDA
Adjusted EBITDA was $48 million in the third quarter of 2014, an $8 million increase over the corresponding period in the prior year, with Adjusted EBITDA margin improving to 13.2% in the third quarter of 2014 from 11.4% in the third quarter of 2013. Adjusted EBITDA for the Filtration segment was $46 million in the third quarter of 2014, an $8 million improvement over the same period in the prior year, due to improved operating profit in North America. Adjusted EBITDA for the Affinia South America segment was $10 million in third quarter of 2014, which is flat to the same period in the prior year.
Net Income
Net income was $23 million in the third quarter of 2014 compared to $9 million in the third quarter of 2013. Higher net income was driven by improved sales and operating profit. In addition, the third quarter of 2014 included the recognition of the remaining $11 million gain on the sale of the Chassis group that closed in the second quarter of 2014, while the third quarter of 2013 included $6 million of expenses associated with establishing litigation and environmental reserves.
Balance Sheet
Affinia ended the third quarter of 2014 with $58 million of cash on hand and a total debt balance of $820 million. Net debt as of September 30, 2014 declined to 4.5 times the trailing twelve months Adjusted EBITDA from 5.2 times trailing twelve months Adjusted EBITDA as of December 31, 2013. During the third quarter, Affinia paid down $30 million of outstanding Term Loans and made a distribution to shareholders of $12 million to further reduce the seller financing note.
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (GAAP) included within this press release, Affinia has provided certain information which is considered non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in accordance with Securities and Exchange Commission rules and is included in the attached supplemental data.
EBITDA, Segment EBITDA, Adjusted EBITDA, and Adjusted Segment EBITDA are non-GAAP financial measures. EBITDA is earnings before interest, taxes, depreciation and amortization. Affinia’s EBITDA is calculated by adding back depreciation and amortization and interest expense to income from continuing operations before income tax provision. Adjusted EBITDA and Adjusted Segment EBITDA are defined as EBITDA adjusted for certain items that management believes hinder comparison of the performance of Affinia’s business either period-over-period or with other businesses. Items are excluded from Adjusted EBITDA and Adjusted Segment EBITDA because they are individually or collectively material items and management does not consider them to be representative of the performance of the business during the periods presented. Management believes that these non-GAAP financial measures are useful to both management and the Company’s stakeholders in their analysis of the Company’s business and operating performance. Management also uses this information for operational planning and decision-making purposes.
Currency adjusted net sales excludes the impact of currency on current period results by applying the same exchange rates to net sales in both periods. To calculate currency adjusted net sales, the exchange rates used in the prior year are applied to the current year results. By excluding the impacts of currency, management believes the comparability of financial results between reporting periods is enhanced.
Net debt represents total debt outstanding less cash on hand at period end.
Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by Affinia may not be comparable to similarly titled measures reported by other companies.
In accordance with Securities and Exchange Commission rules, each of Segment EBITDA, Adjusted Segment EBITDA and Adjusted EBITDA are reconciled to their closest GAAP measure, which is income from continuing operations before income tax provision and noncontrolling interest and is included in the attached supplemental data. Currency adjusted net sales are reconciled to their most closely correlated GAAP measure, which is net sales.
Affinia Group Intermediate Holdings Inc.
Condensed Consolidated Statements of Operations (Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| (Dollars in millions) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Net sales | | $ | 364 | | | $ | 351 | | | $ | 1,060 | | | $ | 1,023 | |
Cost of sales | | | (274 | ) | | | (269 | ) | | | (800 | ) | | | (784 | ) |
| | | | | | | | | | | | | | | | |
Gross profit | | | 90 | | | | 82 | | | | 260 | | | | 239 | |
Selling, general and administrative expenses | | | (48 | ) | | | (51 | ) | | | (150 | ) | | | (142 | ) |
| | | | | | | | | | | | | | | | |
Operating profit | | | 42 | | | | 31 | | | | 110 | | | | 97 | |
Loss on extinguishment of debt | | | — | | | | — | | | | — | | | | (15 | ) |
Other income and expense, net | | | — | | | | (1 | ) | | | (10 | ) | | | (3 | ) |
Interest expense | | | (15 | ) | | | (15 | ) | | | (45 | ) | | | (58 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations before income tax provision, equity in income (loss), net of tax and noncontrolling interest | | | 27 | | | | 15 | | | | 55 | | | | 21 | |
Income tax provision | | | (10 | ) | | | (8 | ) | | | (26 | ) | | | (12 | ) |
Equity in income (loss), net of tax | | | — | | | | (2 | ) | | | — | | | | (2 | ) |
| | | | | | | | | | | | | | | | |
Net income from continuing operations | | | 17 | | | | 5 | | | | 29 | | | | 7 | |
Income from discontinued operations, net of tax | | | 6 | | | | 4 | | | | 28 | | | | 7 | |
| | | | | | | | | | | | | | | | |
Net income | | | 23 | | | | 9 | | | | 57 | | | | 14 | |
Less: net income attributable to noncontrolling interest, net of tax | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Net income attributable to the Company | | $ | 23 | | | $ | 9 | | | $ | 57 | | | $ | 14 | |
| | | | | | | | | | | | | | | | |
Affinia Group Intermediate Holdings Inc.
Condensed Consolidated Balance Sheets (Unaudited)
| | | | | | | | |
| | | September 30, | | | December 31, | |
| (Dollars in millions) | | 2014 | | | 2013 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 58 | | | $ | 101 | |
Trade accounts receivable, less allowances of $4 million at September 30, 2014 and $2 million at December 31, 2013 | | | 171 | | | | 141 | |
Inventories, net | | | 230 | | | | 221 | |
Current deferred taxes | | | 32 | | | | 39 | |
Prepaid taxes | | | 29 | | | | 29 | |
Other current assets | | | 37 | | | | 32 | |
Current assets of discontinued operations | | | — | | | | 141 | |
| | | | | | | | |
Total current assets | | | 557 | | | | 704 | |
Property, plant, and equipment, net | | | 121 | | | | 123 | |
Goodwill | | | 3 | | | | 3 | |
Other intangible assets, net | | | 55 | | | | 60 | |
Deferred financing costs | | | 15 | | | | 18 | |
Deferred income taxes | | | 108 | | | | 80 | |
Investments and other assets | | | 18 | | | | 21 | |
| | | | | | | | |
Total assets | | $ | 877 | | | $ | 1,009 | |
| | | | | | | | |
Liabilities and shareholder’s equity (deficit) | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 141 | | | $ | 121 | |
Notes payable | | | 13 | | | | 23 | |
Current maturities of long-term debt | | | — | | | | 7 | |
Other accrued expenses | | | 92 | | | | 78 | |
Accrued payroll and employee benefits | | | 23 | | | | 19 | |
Current liabilities of discontinued operations | | | — | | | | 31 | |
| | | | | | | | |
Total current liabilities | | | 269 | | | | 279 | |
Long-term debt | | | 807 | | | | 907 | |
Deferred employee benefits and other noncurrent liabilities | | | 21 | | | | 24 | |
| | | | | | | | |
Total liabilities | | | 1,097 | | | | 1,210 | |
| | | | | | | | |
Contingencies and commitments | | | | | | | | |
Shareholder’s equity: | | | | | | | | |
Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding | | | — | | | | — | |
Additional paid-in capital | | | 454 | | | | 456 | |
Accumulated deficit | | | (638 | ) | | | (638 | ) |
Accumulated other comprehensive loss | | | (37 | ) | | | (20 | ) |
| | | | | | | | |
Total shareholder’s deficit of the Company | | | (221 | ) | | | (202 | ) |
Noncontrolling interest in consolidated subsidiaries | | | 1 | | | | 1 | |
| | | | | | | | |
Total shareholder’s deficit | | | (220 | ) | | | (201 | ) |
| | | | | | | | |
Total liabilities and shareholder’s equity (deficit) | | $ | 877 | | | $ | 1,009 | |
| | | | | | | | |
Affinia Group Intermediate Holdings Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| | | | | | | | |
| | | Nine Months Ended | |
| | | September 30, | |
| (Dollars in millions) | | 2014 | | | 2013 | |
Operating activities | | | | | | | | |
Net income | | $ | 57 | | | $ | 14 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 15 | | | | 17 | |
Currency devaluation | | | 7 | | | | 2 | |
Gain on the sale of Chassis group | | | (32 | ) | | | — | |
Stock-based compensation | | | — | | | | 1 | |
Loss on extinguishment of debt | | | — | | | | 15 | |
Write-off of unamortized deferred financing costs | | | 1 | | | | 8 | |
Write-off of original issue discount on Subordinated Notes | | | — | | | | 1 | |
Provision for deferred income taxes | | | (29 | ) | | | 9 | |
Change in trade accounts receivable | | | (58 | ) | | | (24 | ) |
Change in inventories | | | (19 | ) | | | (6 | ) |
Change in other current operating assets | | | 3 | | | | (33 | ) |
Change in other current operating liabilities | | | 54 | | | | 51 | |
Change in other | | | 5 | | | | 14 | |
| | | | | | | | |
Net cash provided by operating activities | | | 4 | | | | 69 | |
Investing activities | | | | | | | | |
Proceeds from the sale of Chassis group | | | 149 | | | | — | |
Proceeds from the sale of an equity method investment | | | 4 | | | | — | |
Investment in companies, net of cash acquired | | | — | | | | (1 | ) |
Additions to property, plant and equipment | | | (18 | ) | | | (18 | ) |
| | | | | | | | |
Net cash provided by (used in) investing activities | | | 135 | | | | (19 | ) |
Financing activities | | | | | | | | |
Net decrease in other short-term debt | | | — | | | | (1 | ) |
Payment of deferred financing costs | | | — | | | | (15 | ) |
Repayments of other debt | | | (10 | ) | | | — | |
Repayments of Secured Notes | | | — | | | | (195 | ) |
Repayments of Subordinated Notes | | | — | | | | (367 | ) |
Repayment of Term Loans | | | (109 | ) | | | (1 | ) |
Proceeds from Senior Notes | | | — | | | | 250 | |
Proceeds from Term Loans | | | — | | | | 667 | |
Distribution to our shareholders | | | (57 | ) | | | (352 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (176 | ) | | | (14 | ) |
Effect of exchange rates on cash | | | (6 | ) | | | (1 | ) |
(Decrease) increase in cash and cash equivalents | | | (43 | ) | | | 35 | |
Cash and cash equivalents at beginning of the period | | | 101 | | | | 51 | |
| | | | | | | | |
Cash and cash equivalents at end of the period | | $ | 58 | | | $ | 86 | |
| | | | | | | | |
Affinia Group Intermediate Holdings Inc.
Segment Information
The following tables provide the components of operating profit and Adjusted EBITDA by segment, as well as for corporate, eliminations and other, and Affinia Group Intermediate Holdings Inc. on a consolidated basis:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | Three Months Ended | |
| | | September 30, 2014 | | | September 30, 2013 | |
| | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Consolidated | | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Consolidated | |
Net sales | | $ | 248 | | | $ | 116 | | | $ | — | | | $ | 364 | | | $ | 234 | | | $ | 117 | | | $ | — | | | $ | 351 | |
Cost of sales | | | (180 | ) | | | (93 | ) | | | (1 | ) | | | (274 | ) | | | (177 | ) | | | (94 | ) | | | 2 | | | | (269 | ) |
Gross profit | | | 68 | | | | 23 | | | | (1 | ) | | | 90 | | | | 57 | | | | 23 | | | | 2 | | | | 82 | |
Selling, general & administrative expenses | | | (25 | ) | | | (14 | ) | | | (9 | ) | | | (48 | ) | | | (22 | ) | | | (14 | ) | | | (15 | ) | | | (51 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Profit | | | 43 | | | | 9 | | | | (10 | ) | | | 42 | | | | 35 | | | | 9 | | | | (13 | ) | | | 31 | |
Operating Profit % | | | 17.3 | % | | | 7.8 | % | | | — | | | | 11.5 | % | | | 15.0 | % | | | 7.7 | % | | | — | | | | 8.8 | % |
Other income and expense, net | | | (1 | ) | | | — | | | | 1 | | | | — | | | | (1 | ) | | | — | | | | — | | | | (1 | ) |
Depreciation and amortization | | | 4 | | | | 1 | | | | — | | | | 5 | | | | 3 | | | | — | | | | — | | | | 3 | |
Legal/Environmental reserves | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | 4 | | | | 6 | |
Restructuring and other | | | — | | | | — | | | | 1 | | | | 1 | | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 46 | | | $ | 10 | | | $ | (8 | ) | | $ | 48 | | | $ | 38 | | | $ | 10 | | | $ | (8 | ) | | $ | 40 | |
Adjusted EBITDA % to net sales | | | 18.5 | % | | | 8.6 | % | | | — | | | | 13.2 | % | | | 16.2 | % | | | 8.5 | % | | | — | | | | 11.4 | % |
| |
| (Dollars in millions) | | Nine Months Ended | |
| | | September 30, 2014 | | | September 30, 2013 | |
| | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Consolidated | | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Consolidated | |
Net sales | | $ | 732 | | | $ | 328 | | | $ | — | | | $ | 1,060 | | | $ | 678 | | | $ | 345 | | | $ | — | | | $ | 1,023 | |
Cost of sales | | | (538 | ) | | | (261 | ) | | | (1 | ) | | | (800 | ) | | | (507 | ) | | | (277 | ) | | | — | | | | (784 | ) |
Gross profit | | | 194 | | | | 67 | | | | (1 | ) | | | 260 | | | | 171 | | | | 68 | | | | — | | | | 239 | |
Selling, general & administrative expenses | | | (77 | ) | | | (41 | ) | | | (32 | ) | | | (150 | ) | | | (67 | ) | | | (43 | ) | | | (32 | ) | | | (142 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Profit | | | 117 | | | | 26 | | | | (33 | ) | | | 110 | | | | 104 | | | | 25 | | | | (32 | ) | | | 97 | |
Operating Profit % | | | 16.0 | % | | | 7.9 | % | | | — | | | | 10.4 | % | | | 15.3 | % | | | 7.2 | % | | | — | | | | 9.5 | % |
Other income and expense, net | | | (9 | ) | | | (3 | ) | | | 2 | | | | (10 | ) | | | (5 | ) | | | — | | | | (13 | ) | | | (18 | ) |
Depreciation and amortization | | | 12 | | | | 3 | | | | — | | | | 15 | | | | 11 | | | | 2 | | | | 1 | | | | 14 | |
Loss on extinguishment of debt | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15 | | | | 15 | |
Legal/Environmental reserves | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | 9 | | | | 11 | |
Currency devaluation | | | 5 | | | | 2 | | | | — | | | | 7 | | | | 2 | | | | — | | | | — | | | | 2 | |
Bad debt expense | | | 2 | | | | — | | | | — | | | | 2 | | | | — | | | | — | | | | — | | | | — | |
Restructuring and other | | | — | | | | 1 | | | | 9 | | | | 10 | | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 127 | | | $ | 29 | | | $ | (22 | ) | | $ | 134 | | | $ | 113 | | | $ | 28 | | | $ | (19 | ) | | $ | 122 | |
Adjusted EBITDA % to net sales | | | 17.3 | % | | | 8.8 | % | | | — | | | | 12.6 | % | | | 16.7 | % | | | 8.1 | % | | | — | | | | 11.9 | % |
Affinia Group Intermediate Holdings Inc.
Reconciliation of Non-GAAP Measures
The supplemental data presented below is a reconciliation of certain financial measures which are intended to facilitate analysis of Affinia Group Intermediate Holdings Inc.’s business and operating performance.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| (Dollars in millions) | | September 30, 2014 | | | September 30, 2013 | |
| | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Affinia Group
Intermediate
Holdings Inc. | | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Affinia Group
Intermediate
Holdings Inc. | |
Income from continuing operations before income tax provision, equity in income, net of tax and noncontrolling interest | | $ | 41 | | | $ | 9 | | | $ | (23 | ) | | $ | 27 | | | $ | 34 | | | $ | 9 | | | $ | (28 | ) | | $ | 15 | |
Add back: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 4 | | | | 1 | | | | — | | | | 5 | | | | 3 | | | | — | | | | — | | | | 3 | |
Interest expense | | | 1 | | | | — | | | | 14 | | | | 15 | | | | — | | | | — | | | | 15 | | | | 15 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 46 | | | | 10 | | | | (9 | ) | | | 47 | | | | 37 | | | | 9 | | | | (13 | ) | | | 33 | |
Legal/Environmental reserves | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | 4 | | | | 6 | |
Restructuring and other | | | — | | | | — | | | | 1 | | | | 1 | | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 46 | | | $ | 10 | | | $ | (8 | ) | | $ | 48 | | | $ | 38 | | | $ | 10 | | | $ | (8 | ) | | $ | 40 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Nine Months Ended | |
| (Dollars in millions) | | September 30, 2014 | | | September 30, 2013 | |
| | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Affinia Group
Intermediate
Holdings Inc. | | | Filtration | | | Affinia
South
America | | | Corporate/
Elims/
Other | | | Affinia Group
Intermediate
Holdings Inc. | |
Income from continuing operations before income tax provision, equity in income, net of tax and noncontrolling interest | | $ | 107 | | | $ | 23 | | | $ | (75 | ) | | $ | 55 | | | $ | 98 | | | $ | 25 | | | $ | (102 | ) | | $ | 21 | |
Add back: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 12 | | | | 3 | | | | — | | | | 15 | | | | 11 | | | | 2 | | | | 1 | | | | 14 | |
Interest expense | | | 1 | | | | — | | | | 44 | | | | 45 | | | | 1 | | | | — | | | | 57 | | | | 58 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 120 | | | | 26 | | | | (31 | ) | | | 115 | | | | 110 | | | | 27 | | | | (44 | ) | | | 93 | |
Loss on extinguishment of debt | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15 | | | | 15 | |
Currency devaluation | | | 5 | | | | 2 | | | | — | | | | 7 | | | | 2 | | | | — | | | | — | | | | 2 | |
Bad debt expense | | | 2 | | | | — | | | | — | | | | 2 | | | | — | | | | — | | | | — | | | | — | |
Legal/Environmental reserves | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | 9 | | | | 11 | |
Restructuring and other | | | — | | | | 1 | | | | 9 | | | | 10 | | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 127 | | | $ | 29 | | | $ | (22 | ) | | $ | 134 | | | $ | 113 | | | $ | 28 | | | $ | (19 | ) | | $ | 122 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | Three Months Ended | | | Nine Months Ended | |
| (Dollars in millions) | | September 30, | | | September 30, | |
| | | 2014 | | | 2013 | | | Variance | | | % Change | | | 2014 | | | 2013 | | | Variance | | | % Change | |
Currency adjusted net sales | | $ | 382 | | | $ | 351 | | | $ | 31 | | | | 9 | % | | $ | 1,127 | | | $ | 1,023 | | | $ | 104 | | | | 10 | % |
Impact of currency adjustment | | | (18 | ) | | | — | | | | (18 | ) | | | — | | | | (67 | ) | | | — | | | | (67 | ) | | | — | |
Net sales | | $ | 364 | | | $ | 351 | | | $ | 13 | | | | 4 | % | | $ | 1,060 | | | $ | 1,023 | | | $ | 37 | | | | 4 | % |
Affinia Group Intermediate Holdings Inc.
Reconciliation of Non-GAAP Measures (continued)
The supplemental data presented below is a reconciliation of certain financial measures which are intended to facilitate analysis of Affinia Group Intermediate Holdings Inc.’s business and operating performance.
Reconciliation of Net Debt and Leverage Ratio
(Dollars in millions)
| | | | | | | | |
| | | September 30, 2014 | | | December 31, 2013 | |
Total Debt Outstanding | | $ | 820 | | | $ | 937 | |
Cash on Hand | | | 58 | | | | 101 | |
| | | | | | | | |
Net Debt | | $ | 762 | | | $ | 836 | |
Trailing Twelve Months Adjusted EBITDA | | $ | 171 | | | $ | 162 | |
Leverage Ratio (a) | | | 4.5X | | | | 5.2X | |
| (a) | Leverage ratio represents net debt divided by trailing twelve months Adjusted EBITDA. |
Conference Call
Affinia Group will hold a conference call and webcast to discuss its results on Thursday, November 13, 2014 at 11:00 a.m. Eastern Time.
To participate in the webcast, visit Affinia’s web site,www.affiniagroup.com, and click on the webcast link. To participate in the conference call, dial (800) 708-4540 within the United States and Canada or (847) 619-6397 for international callers and enter participant code 38367570. A replay of the call will be available shortly after the live conference ends.
Affinia Group Intermediate Holdings Inc.is an innovative global leader in the design, manufacture, distribution and marketing of industrial grade products and services, including extensive offerings of aftermarket parts for automotive and heavy-duty vehicles. With approximately $1.4 billion in annual revenue, Affinia has operations in North and South America, Europe, and Asia. For more information, visitwww.affiniagroup.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements may include comments concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical. When used in this release, the words “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” or future or conditional verbs, such as “could,” “may,” “should,” or “will,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there is no assurance that these expectations, beliefs and projections will be achieved. For a more detailed discussion of these risks and uncertainties, see Part I, “Item 1A. Risk Factors” in our Annual Report on form 10-K for the year ended December 31, 2013. With respect to all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this release. Such risks, uncertainties and other important factors include, among others, domestic and global economic conditions and the resulting impact on the availability and cost of credit; financial viability of key customers and key suppliers; our dependence on our largest customers; increased crude oil and gasoline prices and resulting reductions in global demand for the use of automobiles; the shift in demand from premium to economy products; pricing and pressures from imports; increasing costs for manufactured components, raw materials and energy; the expansion of return policies or the extension of payment terms; risks associated with our non-U.S. operations; risks related to our receivables factoring arrangements; product liability and warranty and recall claims brought against us; reduced inventory levels by our distributors resulting from consolidation and increased efficiency; environmental and automotive safety regulations; the availability of raw materials, manufactured components or equipment from our suppliers; challenges to our intellectual property portfolio; our ability to develop improved products; the introduction of improved products and services that extend replacement cycles otherwise reduce demand for our products; our ability to achieve cost savings from our restructuring plans; our ability to successfully effect dispositions of existing lines of business; our ability to successfully combine our operations with any businesses we have acquired or may acquire; risk of impairment charges to our long-lived assets; risk of impairment to intangibles and goodwill; the risk of business disruptions related to a variety of events or conditions including natural and man-made disasters; risks associated with foreign exchange rate fluctuations; risks associated with our expansion into new markets; the impact on our tax rate resulting from the mix of our profits and losses in various jurisdictions; reductions in the value of our deferred tax assets; difficulties in developing, maintaining or upgrading information technology systems; risks associated with doing business in corrupting environments; and our substantial leverage and limitations on flexibility in operating our business contained in our debt agreements. Additionally, there may be other factors that could cause our actual results to differ materially from the forward-looking statements. Our forward-looking statements apply only as of the date of this release or as of the date they were made. We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
