Exhibit 99.1
[PROLIANCE LOGO]
FOR: PROLIANCE INTERNATIONAL, INC.
Contact:
Richard A. Wisot
Chief Financial Officer
(203) 859-3552
FOR IMMEDIATE RELEASE
FD
Investor Contact: Eric Boyriven,
Alexandra Tramont
(212) 850-5600
PROLIANCE INTERNATIONAL, INC. REPORTS 2007 FIRST QUARTER RESULTS
NEW HAVEN, CONNECTICUT, May 14, 2007 - Proliance International, Inc. (AMEX: PLI)
today announced results for the first quarter ended March 31, 2007.
Net sales in the first quarter of 2007 were $91.9 million, compared to $91.3
million in the first quarter of 2006. The sales increase was primarily
attributable to growth in the Company's European operations. The Company
reported a net loss for the first quarter of 2007 of $6.3 million, or $0.42 per
basic and diluted share, compared to a net loss of $5.1 million, or $0.33 per
basic and diluted share in the first quarter of 2006.
Charles E. Johnson, President and CEO of Proliance stated, "The seasonally weak
first quarter came in much as expected, as higher cost inventory continued to
work its way through to the market, and we continued to experience mild weather
conditions accompanied by lower driving activity by consumers, attributable to
high fuel costs. Our results in the quarter reflect higher commodity costs,
changes to our heat exchange sales mix as we experience higher sales to
wholesale customers and relatively less to our direct customers and a continued
highly competitive marketplace. At the same time, we continued to make
improvements to our business in the quarter including a reduction of inventory
and further implementation of cost reduction and branch alignment initiatives to
effectively adapt to the trends we are seeing in the market."
From an operating perspective, Proliance's 2007 first quarter performance
reflects the following:
o The Company continued to lower inventory levels during the quarter
while maintaining high service levels with its customers. Inventories
at March 31, 2007 were $113.7 million versus $118.9 million at
December 31, 2006, a decrease of $5.2 million. The reduction in the
current quarter reflects success in the Company's efforts to add speed
and supply flexibility to better manage inventory levels. Inventory
reduction remains a key goal for 2007, and the Company is currently
targeting year-end 2007 inventory levels below year-end 2006 levels.
o Domestic segment heat exchange product unit volumes were slightly
stronger in the first quarter, despite the decline in miles driven for
the first two months of 2007 versus 2006 levels. However, as noted
above, the shift in sales mix towards wholesale customers and away
from the Company's direct customers translated into lower average
selling prices and lower overall average margins for certain domestic
heat exchange products. As has been noted in prior communications, the
Company has taken action to better align its branch system with market
needs as a result of this change in mix. Domestic temperature control
product sales were lower than year-ago levels, reflecting higher
preseason orders in 2006 from several of its major customers and
generally mild weather conditions. Softer market conditions also led
to lower domestic heavy duty product sales in the first quarter of
2007. International segment sales increased in the quarter, primarily
as a result of higher marine and heat exchange sales in Europe, as
well as increased foreign translation rates.
o As noted, the impact of higher commodity prices, low production rates
and the shift in the customer mix of sales away from direct customers
and toward wholesale customers were reflected in lower gross margins
for the quarter. For the first quarter of 2007, consolidated gross
margin was $17.4 million, or 18.9% of net sales, versus a consolidated
gross margin of $20.9 million or 22.9% of net sales, in the same
period in 2006. Copper and aluminum market costs are up more than 70%
and 30%, respectively, over their levels of a year ago. The decrease
in gross margin was partially offset by cost reduction initiatives
completed in 2006. The Company has continued to undertake initiatives
to reduce product costs and implement price actions wherever possible.
The Company has also initiated programs to reduce product costs
through product design improvements, reductions of direct
manufacturing costs and overhead, as well as alternative approaches to
sourcing, which will begin to have impact throughout the remainder of
2007.
o Selling, general and administrative expenses totaled $20.6 million, or
22.4% of net sales, in the 2007 first quarter, compared to $22.9
million, or 25.1% of net sales, in the same period in 2006. The
decrease in expenses primarily reflects the lower administrative
spending as a result of cost reduction actions implemented in 2006,
including the elimination of the Racine administrative office and the
consolidation of these functions into the Company's New Haven
corporate office. Branch expenses for the quarter were also lower due
to the impact of the branch realignment program initiated during the
third quarter of 2006 to better align the Company's go-to-market
strategy with customer needs. The Company reported a $0.3 million of
restructuring costs for the first quarter of 2007, primarily
associated with changes to the Company's branch operating structure.
These changes resulted in the reduction of branch and agency locations
from 94 at the end of the 2006 fourth quarter to 90 at the end of the
2007 first quarter and the establishment of supply agreements with
distribution partners in certain areas. These activities are part of
the previously announced $2 - $3 million of new restructuring
initiatives in 2007. In addition, as previously disclosed, during the
second quarter of 2007, the Company will continue to take actions to
reduce costs, including manufacturing and administrative staff
reductions and the closure of five additional branch locations, which
will result in additional restructuring costs of about $1.1 million.
This will further improve our year-over-year overhead comparisons.
Mr. Johnson concluded, "As we enter the beginning of our peak selling season and
ramp up our plants to meet our increased seasonal demand, we will begin to see
the favorable impact of our cost-reduction
initiatives as we sell off higher cost product. This will become increasingly
apparent in our results for the third quarter and fourth quarter in
year-over-year comparisons. We continue to anticipate improved profitability
over 2006 levels for the 2007 fiscal year and remain committed to our goal of
achieving profitability for the full year. Although our sales levels were
essentially flat for the first quarter, we expect sales to grow overall in 2007.
At the same time, we will continue our efforts to improve our products and
customer service, our 'go-to-market' distribution system, our inventory turns
and further improve our overhead structure."
PROLIANCE INTERNATIONAL, INC. is a leading global manufacturer and distributor
of aftermarket heat exchange and temperature control products for automotive and
heavy-duty applications serving North America, Central America and Europe.
Proliance International, Inc.'s Strategic Corporate Values Are:
o Being An Exemplary Corporate Citizen
o Employing Exceptional People
o Dedication To World-Class Quality Standards
o Market Leadership Through Superior Customer Service
o Commitment to Exceptional Financial Performance
FORWARD-LOOKING STATEMENTS
Statements included in this press release, which are not historical in nature,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Statements relating to the
future financial performance of the Company are subject to business conditions
and growth in the general economy and automotive and truck business, the impact
of competitive products and pricing, changes in customer product mix, failure to
obtain new customers or retain old customers or changes in the financial
stability of customers, changes in the cost of raw materials, components or
finished products and changes in interest rates. Such statements are based upon
the current beliefs and expectations of Proliance management and are subject to
significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements. When used in this press release, the
terms "anticipate," "believe," "estimate," "expect," "may," "objective," "plan,"
"possible," "potential," "project," "will" and similar expressions identify
forward-looking statements.
Factors that could cause Proliance's results to differ materially from those
described in the forward-looking statements can be found in the 2006 Annual
Report on Form 10-K of Proliance, in the Quarterly Reports on Forms 10-Q of
Proliance, and Proliance's other filings with the SEC. The forward-looking
statements contained in this press release are made as of the date hereof, and
we do not undertake any obligation to update any forward-looking statements,
whether as a result of future events, new information or otherwise.
-TABLES FOLLOW-
PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
THREE MONTHS
ENDED MARCH 31,
-----------------
2007 2006
------- -------
(unaudited)
Net sales $91,938 $91,336
Cost of sales 74,580 70,388
------- -------
Gross margin 17,358 20,948
Selling, general and administrative expenses 20,589 22,932
Restructuring charges 275 520
------- -------
Operating loss from operations (3,506) (2,504)
Interest expense 2,681 2,253
------- -------
Loss from operations before taxes (6,187) (4,757)
Income tax provision 145 302
------- -------
Net loss $(6,332) $(5,059)
======= =======
Basic and diluted net loss per share: $ (0.42) $ (0.33)
======= =======
Weighted average common shares - basic and diluted 15,259 15,256
======= =======
Table 1 of 3
PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, 2007 DECEMBER 31, 2006
-------------- -----------------
(unaudited)
Cash and cash equivalents $ 4,583 $ 3,135
Accounts receivable, net 57,684 58,209
Inventories, net 113,712 118,912
Other current assets 7,742 7,498
Net property, plant and equipment 22,819 23,876
Other assets 13,249 12,732
-------- --------
Total assets $219,789 $224,362
======== ========
Accounts payable $ 55,283 $ 58,114
Accrued liabilities 26,739 28,355
Total debt 62,721 55,202
Other long-term liabilities 7,043 8,218
Stockholders' equity 68,003 74,473
-------- --------
Total liabilities and stockholders' equity $219,789 $224,362
======== ========
Table 2 of 3
PROLIANCE INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION
(IN THOUSANDS)
THREE MONTHS
ENDED MARCH 31,
-----------------
2007 2006
------- -------
(unaudited)
SEGMENT DATA:
Net sales:
Domestic $69,041 $72,516
International 22,897 18,820
------- -------
Total net sales $91,938 $91,336
======= =======
Operating (loss) income from operations:
Domestic $ (347) $ 381
Restructuring charges (260) (478)
------- -------
Domestic total (607) (97)
------- -------
International (108) 497
Restructuring charges (15) (42)
------- -------
International total (123) 455
------- -------
Corporate expenses (2,776) (2,862)
------- -------
Total operating loss from continuing operations $(3,506) $(2,504)
======= =======
CAPITAL EXPENDITURES, NET $ 330 $ 1,431
======= =======
Table 3 of 3
END
