FOR IMMEDIATE RELEASE EXHIBIT 99.1
NEWS RELEASE
ASSOCIATED MATERIALS REPORTS FOURTH QUARTER
AND YEAR-END RESULTS
CUYAHOGA FALLS, Ohio, February 20 -- ASSOCIATED MATERIALS INCORPORATED ("AMI" OR
THE "COMPANY") today announced fourth quarter 2003 net sales of $264.7 million,
a 66.8% increase over $158.7 million for the same period in 2002. For the 2003
fiscal year ended January 3, 2004, net sales were $779.8 million or 27.6% higher
than $611.3 million for the same period in 2002. The results for 2003 include
the operations of the Company's subsidiary, Gentek Holdings, Inc. ("Gentek"),
subsequent to its acquisition on August 29, 2003, which contributed $76.3
million and $103.4 million of net sales in the fourth quarter and year to date
2003 periods, respectively. As discussed below, results of continuing operations
for the year ended December 31, 2002 exclude the Company's AmerCable division,
which was sold on June 24, 2002.
Net income for the fourth quarter of 2003 was $9.6 million. This compares to net
income of $4.6 million for the same period in 2002. For the year ended January
3, 2004, net income was $24.5 million compared to net income of $6.4 million for
the same period in 2002. Gentek contributed $2.0 million and $3.1 million of net
income for the fourth quarter of 2003 and year ended January 3, 2004,
respectively.
EBITDA (as defined below) for the fourth quarter of 2003 was $30.4 million
compared to $16.7 million for the fourth quarter of 2002. Gentek contributed
$6.4 million of EBITDA in the fourth quarter of 2003. A reconciliation of net
income to EBITDA is included below.
Adjusted EBITDA (as defined below) for the year ended January 3, 2004 was $86.8
million compared to $64.6 million for the same period in 2002. Gentek
contributed $10.3 million of Adjusted EBITDA for the year ended January 3, 2004.
Adjusted EBITDA for the year ended January 3, 2004 excludes a cost of sales
expense of $1.4 million relating to an inventory fair value adjustment recorded
at the time of the acquisition of Gentek. Adjusted EBITDA for the year ended
December 31, 2002 excludes $1.9 million of EBITDA relating to the AmerCable
division, April 2002 merger transaction costs of $9.3 million, debt
extinguishment costs of $7.6 million and a cost of sales expense of $1.9 million
relating to an inventory fair value adjustment recorded at the time of the
merger transaction with an affiliate of Harvest Partners (referred to as the
April 2002 merger transaction). A reconciliation of net income to EBITDA and to
Adjusted EBITDA is included below.
Michael Caporale, President and Chief Executive Officer, commented, "I am very
pleased with our fourth quarter and full year results. During the fourth
quarter, we experienced solid growth in all of our product offerings."
Mr. Caporale continued, "The performance of Gentek since our acquisition at the
end of August has exceeded our expectations. I commend our Gentek employees for
their efforts and thank our loyal Gentek(R) and Revere(R) customers for their
continued business."
RESULTS OF OPERATIONS
Net sales increased 66.8% during the fourth quarter of 2003 compared to the same
period in 2002, driven by increased vinyl window and vinyl siding sales along
with net sales from Gentek. Gross profit in the fourth quarter of 2003 was $69.1
million, or 26.1% of net sales, compared to gross profit of $43.7 million, or
27.5% of net sales, in the fourth quarter of 2002. The decrease in gross profit
margin percentage is primarily due to the impact of the results contributed by
Gentek as Gentek's gross margin percentage is typically lower than Alside's as a
larger proportion of Gentek's net sales are to independent distributors versus
contractors through company-owned distribution centers. Additionally, the
decrease in margin percentage is due to lower margin window sales comprising a
larger proportion of net sales in 2003. Selling, general and administrative
expense increased to $46.3 million, or 17.5% of net sales, for the fourth
quarter of 2003 versus $29.9 million, or 18.8% of net sales, for the same period
in 2002. The increase in selling, general and administrative expense is
primarily a result of the three new supply centers added in 2003 along with the
acquisition of Gentek. Income from operations was $22.8 million in the fourth
quarter of 2003 compared to $13.8 million for the same period in 2002.
Net sales increased 27.6% for the year ended January 3, 2004 compared to the
same period in 2002, primarily driven by increased window sales along with net
sales from Gentek. Gross profit increased to $218.3 million, or 28.0% of net
sales, for the year ended January 3, 2004 compared to $179.3 million, or 29.3%
of net sales, for the same period in 2002. The decrease in gross profit margin
percentage was a result of the impact of the Gentek acquisition as well as
window sales comprising a larger proportion of net sales in 2003 compared to the
same period in 2002. Selling, general and administrative expense increased to
$149.6 million, or 19.2% of net sales, for the year ended January 3, 2004
compared to $127.2 million, or 20.8% of net sales, for the same period in 2002.
The increase in selling, general and administrative expense is primarily a
result of the three new supply centers added in 2003 along with the seven new
supply centers added in 2002, which had a full year of expenses in 2003, along
with the acquisition of Gentek. Income from operations was $68.7 million for the
year ended January 3, 2004 compared to $52.2 million for the same period in
2002.
* * *
Associated Materials' management will host its year end earnings conference call
on Friday, March 5th at 11 a.m. Eastern Time. The toll free dial-in number for
the call is (866) 686-6743. A replay of the call will be available through March
12, 2004 by dialing (888) 769-9756 and entering the conference call
identification number of 8389263. 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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* * *
Associated Materials Incorporated is a leading manufacturer of exterior
residential building products, which are distributed through company-owned
distribution centers and independent distributors across North America. AMI
produces a broad range of vinyl windows, vinyl siding, aluminum and steel siding
and accessories, as well as vinyl fencing, decking and railing. AMI is a
privately held, wholly-owned subsidiary of Associated Materials Holdings Inc.,
which is controlled by affiliates of Harvest Partners, Inc. For more
information, please visit the company's website at
http://www.associatedmaterials.com.
Founded in 1981, Harvest Partners has approximately $1 billion of invested and
committed capital, and is focused on management buyouts and growth financings of
profitable, middle-market specialty services, manufacturing and value-added
distribution businesses, with a particular emphasis on multinational
transactions. Harvest has significant capital available through its managed
funds, which include numerous U.S. and European industrial corporations and
financial institutions. For more information on Harvest Partners please visit
its web site at http://www.harvpart.com.
This press release contains certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) relating to AMI
that are based on the beliefs of AMI'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. Such statements reflect the
current views of AMI's management with respect to its operations and results of
operations regarding the home building industry, economy, interest rates,
availability of consumer credit, employment trends, levels of consumer
confidence, consumer preferences, raw material costs and availability, national
and regional trends in new housing starts, weather conditions, its ability to
comply with certain financial covenants in loan documents governing its
indebtedness, level of competition within its market, availability of
alternative building products, its level of indebtedness, costs of environmental
compliance, potential conflict between existing Alside and new Gentek
distribution channels, achievement of anticipated synergies and operational
efficiencies from the acquisition of Gentek, shifts in market demand, and
general economic conditions. These statements are subject to certain risks and
uncertainties. 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
At the Company: At Abernathy MacGregor Group Inc.:
D. Keith LaVanway Alison Brandt
Chief Financial Officer Media
(330) 922-2004 (212) 371-5999
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ASSOCIATED MATERIALS INCORPORATED
CONDENSED PREDECESSOR / SUCCESSOR STATEMENTS OF OPERATIONS (A)
(UNAUDITED)
(IN THOUSANDS)
One
Three Three Hundred Two Hundred
Months Months Year Eight Days Fifty-Seven Year
Ended Ended Ended Ended Days Ended Ended
January 3, December 31, January 3, April 18, December 31, December 31,
2004 2002 2004 2002 2002 2002
---------- ------------ ---------- ----------- ------------ -------------
PREDECESSOR SUCCESSOR COMBINED
----------- ------------ -------------
Net sales
Building products ............................ $ 264,723 $ 158,691 $ 779,836 $ 161,959 $ 449,324 $ 611,283
AmerCable .................................... -- -- -- 18,271 -- 18,271
---------- ------------ ---------- ----------- ------------ ------------
Total ................................... 264,723 158,691 779,836 180,230 449,324 629,554
Gross profit
Building products ............................ 69,124 43,685 218,311 47,102 132,247 179,349
AmerCable .................................... -- -- -- 2,777 -- 2,777
---------- ------------ ---------- ----------- ------------ ------------
Total ................................... 69,124 43,685 218,311 49,879 132,247 182,126
Selling, general and administrative expense
Building products ............................ 46,287 29,873 149,571 41,080 86,097 127,177
AmerCable .................................... -- -- -- 2,192 -- 2,192
---------- ------------ ---------- ----------- ------------ ------------
Total ................................... 46,287 29,873 149,571 43,272 86,097 129,369
Income from operations
Building products ............................ 22,837 13,812 68,740 6,022 46,150 52,172
AmerCable .................................... -- -- -- 585 -- 585
---------- ------------ ---------- ----------- ------------ ------------
Total ................................... 22,837 13,812 68,740 6,607 46,150 52,757
Interest, net (b) .................................. 6,742 5,867 27,369 2,068 16,850 18,918
Foreign currency (gain) ............................ (349) -- (548) -- -- --
Merger transaction costs (c) ....................... -- -- -- 9,319 -- 9,319
Debt extinguishment costs (d) ...................... -- -- -- -- 7,579 7,579
---------- ------------ ---------- ----------- ------------ ------------
Income (loss) from continuing operations before
income taxes..................................... 16,444 7,945 41,919 (4,780) 21,721 16,941
Income taxes ....................................... 6,816 3,298 17,388 977 9,016 9,993
---------- ------------ ---------- ----------- ------------ ------------
Net income (loss) from continuing operations ....... 9,628 4,647 24,531 (5,757) 12,705 6,948
Loss from discontinued operations .................. -- -- -- -- (521) (521)
---------- ------------ ---------- ----------- ------------ ------------
Net income (loss) .................................. $ 9,628 $ 4,647 $ 24,531 $ (5,757) $ 12,184 $ 6,427
========== ============ ========== =========== ============ ============
Other Data:
EBITDA (e).......................................... $ 30,427 $ 16,735 $ 85,403 $ 1,257 $ 46,380 $ 47,637
Adjusted EBITDA (e)................................. 30,427 16,735 86,805 9,356 55,210 64,566
January 3, December 31,
2004 2002
Selected Balance Sheet Data:
Cash .............................................. $ 4,282 $ 13,022
Accounts receivable, net............................ 106,975 67,861
Inventory........................................... 97,907 60,369
Accounts payable.................................... 49,881 31,319
Accrued liabilities................................. 53,234 34,319
Long-term debt...................................... 305,000 242,408
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(a) Operating results prior to the April 2002 merger transaction are
presented as the Predecessor's results of operations and include 108
days from January 1, 2002 to April 18, 2002. Operating results
subsequent to the April 2002 merger transaction are presented as the
Successor's results of operations. For the 2002 periods presented,
this includes 257 days from April 19, 2002 to December 31, 2002.
AmerCable's results are included in continuing operations of the
Predecessor prior to the April 2002 merger transaction. Subsequent
to the April 2002 merger transaction, AmerCable's results are
treated as discontinued operations due to the Successor's decision
to divest this division. Operating results for 2003 also include the
results of the Company's Gentek Holdings subsidiary subsequent to
its acquisition on August 29, 2003.
(b) The year ended January 3, 2004 results include the write-off of $3.9
million of debt issuance costs as a result of amending and restating
the Company's credit facility for the Gentek Holdings acquisition.
(c) Merger transaction costs include investment banking and legal fees
incurred by the Predecessor in conjunction with the strategic review
process and subsequent April 2002 merger transaction.
(d) Debt extinguishment costs include $4.9 million for the
extinguishment of substantially all of the Successor's assumed
9-1/4% senior subordinated notes and $2.7 million for the expense of
financing fees related to an interim credit facility utilized for
the April 2002 merger transaction, which was repaid shortly
thereafter.
(e) EBITDA is calculated as net income (loss) plus interest, taxes,
depreciation and amortization. Adjusted EBITDA excludes certain
items and AmerCable's operating results. The Company considers
Adjusted EBITDA to be an important indicator of its operational
strength and performance of its business. The Company has included
Adjusted EBITDA because it is a key financial measure used by
management to (i) assess the Company's ability to service its debt
and / or incur debt and meet the Company's capital expenditure
requirements; (ii) internally measure the Company's operating
performance; and (iii) determine the Company's incentive
compensation programs. In addition, the Company's credit facility
has certain covenants that use ratios utilizing this measure of
Adjusted EBITDA. The definition of EBITDA under the Company's credit
facility does not exclude the results of AmerCable. The Company has,
however, excluded the results of AmerCable when calculating Adjusted
EBITDA as AmerCable is not included in the Company's continuing
operations. The definition of EBITDA under the indenture governing
the 9 3/4% notes due 2012 also excludes certain items. Adjusted
EBITDA has not been prepared in accordance with accounting
principles generally accepted in the United States. Adjusted EBITDA
as presented by the Company may not be comparable to similarly
titled measures reported by other companies. Such supplementary
adjustments to EBITDA may not be in accordance with current SEC
practices or the rules and regulations adopted by the SEC that apply
to registration statements filed under the Securities Act and
periodic reports filed under the Securities Exchange Act of 1934.
Accordingly, the SEC may require that Adjusted EBITDA be presented
differently in filings made with the SEC than as presented in this
release, or not be presented at all. Adjusted EBITDA is not a
measure determined in accordance with GAAP and should not be
considered as an alternative to, or more meaningful than, net income
(loss) (as determined in accordance with GAAP), as a measure of the
Company's operating results or cash flows from operations (as
determined in accordance with GAAP). The reconciliation of net
income (loss) to EBITDA and Adjusted EBITDA is as follows:
One
Three Three Hundred Two Hundred
Months Months Year Eight Days Fifty-Seven Year
Ended Ended Ended Ended Days Ended Ended
January 3, December 31, January 3, April 18, December 31, December 31,
2004 2002 2004 2002 2002 2002
---------- ------------ ---------- ----------- ------------ ------------
PREDECESSOR SUCCESSOR COMBINED
----------- ------------ ------------
Reconciliation of net income (loss) to EBITDA and
Adjusted EBITDA (f) :
Net income (loss) .................................. $ 9,628 $ 4,647 $ 24,531 $ (5,757) $ 12,184 $ 6,427
Interest - Continuing operations................ 6,742 5,867 27,369 2,068 16,850 18,918
- Discontinued operations (g).......... -- -- -- -- 1,213 1,213
Taxes - Continuing operations................ 6,816 3,298 17,388 977 9,016 9,993
- Discontinued operations.............. -- -- -- -- (370) (370)
Depreciation and amortization
- Continuing operations................ 7,241 2,923 16,115 3,969 7,169 11,138
- Discontinued operations.............. - -- -- -- 318 318
---------- ------------ ---------- ----------- ------------ ------------
EBITDA 30,427 16,735 85,403 1,257 46,380 47,637
Debt extinguishment costs (d)....................... -- -- -- -- 7,579 7,579
AmerCable's EBITDA (h).............................. -- -- -- (1,220) (640) (1,860)
Merger transaction costs (c)........................ -- -- -- 9,319 -- 9,319
Cost of sales adjustment (i)........................ -- -- 1,402 -- 1,891 1,891
---------- ------------ ---------- ----------- ------------ ------------
Adjusted EBITDA..................................... $ 30,427 $ 16,735 $ 86,805 $ 9,356 $ 55,210 $ 64,566
========== ============ ========== =========== ============ ============
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(f) The 2003 results of operations include the results of Gentek
subsequent to its acquisition on August 29, 2003. A reconciliation
of Gentek's Adjusted EBITDA for the quarter and year ended January
3, 2004 is as follows:
Three
Months Year
Ended Ended
January 3, January 3,
2004 2004
---------- ----------
Reconciliation of Gentek's EBITDA / Adjusted EBITDA:
Net income ......................................... $ 1,968 $ 3,067
Interest ........................................... 377 436
Taxes .............................................. 865 1,644
Depreciation and amortization ...................... 3,235 3,720
---------- ----------
Gentek's EBITDA .................................... 6,445 8,867
Cost of sales adjustment (i) ....................... -- 1,402
---------- ----------
Gentek's Adjusted EBITDA ........................... $ 6,445 $ 10,269
========== ==========
(g) Includes accelerated amortization of $0.8 million of debt issuance
costs as a result of using the proceeds from the sale of AmerCable
to permanently reduce the Company's credit facility.
(h) AmerCable's EBITDA is calculated as its net income (loss) plus
interest, taxes, depreciation and amortization. For the periods
through the date of its sale, AmerCable's EBITDA is calculated as
follows:
January 1, January 1,
2002 April 19, 2002 2002
To To To
April 18, 2002 June 24, 2002 June 24, 2002
-------------- -------------- -------------
PREDECESSOR SUCCESSOR COMBINED
-------------- -------------- -------------
Reconciliation of AmerCable's net income (loss) to EBITDA:
Net income (loss) .................................... $ 359 $ (521) $ (162)
Interest - Discontinued operations (g)............ -- 1,213 1,213
Taxes - Continuing operations.................. 226 -- 226
- Discontinued operations................ -- (370) (370)
Depreciation and amortization
- Continuing operations.................. 635 -- 635
- Discontinued operations................ -- 318 318
-------------- -------------- -------------
AmerCable's EBITDA.................................... $ 1,220 $ 640 $ 1,860
============== ============== =============
(i) The cost of sales adjustments relate to inventory fair value
adjustments recorded at the time of the April 2002 merger
transaction totaling $1.9 million and at the time of the Gentek
acquisition totaling $1.4 million.
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