EXHIBIT 99.1
WOLVERINE TUBE, INC.
PRESS RELEASE
Contact: James E. Deason
Executive Vice President, Chief Financial Officer
(256) 580-3959
WOLVERINE TUBE ANNOUNCES THIRD QUARTER RESULTS
FREE CASH FLOW $18 MILLION IN THE QUARTER
HUNTSVILLE, ALABAMA, (OCTOBER 31, 2003) - Wolverine Tube, Inc. (NYSE:WLV) today
reported a net loss of $31.7 million or $2.58 per share for the third quarter
of 2003, compared with net income of $1.8 million, or $0.15 per diluted share
in the third quarter of 2002. The third quarter results included a $23.2
million goodwill impairment charge and a previously announced restructuring
charge of $6.4 million ($4.3 million after tax). Excluding these items, this
net loss would have been $4.3 million or $0.35 per share in the third quarter
of 2003. Net sales for the third quarter of 2003 were $144.1 million compared
with $134.8 million in the year-earlier period. Total pounds of product shipped
were 80.5 million pounds, compared to 77.2 million pounds in the prior year.
Gross profit for the third quarter of 2003 decreased to $6.2 million from $14.5
million in the third quarter of 2002. Cash flow from operations was $19.4
million in the third quarter of 2003, compared to $16.5 million in the prior
year. Free cash flow generated in the quarter was $17.8 million, compared to
$14.4 million in the third quarter of 2002. Free cash flow is defined as cash
flow from operations less capital expenditures. Results for the three and
nine-month periods ended September 28, 2003, are outlined in the accompanying
tables.
Commenting on the announcement, Dennis Horowitz, Chairman, President and Chief
Executive Officer said, "The third quarter financial results were disappointing
and to a large extent reflect issues that we have spoken about before,
including rising energy, healthcare and pension costs, a leaner product mix,
pricing pressures and the adverse impact of the strong Canadian dollar.
Exacerbating the impact of the aforementioned on operating profit was a
confluence of events which negatively affected manufacturing efficiencies,
including, lower than anticipated volumes at our Booneville facility, an
unsuccessful union organizing attempt at our Decatur facility and the east
coast blackout which affected our London, Ontario, Canada operations."
THIRD QUARTER RESULTS BY SEGMENT
Shipments of commercial products totaled 53.5 million pounds, a 5.7 percent
increase from last year's third quarter shipments of 50.6 million pounds. Net
sales were $106.1 million, up 5.1 percent from last year's third quarter sales
of $101.0 million. Gross profit was $5.9 million, compared to last year's third
quarter gross profit of $11.7 million. The decrease in gross profit reflects
the shift in mix from the higher value added technical and enhanced surface
tube to lower value smooth tube and the aforementioned costs and manufacturing
issues.
Shipments of wholesale products totaled 22.4 million pounds, a 7.2 percent
increase over last year's third quarter shipments of 20.9 million pounds. Net
sales were $28.5 million, up 15.7 percent from last year's third quarter sales
of $24.6 million. Gross profit was $38 thousand, compared to $1.9 million in
last year's third quarter. Again, the cost issues discussed above, along with
rapidly increasing copper prices
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Corporate Headquarters
200 Clinton Avenue West, Suite 1000
Huntsville, AL 35801
WOLVERINE TUBE, INC.
Page 2
and short supply of recycled materials, have impacted this quarter's operations
as compared to the third quarter of last year.
Shipments of rod, bar and other products totaled 4.6 million pounds, a 20.7
percent decrease from last year's third quarter shipments of 5.8 million
pounds. Net sales were $9.5 million, compared to $9.2 million in the third
quarter of 2002. Gross profit was $330 thousand, down from last year's $862
thousand. Gains in our European distribution facility were more than offset by
losses in North America in rod and bar, which were due to declines in volume
and price.
OUTLOOK
Commenting on the outlook for the Company, Horowitz said, "As we look forward,
we are finally beginning to sense an improvement in the industrial sector of
the North American economy. Also, the demand from our China facility remains
strong and our Portugal facility continues to expand, albeit at a rate and pace
below our expectations, reflecting the lackluster European economy.
Productivity and efficiencies at our facilities have returned to more normal
levels and we will benefit financially from the workforce reduction that was
previously announced." Horowitz continued, "We anticipate recording an
additional restructuring charge of $2.5 million to $5.0 million in future
quarters, for the Booneville closure. At the same time, while overall business
conditions are still challenging, early indications are that the fourth quarter
will show improvement over our recently completed third quarter, even given our
normal seasonality."
THIRD QUARTER CONFERENCE CALL
The Company will hold a conference call on October 31, 2003 at 9:30 a.m.
Central Time (10:30 a.m. ET) to discuss the contents of this release. Dial in
to the conference call line at (800) 311-9402 Access Code: Wolverine, ten
minutes prior to the scheduled start time. A link to the broadcast can be found
on the Company's website at www.wlv.com, in the Investor Relations section
under "Conference Calls" link. If you are unable to participate at this time, a
replay will be available through November 14, 2003, on this website or by
calling (800) 858-5309 (access code 40179, pass code 40179). Should you have
any problems accessing the call or the replay, please contact the Company at
(256) 890-0460.
The tables following the text of this press release provide financial details
that are included in this press release and that will be discussed on the
conference call. This includes a reconciliation of net cash provided (used) by
operating activities to free cash flow and net cash provided (used) by
operating activities to adjusted earnings before interests, taxes, depreciation
and amortization. This press release, including these financial details, is now
available on the Wolverine website at www.wlv.com in the Investor Relations
section under the heading Press Releases.
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WOLVERINE TUBE, INC.
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ABOUT WOLVERINE TUBE, INC.
Wolverine Tube, Inc. is a world-class quality partner, providing its customers
with copper and copper alloy tube, fabricated products, metal joining products
as well as copper and copper alloy rod, bar and other products. Internet
addresses: www.wlv.com and www.silvaloy.com.
Forward-looking statements in this press release are made pursuant to the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements use such words as "may", "will", "expect",
"believe", "plan", "anticipate" and other similar terminologies. This press
release contains forward-looking statements regarding factors affecting the
Company's expectations of future sales, earnings and cash flows. Such
statements are based on current expectations, estimates and projections about
the industry and markets in which the Company operates, as well as management's
beliefs and assumptions and information currently available. These
forward-looking statements are subject to various risks and uncertainties that
could cause actual results to differ materially from those stated or implied by
such forward-looking statements. The Company undertakes no obligation to
publicly release any revision of any forward-looking statements contained
herein to reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events. With respect to expectations of
future sales, earnings and cash flows, factors that could affect actual results
include, without limitation, the timing and magnitude of recovery from the
current economic downturn, costs and cost savings related to the Booneville
closing, the persistence of low levels of U.S. commercial construction
activity, the effect of currency fluctuations, competitive products and
pricing, environmental contingencies, regulatory pressures, labor cost
(including healthcare and pension expense), raw material costs, technology,
fuel and energy costs, the mix of geographic and product revenues, and any
inability to achieve or delays in achieving anticipated results from our cost
reduction initiatives (including our workforce reduction program), product and
process development activities, productivity and efficiency initiatives, global
expansion activities, market share penetration efforts and working capital
management programs. A discussion of risks and uncertainties which could cause
actual results to differ from those contained in the forward-looking
statements, can be found in the Company's Annual Report on Form 10-K for the
most recently ended fiscal year and reports filed from time to time with the
Securities and Exchange Commission.
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WLV Reports Third Quarter Results
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October 31, 2003
WOLVERINE TUBE, INC. FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three-month period ended Nine-month period ended
--------------------------- ---------------------------
In thousands, except per share data 9/28/2003 9/29/2002 9/28/2003 9/29/2002
--------- --------- --------- ---------
Pounds shipped 80,520 77,232 247,285 238,342
========= ========= ========= =========
Net sales $ 144,099 $ 134,817 $ 440,574 $ 424,907
Cost of goods sold 137,857 120,347 407,105 376,902
--------- --------- --------- ---------
Gross profit 6,242 14,470 33,469 48,005
Selling, general and administrative expenses 8,105 7,061 23,812 23,215
Restructuring charges 6,438 -- 6,438 --
--------- --------- --------- ---------
Income (loss) from operations (8,301) 7,409 3,219 24,790
Interest expense, net 5,269 5,620 15,739 14,921
Gain on extinguishment of debt -- (1,074) -- (1,074)
Amortization and other, net 244 455 1,278 1,057
Goodwill impairment 23,153 -- 23,153 --
--------- --------- --------- ---------
Income (loss) before income taxes (36,967) 2,408 (36,951) 9,886
Income tax provision (benefits) (5,245) 581 (5,966) 2,885
--------- --------- --------- ---------
Net income (loss) $ (31,722) $ 1,827 $ (30,985) $ 7,001
========= ========= ========= =========
Net income (loss) per common share - basic $ (2.58) $ 0.15 $ (2.52) $ 0.57
Net income (loss) per common share - diluted $ (2.58) $ 0.15 $ (2.52) $ 0.56
--------- --------- --------- ---------
Basic shares 12,279 12,258 12,273 12,219
Diluted shares 12,279 12,405 12,273 12,351
--------- --------- --------- ---------
SEGMENT INFORMATION (UNAUDITED)
Three-month period ended Nine-month period ended
----------------------------- -----------------------------
In thousands 9/28/2003 9/29/2002 9/28/2003 9/29/2002
--------- --------- --------- ---------
Pounds:
Commercial 53,469 50,564 167,723 162,088
Wholesale 22,415 20,899 65,897 59,516
Rod, bar, and other 4,636 5,769 13,665 16,738
-------- -------- -------- --------
Total pounds 80,520 77,232 247,285 238,342
======== ======== ======== ========
Net sales:
Commercial $106,098 $100,996 $332,099 $326,217
Wholesale 28,512 24,650 80,917 71,537
Rod, bar, and other 9,489 9,171 27,558 27,153
-------- -------- -------- --------
Total net sales $144,099 $134,817 $440,574 $424,907
======== ======== ======== ========
Gross Profit:
Commercial $ 5,874 $ 11,709 $ 31,749 $ 41,200
Wholesale 38 1,899 500 4,844
Rod, bar, and other 330 862 1,220 1,961
-------- -------- -------- --------
Total gross profit $ 6,242 $ 14,470 $ 33,469 $ 48,005
======== ======== ======== ========
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WLV Reports Third Quarter Results
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October 31, 2003
WOLVERINE TUBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In thousands 9/28/2003 12/31/2002
--------- ----------
Assets
Cash and cash equivalents $ 50,059 $ 53,920
Accounts receivable 87,469 65,212
Inventory 96,396 85,485
Other current assets 10,207 14,402
Property, plant and equipment, net 202,806 208,999
Other assets 101,034 122,702
-------- --------
Total assets $547,971 $550,720
======== ========
Liabilities and Stockholders' Equity
Accounts payables and other accrued expenses $ 65,776 $ 49,583
Short-term borrowings 1,574 1,217
Deferred income taxes 6,687 11,902
Pension liabilities 18,776 14,540
Long-term debt 255,451 255,712
Other liabilities 17,633 17,131
-------- --------
Total liabilities 365,897 350,085
-------- --------
Stockholders' equity 182,074 200,635
-------- --------
Total liabilities and stockholders' equity $547,971 $550,720
======== ========
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WLV Reports Third Quarter Results
Page 5
October 31, 2003
WOLVERINE TUBE, INC.
Reconciliation of Net Cash Provided (Used) by Operating
Activities to Free Cash Flow (1) (Unaudited)
Three-month period ended Nine-month period ended
--------------------------- ---------------------------
In thousands 09/28/03 09/29/02 09/28/03 09/29/02
-------- -------- -------- --------
Net income (loss) $(31,722) $ 1,827 $(30,985) $ 7,001
Depreciation and amortization 4,743 4,601 14,117 13,326
Changes in operating assets and liabilities 21,011 10,887 (9,855) 8,313
Goodwill impairment 23,153 -- 23,153 --
Non-cash portion of restructuring charge 5,077 -- 5,077 --
Other (2,834) (787) (3,717) (583)
-------- -------- -------- --------
Net cash provided (used) by operating activities 19,428 16,528 (2,210) 28,057
Additions to property, plant and equipment (1,676) (2,129) (4,330) (5,409)
-------- -------- -------- --------
Free cash flow $ 17,752 $ 14,399 $ (6,540) $ 22,648
======== ======== ======== ========
Reconciliation of Net Cash Provided (Used) by Operating
Activities to Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (2) (Unaudited)
Three-month period ended Nine-month period ended
---------------------------- ----------------------------
In thousands 9/28/2003 9/29/2002 9/28/2003 9/29/2002
--------- --------- --------- ---------
Net cash provided (used) by operating activities $ 19,428 $ 16,528 $ (2,210) $ 28,057
Changes in operating assets and liabilities (21,011) (10,887) 9,855 (8,313)
Other 2,834 787 3,717 583
Non-cash portion of restructuring charge (5,077) 0 (5,077) 0
Restructuring charges 6,438 -- 6,438 --
Interest expense, net 5,269 5,620 15,739 14,921
Income tax provision (benefit) (5,245) 581 (5,966) 2,885
-------- -------- -------- --------
Adjusted earnings before interest, taxes,
depreciation and amortization $ 2,636 $ 12,629 $ 22,496 $ 38,133
======== ======== ======== ========
(1) This statement reconciles net cash provided (used) by operating
activities to free cash flow, which is a non-GAAP financial measure.
Management believes free cash flow is a meaningful measure of
financial performance and liquidity and provides investors with a
measure of cash that may be used for debt service and for other
purposes.
(2) This statement reconciles net cash provided (used) by operating
activities to adjusted earnings before interest, taxes, depreciation
and amortization (Adjusted EBITDA), which is a non-GAAP financial
measure. Management believes Adjusted EBITDA is a meaningful measure
of liquidity and the Company's ability to service debt.
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