CONTACT
David A. Rawden
Executive Vice President & CFO
404/687-5905
ALLIED HOLDINGS REPORTS SECOND QUARTER RESULTS
DECATUR, GEORGIA, AUGUST 5, 2004 - ALLIED HOLDINGS, INC. (AMEX:AHI) TODAY
REPORTED RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2004. The Company
reported a net loss for the second quarter of $3.8 million, compared to net
income of $3.4 million in the second quarter of 2003, a decrease of $7.2
million. Basic and diluted loss per share in the second quarter of 2004 was
$0.43, versus basic earnings per share of $0.40 and diluted earnings per share
of $0.39 in the second quarter last year.
Revenues for the second quarter of 2004 were $236.6 million compared to revenues
of $230.1 million in the second quarter last year, an increase of $6.5 million
or 2.8 percent. Earnings before interest, taxes, depreciation and amortization,
and gains and losses on disposal of assets (Adjusted EBITDA) for the second
quarter of 2004 were $14.7 million compared to $19.4 million of Adjusted EBITDA
reported during the second quarter last year, a decline of $4.7 million.
Adjusted EBITDA is presented because management believes it provides useful
information to investors regarding the Company's ability to generate cash flows
that can be used to service debt and provide for capital expenditures. A
reconciliation of Adjusted EBITDA to net income (loss) is provided in the
financial schedules attached to this press release.
The decline in Adjusted EBITDA in the second quarter was primarily a result of
significantly higher fuel costs, higher benefits costs related to employees
covered by the Company's collective bargaining agreement with the Teamsters, the
financial impact of the terms of the previously disclosed General Motors'
contract renewal, higher repair and maintenance costs associated with a small
number of US and Canadian terminal operations and a $3.6 million charge to
expense as a result of an increase in self-insurance reserves, primarily caused
by higher than expected inflationary cost trends in the Company's reserves for
aged workers' compensation claims.
The Company increased its reserves for aged workers' compensation claims during
the second quarter by $5.9 million. The impact of this increase in reserves was
partially offset by progress in the general liability area. The net impact from
these two items was an increase in self-insurance reserves during the second
quarter of $3.6 million, or 3.9% of the Company's self-insurance reserves as of
June 30, 2004.
Increased costs during the second quarter were partially mitigated by higher
revenues, higher revenue per unit, improved driver and line haul productivity,
and ongoing reductions in losses associated with cargo claims as a result of the
Company's emphasis on damage-free delivery of customer products.
The increase in revenues in the second quarter this year compared to last year
was primarily the result of a 0.6 percent increase in vehicle deliveries and a
$2.30 increase in revenue per unit. Revenue per unit increased primarily due to
higher priced rail diversion traffic, longer length of haul and improved traffic
selection during the second quarter.
Allied's net loss in the quarter was primarily due to reduced investment income
earned on collateral held by Allied's captive insurance company, currency
exchange losses of $1.0 million related to a strengthening U.S. dollar
associated with the Company's operations in Canada and the $3.6 million increase
in self-insurance reserves.
Allied Holdings, Inc.
August 5, 2004
Commenting on the results, Hugh E. Sawyer, Allied's President and Chief
Executive Officer, said, "We are disappointed with the second quarter; however,
after a poor start to the year in January we were pleased that our core
operations showed signs of improvement in the second quarter versus the first
quarter of 2004. In fact, Adjusted EBITDA increased from $7.8 million in the
first quarter of 2004 to $14.7 million in the second quarter of 2004, which
includes a $3.6 million increase in reserves for self-insured claims."
Mr. Sawyer added, "The charge to expense as a result of the increase in
self-insurance reserves had a significant impact on our results in the second
quarter and we clearly need to do more to improve this area of our business. In
simple terms, we have focused our time, energy and financial resources on
programs to reduce future workers compensation costs by reducing current period
worker injuries and accidents. To date we have demonstrated progress in the
number of lost time days, which are down 14% versus last year. Indeed, since
2002 lost time days are down 23%. Given the overall progress in our current
period risk management initiatives we believe we have reached the point where we
can now allocate more time and investment toward the potential settlement of
certain workers' compensation cases that impact our reserves."
Mr. Sawyer added, "As I promised at year-end, risk management will continue to
be a top priority at Allied and we have targeted future settlements of
outstanding aged workers compensation claims and reductions in total risk
management expense as our primary objectives. However, the underlying changes in
culture, processes and accountability are challenging to achieve and the
quarterly and annual improvements may be uneven."
Mr. Sawyer concluded, "We recognize that it will take a sustained effort to
resolve our aged workers compensation claims and until these programs gain
traction we believe we have taken a reasonable approach to establishing
appropriate self-insurance reserves. We will continue to revisit the Company's
self-insurance reserves on a regular basis to confirm that our reserves are
adequately established."
Revenues for the six month period ended June 30, 2004 were $448.9 million,
versus $443.7 million for the same six month period in 2003, an increase of 1.2
percent. Allied experienced a net loss of $12.8 million in the first six months
of 2004, versus a net loss of $2.3 million in the same period of 2003. Adjusted
EBITDA for the first six months of 2004 was $22.5 million, versus $30.0 million
of Adjusted EBITDA in the first six months of 2003.
The Company's 2004 net loss for the six month period versus the prior year
period was increased by a $3.1 million reduction in investment income earned on
collateral held by Allied's captive insurance company, a $3.6 million increase
in self insurance reserves and a $1.1 million currency exchange loss related to
a strengthening U.S. dollar associated with the Company's operations in Canada.
The Company recorded a $2.4 million gain in currency exchange during the first
six months of 2003.
During the second quarter of 2004, the Company borrowed a net $6.4 million of
indebtedness and capital expenditures were $8.4 million. During the second
quarter of 2003, the Company paid down a net $3.8 million of indebtedness and
spent $2.5 million on capital expenditures. For the first six months of 2004,
the Company had net borrowings of $18.1 million of indebtedness and capital
expenditures were $13.3 million. That compares to net borrowings of $2.8 million
of indebtedness and capital expenditures of
Allied Holdings, Inc.
August 5, 2004
$8.4 million in the first half of 2003. Borrowings for the second quarter and
the first six months of 2004 were higher primarily as a result of lower Adjusted
EBITDA and increased capital expenditures.
The Company expects to remanufacture approximately 135 rigs during 2004 and has
adjusted its estimate of 2004 capital expenditures to a range of $24 to $28
million from previous estimates of $25 to $35 million.
Mr. Sawyer added, "I am not pleased with the erosion in our second quarter and
year-to-date Adjusted EBITDA and net income. However, the year is not yet over
and I expect Allied's second half performance to improve. There are signs of
progress in organic growth, driver productivity and cargo claims. Further, I am
pleased to report that we have agreed to retain our GM yard management service
operations in consideration for a negotiated price increase, which we believe
will restore the profitability of these services in the second half of 2004.
Additionally, we have a contractually mandated price increase which should have
a positive impact on our Ford book of business during the second half of 2004."
Mr. Sawyer concluded, "Despite progress in many areas of the Company, 2004 will
not be the profitable year we had originally hoped it might be. A poor start in
January, escalating fuel costs, uneven OEM production cycles and increased
workers' compensation reserves have made this another challenging transition
year of our turnaround. Nevertheless, your management team will continue to take
every appropriate step to close the gap in performance and to position the
Company for better results in the second half of 2004 and the years ahead."
ABOUT ALLIED HOLDINGS
Allied Holdings, Inc. is the parent company of several subsidiaries engaged in
providing distribution and transportation services of new and used vehicles to
the automotive industry. The services of Allied's subsidiaries span the finished
vehicle distribution continuum, and include car-hauling, intramodal transport,
inspection, accessorization, and dealer prep. Allied, through its subsidiaries,
is the leading company in North America specializing in the delivery of new and
used vehicles.
Statements in this press release that are not strictly historical are "forward
looking" statements. Such statements include, without limitations, any
statements containing the words "believe," "anticipate," "estimate," "expect,"
"intend," "plan," "seek," and similar expressions. Investors are cautioned that
such statements, including statements regarding the benefits resulting from the
renewal of the contract with the Teamsters in the U.S. and its affect on the
Company's revitalization effort and managements ability to react to external
factors and uncertainties; the Company's ability to maintain a stable operating
platform; the ability of the Company to execute key initiatives and the benefits
derived from such execution; the ability of the Company to increase sales growth
in AAG and Axis; the ability to ascertain opportunities to reduce costs and
expenses; profitability from our GM yard management services operations; the
expected increase in revenues from the Company's book of business with Ford; the
Company's risk management initiatives including efforts to reduce workers'
compensation reserve amounts, the amount of the Company's capital expenditures
related to rig remanufacturing and other matters; and the Company's ability to
secure new or additional sources of revenue, are subject to certain risks and
uncertainties that could cause actual results to differ materially. Without
limitation, these risks and uncertainties include economic recessions or
extended or more severe downturns in new vehicle production or sales, the highly
competitive nature of the automotive distribution industry, the ability of the
Company to comply with the terms of its current debt agreements, the ability of
the Company to obtain financing in the future and the Company's highly leveraged
Allied Holdings, Inc.
August 5, 2004
financial position. Investors are urged to carefully review and consider the
various disclosures made by the Company in this press release and in the
Company's reports filed with the Securities and Exchange Commission.
NOTE: THE INFORMATION IN THIS PRESS RELEASE WILL BE DISCUSSED BY MANAGEMENT
TODAY ON A CONFERENCE CALL THAT CAN BE ACCESSED AT THE FOLLOWING LINKS:
WWW.COMPANYBOARDROOM.COM OR WWW.ALLIEDHOLDINGS.COM BEGINNING AT 10:30 A.M. EST.
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2004 SECOND QUARTER EARNINGS RELEASE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED
JUNE 30,
--------------------------
2004 2003
--------- ---------
Revenues $ 236,616 $ 230,078
Net (loss) income $ (3,753) $ 3,372
(Loss) earnings per share:
Basic $ (0.43) $ 0.40
Diluted $ (0.43) $ 0.39
Weighted average common shares outstanding:
Basic 8,704 8,462
Diluted 8,704 8,700
FOR THE SIX MONTHS ENDED
JUNE 30,
--------- ---------
2004 2003
--------- ---------
Revenues $ 448,860 $ 443,670
Net loss $ (12,801) $ (2,292)
Loss per share:
Basic and diluted $ (1.48) $ (0.27)
Weighted average common shares outstanding:
Basic and diluted 8,663 8,436
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2004 2003
---------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,301 $ 2,148
Restricted cash and cash equivalents 26,763 26,267
Restricted investments 3,235 --
Receivables, net of allowance for doubtful accounts of
$2,173 and $3,575 respectively 59,846 55,110
Inventories 4,549 4,983
Deferred income taxes 16,608 20,213
Prepayments and other current assets 17,529 12,644
--------- ---------
Total current assets 133,831 121,365
--------- ---------
PROPERTY AND EQUIPMENT, NET 146,295 155,573
--------- ---------
GOODWILL, NET 89,173 90,203
--------- ---------
OTHER ASSETS:
Restricted cash and cash equivalents -- 55,817
Restricted investments 63,746 --
Other non-current assets 32,546 32,777
--------- ---------
Total other assets 96,292 88,594
--------- ---------
Total assets $ 465,591 $ 455,735
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 13,500 $ 16,374
Borrowings under revolving credit facility 29,555 --
Accounts and notes payable 40,464 34,272
Accrued liabilities 82,707 80,937
--------- ---------
Total current liabilities 166,226 131,583
--------- ---------
LONG-TERM DEBT, less current maturities 221,583 230,126
--------- ---------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 5,106 5,302
--------- ---------
DEFERRED INCOME TAXES 16,608 20,213
--------- ---------
OTHER LONG-TERM LIABILITIES 60,762 59,697
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value; 5,000 shares authorized, none
outstanding -- --
Common stock, no par value; 20,000 shares authorized, 8,869
and 8,764 shares outstanding at June 30, 2004
and December 31, 2003, respectively -- --
Additional paid-in capital 48,324 47,511
Treasury stock at cost, 139 shares at June 30, 2004
and December 31, 2003, respectively (707) (707)
Accumulated deficit (47,825) (35,024)
Accumulated other comprehensive loss, net of tax (4,486) (2,966)
--------- ---------
Total stockholders' equity (deficit) (4,694) 8,814
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 465,591 $ 455,735
========= =========
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
REVENUES $ 236,616 $ 230,078 $ 448,860 $ 443,670
--------- --------- --------- ---------
OPERATING EXPENSES:
Salaries, wages and fringe benefits 126,518 123,502 246,465 241,077
Operating supplies and expenses 41,513 35,968 78,559 73,148
Purchased transportation 28,588 25,837 54,494 50,550
Insurance and claims 11,041 11,477 20,204 20,834
Operating taxes and licenses 8,096 8,159 14,655 15,997
Depreciation and amortization 9,929 11,653 20,315 23,677
Rents 2,029 1,620 3,745 3,240
Communications and utilities 1,351 1,580 3,305 3,468
Other operating expenses 2,765 2,535 4,951 5,384
Loss (gain) on disposal of operating assets, net 127 195 (1,010) 459
--------- --------- --------- ---------
Total operating expenses 231,957 222,526 445,683 437,834
--------- --------- --------- ---------
Operating income 4,659 7,552 3,177 5,836
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (7,577) (7,373) (14,945) (14,754)
Investment income 131 3,007 188 3,333
Gain on early extinguishment of debt -- -- -- --
Foreign exchange (loss) gain, net (966) 1,430 (1,121) 2,448
Other, net -- -- (100) --
--------- --------- --------- ---------
(8,412) (2,936) (15,978) (8,973)
--------- --------- --------- ---------
(LOSS) INCOME BEFORE INCOME TAXES (3,753) 4,616 (12,801) (3,137)
INCOME TAX (PROVISION) BENEFIT -- (1,244) -- 845
--------- --------- --------- ---------
NET (LOSS) INCOME $ (3,753) $ 3,372 $ (12,801) $ (2,292)
========= ========= ========= =========
(LOSS) EARNINGS PER COMMON SHARE:
BASIC $ (0.43) $ 0.40 $ (1.48) $ (0.27)
========= ========= ========= =========
DILUTED $ (0.43) $ 0.39 $ (1.48) $ (0.27)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 8,704 8,462 8,663 8,436
========= ========= ========= =========
DILUTED 8,704 8,700 8,663 8,436
========= ========= ========= =========
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2004 SECOND QUARTER EARNINGS RELEASE
OPERATING DATA
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------- --------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
AAG, INCLUDING ALLIED HOLDINGS
REVENUES $230,005,000 $223,098,000 $435,672,000 $429,300,000
OPERATING INCOME $ 4,022,000 $ 6,559,000 $ 1,884,000 $ 4,172,000
OPERATING RATIO 98.25% 97.06% 99.57% 99.03%
VEHICLES DELIVERED 2,445,053 2,430,950 4,621,801 4,644,226
LOADS DELIVERED 317,311 316,308 600,945 604,321
VEHICLES PER LOAD 7.71 7.69 7.69 7.69
REVENUE PER VEHICLE $ 94.07 $ 91.77 $ 94.26 $ 92.44
PERCENT DAMAGE FREE DELIVERY 99.75% 99.70% 99.75% 99.70%
AVERAGE NUMBER OF ACTIVE RIGS 3,762 3,836 3,730 3,820
AVERAGE NUMBER OF EMPLOYEES:
DRIVERS 4,108 4,131 3,935 4,183
OTHERS 1,991 1,989 1,934 2,001
AXIS GROUP:
REVENUES $ 6,611,000 $ 6,980,000 $ 13,188,000 $ 14,370,000
OPERATING INCOME $ 637,000 $ 993,000 $ 1,293,000 $ 1,664,000
CERTAIN AMOUNTS IN THE INFORMATION PRESENTED ABOVE HAVE BEEN RECLASSIFIED TO
CONFORM TO THE CURRENT YEAR PRESENTATION.
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
2004 SECOND QUARTER EARNINGS RELEASE
NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA:
NET (LOSS) INCOME $ (3,753,000) $ 3,372,000 $(12,801,000) $ (2,292,000)
INCOME TAX EXPENSE (BENEFIT) -- 1,244,000 -- (845,000)
INTEREST EXPENSE 7,577,000 7,373,000 14,945,000 14,754,000
INVESTMENT INCOME (131,000) (3,007,000) (188,000) (3,333,000)
FOREIGN EXCHANGE (GAINS) LOSSES, NET 966,000 (1,430,000) 1,121,000 (2,448,000)
OTHER, NET -- -- 100,000 --
LOSS (GAIN) ON DISPOSAL OF OPERATING ASSETS 127,000 195,000 (1,010,000) 459,000
DEPRECIATION AND AMORTIZATION 9,929,000 11,653,000 20,315,000 23,677,000
------------ ------------ ------------ ------------
ADJUSTED EBITDA $ 14,715,000 $ 19,400,000 $ 22,482,000 $ 29,972,000
============ ============ ============ ============
Adjusted EBITDA is presented because management believes it provides useful
information to investors regarding the Company's ability to generate cash flows
that can be used to service debt and provide for capital expenditures. Adjusted
EBITDA is also a component of certain financial covenants in the Company's debt
agreements. The Company's net income is the closest measure in the Company's
financial statements prepared in accordance with Generally Accepted Accounting
Principles ("GAAP"), in terms of comparability to Adjusted EBITDA. As such, a
reconciliation of Adjusted EBITDA to the net income for the three and six months
ended June 30, 2004 and 2003 are provided above. Because Adjusted EBITDA is not
a measure determined in accordance with GAAP and is thus susceptible to varying
calculations, Adjusted EBITDA as presented may not be comparable to other
similarly titled measures used by other companies.