EXHIBIT 99.1
WOLVERINE TUBE, INC.
P R E S S R E L E A S E
Contact: James E. Deason
Executive Vice President
Chief Financial Officer
(256) 580-3500
WOLVERINE TUBE ANNOUNCES THIRD QUARTER EARNINGS
GROSS PROFIT IMPROVES NINETY-SEVEN PERCENT
HUNTSVILLE, ALABAMA, (OCTOBER 26, 2004) - Wolverine Tube, Inc. (NYSE:WLV) today
reports results for the third quarter and nine months ended October 3, 2004.
Loss from continuing operations for the third quarter was $2.5 million, or $0.17
per share. Included in the loss was $2.1 million of after-tax restructuring and
non-recurring charges related to the write-down of the Company's idled Roxboro
property held for sale and the premium paid and write-off of unamortized
financing fees and bond discount recorded in conjunction with the repurchase of
$14.5 million of our 10 1/2 percent notes. Excluding these restructuring and
non-recurring charges, loss from continuing operations would have been $400
thousand or $0.03 per share. Operating results were further negatively impacted
by $2.2 million after-tax, as a result of a sharp spike in copper prices,
especially in the latter part of the quarter, and the relative strengthening of
the Canadian dollar versus the U.S. dollar. This rise in copper prices resulted
in a loss on the Company's metal accounting and copper hedge position, which
should be offset in the fourth quarter if the COMEX copper price remains at or
below the current levels. Excluding the impact of the aforementioned metal
accounting, currency translation, restructuring and non-recurring items, income
from continuing operations would have been $1.8 million or $0.12 per share. In
the third quarter of 2003 loss from continuing operations was $31.7 million or
$2.58 per share. Excluding goodwill impairment charge and restructuring charge
in the third quarter of 2003, the loss was $4.3 million or $0.35 per share.
Total pounds of product shipped in the third quarter of 2004 were 84.5 million,
an increase of five percent compared to the 80.5 million pounds shipped in 2003.
Net sales were $200.0 million in 2004 compared to $144.1 million in the third
quarter of 2003. Average COMEX copper prices for the third quarter of 2004 were
$1.29 per pound compared to $0.80 per pound in the same quarter of the prior
year. Gross profit for the third quarter of 2004 increased to $12.3 million from
$6.2 million in the third quarter of 2003, a 97 percent increase. Results for
the first nine months of 2004 are outlined in the accompanying tables.
Commenting on the announcement, Dennis Horowitz, Chairman, President and Chief
Executive Officer said, "Strength in the overall industrial economy continues to
translate into increased demand for Wolverine products, which results in
significantly improved operating results. Our value-added commercial segment has
continued its growth and has benefited from Wolverine's broad product, customer
and geographic base. Additionally, our wholesale and rod & bar product segments
continue to improve. The impact of the sharp rise in copper prices on our copper
hedge and weakening U.S. dollar versus the Canadian dollar had a very
significant negative effect on reported third quarter earnings." Horowitz
continued, "However, excluding these impacts, third quarter earnings are in-line
with our previously announced expectations."
Plants at:
Altoona, PA o Ardmore, TN o Carrollton, TX o Decatur, AL o Jackson, TN
o Shawnee, OK o Warwick, RI o London, Ontario o Montreal, Quebec
o Shanghai, China o Esposende, Portugal
WOLVERINE TUBE, INC.
Page 2
THIRD QUARTER RESULTS BY SEGMENT
Shipments of commercial products totaled 58.4 million pounds, a 9.2 percent
increase from last year's third quarter shipments of 53.5 million pounds. Net
sales were $147.0 million, up 38.6 percent from last year's third quarter sales
of $106.1 million. Gross profit was $11.3 million, up 92.2 percent from last
year's third quarter gross profit of $5.9 million. The third quarter has
benefited from improvements in the HVAC and consumer appliance markets,
continued improvement in commercial construction and the continuation of
favorable outsourcing trends by our customers to our fabricated products
facilities.
Shipments of wholesale products totaled 20.5 million pounds, compared to last
year's third quarter shipments of 22.4 million pounds. This decrease reflects
slower demand due to the hurricanes that impacted Florida, our largest
refrigeration tube market and cautious purchasing by distributors and
wholesalers due to the erratic copper market. Net sales were $38.2 million, up
34.1 percent from last year's third quarter sales of $28.5 million. Gross profit
was $198 thousand, as compared to last year's third quarter of $38 thousand,
even including the negative impact of the metal accounting and hedge loss.
Approximately 60 percent of the hedge loss is allocated to the wholesale product
segment.
Shipments of rod, bar and other products totaled 5.6 million pounds, a 20
percent increase from last year's third quarter shipments of 4.6 million pounds.
Net sales were $14.8 million, up 55.8 percent from the third quarter of the
year-earlier period. Gross profit was $835 thousand, up from last year's $330
thousand. Increased volumes and pricing were the major drivers of improvement.
OUTLOOK
Commenting on the outlook for the Company Horowitz said, "Wolverine benefited
from its broad product, customer and geographic base in the third quarter, and
we expect those benefits to continue in this fourth quarter. Demand for
industrial tube, on the whole should be at acceptable levels. We are
particularly pleased with the growth in our fabricated products business, as
more and more of our OEM customers are outsourcing to Wolverine". Horowitz
continued, "In total, on a seasonally adjusted basis, technical tube demand is
expected to be stronger quarter over quarter. Technical tube demand in the
United States and Europe is at anticipated levels. China is lower, to some
extent reflecting a slowing in that economy, and increased competition in lower
technology products. The fundamentals of our wholesale and rod & bar businesses
are unchanged".
"In terms of fourth quarter outlook," added Horowitz, "earnings from continuing
operations and before metal and currency will reflect the normal seasonality of
our business. Additionally, if copper remains at today's prices or lower, we
will recapture, at a minimum, the hedge loss realized in the third quarter".
"Finally", Horowitz stated, "we remain comfortable with our previous expectation
to generate positive free cash flow for the year, assuming no significant rise
in raw materials cost."
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WOLVERINE TUBE, INC.
Page 3
THIRD QUARTER CONFERENCE CALL
The Company will hold a conference call this morning 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 http://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 9, 2004, on this website or by calling (877)
919-4059 (pass code: 43136411). 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 income from continuing
operations to earnings before interests, taxes, depreciation and amortization.
This press release, including these financial details, is now available on the
Wolverine website at http://www.wlv.com in the Investor Relations section under
the heading Press Releases.
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 & other products. Internet addresses
http://www.wlv.com and http://www.silvaloy.com.
FORWARD-LOOKING STATEMENTS
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 effect of currency fluctuations, raw material
costs and our ability to effectively hedge these costs, fluctuation in the COMEX
copper price, the levels of U.S. commercial construction activity, competitive
products and pricing, environmental contingencies, regulatory pressures,
technology, the mix of geographic and product revenues, product and process
development activities, productivity and efficiency initiatives, global
expansion activities including our Mexico expansion and unanticipated costs or
delays in the ramp-up of production and the level of future customer demand in
the Mexican market, market share penetration efforts, working capital management
programs, completion of anticipated sale of the Roxboro facility and capital
spending, including the investment in Mexico. 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.
-- TABLES TO FOLLOW --
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WLV REPORTS THIRD QUARTER RESULTS
PAGE 4
OCTOBER 26, 2004
WOLVERINE TUBE, INC. FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
IN THOUSANDS, EXCEPT PER SHARE DATA 10/03/04 09/28/03 10/03/04 09/28/03
-------------------------- --------------------------
Pounds shipped 84,477 80,520 269,181 247,285
========================================================================================================
Net sales $200,038 $144,099 $619,923 $440,574
Cost of goods sold 187,713 137,857 568,532 407,105
- --------------------------------------------------------------------------------------------------------
Gross profit 12,325 6,242 51,391 33,469
Selling, general and administrative expenses 9,195 8,105 28,694 23,812
Restructuring charges 862 6,438 1,727 6,438
- --------------------------------------------------------------------------------------------------------
Operating income/(loss)from continuing operations 2,268 (8,301) 20,970 3,219
Interest expense, net 4,922 5,269 15,752 15,739
Amortization and other, net (22) 244 1,115 1,278
Loss on extinguishment of debt 2,372 0 3,009 0
Goodwill impairment 0 23,153 0 23,153
- --------------------------------------------------------------------------------------------------------
Income/(loss) from continuing operations before taxes (5,004) (36,967) 1,094 (36,951)
Income tax provision/(benefit) (2,492) (5,245) (1,062) (5,966)
- --------------------------------------------------------------------------------------------------------
Income/(loss) from continuing operations (2,512) (31,722) 2,156 (30,985)
Loss from discontinued operations, net of tax (73) 0 (325) 0
- --------------------------------------------------------------------------------------------------------
Net income/(loss) $ (2,585) $(31,722) $ 1,831 $(30,985)
========================================================================================================
- --------------------------------------------------------------------------------------------------------
Basic earnings per share:
Continuing operations $ (0.17) $ (2.58) $ 0.16 $ (2.52)
Discontinued operations 0.00 0.00 (0.02) 0.00
- --------------------------------------------------------------------------------------------------------
Net income/(loss) $ (0.17) $ (2.58) $ 0.14 $ (2.52)
- ---------------------------------------------------------------------------------------------------------
Diluted earnings per share:
Continuing operations $ (0.17) $ (2.58) $ 0.16 $ (2.52)
Discontinued operations 0.00 0.00 (0.02) 0.00
- --------------------------------------------------------------------------------------------------------
Net income/(loss) $ (0.17) $ (2.58) $ 0.14 $ (2.52)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Basic shares outstanding 14,835 12,279 13,246 12,273
Diluted shares outstanding 15,293 12,449 13,577 12,435
- --------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION (UNAUDITED)
Three Months Ended Nine Months Ended
IN THOUSANDS 10/03/04 09/28/03 10/03/04 09/28/03
-------------------------- --------------------------
Pounds:
Commercial 58,404 53,469 181,776 167,723
Wholesale 20,510 22,415 69,327 65,897
Rod, bar and other 5,563 4,636 18,078 13,665
- --------------------------------------------------------------------------------------------------------
Total pounds 84,477 80,520 269,181 247,285
========================================================================================================
Net sales:
Commercial $147,020 $106,098 $446,971 $332,099
Wholesale 38,231 28,512 126,914 80,917
Rod, bar and other 14,787 9,489 46,038 27,558
- --------------------------------------------------------------------------------------------------------
Total net sales $200,038 $144,099 $619,923 $440,574
========================================================================================================
Gross profit:
Commercial $ 11,292 $ 5,874 $ 42,290 $ 31,749
Wholesale 198 38 5,446 500
Rod, bar and other 835 330 3,655 1,220
- --------------------------------------------------------------------------------------------------------
Total gross profit $ 12,325 $ 6,242 $ 51,391 $ 33,469
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WLV REPORTS THIRD QUARTER RESULTS
PAGE 5
OCTOBER 26, 2004
WOLVERINE TUBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
IN THOUSANDS 10/3/04 9/28/03 12/31/03
- ------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 34,827 $ 50,059 $ 46,089
Accounts receivable 108,555 87,469 86,825
Inventory 126,572 96,396 108,005
Other current assets 12,702 10,207 12,782
Property, plant and equipment, net 192,992 202,806 198,542
Other assets 97,508 101,034 101,015
- ------------------------------------------------------------------------------------------------
Total assets $573,156 $547,971 $553,258
- ------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Accounts payable and other accrued expenses $ 88,327 $ 65,776 $ 77,290
Short-term borrowings 659 1,574 1,502
Deferred income taxes 0 6,687 359
Pension liabilities 24,968 18,776 22,316
Long-term debt 235,970 255,451 254,284
Other liabilities 18,678 17,633 18,156
- ------------------------------------------------------------------------------------------------
Total liabilities 368,602 365,897 373,907
- ------------------------------------------------------------------------------------------------
Stockholders' equity 204,554 182,074 179,351
- ------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $573,156 $547,971 $553,258
- ------------------------------------------------------------------------------------------------
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATIONS (1) (UNAUDITED)
10/3/04 9/28/03 10/3/04 9/28/03
--------------------- ------------ ------------
IN THOUSANDS
Income/(loss) from continuing operations ($2,512) ($31,722) $ 2,156 ($30,985)
Interest expense, net 4,922 5,269 15,752 15,739
Income tax/(benefit) (2,492) (5,245) (1,062) (5,966)
Depreciation and amortization 4,122 4,743 13,155 14,117
Goodwill impairment 0 23,153 0 23,153
- ------------------------------------------------------------------------------------------------ ------------ ------------
Earnings/(loss) before interest, taxes, depreciation and amortization $4,040 ($ 3,802) $30,001 $16,058
================================================================================================ ============ ============
(1) This statement reconciles income from continuing operations to earnings
before interest, taxes, depreciation and amortization (EBITDA), which is a
non-GAAP financial measure. Management believes EBITDA is a meaningful measure
of financial performance and the Company's ability to service debt.