EXHIBIT 99.1
WOLVERINE TUBE, INC.
P R E S S R E L E A S E
Contact: Thomas B. Sabol
Senior Vice President
Chief Financial Officer
(256) 580-3500
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WOLVERINE TUBE REPORTS FIRST QUARTER RESULTS
COMPANY SECURES $40 MILLION OF ADDITIONAL LIQUIDITY
HUNTSVILLE, ALABAMA, (APRIL 29, 2005) - Wolverine Tube, Inc. (NYSE:WLV) today
reported results for the first quarter ended April 3, 2005. Net loss for the
first quarter of 2005 was $2.5 million or $0.17 per share, versus net income of
$1.4 million, or $0.11 per diluted share ($1.8 million or $0.14 per diluted
share excluding restructuring charges) in the first quarter of 2004. Included in
this net loss was a $521 thousand tax charge related to the repatriation of
$10.2 million from China. Excluding this charge, the net loss would have been
$2.0 million or $0.13 per share. Net sales for the first quarter of 2005 were
$213.5 million, a 3.7 percent increase over the first quarter of 2004. The
increase in net sales is primarily attributable to the rise in COMEX copper
prices, partly offset by reduced volumes. COMEX copper prices averaged $1.47 per
pound in the first quarter of 2005 compared to $1.23 per pound in the first
quarter of 2004. Total pounds of product shipped were 83.8 million pounds, a
decrease of 10.3 percent from last year's first quarter. Gross profit for the
first quarter of 2005 was to $10.1 million as compared to $17.5 million in the
first quarter of 2004.
Commenting on the results, Dennis Horowitz, Chairman and Chief Executive Officer
said, "The first quarter of 2005 was challenging and disappointing. The slowing
pace of economic growth in the quarter, coupled with three months of declining
durable goods orders, impacted not only Wolverine's but other industrial
companies' performance. In addition, specific to our industry, were erratic and
continually rising copper prices during the quarter. This significantly lowered
demand and adversely impacted pricing in our wholesale products business both in
the U.S. and in Canada. At the same time," Horowitz continued, "our industrial
tube business and to a lesser extent our fabricated products business were
negatively impacted by uncertainty of Original Equipment Manufacturers (OEM)
build schedules related to the approaching 13 SEER transition, as well as the
slow start to the 2005 cooling season and inventory overhang from 2004. On the
positive side, demand for technical tube remains strong as our customer base
continues to broaden both geographically and in terms of adoption of our newest
products. Also, the transition to our Mexico facility continues to go well in
terms of both timing and customer acceptance."
"Further," Horowitz stated, "our unionized employees in the Montreal facility
chose to reject the Company's contract proposal which had a negative effect on
our financial performance in the first quarter, as we experienced work slow
downs during the period of contract negotiation preceding the strike. We
continue to seek resolution to this issue, but at this time have not been able
to come to terms that are satisfactory to the employees while at the same time
allowing Wolverine to remain competitive in a very competitive global market. In
addition, in reaction to the overall slowing demand, we reduced production
schedules and brought down Wolverine produced inventories to improve cash flow
and prevent excessive inventory build-up. These actions, while appropriate,
negatively affected our earnings since we were unable to absorb fixed costs into
inventory," concluded Horowitz.
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FIRST QUARTER RESULTS BY SEGMENT
Shipments of commercial products totaled 55.5 million pounds, a 9.2 percent
decrease from the first quarter of 2004 of 61.1 million pounds. Net sales
increased 5.6 percent to $153.1 million. Gross profit for commercial products
decreased to $9.6 million, a 35.5 percent decline. This reflects lower volumes,
resulting in under absorption of fixed costs. Also, to a lesser extent, the
Canadian dollar strengthened against the U.S. dollar which reduced gross profit.
Shipments of wholesale products totaled 23.4 million pounds, as compared to 25.9
million pounds in the first quarter of 2004. Net sales were $45.6 million in the
first quarter of both 2005 and 2004. Gross profit was a loss of $124 thousand in
the first quarter of 2005 compared to a profit of $1.7 million in the first
quarter of the prior year. The substantial decline is principally due to very
weak pricing in the U.S. and Canada as well as lower demand in this product
segment.
Shipments of rod, bar and other totaled 4.9 million pounds, a 23.0 percent
decrease from the first quarter of 2004 of 6.4 million pounds. Gross profit was
approximately $565 thousand as compared to $836 thousand last year. Montreal's
challenges in the quarter offset gains from the European distribution
operations.
LIQUIDITY
Commenting on liquidity, Horowitz stated, "Our cash position was $15.3 million
and outstanding borrowings under our revolving credit facility were $7.5
million. As a consequence of the continuing rise in copper price and the impact
this has on working capital needs, we repatriated $10.2 million from our China
operations, which was primarily used to pay down borrowings on the revolving
credit facility. Also, to assure ourselves of adequate liquidity, we have
recently completed a $45.0 million accounts receivable securitization facility
and have amended and restated our revolving credit facility. The net affect of
the above is that we now have borrowing capacity of up to $80.0 million versus
$37.5 million at the end of 2004." Horowitz continued, "We are pleased to have
completed these transactions and believe that access to additional liquidity is
a strong and very positive step for our Company."
OUTLOOK
Commenting on the outlook for the Company Horowitz said, "As we look to the
second quarter and balance of 2005, we anticipate a recovery in the wholesale
tube market on falling copper prices and as customers begin to hold more normal
levels of inventory. We believe industrial tube demand will improve as OEMs
begin to ramp-up for the transition to 13 SEER units. We will enjoy continued
growth in fabricated products as OEMs further pursue outsourcing initiatives. We
anticipate that technical tube demand will remain strong on a global basis.
While these demand factors are critical to our success, we must, at the same
time, sharpen our focus on internal improvements including operating
efficiencies, yield, productivity and cost. We are actively reviewing a number
of opportunities in these areas."
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FIRST 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
the "Conference Calls" link. If you are unable to participate at this time, a
replay will be available through May 29, 2005 on this website or by calling
(877) 919-4059 (pass code: 71067292). 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", "should", "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 about the Company's business and other 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
fluctuation; energy and raw material costs and our ability to effectively hedge
these costs; the duration and financial impact of the Montreal strike;
fluctuation in the COMEX copper price; the levels of North American
commercial construction activity; continuation of historical trends in customer
inventory levels and expected demand for our products; outsourcing levels of
OEMs; the effect of the 13 SEER regulations on product demand and the
seasonality of our business; unanticipated costs or delays in the continued
ramp-up of production and the ability to sustain cost efficiencies at our
Monterrey, Mexico facility; the level of customer demand in the Mexican market;
our ability to realize the expected benefits of the Chinese distribution
agreement; competitive products and pricing; environmental contingencies;
regulatory matters; changes in technology and our ability to maintain
technologically competitive products; the mix of geographic and product
revenues; pension and healthcare costs; the success of our product and process
development activities, productivity and efficiency initiatives, global
expansion activities, market share penetration efforts, working capital
management programs and capital spending initiatives and our ability to continue
de-leveraging our balance sheet. 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 --
WLV Reports 1st Quarter Results
Page 5
April 29, 2005
WOLVERINE TUBE, INC. FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three-month period ended
In thousands, except per share data 4/3/2005 4/4/2004
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Pounds shipped 83,759 93,352
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Net sales $ 213,482 $ 205,805
Cost of goods sold 203,422 188,320
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Gross profit 10,060 17,485
Selling, general and administrative expenses 8,308 9,437
Restructuring charges (benefits) (82) 571
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Operating income 1,834 7,477
Interest expense, net 5,322 5,070
Amortization and other, net 12 668
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Income (loss) before income taxes (3,500) 1,739
Income tax provision (benefits) (1,018) 371
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Net income (loss) $ (2,482) $ 1,368
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Earnings Per Share:
Basic $ (0.17) $ 0.11
Diluted $ (0.17) $ 0.11
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Basic shares 14,965 12,289
Diluted shares 15,323 12,534
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SEGMENT INFORMATION (UNAUDITED)
Three-month period ended
In thousands 4/3/2005 4/4/2004
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Pounds:
Commercial 55,455 61,070
Wholesale 23,411 25,932
Rod, bar, and other 4,893 6,350
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Total pounds 83,759 93,352
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Net sales:
Commercial $ 153,070 $ 144,926
Wholesale 45,581 45,574
Rod, bar, and other 14,831 15,305
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Total net sales $ 213,482 $ 205,805
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Gross Profit:
Commercial $ 9,619 $ 14,903
Wholesale (124) 1,746
Rod, bar, and other 565 836
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Total gross profit $ 10,060 $ 17,485
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-MORE-
WLV Reports 1st Quarter Results
Page 6
April 29, 2005
WOLVERINE TUBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
In thousands 4/3/2005 4/4/2004 12/31/2004
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Assets:
Cash and cash equivalents $ 15,263 $ 31,606 $ 35,017
Accounts receivable 114,609 119,101 93,964
Inventory 157,702 118,361 151,979
Other current assets 10,557 10,893 6,905
Deferred taxes, current 7,194 5,574 7,707
Property, plant and equipment, net 193,507 194,904 194,966
Other assets 96,646 100,956 96,920
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Total assets $595,478 $581,395 $587,458
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Liabilities and Stockholders' Equity:
Accounts payables and other accrued expenses $ 96,119 $ 81,872 $ 92,388
Short-term borrowings 321 1,315 1,219
Deferred income taxes -- 538 --
Pension liabilities 29,366 23,307 27,915
Long-term debt 242,401 274,474 237,022
Other liabilities 19,648 18,109 19,412
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Total liabilities 387,855 399,615 377,956
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Stockholders' equity 207,623 181,780 209,502
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Total liabilities and stockholders' equity $595,478 $581,395 $587,458
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This press release contains, and our conference call will include, references to
earning's before interest, taxes, depreciation and amortization (EBITDA), a
non-GAAP financial measure. The following table provides a reconciliation of
EBITDA to income from continuing operations. Management believes EBITDA is a
meaningful measure of liquidity and the Company's ability to service debt
because it provides a measure of cash available for such purposes. Additionally,
management provides an EBITDA measure so that investors will have the same
financial information that management uses with the belief that it will assist
investors in properly assessing the Company's performance on a year-over-year
and quarter-over-quarter basis.
RECONCILIATION OF NET INCOME (LOSS) TO EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION AND AMORIZATION (UNAUDITED)
Three-month period ended
In thousands 4/3/2005 4/4/2004
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Net Income (loss) ($2,482) $ 1,368
Depreciation and amortization 4,293 4,668
Interest expense, net 5,322 5,070
Income tax provision (benefit) (1,018) 371
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Earnings before interest, taxes, depreciation and amortization $6,115 $11,477
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