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
WOLVERINE TUBE REPORTS SECOND QUARTER LOSS
RECORD HIGH COPPER PRICES, SLOWER SEASONAL DEMAND
AND MONTREAL STRIKE IMPACT RESULTS
HUNTSVILLE, ALABAMA, (AUGUST 2, 2005) - Wolverine Tube, Inc. (NYSE:WLV) today
reported results for the second quarter and six months ended July 3, 2005. The
net loss for the second quarter of 2005 was $5.7 million or $0.38 per diluted
share, versus income from continuing operations of $3.3 million, or $0.25 per
diluted share in the second quarter of 2004. Net sales for the second quarter of
2005 were $196.3 million, an 8.3 percent decrease over the second quarter 2004
net sales of $214.1 million. The decrease in net sales is primarily attributable
to the impact of record high copper prices on our wholesale segment, sharply
reduced demand from certain of our HVAC customers, and the impact of the strike
at the Company's Montreal facility. Total pounds of product shipped during the
quarter were 74.0 million pounds, a decrease of 19.0 percent from last year's
second quarter of 91.4 million pounds. COMEX copper prices averaged $1.53 per
pound in the second quarter of 2005 as compared to $1.23 per pound in the
comparable quarter of 2004. Gross profit for the second quarter of 2005 was $5.7
million as compared to gross profit of $21.6 million in the second quarter of
2004. Results for the first half of 2005 are outlined in the accompanying
tables.
Commenting on the results, Dennis Horowitz, Chairman and Chief Executive Officer
said, "The second quarter of 2005 was challenging and disappointing for
Wolverine. Indeed, our pounds shipped during the quarter were the lowest we have
experienced in a second quarter since at least 1993. The Company and its
competitors continue to be impacted by the negative effects of record high
copper prices. This is especially true in our wholesale products segment, as
record high copper prices reduce demand and profitability, and in some cases
cause customers to substitute alternative materials for copper, principally in
residential construction. In our commercial products segment, unseasonably cool
weather for most of the second quarter impacted demand from a number of our HVAC
customers. In addition, lower demand for certain HVAC products made many of
these customers cautious regarding the timing of changeovers to production of 13
SEER units."
Further, Mr. Horowitz added, "Although we have settled the strike by our
unionized employees at our Montreal, Quebec facility, and while these employees
began to ramp up production in June, the approximate net effect on operating
income from the two-month strike was in excess of $3 million in the quarter. I
applaud the efforts of our non-unionized employees at Montreal and our employees
at other facilities that were able to offset a portion of the impact of the
strike, especially in its first month."
Horowitz continued, "While the compound effect of record high copper prices,
significantly reduced HVAC related product volumes and the Montreal strike
resulted in unsatisfactory financial performance in the quarter, we have made
progress in a number of business areas. Our new Monterrey, Mexico facility is
now shipping a range of commercial products to our customers, demand for
increasingly complex fabricated product assemblies and sub-assemblies continues
to grow and we have seen further market penetration of our commercial products
on an international basis. Importantly, we have reduced inventories and enhanced
our liquidity position. However, due to the fixed cost nature of our business,
the Company was unable to mitigate the impact of reduced volumes, high copper
prices and the impact of the Montreal strike."
Page 1 of 4
WOLVERINE TUBE, INC.
SECOND QUARTER RESULTS BY SEGMENT
Shipments of commercial products for the second quarter totaled 52.3 million
pounds, a 16.1 percent decrease from 62.3 million pounds in the second quarter
of 2004. Net sales of commercial products decreased 5.2 percent to $146.9
million, from $155.0 million in the second quarter 2004. Gross profit for
commercial products decreased to $5.5 million from $16.1 million in the second
quarter 2004.
Shipments of wholesale products totaled 19.4 million pounds, as compared to 22.9
million pounds in the second quarter of 2004, a decrease of 15.3 percent. Net
sales were $38.4 million in the second quarter of 2005 and $43.1 million in the
second quarter of 2004, a 10.9 percent decrease. Gross profit was a negative
$0.2 million in the second quarter of 2005 as compared to $3.5 million in the
second quarter of 2004.
Shipments of rod, bar and other totaled 2.3 million pounds, a 62.9 percent
decrease from the second quarter of 2004 of 6.2 million pounds. The Montreal
facility is the Company's only rod and bar facility. Net sales in the second
quarter 2005 were $11.0 million, as compared to $15.9 million in the same period
in 2004, a 30.8 percent decrease. Gross profit decreased to $0.4 million in the
second quarter 2005 from $2.0 million in the second quarter 2004.
LIQUIDITY
Addressing liquidity, Tom Sabol, Senior Vice President and Chief Financial
Officer stated, "Based on sequential improvement in working capital management
primarily through reduced inventory levels, we believe our cash and liquidity
positions continue to be stable and sufficient. The utilization of our
receivables sale facility at the end of the second quarter was only $4.5
million as compared to the $12.0 million utilized as of April 28, 2005 when we
entered into the facility. The Company also had no outstanding borrowings under
its secured revolving credit facility at the end of the second quarter versus
$7.5 million outstanding as of the end of our first quarter. The combined
additional availability under these agreements currently totals in excess of
$40 million." At the same time, Sabol continued, "Due to our weaker than
anticipated operating results, we would not have satisfied one of our financial
covenants at the end of the quarter on our existing financing facilities.
Working with our commercial banks, we amended our agreements and the Company is
currently in compliance with all financial covenants."
OUTLOOK
Commenting on the outlook for the Company Horowitz said, "As we look to the
remainder of the year, we anticipate a seasonably adjusted strengthening of
demand across most of our business segments for the second half of the year.
Within our commercial products segment our technical tube business remains solid
and we expect this to continue. For those components of this segment selling to
certain HVAC customers, we expect the current warm weather to spur demand as
should firming 13 SEER build schedules which inevitably must be in place by year
end. Our wholesale products segment should rebound when copper prices fall. Many
experts continue to predict that this will be the case by year end. Finally,
with our Montreal facility ramping up, we expect a stronger second half of the
year in our rod and bar segment."
Page 2 of 4
SECOND QUARTER CONFERENCE CALL
The Company will hold a conference call this morning at 9:30 a.m. Central Time
(10:30 a.m. Eastern Time) 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 August 30, 2005 on our website or by calling
(877) 919-4059 (U.S.) or (334) 323-7226 (International) (pass code: 83360006).
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 and other
matters concerning the Company's business, operating results and financial
condition. 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 and other matters concerning the Company's business, operating
results and financial condition, 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; 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; unanticipated weather conditions and its
effect on product demand; unanticipated cost or delays in the continued ramp-up
of production and the return of business at our Montreal facility; 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
Page 3 of 4
Monterrey, Mexico facility; the level of customer demand in the Mexican market;
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-levering 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 --
Page 4 of 4
WLV Reports Second Quarter Results
Page 5
August 2, 2005
WOLVERINE TUBE, INC. FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<Table>
<Caption>
Three-month period ended Six-month period ended
In thousands, except per share data 7/3/2005 7/4/2004 7/3/2005 7/4/2004
---------- ---------- ---------- ----------
Pounds shipped 73,982 91,352 157,741 184,704
========== ========== ========== ==========
Net sales $ 196,321 $ 214,080 $ 409,803 $ 419,885
Cost of goods sold 190,667 192,499 394,089 380,819
---------- ---------- ---------- ----------
Gross profit 5,654 21,581 15,714 39,066
Selling, general and administrative expenses 8,644 10,062 16,952 19,499
Restructuring charges 136 294 54 865
---------- ---------- ---------- ----------
Operating income (loss) from continuing operations (3,126) 11,225 (1,292) 18,702
Interest expense, net 5,244 5,760 10,566 10,830
Amortization and other, net 430 1,106 442 1,774
---------- ---------- ---------- ----------
Income (loss) from continuing operations before income taxes (8,800) 4,359 (12,300) 6,098
Income tax provision (benefits) (3,118) 1,059 (4,136) 1,430
---------- ---------- ---------- ----------
Income (loss) from continuing operations (5,682) 3,300 (8,164) 4,668
Earnings (loss) from discontinued operations, net of income tax -- (252) -- (252)
---------- ---------- ---------- ----------
Net income (loss) $ (5,682) $ 3,048 $ (8,164) $ 4,416
========== ========== ========== ==========
Basic earnings per share:
Income (loss) from continuing operations $ (0.38) $ 0.26 $ (0.54) $ 0.37
Loss from discontinued operations -- (0.02) -- (0.02)
---------- ---------- ---------- ----------
Net income (loss) $ (0.38) $ 0.24 $ (0.54) $ 0.35
Diluted earnings per share:
Income (loss) from continuing operations $ (0.38) $ 0.25 $ (0.54) $ 0.37
Loss from discontinued operations -- $ (0.02) -- $ (0.02)
---------- ---------- ---------- ----------
Net income (loss) $ (0.38) $ 0.23 $ (0.54) $ 0.35
---------- ---------- ---------- ----------
Basic shares 15,051 12,648 15,014 12,469
Diluted shares 15,051 13,063 15,014 12,764
---------- ---------- ---------- ----------
</Table>
SEGMENT INFORMATION (UNAUDITED)
<Table>
<Caption>
Three-month period ended Six-month period ended
In thousands 7/3/2005 7/4/2004 7/3/2005 7/4/2004
---------- ---------- ---------- ----------
Pounds:
Commercial 52,267 62,302 107,722 123,372
Wholesale 19,371 22,886 42,782 48,817
Rod, bar, and other 2,344 6,164 7,237 12,515
---------- ---------- ---------- ----------
Total pounds 73,982 91,352 157,741 184,704
========== ========== ========== ==========
Net sales:
Commercial $ 146,881 $ 155,024 $ 299,951 $ 299,951
Wholesale 38,446 43,109 84,027 88,683
Rod, bar, and other 10,994 15,947 25,825 31,251
---------- ---------- ---------- ----------
Total net sales $ 196,321 $ 214,080 $ 409,803 $ 419,885
========== ========== ========== ==========
Gross Profit:
Commercial $ 5,472 $ 16,081 $ 15,091 $ 30,998
Wholesale (178) 3,501 (302) 5,248
Rod, bar, and other 360 1,999 925 2,820
---------- ---------- ---------- ----------
Total gross profit $ 5,654 $ 21,581 $ 15,714 $ 39,066
========== ========== ========== ==========
</Table>
-MORE-
WLV Reports Second Quarter Results
Page 6
August 2, 2005
WOLVERINE TUBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<Table>
<Caption>
In thousands 7/3/2005 7/4/2004 12/31/2004
---------- ---------- ----------
Assets
Cash and cash equivalents $ 13,988 $ 42,649 $ 35,017
Accounts receivable 100,159 117,300 93,964
Inventory 143,509 112,490 151,979
Other current assets 23,583 17,827 14,612
Property, plant and equipment, net 190,557 193,108 194,966
Other assets 97,097 99,331 96,920
---------- ---------- ----------
Total assets $ 568,893 $ 582,705 $ 587,458
========== ========== ==========
Liabilities and Stockholders' Equity
Accounts payables and other accrued expenses $ 83,375 $ 84,530 $ 92,388
Short-term borrowings 948 529 1,219
Deferred income taxes -- 1,666 --
Pension liabilities 29,656 23,647 27,915
Long-term debt 235,728 249,670 237,022
Other liabilities 19,667 18,233 19,412
---------- ---------- ----------
Total liabilities 369,374 378,275 377,956
---------- ---------- ----------
Stockholders' equity 199,519 204,430 209,502
---------- ---------- ----------
Total liabilities and stockholders' equity $ 568,893 $ 582,705 $ 587,458
========== ========== ==========
</Table>
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 INCOME FROM CONTINUING OPERATIONS TO EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (UNAUDITED)
<Table>
<Caption>
Three-month period ended Six-month period ended
In thousands 7/3/2005 7/4/2004 7/3/2005 7/4/2004
---------- ---------- ---------- ----------
Income(loss) from continuing operations $ (5,682) $ 3,300 $ (8,164) $ 4,668
Depreciation and amortization 4,252 4,365 8,545 9,033
Interest expense, net 5,244 5,760 10,566 10,830
Income tax provision/(benefit) (3,118) 1,059 (4,136) 1,430
---------- ---------- ---------- ----------
Earnings before interest, taxes, depreciation and amortization $ 696 $ 14,484 $ 6,811 $ 25,961
========== ========== ========== ==========
</Table>
-END-