Exhibit 99.1
NEWS RELEASE
ASSOCIATED MATERIALS REPORTS FIRST QUARTER RESULTS
CUYAHOGA FALLS, Ohio, May 10 -- ASSOCIATED MATERIALS INCORPORATED ("AMI" or the
"Company") today announced first quarter 2004 net sales of $204.3 million, an
84.2% increase over $110.9 million for the same period in 2003. The results for
2004 include the operations of the Company's subsidiary, Gentek Holdings, Inc.
("Gentek"). Gentek, which was acquired by AMI on August 29, 2003, contributed
$65.4 million of net sales in the first quarter of 2004.
The net loss for the first quarter of 2004 was $9.1 million. This compares to a
net loss of $5.0 million for the same period in 2003. Gentek contributed $0.5
million of net income for the first quarter of 2004.
EBITDA (as defined below) for the first quarter of 2004 was a loss of $4.4
million compared to a loss of $0.4 million for the first quarter of 2003. Gentek
contributed $2.7 million of EBITDA in the first quarter of 2004.
Adjusted EBITDA (as defined below) for the first quarter of 2004 was $10.1
million. As compared to EBITDA, Adjusted EBITDA for the first quarter of 2004
excludes a bonus paid to certain members of company management totaling
approximately $14.5 million related to the completion of the offering of senior
discount notes on March 4, 2004 by the Company's indirect parent company, AMH
Holdings, Inc. ("AMH"). A reconciliation of net loss to EBITDA and to Adjusted
EBITDA is included below.
Michael Caporale, President and Chief Executive Officer, commented, "I am very
pleased with our first quarter results. We continued our strong sales momentum
from 2003 into the first quarter of this year."
Mr. Caporale continued, "In addition to our excellent operating performance,
during the first quarter we successfully completed AMH's offering of senior
discount notes. The gross proceeds of $258.3 million from the offering were used
to redeem all of AMH's preferred stock, including accrued and unpaid dividends,
pay a dividend to AMH's common stockholders, and pay a bonus to certain members
of senior management. The completion of this offering allowed us the opportunity
to return money to our shareholders while allowing our bondholders an additional
opportunity to invest in our company."
RESULTS OF OPERATIONS
Net sales increased 84.2% during the first quarter of 2004 compared to the same
period in 2003, driven by increased vinyl window and vinyl siding sales along
with net sales from Gentek. Gross profit in the first quarter of 2004 was $50.4
million, or 24.6% of net sales, compared to gross profit of $28.2 million, or
25.4% of net sales, in the first quarter of 2003. The decrease in gross profit
margin percentage is primarily due to the impact of
the results contributed by Gentek as Gentek's gross margin percentage is
typically lower than Alside's as a larger proportion of Gentek's net sales are
to independent distributors versus contractors through company-owned
distribution centers. Selling, general and administrative expense increased to
$59.9 million, or 29.3% of net sales, for the first quarter of 2004 versus $31.3
million, or 28.2% of net sales, for the same period in 2003. The increase in
selling, general and administrative expense is a result of the management bonus
relating to AMH's offering of senior discount notes, the impact of the
acquisition of Gentek, as well as the result of adding two new Alside supply
centers in 2004 along with the three new supply centers added in 2003, which had
a full quarter of expense in 2004. The loss from operations was $9.5 million in
the first quarter of 2004 compared to a loss of $3.1 million for the same period
in 2003.
* * *
AMI's management will host its first quarter earnings conference call on Monday,
May 10th at 11 a.m. Eastern Time. The toll free dial-in number for the call is
(866) 686-6743. A replay of the call will be available through May 17, 2004 by
dialing (888) 769-9756 and entering the conference call identification number of
8863442. The conference call and replay will also be available via webcast,
which along with this news release can be accessed via the Company's web site at
http://www.associatedmaterials.com.
* * *
Associated Materials Incorporated is a leading manufacturer of exterior
residential building products, which are distributed through company-owned
distribution centers and independent distributors across North America. AMI
produces a broad range of vinyl windows, vinyl siding, aluminum trim coil,
aluminum and steel siding and accessories, as well as vinyl fencing, decking and
railing. AMI is a privately held, wholly-owned subsidiary of Associated
Materials Holdings Inc., a wholly-owned subsidiary of AMH Holdings, Inc., which
is controlled by affiliates of Harvest Partners, Inc. For more information,
please visit the company's website at http://www.associatedmaterials.com.
Founded in 1981, Harvest Partners has approximately $1 billion of invested and
committed capital, and is focused on management buyouts and growth financings of
profitable, middle-market specialty services, manufacturing and value-added
distribution businesses, with a particular emphasis on multinational
transactions. Harvest has significant capital available through its managed
funds, which include numerous U.S. and European industrial corporations and
financial institutions. For more information on Harvest Partners please visit
its web site at http://www.harvpart.com.
This press release contains certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) relating to AMI
that are based on the beliefs of AMI's management. When used in this press
release, the words "may," "will," "should," "expect," "intend," "estimate,"
"anticipate," "believe," "predict," "potential" or "continue" or similar
expressions identify forward-looking statements. Such statements reflect the
current views of AMI's management with respect to its operations and results of
operations regarding the home building industry, economy, interest rates,
availability of consumer credit, employment trends, levels of consumer
confidence, consumer preferences, raw material costs and availability, national
and
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regional trends in new housing starts, weather conditions, its ability to comply
with certain financial covenants in loan documents governing its indebtedness,
level of competition within its market, availability of alternative building
products, its level of indebtedness, costs of environmental compliance,
potential conflict between existing Alside and new Gentek distribution channels,
achievement of anticipated synergies and operational efficiencies from the
acquisition of Gentek, shifts in market demand, and general economic conditions.
These statements are subject to certain risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions or estimates prove incorrect, actual results may vary materially
from those described herein as expected, intended, estimated, anticipated,
believed or predicted.
For Further Information
At the Company: At Abernathy MacGregor Group Inc.:
D. Keith LaVanway Alison Brandt
Chief Financial Officer Media
(330) 922-2004 (212) 371-5999
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Exhibit 99.1
ASSOCIATED MATERIALS INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS (A)
(UNAUDITED)
(IN THOUSANDS)
Quarter Quarter
Ended Ended
April 3, March 29,
2004 2003
--------- ---------
Net sales ................................. $ 204,321 $ 110,944
Gross profit .............................. 50,355 28,168
Selling, general and administrative
expense ................................... 59,892 31,310
--------- ---------
Loss from operations ...................... (9,537) (3,142)
Interest, net ............................. 6,012 5,438
Foreign currency loss ..................... 6 --
--------- ---------
Loss before income taxes .................. (15,555) (8,580)
Income taxes .............................. (6,456) (3,560)
--------- ---------
Net loss .................................. $ (9,099) $ (5,020)
========= =========
Other Data:
EBITDA (B)(C) ............................. $ (4,437) $ (425)
Adjusted EBITDA (B)(C) .................... 10,061 (425)
April 3, January 3,
2004 2004
-------- --------
Selected Balance Sheet Data:
Cash ...................................... $ 6,250 $ 4,282
Accounts receivable, net .................. 115,889 106,975
Inventory ................................. 115,554 97,907
Accounts payable .......................... 73,463 49,881
Accrued liabilities ....................... 42,153 53,234
Long-term debt ............................ 327,300 305,000
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(A) Operating results for the quarter ended April 3, 2004 include the results
of the Company's Gentek Holdings subsidiary, which was acquired on August
29, 2003.
(B) EBITDA is calculated as net loss plus interest, taxes, depreciation and
amortization. Adjusted EBITDA excludes certain items. The Company
considers Adjusted EBITDA to be an important indicator of its operational
strength and performance of its business. The Company has included
Adjusted EBITDA because it is a key financial measure used by management
to (i) assess the Company's ability to service its debt and / or incur
debt and meet the Company's capital expenditure requirements; (ii)
internally measure the Company's operating performance; and (iii)
determine the Company's incentive compensation programs. In addition, the
Company's credit facility has certain covenants that use ratios utilizing
this measure of Adjusted EBITDA. The definition of EBITDA under the
indenture governing the 9-3/4% notes due 2012 also excludes certain items.
Adjusted EBITDA has not been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"). Adjusted
EBITDA as presented by the Company may not be comparable to similarly
titled measures reported by other companies. Such supplementary
adjustments to EBITDA may not be in accordance with current SEC practices
or the rules and regulations adopted by the SEC that apply to periodic
reports filed under the Securities Exchange Act of 1934. Accordingly, the
SEC may require that Adjusted EBITDA be presented differently in filings
made with the SEC than as presented in this release, or not be presented
at all. Adjusted EBITDA is not a measure determined in accordance with
GAAP and should not be considered as an alternative to, or more meaningful
than, net loss (as determined in accordance with GAAP), as a measure of
the Company's operating results or cash flows from operations (as
determined in accordance with GAAP) or as a measure of the Company's
liquidity. The reconciliation of net loss to EBITDA and Adjusted EBITDA is
as follows:
Quarter Quarter
Ended Ended
April 3, March 29,
2004 2003
-------- --------
Reconciliation of net loss to EBITDA
and Adjusted EBITDA (C):
Net loss ............................... $ (9,099) $ (5,020)
Interest ............................... 6,012 5,438
Taxes .................................. (6,456) (3,560)
Depreciation and amortization .......... 5,106 2,717
-------- --------
EBITDA ................................. (4,437) (425)
Management bonus (D) ................... 14,498 --
-------- --------
Adjusted EBITDA ........................ $ 10,061 $ (425)
======== ========
(C) The 2004 results of operations include the results of Gentek. A
reconciliation of Gentek's net income to EBITDA for the quarter ended
April 3, 2004 is as follows:
Quarter
Ended
April 3,
2004
Reconciliation of Gentek's net income to EBITDA:
Net income ........................................... $ 466
Interest ............................................. 35
Taxes ................................................ 329
Depreciation and amortization ........................ 1,841
------
Gentek's EBITDA ...................................... $2,671
======
(D) Represents a management bonus paid in connection with the completion on
March 4, 2004 of AMH's offering of senior discount notes.
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