Accuride Corporation (NYSE: ACW), a leading supplier of components to the commercial vehicle industry, today reported financial results for the second quarter ended June 30, 2012.
Accuride achieved second quarter 2012 net sales from continuing operations of $268.8 million, compared with $241.9 million in the same period in 2011, an increase of 11.1 percent, with all business segments reporting year-over-year-growth. The Company delivered operating income for the quarter of $9.6 million, up $1.1 million, or 13.4 percent, from the second quarter of 2011. The Company reported a net loss of $0.8 million, or $0.02 per share during the quarter. Second quarter Adjusted EBITDA increased 19.1 percent to $25.3 million, resulting in an Adjusted EBITDA margin of 9.4 percent, compared to 8.8 percent in the same quarter of 2011. As of June 30, 2012, the Company had $35.7 million of cash plus $66.5 million in availability under its ABL credit facility for total liquidity of $102.2 million.
“Accuride continues to solidly execute our ‘Fix and Grow’ strategy to drive profitable operational improvements across our core businesses,” said Accuride President and CEO Rick Dauch. “We are restoring our reputation as a dependable and capable supplier to our customers. Although industry conditions began to soften in the second quarter, we remain intensely focused on the improvement initiatives within our control, including:
- Installing, qualifying and commercializing new aluminum production capacity at our Camden, S.C., and Monterrey, Mexico, plants,
- Installing and qualifying Gunite’s new production equipment at our Rockford, Ill., facility,
- Improving profitability at Brillion Iron Works, and,
- Eliminating the past-due situation and stabilizing operations at Imperial.”
Industry ConditionsThe commercial vehicle industry’s underlying equipment replacement fundamentals remain strong. The industry is experiencing some near-term slowdown within the Class 8 segment. Net orders in the first quarter were lower than expected, and, in turn, order backlogs declined during the second quarter. Orders are likely to remain weak through the historically slow summer season and OEMs are adjusting build schedules in the second half of the year. Medium-duty production continues to improve at a modest pace, while trailer backlogs remain at their highest levels since 2007 and continue to increase.Second Quarter Business Segment Results Accuride WheelsAccuride Wheels segment net sales were $112.9 million, up $10.0 million, or 9.7 percent, from the same period in 2011, supported by higher year-over-year build rates. Wheels Adjusted EBITDA was $25.8 million, an increase of $4.3 million, or 19.8 percent from the second quarter of 2011. We continue to experience strong aluminum wheel demand, driven by fleet requirements to reduce operating costs and vehicle weight. We are supporting this mix shift with the additional capacity installed at our Erie, Camden and Monterrey plants in 2011. Additional planned investments in 2012-13 will allow us to continue to meet future increases in aluminum wheel demand while we upgrade our steel wheel capabilities. GuniteGunite segment net sales were $67.3 million, up $0.2 million, or 0.3 percent, from the second quarter of 2011 as aftermarket volume softness continued. Gunite’s Adjusted EBITDA was $1.1 million, compared to $5.7 million in the second quarter of 2011. Gunite is in the midst of a major capital investment program to upgrade casting operations, install efficient machining equipment and consolidate our manufacturing footprint. We will consolidate the machining operations of our Elkhart, Ind. and Brillion, Wisc. plants into the Rockford, Ill. facility by the end of the first quarter of next year. Brillion Iron WorksBrillion Iron Works’ second quarter net sales were $49.3 million, up $11.1 million, or 29.1 percent, from the second quarter of 2011, while Adjusted EBITDA was $8.8 million, an increase of $6.9 million, or 363.0 percent, from the second quarter of 2011. Brillion continues to benefit from strong market demand, enabling it to selectively target higher-margin business with industrial and off-road customers. Accuride is assessing strategic options for Brillion that could potentially result in its divestiture under appropriate financial conditions. ImperialImperial segment second quarter net sales were $39.3 million, an increase of $5.6 million, or 16.8 percent, over the same period in 2011 due to higher OEM customer production volumes. While Imperial Adjusted EBITDA improved quarter-over-quarter to break-even in the current quarter, it was down from a positive $2.1 million in last year’s second quarter. Imperial made significant progress in eliminating its past-due position with customers. Now operationally stable, the business will return to profitability in the second half of 2012. Imperial also earned $12-15 million in new business awards that will launch with new customers in 2013. Liquidity and DebtAs of June 30, 2012, total debt was $323.6 million, consisting of $303.6 million of our outstanding 9.5% senior secured notes, net of discount, and a $20.0 million draw on our ABL facility. As of June 30, 2012, the Company had $35.7 million of cash plus $66.5 million in availability under its ABL credit facility for total liquidity of $102.2 million. The Company’s strong operating cash flow enabled it to fund its capital spending of $15.2 million in the quarter. Outlook and Summary“As we continue to execute our ‘Fix & Grow’ strategy, we are improving the operational and financial performance of our business,” Dauch said. “Given the positive long-term outlook for the North American commercial vehicle market, we remain confident that we are on track and will restore Accuride to a profitable, world-class supplier to the global commercial vehicle industry.” Chief Financial Officer Greg Risch outlined the Company’s full-year guidance stating, “Despite near-term softness in market demand, we continue to expect 2012 net sales to be in the range of $1,000 to $1,025 million. We expect a fully diluted loss per share between $0.12 and $0.05, including a $0.06 loss per share related to the Elkhart closure, and Adjusted EBITDA ranging from $95 to $100 million for the year.”