LAKE FOREST, Ill.--(BUSINESS WIRE)--UCI Holdings Limited, the parent company of UCI International, LLC (“UCI”), today announced UCI’s results for the second quarter ended June 30, 2015. The company reported net sales from continuing operations of $201.5 million compared to $200.3 million for the second quarter of 2014. The company, a leading manufacturer of vehicle replacement parts, reported that net sales increased in its filtration and cooling systems product lines and decreased in its fuel delivery systems product line. As a result of the sale of the Wells vehicle electronics business on July 1, 2015, the vehicle electronics product line is accounted for as a discontinued operation for all periods presented.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for UCI’s continuing operations, as adjusted, was $16.2 million for the second quarter of 2015, compared to $21.3 million in the year-ago quarter. The reconciliation of net loss to EBITDA and adjusted EBITDA, a non-GAAP measure of financial performance, is set forth in Schedule A.
Net loss from continuing operations for the second quarter of 2015 was $18.8 million, including $8.2 million, net of tax, in special items, consisting primarily of restructuring costs, business optimization costs, new business changeover and sales commitment costs, an environmental accrual adjustment and other litigation costs. Excluding these items, adjusted net loss from continuing operations would have been $10.6 million for the quarter. Net loss from continuing operations for the second quarter of 2014 was $27.4 million, including $26.5 million, net of tax, in special items, consisting primarily of a trademark impairment loss, restructuring costs, business optimization costs and new business changeover and sales commitment costs.
As of June 30, 2015, the company’s cash on hand for continuing operations was $43.0 million and total debt was $716.5 million.
Conference Call
UCI will host a conference call to discuss its results and performance on Thursday, August 6, at 11:00 a.m. Eastern Time (ET). Interested parties are invited to listen to the call by telephone. Domestic callers can dial (800) 637-1381. International callers can dial (502) 498-8424.
A replay of the call will be available from August 7 for a 14 day period, at www.uciholdings.com. Click on the UCI 2015 2nd Quarter Results button.
About UCI International, LLC
UCI International, LLC is among North America’s largest and most diversified companies servicing the vehicle replacement parts market. We supply a broad range of products to the automotive, trucking, marine, mining, construction, agricultural and industrial vehicle markets. Our customer base includes leading aftermarket companies, as well as a diverse group of original equipment manufacturers.
Forward Looking Statements
All statements, other than statements of historical facts, included in this press release and the attached report that address activities, events or developments that UCI expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements give UCI’s current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of UCI and its subsidiaries. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They are subject to uncertainties and factors relating to UCI’s operations and business environment, all of which are difficult to predict and many of which are beyond UCI’s control. UCI cautions investors that these uncertainties and factors could cause UCI’s actual results to differ materially from those stated in the forward-looking statements. UCI cautions that investors should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, UCI undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
| UCI Holdings Limited | ||||||||||||||||||||||
| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
| Net sales | ||||||||||||||||||||||
| Third party net sales | $ | 187,244 | $ | 186,276 | $ | 373,805 | $ | 370,341 | ||||||||||||||
| Related party net sales | 14,325 | 13,974 | 29,035 | 28,227 | ||||||||||||||||||
| Total net sales | 201,569 | 200,250 | 402,840 | 398,568 | ||||||||||||||||||
| Cost of sales | 178,732 | 171,911 | 367,663 | 347,982 | ||||||||||||||||||
| Gross profit | 22,837 | 28,339 | 35,177 | 50,586 | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||
| Selling, general and administrative | (13,563 | ) | (13,959 | ) | (27,366 | ) | (28,727 | ) | ||||||||||||||
| Amortization of acquired intangible assets | (4,044 | ) | (4,085 | ) | (8,091 | ) | (8,168 | ) | ||||||||||||||
| Restructuring costs, net | (6,411 | ) | (4,268 | ) | (6,740 | ) | (8,377 | ) | ||||||||||||||
| Trademark impairment loss | - | (38,000 | ) | - | (38,000 | ) | ||||||||||||||||
| Operating loss | (1,181 | ) | (31,973 | ) | (7,020 | ) | (32,686 | ) | ||||||||||||||
| Other expense | ||||||||||||||||||||||
| Interest expense, net | (1,017 | ) | (11,303 | ) | (6,669 | ) | (26,699 | ) | ||||||||||||||
| Miscellaneous, net | (1,017 | ) | (788 | ) | (1,931 | ) | (1,807 | ) | ||||||||||||||
| Loss from continuing operations before income taxes | (3,215 | ) | (44,064 | ) | (15,620 | ) | (61,192 | ) | ||||||||||||||
| Income tax (expense) benefit | (15,581 | ) | 16,658 | (12,132 | ) | 20,367 | ||||||||||||||||
| Loss from continuing operations | (18,796 | ) | (27,406 | ) | (27,752 | ) | (40,825 | ) | ||||||||||||||
| (Loss) income from discontinued operations, net of tax | (12,265 | ) | 1,806 | (15,574 | ) | 2,683 | ||||||||||||||||
| Net loss | (31,061 | ) | (25,600 | ) | (43,326 | ) | (38,142 | ) | ||||||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||||||||||
| Foreign currency translation adjustments | (8,636 | ) | 973 | (16,380 | ) | 6,164 | ||||||||||||||||
| Pension and OPEB liability, net of tax | 396 | 32 | 779 | 62 | ||||||||||||||||||
| Total other comprehensive (loss) income | (8,240 | ) | 1,005 | (15,601 | ) | 6,226 | ||||||||||||||||
| Comprehensive loss | $ | (39,301 | ) | $ | (24,595 | ) | $ | (58,927 | ) | $ | (31,916 | ) | ||||||||||
| UCI Holdings Limited | ||||||||||||
|
Condensed Consolidated Balance Sheets |
||||||||||||
| (in thousands) | ||||||||||||
| June 30, | December 31, | |||||||||||
| 2015 | 2014 | |||||||||||
|
Assets |
(Unaudited) |
|||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 43,030 | $ | 41,468 | ||||||||
| Accounts receivable, net | 130,888 | 140,762 | ||||||||||
| Related party receivables | 11,720 | 17,185 | ||||||||||
| Inventories | 177,083 | 180,517 | ||||||||||
| Deferred tax assets | 12,993 | 27,009 | ||||||||||
| Discontinued current assets | 111,821 | 133,601 | ||||||||||
| Other current assets | 24,501 | 19,358 | ||||||||||
| Total current assets | 512,036 | 559,900 | ||||||||||
| Property, plant and equipment, net | 129,721 | 138,404 | ||||||||||
| Goodwill | 218,170 | 219,125 | ||||||||||
| Other intangible assets, net | 244,329 | 253,685 | ||||||||||
| Deferred financing costs, net | 9,128 | 11,578 | ||||||||||
| Discontinued long-term assets | 177,257 | 176,051 | ||||||||||
| Other long-term assets | 745 | 1,380 | ||||||||||
| Total assets | $ | 1,291,386 | $ | 1,360,123 | ||||||||
|
Liabilities and shareholder's equity |
||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 104,708 | $ | 111,888 | ||||||||
| Current maturities of long-term debt | 33,063 | 23,066 | ||||||||||
| Related party payables | 4,813 | 2,450 | ||||||||||
| Product returns liability | 28,227 | 35,736 | ||||||||||
| Interest payable | 14,632 | 13,083 | ||||||||||
| Discontinued current liabilities | 31,934 | 44,628 | ||||||||||
| Accrued expenses and other current liabilities | 55,391 | 39,970 | ||||||||||
| Total current liabilities | 272,768 | 270,821 | ||||||||||
| Long-term debt, less current maturities | 683,402 | 684,798 | ||||||||||
| Pension and other post-retirement liabilities | 89,382 | 90,296 | ||||||||||
| Deferred tax liabilities | 46,395 | 55,695 | ||||||||||
| Long-term related party payables | 101 | 101 | ||||||||||
| Discontinued long-term liabilities | 29,142 | 30,183 | ||||||||||
| Other long-term liabilities | 3,542 | 2,648 | ||||||||||
| Total liabilities | 1,124,732 | 1,134,542 | ||||||||||
| Contingencies | ||||||||||||
| Shareholder's equity | ||||||||||||
| Common stock | 320,038 | 320,038 | ||||||||||
| Retained deficit | (96,220 | ) | (52,894 | ) | ||||||||
| Accumulated other comprehensive loss | (57,164 | ) | (41,563 | ) | ||||||||
| Total shareholder's equity | 166,654 | 225,581 | ||||||||||
| Total liabilities and shareholder's equity | $ | 1,291,386 | $ | 1,360,123 | ||||||||
| UCI Holdings Limited | |||||||||||||
| Condensed Consolidated Statements of Cash Flows (unaudited) | |||||||||||||
| (in thousands) | |||||||||||||
| Six Months Ended June 30, | |||||||||||||
| 2015 | 2014 | ||||||||||||
| Net cash provided by (used in) operating activities |
$ |
5,586 | $ | (21,679 | ) | ||||||||
| Cash flows from investing activities: | |||||||||||||
| Capital expenditures | (12,138 | ) | (21,522 | ) | |||||||||
| Proceeds from sale of property, plant and equipment | 13 | 893 | |||||||||||
| Net cash used in investing activities | (12,125 | ) | (20,629 | ) | |||||||||
| Cash flows from financing activities: | |||||||||||||
| Revolver borrowings | 10,000 | - | |||||||||||
| Debt repayments | (1,550 | ) | (1,534 | ) | |||||||||
| Net cash provided by (used in) financing activities | 8,450 | (1,534 | ) | ||||||||||
| Effect of exchange rate changes on cash | (341 | ) | (13 | ) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 1,570 | (43,855 | ) | ||||||||||
| Cash and cash equivalents at the beginning of period | 44,468 | 76,619 | |||||||||||
| Cash and cash equivalents at the end of period | $ | 46,038 | $ | 32,764 | |||||||||
| Less: discontinued operations cash and cash equivalents at the end of period | (3,008 | ) | |||||||||||
| Cash and cash equivalents of continuing operations at the end of period | $ | 43,030 | |||||||||||
Schedule A
Reconciliation of EBITDA to Adjusted EBITDA
EBITDA, a measure used by our strategic owner to measure operating performance, is defined as net income (loss) for the period plus income tax expense (benefit), net interest expense, depreciation expense of property, plant and equipment and amortization expense of identifiable intangible assets. Adjusted EBITDA presented herein is also a financial measure used by our strategic owner to measure operating performance. Adjusted EBITDA is calculated as EBITDA adjusted to exclude items of a significant or unusual nature that cannot be attributed to ordinary business activities, such as business optimization costs, restructuring costs and costs related to implementation of cost sharing arrangements with FRAM Group. EBITDA and Adjusted EBITDA are not presentations in accordance with GAAP, or measures of our financial condition, liquidity or profitability and should not be considered as a substitute for net income (loss), operating profit or any other performance measures derived in accordance with GAAP or as a substitute for cash flow from operating activities as a measure of our liquidity in accordance with GAAP. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow, as they do not take into account certain items such as interest and principal payments on our indebtedness, working capital needs, tax payments and capital expenditures. We believe that the inclusion of EBITDA and Adjusted EBITDA is appropriate to provide additional information to investors about our operating performance and to provide a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. We additionally believe that issuers of high yield debt securities also present EBITDA and Adjusted EBITDA because investors, analysts and rating agencies consider these measures useful. In addition, Adjusted EBITDA is used to determine our compliance with certain covenants, including the fixed charge coverage ratio used for purposes of debt incurrence under the indenture governing the Senior Notes and certain other agreements governing our indebtedness. Because not all companies calculate EBITDA and Adjusted EBITDA identically, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures used by other companies. Furthermore, until a business has been sold, certain of our financial covenants are measured using the aggregation of continuing and discontinued operations. Accordingly, the table below presents the aggregation of Adjusted EBITDA from continuing operations and discontinued operations.
| Reconciliation of Net Loss to EBITDA and Adjusted EBITDA | |||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Net loss from continuing operations | $ | (18.7 | ) | $ | (27.4 | ) | $ | (27.7 | ) | $ | (40.8 | ) | |||||||||
| Income tax (benefit) expense | 15.5 | (16.7 | ) | 12.1 | (20.4 | ) | |||||||||||||||
| Net interest expense | 1.0 | 11.3 | 6.7 | 26.7 | |||||||||||||||||
| Depreciation and amortization expense | 10.2 | 11.2 | 21.1 | 22.0 | |||||||||||||||||
| EBITDA from continuing operations | 8.0 | (21.6 | ) | 12.2 | (12.5 | ) | |||||||||||||||
| Restructuring costs, net | 6.4 | 4.3 | 6.7 | 8.4 | |||||||||||||||||
| Business optimization costs | 0.9 | 0.2 | 1.0 | 0.7 | |||||||||||||||||
| New business changeover and sales commitment costs | 0.5 | 0.2 | 1.2 | 1.4 | |||||||||||||||||
| Environmental accrual adjustment | 0.3 | - | 0.3 | - | |||||||||||||||||
| Other litigation costs | 0.1 | - | 0.2 | - | |||||||||||||||||
| Trademark impairment loss | - | 38.0 | - | 38.0 | |||||||||||||||||
| Cost related to implementation of cost sharing and | |||||||||||||||||||||
| manufacturing arrangements with FRAM Group | - | 0.1 | - | 0.1 | |||||||||||||||||
| Miscellaneous non-operating expenses | - | 0.1 | - | 0.1 | |||||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 16.2 | $ | 21.3 | $ | 21.6 | $ | 36.2 | |||||||||||||
| Adjusted EBITDA from discontinued operations | 2.1 | 9.7 | 5.8 | 17.9 | |||||||||||||||||
| Adjusted EBITDA | $ | 18.3 | $ | 31.0 | $ | 27.4 | $ | 54.1 | |||||||||||||
| Net sales from continuing operations | $ | 201.5 | $ | 200.3 | $ | 402.8 | $ | 398.6 | |||||||||||||
| Adjusted EBITDA margin from continuing operations | 8.0 | % | 10.6 | % | 5.4 | % | 9.1 | % | |||||||||||||
