Remy International, Inc. Announces Second Quarter 2014 Results - Siouxland News - KMEG 14 and FOX 44

Remy International, Inc. Announces Second Quarter 2014 Results

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SOURCE Remy International, Inc.

PENDLETON, Ind., July 30, 2014 /PRNewswire/ -- Remy International, Inc. (NASDAQ: REMY), a leading worldwide manufacturer, remanufacturer, and distributor of starter motors and alternators for light vehicle and commercial vehicle applications, multi-line products and hybrid electric motors, today announced its financial results for the second quarter ended June 30, 2014.  

Financial Results

Three months ended June 30,


Six months ended June 30,


2014


2013


2014


2013

Net sales

$299.3 million


$282.3 million


$599.6 million


$564.1 million

Net income

$10.0 million


$11.5 million


$19.4 million


$13.3 million

Diluted earnings per share

$0.32


$0.36


$0.62


$0.40

Adjusted net income

$10.8 million


$13.3 million


$22.2 million


$22.6 million

Adjusted diluted earnings per share

$0.34


$0.42


$0.70


$0.70

Net cash provided by (used in) operating activities

$5.1 million


$6.4 million


$(4.1) million


$(9.9) million

Adjusted EBITDA

$34.7 million


$33.2 million


$68.2 million


$64.5 million

Second Quarter Highlights

  • Net sales of $299.3 million for the second quarter of 2014, an increase of 6% compared to $282.3 million for the second quarter of 2013.
  • Adjusted EBITDA of $34.7 million for the second quarter of 2014 compared to $33.2 million for the second quarter of 2013. 
  • Adjusted net income was $10.8 million for the second quarter of 2014 compared to $13.3 million for the second quarter of 2013. 
  • On May 9, 2014, Standard & Poor's (S&P) Ratings Services upgraded our corporate credit rating from B+ to BB- on improved financial metrics reflecting our leading position in North America as a supplier of starters and alternators to original equipment manufacturers and the aftermarket.
  • On July 25, 2014, the Board of Directors declared a quarterly dividend of $0.10 per share payable on August 29, 2014 to stockholders of record as of August 15, 2014.

Jay Pittas, Remy International, Inc. President and CEO commented, "The second quarter was a solid one for us with the business performing as expected with higher revenue and profit versus the second quarter of 2013. Our top line growth strategies are succeeding with the trailing three quarter's revenue up 7% versus the prior period. We continue to undertake initiatives to grow the top line and secure new business as well as take steps to improve operating efficiencies. By executing our plan, we will drive superior long-term value for stockholders."

About Remy International, Inc.

Founded by the Remy Brothers in 1896, Remy International, Inc. is a leading global manufacturer and remanufacturer of alternators, starter motors and electric traction motors.  Headquartered in Pendleton, IN, with global operations across five continents and 10 countries, Remy International markets products under the Delco Remy®, Remy®, World Wide Automotive® and USA Industries® brands.  Known for innovation, efficiency, quality, and best-in-class customer service and support, Remy International's products are integrated by leading industrial, specialty, automotive and heavy-duty OEMs, and aftermarket providers worldwide.  We Start the World & Keep It Running™.

Conference Call

Remy will host a call with investors and analysts to discuss second quarter 2014 results on Thursday, July 31, 2014 beginning at 9:00 a.m. Eastern Time.  A live webcast of the conference call will be available on the Remy Investor Relations website at http://www.remyinc.com.  The conference call replay will also be available via webcast through the Remy Investor Relations website at http://www.remyinc.com.

Use of Non-U.S. GAAP Financial Information

Accounting principles generally accepted in the United States (U.S. GAAP) is the standard framework of guidelines for financial accounting. U.S. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with U.S. GAAP, Remy has provided Adjusted net income, Adjusted diluted earnings per share, and Adjusted EBITDA, non-U.S. GAAP financial measures, which are frequently used by management, analysts, investors and other interested parties.  Management believes that the non-U.S. GAAP financial measures presented provide a useful measure of Remy's financial performance since they exclude certain items which do not reflect ongoing operations.  A reconciliation of U.S. GAAP net income to Adjusted net income and Adjusted diluted earnings per share is provided herein.  Adjusted EBITDA is defined by the Company as net income attributable to common stockholders before (i) interest expense–net, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) net income attributable to noncontrolling interest, (vi) restructuring, other charges and other impairment charges, (vii) loss on extinguishment of debt and refinancing fees, (viii) executive officer separation cost, (ix) certain purchase accounting finished goods inventory step-up costs and (x) other adjustments.   Adjusted EBITDA as defined by the Company may differ from non-U.S. GAAP measures used by other companies and is not a measurement under U.S. GAAP.  There are limitations inherent in non-U.S. GAAP financial measures in that they exclude a variety of charges and credits that are required to be included in a U.S. GAAP presentation, and therefore do not present the full measure of the Company's recorded costs against its revenue.  Accordingly, in analyzing Remy's future financial performance, non-U.S. GAAP results presented should be considered together with U.S. GAAP results, rather than as an alternative to U.S. GAAP basis financial measures. Reconciliations of non-U.S. GAAP measures to related U.S. GAAP measures are presented in the financial schedules which accompany this release.

Forward Looking Statements

This press release contains forward-looking statements.  Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts.  Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results.  We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events to reflect the new information, future events, or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, future financial results and liquidity, development of new products and services, the effect of competitive products or pricing, the effect of commodity and raw material prices, the impact of supply chain cost management initiatives, restructuring risks, customs duty claims, litigation uncertainties and warranty claims, conditions in the automotive industry, foreign currency fluctuations, costs related to re-sourcing and outsourcing products, the effect of economic conditions, and other risks identified in the "Special note regarding forward-looking statements", "Risk Factors" and other sections of the Company's previously filed most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

A copy of the second quarter 2014 Form 10-Q will be available on the Remy International Website at:
http://www.remyinc.com under "Investor Relations".

Investor Contact:  Fred Knechtel, Sr. Vice President, CFO and Treasurer
Knechtel.Fred@remyinc.com
(765) 778-6871

 

Remy International, Inc.

Index of consolidated financial information




Consolidated balance sheets as of June 30, 2014 (unaudited) and December 31, 2013

A-2

Consolidated statements of operations (unaudited) for the three and six months ended June 30, 2014 and June 30, 2013

A-3

Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2014 and June 30, 2013

A-4

Reconciliation of non-U.S. GAAP financial measures (unaudited) for the three and six months ended June 30, 2014 and June 30, 2013

A-5

 

The accompanying unaudited consolidated financial information and reconciliation schedules should be read in conjunction with the Remy International, Inc. Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2014 and June 30, 2014, each of which were filed with the United States Securities and Exchange Commission.

 

 


Remy International, Inc.

Consolidated balance sheets






June 30,



December 31,


(In thousands, except share information)

2014



2013


Assets:

 (unaudited)





Current assets:






Cash and cash equivalents

$

56,150



$

114,884


Trade accounts receivable (less allowances of $1,885 and $1,583)

243,087



191,548


Other receivables

19,484



21,023


Inventories

188,098



159,340


Deferred income taxes

36,244



36,329


Prepaid expenses and other current assets

15,225



11,151


Total current assets

558,288



534,275








Property, plant and equipment

261,390



249,326


Less accumulated depreciation and amortization

(114,971)



(103,715)


Property, plant and equipment, net

146,419



145,611








Deferred financing costs, net of amortization

3,467



3,802


Goodwill

285,433



271,418


Intangibles, net

107,916



89,909


Other noncurrent assets

78,506



72,040


Total assets

$

1,180,029



$

1,117,055








Liabilities and Equity:






Current liabilities:






Short-term debt

$

7,390



$

2,369


Current maturities of long-term debt

3,389



3,392


Accounts payable

199,580



168,491


Accrued interest

113



92


Accrued restructuring

153



1,026


Other current liabilities and accrued expenses

120,012



110,179


Total current liabilities

330,637



285,549








Long-term debt, net of current maturities

292,310



293,835


Postretirement benefits other than pensions

1,515



1,628


Accrued pension benefits

17,993



19,103


Deferred income taxes

811



1,000


Other noncurrent liabilities

28,123



24,783








Equity:






Remy International, Inc. stockholders' equity:






Common stock, Par value of $0.0001; 31,995,332 shares outstanding at

June 30, 2014, and 31,981,544 shares outstanding at December 31, 2013

3



3


Treasury stock, at cost; 457,107 treasury shares at June 30, 2014, and

267,924 treasury shares at December 31, 2013

(3,982)



(1,477)


Additional paid-in capital

324,322



320,687


Retained earnings

226,504



213,418


Accumulated other comprehensive loss

(38,207)



(41,474)


Total Remy International, Inc. stockholders' equity

508,640



491,157


Total liabilities and equity

$

1,180,029



$

1,117,055


 

 


Remy International, Inc.

Consolidated statements of operations

(Unaudited)






Three months ended June 30,



Six months ended June 30,


(In thousands, except per share amounts)

2014



2013



2014



2013





Net sales

$

299,293



$

282,349



$

599,587



$

564,076


Cost of goods sold

241,147



227,648



486,974



454,396


Gross profit

58,146



54,701



112,613



109,680


Selling, general, and administrative expenses

35,929



32,415



69,268



72,565


Restructuring and other charges

79



2,128



393



2,809


Operating income

22,138



20,158



42,952



34,306


Interest expense–net

5,390



3,731



11,026



10,068


Loss on extinguishment of debt and refinancing fees

-



-



-



4,256


Income before income taxes

16,748



16,427



31,926



19,982


Income tax expense

6,792



4,963



12,503



6,675


Net income

9,956



11,464



19,423



13,307


Less net income attributable to noncontrolling interest

-



96



-



659


Net income attributable to common stockholders

$

9,956



$

11,368



$

19,423



$

12,648














Basic earnings per share:












Earnings per share

$

0.32



$

0.36



$

0.62



$

0.41


Weighted average shares outstanding

31,514



31,239



31,447



31,173


Diluted earnings per share:












Earnings per share

$

0.32



$

0.36



$

0.62



$

0.40


Weighted average shares outstanding

31,593



31,364



31,571



31,314


Dividends declared per common share

$

0.10



$

0.10



$

0.20



$

0.20


 

 


Remy International, Inc.

Consolidated statements of cash flows

(Unaudited)




Six months ended June 30,


(In thousands)

2014



2013


Cash flows from operating activities:






Net income

$

19,423



$

13,307


Adjustments to reconcile net income to cash used in operating activities:






Depreciation and amortization

18,816



17,022


Amortization of debt issuance costs

500



613


Loss on extinguishment of debt and refinancing fees

-



4,256


Stock-based compensation

2,561



3,246


Deferred income taxes

981



(3,409)


Accrued pension and postretirement benefits, net

(997)



(416)


Restructuring and other charges

393



2,809


Cash payments for restructuring charges

(1,266)



(4,949)


Other

273



(801)


Changes in operating assets and liabilities, net of restructuring charges:






  Accounts receivable

(40,969)



(27,010)


  Inventories

(13,998)



(9,187)


  Accounts payable

22,548



(6,206)


  Other current assets and liabilities, net

1,647



7,231


  Other noncurrent assets and liabilities, net

(13,974)



(6,446)


Net cash used in operating activities

(4,062)



(9,940)








Cash flows from investing activities:






Purchases of property, plant and equipment

(11,627)



(13,239)


Net proceeds on sale of assets

80



303


Acquisition of USA Industries, Inc., net of cash acquired of $109

(40,070)



-


Net cash used in investing activities

(51,617)



(12,936)








Cash flows from financing activities:






Change in short-term debt and revolver

4,930



(5,750)


Payments made on long-term debt, including capital leases

(1,693)



(288,874)


Proceeds from issuance of long-term debt

-



299,250


Dividend payments on common stock

(6,548)



(6,331)


Purchase of treasury stock

(2,505)



(1,248)


Debt issuance costs

-



(3,476)


Purchase of and distributions to noncontrolling interest

-



(18,902)


Other

1,142



-


Net cash used in financing activities

(4,674)



(25,331)








Effect of exchange rate changes on cash and cash equivalents

1,619



(2,480)


Net decrease in cash and cash equivalents

(58,734)



(50,687)


Cash and cash equivalents at beginning of period

114,884



111,733


Cash and cash equivalents at end of period

$

56,150



$

61,046


Supplemental information:






Noncash investing and financing activities:






Purchases of property, plant and equipment in accounts payable

$

2,816



$

1,825


 

Remy International, Inc.
Reconciliation of non-U.S. GAAP financial measures
(Unaudited)

Adjusted EBITDA

Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. We use adjusted EBITDA as a supplement to our U.S. GAAP results in evaluating our business. Other companies in our industry define adjusted EBITDA differently from us and, as a result, our measure is not comparable to similarly titled measures used by other companies in our industry.

We define adjusted EBITDA as net income attributable to common stockholders before interest expense–net, income tax expense, depreciation and amortization, stock-based compensation expense, net income attributable to noncontrolling interest, restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive officer separation cost, certain purchase accounting finished goods inventory step-up costs and other adjustments as set forth in the reconciliations provided below.

Adjusted EBITDA is one of the key factors upon which we assess performance. As an analytical tool, adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed by U.S. GAAP. There are limitations to using non-U.S. GAAP measures such as adjusted EBITDA. Although we believe that adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not reflect our ongoing operations, adjusted EBITDA excludes certain financial information that some may consider important in evaluating our performance.

The following table sets forth a reconciliation of adjusted EBITDA to its most directly comparable U.S. GAAP measure, net income attributable to common stockholders.

 


Three months ended June 30,



Six months ended June 30,


 (In thousands)

2014



2013



2014



2013









Net income attributable to common stockholders

$

9,956



$

11,368



$

19,423



$

12,648


Adjustments:












Interest expense–net

5,390



3,731



11,026



10,068


Income tax expense

6,792



4,963



12,503



6,675


Depreciation and amortization

10,161



8,809



18,816



17,022


Stock-based compensation expense

1,342



1,749



2,561



3,246


Net income attributable to noncontrolling interest

-



96



-



659


Restructuring and other charges

79



2,128



393



2,809


Loss on extinguishment of debt and refinancing fees

-



-



-



4,256


Executive officer separation

-



-



-



7,000


Purchase accounting finished goods inventory step-up

965



-



3,474



-


Other

49



368



49



104


Total adjustments

24,778



21,844



48,822



51,839


Adjusted EBITDA

$

34,734



$

33,212



$

68,245



$

64,487


 

 

Remy International, Inc.
Reconciliation of non-U.S. GAAP financial measures
(Unaudited)

Adjusted net income and adjusted diluted earnings per share

Management believes adjusted net income and adjusted diluted earnings per share, which are non-GAAP measures, are useful in evaluating the ongoing operating performance of the Company.  We define adjusted net income as net income before restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive officer separation cost, purchase accounting related charges and other adjustments as set forth in the reconciliations provided below. Adjusted diluted earnings per share is defined as adjusted net income attributable to common stockholders divided by the weighted average number of diluted shares outstanding for the period. Other companies in our industry define adjusted net income and adjusted diluted earnings per share differently from us and, as a result, our measures are not comparable to similarly titled measures used by other companies in our industry.

The following table sets forth a reconciliation of adjusted net income to its most directly comparable U.S. GAAP measure, net income:

 

(In thousands, except per share amounts)

Three months

ended June 30,



Six months

ended June 30,



2014



2013



2014



2013


Net income

$

9,956



$

11,464



$

19,423



$

13,307


Adjustments:












Purchase accounting related charges (a)

1,291



-



4,083



-


Restructuring and other charges (b)

79



2,128



393



2,809


Loss on extinguishment of debt and refinancing fees (c)

-



-



-



4,256


Executive officer separation (d)

-



-



-



7,000


Tax impact of Non-GAAP adjustments (e)

(513)



(273)



(1,669)



(4,752)


Total adjustments

857



1,855



2,807



9,313


Adjusted net income

10,813



13,319



22,230



22,620


Less net income attributable to noncontrolling interest

-



96



-



659


Adjusted net income attributable to common stockholders

$

10,813



$

13,223



$

22,230



$

21,961














Basic earnings per share:












Weighted average shares outstanding

31,514



31,239



31,447



31,173


Earnings per share

$

0.32



$

0.36



$

0.62



$

0.41


Adjusted earnings per share

$

0.34



$

0.42



$

0.71



$

0.70


Diluted earnings per share:












Weighted average shares outstanding

31,593



31,364



31,571



31,314


Earnings per share

$

0.32



$

0.36



$

0.62



$

0.40


Adjusted earnings per share

$

0.34



$

0.42



$

0.70



$

0.70


 

(a)

Represents the elimination of finished goods inventory step-up, customer relationships amortization and lease intangible amortization related to the USA Industries acquisition.

(b)

Represents the elimination of restructuring and other charges.

(c)

Represents the loss on extinguishment of debt and refinancing fees as a result of the refinancing of our Term B Loan syndication.

(d)

Represents the lump sum cash payment pursuant to the terms of the Transition, Noncompetition and Release Agreement with John H. Weber, our former President and Chief Executive Officer, effective February 28, 2013.

(e)

Represents the tax impact of Non-GAAP adjustments by using the appropriate tax rate of the jurisdictions where the charges were incurred.

 

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