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Second Quarter Highlights
- Acquisition of ASC Industries Provides Global Low Cost Manufacturing and Procurement Platform
- Sale of Neapco and Pioneer operations streamlines operations and reduces leverage
- Continued progress on cost reduction through consolidation of manufacturing facilities
- Core business continues to generate revenue and EBITDA growth
EVANSVILLE, IN August 15, 2006 – United Components, Inc. (“UCI”) today announced results for the second quarter ended June 30, 2006. Revenue of $245.8 million increased $13.8 million compared to the year-ago quarter, with small increases in the original equipment sales, original equipment service and heavy duty channels, and declines in the retail and traditional channels. The quarter also included $10.3 million in sales by water pump manufacturer ASC Industries, which was acquired by UCI during the quarter. UCI’s consolidated results include ASC from the May 25 acquisition date. Also, on June 30, the company completed the sales of its Neapco driveline components and Pioneer specialty distribution operations, for about $36 million in cash. Neapco and Pioneer are accounted for as discontinued operations for all periods presented.
Net loss for the quarter was $19.1 million, including a loss of $17.3 million related to the discontinued operations and their sale, as well as $14.1 million in one time charges, primarily costs related to the acquisition of ASC and facilities consolidation costs. Excluding these charges, net income would have been $12.3 million for the quarter. Net income for the second quarter of 2005 was $4.4 million.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for UCI’s continuing operations, as adjusted consistent with the company’s historical presentations, was $33.3 million for the second quarter, compared with $30.5 million for the year-ago quarter. The calculation of adjusted EBITDA is set forth in Schedule A.
“The acquisition of ASC Industries during the second quarter has dramatically expanded our global manufacturing and procurement platform,” said Bruce Zorich, Chief Executive Officer of UCI. “ASC was a first mover within the aftermarket supplier community in establishing manufacturing and sourcing operations in China, having operated multiple manufacturing and procurement facilities in China for more than ten years. We believe that this base of operations and skilled management team will lead to improved product quality and lower costs across the company.”
During the second quarter, UCI also continued to streamline its manufacturing footprint, with the closure of a Mexican filter manufacturing plant and a Canadian pump manufacturing facility. In both cases, operations were consolidated into larger, more efficient facilities to reduce future costs.
“We’re also pleased to report that we continue to execute on our strategic plan to grow revenue and profitability for the company,” said Bruce Zorich, Chief Executive Officer of UCI. “With the acquisition of ASC and the sale of Neapco and Pioneer complete, we have realigned UCI to focus on strategic initiatives in our core business. We have seen benefits from our initiatives in the areas of business development and operational improvement during the first half of 2006. We expect these benefits to continue in the quarters ahead, even as the industry continues to fight rising gas prices and increases in our freight and raw material costs.”
In connection with the acquisition of ASC, UCI amended and restated the credit agreement for its senior credit facility and borrowed an additional $113 million. As of June 30, the company’s debt stood at $567 million. The company ended the quarter with $57 million in cash. In addition, on July 6, following the sale of Neapco and Pioneer, the company repaid $35 million of its senior credit facility borrowings.
Conference Call
UCI will host a conference call to discuss its results and performance on Wednesday, August 16, 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 (641) 297-7667.
A replay of the call will be available here from August 17, 2006, for a ninety-day period.
About United Components, Inc
United Components, Inc. 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, including those discussed in Item 1A of UCI’s 2005 Annual Report on Form 10-K and in its other SEC filings, 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.
For More Information, Contact:
Charlie Dickson, Chief Financial Officer (812) 867-4726
Dave Barron, (812) 867-4727
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