EX-99.2 3 d527899dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

UCI Holdings Limited Reports Results of Operations for

First Quarter 2013

LAKE FOREST, IL May 8, 2013 – UCI Holdings Limited, the parent company of UCI International, Inc. (“UCI”), today announced UCI’s results for the first quarter ended March 31, 2013. Net sales of $245.8 million decreased from the $261.6 million reported for the first quarter of 2012. The company, a leading manufacturer of vehicle replacement parts, reported that net sales increased in the traditional, OES (new car dealer service) and OEM (original equipment manufacturer) channels, and declined in the retail and heavy duty channels. Net sales for the first quarter of 2013 also included $19.6 million in related party sales to FRAM Group, compared to $6.0 million for the first quarter of 2012.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, was $25.5 million for the first quarter of 2013, compared to $45.4 million in the year-ago quarter. The reconciliation of net income to adjusted EBITDA, a non-GAAP measure of financial performance, is set forth in Schedule A.

Net loss for the first quarter of 2013 was $5.1 million, including $4.0 million, net of tax, in special items, consisting primarily of business optimization costs, costs related to implementation of our cost sharing and manufacturing arrangements with FRAM Group and restructuring costs. Net income for the first quarter of 2012 was $6.9 million, including $3.8 million, net of tax, in special items, consisting primarily of costs related to implementation of our cost sharing and manufacturing arrangements with FRAM Group, business optimization costs, costs of defending class action litigation and costs of obtaining new business.

“General economic conditions, as well as weather conditions and continued general slowness in the aftermarket affected our revenue in the first quarter,” said Bruce Zorich, Chief Executive Officer of UCI.

As of March 31, 2013, the company’s cash on hand was $69.8 million and total debt was $692.6 million.

Conference Call

UCI will host a conference call to discuss its results and performance on Thursday, May 9, 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 May 10 for a 14 day period, at www.uciholdings.com. Click on the UCI 2013 1st Quarter Results button.


About UCI International, Inc.

UCI International, 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 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:

Ricardo Alvergue, Chief Financial Officer (847) 482-4165


UCI Holdings Limited

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in thousands)

 

     Three Months
Ended
March 31,
2013
    Three Months
Ended
March 31,
2012
 

Net sales

   $ 245,857      $ 261,631   

Cost of sales

     198,625        194,634   
  

 

 

   

 

 

 

Gross profit

     47,232        66,997   

Operating expenses

    

Selling and warehousing

     (18,080     (17,598

General and administrative

     (15,725     (15,708

Amortization of acquired intangible assets

     (5,544     (5,526

Restructuring costs, net

     (320     4   

Antitrust litigation costs

     (24     (530
  

 

 

   

 

 

 

Operating income

     7,539        27,639   

Other expense

    

Interest expense, net

     (13,455     (13,868

Miscellaneous, net

     (1,331     (1,524
  

 

 

   

 

 

 

Income (loss) before income taxes

     (7,247     12,247   

Income tax (expense) benefit

     2,190        (5,394
  

 

 

   

 

 

 

Net income (loss)

     (5,057     6,853   
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments

     (135     2,731   

Pension and OPEB liability, net of tax

     632        15,438   
  

 

 

   

 

 

 

Total other comprehensive income

     497        18,169   
  

 

 

   

 

 

 

Comprehensive income (loss)

   $ (4,560   $ 25,022   
  

 

 

   

 

 

 


UCI Holdings Limited

Condensed Consolidated Balance Sheets

(in thousands)

 

     March 31,
2013
    December 31,
2012
 
     (unaudited)     (audited)  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 69,765      $ 78,917   

Accounts receivable, net

     217,931        227,542   

Related party receivables

     24,721        19,872   

Inventories

     177,112        175,291   

Deferred tax assets

     28,297        28,877   

Other current assets

     34,168        27,105   
  

 

 

   

 

 

 

Total current assets

     551,994        557,604   

Property, plant and equipment, net

     160,795        160,174   

Goodwill

     308,675        309,102   

Other intangible assets, net

     393,391        399,585   

Deferred financing costs, net

     16,784        17,483   

Other long-term assets

     3,742        3,732   
  

 

 

   

 

 

 

Total assets

   $ 1,435,381      $ 1,447,680   
  

 

 

   

 

 

 

Liabilities and shareholder’s equity

    

Current liabilities

    

Accounts payable

   $ 133,347      $ 132,803   

Current maturities of long-term debt

     2,485        3,177   

Related party payables

     581        734   

Accrued expenses and other current liabilities

     106,695        115,453   
  

 

 

   

 

 

 

Total current liabilities

     243,108        252,167   

Long-term debt, less current maturities

     690,064        690,748   

Pension and other post-retirement liabilities

     119,421        120,093   

Deferred tax liabilities

     113,820        110,965   

Other long-term liabilities

     2,367        2,546   
  

 

 

   

 

 

 

Total liabilities

     1,168,780        1,176,519   

Contingencies

    

Shareholder’s equity

    

Common stock

     320,038        320,038   

Retained deficit

     (10,300     (5,243

Accumulated other comprehensive loss

     (43,137     (43,634
  

 

 

   

 

 

 

Total shareholder’s equity

     266,601        271,161   
  

 

 

   

 

 

 

Total liabilities and shareholder’s equity

   $ 1,435,381      $ 1,447,680   
  

 

 

   

 

 

 


UCI Holdings Limited

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

     Three Months
Ended
March 31,
2013
    Three Months
Ended
March 31,
2012
 

Net cash provided by (used in) operating activities

   $ (650   $ 11,888   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (7,284     (10,728

Proceeds from sale of property, plant and equipment

     21        1,394   
  

 

 

   

 

 

 

Net cash used in investing activities

     (7,263     (9,334
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Debt repayments

     (1,452     (825
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,452     (825

Effect of exchange rate changes on cash

     213        255   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (9,152     1,984   

Cash and cash equivalents at beginning of period

     78,917        67,697   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 69,765      $ 69,681   
  

 

 

   

 

 

 


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. Additionally, Adjusted EBITDA is used in the calculation of compliance with certain covenants in the Senior Secured Credit Facilities and the indenture governing the Senior Notes. 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.

Schedule A

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(dollars in millions)

 

     Three Months
Ended
March 31,
2013
    Three Months
Ended
March 31,
2012
 

Net income (loss)

   $ (5.1   $ 6.9   

Income tax expense (benefit)

     (2.2     5.4   

Net interest expense

     13.5        13.9   

Depreciation and amortization expense

     12.8        13.0   
  

 

 

   

 

 

 

EBITDA

     19.0        39.2   

Business optimization costs

     5.0        2.3   

Cost related to implementation of cost sharing and manufacturing arrangements with FRAM Group

     1.2        3.2   

Restructuring costs, net

     0.3        —     

Cost of defending class action litigation

     —          0.5   

New business changeover and sales commitment costs

     —          0.2   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 25.5      $ 45.4   
  

 

 

   

 

 

 

Net sales

   $ 245.8      $ 261.6   

Adjusted EBITDA margin

     10.4     17.4


Schedule A (continued)

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(dollars in millions)

 

     Trailing Twelve
Months Ended
March 31,

2013
 

Net income

   $ 2.6   

Income tax expense

     —     

Net interest expense

     54.4   

Depreciation and amortization expense

     52.0   
  

 

 

 

EBITDA

     109.0   

Business optimization costs

     17.3   

Restructuring costs, net

     6.2   

Cost related to implementation of cost sharing and manufacturing arrangements with FRAM Group

     5.1   

Cost of defending class action litigation

     0.7   

Environmental accrual adjustment

     0.5   

New business changeover and sales commitment costs

     0.3   

UCI International, Inc. non-operating expenses

     0.2   
  

 

 

 

Adjusted EBITDA

   $ 139.3   
  

 

 

 

Net sales

   $ 968.7   

Adjusted EBITDA margin

     14.4

Full period estimated effect of UCI’s cost savings and synergies (a)

     54.3   
  

 

 

 

Covenant Adjusted EBITDA (b)

   $ 193.6   
  

 

 

 

Net sales

   $ 968.7   

Covenant Adjusted EBITDA margin

     20.0

 

a) Reflects the full period estimated effect of UCI International’s implemented but, as yet, unrealized cost savings initiatives and synergies, primarily associated with Rank’s acquisition of FRAM Group. As of March 31, 2013, UCI International had implemented $114.2 million of annualized cost savings and synergies, of which $59.9 million had been realized. For the three months ended March 31, 2013, UCI International incurred $5.5 million in operating expenses and $2.7 million in capital expenditures associated with these cost savings and synergies. UCI expects to incur an additional approximate $2.0 million in operating expenses and $15.0 million in capital expenditures associated with these cost savings and synergies in the last nine months of 2013.


(In $ millions)    Implemented
Cost Savings
     Cost Savings
Achieved
     Implemented
Cost Savings
to be Achieved
 

Corporate synergies (i)

   $ 16.2       $ 13.6       $ 2.6   

Procurement savings (ii)

     49.9         22.7         27.2   

In-sourcing (iii)

     29.3         17.5         11.8   

Other (iv)

     18.8         6.1         12.7   
  

 

 

    

 

 

    

 

 

 
   $ 114.2       $ 59.9       $ 54.3   
  

 

 

    

 

 

    

 

 

 

 

i. Represents our estimated cost savings from cost sharing arrangements with FRAM Group related to overhead reductions, cost savings from synergies and reduced information technology costs.
ii. Represents our estimated reductions in procurement costs resulting from benchmarking procurement costs and benefits of scale with FRAM Group.
iii. Represents our estimated cost savings from in-sourcing the manufacturing of high volume parts.
iv. Represents estimated cost savings from expenditure controls.

 

b) Reflects Adjusted EBITDA as defined in calculating covenant compliance and other ratios under UCI International’s Senior Secured Credit Facility and the Indenture governing UCI International’s 8.625% senior notes.