Wolverine Tube Announces Third Quarter Results Free Cash Flow $18
Million in the Quarter HUNTSVILLE, Ala., Oct. 31
/PRNewswire-FirstCall/ -- Wolverine Tube, Inc. today reported a net
loss of $31.7 million or $2.58 per share for the third quarter of
2003, compared with net income of $1.8 million, or $0.15 per
diluted share in the third quarter of 2002. The third quarter
results included a $23.2 million goodwill impairment charge and a
previously announced restructuring charge of $6.4 million ($4.3
million after tax). Excluding these items, this net loss would have
been $4.3 million or $0.35 per share in the third quarter of 2003.
Net sales for the third quarter of 2003 were $144.1 million
compared with $134.8 million in the year-earlier period. Total
pounds of product shipped were 80.5 million pounds, compared to
77.2 million pounds in the prior year. Gross profit for the third
quarter of 2003 decreased to $6.2 million from $14.5 million in the
third quarter of 2002. Cash flow from operations was $19.4 million
in the third quarter of 2003, compared to $16.5 million in the
prior year. Free cash flow generated in the quarter was $17.8
million, compared to $14.4 million in the third quarter of 2002.
Free cash flow is defined as cash flow from operations less capital
expenditures. Results for the three and nine-month periods ended
September 28, 2003, are outlined in the accompanying tables.
Commenting on the announcement, Dennis Horowitz, Chairman,
President and Chief Executive Officer said, "The third quarter
financial results were disappointing and to a large extent reflect
issues that we have spoken about before, including rising energy,
healthcare and pension costs, a leaner product mix, pricing
pressures and the adverse impact of the strong Canadian dollar.
Exacerbating the impact of the aforementioned on operating profit
was a confluence of events which negatively affected manufacturing
efficiencies, including, lower than anticipated volumes at our
Booneville facility, an unsuccessful union organizing attempt at
our Decatur facility and the east coast blackout which affected our
London, Ontario, Canada operations." THIRD QUARTER RESULTS BY
SEGMENT Shipments of commercial products totaled 53.5 million
pounds, a 5.7 percent increase from last year's third quarter
shipments of 50.6 million pounds. Net sales were $106.1 million, up
5.1 percent from last year's third quarter sales of $101.0 million.
Gross profit was $5.9 million, compared to last year's third
quarter gross profit of $11.7 million. The decrease in gross profit
reflects the shift in mix from the higher value added technical and
enhanced surface tube to lower value smooth tube and the
aforementioned costs and manufacturing issues. Shipments of
wholesale products totaled 22.4 million pounds, a 7.2 percent
increase over last year's third quarter shipments of 20.9 million
pounds. Net sales were $28.5 million, up 15.7 percent from last
year's third quarter sales of $24.6 million. Gross profit was $38
thousand, compared to $1.9 million in last year's third quarter.
Again, the cost issues discussed above, along with rapidly
increasing copper prices and short supply of recycled materials,
have impacted this quarter's operations as compared to the third
quarter of last year. Shipments of rod, bar and other products
totaled 4.6 million pounds, a 20.7 percent decrease from last
year's third quarter shipments of 5.8 million pounds. Net sales
were $9.5 million, compared to $9.2 million in the third quarter of
2002. Gross profit was $330 thousand, down from last year's $862
thousand. Gains in our European distribution facility were more
than offset by losses in North America in rod and bar, which were
due to declines in volume and price. OUTLOOK Commenting on the
outlook for the Company, Horowitz said, "As we look forward, we are
finally beginning to sense an improvement in the industrial sector
of the North American economy. Also, the demand from our China
facility remains strong and our Portugal facility continues to
expand, albeit at a rate and pace below our expectations,
reflecting the lackluster European economy. Productivity and
efficiencies at our facilities have returned to more normal levels
and we will benefit financially from the workforce reduction that
was previously announced." Horowitz continued, "We anticipate
recording an additional restructuring charge of $2.5 million to
$5.0 million in future quarters, for the Booneville closure. At the
same time, while overall business conditions are still challenging,
early indications are that the fourth quarter will show improvement
over our recently completed third quarter, even given our normal
seasonality." THIRD QUARTER CONFERENCE CALL The Company will hold a
conference call on October 31, 2003 at 9:30 a.m. Central Time
(10:30 a.m. ET) to discuss the contents of this release. Dial in to
the conference call line at (800) 311-9402 Access Code: Wolverine,
ten minutes prior to the scheduled start time. A link to the
broadcast can be found on the Company's website at
http://www.wlv.com/, in the Investor Relations section under
"Conference Calls" link. If you are unable to participate at this
time, a replay will be available through November 14, 2003, on this
website or by calling (800) 858-5309 (access code 40179, pass code
40179). Should you have any problems accessing the call or the
replay, please contact the Company at (256) 890-0460. The tables
following the text of this press release provide financial details
that are included in this press release and that will be discussed
on the conference call. This includes a reconciliation of net cash
provided (used) by operating activities to free cash flow and net
cash provided (used) by operating activities to adjusted earnings
before interests, taxes, depreciation and amortization. This press
release, including these financial details, is now available on the
Wolverine website at http://www.wlv.com/ in the Investor Relations
section under the heading Press Releases. ABOUT WOLVERINE TUBE,
INC. Wolverine Tube, Inc. is a world-class quality partner,
providing its customers with copper and copper alloy tube,
fabricated products, metal joining products as well as copper and
copper alloy rod, bar and other products. Internet addresses:
http://www.wlv.com/ and http://www.silvaloy.com/. Forward-looking
statements in this press release are made pursuant to the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements use such words as "may,"
"will," "expect," "believe," "plan," "anticipate" and other similar
terminologies. This press release contains forward-looking
statements regarding factors affecting the Company's expectations
of future sales, earnings and cash flows. Such statements are based
on current expectations, estimates and projections about the
industry and markets in which the Company operates, as well as
management's beliefs and assumptions and information currently
available. These forward-looking statements are subject to various
risks and uncertainties that could cause actual results to differ
materially from those stated or implied by such forward-looking
statements. The Company undertakes no obligation to publicly
release any revision of any forward-looking statements contained
herein to reflect events or circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events. With
respect to expectations of future sales, earnings and cash flows,
factors that could affect actual results include, without
limitation, the timing and magnitude of recovery from the current
economic downturn, costs and cost savings related to the Booneville
closing, the persistence of low levels of U.S. commercial
construction activity, the effect of currency fluctuations,
competitive products and pricing, environmental contingencies,
regulatory pressures, labor cost (including healthcare and pension
expense), raw material costs, technology, fuel and energy costs,
the mix of geographic and product revenues, and any inability to
achieve or delays in achieving anticipated results from our cost
reduction initiatives (including our workforce reduction program),
product and process development activities, productivity and
efficiency initiatives, global expansion activities, market share
penetration efforts and working capital management programs. A
discussion of risks and uncertainties which could cause actual
results to differ from those contained in the forward-looking
statements, can be found in the Company's Annual Report on Form
10-K for the most recently ended fiscal year and reports filed from
time to time with the Securities and Exchange Commission. WOLVERINE
TUBE, INC. FINANCIAL DATA Consolidated Statements of Operations
(Unaudited) In thousands, except per share data Three-month
Nine-month period ended period ended ----------------------
---------------------- 9/28/2003 9/29/2002 9/28/2003 9/29/2002
--------- --------- --------- --------- Pounds shipped 80,520
77,232 247,285 238,342 ========= ========= ========= ========= Net
sales $ 144,099 $ 134,817 $ 440,574 $ 424,907 Cost of goods sold
137,857 120,347 407,105 376,902 --------- --------- ---------
--------- Gross profit 6,242 14,470 33,469 48,005 Selling, general
and administrative expenses 8,105 7,061 23,812 23,215 Restructuring
charges 6,438 -- 6,438 -- --------- --------- --------- ---------
Income (loss) from operations (8,301) 7,409 3,219 24,790 Interest
expense, net 5,269 5,620 15,739 14,921 Gain on extinguishment of
debt -- (1,074) -- (1,074) Amortization and other, net 244 455
1,278 1,057 Goodwill impairment 23,153 -- 23,153 -- ---------
--------- --------- --------- Income (loss) before income taxes
(36,967) 2,408 (36,951) 9,886 Income tax provision (benefits)
(5,245) 581 (5,966) 2,885 --------- --------- --------- ---------
Net income (loss) $ (31,722) $ 1,827 $ (30,985) $ 7,001 =========
========= ========= ========= Net income (loss) per common share -
basic $ (2.58) $ 0.15 $ (2.52) $ 0.57 Net income (loss) per common
share - diluted $ (2.58) $ 0.15 $ (2.52) $ 0.56 ========= =========
========= ========= Basic shares 12,279 12,258 12,273 12,219
Diluted shares 12,279 12,405 12,273 12,351 ========= =========
========= ========= Segment Information (Unaudited) In thousands
Three-month Nine-month period ended period ended
---------------------- ---------------------- 9/28/2003 9/29/2002
9/28/2003 9/29/2002 --------- --------- --------- --------- Pounds:
Commercial 53,469 50,564 167,723 162,088 Wholesale 22,415 20,899
65,897 59,516 Rod, bar, and other 4,636 5,769 13,665 16,738
--------- --------- --------- --------- Total pounds 80,520 77,232
247,285 238,342 ========= ========= ========= ========= Net sales:
Commercial $ 106,098 $ 100,996 $ 332,099 $ 326,217 Wholesale 28,512
24,650 80,917 71,537 Rod, bar, and other 9,489 9,171 27,558 27,153
--------- --------- --------- --------- Total net sales $ 144,099 $
134,817 $ 440,574 $ 424,907 ========= ========= ========= =========
Gross Profit: Commercial $ 5,874 $ 11,709 $ 31,749 $ 41,200
Wholesale 38 1,899 500 4,844 Rod, bar, and other 330 862 1,220
1,961 --------- --------- --------- --------- Total gross profit $
6,242 $ 14,470 $ 33,469 $ 48,005 ========= ========= =========
========= WOLVERINE TUBE, INC. Condensed Consolidated Balance
Sheets (Unaudited) In thousands 9/28/03 12/31/02 Assets ---------
--------- Cash and cash equivalents $ 50,059 $ 53,920 Accounts
receivable 87,469 65,212 Inventory 96,396 85,485 Other current
assets 10,207 14,402 Property, plant and equipment, net 202,806
208,999 Other assets 101,034 122,702 --------- --------- Total
assets $ 547,971 $ 550,720 ========= ========= Liabilities and
Stockholders' Equity Accounts payables and other accrued expenses $
65,776 $ 49,583 Short-term borrowings 1,574 1,217 Deferred income
taxes 6,687 11,902 Pension liabilities 18,776 14,540 Long-term debt
255,451 255,712 Other liabilities 17,633 17,131 --------- ---------
Total liabilities 365,897 350,085 --------- --------- Stockholders'
equity 182,074 200,635 --------- --------- Total liabilities and
stockholders' equity $ 547,971 $ 550,720 ========= =========
WOLVERINE TUBE, INC. Reconciliation of Net Cash Provided (Used) by
Operating Activities to Free Cash Flow (1) (Unaudited) In thousands
Three-month Nine-month period ended period ended
---------------------- ---------------------- 9/28/2003 9/29/2002
9/28/2003 9/29/2002 --------- --------- --------- --------- Net
income (loss) $ (31,722) $ 1,827 $ (30,985) $ 7,001 Depreciation
and amortization 4,743 4,601 14,117 13,326 Changes in operating
assets and liabilities 21,011 10,887 (9,855) 8,313 Goodwill
impairment 23,153 -- 23,153 -- Non-cash portion of restructuring
charge 5,077 -- 5,077 -- Other (2,834) (787) (3,717) (583)
--------- --------- --------- --------- Net cash provided (used) by
operating activities 19,428 16,528 (2,210) 28,057 Additions to
property, plant and equipment (1,676) (2,129) (4,330) (5,409)
--------- --------- --------- --------- Free cash flow $ 17,752 $
14,399 $ (6,540) $ 22,648 ========= ========= ========= =========
Reconciliation of Net Cash Provided (Used) by Operating Activities
to Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (2) (Unaudited) In thousands Three-month Nine-month
period ended period ended ----------------------
---------------------- 9/28/2003 9/29/2002 9/28/2003 9/29/2002
--------- --------- --------- --------- Net cash provided (used) by
operating activities $ 19,428 $ 16,528 $ (2,210) $ 28,057 Changes
in operating assets and liabilities (21,011) (10,887) 9,855 (8,313)
Other 2,834 787 3,717 583 Non-cash portion of restructuring charge
(5,077) 0 (5,077) 0 Restructuring charges 6,438 -- 6,438 --
Interest expense, net 5,269 5,620 15,739 14,921 Income tax
provision (benefit) (5,245) 581 (5,966) 2,885 --------- ---------
--------- --------- Adjusted earnings before interest, taxes,
depreciation and amortization $ 2,636 $ 12,629 $ 22,496 $ 38,133
========= ========= ========= ========= (1) This statement
reconciles net cash provided (used) by operating activities to free
cash flow, which is a non-GAAP financial measure. Management
believes free cash flow is a meaningful measure of financial
performance and liquidity and provides investors with a measure of
cash that may be used for debt service and for other purposes. (2)
This statement reconciles net cash provided (used) by operating
activities to adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA), which is a
non-GAAP financial measure. Management believes Adjusted EBITDA is
a meaningful measure of liquidity and the Company's ability to
service debt. DATASOURCE: Wolverine Tube, Inc. CONTACT: James E.
Deason, Executive Vice President, Chief Financial Officer of
Wolverine Tube, +1-256-580-3959 Web site: http://www.wlv.com/
http://www.silvaloy.com/
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