Accuride saw third-quarter sales increase compared to a year earlier, but had a net loss of more than $200 million, largely because of restructuring charges. The company's stock will be suspended from trading on the New York Stock Exchange.
Third-quarter sales were $239.5 million, up 8.6 percent compared with $220.6 million in the prior year period. The increase in sales is related to strong demand for wheel-end components and military wheels as well as raw material recovery surcharges, partially offset by reduced demand from customers in the commercial vehicle industry.
On a U.S. GAAP basis, the company reported a net loss of $201.2 million, or ($5.67) per diluted share, compared with a net loss of $1.2 million, or ($0.03) per diluted share, in the prior year.
The results for the quarter were impacted by $195.5 million in non-cash goodwill and other intangible impairment and $6.5 million of restructuring charges totaling $202 million, or ($5.69) per diluted share.
"Throughout the third quarter, we continued to build on the momentum from the previous quarter including organic growth initiatives and operating improvements," said Bill Lasky, Accuride's President and CEO. "Even though customer demand in our end markets remained at low levels, the restructuring initiatives announced during the quarter allowed us to streamline our operations and lower operating expenses without hindering our ability to meet projected customers' needs during the next industry peak build levels."
Gross profit fell to $11.9 million, or 5 percent of sales, including $6.8 million in costs related to the recently announced restructuring initiatives compared to $13.3 million, or 6 percent of sales, in third quarter, 2007.
Gross profit in the Wheels segment declined compared to the prior year quarter primarily due to lower demand for commercial vehicle wheels and $4.3 million in costs related to the recently announced restructuring initiatives. Gross profit in 2007 for the Wheels segment benefited from $0.4 million related to a commercial dispute with a customer which was offset by a $1.2 million charge related to a change in post-employment benefits.
The company had an operating loss of $215.1 million in the third quarter of 2008, due to $212.2 million in goodwill and other intangible impairment and $11.5 million in restructuring charges.
Excluding these charges, the company experienced a decrease in operating expenses totaling
$3.6 million related to on-going expense and salary reduction initiatives.
Accuride's stock will be suspended from trading on the New York Stock Exchange starting Wednesday, Nov. 12, due to the fact the company fell below the NYSE's continued listing standard regarding average global market capitalization over a consecutive 30 trading day period of not less than $25 million, which the NYSE views as a minimum threshold for continued listing. Accuride does not plan to appeal the suspension. The company anticipates being quoted on the Pink Sheet Electronic Quotation Service as soon as the NYSE suspends trading. Company officials noted that not being listed on the NYSE is not a default under the company's credit agreement.
On Sept. 23, the company announced a series of strategic restructuring initiatives to
reduce expenses, increase competitiveness, strengthen customer relationships and improve
shareholder value.
As a result of the initial initiatives, Accuride eliminated 392 positions, or 11 percent of its total
workforce. At the same time, the company reiterated that it would continue to pursue a second
phase of initiatives that would further reduce overhead costs and improve asset utilization
through the redeployment of equipment and rationalization of facilities, while maintaining
capacity to service projected customer needs during peak build levels.
The company incurred a restructuring charge of approximately $11.5 million in the third quarter
of 2008, of which a total of $7.2 million will impact cash during 2008 and 2009. It is expected
that the restructuring will save the company an estimated $6 million in 2008 and generate
annual cost savings of $27.5 million thereafter. The impacts and benefits of the second phase of
restructuring are expected to be announced in late fourth quarter.
During the third quarter, the industry saw improvement within the North America Class 8 segment compared to the previous year's third quarter, such improvement however, was offset by declines in North American Class 5-7, U.S. trailer and aftermarket segments. Backlogs within the Class 5-8 markets as well as the trailer market are currently at historical lows and order boards within these markets saw month-over-month declines in the third quarter.
With backlogs failing to increase, some OEMs continue to reduce their build plans with very little notice to suppliers for the remainder of 2008. Currently OEM reported build rates translate into North America Class 8 production levels of approximately 200,000 units for 2008.
Looking ahead to 2009, Accuride says it does not anticipate a significant pre-buy in advance of upcoming changes in emission standards similar to what was experienced in 2006. According to industry experts, equipment demand will remain at replacement levels through the first half of 2009 as the general economy and freight environment remain weak. Therefore, 2009 outlook expectations have been lowered with an industry rebound not expected until the second half of the year at the earliest.
"Despite a very challenging demand and raw material environment, we have made great
strides by implementing operating improvements in a number of our businesses," said Lasky.
"The initial restructuring steps taken earlier this quarter will enable us to strengthen the
company as we head into 2009 with an estimated $20 million in year-over-year cost savings.
"There are additional initiatives to be announced later in the fourth quarter that provide additional savings in 2009. While we are not yet prepared to share the details, we are drafting a phase two restructuring plan that has the potential to contribute an additional $12 [million] to $15 million to our bottom line starting in 2010. Along with a lower cost structure for Accuride, the plan will result in added capacity in key areas."
Third-quarter sales were $239.5 million, up 8.6 percent compared with $220.6 million in the prior year period. The increase in sales is related to strong demand for wheel-end components and military wheels as well as raw material recovery surcharges, partially offset by reduced demand from customers in the commercial vehicle industry.
On a U.S. GAAP basis, the company reported a net loss of $201.2 million, or ($5.67) per diluted share, compared with a net loss of $1.2 million, or ($0.03) per diluted share, in the prior year.
The results for the quarter were impacted by $195.5 million in non-cash goodwill and other intangible impairment and $6.5 million of restructuring charges totaling $202 million, or ($5.69) per diluted share.
"Throughout the third quarter, we continued to build on the momentum from the previous quarter including organic growth initiatives and operating improvements," said Bill Lasky, Accuride's President and CEO. "Even though customer demand in our end markets remained at low levels, the restructuring initiatives announced during the quarter allowed us to streamline our operations and lower operating expenses without hindering our ability to meet projected customers' needs during the next industry peak build levels."
Gross profit fell to $11.9 million, or 5 percent of sales, including $6.8 million in costs related to the recently announced restructuring initiatives compared to $13.3 million, or 6 percent of sales, in third quarter, 2007.
Gross profit in the Wheels segment declined compared to the prior year quarter primarily due to lower demand for commercial vehicle wheels and $4.3 million in costs related to the recently announced restructuring initiatives. Gross profit in 2007 for the Wheels segment benefited from $0.4 million related to a commercial dispute with a customer which was offset by a $1.2 million charge related to a change in post-employment benefits.
The company had an operating loss of $215.1 million in the third quarter of 2008, due to $212.2 million in goodwill and other intangible impairment and $11.5 million in restructuring charges.
Excluding these charges, the company experienced a decrease in operating expenses totaling
$3.6 million related to on-going expense and salary reduction initiatives.
Accuride's stock will be suspended from trading on the New York Stock Exchange starting Wednesday, Nov. 12, due to the fact the company fell below the NYSE's continued listing standard regarding average global market capitalization over a consecutive 30 trading day period of not less than $25 million, which the NYSE views as a minimum threshold for continued listing. Accuride does not plan to appeal the suspension. The company anticipates being quoted on the Pink Sheet Electronic Quotation Service as soon as the NYSE suspends trading. Company officials noted that not being listed on the NYSE is not a default under the company's credit agreement.
On Sept. 23, the company announced a series of strategic restructuring initiatives to
reduce expenses, increase competitiveness, strengthen customer relationships and improve
shareholder value.
As a result of the initial initiatives, Accuride eliminated 392 positions, or 11 percent of its total
workforce. At the same time, the company reiterated that it would continue to pursue a second
phase of initiatives that would further reduce overhead costs and improve asset utilization
through the redeployment of equipment and rationalization of facilities, while maintaining
capacity to service projected customer needs during peak build levels.
The company incurred a restructuring charge of approximately $11.5 million in the third quarter
of 2008, of which a total of $7.2 million will impact cash during 2008 and 2009. It is expected
that the restructuring will save the company an estimated $6 million in 2008 and generate
annual cost savings of $27.5 million thereafter. The impacts and benefits of the second phase of
restructuring are expected to be announced in late fourth quarter.
During the third quarter, the industry saw improvement within the North America Class 8 segment compared to the previous year's third quarter, such improvement however, was offset by declines in North American Class 5-7, U.S. trailer and aftermarket segments. Backlogs within the Class 5-8 markets as well as the trailer market are currently at historical lows and order boards within these markets saw month-over-month declines in the third quarter.
With backlogs failing to increase, some OEMs continue to reduce their build plans with very little notice to suppliers for the remainder of 2008. Currently OEM reported build rates translate into North America Class 8 production levels of approximately 200,000 units for 2008.
Looking ahead to 2009, Accuride says it does not anticipate a significant pre-buy in advance of upcoming changes in emission standards similar to what was experienced in 2006. According to industry experts, equipment demand will remain at replacement levels through the first half of 2009 as the general economy and freight environment remain weak. Therefore, 2009 outlook expectations have been lowered with an industry rebound not expected until the second half of the year at the earliest.
"Despite a very challenging demand and raw material environment, we have made great
strides by implementing operating improvements in a number of our businesses," said Lasky.
"The initial restructuring steps taken earlier this quarter will enable us to strengthen the
company as we head into 2009 with an estimated $20 million in year-over-year cost savings.
"There are additional initiatives to be announced later in the fourth quarter that provide additional savings in 2009. While we are not yet prepared to share the details, we are drafting a phase two restructuring plan that has the potential to contribute an additional $12 [million] to $15 million to our bottom line starting in 2010. Along with a lower cost structure for Accuride, the plan will result in added capacity in key areas."
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