Delaware (State or other jurisdiction of incorporation) | 333-05978 (Commission File Number) | 58-2502320 (I.R.S. Employer Identification Number) |
303 Research Drive, Suite 400 Norcross, GA 30092 (Address of principal executive offices, including zip code) |
Exhibit No. | Description | |
99.1 | Press Release of Euramax Holdings, Inc. dated March 28, 2014, reporting Euramax Holdings, Inc.'s financial results for the fourth quarter and full year 2013. |
EURAMAX HOLDINGS, INC. | |||
By: | /s/ Mary S. Cullin | ||
Name: Mary S. Cullin | |||
Title: Senior Vice President, Chief Financial Officer and Treasurer | |||
Exhibit No. | Description | |
99.1 | Press Release dated March 28, 2014. |
• | Net sales for 2013 decreased $10.4 million, or 1.2%, to $826.7 million compared to $837.1 million for 2012. |
◦ | Net sales declines were primarily the result of lower demand in the Company's U.S. Commercial Products segment predominantly in the post frame construction market. The Company believes this decline in demand was the result of uncertain economic conditions in the U.S. commercial construction markets combined with extreme weather conditions throughout many of its core sales territories in North America during the first and fourth quarters of 2013. Net sales for the Company's European operating segments also continued to be negatively impacted by certain economic conditions and reduced consumer confidence primarily in the RV and transportation end markets we serve. |
◦ | Overall net sales declines were partially offset by higher demand in the U.S. Residential Products segment. Sales of patio covers and vinyl window products improved over the prior year driven by economic conditions in the residential repair and remodel sector. The Company believes demand for roof drainage and roofing accessory products in both the home center and distributor markets also benefited from favorable weather conditions during the second and third quarters of 2013 compared to significant drought conditions experienced in the prior year. Demand for architectural and industrial projects in the European segments also increased modestly despite market challenges in Western Europe, as a result of ongoing business development initiatives in emerging markets. |
◦ | Foreign currency translation resulted in an approximate $4.6 million increase in net sales during 2013 primarily as a result of the strengthening of the euro against the U.S. dollar compared to 2012. |
• | On a consolidated basis, income (loss) from operations in North America and Europe for 2013 declined $4.4 million, or 38.6%, to $7.0 million compared to $11.4 million for 2012. |
◦ | In the Company's U.S. segments, operating income declined $7.6 million, or 36.0%, compared to the prior year. This decline is primarily related to lower demand in the U.S. commercial construction markets and a reduction in pricing in both the U.S. Residential and U.S. Commercial segments as a result of lower raw material costs. |
◦ | In Europe, the Company's end markets continue to be negatively impacted by economic uncertainty and reduced consumer confidence, primarily in the RV and transportation end markets we serve. Despite the overall end market challenges, operating income for our European segments improved $1.6 million, or 61.5%, over the prior year. This improvement in operating income is the result of continued emphasis on various initiatives including product profitability, business development initiatives in emerging markets and actions taken to reduce operating costs and improve efficiency. |
• | Adjusted EBITDA is a significant operating measure used by the Company to measure its operating performance and liquidity. Adjusted EBITDA was $53.4 million for 2013 compared to $56.4 million for 2012. Adjusted for the impact of pro forma items, Pro Forma Adjusted EBITDA was $55.5 million for 2013 compared to $61.4 million for 2012. |
December 31, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,977 | $ | 10,024 | |||
Accounts receivable, less allowances of $2,235 and $2,751 in 2013 and 2012, respectively | 73,996 | 73,876 | |||||
Inventories, net | 89,760 | 89,294 | |||||
Income taxes receivable | 982 | 1,527 | |||||
Deferred income taxes | 580 | 907 | |||||
Other current assets | 7,008 | 4,789 | |||||
Total current assets | 181,303 | 180,417 | |||||
Property, plant, and equipment, net | 130,114 | 141,208 | |||||
Goodwill | 204,053 | 199,375 | |||||
Customer relationships, net | 40,631 | 54,589 | |||||
Other intangible assets, net | 7,073 | 7,475 | |||||
Deferred income taxes | 87 | 68 | |||||
Other assets | 8,712 | 11,290 | |||||
Total assets | $ | 571,973 | $ | 594,422 | |||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 57,262 | $ | 55,883 | |||
Accrued expenses | 26,366 | 30,667 | |||||
Accrued interest payable | 9,020 | 9,017 | |||||
Deferred income taxes | 605 | 847 | |||||
Total current liabilities | 93,253 | 96,414 | |||||
Long-term debt | 535,396 | 516,674 | |||||
Deferred income taxes | 18,980 | 20,419 | |||||
Other liabilities | 32,907 | 46,907 | |||||
Total liabilities | 680,536 | 680,414 | |||||
Shareholder's (deficit) equity | |||||||
Common stock | 195 | 189 | |||||
Additional paid-in capital | 724,071 | 721,869 | |||||
Accumulated loss | (843,750 | ) | (818,855 | ) | |||
Accumulated other comprehensive income | 10,921 | 10,805 | |||||
Total shareholders' (deficit) equity | (108,563 | ) | (85,992 | ) | |||
Total liabilities and shareholders' (deficit) equity | $ | 571,973 | $ | 594,422 |
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||
Net sales | $ | 196,431 | $ | 195,492 | $ | 826,672 | $ | 837,140 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold (excluding depreciation and amortization) | 171,539 | 166,788 | 699,962 | 701,045 | |||||||||||
Selling and general (excluding depreciation and amortization) | 15,661 | 19,069 | 75,428 | 83,492 | |||||||||||
Depreciation and amortization | 9,542 | 8,846 | 35,099 | 34,784 | |||||||||||
Other operating charges | 3,810 | 3,823 | 9,165 | 6,425 | |||||||||||
Multiemployer pension withdrawal expense | — | — | — | 39 | |||||||||||
Income (loss) from operations | (4,121 | ) | (3,034 | ) | 7,018 | 11,355 | |||||||||
Interest expense | (12,821 | ) | (14,067 | ) | (54,078 | ) | (54,858 | ) | |||||||
Other income, net | 3,343 | 4,337 | 7,404 | 5,012 | |||||||||||
Loss before income taxes | (13,599 | ) | (12,764 | ) | (39,656 | ) | (38,491 | ) | |||||||
Benefit from income taxes | (2,117 | ) | (883 | ) | (14,761 | ) | (1,723 | ) | |||||||
Net loss | $ | (11,482 | ) | $ | (11,881 | ) | $ | (24,895 | ) | $ | (36,768 | ) |
Year Ended | |||||||
December 31, 2013 | December 31, 2012 | ||||||
Net cash (used in) provided by operating activities | $ | (10,315 | ) | $ | 3,985 | ||
Investing activities: | |||||||
Proceeds from sale of assets | 2,346 | 1,321 | |||||
Capital expenditures | (10,742 | ) | (7,140 | ) | |||
Purchase of a business, net of cash acquired | — | (6,445 | ) | ||||
Net cash used in investing activities | (8,396 | ) | (12,264 | ) | |||
Financing activities: | |||||||
Net borrowings on ABL Credit Facility | 18,270 | 8,280 | |||||
Deferred financing fees | (175 | ) | (34 | ) | |||
Net cash provided by financing activities | 18,095 | 8,246 | |||||
Effect of exchange rate changes on cash | (431 | ) | (4,270 | ) | |||
Net decrease in cash and cash equivalents | (1,047 | ) | (4,303 | ) | |||
Cash and cash equivalents at beginning of year | 10,024 | 14,327 | |||||
Cash and cash equivalents at end of year | $ | 8,977 | $ | 10,024 |
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||
Net loss | $ | (11,482 | ) | $ | (11,881 | ) | $ | (24,895 | ) | $ | (36,768 | ) | |||
Add: | |||||||||||||||
Interest expense | 12,821 | 14,067 | 54,078 | 54,858 | |||||||||||
Depreciation and amortization (a) | 9,542 | 8,846 | 35,099 | 35,280 | |||||||||||
Benefit from income taxes | (2,117) | (883) | (14,761) | (1,723) | |||||||||||
Adjustments: | |||||||||||||||
Other income, net (b) | (3,343) | (4,337) | (7,404) | (5,012) | |||||||||||
Transition services agreement expense (c) | 2,000 | — | 2,000 | — | |||||||||||
Plant closure, severance, relocation and one-time compensation costs | 1,154 | 3,489 | 5,903 | 5,119 | |||||||||||
Asset write-offs and impairments (d) | 1,121 | — | 1,121 | — | |||||||||||
Non-recurring consulting, legal and professional fees | 43 | 269 | 89 | 1,014 | |||||||||||
Stock compensation expense | (37) | 755 | 2,208 | 3,036 | |||||||||||
Long term incentive plan (e) | (2,406) | (836) | (1,604) | 277 | |||||||||||
Loss on asset held for sale (f) | — | — | 1,594 | — | |||||||||||
Multiemployer pension withdrawal | — | — | — | 39 | |||||||||||
Acquisition-related costs | — | 65 | — | 292 | |||||||||||
Adjusted EBITDA (g) | $ | 7,296 | $ | 9,554 | $ | 53,428 | $ | 56,412 |
(a) | Depreciation and amortization for 2012 included amortization attributable to royalty payments under a minimum purchase agreement entered into in connection with our acquisition of a product line in 2005, which was being recognized in net sales. The royalty agreement was fully amortized as of September 28, 2012. |
(b) | Other income, net for the three months ended December 31, 2013 is primarily comprised of translation gains on intercompany obligations of approximately $3.5 million, offset by losses of $0.2 million on forward foreign currency contracts. Other income, net for the three months ended December 31, 2012 is primarily composed of translation gains on intercompany obligations of $4.6 million, offset by losses of $0.2 million on forward foreign currency contracts. |
(c) | Transition services agreement expense for the three months and year ended December 31, 2013, include expenses incurred related to the resignation of the Company's chief executive officer in November 2013. |
(d) | Asset writeoffs and impairments for the year ended December 31, 2013 includes a $1.1 million impairment of capitalized software costs as a result of the decision to abandon the implementation of an Enterprise Resource Planning System that did not align with the Company's relocation and consolidation activities. |
(e) | The Company determined that as of December 31, 2013, the liability related to the Long Term Incentive Plan (the "Plan") no longer met the probability threshold required by generally accepted accounting principles for recognition in the financial statements. As a result, previously recorded compensation expense of $2.4 million was reversed within selling, general, and administrative expenses during the fourth quarter of 2013. |
(f) | Loss on assets held for sale for the year ended December 31, 2013 includes the sale of land and buildings as part of restructuring activities in the European Engineered Products segment related to the consolidation and relocation of multiple plant facilities into one location. |
(g) | Adjusted EBITDA excludes certain pro forma adjustments allowable under the definition of Consolidated Cash Flow used in calculating the Fixed Charge Coverage Ratio and Secured Debt Ratio under the indenture for the Company’s Notes. We have prepared a reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA in the following table. |
Year Ended | |||||||
December 31, 2013 | December 31, 2012 | ||||||
Adjusted EBITDA | $ | 53,428 | $ | 56,412 | |||
Pro Forma Adjustments: | |||||||
Legal, professional and consulting fees | 963 | 1,663 | |||||
Cost savings from restructuring activities and other social programs | 1,025 | 1,574 | |||||
Pro forma impact of acquisitions and exit activities and (a) | 302 | 1,165 | |||||
Cost incurred as a result of supply disruptions | — | 635 | |||||
Contributions to pension plans in excess of net periodic pension cost (b) | (231 | ) | (19 | ) | |||
Pro Forma Adjusted EBITDA | $ | 55,487 | $ | 61,430 |
(a) | Acquisitions and exit activities in 2013 included the discontinuance of a product line and one time product enhancement costs in our European Engineered Products segment. Acquisitions and exit activities in 2012 were primarily comprised of the pro forma impact, totaling approximately $1.2 million on adjusted EBITDA, as if the acquisition of Cleveland Tubing, Inc. had occurred on the first day of the Company's fiscal year. |
(b) | These amounts represent cash contributions to defined benefit pension plans in the U.S. and UK in excess of net periodic pension cost recognized during the fiscal year. In 2013, the Company recognized a $0.2 million gain on its Senior Executive Retirement Plan as a result of the resignation of its chief executive officer in November 2013. |