EX-99.1 2 file2.htm PRESS RELEASE DATED NOVEMBER 13, 2007

Exhibit 99.1


 

 

 

FOR: PROLIANCE INTERNATIONAL, INC.

 

 

 

 

 

Contact:
Arlen F. Henock
Chief Financial Officer
(203) 859-3626

FOR IMMEDIATE RELEASE

 

 

 

 

FD
Investor Contact: Eric Boyriven,
Alexandra Tramont
(212) 850-5600

PROLIANCE INTERNATIONAL, INC. REPORTS IMPROVEMENT IN 2007 THIRD

QUARTER OPERATING INCOME

NEW HAVEN, CONNECTICUT, November 13, 2007 ( Proliance International, Inc. (AMEX: PLI) today announced results for the third quarter ended September 30, 2007.

Charles E. Johnson, President and CEO of Proliance stated, “I am pleased to report improved operating results in the third quarter as we saw the benefits of our restructuring initiatives drive improved profitability. Operating income increased by $0.6 million to $6.2 million in the third quarter, despite a $1.0 million increase in restructuring expenses year-over-year. The 10.6% improvement in operating income primarily reflects the impact of our continued cost reduction efforts. These actions have significantly reduced operating expenses, thereby improving our operating performance and offsetting the impact of lower revenues.”

For the third quarter of 2007, net sales were $115.3 million, down 4.5% from $120.7 million in the third quarter of 2006. In the domestic segment, the Company experienced a decline in sales of air conditioning and heat exchange products, primarily attributable to the impact of reductions in branch locations, soft market conditions and customer inventory reduction actions. International sales increased by $3.5 million, or 12.4%, on a year-over-year basis, primarily due to higher marine sales, the strength in the heavy duty market and the effect of changes in currency exchange rates.

Net income for the three months ended September 30, 2007 was $0.1 million, or $0.01 per basic and diluted share, which included $1.9 million in restructuring charges as well as $0.9 million in one-time debt extinguishment costs as a result of the Company’s recent senior debt refinancing. This compares to net income of $1.3 million, or $0.08 per basic and diluted share, for the same period a year ago, which included $0.8 million in restructuring charges.

Gross margin, as a percentage of net sales, was 23.6% during the third quarter of 2007 versus 25.2% in the third quarter of 2006, reflecting higher commodity costs, competitive pricing pressure, the shift in the customer sales mix away from the branch locations to wholesale customers, as well as lower

 

 

 



production levels due to the Company’s inventory reduction actions. This was offset in part by reduced expenses from lower manufacturing levels and inventory related costs.

Selling, general and administrative expenses decreased in the third quarter of 2007 both in dollars and as a percentage of net sales compared to the third quarter of 2006. The $4.8 million decline in expenses and the decline to 16.6% from 19.8% as a percentage of net sales reflect the actions taken to lower administrative spending during 2006 and 2007, as well as lower branch expenses as a result of the year-over-year reduction in branch locations.

As previously announced on October 2, 2007, the Company closed two branches in the third quarter of 2007 and is closing an additional 36 branch locations during the fourth quarter. These actions should drive selling, general and administrative expenses as a percentage of net sales lower in future quarters. As a result of these branch closures, the Company expects to record between $0.5 million and $0.7 million in additional restructuring charges in the fourth quarter of 2007. The Company will have 47 branches in operation after these actions.

In the third quarter of 2007, the Company reported $1.9 million of restructuring costs compared to $0.8 million in the same period a year ago. The 2007 restructuring costs were associated with changes to the Company’s branch operating structure and headcount reductions in North America. Since July 1, 2007, the Company has reduced headcount by approximately 16% including the previously announced branch closures. All of the restructuring charges described above are part of the previously announced $5.0 million to $7.0 million in total restructuring initiatives to be undertaken throughout 2007, of which approximately $3.2 million have been incurred to date.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding restructuring charges were $10.3 million and $8.1 million for the three months ended September 30, 2007 and 2006, respectively. EBITDA excluding restructuring charges and the previously announced arbitration earn-out decision charge incurred in the second quarter of 2007 was $12.1 million and $13.5 million for the nine months ended September 30, 2007 and 2006, respectively. The EBITDA measures above constitute “non-GAAP financial measures” as defined by the rules of the Securities and Exchange Commission. The Company has provided the foregoing data as it believes that it provides the marketplace with additional information useful in evaluating the financial performance of the Company during the three and nine months ended September 30, 2007 and 2006. A separate tabular presentation of this information is provided herein, to indicate how the financial measure was determined.

Inventories at September 30, 2007 of $111.2 million were $7.8 million lower than levels at December 31, 2006 and $25.9 million lower than levels at September 30, 2006, reflecting the Company’s efforts to better manage its inventory levels through additional speed and supply flexibility, along with other ongoing inventory reduction efforts. The Company continues to expect year-end inventory levels of approximately $100 million.

Mr. Johnson concluded, “Looking ahead, we are on track to deliver on our previously announced guidance for the year. We continue to expect year-over-year improved financial results in the fourth quarter and profitability on a pre-tax basis before restructuring and debt extinguishment expenses for the second half of 2007. While there is a risk of on-going softness in our markets, we are taking the necessary steps and making required investments to drive our operating costs even lower in future periods while continuing to deliver on our commitment to our customers.”

 

 

 



Proliance International, Inc. is a leading global manufacturer and distributor of aftermarket heat exchange and temperature control products for automotive and heavy-duty applications serving North America, Central America and Europe.

Proliance International, Inc.’s Strategic Corporate Values Are:

 

Being An Exemplary Corporate Citizen

 

Employing Exceptional People

 

Dedication To World-Class Quality Standards

 

Market Leadership Through Superior Customer Service

 

Commitment to Exceptional Financial Performance

FORWARD-LOOKING STATEMENTS

Statements included in this press release, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements relating to the future financial performance or liquidity of the Company are subject to business conditions and growth in the general economy and automotive and truck business, the impact of competitive products and pricing, changes in customer product mix, failure to obtain new customers or retain old customers or changes in the financial stability of customers, changes in the cost of raw materials, components or finished products and changes in interest rates. Such statements are based upon the current beliefs and expectations of Proliance management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. When used in this press release, the terms “anticipate,” “believe,” “estimate,” “expect,” “may,” “objective,” “plan,” “possible,” “potential,” “project,” “will” and similar expressions identify forward-looking statements.

Factors that could cause Proliance’s results to differ materially from those described in the forward-looking statements can be found in the 2006 Annual Report on Form 10-K of Proliance, in the Quarterly Reports on Forms 10-Q of Proliance, and Proliance’s other filings with the SEC. The forward-looking statements contained in this press release are made as of the date hereof, and we do not undertake any obligation to update any forward-looking statements, whether as a result of future events, new information or otherwise.

 

 

-TABLES FOLLOW-

 



PROLIANCE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(unaudited)

 

 

 

Three Months
Ended September 30, 

 

Nine Months
Ended September 30,

 

 

 

 

2007

 

 

2006

 

 

2007

 

 

2006

 

Net sales

 

$

115,333

 

$

120,734

 

$

309,685

 

$

324,180

 

Cost of sales

 

 

88,115

 

 

90,327

 

 

243,857

 

 

243,789

 

Gross margin

 

 

27,218

 

 

30,407

 

 

65,828

 

 

80,391

 

Selling, general and administrative expenses

 

 

19,107

 

 

23,923

 

 

59,602

 

 

71,231

 

Arbitration earn-out decision

 

 

 

 

 

 

3,174

 

 

 

Restructuring charges

 

 

1,864

 

 

837

 

 

3,192

 

 

1,491

 

Operating income (loss)

 

 

6,247

 

 

5,647

 

 

(140

)

 

7,669

 

Interest expense

 

 

4,556

 

 

3,634

 

 

10,159

 

 

8,578

 

Debt extinguishment costs

 

 

891

 

 

 

 

891

 

 

 

Income (loss) before taxes

 

 

800

 

 

2,013

 

 

(11,190

)

 

(909

)

Income tax provision

 

 

671

 

 

754

 

 

1,247

 

 

1,849

 

Net income (loss)

 

$

129

 

$

1,259

 

$

(12,437

)

$

(2,758

)

Basic income (loss) per common share

 

$

0.01

 

$

0.08

 

$

(0.89

)

$

(0.18

)

Diluted income (loss) per common share

 

$

0.01

 

$

0.08

 

$

(0.89

)

$

(0.18

)

Weighted average common shares

– Basic

 

 

15,269

 

 

15,256

 

 

15,265

 

 

15,256

 

 

– Diluted

 

 

17,454

 

 

15,803

 

 

15,265

 

 

15,256

 

 

 

Table 1 of 4

 



 

PROLIANCE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

September 30, 2007

 

December 31, 2006

 

 

 

(unaudited)

 

 

 

Cash and cash equivalents

 

 

$      1,043

 

 

$      3,135

 

Accounts receivable, net

 

 

70,555

 

 

58,209

 

Inventories, net

 

 

111,155

 

 

118,912

 

Other current assets

 

 

7,416

 

 

7,498

 

Net property, plant and equipment

 

 

21,379

 

 

23,876

 

Other assets

 

 

13,011

 

 

12,732

 

Total assets

 

 

$   224,559

 

 

$   224,362

 

Accounts payable

 

 

$     55,478

 

 

$     58,114

 

Accrued liabilities

 

 

27,613

 

 

28,355

 

Total debt

 

 

71,056

 

 

55,202

 

Other long-term liabilities

 

 

5,430

 

 

8,218

 

Stockholders’ equity

 

 

64,982

 

 

74,473

 

Total liabilities and stockholders’ equity

 

 

$   224,559

 

 

$  224,362

 

Table 2 of 4

 

 



 

 

 

 

 

PROLIANCE INTERNATIONAL, INC.

SUPPLEMENTARY INFORMATION

(in thousands)

(unaudited)

 

 

 

Three Months
Ended September 30, 

 

Nine Months
Ended September 30, 

 

 

 

2007

 

2006

 

2007

 

2006

 

SEGMENT DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

84,030

 

$

92,890

 

$

229,672

 

$

253,470

 

International

 

 

31,303

 

 

27,844

 

 

80,013

 

 

70,710

 

Total net sales

 

$

115,333

 

$

120,734

 

$

309,685

 

$

324,180

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

7,804

 

$

6,509

 

$

10,532

 

$

12,781

 

Restructuring charges

 

 

(1,492

)

 

(263

)

 

(2,727

)

 

(849

)

Domestic total

 

 

6,312

 

 

6,246

 

 

7,805

 

 

11,932

 

International

 

 

2,141

 

 

2,229

 

 

2,689

 

 

4,341

 

Restructuring charges

 

 

(372

)

 

(574

)

 

(465

)

 

(642

)

International total

 

 

1,769

 

 

1,655

 

 

2,224

 

 

3,699

 

Corporate expenses

 

 

(1,834

)

 

(2,254

)

 

(6,995

)

 

(7,962

)

Arbitration earn-out decision

 

 

 

 

 

 

(3,174

)

 

 

Total operating income (loss)

 

$

6,247

 

$

5,647

 

$

(140

)

$

7,669

 

CAPITAL EXPENDITURES, Net

 

$

791

 

$

1,093

 

$

1,004

(a)

$

3,688

 

 

 

(a)

Includes proceeds of $0.8 million from sale of a facility.

 

 

Table 3 of 4

 



PROLIANCE INTERNATIONAL, INC.

SUPPLEMENTARY INFORMATION

(in thousands)

(unaudited)

NON-GAAP FINANCIAL MEASURE - EBITDA
BEFORE RESTRUCTURING AND ARBITRATION DECISION CHARGES

 

 

 

Three Months
Ended September 30, 

 

Nine Months
Ended September 30, 

 

 

 

2007

 

2006

 

2007

 

2006

 

Operating income (loss)

 

$

6,247

 

$

5,647

 

$

(140

)

$

7,669

 

Depreciation and amortization(a)

 

 

2,197

 

 

1,639

 

 

5,857

 

 

4,311

 

EBITDA

 

 

8,444

 

 

7,286

 

 

5,717

 

 

11,980

 

Restructuring charges

 

 

1,864

 

 

837

 

 

3,192

 

 

1,491

 

Arbitration earn-out decision

 

 

 

 

 

 

3,174

 

 

 

EBITDA before restructuring and arbitration decision charges(b)

 

$

10,308

 

$

8,123

 

$

12,083

 

$

13,471

 

(a)

Depreciation and amortization does not include amortization of deferred debt costs that are classified as interest expense.

(b)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) less restructuring charges and the arbitration earn-out decision charge constitutes a “non-GAAP financial measure” as defined by the rules of the Securities and Exchange Commission. The Company has provided the foregoing data as it believes that it provides the marketplace with additional information useful in evaluating the financial performance of the Company during the three and nine months ended September 30, 2007 and 2006.

 

 

Table 4 of 4

END