HUNTSVILLE, Ala., April 29, 2005 (PRIMEZONE) -- Wolverine Tube, Inc. (NYSE:WLV) today reported results for the first quarter ended April 3, 2005. Net loss for the first quarter of 2005 was $2.5 million or $0.17 per share, versus net income of $1.4 million, or $0.11 per diluted share ($1.8 million or $0.14 per diluted share excluding restructuring charges) in the first quarter of 2004. Included in this net loss was a $521 thousand tax charge related to the repatriation of $10.2 million from China. Excluding this charge, the net loss would have been $2.0 million or $0.13 per share. Net sales for the first quarter of 2005 were $213.5 million, a 3.7 percent increase over the first quarter of 2004. The increase in net sales is primarily attributable to the rise in COMEX copper prices, partly offset by reduced volumes. COMEX copper prices averaged $1.47 per pound in the first quarter of 2005 compared to $1.23 per pound in the first quarter of 2004. Total pounds of product shipped were 83.8 million pounds, a decrease of 10.3 percent from last year's first quarter. Gross profit for the first quarter of 2005 was to $10.1 million as compared to $17.5 million in the first quarter of 2004.
Commenting on the results, Dennis Horowitz, Chairman and Chief Executive Officer said, "The first quarter of 2005 was challenging and disappointing. The slowing pace of economic growth in the quarter, coupled with the three months of declining durable goods orders, impacted not only Wolverine's but other industrial companies' performance. In addition, specific to our industry, were erratic and continually rising copper prices during the quarter. This significantly lowered demand and adversely impacted pricing in our wholesale products business both in the U.S. and in Canada. At the same time," Horowitz continued, "our industrial tube business and to a lesser extent our fabricated products business were negatively impacted by uncertainty of Original Equipment Manufacturers (OEM) build schedules related to the approaching 13 SEER transition, as well as the slow start to the 2005 cooling season and inventory overhang from 2004. On the positive side, demand for technical tube remains strong as our customer base continues to broaden both geographically and in terms of adoption of our newest products. Also, the transition to our Mexico facility continues to go well in terms of both timing and customer acceptance."
"Further," Horowitz stated, "our unionized employees in the Montreal facility chose to reject the Company's contract proposal which had a negative effect on our financial performance in the first quarter, as we experienced work slow downs during the period of contract negotiation preceding the strike. We continue to seek resolution to this issue, but at this time have not been able to come to terms that are satisfactory to the employees while at the same time allowing Wolverine to remain competitive in a very competitive global market. In addition, in reaction to the overall slowing demand, we reduced production schedules and brought down Wolverine produced inventories to improve cash flow and prevent excessive inventory build-up. These actions, while appropriate, negatively affected our earnings since we were unable to absorb fixed costs into inventory," concluded Horowitz.
FIRST QUARTER RESULTS BY SEGMENT
Shipments of commercial products totaled 55.5 million pounds, a 9.2 percent decrease from the first quarter of 2004 of 61.1 million pounds. Net sales increased 5.6 percent to $153.1 million. Gross profit for commercial products decreased to $9.6 million, a 35.5 percent decline. This reflects lower volumes, resulting in under absorption of fixed costs. Also, to a lesser extent, the Canadian dollar strengthened against the U.S. dollar which reduced gross profit.
Shipments of wholesale products totaled 23.4 million pounds, as compared to 25.9 million pounds in the first quarter of 2004. Net sales were $45.6 million in the first quarter of both 2005 and 2004. Gross profit was a loss of $124 thousand in the first quarter of 2005 compared to a profit of $1.7 million in the first quarter of the prior year. The substantial decline is principally due to very weak pricing in the U.S. and Canada as well as lower demand in this product segment.
Shipments of rod, bar and other totaled 4.9 million pounds, a 23.0 percent decrease from the first quarter of 2004 of 6.4 million pounds. Gross profit was approximately $565 thousand as compared to $836 thousand last year. Montreal's challenges in the quarter offset gains from the European distribution operations.
LIQUIDITY
Commenting on liquidity, Horowitz stated, "Our cash position was $15.3 million and outstanding borrowings under our revolving credit facility were $7.5 million. As a consequence of the continuing rise in copper price and the impact this has on working capital needs, we repatriated $10.2 million from our China operations, which was primarily used to pay down borrowings on the revolving credit facility. Also, to assure ourselves of adequate liquidity, we have recently completed a $45.0 million accounts receivable securitization facility and have amended and restated our revolving credit facility. The net affect of the above is that we now have borrowing capacity of up to $80.0 million versus $37.5 million at the end of 2004." Horowitz continued, "We are pleased to have completed these transactions and believe that access to additional liquidity is a strong and very positive step for our Company."
OUTLOOK
Commenting on the outlook for the Company Horowitz said, "As we look to the second quarter and balance of 2005, we anticipate a recovery in the wholesale tube market on falling copper prices and as customers begin to hold more normal levels of inventory. We believe industrial tube demand will improve as OEMs begin to ramp-up for the transition to 13 SEER units. We will enjoy continued growth in fabricated products as OEMs further pursue outsourcing initiatives. We anticipate that technical tube demand will remain strong on a global basis. While these demand factors are critical to our success, we must, at the same time, sharpen our focus on internal improvements including operating efficiencies, yield, productivity and cost. We are actively reviewing a number of opportunities in these areas."
FIRST QUARTER CONFERENCE CALL
The Company will hold a conference call this morning 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 the "Conference Calls" link. If you are unable to participate at this time, a replay will be available through May 29, 2005 on this website or by calling (877) 919-4059 (pass code: 71067292). 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 income from continuing operations to 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 & other products. Internet addresses http://www.wlv.com and http://www.silvaloy.com.
FORWARD-LOOKING STATEMENTS
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", "should", "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 about the Company's business and other 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 effect of currency fluctuation; energy and raw material costs and our ability to effectively hedge these costs; the duration and financial impact of the Montreal strike; fluctuation in the COMEX copper price; the levels of North American commercial construction activity; continuation of historical trends in customer inventory levels and expected demand for our products; outsourcing levels of OEMs; the effect of the 13 SEER regulations on product demand and the seasonality of our business; unanticipated costs or delays in the continued ramp-up of production and the ability to sustain cost efficiencies at our Monterrey, Mexico facility; the level of customer demand in the Mexican market; our ability to realize the expected benefits of the Chinese distribution agreement; competitive products and pricing; environmental contingencies; regulatory matters; changes in technology and our ability to maintain technologically competitive products; the mix of geographic and product revenues; pension and healthcare costs; the success of our product and process development activities, productivity and efficiency initiatives, global expansion activities, market share penetration efforts, working capital management programs and capital spending initiatives and our ability to continue de-leveraging our balance sheet. 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.
WLV Reports 1st Quarter Results
April 29, 2005
WOLVERINE TUBE, INC. FINANCIAL DATA
Consolidated Statements of Operations (Unaudited)
Three-month period ended
In thousands, except per share data 4/3/2005 4/4/2004
--------------------------------
Pounds shipped 83,759 93,352
=====================================================================
Net sales $ 213,482 $ 205,805
Cost of goods sold 203,422 188,320
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Gross profit 10,060 17,485
Selling, general and
administrative expenses 8,308 9,437
Restructuring charges
(benefits) (82) 571
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Operating income 1,834 7,477
Interest expense, net 5,322 5,070
Amortization and other,
net 12 668
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Income (loss) before
income taxes (3,500) 1,739
Income tax provision
(benefits) (1,018) 371
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Net income (loss) $ (2,482) $ 1,368
=====================================================================
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Earnings Per Share:
Basic $ (0.17) $ 0.11
Diluted $ (0.17) $ 0.11
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic shares 14,965 12,289
Diluted shares 15,323 12,534
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Segment Information (Unaudited)
Three-month period ended
4/3/2005 4/4/2004
--------------------------------
In thousands
Pounds:
Commercial 55,455 61,070
Wholesale 23,411 25,932
Rod, bar, and other 4,893 6,350
---------------------------------------------------------------------
Total pounds 83,759 93,352
=====================================================================
Net sales:
Commercial $ 153,070 $ 144,926
Wholesale 45,581 45,574
Rod, bar, and other 14,831 15,305
---------------------------------------------------------------------
Total net sales $ 213,482 $ 205,805
=====================================================================
Gross Profit:
Commercial $ 9,619 $ 14,903
Wholesale (124) 1,746
Rod, bar, and other 565 836
---------------------------------------------------------------------
Total gross profit $ 10,060 $ 17,485
=====================================================================
WLV Reports 1st Quarter Results
April 29, 2005
WOLVERINE TUBE, INC.
Condensed Consolidated Balance Sheet (Unaudited)
In thousands 4/3/2005 4/4/2004 12/31/2004
----------------------------------------------------------------------
Assets:
Cash and
cash equivalents $15,263 $31,606 $35,017
Accounts receivable 114,609 119,101 93,964
Inventory 157,702 118,361 151,979
Other current
assets 10,557 10,893 6,905
Deferred taxes,
current 7,194 5,574 7,707
Property, plant and
equipment, net 193,507 194,904 194,966
Other assets 96,646 100,956 96,920
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Total assets $595,478 $581,395 $587,458
=====================================================================
Liabilities and Stockholders' Equity:
Accounts payables and
other accrued
expenses $96,119 $81,872 $92,388
Short-term
borrowings 321 1,315 1,219
Deferred income taxes -- 538 --
Pension liabilities 29,366 23,307 27,915
Long-term debt 242,401 274,474 237,022
Other liabilities 19,648 18,109 19,412
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Total liabilities 387,855 399,615 377,956
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Stockholders' equity 207,623 181,780 209,502
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Total liabilities and
stockholders' equity $595,478 $581,395 $587,458
=====================================================================
This press release contains, and our conference call will include,
references to earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP financial measure. The following
table provides a reconciliation of EBITDA to income from continuing
operations. Management believes EBITDA is a meaningful measure of
liquidity and the Company's ability to service debt because it
provides a measure of cash available for such purposes. Additionally,
management provides an EBITDA measure so that investors will have the
same financial information that management uses with the belief that
it will assist investors in properly assessing the Company's
performance on a year-over-year and quarter-over-quarter basis.
Reconciliation of Net Income (Loss) to Earnings
Before Interest, Taxes, Depreciation and Amortization (Unaudited)
Three-month period ended
In thousands 4/3/2005 4/4/2004
------------------------------
Net Income (loss) ($2,482) $1,368
Depreciation and amortization 4,293 4,668
Interest expense, net 5,322 5,070
Income tax provision
(benefit) (1,018) 371
---------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $6,115 $11,477
=====================================================================