HUNTSVILLE, Ala., March 31, 2008 (PRIME NEWSWIRE) -- Wolverine Tube, Inc. (OTCBB:WLVT) today reported results for the full year and fourth quarter of 2007. The net loss for the year ended December 31, 2007 was $97.0 million or $6.04 per common share compared to a net loss of $79.2 million or $5.26 per common share for 2006. Included in the 2007 results were $112.1 million of pre-tax restructuring and other charges.
Fourth Quarter Highlights
* Adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA") of $2.4 million compared to $0.4 million in
2006;
* Completed shutdown of Decatur, Alabama and Booneville, Mississippi
operations;
* Exited domestic plumbing tube business;
* Completed Rights' Offering with net cash proceeds of $28 million;
* Named David A. Owen as Chief Financial Officer.
Full year Highlights
* Adjusted EBITDA of $45.0 million compared to $37.7 million in 2006;
* Alpine/Plainfield $50 million convertible preferred investment in
February 2007;
* New Board composition with Steven S. Elbaum named Chairman and
Harold M. Karp named President & COO;
* Focused business model and strategy around global leadership in
value added, heat exchange tubing, fabricated products and joining
technologies;
* Initiated restructuring, asset sales and related actions to align
Wolverine's tangible and intangible assets and capital with focused
business model and strategy.
Fourth Quarter Results
The net loss for the fourth quarter of 2007 was $106.4 million or $3.54 per common share, as compared to a net loss of $34.0 million or $2.25 per common share in the same period of 2006. Included in the 2007 and 2006 results were $97.1 million and $25.0 million in pre-tax charges, relating primarily to restructuring, adjustment to deferred tax valuation allowances, advisory fees and expenses.
Net sales for the fourth quarter of 2007 were $273.7 million, as compared to $271.6 million for the fourth quarter of 2006. Total pounds shipped in the fourth quarter of 2007 were 58.2 million pounds compared to 61.2 million pounds shipped in the fourth quarter of 2006.
Adjusted EBITDA was $2.4 million for the fourth quarter of 2007 compared to $0.4 million for the quarter ended December 31, 2006.
Full Year 2007 Results
Net sales in 2007 declined 7% to $1.2 billion from $1.3 billion in 2006, reflecting a 16% decrease in pounds shipped, partially offset by a $0.44 per pound increase in per unit selling price.
Total pounds shipped in 2007 were 275.1 million pounds compared to 326.5 million pounds in 2006. Of the total pounds shipped, approximately 217.6 million pounds and 277.7 million pounds were manufactured by the Company in 2007 and 2006, respectively. The balance of the pounds shipped by the Company was attributable to products sourced and resold to customers. The decrease in pounds shipped in 2007 was due primarily to the falling demand for industrial tube used in the residential air conditioning market, continued substitution of plastics in the residential plumbing market and the closure of our Montreal facility in late 2006.
Gross profit for 2007 was $63.6 million as compared to $46.3 million in 2006, an improvement of $17.3 million or 37%. The improvement was due primarily to improved pricing and a higher margin mix of products. 2007 EBITDA before restructuring charges was $45.0 million compared to $37.7 million for 2006.
Harold Karp, President and Chief Operating Officer, commented, "2007 was a very pivotal year for Wolverine. We concentrated on restructuring the business and improving its competitiveness. We closed two factories and exited the domestic plumbing tube business and are now focused on our value added, heat transfer tubing products, fabricated products and joining technology products in the global marketplace."
Refinancing and Liquidity
In February 2007, the Company sold 50,000 shares of Series A Convertible Preferred Stock, for $50 million to The Alpine Group, Inc. ("Alpine") and a fund managed by Plainfield Asset Management LLC ("Plainfield") pursuant to a Preferred Stock Purchase Agreement (the "Preferred Stock Purchase Agreement"). On October 25, 2007, the Company completed a common stock rights offering in which stockholders purchased 25.4 million shares of common stock, resulting in proceeds of $28 million. Additionally, under the terms of a call option described in the Preferred Stock Purchase Agreement, Alpine purchased an additional 4,620 shares of Series A Convertible Preferred Stock on January 25, 2008 for $4.6 million. During March 2008, Plainfield refinanced $38.3 million of the 7.375% Senior Notes held by it by extending the maturity date to March 28, 2009, with an increase in the interest rate to 10.5%, and Alpine purchased $10 million of Series B Convertible Preferred Stock under terms substantially similar to the Series A Convertible Preferred Stock.
In addition, during the first quarter of 2008, the Company completed the following:
* Extended its $35 million secured revolving credit facility to April 28, 2009; * Extended its $75 million receivables sales facility to February 19, 2009; * Sold its Small Tube Products business for approximately $28 million, including an estimated working capital adjustment; * Sold 30% of Wolverine Shanghai to the Wieland Group for $9.6 million cash and $2.0 of estimated additional intangible value.
David A. Owen, Wolverine's Chief Financial Officer, stated, "The capital invested by Plainfield and Alpine, existing cash sources and credit facilities are adequate to address Wolverine's operational and debt repayment requirements for 2008."
Operations and Market Update
Mr. Karp noted, "The global high performance chiller tube markets were very strong in 2007, and Wolverine achieved record shipments in these markets in 2007. Wolverine's commercial fabricated products shipments increased 22% in 2007 which is in line with our strategy to partner more broadly with our large OEM customers in support of their efforts to improve efficiencies and reduce cost through outsourcing of their fabricated products needs. Wolverine is well positioned to support this continued growth through well established global sourcing capabilities and through its focus on capacity and efficiency improvements at our fabricated products manufacturing locations in Mexico, China, Portugal and in the USA.
"The overall North American market for residential air conditioning, heat pump and refrigeration products was down approximately 10% in 2007; however, Wolverine's inner groove tube shipments increased 6% in 2007 as a result of market share increases with many of our major customers."
Mr. Karp further stated, "Wolverine's operational improvement efforts throughout 2007 were focused on strengthening its managerial and technical talent along with establishing a continuous improvement culture. Significant operational progress was made in 2007 as our continuous improvement culture has been established through a focused implementation of lean manufacturing and six sigma initiatives, as well as new technologies to reduce cost and improve quality performance. These efforts combined with a sharpened focus on customer satisfaction resulted in enhanced key customer relationships, improved manufacturing efficiencies and strengthening the operational base from which to grow the business."
Restructuring and Other Charges
Included in the 2007 results were total pre-tax restructuring, impairment and other charges of $112.1 million in 2007, of which $90.3 million was non-cash. Comparable charges in 2006 were $65.0 million, of which $38.4 million was non-cash. The charges are listed in the following table:
($ Millions) 2007 2006
------- -------
Facility Closures:
Decatur, Alabama $ 61.0 $ --
Booneville, Mississippi 3.7 --
Montreal, Quebec 2.5 40.7
Jackson, Tennessee 7.1 16.5
Advisory fees & Severance costs 6.5 7.4
Goodwill impairment 30.8 --
Other 0.5 0.4
------- -------
$112.1 $ 65.0
======= =======
Steven S. Elbaum, Chairman, stated, "The period following the February 2007 investments by Alpine and Plainfield has been focused on redefining the Company's business strategy and installing a new management team to implement that strategy under an expanded Board of Directors. Significant restructuring activities, including the shutdown and/or sale of non-core operations, are required to achieve a competitive and properly aligned operating base. These actions and the financial and accounting consequences are complex given Wolverine's difficult history and its complicated array of assets, businesses and obligations. We expect Wolverine's business model and reported results to be clearer during the second half of 2008, and the Company's focus and progress will also be more clear and measurable."
ABOUT WOLVERINE TUBE, INC.
Wolverine Tube, Inc. is a world-class quality partner, providing its customers with copper and copper alloy tube, fabricated products, and metal joining 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 operating and financial results and liquidity. 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. 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)
Three-month Twelve-month
In thousands, except period ended period ended
per share data 12/31/2007 12/31/2006 12/31/2007 12/31/2006
----------- ----------- ----------- -----------
Net sales $ 273,682 $271,632 $1,228,651 $1,315,876
Cost of goods sold 265,572 267,466 1,165,083 1,269,603
-------------------- ----------- ----------- ----------- -----------
Gross profit 8,110 4,166 63,568 46,273
Selling, general and
administrative
expenses 8,653 7,111 32,461 30,634
Advisory fees and
severance expenses 356 3,528 6,271 7,434
Restructuring charges 65,963 2,031 75,097 57,609
-------------------- ----------- ----------- ----------- -----------
Operating (loss) (66,862) (8,504) (50,261) (49,404)
Loss on sale of
receivables 352 706 2,531 4,397
Interest and
amortization
expense, net 5,846 5,986 23,515 23,317
Embedded derivatives
mark to market -- -- (15,755) --
Other expense, net 310 475 2,605 477
-------------------- ----------- ----------- ----------- -----------
(Loss) from
continuing
operations before
income taxes (73,370) (15,671) (63,157) (77,595)
Income tax provision 3,440 18,778 8,516 9,385
----------- ----------- ----------- -----------
Net (loss) from
continuing operations (76,810) (34,449) (71,673) (86,980)
Income/(loss) from
discontinued
operations, net of
income taxes (29,540) 453 (25,357) 7,756
-------------------- ----------- ----------- ----------- -----------
Net (loss) (106,350) (33,996) (97,030) (79,224)
Accretion of
convertible preferred
stock and beneficial
conversion
feature 1,256 -- 4,618 --
Less: Preferred stock
dividends, including
$9,618 million
non-cash deemed
dividends recognized
in the first quarter
of 2007 1,062 -- 13,284 --
-------------------- ----------- ----------- ----------- -----------
Net (loss) applicable
to common shares $ (108,668) $ (33,996) $ (114,932) $ (79,224)
=========== =========== =========== ===========
-------------------- ----------- ----------- ----------- -----------
Net (loss) income
per share (1):
Basic:
Continuing
operations $ (2.58) $ (2.28) $ (4.71) $ (5.77)
Discontinued
operations (0.96) 0.03 (1.33) 0.51
Net (loss) per
common share
- Basic $ (3.54) $ (2.25) $ (6.04) $ (5.26)
Diluted:
Continuing
operations $ (2.58) $ (2.28) $ (4.71) $ (5.77)
Discontinued
operations (0.96) 0.03 (1.33) 0.51
Net (loss) per common
share - Diluted $ (3.54) $ (2.25) $ (6.04) $ (5.26)
Common shares
outstanding:
Basic 30,667 15,081 19,038 15,071
Diluted 30,667 15,081 19,038 15,071
-------------------- ----------- ----------- ----------- -----------
(1) For the quarter ended December 31, 2007, basic EPS is calculated,
in accordance with GAAP, by using the two-class method. Both the
three and twelve month periods reported ended with net losses
applicable to common shares. As preferred shares do not share in the
losses of our business, 100% of the net loss is allocable to our
common shares.
Segment Information (Unaudited)
The Company currently operates in Commercial Products and Wholesale
Products segments. Commercial Products include technical, industrial
and copper alloy tubes, fabricated products, and metal joining
products. Wholesale Products include plumbing and refrigeration
tube. Prior to 2007, the Company's business also included a Rod, Bar
and Other Products segment comprising a broad range of copper and
copper alloy solid products as well as a distribution business in
The Netherlands. As a result of the closing of our Montreal, Quebec
rod and bar facility, we exited the rod, bar and other products
segment at the end of 2006. The Netherlands distribution business,
which was historically included in the Rod, Bar and Other Products
segment, is now included in the Commercial Products segment for the
current quarter and the comparable period in 2006.
Three-month Twelve-month
period ended period ended
In thousands 12/31/2007 12/31/2006 12/31/2007 12/31/2006
---------- ---------- ---------- ----------
Pounds Shipped:
Commercial 44,616 45,526 203,236 230,377
Wholesale 13,577 12,454 71,833 79,114
Rod, bar, and
other (1) -- 3,267 -- 17,000
---------------------- ---------- ---------- ---------- ----------
Total pounds shipped 58,193 61,247 275,069 326,491
====================== ========== ========== ========== ==========
Net sales:
Commercial $ 215,437 $ 210,209 $ 926,518 $ 947,750
Wholesale 58,245 49,250 302,133 310,993
Rod, bar, and
other (1) 12,173 -- 57,133
---------------------- ---------- ---------- ---------- ----------
Total net sales $ 273,682 $ 271,632 $1,228,651 $1,315,876
====================== ========== ========== ========== ==========
Gross Profit:
Commercial $ 4,013 $ 3,394 $ 37,327 $ 26,415
Wholesale 4,097 555 26,241 22,656
Rod, bar, and
other (1) 217 -- (2,798)
---------------------- ---------- ---------- ---------- ----------
Total gross profit $ 8,110 $ 4,166 $ 63,568 $ 46,273
====================== ========== ========== ========== ==========
(1) The Netherlands distribution business is included in the
Commercial segment in both 2007 and 2006.
The net sales reclassified in 2006 were $8.5 million for the three-
month period and $25.6 million for the twelve-month period.
The gross profits reclassified in 2006 were $1.1 million for the three-
month period and $3.7 million for the twelve-month period.
WOLVERINE TUBE, INC.
Condensed Consolidated Balance Sheet (Unaudited)
In thousands 12/31/2007 12/31/2006
--------------------------------------------- --------- ---------
Assets
Cash and cash equivalents $63,303 $ 17,354
Restricted cash 2,126 5,629
Accounts receivable, net 107,375 62,529
Inventory 110,768 122,943
Assets held for sale 43,001 11,135
Other current assets 12,536 11,417
Property, plant and equipment, net 65,762 133,259
Other assets 51,802 91,064
--------------------------------------------- -------------------
Total assets $456,673 $455,330
============================================= ===================
Liabilities and Stockholders' Equity
Accounts payables and other accrued expenses $82,858 $ 67,499
Short-term borrowings 90,939 1,638
Liabilities held for sale 1,853 --
Deferred income taxes 677 880
Pension liabilities 17,616 28,504
Long-term debt 146,021 238,362
Other liabilities 43,410 29,271
--------------------------------------------- -------------------
Total liabilities 383,374 366,154
--------------------------------------------- -------------------
Preferred stock 4,393 --
Total stockholders' equity 68,906 89,176
--------------------------------------------- -------------------
Total liabilities and stockholders' equity $456,673 $455,330
============================================= ===================
This press release contains references to adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), a non-GAAP
financial measure. The following table provides a reconciliation of
adjusted EBITDA to net (loss). Management believes adjusted 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 adjusted 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 to Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization (Unaudited)
Three-month Twelve-month
period ended period ended
In thousands 12/31/2007 12/31/2006 12/31/2007 12/31/2006
---------- ---------- ---------- ----------
Net loss from
operations $(106,350) $ (33,996) $ (97,030) $ (79,224)
Depreciation and
amortization 2,720 3,995 13,633 16,977
Interest expense, net
(including loss on
sale of receivables) 5,552 6,050 23,555 25,570
Impairment of assets
and non-cash portion
of restructuring
charges 83,975 534 90,318 38,396
Income tax provision 3,440 18,778 8,516 9,385
---------- ---------- ---------- ----------
Earnings before
interest, taxes,
depreciation and
amortization (10,663) (4,639) 38,992 11,104
Advisory fees and
severance expenses 356 3,528 6,271 7,434
Non-cash gain on
embedded derivative
(mark to market) -- -- (15,755) --
Other restructuring
charges 12,745 1,496 15,536 19,205
--------------------------------- ---------- ---------- ----------
Adjusted earnings
before interest,
taxes, depreciation
and amortization $ 2,438 $ 385 $ 45,044 $ 37,743
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