HUNTSVILLE, Ala., Sept. 2, 2008 (GLOBE NEWSWIRE) -- Wolverine Tube, Inc. (OTCBB:WLVT) today reported results for the second quarter 2008. The net loss for the second quarter of 2008 was $3.2 million compared to net income of $13.3 million in the same period of 2007. The 2007 results include $7.1 million of non-cash income from the adjustment to fair value of the conversion price embedded in a Preferred Stock Purchase Agreement.
Net income for the first half of 2008 was $1.8 million compared to $10.9 million for the same period in 2007. The 2008 results include a $5.0 million gain on the sale of a minority interest in our China subsidiary. The 2007 six month period results included an $11.2 million non-cash gain from adjustment to fair value of the Preferred Stock described above.
Net sales for the second quarter of 2008 were $245.5 million, as compared to $297.6 million for the second quarter of 2007. A total of 46.5 million pounds of copper tubing was shipped in the second quarter of 2008 compared to 66.4 million in the 2007 quarter. The comparative decrease in shipments was due primarily to the Company's withdrawal from the domestic wholesale plumbing tube business and closure of its Decatur, Alabama manufacturing facility in late 2007. The gross margin was 3.2% for the second quarter of 2008 compared to 5.1% for the second quarter of 2007, for the comparable remaining commercial products segment. Gross margin was adversely affected in 2008 by lower production and shipping volumes, resulting from declines in the residential housing market and related demand weakness for HVAC and appliance products.
Net sales for the first half of 2008 were $447 million compared to $518.9 million for the same period in 2007. A total of 87.1 million pounds of copper tubing was shipped in the first half of 2008 compared to 119.2 million in the 2007 half. Eighty-percent of the comparative decrease is due to the withdrawal from the domestic wholesale plumbing tube business, and the balance due to the reduction in demand for HVAC and appliance products used in residential markets.
As previously reported, the Company recently discovered certain errors associated with valuing and accounting for inventory and cost of sales at its fabricated products' plant in Carrollton, Texas. In addition, the Company recorded an adjustment to certain foreign currency accounts in the first quarter of 2008 that related to translation adjustments errors recorded in prior periods. This item was unrelated to the aforementioned errors in inventory accounting. Correction of these errors has resulted in revisions to the previously issued financial statements for 2007 and the first quarter of 2008. The Company's Audit Committee has completed an independent investigation of these matters. Appropriate, corrective action has been taken and management is in the process of enhancing internal accounting procedures and controls to prevent any recurrence.
Recent Accomplishments
* On July 8, 2008, we sold our Canadian plumbing tube business for approximately $41 million in cash. * On August 1, 2008, we retired the balance of $61 million of our 7.38% Senior Notes. Earlier in the year, we repurchased $37 million of these notes at a discount to face value. * Proforma net debt (net of cash and cash equivalents) is approximately $132 million on June 30, 2008 after giving effect to the sale of the Canadian plumbing tube business, down from approximately $264 million on June 30, 2007. * The Asia Pacific region's technical tube shipments for the first half of 2008 were up 14% and regional profitability was up 32% over the same prior year period. * Gross spread per pound for the second quarter of 2008 was up 11% compared to same time period in 2007, reflecting the strategic focus on high performance tubes and engineered heat transfer products.
Mr. Harold Karp, President and Chief Operating Officer, commented that, "we continue to make commercial and operational progress despite lower shipment volumes. Customer confidence has grown in our fabricated products' lines as new business represented approximately 20% of second quarter 2008 shipments. Our lean process and quality improvement initiatives have resulted in significant operational cost reductions, as second quarter results showed a 5% increase in yields and productivity in Monterrey, Mexico, and a 4% reduction in value-added cost per pound in our Shawnee, Oklahoma facility. These initiatives will continue to reduce costs and to increase productivity throughout all of Wolverine's locations."
ABOUT WOLVERINE TUBE, INC.
Wolverine Tube, Inc. provides 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
All statements in this press release other than statements of historical fact are forward-looking statements within the meaning of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in this press release. The forward-looking statements speak only as of the date of this press release, and the Company expressly disclaims any obligations to release publicly any update or revision to any forward-looking statement contained herein if there are any changes in conditions or circumstances on which any such forward-looking statement is based.
WOLVERINE TUBE, INC. FINANCIAL DATA
Consolidated Statements of Operations (Unaudited)
Three months ended Six months ended
In thousands, except 7/1/2007 7/1/2007
per share data 6/29/2008 (revised) 6/29/2008 (revised)
--------- --------- --------- ---------
Net sales $ 245,511 $ 297,557 $ 446,970 $ 518,931
Cost of goods sold 237,569 275,320 427,205 486,002
------------------------- --------- --------- --------- ---------
Gross profit 7,942 22,237 19,765 32,929
Selling, general and
administrative expenses 6,246 7,741 13,181 14,576
Advisory fees and expenses 27 2,405 552 6,085
Restructuring and
impairment charges 1,123 779 5,060 3,446
------------------------- --------- --------- --------- ---------
Operating income (loss) 546 11,312 972 8,822
Loss on sale of receivables 103 810 207 1,318
Interest and amortization
expense, net 5,433 5,937 11,071 11,915
Embedded derivatives mark
to fair value (3) (7,086) (3) (11,177)
Gain (loss) on sale of
minority interest in
Chinese subsidiary 378 -- (5,004) --
Other (income) expense,
net (456) 188 (737) (27)
------------------------- --------- --------- --------- ---------
Income (loss) from
continuing operations
before minority interest
in Chinese subsidiary and
income taxes (4,909) 11,463 (4,562) 6,793
Minority interest in
Chinese subsidiary 194 -- 275 --
Income tax expense 787 252 1,888 671
-------------------- --------------------
Net income (loss) from
continuing operations (5,890) 11,211 (6,725) 6,122
Income from discontinued
operations, net of income
taxes 2,717 2,088 8,564 4,822
------------------------- -------------------- --------------------
Net income (loss) (3,173) 13,299 1,839 10,944
Less: Accretion of
convertible preferred
stock and beneficial
conversion feature 1,255 1,255 2,511 2,107
Less: Preferred stock
dividends, including
$9,618 million non-cash
deemed dividends
recognized in the first
quarter of 2007 1,625 1,000 2,816 11,118
------------------------- --------- --------- --------- ---------
Net income (loss)
applicable to common
shares $ (6,053) $ 11,044 $ (3,488) $ (2,281)
========= ========= ========= =========
------------------------- --------- --------- --------- ---------
Income (loss) per common
share - Basic
Continuing operations $ (0.22) $ 0.15 $ (0.30) $ (0.47)
Discontinued operations 0.03 0.03 0.09 0.08
------------------------- --------- --------- --------- ---------
Net income (loss) per
common share $ (0.19) $ 0.18 $ (0.21) $ (0.39)
Income (loss) per common
share - Diluted
Continuing operations $ (0.22) $ 0.15 $ (0.30) $ (0.47)
Discontinued operations 0.03 0.03 0.09 0.08
------------------------- --------- --------- --------- ---------
Net income (loss) per
common share $ (0.19) $ 0.18 $ (0.21) $ (0.39)
Common shares outstanding:
Basic 40,624 15,176 40,624 15,155
Diluted 40,624 15,176 40,624 15,155
------------------------- --------- --------- --------- ---------
(1) For both quarters ended June 29, 2008 and July 1, 2007 basic and
diluted EPS are calculated, in accordance with General Accepted
Accounting Principles ("GAAP"), by using the two-class method.
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.
Three months ended Six months ended
7/1/2007 7/1/2007
In thousands 6/29/2008 (revised) 6/29/2008 (revised)
--------- --------- --------- ---------
Pounds Shipped:
Commercial 46,480 53,744 86,890 95,216
Wholesale (12) 12,607 252 24,009
WOLVERINE TUBE, INC.
Condensed Consolidated Balance Sheet (Unaudited)
12/31/2007
In thousands 6/29/2008 (revised)
--------------------------------------------- ---------- ----------
Assets
Cash and cash equivalents $ 26,363 $ 63,303
Restricted cash 6,957 2,126
Accounts receivable, net 113,131 108,398
Inventory 97,400 107,238
Assets held for sale 75,621 43,001
Other current assets 9,901 12,536
Property, plant and equipment, net 54,645 65,762
Other assets 54,262 51,802
--------------------------------------------- ---------- ----------
Total assets $ 438,280 $ 454,166
============================================= ========== ==========
Liabilities and Stockholders' Equity
Accounts payables and accrued expenses $ 77,011 $ 82,858
Short-term borrowings 199,526 90,939
Liabilities held for sale 20,992 1,853
Deferred income taxes 605 677
Pension liabilities 14,326 17,616
Long-term debt -- 146,021
Other liabilities 32,447 43,410
--------------------------------------------- ---------- ----------
Total liabilities 344,907 383,374
--------------------------------------------- ---------- ----------
Minority interest in Chinese subsidiary 5,207 --
Convertible Preferred stock 21,098 4,393
Total stockholders' equity 67,068 66,399
--------------------------------------------- ---------- ----------
Total liabilities, minority interest in
Chinese subsidiary, convertible preferred
stock and stockholders' equity $ 438,280 $ 454,166
============================================= ========== ==========