HUNTSVILLE, Ala., Jan 05, 2009 -- Wolverine Tube, Inc. (WLVT) today reported results for the third quarter 2008. The net loss for the third quarter of 2008 was $23.9 million compared to a net loss of $3.5 million in the same period of 2007. The 2008 results include a gain of approximately $21.7 million on the sale of a minority interest in our China subsidiary and the sale of a closed facility in Montreal, Canada and an estimated $44.0 million non-cash goodwill impairment charge. The 2007 results include a $3.8 million non-cash gain from the adjustment to fair value of the conversion price embedded in a Preferred Stock Purchase agreement.
The net loss for the nine months ended September 28, 2008 was $31.6 million compared to net income of $6.8 million for the same period in 2007. The 2008 results include gains totaling $26.7 million from dispositions and a preliminary $44.0 million non-cash goodwill impairment charge. The 2007 nine month period results included a $14.9 million non-cash gain from adjustment to fair value of the conversion price embedded in a Preferred Stock Purchase Agreement.
Net sales for the third quarter of 2008 were $231.0 million compared to $268.5 million for the third quarter of 2007. The comparative sales' decrease in 2008 is due primarily to the Company's decision to exit the U.S. residential plumbing tube business in late 2007.
Net sales for the first nine months of 2008 were $678.0 million compared to $787.4 million for the same period in 2007. Approximately 70% of the comparative sales' decrease is due to the Company's decision to exit the U.S. residential plumbing tube business in late 2007, and 30% due to the reduction in demand for HVAC and appliance tubing products used in residential markets.
Third Quarter Accomplishments:
-- In September 2008, we sold an additional 20% of our China subsidiary to
complete the 50/50 strategic joint venture with Wieland. We received
cash proceeds of approximately $20 million for the entire transaction
and recorded a gain on the 50% disposition of approximately $12.6
million.
-- On July 8, 2008, we sold our Canadian residential plumbing tube
business for approximately $41 million in cash and completed the
Company's exit from all North American residential plumbing tube
markets.
-- On August 1, 2008, we retired the balance of $61 million of our 7.375%
Senior Notes.
-- Net debt (debt less unrestricted cash) was reduced to approximately
$128.1 million at September 28, 2008.
The estimated $44.0 million non-cash goodwill impairment charge eliminates substantially all of the goodwill and intangible assets recorded on the Company's balance sheet, and is consistent with the restructuring of the Company's business model. Step one of the goodwill impairment test was performed in the 3rd quarter indicating an impairment that will be confirmed in the fourth quarter of 2008, after the second step of the impairment test has been performed. The remaining goodwill is $2.7 million.
Mr. Harold Karp, President and Chief Operating Officer, commented that, "current global economic conditions have weakened demand for our residential and light commercial tube products, fabricated assemblies, and brazing alloys; however, our commercial high performance tube business is sound, and there are encouraging new product opportunities for heat transfer applications in new markets. Our financial and operational restructuring continued in the third quarter with the successful sale of our Canadian plumbing tube business."
Mr. Karp further commented that, "we continue to focus on operational improvements despite lower shipment volumes. Global productivity in our high performance tube products has increased by 9% for the third quarter compared to the same period last year, and our lean and continuous improvement initiatives have resulted in a 5% cost reduction through the third quarter. Comparative inventory turns were up 29% as a result of improvements in working capital management. We are making significant progress in key areas of our business."
About Wolverine Tube, Inc.
Wolverine Tube, Inc. provides its customers with copper and copper alloy tube, fabricated products and metal joining products. Internet addresses: www.wlv.com and 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.
SOURCE Wolverine Tube, Inc.