ANN ARBOR, Mich., Aug. 9,
2013 /PRNewswire/ -- Tecumseh Products Company (Nasdaq: TECUA,
TECUB), a leading global manufacturer of compressors and related
products, today reported an operating loss of $3.9 million and a net loss of $6.3 million, or a net loss per share of
$0.35, on net sales of $227.6 million for the quarter ended June 30, 2013. This compares with an operating
profit of $40.2 million and net
income of $44.0 million, or
$2.38 per share, on net sales of
$228.1 million for the second quarter
of 2012. The results in the second quarter of 2012 were primarily
due to the recording of a non-recurring, non-cash postretirement
benefit curtailment gain of $45.0
million.
"We continued to move forward in the second quarter of
2013. We are committed to our strategy to revitalize our
product line, improve our competitive position and align the global
manufacturing capacity to make Tecumseh a stronger company for the future,"
said Jim Connor, President and CEO.
"We had some positive headwinds related to commodity pricing and a
favorable impact from the strengthening of the U.S. Dollar, which
helped our financial results as we take the necessary steps to
complete the strategic initiatives we outlined in the middle of
May."
REVIEW OF OPERATIONS
Revenue: Net sales in the second quarter of 2013
decreased $0.5 million, or 0.2%,
versus the same period of 2012. Excluding the decrease in
sales due to the effect of unfavorable changes in foreign currency
translation of $3.4 million, net
sales increased by 1.3% compared to the second quarter of 2012,
primarily due to net volume and mix increases and price
increases.
Sales of compressors used in commercial refrigeration and
aftermarket applications represented 60% of our total sales and
decreased 4.6% compared to the second quarter of 2012 to
$136.2 million.
Sales of compressors for air conditioning applications and all
other applications represented 21% of our total sales and increased
33.2% compared to the second quarter of 2012 to $48.9 million.
Sales of compressors used in household refrigeration and freezer
("R&F") applications represented 19% of our total sales and
decreased 12.6% compared to the second quarter of 2012 to
$42.5 million.
Gross profit: Gross profit increased $1.6 million, from $17.6
million in the second quarter of 2012 to $19.2 million in the second quarter of
2013. Our gross profit margin increased from 7.7% to 8.4% in
the second quarter of 2012 and 2013, respectively.
Income / Loss from Continuing Operations: Loss from
continuing operations for the quarter ended June 30, 2013 was
$6.0 million, or a net loss per share
of $0.33, as compared to income from
continuing operations of $43.4
million, or $2.35 per share,
in the same period of 2012. The change was primarily related to the
curtailment gain on our postretirement benefit plan recognized in
the second quarter of 2012. In addition, S&A expense decreased
by $0.9 million, despite a
$1.0 million bad debt expense
recognized in the second quarter of 2013 related to a bankruptcy
filing by one of our Brazilian customers.
Cash Flow: Cash and cash equivalents were $34.7 million at the end of the second quarter
2013 while cash balances were $55.3
million and $46.2 million at
December 31, 2012 and June 30, 2012, respectively. In the first
six months of 2013, cash used in operations was $7.0 million as compared to $3.8 million of cash provided by operations in
the first six months of 2012.
Cash used in investing activities was $4.7 million in the first six months of 2013 as
compared to $3.7 million for the same
period of 2012. The 2013 cash used in investing activities is
primarily related to capital expenditures of $4.9 million.
Cash used in financing activities was $8.9 million in the first six months of 2013
compared to cash used in financing activities of $3.6 million in the first six months of
2012.
BUSINESS OUTLOOK
We are adjusting our revenue, cash flow and capital spending
projections for the full year of 2013:
- For the full year of 2013, we currently expect net sales to
remain flat or increase up to 3 percent from 2012 levels.
- Our operating cash flow is expected to be flat; however, we
believe we will require additional cash of $5.0 million to $8.0 million, to fund our
restructuring initiatives.
- We expect capital spending in 2013 to be approximately
$13.0 million to $18.0 million.
For the third quarter of 2013, we expect our sales and resulting
operating profit to be slightly higher than the third quarter of
2012 and positive operating cash flow due to lower inventory
levels.
NON-GAAP FINANCIAL MEASURES
While the Generally Accepted Accounting Principles in
the United States of America
("GAAP") results provide significant insight into our operations
and financial position, Tecumseh
management supplements its analysis of the business using Earnings
Before Interest, Taxes, Depreciation and Amortization from
Continuing Operations ("EBITDA") and Earnings Before Interest,
Taxes, Depreciation, Amortization, and Impairments, restructuring
charges, and other items from Continuing Operations ("EBITDAR");
both of these are non-GAAP financial measures. Management believes
that these non-GAAP financial measures, when taken together with
the corresponding GAAP measure, provide incremental insight into
the underlying factors and trends affecting our performance.
However, EBITDA from Continuing Operations and EBITDAR from
Continuing Operations, as defined below, should be viewed as
supplemental data, rather than as a substitute or an alternative to
the comparable GAAP measure. The table below presents a
reconciliation of EBITDA from Continuing Operations and EBITDAR
from Continuing Operations from our Net income (loss).
RECONCILIATION OF
EBITDA FROM CONTINUING OPERATIONS AND EBITDAR FROM
CONTINUING OPERATIONS FROM NET INCOME
(LOSS) (in millions)
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Three Months Ended
June 30,
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2013
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2012
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Net (loss)
income
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$
(6.3)
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$
44.0
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Loss (income) from
discontinued operations, net of tax
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0.3
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(0.6)
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Tax expense
(benefit)
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0.2
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(4.3)
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Interest expense
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2.3
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2.8
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Interest income
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(0.4)
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(1.7)
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Operating (loss)
income
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(3.9)
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40.2
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Depreciation and
amortization
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9.0
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9.0
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EBITDA FROM
CONTINUING OPERATIONS
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$
5.1
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$
49.2
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Impairment, restructuring
charges and other items
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2.0
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(44.2)
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EBITDAR FROM
CONTINUING OPERATIONS
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$
7.1
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$
5.0
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CONFERENCE CALL INFORMATION
Tecumseh will broadcast its
financial results conference call live over the Internet on
Monday, August 12, 2013, at
11:00 a.m. eastern time, and it
expects to post before the conference call a slide presentation to
be used in connection with the conference call. Webcast information
can be found in the Investor Relations section of
www.tecumseh.com.
About Tecumseh Products Company
Tecumseh Products Company is a global manufacturer of
hermetically sealed compressors for residential and specialty air
conditioning, household refrigerators and freezers, and commercial
refrigeration applications, including air conditioning and
refrigeration compressors, as well as condensing units, heat pumps
and complete refrigeration systems. Press releases and other
investor information can be accessed via the Investor Relations
section of Tecumseh Products Company's Website at
www.tecumseh.com.
Cautionary Statements Relating to Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act that
are subject to the safe harbor provisions created by that Act. In
addition, forward-looking statements may be made orally in the
future by or on behalf of us. Forward-looking statements can be
identified by the use of terms such as "expects," "should," "may,"
"believes," "anticipates," "will," and other future tense and
forward-looking terminology, or by the fact that they appear under
the caption "Business Outlook." Our forward-looking statements
generally relate to our future performance, including our
anticipated operating results and liquidity sources and
requirements, our business strategies and goals, and the effect of
laws, rules, regulations, new accounting pronouncements and
outstanding litigation, on our business, operating results, and
financial condition.
Readers are cautioned that actual results may differ materially
from those projected as a result of certain risks and
uncertainties, including, but not limited to, i) current and future
global or regional economic conditions, including housing starts,
and the condition of credit markets, which may magnify other risk
factors; ii) loss of, or substantial decline in sales to, any of
our key customers; iii) our history of losses and our ability to
maintain adequate liquidity in total and within each foreign
operation; iv) our ability to restructure or reduce our costs and
increase productivity and quality and develop successful new
products in a timely manner; v) actions of competitors in highly
competitive markets with intense competition; vi) the ultimate cost
of defending and resolving legal and environmental matters,
including any liabilities resulting from the regulatory antitrust
investigations commenced by the United States Department of Justice
Antitrust Division and the Secretariat of Economic Law of the
Ministry of Justice of Brazil,
both of which could preclude commercialization of products or
adversely affect profitability and/or civil litigation related to
such investigations; vii) availability and volatility in the cost
of materials, particularly commodities, including steel, copper and
aluminum, whose cost can be subject to significant variation; viii)
financial market changes, including fluctuations in foreign
currency exchange rates and interest rates; ix) default on
covenants of financing arrangements and the availability and terms
of future financing arrangements; x) reduction or elimination of
credit insurance; xi) significant supply interruptions or cost
increases; xii) potential political and economic adversities that
could adversely affect anticipated sales and production; xiii) in
India, potential military conflict
with neighboring countries could adversely affect anticipated sales
and production; xiv) local governmental, environmental, trade and
energy regulations; xv) increased or unexpected warranty claims;
xvi) the extent of any business disruption caused by work stoppages
initiated by organized labor unions; xvii) the extent of any
business disruption that may result from the restructuring and
realignment of our manufacturing operations and personnel or system
implementations, the ultimate cost of those initiatives and the
amount of savings actually realized; xviii) the success of our
ongoing effort to bring costs in line with projected production
levels and product mix; xix) weather conditions affecting demand
for replacement products; and xx) the effect of terrorist activity
and armed conflict. These forward-looking statements are made
only as of the date of this release, and we undertake no obligation
to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise.
Contact:
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Janice
Stipp
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Tecumseh Products
Company
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734-585-9507
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Investor.relations@tecumseh.com
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SOURCE Tecumseh Products Company