ANN ARBOR, Mich., Nov. 5,
2013 /PRNewswire/ -- Tecumseh Products Company (Nasdaq: TECUA,
TECUB), a leading global manufacturer of compressors and related
products, today reported an operating loss of $3.4 million and a net loss of $5.7 million, or a net loss per share of
$0.30, on net sales of $194.4 million for the quarter ended
September 30, 2013. This compares with an operating loss of
$3.3 million and a net loss of
$3.8 million, or $0.21 per share, on net sales of $208.6 million for the third quarter of 2012.
"We had some favorable manufacturing, commodity and foreign
currency impacts in the third quarter that have given us favorable
margins; although, this was partially offset by some warranty
issues," said Jim Connor,
President and CEO. "We continue to focus on our core business
as we navigate through this uncertain economy and position
ourselves to increase shareholder value."
REVIEW OF OPERATIONS
Revenue: Net sales in the third quarter of 2013 decreased
$14.2 million, or 6.8%, versus the
same period of 2012. Excluding the decrease in sales due to
the effect of unfavorable changes in foreign currency translation
of $7.0 million, net sales decreased
by 3.5% compared to the third quarter of 2012, primarily due to
lower net volume and unfavorable changes in sales mix, partially
offset by price increases. Volume declines partially related to
lower volumes in India as we were
producing units primarily to replace compressors related to a
warranty claim that originated in the second quarter of 2013.
Sales of compressors used in commercial refrigeration and
aftermarket applications represented 62% of our total sales and
decreased 2.4% compared to the third quarter of 2012 to
$120.1 million.
Sales of compressors for air conditioning applications and all
other applications represented 21% of our total sales and decreased
7.0% compared to the third quarter of 2012 to $41.3 million.
Sales of compressors used in household refrigeration and freezer
("R&F") applications represented 17% of our total sales and
decreased 19.9% compared to the third quarter of 2012 to
$33.0 million.
Gross profit: Gross profit increased $5.8 million from $18.2
million in the third quarter of 2012 to $24.0 million in the third quarter of 2013.
Our gross profit margin increased from 8.7% to 12.3% in the third
quarter of 2012 and 2013, respectively. This improvement primarily
related to favorable changes in currency exchange effects,
manufacturing costs, commodity costs and price increases, partially
offset by expenses related to two warranty claims.
Impairments, restructuring charges, and other items: We
recorded $7.4 million of expense in
impairments, restructuring charges, and other items in the third
quarter of 2013, compared to $0.6
million in the same period of 2012. In the third quarter of
2013, this expense mainly related to severance and business process
re-engineering costs of $6.8 million
at our French location.
Loss from Continuing Operations: Net loss from continuing
operations for the quarter ended September 30, 2013 was
$5.4 million, or a net loss per share
of $0.29, as compared to a net loss
from continuing operations of $3.9
million, or $0.22 per share,
in the same period of 2012. The change was primarily related to
higher impairments, restructuring charges, and other items and a
lower income tax benefit, partially offset by higher gross profit
in the third quarter of 2013. In addition, S&A expense
decreased by $2.0 million including a
decrease of $1.7 million for
professional services and a decrease of $1.1
million in expense relating to our incentive compensation
awards.
Cash Flow: Cash and cash equivalents were $40.0 million at the end of the third quarter
2013 while cash balances were $55.3
million and $53.2 million at
December 31, 2012 and
September 30, 2012, respectively. In the first
nine months of 2013, cash used in operations was $9.7 million as compared to $4.3 million of cash provided by operations in
the first nine months of 2012. This change primarily related
to increased inventory levels, partially offset by decreases in
accounts receivable and increases in accounts payable and accrued
expenses.
Cash used in investing activities was $6.1 million in the first nine months of 2013 as
compared to $4.4 million for the same
period of 2012. The 2013 cash used in investing activities is
primarily related to capital expenditures of $8.2 million.
Cash provided by financing activities was $0.1 million in the first nine months of 2013
compared to cash provided by financing activities of $4.2 million in the first nine months of
2012.
BUSINESS OUTLOOK
We are adjusting our revenue, cash flow and capital spending
projections for the full year of 2013:
- For 2013, we currently expect net sales to remain flat or
decrease up to 5 percent from 2012 levels due to the lack of
economic improvements in key markets and lower volumes in
India as most of our third quarter
production levels went to replace compressors to satisfy a warranty
claim that originated in the second quarter of 2013.
- For 2013, we currently expect our operating cash flow to be
flat to positive.
- We expect capital spending in 2013 to be approximately
$15.0 million to $20.0 million.
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)
|
|
|
|
Three Months Ended
September 30,
|
|
2013
|
|
2012
|
Net (loss)
|
$
(5.7)
|
|
|
$
|
(3.8)
|
|
Loss (income) from
discontinued operations, net of tax
|
0.3
|
|
|
(0.1)
|
|
Tax expense
(benefit)
|
0.1
|
|
|
(1.6)
|
|
Interest
expense
|
2.2
|
|
|
2.5
|
|
Interest
income
|
(0.3)
|
|
|
(0.3)
|
|
Operating
(loss)
|
(3.4)
|
|
|
(3.3)
|
|
Depreciation and
amortization
|
8.6
|
|
|
8.8
|
|
EBITDA FROM
CONTINUING OPERATIONS
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$
|
5.2
|
|
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$
|
5.5
|
|
Impairments,
restructuring charges and other items
|
7.4
|
|
|
0.6
|
|
EBITDAR FROM
CONTINUING OPERATIONS
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$
|
12.6
|
|
|
$
|
6.1
|
|
CONFERENCE CALL INFORMATION
Tecumseh will broadcast its
financial results conference call live over the Internet on
Wednesday, November 6, 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 our
website at 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:
|
Janice
Stipp
|
|
Tecumseh Products
Company
|
|
734-585-9507
|
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Investor.relations@tecumseh.com
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SOURCE Tecumseh Products Company