CUYAHOGA FALLS, Ohio, Aug. 9 /PRNewswire/ -- Associated Materials
Incorporated ("AMI" or the "Company") today announced second quarter 2004 net
sales of $301.6 million, a 67.2% increase over $180.4 million for the same
period in 2003. For the six months ended July 3, 2004, net sales were
$505.9 million or 73.7% higher than $291.3 million for the same period in
2003. The results for 2004 include the operations of the Company's
subsidiary, Gentek Holdings, Inc. ("Gentek"). Gentek, which was acquired by
AMI on August 29, 2003, contributed $93.8 million and $159.2 million of net
sales for the second quarter and six months ended July 3, 2004, respectively.
Net income for the second quarter of 2004 was $16.7 million. This
compares to net income of $10.3 million for the same period in 2003. For the
six months ended July 3, 2004, net income was $7.6 million compared to net
income of $5.3 million for the same period in 2003. Gentek contributed
$3.9 million and $4.4 million of net income for the second quarter and six
months ended July 3, 2004, respectively.
EBITDA (as defined below) for the second quarter of 2004 was
$39.8 million. This compares to EBITDA of $25.9 million for the same period
in 2003. For the six months ended July 3, 2004, EBITDA was $35.4 million
compared to EBITDA of $25.5 million for the same period in 2003. Gentek
contributed $8.4 million and $11.0 million of EBITDA in the second quarter of
2004 and six months ended July 3, 2004, respectively.
Adjusted EBITDA (as defined below) for the six months ended July 3, 2004
was $49.9 million. Adjusted EBITDA for the six months ended July 3, 2004
excludes a bonus paid to certain members of company management totaling
approximately $14.5 million related to the completion of the offering of
senior discount notes on March 4, 2004 by the Company's indirect parent
company, AMH Holdings, Inc. ("AMH"). There were no adjustments to
EBITDA for the second quarter of 2004 or for the quarter and six months ended
June 28, 2003. A reconciliation of net income to EBITDA and to Adjusted
EBITDA is included below.
Michael Caporale, President and Chief Executive Officer, commented, "I am
very pleased with our second quarter results. We continued to experience
strong sales and EBITDA growth."
Mr. Caporale continued, "Even with the recently announced federal interest
rate increase, we remain optimistic about the underlying fundamentals of our
industry. Mortgage rates continue to be at relatively low historical levels,
consumer confidence continues to be strong, and consumers continue to invest
in their homes."
Results of Operations
Net sales increased 67.2% during the second quarter of 2004 compared to
the same period in 2003, driven by increased vinyl window and vinyl siding
sales along with net sales from Gentek. Gross profit in the second quarter of
2004 was $83.3 million, or 27.6% of net sales, compared to gross profit of
$56.8 million, or 31.5% of net sales, in the second quarter of 2003. The
decrease in gross profit margin percentage is primarily due to the impact of
the results contributed by Gentek as Gentek's gross margin percentage is
typically lower than Alside's as a larger proportion of Gentek's net sales are
to independent distributors versus contractors through company-owned
distribution centers. Additionally, a portion of Gentek's net sales are from
metal products, which typically have a lower margin percentage than vinyl
windows and vinyl siding. Selling, general and administrative expense
increased to $48.0 million, or 15.9% of net sales, for the second quarter of
2004 versus $33.7 million, or 18.7% of net sales, for the same period in 2003.
The increase in selling, general and administrative expense is a result of the
impact of the acquisition of Gentek, as well as the result of adding two new
Alside supply centers in 2004. Income from operations was $35.3 million in
the second quarter of 2004 compared to $23.1 million for the same period in
2003.
Net sales increased 73.7% for the six months ended July 3, 2004 compared
to the same period in 2003, driven by increased vinyl window and vinyl
siding sales along with net sales from Gentek. Gross profit increased to
$133.7 million, or 26.4% of net sales, compared to gross profit of
$85.0 million, or 29.2% of net sales, for the same period in 2003. The
decrease in gross profit margin percentage was a result of the impact of the
Gentek acquisition. Selling, general and administrative expense increased to
$107.9 million, or 21.3% of net sales, for the six months ended July 3, 2004
versus $65.0 million, or 22.3% of net sales, for the same period in 2003. The
increase in selling, general and administrative expense is the result of a
management bonus paid in relation to AMH's offering of senior discount notes
on March 4, 2004, the impact of the acquisition of Gentek, as well as the
result of adding two new Alside supply centers in 2004 along with the three
new supply centers added in 2003, which had a full six months of expense in
2004. Income from operations was $25.7 million for the six months ended
July 3, 2004 compared to $20.0 million for the same period in 2003.
AMH
AMH remains in the process of registering notes with the Securities and
Exchange Commission, which will be exchanged for its outstanding 11-1/4%
senior discount notes on substantially equivalent terms. The attached
consolidating financial information for the quarter and six months ended
July 3, 2004 includes AMI and AMH, which conducts all of its operating
activities through AMI. Including AMH's interest expense, which primarily
consists of accretion on AMH's 11-1/4% senior discount notes, AMH's
consolidated net income was $11.7 million and $1.0 million for the quarter and
six months ended July 3, 2004, respectively.
Management will host its second quarter earnings conference call on
Monday, August 9th at 11 a.m. Eastern Time. The toll free dial-in number for
the call is (877) 363-0523. A replay of the call will be available through
August 16, 2004 by dialing (888) 769-9756 and entering the conference call
identification number of 9413421. The conference call and replay will also be
available via webcast, which along with this news release can be accessed via
the Company's web site at http://www.associatedmaterials.com.
Associated Materials Incorporated is a leading manufacturer of exterior
residential building products, which are distributed through company-owned
distribution centers and independent distributors across North America. AMI
produces a broad range of vinyl windows, vinyl siding, aluminum trim coil,
aluminum and steel siding and accessories, as well as vinyl fencing, decking
and railing. AMI is a privately held, wholly-owned subsidiary of Associated
Materials Holdings Inc., a wholly-owned subsidiary of AMH Holdings, Inc.,
which is controlled by affiliates of Harvest Partners, Inc. For more
information, please visit the Company's website at
http://www.associatedmaterials.com.
Founded in 1981, Harvest Partners has approximately $1 billion of invested
and committed capital, and is focused on management buyouts and growth
financings of profitable, middle-market specialty services, manufacturing and
value-added distribution businesses, with a particular emphasis on
multinational transactions. Harvest has significant capital available through
its managed funds, which include numerous U.S. and European industrial
corporations and financial institutions. For more information on Harvest
Partners please visit its website at http://www.harvpart.com.
This press release contains certain forward-looking statements (as such
term is defined in the Private Securities Litigation Reform Act of 1995)
relating to AMI that are based on the beliefs of AMI's management. When used
in this press release, the words "may," "will," "should," "expect," "intend,"
"estimate," "anticipate," "believe," "predict," "potential" or "continue" or
similar expressions identify forward-looking statements. Such statements
reflect the current views of AMI's management with respect to its operations
and results of operations regarding the home building industry, economy,
interest rates, availability of consumer credit, employment trends, levels of
consumer confidence, consumer preferences, raw material costs and
availability, national and regional trends in new housing starts, weather
conditions, its ability to comply with certain financial covenants in loan
documents governing its indebtedness, level of competition within its market,
availability of alternative building products, its level of indebtedness,
costs of environmental compliance, potential conflict between Alside and
Gentek distribution channels, achievement of anticipated synergies and
operational efficiencies from the acquisition of Gentek, shifts in market
demand, and general economic conditions. These statements are subject to
certain risks and uncertainties. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions or estimates prove
incorrect, actual results may vary materially from those described herein as
expected, intended, estimated, anticipated, believed or predicted.
ASSOCIATED MATERIALS
Condensed Statements of Operations (a)
(Unaudited)
Quarters Ended July 3, 2004 and June 28, 2003
(in thousands)
AMH
AMI AMH Eliminations Consolidated
Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended
June 28, July 3, July 3, July 3, July 3,
2003 2004 2004 2004 2004
Net sales $180,363 $301,602 $ - $ - $301,602
Gross profit 56,800 83,325 - - 83,325
Selling, general
and
administrative
expense 33,704 48,040 - - 48,040
Income from
operations 23,096 35,285 - - 35,285
Interest
expense, net 5,483 6,254 7,516 - 13,770
Foreign
currency loss - 609 - - 609
Income (loss)
before income
taxes 17,613 28,422 (7,516) - 20,906
Income taxes 7,309 11,703 (2,541) - 9,162
Income (loss)
before equity
income from
subsidiaries 10,304 16,719 (4,975) - 11,744
Equity income
from
subsidiaries - - 16,719 (16,719) -
Net income $ 10,304 $ 16,719 $ 11,744 $(16,719) $ 11,744
Other Data:
EBITDA (b)(c) $ 25,891 $ 39,813
Adjusted
EBITDA (b)(c) 25,891 39,813
ASSOCIATED MATERIALS
Condensed Statements of Operations (a)
(Unaudited)
Six Months Ended July 3, 2004 and June 28, 2003
(in thousands)
AMH
AMI AMH Eliminations Consolidated
Six Months Six Months Six Months Six Months Six Months
Ended Ended Ended Ended Ended
June 28, July 3, July 3, July 3, July 3,
2003 2004 2004 2004 2004
Net sales $291,307 $505,923 $ - $ - $505,923
Gross profit 84,968 133,680 - - 133,680
Selling, general
and
administrative
expense 65,014 107,932 - - 107,932
Income from
operations 19,954 25,748 - - 25,748
Interest
expense, net 10,921 12,266 9,940 - 22,206
Foreign
currency loss - 615 - - 615
Income (loss)
before income
taxes 9,033 12,867 (9,940) - 2,927
Income taxes 3,749 5,247 (3,361) - 1,886
Income (loss)
before equity
income from
subsidiaries 5,284 7,620 (6,579) - 1,041
Equity income
from
subsidiaries - - 7,620 (7,620) -
Net income $ 5,284 $ 7,620 $ 1,041 $ (7,620) $ 1,041
Other Data:
EBITDA (b)(c) $ 25,466 $ 35,376
Adjusted
EBITDA (b)(c) 25,466 49,874
AMH
AMI AMH Consolidated
January 3, July 3, July 3, July 3,
2004 2004 2004 2004
Selected Balance
Sheet Data:
Cash $ 4,282 $ 2,655 $ 34 $ 2,689
Accounts
receivable, net 106,975 152,471 - 152,471
Inventory 97,907 122,327 - 122,327
Accounts payable 49,881 81,633 - 81,633
Accrued
liabilities 53,234 47,401 144 47,545
Long-term debt 305,000 331,159 267,869 599,028
(a) Operating results for the quarter and six months ended July 3, 2004
include the results of the Company's Gentek Holdings subsidiary, which
was acquired on August 29, 2003.
(b) EBITDA is calculated as net income plus interest, taxes, depreciation
and amortization. Adjusted EBITDA excludes certain items. The
Company considers Adjusted EBITDA to be an important indicator of its
operational strength and performance of its business. The Company has
included Adjusted EBITDA because it is a key financial measure used by
management to (i) assess the Company's ability to service its debt
and / or incur debt and meet the Company's capital expenditure
requirements; (ii) internally measure the Company's operating
performance; and (iii) determine the Company's incentive compensation
programs. In addition, the Company's credit facility has certain
covenants that use ratios utilizing this measure of Adjusted EBITDA.
The definition of EBITDA under the indenture governing the 9-3/4%
notes due 2012 also excludes certain items. Adjusted EBITDA has not
been prepared in accordance with accounting principles generally
accepted in the United States ("GAAP"). Adjusted EBITDA as presented
by the Company may not be comparable to similarly titled measures
reported by other companies. Such supplementary adjustments to EBITDA
may not be in accordance with current SEC practices or the rules and
regulations adopted by the SEC that apply to periodic reports filed
under the Securities Exchange Act of 1934. Accordingly, the SEC may
require that Adjusted EBITDA be presented differently in filings made
with the SEC than as presented in this release, or not be presented at
all. Adjusted EBITDA is not a measure determined in accordance with
GAAP and should not be considered as an alternative to, or more
meaningful than, net income (as determined in accordance with GAAP),
as a measure of the Company's operating results or cash flows from
operations (as determined in accordance with GAAP) or as a measure of
the Company's liquidity. The reconciliation of the Company's net
income to EBITDA and Adjusted EBITDA is as follows (in thousands):
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 28, July 3, June 28, July 3,
2003 2004 2003 2004
Reconciliation of net
income to EBITDA and
Adjusted EBITDA (c):
Net income $10,304 $16,719 $5,284 $7,620
Interest 5,483 6,254 10,921 12,266
Taxes 7,309 11,703 3,749 5,247
Depreciation and
amortization 2,795 5,137 5,512 10,243
EBITDA 25,891 39,813 25,466 35,376
Management bonus (d) - - - 14,498
Adjusted EBITDA $ 25,891 $ 39,813 $ 25,466 $ 49,874
(c) The 2004 results of operations include the results of Gentek. A
reconciliation of Gentek's net income to EBITDA for the quarter and
six months ended July 3, 2004 are as follows (in thousands):
Quarter Six Months
Ended Ended
July 3, July 3,
2004 2004
Reconciliation of Gentek's net income to EBITDA:
Net income $3,900 $4,365
Interest 102 138
Taxes 2,609 2,938
Depreciation and amortization 1,739 3,580
Gentek's EBITDA $8,350 $11,021
(d) Represents a management bonus paid in connection with the completion
on March 4, 2004 of AMH's offering of senior discount notes.
SOURCE Associated Materials Incorporated
