UCI International, Inc. Q2 2015 Results | August 6, 2015 Confidential
Disclaimer This presentation may contain “forward -looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward- looking statements. Although forward-looking statements reflect management’s good faith beliefs, reliance should not be placed on forward- looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. UCI International, Inc. (“UCI” or the “Company”) undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: our comments relating to growth of, or changes in, the light and heavy-duty vehicle aftermarket; maintaining existing sales levels with our current customers while attracting new ones; operating in international markets and expanding into adjacent markets while strengthening our market share in our existing markets; initiating effective cost cutting initiatives; and financial projections. The Company derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed assumptions. While the Company believes that its assumptions are reasonable, you are cautioned that it is very difficult to predict the impact of known factors, and it is impossible for the Company to anticipate all factors that could affect its actual results. Important factors that could cause actual results to differ materially from expectations are disclosed under the “Risk Factors” section in our Annual Report on Form 20-F. All written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in the Company’s public communications. You should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties. Some financial information in this presentation has been rounded and, as a result, the figures shown as totals in this presentation may vary slightly from the exact arithmetic aggregation of the figures that precede them. 1
Disclaimer Explanatory Note on Non-GAAP Financial Measures In this presentation, we utilize certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA and Covenant Adjusted EBITDA, that in each case are not recognized under U.S. GAAP or IFRS. These measures are presented as we believe that they and similar measures are widely used in the markets in which we operate as a means of evaluating a company’s operating performance and financing structure. They may not be comparable to other similarly titled measures of other companies and are not measurements under U.S. GAAP, IFRS or other generally accepted accounting principles, nor should they be considered as substitutes for the information contained in the financial statements included in this presentation. EBITDA, a measure used by our management to measure operating performance, is defined as profit (loss) from continuing operations plus income tax, net financial expenses, depreciation of property, plant and equipment and amortization of intangible assets. EBITDA is not a measure of our financial condition, liquidity or profitability and should not be considered as a substitute for profit (loss) for the year, operating profit or any other performance measures derived in accordance with U.S. GAAP or as a substitute for cash flow from operating activities as a measure of our liquidity in accordance with U.S. GAAP. Adjusted EBITDA is calculated as EBITDA adjusted for particular items relevant to explaining operating performance. These adjustments include significant items of an unusual nature that cannot be attributed to ordinary business operations, including items such as integration, restructuring, defense against class action litigation and business optimization costs. Covenant Adjusted EBITDA is defined as Adjusted EBITDA as adjusted to provide the full- period effect for businesses acquired after the beginning of a period and the full-period effect to implemented cost saving programs. Adjusted EBITDA is not a presentation made in accordance with U.S. GAAP, is not a measure of financial condition, liquidity or profitability and should not be considered as an alternative to profit (loss) for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. The determination of Adjusted EBITDA and Covenant Adjusted EBITDA contains a number of estimates and assumptions that may prove to be incorrect and differ materially from actual results. Additionally, EBITDA, Adjusted EBITDA and Covenant Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not take into account certain items such as interest and principal payments on our indebtedness, depreciation and amortization expense, working capital needs, tax payments and capital expenditures. We believe that the inclusion of EBITDA, Adjusted EBITDA and Covenant Adjusted EBITDA in this presentation is appropriate to provide additional information to investors about our operating performance to provide measures of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Because not all companies calculate EBITDA, Adjusted EBITDA and Covenant Adjusted EBITDA identically, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures in other companies. See a reconciliation of these non- GAAP financial measures to net income (loss) in the Appendix. 2
Presenters Overview Tom Degnan Chief Executive Officer Ricardo Alvergue Chief Financial Officer 3
̶ ̶ ̶ ̶ ̶ Q2 2015 Highlights Net sales of $202 million vs. $200 million in Q2 2014, an increase of 0.6% Increases in filtration due to new business wins and cooling systems due to continued OE growth Partially offset by lower fuel delivery systems sales across all channels Adjusted EBITDA from continuing operations declined by $5.1 million, to $16.2 million for the quarter Results impacted by increased operational costs, lower customer pricing and unfavorable sales mix These items were partially offset by favorable product warranty costs in our fuel delivery product line Trade working capital of $203 million at Q2 2015, up $4 million from Q2 2014 Improvement of $10 million sequentially from Q1 2015 Operating cash flows of $19 million in Q2 2015 vs. $6 million in Q2 2014 Net debt of 5.7x LTM Covenant Adjusted EBITDA at June 30, 2015 Sale of Wells Vehicle Electronics business completed on July 1, 2015 4
̶ Sale of Wells Vehicle Electronics On May 8, 2015 we entered an agreement to sell the Wells business Transaction completed on July 1, 2015 Sale price of $251 million, subject to certain adjustments based on closing date cash, indebtedness and working capital Net proceeds used in accordance with Q1 2015 amendment to credit agreement Prepaid $241.6 million of borrowings under the senior secured term loan facility Senior secured leverage ratio of 0.39x as of July 1 st is lower than the allowed 0.75 to 1.00 ratio per the Q1 2015 credit agreement amendment Annualized interest savings are expected to be $13 million 5
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