ANN ARBOR, Mich., March 4, 2014 /PRNewswire/ -- Tecumseh Products
Company (Nasdaq: TECUA, TECUB), a leading global manufacturer of
compressors and related products, today reported an operating loss
of $19.0 million and a net loss of
$37.5 million, or a net loss per
share of $2.03, on net sales of
$823.6 million for the year ended
December 31, 2013. This compares with operating income of
$19.9 million and a net income of
$22.6 million, or $1.22 per share, on net sales of $854.7 million for 2012, which included a
$45.0 million postretirement benefit
curtailment gain due to the termination of certain postretirement
benefits for salaried employees and retirees in
2012.
Jim Connor, President and CEO
stated, "2013 was a very challenging year. The biggest operational
challenges we faced were in the areas of new product development,
ramping up new products with key customers, and maintaining global
quality standards. Key hires recently announced to lead our global
engineering and manufacturing functions directly addressed these
challenges. With the hiring of Igor
Popov as our Chief Restructuring Officer, we have commenced
both an operational turnaround and a new strategic planning process
that shifts our focus away from dependence upon one-time events and
towards sustainable, long-term profitability."
REVIEW OF OPERATIONS
Revenue: Net sales in the year ended December 31,
2013 decreased by $31.1 million, or
3.6%, compared with the same period of 2012. Excluding the decrease
in sales due to the effect of changes in foreign currency
translation of $24.4 million, net
sales decreased by 0.8% from 2012, primarily due to net decreases
in volume and mix, partially offset by net price increases.
Sales of compressors used in commercial refrigeration and
aftermarket applications represented 59% of our total sales and
decreased by 3.2% to $487.7 million
in 2013, when compared to 2012.
Sales of compressors for air conditioning applications and all
other applications represented 22% of our total sales and increased
by 9.6% to $180.9 million in 2013,
when compared to 2012.
Sales of compressors used in household refrigeration and freezer
("R&F") applications represented 19% of our total sales and
decreased by 16.7% to $155.0 million
in 2013, when compared to 2012.
Gross profit: Gross profit increased by $13.4 million from $64.7
million, or 7.6% of net sales, in 2012 to $78.1 million, or 9.5% of net sales in 2013. 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 and net unfavorable changes in volume and sales mix.
Impairments, restructuring charges, and other items: We
recorded $13.6 million of expense in
impairments, restructuring charges, and other items in 2013,
compared to $40.6 million of income
in the same period of 2012. In 2013, this expense mainly related to
severance and business process re-engineering costs at our French
location. In 2012, the income related primarily to the curtailment
gain on our postretirement benefit plan of $45.0 million.
Loss from Continuing Operations: Net loss from continuing
operations for the year ended December 31, 2013 was
$34.4 million, or a net loss per
share of $1.86, as compared to net
income from continuing operations of $23.1
million, or $1.25 per share
for the year ended December 31, 2012. The change was primarily
related to the postretirement benefit curtailment gain recorded in
the second quarter of 2012, higher other impairments, restructuring
charges, and other items in 2013 and an income tax benefit in 2012
compared to income tax expense in 2013 which primarily related to
the postretirement benefit curtailment, partially offset by higher
gross profit and lower selling and administrative expenses in
2013.
Cash Flow: Cash and cash equivalents were $55.0 million at the end of the 2013 and
$55.3 million at the end of
2012. Cash provided by operations was $11.6 million in 2013, as compared to
$8.8 million in 2012. This change
primarily related to decreases in accounts receivable and increases
in accounts payable and accrued expenses, partially offset by
increases in
inventory.
Cash used in investing activities was $22.0 million in 2013 as compared to $5.7 million in 2012. The 2013 cash used in
investing activities is primarily related to capital expenditures
of $11.8 million and blocked funds of
$12.7 million relating to our term
loan with PNC Bank.
Cash provided by financing activities was $9.8 million in 2013 compared to cash provided by
financing activities of $3.1 million
in 2012. The increase in borrowings in 2013 is mainly due to a new
term loan financing with PNC.
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 from Continuing Operations") and
Earnings Before Interest, Taxes, Depreciation, Amortization, and
Impairments, restructuring charges, and other items from Continuing
Operations ("EBITDAR from Continuing Operations"); 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 (loss) income.
RECONCILIATION OF
EBITDA FROM CONTINUING OPERATIONS AND EBITDAR FROM CONTINUING
OPERATIONS FROM NET (LOSS) INCOME
|
(in
millions)
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
Net (loss)
income
|
$
|
(37.5)
|
|
|
$
|
22.6
|
|
Loss from discontinued
operations, net of tax
|
3.1
|
|
|
0.5
|
|
Tax expense
(benefit)
|
7.7
|
|
|
(10.2)
|
|
Interest expense
|
9.2
|
|
|
10.2
|
|
Interest income
|
(1.5)
|
|
|
(3.2)
|
|
Operating (loss)
income
|
(19.0)
|
|
|
19.9
|
|
Depreciation and
amortization
|
33.5
|
|
|
36.4
|
|
EBITDA FROM
CONTINUING OPERATIONS
|
$
|
14.5
|
|
|
$
|
56.3
|
|
Impairments, restructuring
charges and other items
|
13.6
|
|
|
(40.6)
|
|
EBITDAR FROM
CONTINUING OPERATIONS
|
$
|
28.1
|
|
|
$
|
15.7
|
|
CONFERENCE CALL INFORMATION
Tecumseh will broadcast its
financial results conference call live over the Internet on
Wednesday, March 5, 2014, 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 may contain 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." 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) our history of
losses and our ability to maintain adequate liquidity in total and
within each foreign operation; ii) our ability to develop
successful new products in a timely manner; iii) the success
of our ongoing effort to improve productivity and restructure to
reduce costs and bring them in line with projected production
levels and product mix; iv) 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; v) loss of, or substantial decline in, sales to
any of our key customers; vi) current and future global or regional
political and economic conditions, including housing starts, and
the condition of credit markets, which may magnify other risk
factors; vii) increased or unexpected warranty claims; viii)
actions of competitors in markets with intense competition; ix)
financial market changes, including fluctuations in foreign
currency exchange rates and interest rates; x) 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; xi) local governmental, environmental, trade
and energy regulations; xii) availability and volatility in the
cost of materials, particularly commodities, including steel,
copper and aluminum, whose cost can be subject to significant
variation; xiii) significant supply interruptions or cost
increases; xiv) loss of key employees; xv) the extent of any
business disruption caused by work stoppages initiated by organized
labor unions; xvi) risks relating to our information
technology systems; xvii) impact of future changes in accounting
rules and requirements on our financial statements; xviii) default
on covenants of financing arrangements and the availability and
terms of future financing arrangements; xix) reduction or
elimination of credit insurance; xx) potential political and
economic adversities that could adversely affect anticipated sales
and production; xxi) in India,
potential military conflict with neighboring countries that could
adversely affect anticipated sales and production; xxii) weather
conditions affecting demand for replacement products; and xxiii)
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
Investor.relations@tecumseh.com
SOURCE Tecumseh Products Company