WLV Wolverine Tube

Wolverine Tube Reports 2003 Fourth Quarter and Full Year Results Operating Results Improved Over Third Quarter HUNTSVILLE, Ala., Feb. 19 /PRNewswire-FirstCall/ -- Wolverine Tube, Inc. today reported results for the fourth quarter and full year ended December 31, 2003. Loss from continuing operations for the fourth quarter of 2003 was $8.0 million, or $0.65 per diluted share. Included in the loss was a $5.7 million after-tax restructuring charges, principally related to the previously announced closing of the Company's Booneville, MS manufacturing plant. Excluding the restructuring charges, the loss from continuing operations would have been $2.3 million, or $0.19 per share. Operating results were also negatively impacted by $3.4 million after-tax, as a result of the relative strengthening of the Canadian dollar versus the U.S. dollar and a sharp spike in copper prices, especially in December. This rise in copper prices resulted in a loss on the Company's copper hedge position, which should be offset in subsequent periods. In the fourth quarter of 2002, income from continuing operations was $169,000, or $0.01 per share. Total pounds of product shipped in the fourth quarter of 2003 were 80.1 million, an increase of 11.4 percent compared to 71.9 million pounds in 2002. Net sales for the fourth quarter of 2003 were $155.8 million compared to $125.6 million, a 24 percent increase. Gross profit for the fourth quarter of 2003 decreased to $7.4 million from $10.4 million in the fourth quarter of 2002. Included in gross profit was the aforementioned impact of currency and the loss on the Company's copper hedge, which was $5.4 million before tax. In 2001 the Company discontinued its WRI operations in Ontario, Canada. In the fourth quarter of 2003, the Company recognized $1.6 million net-of-tax losses in discontinued operations to reflect changes in the carrying value of the assets and additional pensions and post retirement obligations as we prepare to dispose of this facility. Forthe year ended December 31, 2003, loss from continuing operations was $39.0 million or $3.18 per share compared with income from continuing operations of $7.2 million, or $0.58 per share for 2002. The 2003 loss included a $23.2 million goodwill impairment charge and restructuring charges, totaling $15.1 million ($10.0 million after-tax) relating principally to the closure of the Booneville plant and a corporate-wide workforce reduction program. Excluding goodwill impairment and the restructuring charges, loss from continuing operations would have been $6.9 million or $0.56 per share. Total pounds of product shipped in 2003 were 327.4 million pounds compared to 310.2 million pounds in 2002. Net sales were $596.3 million, an 8.3 percent increase from 2002. Gross profit for 2003 was $40.8 million compared to $58.4 million in 2002. Commenting on the results, Dennis Horowitz, Chairman, President and Chief Executive Officer, said, "The combined impacts of sharply rising copper prices and the weakening U.S. dollar had a very significant negative effect on our fourth quarter earnings. However, excluding these impacts, fourth quarter operating results was much improved from the third quarter of 2003 and encouraging for several reasons, including improved demand for our value added commercial products, improved demand and pricing in wholesale and rod and bar products, and improved operational performance at our facilities." Horowitz added, "That while our cash position at $46.1 million was belowwhat we expected at year-end, it was principally due to copper price increases, which affected inventory dollar values. At the same time, inventory turns, as well as receivable and payable days outstanding, improved and capital expenditures were within expectations." Fourth Quarter Results by Segment Shipments of commercial products totaled 49.8 million pounds, a 4.8 percent increase over the fourth quarter 2002 of 47.5 million pounds. Net sales increased approximately 16.2 percent to $110.4 million. These results reflect increased shipments of industrial tube, technical tube and fabricated products. Gross profit decreased to $7.3 million from the prior year's fourth quarter of $10.5 million. Gross profit gains due to increased demand and improved operating efficiencies were more than offset by the losses on the Company's copper hedge and currency translation. Shipments of wholesale products totaled 24.1 million pounds, as compared to last year's fourth quarter of 19.5 million pounds. Net sales increased 52.6 percent to $34.2 million from the prior year's fourth quarter. Gross profit was a loss of $800 thousand compared to last year's fourth quarter loss of $500 thousand. Again, increased demand and pricing gains in this segment weremore than offset by the losses on the Company's copper hedge. Shipments of rod, bar and other totaled 6.2 million pounds, a 27.6 percent increase from the fourth quarter of 2002. Net sales increased to $11.2 million, a 36.4 percent increase from the fourth quarter in the prior year. These results reflect increased volume and price in rod and bar. Gross profit in rod, bar and other in the quarter was $900 thousand compared to $400 thousand in the prior year's fourth quarter. Gains in our Europeandistribution business and improvements in rod and bar demand in North America offset copper hedge and currency translation losses. Earnings Outlook Commenting on the outlook for the Company, Horowitz said, "In the second half of the fourth quarter, we began to see tangible improvement in demand across all our product segments and stabilizing in wholesale pricing. This has carried over into the first quarter of 2004 and reflects a recovering U.S. economy. In addition, operations are running well with increasing productivity. Market shares remain strong, and in many cases, are improving, and customer contracts that were up for renewal are essentially completed with only moderate price concessions." Horowitz continued, "Several identifiable challenges that we continue to face are related to copper price volatility and currency translation impacts. On the other hand, natural gas costs are hedged for all of 2004 at levels below 2003, especially in the first quarter. Pension and retirement costs are expected to be relatively stable year-over-year, and our healthcare costs will increase moderately. With this in mind, coupled with seasonal strengthening in the first quarter, operating income from continuing operations should show both a sharp increase both sequentially from the fourth quarter of 2003, as well as in comparison to the first quarter of 2003." Fourth Quarter Conference Call The Company will hold a conference call this morning at 9:30 a.m. Central Time (10:30 a.m. ET) to discuss the contents of this release. Dial in to the conference call line at (800) 311-9402 Access Code: Wolverine, ten minutes prior to the scheduled start time. A link to the broadcast can be found on the Company's website at http://www.wlv.com/, in the Investor Relations section under "Conference Calls" link. If you are unable to participate at this time, a replay will be available through March 4, 2004, on this website or by calling (800) 858-5309 (access code 40179, pass code 40179). Should you haveany problems accessing the call or the replay, please contact the Company at (256) 890-0460. The tables following the text of this press release provide financial details that are included in this press release and that will be discussed on the conference call. This includes a reconciliation of net cash provided (used) by operating activities to free cash flow and net cash provided (used) by operating activities to adjusted earnings before interests, taxes, depreciation and amortization. This press release, including these financial details, is now available on the Wolverine website at http://www.wlv.com/ in the Investor Relations section under the heading Press Releases. About Wolverine Tube, Inc. Wolverine Tube, Inc. is a world-class qualitypartner, providing its customers with copper and copper alloy tube, fabricated products, metal joining products as well as copper and copper alloy rod, bar and other products. Internet addresses: http://www.wlv.com/ and http://www.silvaloy.com/. Forward-looking statements in this press release are made pursuant to the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements use such words as "may", "will", "expect", "believe", "plan", "anticipate" and other similar terminologies. This press release contains forward-looking statements regarding factors affecting the Company's expectations of future sales, earnings and cash flows. Such statements are based on current expectations, estimatesand projections about the industry and markets in which the Company operates, as well as management's beliefs and assumptions and information currently available. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The Company undertakes no obligation to publicly release any revision of any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. With respect to expectations of future sales, earnings and cash flows, factors that could affect actual results include, without limitation, the effect of currency fluctuations, raw material costs and our ability to effectively hedge these cost, the timing and magnitude of recovery from the current economic downturn, costs and cost savings related to the Booneville closing, the levels of U.S. commercialconstruction activity, competitive products and pricing, environmental contingencies, regulatory pressures, labor cost (including healthcare and pension expense), , technology, fuel and energy costs, the mix of geographic and product revenues, and any inability to achieve or delays in achieving anticipated results from our cost reduction initiatives (including our workforce reduction program), product and process development activities, productivity and efficiency initiatives, global expansion activities, market share penetration effort, working capital management programs and completion of the extension and modification of our credit facility. A discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, can be found in the Company's Annual Report on Form 10-K for the most recently ended fiscal year and reports filed from time to time with the Securities and Exchange Commission. WOLVERINE TUBE, INC. FINANCIAL DATA Consolidated Statements of Operations (Unaudited) Three-month Twelve-month In thousands, period ended period ended except per share data12/31/2003 12/31/2002 12/31/2003 12/31/2002 Pounds shipped 80,069 71,898 327,354 310,240 Net sales $155,750 $125,616 $596,324 $550,523 Cost of goods sold 148,393 115,180 555,498 492,082 Gross profit 7,357 10,436 40,826 58,441 Selling, general and administrative expenses 8,291 7,401 32,103 30,616 Restructuring charges 8,619 -- 15,057 -- Operating income (loss) from continuing operations (9,553) 3,035 (6,334) 27,825 Interest expense, net 5,479 4,760 21,218 19,681 Gain on extinguishment of debt -- (275) -- (1,349) Amortization and other, net 578 (49) 1,856 1,008 Goodwill impairment -- -- 23,153 -- Income (loss) from continuing operations before income taxes (15,610) (1,401) (52,561) 8,485 Income tax provision (benefits) (7,611) (1,570) (13,577) 1,315 Income (loss) from continuing operations (7,999) 169 (38,984) 7,170 Loss from discontinued operations, net of income tax (1,637) (1,610) (1,637) (1,610) Net income (loss) $(9,636) $(1,441) $(40,621) $5,560 Basic (loss) earnings per share: Continuing operations $(0.65) $0.01 $(3.18) $0.58 Discontinued operations (0.13) (0.13) (0.13) (0.13) Net income (loss) $(0.78) $(0.12) $(3.31) $0.45 Diluted (loss) earnings per share: Continuing operations $(0.65) $0.01 $(3.18) $0.58 Discontinued operations $(0.13) $(0.13) $(0.13) $(0.13) Net income (loss) $(0.78) $(0.12) $(3.31) $0.45 Basic shares 12,280 12,262 12,275 12,231 Diluted shares 12,280 12,406 12,275 12,362 Segment Information (Unaudited) Three-month Twelve-month period ended period ended In thousands 12/31/2003 12/31/2002 12/31/2003 12/31/2002 Pounds: Commercial 49,776 47,502 217,499 209,590 Wholesale 24,108 19,548 90,005 79,064 Rod, bar, and other 6,185 4,848 19,850 21,586 Total pounds 80,069 71,898 327,354 310,240 Net sales: Commercial $110,372 $95,017 $442,471 $421,234 Wholesale 34,195 22,401 115,112 93,938 Rod, bar, and other 11,183 8,198 38,741 35,351 Total net sales $155,750 $125,616 $596,324 $550,523 Gross Profit: Commercial $7,248 $10,536 $38,997 $51,736 Wholesale (771) (492) (271) 4,352 Rod, bar, and other 880 392 2,100 2,353 Total gross profit $7,357 $10,436 $40,826 $58,441 WOLVERINE TUBE, INC. Condensed Consolidated Balance Sheets (Unaudited) In thousands 12/31/2003 12/31/2002 Assets Cash and cash equivalents $46,089 $53,920 Accounts receivable 86,825 65,212 Inventory 108,005 85,485 Other current assets 12,782 14,402 Property, plant and equipment, net 198,542 208,999 Other assets 101,015 122,702 Total assets $553,258 $550,720 Liabilities and Stockholders' Equity Accounts payables and other accrued expenses $77,290 $49,583 Short-term borrowings 1,208 1,217 Deferred income taxes 359 11,902 Pension liabilities 22,316 14,540 Long-term debt 254,578 255,712 Other liabilities 18,156 17,131 Total liabilities 373,907 350,085 Stockholders' equity 179,351 200,635 Total liabilities and stockholders' equity $553,258 $550,720 WOLVERINE TUBE, INC. Reconciliation of Net Cash Provided (Used) by Operating Activities to Free Cash Flow (1) (Unaudited) Three-month Twelve-month period ended period ended In thousands 12/31/2003 12/31/2002 12/31/2003 12/31/2003 Income (loss) from continuing operations ($7,999) $169 ($38,984) $7,170 Depreciation and amortization 4,892 5,090 19,009 18,416 Changes in operating assets and liabilities 2,834 9,196 (7,021) 17,509 Goodwill impairment -- -- 23,154 -- Non-cashportion of restructuring charge 6,939 -- 12,016 -- Deferred taxes (8,585) (931) (12,541) (937) Other 128 (145) 367 (722) Net cash provided (used) by operating activities (1,791) 13,379 (4,000) 41,436 Additions to property, plant and equipment (1,639) (2,338) (5,969) (7,747) Free cash flow ($3,430) $11,041 ($9,969)$33,689 Reconciliation of Net Cash Provided (Used) by Operating Activities to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (2) (Unaudited) Three-month Twelve-month period ended period ended In thousands 12/31/2003 12/31/2002 12/31/2003 12/31/2002 Net cash provided (used) by operating activities ($1,791) $13,379 ($4,000) $41,436 Changes in operating assets and liabilities (2,834) (9,196) 7,021 (17,509) Deferred taxes 8,585 931 12,541 937 Other (128) 145 (367) 722 Non-cash portion of restructuring charge (6,939) -- (12,016) -- Restructuring charges 8,619 -- 15,057 -- Interest expense, net 5,479 4,760 21,218 19,681 Income tax provision (benefit) (7,611) (1,570) (13,577) 1,315 Adjusted earnings before interest, taxes, depreciation and amortization $3,380 $8,449 $25,877 $46,582 (1) This statement reconciles net cash provided (used) by operating activities to free cash flow, which is a non-GAAP financial measure. Management believes free cash flow is a meaningful measure of financial performance and liquidity and provides investors with a measure of cash that may be used for debt service and for other purposes. (2) This statement reconciles net cash provided (used) by operating activities to adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), which is a non-GAAP financial measure. Management believes Adjusted EBITDA is a meaningful measure of liquidity and the Company's ability to service debt. Contact: James E. Deason Executive Vice President Chief Financial Officer (256) 580-3510 DATASOURCE: Wolverine Tube, Inc. CONTACT: James E. Deason, Executive Vice President, Chief Financial Officer of Wolverine Tube, +1-256-580-3510 Web site: http://www.wlv.com/ http://www.silvaloy.com/

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