From aftermarketNews Staff & Wire Reports
EVANSVILLE, Ind. — Accuride announced a number of significant changes this week – including a change in top management, restructuring initiatives and the creation of a new aftermarket division.
Top exec John Murphy has tendered his resignation as president and chief executive officer, and as a director of Accuride, effective Sept. 22. Upon acceptance of Murphy’s resignation, Accuride’s board of directors appointed William (Bill) Lasky as interim president and CEO.
Lasky has been an independent director of Accuride since October 2007 and will continue to serve as a director during his employment as interim president and CEO. He has served as the chairman of the board of Stoneridge Inc., a manufacturer of electronic components, modules and systems for various vehicles, since July 2006 and has been a director of Stoneridge since January 2004. Previously, Lasky served as the chairman, president and CEO of JLG Industries, a manufacturer of aerial work platforms, telescopic material handlers and related accessories, from 1999 through late 2006, when JLG Industries was acquired by Oshkosh Truck Corp. Prior to joining JLG Industries, he served in various senior capacities at Dana Corp. from 1977 to 1999.
"Given Bill’s experience from his previous executive assignments at JLG, Dana and Stoneridge, in conjunction with his work as an Accuride Board member, we are confident that he will drive initiatives to improve Accuride’s financial performance while maintaining uninterrupted customer service," said Terrence Keating, chairman of the board of Accuride.
Lasky commented, "I appreciate the confidence of the other Board members in my abilities. Working with all of Accuride’s employees, I plan to have an immediate impact on the company’s direction, and will work with the board to bring permanent leadership to the company to continue these efforts."
Today, Accuride also announced a series of strategic restructuring initiatives to reduce expenses, increase competitiveness, strengthen customer relationships and enhance shareholder value. As a result of the restructuring initiatives, Accuride will eliminate a total of 392 positions, or 11 percent, of its total workforce, including 159 salaried positions, or 18 percent of current level and233 hourly employees, or 9 percent of current level.
The company expects to incur a one-time restructuring charge of approximately $14.3 million in the third quarter of 2008 of which a total of $10 million will impact cash during 2008 and 2009. It is expected that the restructuring will save the company an estimated $6 million in 2008 and generate annual cost savings of approximately $27.5 million thereafter.
"We are extremely mindful of the impact that these difficult but necessary actions have on our employees," said Keating. "However, given the current weak build rates and challenging macroeconomic environment, these initial restructuring steps are necessary to allow us to effectively compete in the markets we serve."
In addition to the workforce reduction, the company reiterated that it would continue to pursue initiatives that would reduce overhead costs and improve asset utilization through the redeployment of equipment and rationalization of facilities, while maintaining sufficient capacity to service customer needs during peak build levels.
"The restructuring plan is a culmination of months of work by management with the support and backing of the Board," said Lasky. "In addition to these initiatives, we believe there are additional opportunities that merit further analysis and we will continue to press to reduce our costs, improve asset utilization, and accelerate organic growth."
In addition, Accuride confirmed its commitment to the aftermarket today by announcing the creation of a dedicated Aftermarket Division to strengthen its services and offerings to its customer base. In conjunction with this announcement, Accuride has named Tony Pape as vice president and general manager of its Aftermarket Division, creating senior executive level focus and accountability for this important market segment. In addition, Phil Stolz was named vice president, Truck OE Sales and Corporate Marketing to help ensure continued excellent OE support with an expanded focus on market development.
"We look to Tony and Phil to take a dynamic approach in significantly strengthening our customer relationships by servicing both the aftermarket and OE service in a centralized fashion," said Rick Schomer, Accuride’s senior vice president, sales and marketing. "To support these initiatives, we will be consolidating our existing warehouses to reduce freight and product handling costs and significantly improve our customer service offering for full mixed product truckloads to our aftermarket customers."
"While we believe the restructuring initiatives will have a $6.0 million positive impact to our earnings in 2008, there are mitigating factors that will keep our earnings under pressure including: a prolonged delay in certain revenue programs due to customer start-up difficulties; continued weak build rates; and a delay of a portion of our recovery of increased raw material costs to early 2009," said Lasky. "It is anticipated that the negotiated raw material cost recovery delay will enable us to solidify our customer relationships in the near term and provide new longer-term business opportunities when the market returns to normal levels. Excluding the one-time charges from our improvement initiatives, we are reaffirming our 2008 Adjusted EBITDA guidance at the lower end of our previously announced range."
David Armstrong, Accuride’s senior vice president, chief financial officer added that the company is currently in full compliance with the financial covenants under its credit facility and anticipates compliance through the end of the year. "Depending on the strength of the commercial vehicle market and the company’s results from operations, it is possible that the company may not maintain compliance with certain financial covenants at the end of the first quarter of 2009,” said Armstrong. “The company is monitoring this situation closely and we will continue to explore alternatives to address compliance concerns. In the meantime, we expect to have adequate liquidity from operating cash flow and our untapped revolver."
Lasky concluded, "The depth of initiatives announced today will result in a leaner organization that is better positioned to deliver increased value to our shareholders while improving our competitiveness and customer service. These actions will better position us to be a more agile competitor in the years ahead."
