EVANSVILLE, IN — United Components, Inc. (UCI) has announced results for the second quarter ended June 30. Revenue of $245.8 million increased $13.8 million compared to the year-ago quarter, with small increases in the original equipment sales, original equipment service and heavy-duty channels, and declines in the retail and traditional channels. The quarter also included $10.3 million in sales by water pump manufacturer ASC Industries, which was acquired by UCI during the quarter. UCI’s consolidated results include ASC from the May 25 acquisition date. Also, on June 30, the company completed the sales of its Neapco driveline components and Pioneer specialty distribution operations, for about $36 million in cash. Neapco and Pioneer are accounted for as discontinued operations for all periods presented.
Net loss for the quarter was $19.1 million, including a loss of $17.3 million related to the discontinued operations and their sale, as well as $14.1 million in one time charges, primarily costs related to the acquisition of ASC and facilities consolidation costs. Excluding these charges, net income would have been $12.3 million for the quarter. Net income for the second quarter of 2005 was $4.4 million.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for UCI’s continuing operations, as adjusted consistent with the company’s historical presentations, was $33.3 million for the second quarter, compared with $30.5 million for the year-ago quarter. The calculation of adjusted EBITDA is set forth in Schedule A.
"The acquisition of ASC Industries during the second quarter has dramatically expanded our global manufacturing and procurement platform," said Bruce Zorich, chief executive officer of UCI. "ASC was a first mover within the aftermarket supplier community in establishing manufacturing and sourcing operations in China, having operated multiple manufacturing and procurement facilities in China for more than ten years. We believe that this base of operations and skilled management team will lead to improved product quality and lower costs across the company."
During the second quarter, UCI also continued to streamline its manufacturing footprint, with the closure of a Mexican filter manufacturing plant and a Canadian pump manufacturing facility. In both cases, operations were consolidated into larger, more efficient facilities to reduce future costs.
"We’re also pleased to report that we continue to execute on our strategic plan to grow revenue and profitability for the company," said Zorich. "With the acquisition of ASC and the sale of Neapco and Pioneer complete, we have realigned UCI to focus on strategic initiatives in our core business. We have seen benefits from our initiatives in the areas of business development and operational improvement during the first half of 2006. We expect these benefits to continue in the quarters ahead, even as the industry continues to fight rising gas prices and increases in our freight and raw material costs."
In connection with the acquisition of ASC, UCI amended and restated the credit agreement for its senior credit facility and borrowed an additional $113 million. As of June 30, the company’s debt stood at $567 million. The company ended the quarter with $57 million in cash. In addition, on July 6, following the sale of Neapco and Pioneer, the company repaid $35 million of its senior credit facility borrowings.
For more information about UCI, go to: www.ucinc.com .
