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Accuride Corporation: Earnings Report For Q2 2014

Accuride Corporation (ACW), a leading supplier of vehicular spare parts in North America, reported strong financial results last month for the second quarter.

Second Quarter Results:

Second quarter 2014 net sales from continuing operations were $181.6 million, an 0.9 percent increase year-over-year. The company achieved operating income of $12.3 million for the quarter, compared to $6 million in the second quarter of 2013. Net income from continuing operations was $5.1 million, or $0.11 per share during the quarter, compared to a 2013 second-quarter net loss of $5.1 million, or $0.11 per share. Net income included a benefit of $2.2 million, or $0.04 per share, related to Mexico tax reform and a reduction in long-term income tax payable. Second quarter Adjusted EBITDA improved year-over-year to $23.2 million, or 12.8 percent of net sales, compared to $17.8 million, or 9.9 percent of net sales, in the same quarter of 2013. As of June 30, 2014, Accuride had $31.9 million of cash plus $40.1 million in availability under its ABL Credit Facility, for total liquidity of $72 million.


President and CEO Rick Dauch said, "We are pleased with our overall results for the quarter, which again demonstrated the return on our strategic investments to 'Fix & Grow' Accuride in anticipation of the commercial vehicle industry recovery now underway. Equipment orders were higher each month this quarter over the prior year, extending backlogs and filling build schedules in the segments we serve, while freight demand and the aftermarket stayed healthy. As the industry outlook solidified this quarter, so did Accuride's profit-generation power. We doubled operating income, aiding further expansion of net income and adjusted EBITDA margins. Accuride was net income positive on a year-to-date basis through June for the first time since the onset of the industry recession in 2007. Wheels and, particularly, Gunite saw continued incremental margin expansion in the quarter due to reduced costs and improved operating efficiency."

Other Results

Accuride Wheels:

Accuride Wheels segment net sales were $101.2 million, up $1.7 million, or 1.7 percent, from the same period in 2013, primarily due to stronger OEM truck and trailer demand that was partially offset by market share changes between truck OEMs and lower OEM light duty and military demand. Wheels' adjusted EBITDA was $20.9 million, an increase of $0.2 million, or 1 percent, from the second quarter of 2013. Wheels continued its pace of product innovation by introducing its new Accu-Flange treatment to limit flange wear in aluminum wheels.

Gunite:

Gunite segment net sales were $48.3 million, down $2.9 million, or 5.7 percent, from the second quarter of 2013, primarily due to weaker-than-expected aftermarket demand for brake drums. Gunite's adjusted EBITDA was $8.3 million, or 17.2 percent of net sales, up from $4.6 million in the second quarter of 2013. Gunite's continued margin expansion reflects its normal seasonally higher mix of aftermarket business and reduced breakeven point, and supports our target for Gunite to become a 10 to 12 percent adjusted EBITDA business in 2014.

Brillion Iron Works:

Brillion Iron Works' second quarter net sales were $32.1 million, up $2.8 million, or 9.6 percent, from the second quarter of 2013. Brillion's adjusted EBITDA was $1.6 million, a decrease of $1.7 million from the second quarter of 2013. Brillion's results were impacted by $1 million in non-cash inventory adjustments and higher-than-expected maintenance costs.

Liquidity And Debt Standing:

As of June 30, 2014, total debt was $340.7 million, consisting of $305.7 million of outstanding 9.5% senior secured notes, net of discount, and a $35 million draw on ABL Credit Facility. Accuride had $31.9 million of cash plus $40.1 million in availability under its ABL Credit Facility, for total liquidity of $72 million.

This article first appeared on GuruFocus.