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Remy International, Inc. Announces Second Quarter 2014 Results

Companies mentioned in this article: Remy International, Inc.

PENDLETON, Ind., July 30, 2014 /PRNewswire/ -- Remy International, Inc. (NASDAQ: REMY), a leading worldwide manufacturer, remanufacturer, and distributor of starter motors and alternators for light vehicle and commercial vehicle applications, multi-line products and hybrid electric motors, today announced its financial results for the second quarter ended June 30, 2014.


    Financial Results                                   Three months ended June 30,                Six months ended June 30,
    -----------------

                                                                  2014                        2013                2014                    2013
                                                                  ----                        ----                ----                    ----

    Net sales                                           $299.3 million             $282.3 million     $599.6 million         $564.1 million

    Net income                                           $10.0 million              $11.5 million      $19.4 million          $13.3 million

    Diluted earnings per share                                   $0.32                       $0.36               $0.62                   $0.40

    Adjusted net income                                  $10.8 million              $13.3 million      $22.2 million          $22.6 million

    Adjusted diluted earnings per share                          $0.34                       $0.42               $0.70                   $0.70

    Net cash provided by (used in) operating activities   $5.1 million               $6.4 million     $(4.1) million         $(9.9) million

    Adjusted EBITDA                                      $34.7 million              $33.2 million      $68.2 million          $64.5 million

Second Quarter Highlights

    --  Net sales of $299.3 million for the second quarter of 2014, an increase
        of 6% compared to $282.3 million for the second quarter of 2013.
    --  Adjusted EBITDA of $34.7 million for the second quarter of 2014 compared
        to $33.2 million for the second quarter of 2013.
    --  Adjusted net income was $10.8 million for the second quarter of 2014
        compared to $13.3 million for the second quarter of 2013.
    --  On May 9, 2014, Standard & Poor's (S&P) Ratings Services upgraded our
        corporate credit rating from B+ to BB- on improved financial metrics
        reflecting our leading position in North America as a supplier of
        starters and alternators to original equipment manufacturers and the
        aftermarket.
    --  On July 25, 2014, the Board of Directors declared a quarterly dividend
        of $0.10 per share payable on August 29, 2014 to stockholders of record
        as of August 15, 2014.

Jay Pittas, Remy International, Inc. President and CEO commented, "The second quarter was a solid one for us with the business performing as expected with higher revenue and profit versus the second quarter of 2013. Our top line growth strategies are succeeding with the trailing three quarter's revenue up 7% versus the prior period. We continue to undertake initiatives to grow the top line and secure new business as well as take steps to improve operating efficiencies. By executing our plan, we will drive superior long-term value for stockholders."

About Remy International, Inc.

Founded by the Remy Brothers in 1896, Remy International, Inc. is a leading global manufacturer and remanufacturer of alternators, starter motors and electric traction motors. Headquartered in Pendleton, IN, with global operations across five continents and 10 countries, Remy International markets products under the Delco Remy(®), Remy(®), World Wide Automotive(® )and USA Industries(®) brands. Known for innovation, efficiency, quality, and best-in-class customer service and support, Remy International's products are integrated by leading industrial, specialty, automotive and heavy-duty OEMs, and aftermarket providers worldwide. We Start the World & Keep It Running(TM).

Conference Call

Remy will host a call with investors and analysts to discuss second quarter 2014 results on Thursday, July 31, 2014 beginning at 9:00 a.m. Eastern Time. A live webcast of the conference call will be available on the Remy Investor Relations website at http://www.remyinc.com. The conference call replay will also be available via webcast through the Remy Investor Relations website at http://www.remyinc.com.

Use of Non-U.S. GAAP Financial Information

Accounting principles generally accepted in the United States (U.S. GAAP) is the standard framework of guidelines for financial accounting. U.S. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with U.S. GAAP, Remy has provided Adjusted net income, Adjusted diluted earnings per share, and Adjusted EBITDA, non-U.S. GAAP financial measures, which are frequently used by management, analysts, investors and other interested parties. Management believes that the non-U.S. GAAP financial measures presented provide a useful measure of Remy's financial performance since they exclude certain items which do not reflect ongoing operations. A reconciliation of U.S. GAAP net income to Adjusted net income and Adjusted diluted earnings per share is provided herein. Adjusted EBITDA is defined by the Company as net income attributable to common stockholders before (i) interest expense-net, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) net income attributable to noncontrolling interest, (vi) restructuring, other charges and other impairment charges, (vii) loss on extinguishment of debt and refinancing fees, (viii) executive officer separation cost, (ix) certain purchase accounting finished goods inventory step-up costs and (x) other adjustments. Adjusted EBITDA as defined by the Company may differ from non-U.S. GAAP measures used by other companies and is not a measurement under U.S. GAAP. There are limitations inherent in non-U.S. GAAP financial measures in that they exclude a variety of charges and credits that are required to be included in a U.S. GAAP presentation, and therefore do not present the full measure of the Company's recorded costs against its revenue. Accordingly, in analyzing Remy's future financial performance, non-U.S. GAAP results presented should be considered together with U.S. GAAP results, rather than as an alternative to U.S. GAAP basis financial measures. Reconciliations of non-U.S. GAAP measures to related U.S. GAAP measures are presented in the financial schedules which accompany this release.

Forward Looking Statements

This press release contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events to reflect the new information, future events, or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, future financial results and liquidity, development of new products and services, the effect of competitive products or pricing, the effect of commodity and raw material prices, the impact of supply chain cost management initiatives, restructuring risks, customs duty claims, litigation uncertainties and warranty claims, conditions in the automotive industry, foreign currency fluctuations, costs related to re-sourcing and outsourcing products, the effect of economic conditions, and other risks identified in the "Special note regarding forward-looking statements", "Risk Factors" and other sections of the Company's previously filed most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

A copy of the second quarter 2014 Form 10-Q will be available on the Remy International Website at:
http://www.remyinc.com under "Investor Relations".

Investor Contact: Fred Knechtel, Sr. Vice President, CFO and Treasurer
Knechtel.Fred@remyinc.com
(765) 778-6871


          Remy International, Inc.

       Index of consolidated financial
                 information


    Consolidated balance sheets as of
     June 30, 2014 (unaudited) and
     December 31, 2013                      A-2

    Consolidated statements of
     operations (unaudited) for the
     three and six months ended June 30,
     2014 and June 30, 2013                 A-3

    Consolidated statements of cash
     flows (unaudited) for the six
     months ended June 30, 2014 and June
     30, 2013                               A-4

    Reconciliation of non-U.S. GAAP
     financial measures (unaudited) for
     the three and six months ended June
     30, 2014 and June 30, 2013             A-5

The accompanying unaudited consolidated financial information and reconciliation schedules should be read in conjunction with the Remy International, Inc. Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2014 and June 30, 2014, each of which were filed with the United States Securities and Exchange Commission.



                                                                             Remy International, Inc.

                                                                           Consolidated balance sheets


                                                                                                          June 30,            December 31,

    (In thousands, except share information)                                                                  2014                     2013
    ---------------------------------------                                                                   ----                     ----

    Assets:                                                                                            (unaudited)

    Current assets:

    Cash and cash equivalents                                                                                         $56,150                 $114,884

    Trade accounts receivable (less allowances of $1,885 and $1,583)                                       243,087                  191,548

    Other receivables                                                                                       19,484                   21,023

    Inventories                                                                                            188,098                  159,340

    Deferred income taxes                                                                                   36,244                   36,329

    Prepaid expenses and other current assets                                                               15,225                   11,151
                                                                                                            ------                   ------

    Total current assets                                                                                   558,288                  534,275


    Property, plant and equipment                                                                          261,390                  249,326

    Less accumulated depreciation and amortization                                                       (114,971)               (103,715)
                                                                                                          --------                 --------

    Property, plant and equipment, net                                                                     146,419                  145,611


    Deferred financing costs, net of amortization                                                            3,467                    3,802

    Goodwill                                                                                               285,433                  271,418

    Intangibles, net                                                                                       107,916                   89,909

    Other noncurrent assets                                                                                 78,506                   72,040
                                                                                                            ------                   ------

    Total assets                                                                                                   $1,180,029               $1,117,055
                                                                                                                   ==========               ==========


    Liabilities and Equity:

    Current liabilities:

    Short-term debt                                                                                                    $7,390                   $2,369

    Current maturities of long-term debt                                                                     3,389                    3,392

    Accounts payable                                                                                       199,580                  168,491

    Accrued interest                                                                                           113                       92

    Accrued restructuring                                                                                      153                    1,026

    Other current liabilities and accrued expenses                                                         120,012                  110,179
                                                                                                           -------                  -------

    Total current liabilities                                                                              330,637                  285,549


    Long-term debt, net of current maturities                                                              292,310                  293,835

    Postretirement benefits other than pensions                                                              1,515                    1,628

    Accrued pension benefits                                                                                17,993                   19,103

    Deferred income taxes                                                                                      811                    1,000

    Other noncurrent liabilities                                                                            28,123                   24,783


    Equity:

    Remy International, Inc. stockholders' equity:

    Common stock, Par value of $0.0001; 31,995,332 shares outstanding at                                         3                        3

    June 30, 2014, and 31,981,544 shares outstanding at December 31, 2013

    Treasury stock, at cost; 457,107 treasury shares at June 30, 2014, and                                 (3,982)                 (1,477)

    267,924 treasury shares at December 31, 2013

    Additional paid-in capital                                                                             324,322                  320,687

    Retained earnings                                                                                      226,504                  213,418

    Accumulated other comprehensive loss                                                                  (38,207)                (41,474)
                                                                                                           -------                  -------

    Total Remy International, Inc. stockholders' equity                                                    508,640                  491,157

    Total liabilities and equity                                                                                   $1,180,029               $1,117,055
                                                                                                                   ==========               ==========



                                                                   Remy International, Inc.

                                                            Consolidated statements of operations

                                                                         (Unaudited)


                                                                       Three months ended June 30,           Six months ended June 30,
                                                                       ---------------------------           -------------------------

    (In thousands, except per share amounts)                            2014                          2013                2014              2013
    ---------------------------------------                             ----                          ----


    Net sales                                                                   $299,293                   $282,349                    $599,587  $564,076

    Cost of goods sold                                               241,147                       227,648             486,974           454,396
                                                                     -------                       -------             -------           -------

    Gross profit                                                      58,146                        54,701             112,613           109,680

    Selling, general, and administrative expenses                     35,929                        32,415              69,268            72,565

    Restructuring and other charges                                       79                         2,128                 393             2,809
                                                                         ---                         -----                 ---             -----

    Operating income                                                  22,138                        20,158              42,952            34,306

    Interest expense-net                                               5,390                         3,731              11,026            10,068

    Loss on extinguishment of debt and refinancing fees                    -                            -                  -            4,256
                                                                         ---                          ---                ---            -----

    Income before income taxes                                        16,748                        16,427              31,926            19,982

    Income tax expense                                                 6,792                         4,963              12,503             6,675
                                                                       -----                         -----              ------             -----

    Net income                                                         9,956                        11,464              19,423            13,307

    Less net income attributable to noncontrolling interest                -                           96                   -              659
                                                                         ---                          ---                 ---              ---

    Net income attributable to common stockholders                                $9,956                    $11,368                     $19,423   $12,648
                                                                                  ======                    =======                     =======   =======


    Basic earnings per share:

    Earnings per share                                                             $0.32                      $0.36                       $0.62     $0.41

    Weighted average shares outstanding                               31,514                        31,239              31,447            31,173
                                                                      ======                        ======              ======            ======

    Diluted earnings per share:

    Earnings per share                                                             $0.32                      $0.36                       $0.62     $0.40
                                                                                   =====                      =====                       =====     =====

    Weighted average shares outstanding                               31,593                        31,364              31,571            31,314
                                                                      ======                        ======              ======            ======

    Dividends declared per common share                                            $0.10                      $0.10                       $0.20     $0.20
                                                                                   =====                      =====                       =====     =====



                                                                                      Remy International, Inc.

                                                                               Consolidated statements of cash flows

                                                                                            (Unaudited)


                                                                                                                              Six months ended June 30,
                                                                                                                              -------------------------

    (In thousands)                                                                                                       2014                                 2013
    -------------                                                                                                        ----                                 ----

    Cash flows from operating activities:

    Net income                                                                                                                 $19,423                             $13,307

    Adjustments to reconcile net income to cash used in operating activities:

    Depreciation and amortization                                                                                      18,816                               17,022

    Amortization of debt issuance costs                                                                                   500                                  613

    Loss on extinguishment of debt and refinancing fees                                                                     -                               4,256

    Stock-based compensation                                                                                            2,561                                3,246

    Deferred income taxes                                                                                                 981                              (3,409)

    Accrued pension and postretirement benefits, net                                                                    (997)                               (416)

    Restructuring and other charges                                                                                       393                                2,809

    Cash payments for restructuring charges                                                                           (1,266)                             (4,949)

    Other                                                                                                                 273                                (801)

    Changes in operating assets and liabilities, net of restructuring charges:

      Accounts receivable                                                                                            (40,969)                            (27,010)

      Inventories                                                                                                    (13,998)                             (9,187)

      Accounts payable                                                                                                 22,548                              (6,206)

      Other current assets and liabilities, net                                                                         1,647                                7,231

      Other noncurrent assets and liabilities, net                                                                   (13,974)                             (6,446)
                                                                                                                      -------                               ------

    Net cash used in operating activities                                                                             (4,062)                             (9,940)


    Cash flows from investing activities:

    Purchases of property, plant and equipment                                                                       (11,627)                            (13,239)

    Net proceeds on sale of assets                                                                                         80                                  303

    Acquisition of USA Industries, Inc., net of cash acquired of $109                                                (40,070)                                   -
                                                                                                                      -------                                  ---

    Net cash used in investing activities                                                                            (51,617)                            (12,936)


    Cash flows from financing activities:

    Change in short-term debt and revolver                                                                              4,930                              (5,750)

    Payments made on long-term debt, including capital leases                                                         (1,693)                           (288,874)

    Proceeds from issuance of long-term debt                                                                                -                             299,250

    Dividend payments on common stock                                                                                 (6,548)                             (6,331)

    Purchase of treasury stock                                                                                        (2,505)                             (1,248)

    Debt issuance costs                                                                                                     -                             (3,476)

    Purchase of and distributions to noncontrolling interest                                                                -                            (18,902)

    Other                                                                                                               1,142                                    -
                                                                                                                        -----                                  ---

    Net cash used in financing activities                                                                             (4,674)                            (25,331)


    Effect of exchange rate changes on cash and cash equivalents                                                        1,619                              (2,480)
                                                                                                                        -----                               ------

    Net decrease in cash and cash equivalents                                                                        (58,734)                            (50,687)

    Cash and cash equivalents at beginning of period                                                                  114,884                              111,733
                                                                                                                      -------                              -------

    Cash and cash equivalents at end of period                                                                                 $56,150                             $61,046
                                                                                                                               =======                             =======

    Supplemental information:

    Noncash investing and financing activities:

    Purchases of property, plant and equipment in accounts payable                                                              $2,816                              $1,825

Remy International, Inc.
Reconciliation of non-U.S. GAAP financial measures
(Unaudited)

Adjusted EBITDA

Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. We use adjusted EBITDA as a supplement to our U.S. GAAP results in evaluating our business. Other companies in our industry define adjusted EBITDA differently from us and, as a result, our measure is not comparable to similarly titled measures used by other companies in our industry.

We define adjusted EBITDA as net income attributable to common stockholders before interest expense-net, income tax expense, depreciation and amortization, stock-based compensation expense, net income attributable to noncontrolling interest, restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive officer separation cost, certain purchase accounting finished goods inventory step-up costs and other adjustments as set forth in the reconciliations provided below.

Adjusted EBITDA is one of the key factors upon which we assess performance. As an analytical tool, adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed by U.S. GAAP. There are limitations to using non-U.S. GAAP measures such as adjusted EBITDA. Although we believe that adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not reflect our ongoing operations, adjusted EBITDA excludes certain financial information that some may consider important in evaluating our performance.

The following table sets forth a reconciliation of adjusted EBITDA to its most directly comparable U.S. GAAP measure, net income attributable to common stockholders.


                                                           Three months ended June 30,           Six months ended June 30,

     (In thousands)                                        2014                          2013                 2014             2013
     -------------                                         ----                          ----                 ----             ----


    Net income attributable to common stockholders                  $9,956                    $11,368                      $19,423  $12,648

    Adjustments:

    Interest expense-net                                  5,390                         3,731               11,026           10,068

    Income tax expense                                    6,792                         4,963               12,503            6,675

    Depreciation and amortization                        10,161                         8,809               18,816           17,022

    Stock-based compensation expense                      1,342                         1,749                2,561            3,246

    Net income attributable to noncontrolling interest        -                           96                    -             659

    Restructuring and other charges                          79                         2,128                  393            2,809

    Loss on extinguishment of debt and refinancing fees       -                            -                   -           4,256

    Executive officer separation                              -                            -                   -           7,000

    Purchase accounting finished goods inventory step-up    965                             -               3,474                -

    Other                                                    49                           368                   49              104
                                                            ---                           ---                  ---              ---

    Total adjustments                                    24,778                        21,844               48,822           51,839

    Adjusted EBITDA                                                $34,734                    $33,212                      $68,245  $64,487
                                                                   =======                    =======                      =======  =======

Remy International, Inc.
Reconciliation of non-U.S. GAAP financial measures
(Unaudited)

Adjusted net income and adjusted diluted earnings per share

Management believes adjusted net income and adjusted diluted earnings per share, which are non-GAAP measures, are useful in evaluating the ongoing operating performance of the Company. We define adjusted net income as net income before restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive officer separation cost, purchase accounting related charges and other adjustments as set forth in the reconciliations provided below. Adjusted diluted earnings per share is defined as adjusted net income attributable to common stockholders divided by the weighted average number of diluted shares outstanding for the period. Other companies in our industry define adjusted net income and adjusted diluted earnings per share differently from us and, as a result, our measures are not comparable to similarly titled measures used by other companies in our industry.

The following table sets forth a reconciliation of adjusted net income to its most directly comparable U.S. GAAP measure, net income:


    (In thousands, except per share amounts)                               Three months                         Six months

                                                                         ended June 30,                     ended June 30,
    ---                                                                  --------------                     --------------

                                                              2014                        2013              2014                 2013
                                                              ----                        ----              ----                 ----

    Net income                                                      $9,956                     $11,464                       $19,423  $13,307

    Adjustments:

    Purchase accounting related charges (a)                  1,291                           -            4,083                    -

    Restructuring and other charges (b)                         79                       2,128               393                2,809

    Loss on extinguishment of debt and refinancing fees (c)      -                          -                -               4,256

    Executive officer separation (d)                             -                          -                -               7,000

    Tax impact of Non-GAAP adjustments (e)                   (513)                      (273)          (1,669)             (4,752)

    Total adjustments                                          857                       1,855             2,807                9,313
                                                               ---                       -----             -----                -----

    Adjusted net income                                     10,813                      13,319            22,230               22,620

    Less net income attributable to noncontrolling interest      -                         96                 -                 659

    Adjusted net income attributable to common stockholders        $10,813                     $13,223                       $22,230  $21,961
                                                                   =======                     =======                       =======  =======


    Basic earnings per share:

    Weighted average shares outstanding                     31,514                      31,239            31,447               31,173
                                                            ======                      ======            ======               ======

    Earnings per share                                               $0.32                       $0.36                         $0.62    $0.41
                                                                     =====

    Adjusted earnings per share                                      $0.34                       $0.42                         $0.71    $0.70
                                                                     =====                       =====                         =====    =====

    Diluted earnings per share:

    Weighted average shares outstanding                     31,593                      31,364            31,571               31,314
                                                            ======                      ======            ======               ======

    Earnings per share                                               $0.32                       $0.36                         $0.62    $0.40
                                                                     =====

    Adjusted earnings per share                                      $0.34                       $0.42                         $0.70    $0.70
                                                                     =====                       =====                         =====    =====


    (a)              Represents the elimination of
                     finished goods inventory step-up,
                     customer relationships amortization
                     and lease intangible amortization
                     related to the USA Industries
                     acquisition.

    (b)              Represents the elimination of
                     restructuring and other charges.

    (c)              Represents the loss on extinguishment
                     of debt and refinancing fees as a
                     result of the refinancing of our
                     Term B Loan syndication.

    (d)              Represents the lump sum cash payment
                     pursuant to the terms of the
                     Transition, Noncompetition and
                     Release Agreement with John H.
                     Weber, our former President and
                     Chief Executive Officer, effective
                     February 28, 2013.

    (e)              Represents the tax impact of Non-
                     GAAP adjustments by using the
                     appropriate tax rate of the
                     jurisdictions where the charges were
                     incurred.

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SOURCE Remy International, Inc.