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Abonner Teksid Aluminum S.A.R.L.S.C.A

Teksid Aluminum S.A.R.L.S.C.A

TK Aluminum Ltd. Reports Financial Results for the First Quarter Ended March 31, 2006

Carmagnola, Italy (ots/PRNewswire)

Teksid Aluminum net revenues
in the first quarter of 2006, increased 10.1% as compared to the
prior year. Adjusted EBITDA decreased by 56.4% materially impacted by
raw material price increases mainly due to the aluminum lag embedded
in the price formula, and operational inefficiencies in one of our
North American operations.
TK Aluminum Ltd., the indirect parent
of Teksid Aluminum Luxembourg S.à.r.l., S.C.A., today reported its
consolidated financial results for the first quarter ended March 31,
2006.
"While Teksid Aluminum revenues continue to grow, we have
experienced a challenging quarter with respect to EBITDA" reported
Jake Hirsch, CEO of Teksid Aluminum. "In the first quarter of 2006,
net revenues grew by 10% while tons sold were relatively flat and
Adjusted EBITDA decreased by 56%. The positive impact of cost
reduction initiatives and restructuring savings were more than offset
by rapidly rising aluminum costs and continued operating
inefficiencies in one of our North American operations. As previously
reported, the aluminum lag has been improved through specific
renegotiation of the price formula with our customers to align them
with our buying formula. Going forward, we will benefit from an
improved time lag between buy and sell on approximately 80% of the
value of our contracts".
Consolidated financial results for the quarter ended March 31,
2006
The table below contains certain financial information of the
Company for the three-month periods ended March 31, 2006 and 2005
respectively. All amounts included herein for the prior period have
been adjusted to reflect the previous restatement of certain
financial information related to the Brazilian investigation reported
in the prior periods.
EUR m            Three-Month Period Ended March 31
                                2006        2005 (as restated)
        K/Tons                    56.2               55.4
        Net Revenues          EUR274.5           EUR249.4
        EBITDA                  EUR3.9            EUR20.8
        Adjusted EBITDA         EUR7.1            EUR16.3
        Net Loss               EUR18.9             EUR8.4
        Capex                   EUR6.8            EUR19.9
        Net Debt (a)          EUR361.8           EUR323.7
(a) Net Debt at December 31, 2005 was EUR313.1 m
Net Revenues increase as a result of aluminum pass through and a
positive foreign exchange impact
Net Revenues in the first quarter of 2006 increased by 10.1%
compared to the same period in 2005, primarily due to exchange rate
fluctuations. Assuming constant exchange rates, Net Revenues in the
first quarter of 2006 were 3.3% higher as compared to the same period
in 2005. Net Revenues in the reported period were primarily affected
by aluminum price increases, partially offset by reduced tooling
sales and contractual price give backs.
Adjusted EBITDA in Q1 2006 was positively impacted by cost
savings, restructuring savings, miscellaneous items, offset by a
rapid increase in aluminum costs and operating inefficiencies in
North America
Adjusted EBITDA for the first quarter of 2006 was 2.6% of Net
Revenues compared to Adjusted EBITDA for the same period in 2005,
which was 6.5% of Net Revenues.
Adjusted EBITDA for the first quarter of 2006 was positively
impacted by cost saving initiatives of EUR4.3 million, by savings of
EUR2.0 million on our restructuring program and by EUR3.3 million of
miscellaneous items. This improvement was offset by the negative
impact of EUR6.0 million due to aluminum price increases and the time
lag in the pass through of such increases to customers, EUR5.0
million due to cost inefficiencies in North America, EUR4.2 million
due to cost inflation, EUR1.2 million due to OEM contractual price
give-backs and product mix, along with EUR0.7 million due to
decreased tooling profit and EUR1.7 million due to negative foreign
exchange impact.
For a definition and reconciliation of EBITDA to Adjusted EBITDA
see enclosed attachment 1.
Net Loss increased primarily due to lower operating performance,
higher interest costs and negative foreign exchange impact
Net Loss for the first quarter of 2006 was EUR18.9 million
representing a loss increase of 125.0% compared to same period in
2005, primarily as a result of aluminum price fluctuations,
operational inefficiencies at our North American operations and
higher interest costs in the current period.
Capital expenditures carefully monitored
Capital expenditures for the first quarter of 2006 were EUR6.8
million compared to EUR19.9 million during the same period of 2005.
Such capital expenditures primarily relate to purchases of machinery
and equipment by the Company's subsidiaries in the United States,
Mexico and Europe. Capital Expenditure approval process has been
carefully monitored in light of reduced operating performance for the
current quarter.
Net Debt increased primarily to support working capital
requirements and as a result of reduced operating performance
Net Debt at March 31, 2006, which includes EUR48.8 million in
cash, increased by EUR48.7 million to EUR361.8 million from Net Debt
of EUR313.1 million at December 31, 2005. The increase in Net Debt
was primarily due to net cash used in operating activities mainly
related to a seasonal increase in working capital and other reserves
for EUR44.3 million and by a EUR6.8 million of cash used for
investing activities, partially offset by a EUR2.4 million positive
impact of foreign exchange.
Aluminum
Aluminum prices continued to increase through Q1 of 2006 by
approximately 7%. This is in addition to a approximately 23% increase
in aluminum prices in the fourth quarter of 2005. To minimize the
effect of aluminum price fluctuations on our results, we are
continuing to negotiate with our customers to amend existing sales
contracts to shorten the time lag between the change in our cost of
aluminium and the change in the price our customers pay to us for
aluminum. Going forward, we will benefit from an improved time lag
between buy and sell on approximately 80% of the value of our
contracts.
China
On April 26, 2006, the Company signed an agreement to increase its
investment in Nanjing Teksid Aluminum Foundry Co, Ltd., an aluminum
foundry based in Nanjing. The investment is pending subject to
approval by the local government. Upon approval, the Company will
invest an additional EUR2.6 million in the Company registered
capital, which will increase the Teksid Aluminum's equity rights to
approximately 70%. Nineteen percent of this equity share is
represented by voting rights provided to the Company from Simest, an
Italian state owned agency that provides specific financial support
for direct investment abroad to Italian companies.
Covenants Compliance
The next Financial Covenants period for the Company will be June
30th, 2006.
Results for the three-month period ended March 31st 2006 and 2005
respectively included herein are unaudited and have been presented in
accordance with U.S. GAAP.
Further comments on the first quarter of 2006 earnings will be
delivered by Messrs. Jake Hirsch and Jon Smith during the bondholders
and analyst conference call to be held on June 5th, 2006, at 15:30
pm, Central European Time, 14:30 pm London Time, 9:30 am Eastern
Time. Registration of the Conference Call will be available on June
the 6th and 7th, 2006 at 15:30 pm, Central European Time, 14:30 pm
London Time, 9:30 am Eastern Time.
Any interested person may join the conference call by using the
dial-in numbers set forth below.
Dial-in +39-071-2861848
About Teksid Aluminum
Teksid Aluminum is a leading independent manufacturer of aluminum
engine castings for the automotive industry. Our principal products
are cylinder heads, engine blocks, transmission housings and
suspension components. We operate 15 manufacturing facilities in
Europe, North America, South America and Asia. Information about
Teksid Aluminum is available on our website at
www.teksidaluminum.com.
Until September 2002, Teksid Aluminum was a division of Teksid
S.p.A., which was owned by Fiat. Through a series of transactions
completed between September 30, 2002 and November 22, 2002, Teksid
S.p.A. sold its aluminum foundry business to a consortium of
investment funds led by equity investors that include affiliates of
each Questor Management Company, LLC, JPMorgan Partners, Private
Equity Partners SGR SpA and AIG Global Investment Corp. As a result
of the sale, Teksid Aluminum is owned by its equity investors through
TK Aluminum Ltd., a Bermuda holding company.
ATTACHMENT 1 to Press Release of May 30, 2006
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Adjusted EBITDA is a supplemental measure of our performance that
is not required by, or presented in accordance with U.S. GAAP.
Furthermore, Adjusted EBITDA should not be considered as an
alternative to net income  (loss) or any other performance measures
derived in accordance with U.S. GAAP, or to cash flows from operating
activities as a measure of liquidity.
The following is a reconciliation of net loss to EBITDA and to
Adjusted EBITDA:
        (in thousands of euro)                     Three Months ended
                                                        March 31
                                                     2006       2005
                                                                 as
                                                              restated
        Net loss                                   (18.923)   (8.383)
        Depreciation and amortization               13.922     15.668
        Income tax (benefit) expense               (2.952)     1.799
        Interest expense (income), net              11.880     11.697
        EBITDA                                      3.927      20.781
        Equity earnings of affiliated companies,     (74)       196
        net
        Foreign exchanges losses (gains), net        975      (4.630)
        Other expense (income), net                 (127)      (761)
        Adjustments to EBITDA:
        Restructuring / Severance / Early           1.432      1.176
        retirement expenses (a)
        SEC Filing, SOA and Exchange Offer fees      174        191
        (b)
        Fees payables to affiliates of the           625        625
        investors (c)
        Change in accounting treatment for the        -       (1.281)
        synthetic lease (d)
        Change in accounting principle of            123         -
        Stock-based compensation (SFAS 123R) (e)
        Adjusted EBITDA                             7.055      16.297
    <end_table>
    (a) Adjustment to eliminate expenses associated with the operational
restructuring, severance, and early retirement programs commenced in
Italy, North America and France. In 2004, early retirement programs in
France were partially subsidized by the French government.
    (b) Adjustment to eliminate the impact of non-recurring expenses incurred
by the Company in connection with its SEC registration process, expired
private exchange offer and consent solicitation.
    (c ) Adjustment to eliminate the impact of fees payable to affiliates of
the investors according to the financial and advisory services
arrangement with affiliates of certain of the equity investors of the
Company. Such item is a specific adjustment as provided by the amendment
of the Senior Credit Facility as executed on April 26, 2005.
    (d) As part of the amendments in connection with our refinancing package,
the change in accounting principle related to the synthetic lease no
longer applies as adjustment to the EBITDA.
    (e) In association with changed accounting treatment of stock-based
compensation expense (SFAS 123R adopted January 1, 2006), for covenant
compliance purposes, the Company should apply, to the relevant financial
measures, the same accounting principles existing at the closing date,
September 30th, 2002.
    Management believes Adjusted EBITDA facilitates comparisons of operating
performance from period to period and company to company by eliminating
potential differences caused by variations in capital structures
 (affecting interest expense), tax positions (such as the impact on
periods or companies of changes in effective tax rates or net operating
losses) and the age and book depreciation of tangible assets (affecting
depreciation expense). The Company presents Adjusted EBITDA as it is the
basis against which certain financial tests are measured under our senior
credit facility. The Company also presents EBITDA because management
believes it is frequently used by securities analysts, investors and
other interested parties in evaluating similar companies, the vast
majority of which present EBITDA when reporting their results.
Nevertheless, both EBITDA and Adjusted EBITDA have limitations as an
analytical tool, and you should not consider it in isolation from, or as
a substitute for analysis of, our results of operations as reported under
U.S. GAAP. Some of these limitations are: such measurements do not
reflect our cash expenditures or future requirements for capital
expenditures or contractual commitments; such measurements do not reflect
changes in, or cash requirements for, our working capital needs; such
measurements do not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on our
debt; although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced in
the future, such measurements do not reflect any cash requirements for
such replacements; such measurements are not adjusted for all non-cash
income or expense items that are reflected in our statements of cash
flows; and other companies in our industry may calculate such
measurements differently than we do, limiting such measurements'
usefulness as a comparative measure.
    Because of these limitations, EBITDA and Adjusted EBITDA should not be
considered as a measure of discretionary cash available to us to invest
in the growth of our business.

Plus de actualités: Teksid Aluminum S.A.R.L.S.C.A
Plus de actualités: Teksid Aluminum S.A.R.L.S.C.A