Accuride posts 4Q results

Accuride Corporation (NYSE: ACW), a leading manufacturer and supplier of commercial vehicle components, today announced its financial results for the fourth quarter 2006

Accuride Corporation (NYSE: ACW), a leading manufacturer and supplier of commercial vehicle components, today announced its financial results for the fourth quarter 2006 and twelve months ended December 31, 2006.

The Company reported results of $344.9 million in net sales for the fourth quarter of 2006 compared to $297.7 million for the fourth quarter of 2005, an increase of 15.9%. This expansion was primarily the result of continued robust demand in the commercial vehicle industry and the partial pass-through of rising raw material costs.

For the twelve months ended December 31, 2006, net sales were $1,408.2 million compared to $1,229.3 million for the same twelve-month period in 2005. Net sales in 2006 of $1,408.2 million increased 9.7% compared to pro forma net sales of $1,283.6 million during the same period in 2005. The Company acquired Transportation Technologies Industries, Inc. (“TTI”) in late January 2005, and pro forma results account for the Company’s acquisition as if it occurred on January 1, 2005.

Net income was $14.3 million, or $0.41 per diluted share, for the fourth quarter of 2006 compared to $14.9 million, or $0.43 per diluted share, for the fourth quarter of 2005, a decrease of 4.0%. Net income for the fourth quarter of 2006 included a $10.4 million increase in revenue from a resolution of a commercial dispute with a customer, which was offset by pre-tax costs of $0.5 million related to SFAS No. 123(R), $10.2 million in accelerated depreciation expense related to light steel wheel assets, $3.4 million in restructuring and pension curtailment costs associated with a reduction in the employee workforce at the London, Ontario facility and $0.2 million in costs related to other non-operating and non-recurring items. Net income for the fourth quarter of 2005 included pre-tax costs of $0.1 million in fees related to the secondary stock offering completed in October 2005 and $1.1 million in costs related to other non-operating and non-recurring items.

Net income for 2006 was $65.1 million, or $1.88 per diluted share, compared to 2005 net income of $51.2 million, or $1.70 per diluted share. 2006 net income increased by 24.2% when compared to 2005 pro forma net income of $52.4 million. Net income for 2006 included a $10.4 million increase in revenue from a resolution of a commercial dispute with a customer, which was offset by pre-tax costs of $1.5 million related to SFAS No. 123(R), $1.4 million in losses from the sale of the facility in Columbia, Tennessee, a $2.3 million impairment charge related to tooling assets at the Piedmont, Alabama, facility, $16.3 million in accelerated depreciation expense related to light steel wheel assets, $3.4 million in restructuring and pension curtailment costs associated with a reduction in the employee workforce at the London, Ontario facility and $0.7 million in costs related to other non-operating and non-recurring items. Pro forma net income for 2005 included pre-tax costs of $20.0 million related to refinancing costs and a loss on extinguishment of debt, $0.8 million in fees related to the secondary stock offering completed in October 2005 and $1.8 million in costs related to other non-operating and non-recurring expenses.
Adjusted EBITDA was $58.4 million for the fourth quarter of 2006, compared to an Adjusted EBITDA of $47.4 million for the same quarter in 2005. For full year 2006, Adjusted EBITDA was $217.1 million compared to $202.5 million pro forma Adjusted EBITDA for the same period in 2005, an increase of 7.2%. The purpose and reconciliation of Adjusted EBITDA for the Company to the most directly comparable GAAP measure is set forth in the accompanying schedules.

“We were able to drive strong top-line growth in 2006,” said Terry Keating, Accuride’s Chairman and CEO. “Demand was so great, however, that many of our plants operated at peak capacity throughout the year, which, when coupled with rising economic costs, caused our margins to be negatively impacted. During the fourth quarter, margins began to expand toward more normalized levels, as our efforts to counter these challenges began to hit the bottom line.”

Liquidity and Cash Flow
As of December 31, 2006, the Company had cash of $110.2 million and total debt of $642.7 million for net debt of $532.5 million, a reduction of $38.5 million during the quarter and $116.8 million during the year. For the fourth quarter of 2006, cash from operating activities was $54.1 million and capital expenditures totaled $17.4 million, resulting in free cash flow of $36.7 million compared to $20.9 million of free cash flow in the fourth quarter of 2005. For the twelve months ended December 31, 2006, cash from operating activities was $151.0 million and capital expenditures totaled $42.2 million, resulting in free cash flow of $108.8 million.

Outlook

“Looking forward to 2007, we believe the year will be very challenging with Class 8 production expected to decline by approximately 35% to 45%. However, we have a very experienced management team and will continue to focus on managing our costs and maximizing profitability and cash flow,” added Keating. “Further, we have spent considerable time evaluating a number of initiatives that will improve our future profitability and growth. These efforts will set the stage for a stronger Accuride as we move into 2008 when ACT Research is forecasting Class 8 production levels to be over 270,000 units followed by an estimated all-time high build rate of over 380,000 units in 2009.”

Based on North American Class 8 production of 200,000 to 235,000 units and Class 5-7 production of 200,000 to 205,000 units, the Company expects Adjusted EBITDA for 2007 to be in the range of $115 million to $135 million. The Company also expects 2007 free cash flow to be in the range of $35 million to $50 million.

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