OREANDA-NEWS. Metaldyne Performance Group Inc. (NYSE: MPG), a leading provider of highly-engineered components for use in powertrain and suspension applications for the global light, commercial and industrial vehicle markets, today reported the following financial results for its second quarter ended July 3, 2016.

Financial Highlights:

$ in millions, except EPS

Q2 2016

Q2 2015

Q2 YTD 2016

Q2 YTD 2015

Net sales

$728

$800

$1,468

$1,565

Net income attributable to stockholders

$36

$44

$61

$77

Adjusted EBITDA

$135

$154

$273

$286

Adjusted EBITDA Margin

18.6%

19.2%

18.6%

18.3%

Net cash provided by operating activities

$66

$65

$127

$118

Capital expenditures

$42

$54

$94

$115

Free Cash Flow

$24

$11

$33

$3

Diluted EPS attributable to stockholders

$0.51

$0.64

$0.87

$1.11

Adjusted EPS attributable to stockholders

$0.49

$0.69

$1.04

$1.12

Treasury Actions Authorized by Our Board of Directors on August 3, 2016:

  • Declared a dividend of $0.0925 per share of common stock outstanding, payable on September 20, 2016 to stockholders of record as of September 6, 2016.
  • Authorized an additional $10 million for a total of $35 million authorized for our share repurchase program. As of July 3, 2016, cumulative shares repurchased totaled 946,256 shares at an average purchase price per share of $15.54.
  • Authorized a voluntary debt reduction plan of $10 million.

Commenting on the Company's results, George Thanopoulos, Chief Executive Officer of MPG, stated, "We are extremely pleased with our second quarter and year to date results, highlighted by our strong cash flow. We continue to deliver strong operating results and margins despite certain macro headwinds and the planned attrition of our non-core wheel bearing business. We attribute these great results to our relentless focus on cost reductions and cash flow. Our solid cash flow gave us flexibility to increase our share repurchase program and authorize a voluntary debt reduction plan. We also see continued momentum in our new business wins centered on our core products. Our results and new business wins are aligned with our short and long-term value creation model."

Business Outlook:

For fiscal year 2016, MPG maintains guidance as follows:

  • Net sales between $2.75 and $2.95 billion
  • Income before tax between $131 and $171 million
  • Adjusted EBITDA between $500 and $540 million
  • Capital expenditures between $190 and $210 million
  • Net cash provided by operating activities between $335 and $355 million
  • Adjusted Free Cash Flow between $310 and $330 million

For fiscal year 2016, MPG increased guidance as follows:

  • Increase Free Cash Flow from ~$125 million to ~$145 million

About MPG:

MPG is a leading provider of highly-engineered components for use in powertrain and suspension applications for the global light, commercial and industrial vehicle markets. MPG produces these components using complex metal-forming manufacturing technologies and processes for a global customer base of vehicle OEMs and Tier I suppliers. MPG's metal-forming manufacturing technologies and processes include aluminum die casting, forging, iron casting and powder metal forming as well as advanced machining and assembly. Headquartered in Southfield, Michigan, MPG has a global footprint spanning 60 locations in 13 countries across North America, South America, Europe and Asia with approximately 12,000 employees. 

Non-GAAP Financial Measures

Adjusted EPS

We define Adjusted EPS as Adjusted Net Income Attributable to Stockholders, defined as net income attributable to stockholders before the after-tax impact of (i) gains and losses on foreign currency transactions, including the re-measurement of the Company's Euro denominated term loan (the "Euro Term Loan"), (ii) specific non-recurring items, and (iii) other adjustments, divided by the weighted average number of shares outstanding for the period on a diluted basis.

For a reconciliation of Adjusted EPS to diluted EPS, the most directly comparable measure determined under U.S. generally accepted accounting principles ("GAAP"), see "RECONCILIATION OF ADJUSTED EPS TO US GAAP DILUTED EPS".

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest expense, provision for (benefit from) income taxes and depreciation and amortization, with further adjustments to reflect the additions and eliminations of certain income statement items, including (i) gains and losses on foreign currency and fixed assets and debt transaction expenses, (ii) stock-based compensation and other non-cash charges, (iii) sponsor management fees and other income and expense items that we consider to be not indicative of our ongoing operations, (iv) specified non-recurring items, and (v) other adjustments.

We believe Adjusted EBITDA is used by investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management uses Adjusted EBITDA (i) as a measurement to compare our operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes, including the preparation of our internal annual operating budget, (iv) to evaluate the performance and effectiveness of our operational strategies and (v) to assess compliance with various metrics associated with our agreements governing our indebtedness. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating performance in the same manner as our management.

For a reconciliation of Adjusted EBITDA to income before tax, the most directly comparable measure determined under U.S. generally accepted accounting principles ("GAAP"), see "RECONCILIATION OF US GAAP INCOME BEFORE TAX TO ADJUSTED EBITDA AND ADJUSTED FREE CASH FLOW".

Adjusted Free Cash Flow

We define Adjusted Free Cash Flow as Adjusted EBITDA less capital expenditures. Capital expenditures are on an accrual basis of accounting and can be calculated by taking the capital expenditures found in the investing section of our condensed consolidated statements of cash flows and adjusting for the change in the period of the capital expenditures in accounts payables found in the supplemental cash flow information on our condensed consolidated statements of cash flows. We present Adjusted Free Cash Flow because our management considers it to be a useful, supplemental indicator of our performance. When measured over time, Adjusted Free Cash Flow provides supplemental information to investors concerning our results of operations and our ability to generate cash flows to satisfy mandatory debt service requirements and make other non-discretionary expenditures.

For a reconciliation of Adjusted Free Cash Flow to income before tax, the most directly comparable GAAP measure, see "RECONCILIATION OF US GAAP INCOME BEFORE TAX TO ADJUSTED EBITDA AND ADJUSTED FREE CASH FLOW".

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities, as stated on the Company's condensed consolidated statement of cash flows, less capital expenditures, as stated on the Company's condensed consolidated statement of cash flows.

Contacts

Investor RelationsDavid Gann
Vice President of Investor Relations and Communications
investors@mpgdriven.com
248-727-1829

METALDYNE PERFORMANCE GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions except per share data)
 
   

July 3,

2016

    

December 31,

2015

  

Assets

                

Current assets:

                

Cash and cash equivalents

  

$

168.5

      

168.2

  

Receivables, net:

                

Trade

    

358.2

      

309.1

  

Other

    

32.1

      

35.4

  

Total receivables, net

    

390.3

      

344.5

  

Inventories

    

179.7

      

186.8

  

Prepaid expenses

    

15.2

      

15.0

  

Other assets

    

22.1

      

21.5

  

Total current assets

    

775.8

      

736.0

  

Property and equipment, net

    

797.8

      

786.0

  

Goodwill

    

907.7

      

907.7

  

Amortizable intangible assets, net

    

674.0

      

708.9

  

Deferred income taxes

    

6.0

      

1.7

  

Other assets

    

16.6

      

17.3

  

Total assets

  

$

3,177.9

      

3,157.6

  

Liabilities and Stockholders' Equity

                

Current liabilities:

                

Accounts payable

  

$

244.7

      

248.9

  

Accrued compensation

    

50.5

      

55.2

  

Accrued liabilities

    

65.7

      

66.8

  

Short-term debt

    

0.8

      

0.7

  

Current maturities, long-term debt and capital lease obligations

    

13.4

      

14.5

  

Total current liabilities

    

375.1

      

386.1

  

Long-term debt, less current maturities

    

1,827.4

      

1,827.1

  

Capital lease obligations, less current maturities

    

22.6

      

22.5

  

Deferred income taxes

    

220.2

      

231.3

  

Other long-term liabilities

    

51.8

      

51.6

  

Total liabilities

    

2,497.1

      

2,518.6

  

Stockholders' equity:

                

Common Stock: par $0.001, 400.0 authorized, 67.5 and 67.9 shares issued and
   outstanding, respectively

    

0.1

      

0.1

  

Common stock held in treasury, at cost: 0.9 and zero shares, respectively

    

(14.7)

      

—

  

Paid-in capital

    

866.2

      

856.2

  

Deficit

    

(115.1)

      

(162.9)

  

Accumulated other comprehensive loss

    

(58.9)

      

(57.3)

  

Total equity attributable to stockholders

    

677.6

      

636.1

  

Noncontrolling interest

    

3.2

      

2.9

  

Total stockholders' equity

    

680.8

      

639.0

  

Total liabilities and stockholders' equity

  

$

3,177.9

      

3,157.6

  

METALDYNE PERFORMANCE GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions except per share amounts)
 
   

Quarter Ended

    

Six Months Ended

  
   

July 3, 2016

    

June 28, 2015

    

July 3, 2016

    

June 28, 2015

  

Net sales

  

$

728.4

      

800.2

    

$

1,467.9

      

1,565.4

  

Cost of sales

    

598.1

      

658.1

      

1,201.1

      

1,294.8

  

Gross profit

    

130.3

      

142.1

      

266.8

      

270.6

  

Selling, general and administrative expenses

    

60.0

      

57.8

      

120.8

      

114.0

  

Operating income

    

70.3

      

84.3

      

146.0

      

156.6

  

Interest expense, net

    

25.9

      

26.9

      

52.4

      

54.5

  

Loss on debt extinguishment

    

—

      

0.4

      

—

      

0.4

  

Other, net

    

(6.3)

      

(1.3)

      

8.7

      

(6.5)

  

Other expense, net

    

19.6

      

26.0

      

61.1

      

48.4

  

Income before tax

    

50.7

      

58.3

      

84.9

      

108.2

  

Income tax expense

    

15.0

      

14.2

      

24.2

      

31.5

  

Net income

    

35.7

      

44.1

      

60.7

      

76.7

  

Income attributable to noncontrolling interest

    

0.2

      

-

      

0.3

      

0.2

  

Net income attributable to stockholders

  

$

35.5

      

44.1

    

$

60.4

      

76.5

  
                                 

Weighted average shares outstanding - Basic

    

67.7

      

67.1

      

67.8

      

67.1

  

Weighted average shares outstanding - Diluted

    

69.8

      

68.7

      

69.3

      

68.7

  
                                 

Cash dividends declared per share

  

$

0.0925

      

0.0900

    

$

0.1825

      

0.0900

  

Net income per share attributable to stockholders

                                

Basic

  

$

0.52

      

0.66

    

$

0.89

      

1.14

  

Diluted

    

0.51

      

0.64

      

0.87

      

1.11

  

METALDYNE PERFORMANCE GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)
 
   

Six Months Ended

  
   

July 3, 2016

    

June 28, 2015

  

Cash flows from operating activities:

                

Net income

  

$

60.7

      

76.7

  

Adjustments to reconcile net income to cash provided by operating activities:

                

Depreciation and amortization

    

110.6

      

115.2

  

Debt fee amortization

    

1.7

      

1.5

  

Loss on fixed asset dispositions

    

1.2

      

0.4

  

Deferred income taxes

    

(14.8)

      

(2.9)

  

Noncash interest expense

    

0.5

      

0.5

  

Stock-based compensation expense

    

8.2

      

7.5

  

Foreign currency adjustment

    

5.2

      

(3.7)

  

Other

    

2.4

      

5.4

  

Changes in assets and liabilities:

                

Receivables, net

    

(46.5)

      

(77.4)

  

Inventories

    

5.4

      

10.0

  

Accounts payable, accrued liabilities, and accrued compensation

    

(7.8)

      

(10.8)

  

Other, current

    

0.9

      

(2.4)

  

Other, non-current

    

(0.4)

      

(2.3)

  

Net cash provided by operating activities

    

127.3

      

117.7

  

Cash flow from investing activities:

                

Capital expenditures

    

(94.2)

      

(115.0)

  

Proceeds from sale of fixed assets

    

0.1

      

1.3

  

Capitalized patent costs

    

(0.1)

      

(0.1)

  

Net cash used for investing activities

    

(94.2)

      

(113.8)

  

Cash flows from financing activities:

                

Cash dividends

    

(12.5)

      

(6.0)

  

Proceeds from stock issuance

    

1.8

      

0.1

  

Purchases of treasury stock

    

(14.7)

      

—

  

Excess tax benefit on stock-based compensation

    

1.0

      

—

  

Cash settlement of equity awards

    

(1.0)

      

(0.2)

  

Borrowings of revolving lines of credit

    

—

      

14.3

  

Payments of revolving lines of credit

    

—

      

(14.6)

  

Proceeds of long-term debt

    

—

      

1,326.6

  

Payments of long-term debt

    

(6.6)

      

(1,360.2)

  

Payment of debt issuance costs

    

—

      

(0.2)

  

Other debt, net

    

(1.3)

      

(1.5)

  

Payment of offering related costs

    

—

      

(0.1)

  

Net cash used for financing activities

    

(33.3)

      

(41.8)

  

Effect of exchange rates on cash

    

0.5

      

(5.9)

  

Net increase (decrease) in cash and cash equivalents

  

$

0.3

      

(43.8)

  

Cash and cash equivalents:

                

Cash and cash equivalents, beginning of period

    

168.2

      

156.5

  

Net increase (decrease) in cash and cash equivalents

    

0.3

      

(43.8)

  

Cash and cash equivalents, end of period

  

$

168.5

      

112.7

  

Supplementary cash flow information:

                

Cash paid for income taxes, net

  

$

38.1

      

33.4

  

Cash paid for interest

    

49.7

      

55.8

  

Noncash transactions:

                

Capital expenditures in accounts payables

    

25.8

      

19.1

  

Dividends declared on restricted stock awards, not yet vested

    

0.5

      

0.1

  

METALDYNE PERFORMANCE GROUP INC.

RECONCILIATION OF ADJUSTED EPS

TO US GAAP DILUTED EPS

(In millions except per share amounts)
 
   

Quarter Ended

    

Six Months Ended

  
   

July 3, 2016

    

June 28, 2015

    

July 3, 2016

    

June 28, 2015

  
                                 
                                 

Net income attributable to stockholders

  

$

35.5

      

44.1

    

$

60.4

      

76.5

  
                                 

Weighted average shares outstanding - Diluted

    

69.8

      

68.7

      

69.3

      

68.7

  

Net income per share attributable to stockholders - Diluted

  

$

0.51

      

0.64

    

$

0.87

      

1.11

  
                                 

Adjustments to Arrive at Adjusted Net Income Attributable to Stockholders

                                

Loss (gain) on re-measurement of Euro Term Loan

  

$

(5.5)

      

(4.1)

    

$

5.5

      

(4.1)

  

Loss (gain) on foreign currency transactions - other

    

(2.6)

      

0.2

      

0.7

      

(4.8)

  

Loss on debt extinguishment

    

—

      

0.4

      

—

      

0.4

  

Debt transaction expenses

    

—

      

1.6

      

—

      

1.7

  

Non-recurring acquisition related items

    

2.1

      

0.4

      

3.4

      

0.1

  

Non-recurring operational items (1)

    

3.8

      

6.7

      

6.0

      

7.1

  

Tax impact of adjustments to net income attributable to stockholders

    

0.6

      

(1.6)

      

(4.0)

      

(0.1)

  

Adjusted Net Income Attributable to Stockholders

  

$

33.9

      

47.7

      

72.0

      

76.8

  
                                 

Weighted average shares outstanding - Diluted

    

69.8

      

68.7

      

69.3

      

68.7

  

Adjusted EPS

  

$

0.49

      

0.69

    

$

1.04

      

1.12

  
                                 

(1) Included in non-recurring operational items are impairment charges and exit costs associated with the closures of Grede's Berlin, Wisconsin, and Bessemer, Alabama facilities.

  

RECONCILIATION OF US GAAP INCOME BEFORE TAX TO ADJUSTED

EBITDA AND ADJUSTED FREE CASH FLOW

(In millions)
 
   

Quarter Ended

    

Six Months Ended

  
   

July 3, 2016

    

June 28, 2015

    

July 3, 2016

    

June 28, 2015

  

Income before tax

  

$

50.7

      

58.3

    

$

84.9

      

108.2

  
                                 

Addbacks to Arrive at Unadjusted EBITDA

                                

Interest expense, net

    

25.9

      

26.9

      

52.4

      

54.5

  

Depreciation and amortization

    

55.4

      

58.8

      

110.6

      

115.2

  

Unadjusted EBITDA

  

$

132.0

      

144.0

    

$

247.9

      

277.9

  
                                 

Adjustments to Arrive at Adjusted EBITDA

                                

Loss (gain) on foreign currency

    

(8.1)

      

(3.9)

      

6.2

      

(8.9)

  

Loss on fixed assets

    

0.9

      

0.2

      

1.2

      

0.4

  

Loss on debt extinguishment

    

—

      

0.4

      

—

      

0.4

  

Debt transaction expenses

    

—

      

1.6

      

—

      

1.7

  

Stock-based compensation expense

    

4.5

      

4.2

      

8.2

      

7.5

  

Non-recurring acquisition related items

    

2.1

      

0.4

      

3.4

      

0.1

  

Non-recurring operational items (1)

    

3.8

      

6.7

      

6.0

      

7.1

  

Adjusted EBITDA

  

$

135.2

      

153.6

    

$

272.9

      

286.2

  
                                 

Capital expenditures (2)

    

45.5

      

51.8

      

90.5

      

97.9

  

Adjusted Free Cash Flow

  

$

89.7

      

101.8

    

$

182.4

      

188.3

  
                                 

(1) Included in non-recurring operational items are impairment charges and exit costs associated with the closures of Grede's Berlin, Wisconsin, and Bessemer, Alabama facilities.

  

(2) Capital expenditures are shown on an accrual basis as described in the definition of Adjusted Free Cash Flow.

  

METALDYNE PERFORMANCE GROUP INC.

RECONCILIATION OF 2016 GUIDANCE

INCOME BEFORE TAX TO ADJUSTED EBITDA AND ADJUSTED FREE CASH FLOW

(In millions)
 
   

2016 Guidance

    

2016 Guidance

  
   

Low End of Range

    

High End of Range

  

Income before tax

  

$

130.7

      

170.7

  
                 

Addbacks to Arrive at Unadjusted EBITDA

                

Interest expense, net

    

104.4

      

104.4

  

Depreciation and amortization

    

238.4

      

238.4

  

Unadjusted EBITDA

    

473.5

      

513.5

  
                 

Adjustments to Arrive at Adjusted EBITDA

                

Stock-based compensation expense

    

18.0

      

18.0

  

Non-recurring operational items (1)

    

8.5

      

8.5

  

Adjusted EBITDA

  

$

500.0

      

540.0

  

Capital expenditures (2)

    

(190.0)

      

(210.0)

  

Adjusted Free Cash Flow

  

$

310.0

      

330.0

  
                 

(1) Non-recurring operational items include charges for disposed operations and other.

  

(2) Capital expenditures are shown on an accrual basis as described in the definition of Adjusted Free Cash Flow.