Affinia Reports Solid Financial Results

ANN ARBOR, Mich. /PRNewswire/ -- Affinia Group Inc., an innovative global leader in the design, manufacture, distribution, and marketing of industrial grade products and services, has reported its financial results for the third quarter ended September 30, 2013.

Third Quarter
On a currency adjusted basis, net sales for the third quarter of 2013 improved by 12% or $45 million over the same period in 2012. As reported, net sales were $401 million for the third quarter of 2013 compared with $375 million over the same period last year. The $26 million period-over-period increase in sales was primarily the result of increased sales within the Company's Filtration and Affinia South America businesses.  

Year-over-year net sales were negatively impacted by $19 million in unfavorable foreign currency translation, mainly due to a weaker Brazilian Real.

Terry McCormack, President and Chief Executive Officer, commented, "We are pleased to report the highest quarterly sales in our company's history for the second consecutive quarter. The solid growth in sales was driven by our European and South American filtration businesses. Our European filtration business continues to lead the way by posting double digit growth in the third quarter. We are very pleased with our improvement, as it allows us to continue to provide the highest standard of products and services that our customers have come to expect from Affinia."

Gross profit for the third quarter of 2013 increased by $5 million to $93 million compared with $88 million in the third quarter of 2012. The increase was attributable to higher revenue partially offset by unfavorable currency translation.

The income before tax provision for the current quarter of 2013 was $20 million compared to $24 million last year. However, the non-GAAP income before tax provision for the third quarter of 2013 was $28 million compared to $25 million last year. (Included in the financial tables is a reconciliation between non-GAAP and GAAP results.) Affinia's net income increased by $5 million in the third quarter of 2013 compared to last year. The increase in net income was driven by higher sales and a lower loss from discontinued operations.

Nine Months
On a currency adjusted basis, net sales for the first nine months of 2013 improved by 9% or $101 million over the same period in 2012. As reported, net sales were $1,170 million for the first nine months of 2013 compared with $1,112 million for the first nine months of 2012.

The $58 million period-over-period increase in sales was primarily the result of increased sales within the Company's Filtration and Affinia South America distribution businesses. Year over year net sales were negatively affected by $43 million in unfavorable foreign currency translation, mainly due to a weaker Brazilian Real.

Gross profit for the first nine months of 2013 was $270 million compared to $254 million for the same period in 2012. Gross margin for the first nine months was 23% unchanged from the first nine months of 2012. The increase in gross profit was mainly due to the increase in sales volume and a decrease in material and manufacturing costs, partially offset by unfavorable currency translation effects.

The income before tax provision for the first nine months of 2013 was $33 million compared to $59 million last year. However, the non-GAAP income before tax provision for the first nine months of 2013 was $76 million compared to $58 million last year.

Net income increased in the first nine months of 2013 to $14 million in comparison to a net loss of $22 million in the first nine months of 2012 due mainly to a lower loss from discontinued operations, net of tax and offset by an increase in loss on extinguishment of debt and additional interest expense related to the company's debt refinancing, which occurred during the second quarter. As part of the refinancing, we incurred $15 million to extinguish debt and additional interest of $12 million related to the write-off of unamortized deferred debt issuance costs and an additional one time interest expense.

Year-to-date cash from operations was $69 million compared to $88 million in the same period in 2012. The $19 million year over year decrease in cash from operations was attributable to higher change in accounts receivable and other operating assets. The third quarter cash from operations was significantly higher than last year and as a result net debt decreased $33 million from the end of the second quarter of 2013 to the end of the third quarter 2013.

"With the completion of a global transformation plan and recent refinancing in the second quarter behind us we are very pleased with the cash flow generated in the third quarter. We reached $43 million of operating cash flow in the third quarter in comparison to $9 million last year. We believe that we will continue to generate free cash flow and make strides in lowering our debt levels in the future," stated Steven Klueg, Senior Vice President and Chief Financial Officer.