UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 12, 2014
TECUMSEH PRODUCTS COMPANY
(Exact name of registrant as specified in its charter)
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Michigan | | 0-452 | | 38-1093240 |
(State or other jurisdiction | | (Commission | | (IRS Employer |
of incorporation) | | File Number) | | Identification No.) |
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5683 Hines Drive, Ann Arbor, Michigan | | 48108 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (734) 585-9500
(not applicable)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02 | Results of Operations and Financial Condition. |
On May 12, 2014, we issued a press release regarding our first quarter 2014 consolidated results of operations and financial condition. A copy of that press release is furnished as Exhibit 99.1 to this report and is incorporated in this Item 2.02 by reference.
Also, on May 12, 2014, (after the filing of this Form 8-K), we intend to post on our website at www.tecumseh.com in the Investors Relation section, a presentation for use in connection with our May 12, 2014 conference call to broadcast our first quarter 2014 financial results. A copy of that presentation is furnished as Exhibit 99.2 to this report and is incorporated in this Item 2.02 by reference.
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Item 7.01 | Regulation FD Disclosure. |
The disclosures in Item 2.02 of this report, the press release furnished as Exhibit 99.1 to this report, and the presentation furnished as Exhibit 99.2 to this report, are incorporated in this item 7.01 by reference.
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Item 9.01 | Financial Statements and Exhibits. |
The following exhibits are filed with this report:
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Exhibit No. | | Description | |
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99.1 | | Press release dated May 12, 2014 |
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99.2 | | First Quarter 2014 Shareholder Update call presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | TECUMSEH PRODUCTS COMPANY |
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Date: | May 12, 2014 | | By | | /s/ Janice E. Stipp |
| | | | | Janice E. Stipp, Executive Vice President, Chief Financial Officer and Treasurer |
EXHIBIT INDEX
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Exhibit No. | | Description | |
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99.1 | | Press release dated May 12, 2014 |
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99.2 | | First Quarter 2014 Shareholder Update call presentation |
Exhibit 99.1
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Contact: | Janice Stipp |
| Tecumseh Products Company |
| 734-585-9507 |
| Investor.relations@tecumseh.com |
Tecumseh Products Company Reports First Quarter 2014 Results
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• | Net sales in the first quarter decreased $28.3 million, or 13.6%, versus the same period of 2013. |
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• | Excluding the effect of unfavorable changes in foreign currency translation of $7.8 million, net sales decreased by 9.9% compared to the first quarter of 2013. |
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• | Net loss for the first quarter ended March 31, 2014 was $11.1 million compared to a net loss of $8.4 million for the first quarter of 2013. |
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• | Operating loss was $5.8 million compared to an operating loss of $5.4 million in 2013. |
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• | EBITDAR from continuing operations for 2014 was $4.7 million compared to $7.3 million in 2013 (EBITDAR is defined below). |
ANN ARBOR, Mich. - May 12, 2014 - Tecumseh Products Company (Nasdaq: TECU), a leading global manufacturer of compressors and related products, today reported an operating loss of $5.8 million and a net loss of $11.1 million, or a net loss per share of $0.60, on net sales of $179.3 million for the quarter ended March 31, 2014. This compares with an operating loss of $5.4 million and a net loss of $8.4 million, or $0.45 per share, on net sales of $207.6 million for the first quarter of 2013.
“The first quarter of 2014 continued to be a challenging and difficult time primarily related to our sales, cost structure and quality issues," stated Jim Connor, President and CEO. “We hired new talent to address these operational issues and to assist with restructuring our business.”
REVIEW OF OPERATIONS
Revenue: Net sales in the first quarter of 2014 decreased by $28.3 million, or 13.6%, compared with the same period of 2013. Excluding the decrease in sales due to the effect of changes in foreign currency translation of $7.8 million, net sales decreased by 9.9% from the first quarter of 2013, primarily due to lower net volume and unfavorable change in sales mix, partially offset by net price increases.
Sales of compressors used in commercial refrigeration and aftermarket applications represented 64% of our total sales and decreased by 2.8% to $115.3 million in the first quarter of 2014, when compared to the first quarter of 2013.
Sales of compressors used in household refrigeration and freezer (“R&F”) applications represented 21% of our total sales and decreased by 9.5% to $38.0 million in the first quarter of 2014, when compared to the first quarter of 2013.
Sales of compressors for air conditioning applications and all other applications represented 15% of our total sales and decreased by 44.7% to $26.0 million in the first quarter of 2014, when compared to the first quarter of 2013.
Gross profit: Gross profit decreased by $5.0 million from $22.1 million, or 10.6% of net sales, in the first quarter of 2013 to $17.1 million, or 9.5% of net sales in same period in 2014. The decrease in gross profit in the first three months of 2014 was primarily attributable to unfavorable changes in other material and manufacturing costs of $4.3 million, net unfavorable changes in volume and sales mix of $4.2 million and increases in commodity costs of $0.2
million. These decreases were partially offset by favorable changes in currency exchange effect of $2.2 million and price increases of $1.5 million.
Selling and administrative (“S&A”): Our S&A expenses decreased by $6.1 million from $29.1 million in the first three months of 2013 to $23.0 million in the first three months of 2014. The decrease was due to a decline in depreciation expense of $1.9 million due to an information technology asset that became fully depreciated in late 2013, a decline of $1.9 million related to our incentive compensation awards, a decrease of $0.7 million in payroll and other employee benefits, lower professional fees of $0.7 million and a net decrease of $0.9 million in other miscellaneous expenses.
Other income (expense), net: Other income (expense), net decreased $0.8 million from $5.0 million in the first three months of 2013 to $4.2 million in the first three months of 2014. This decrease is primarily due to recording no net amortization of gains related to our postretirement benefits due to the curtailment of these benefits that was effective after December 31, 2013, as well as lower income related to various Indian government incentives, partially offset by a gain of $3.4 million on the sale of fixed assets at one of our U.S. locations.
Impairments, restructuring charges, and other items: We recorded $4.1 million of expense in impairments, restructuring charges, and other items in the first three months of 2014, compared to $3.4 million of expense in the same period of 2013. In the first three months of 2014, this expense included $1.2 million related to severance, $1.5 million related to a legal settlement signed in the first quarter of 2014, a $1.2 million environmental reserve with respect to a sold building and $0.2 million related to business process re-engineering. The severance expense was associated with a reduction in force at our Brazilian ($1.0 million) and French ($0.2 million) locations.
Loss from Continuing Operations: Loss from continuing operations for the three months ended March 31, 2014 was $7.8 million, or a net loss per share of $0.42, as compared to a net loss from continuing operations of $7.5 million, or $0.40 per share for the three months ended March 31, 2013. The change was primarily related to lower gross profit due to lower volume and unfavorable sales mix for the three months ended March 31, 2014 compared to the three months ended March 31, 2013, partially offset by lower S&A expenses as well as the other factors described above.
Cash Flow: Cash and cash equivalents were $43.1 million at the end of the first quarter of 2014 while cash balances were $55.0 million and $41.9 million at December 31, 2013 and March 31, 2013, respectively. Cash used in operating activities was $19.2 million in the first quarter of 2014, as compared to $10.2 million in the same period in 2013.
Cash provided by investing activities was $13.4 million in the three months ended March 31, 2014 as compared to cash used in investing activities of $1.4 million during the same period in 2013. The cash provided by investing activities in the first quarter of 2014 is primarily related to the release of blocked funds of $12.7 million relating to our term loan with PNC Bank.
Cash used in financing activities was $5.9 million for the three months ended March 31, 2014 compared to $2.2 million during the same period in 2013.
Strategic Initiatives Update: Based on a recent review of the strategic initiatives we discussed in May 2013, we no longer believe that we will achieve the EBITDAR margin target of 8% - 10% by 2015 (EBITDAR margin is defined as EBITDAR divided by Net sales; EBITDAR is defined below).
NON-GAAP FINANCIAL MEASURES
While the Generally Accepted Accounting Principles in the United States of America (“GAAP”) results provide significant insight into our operations and financial position, Tecumseh management supplements its analysis of the business using Earnings Before Interest, Taxes, Depreciation and Amortization from Continuing Operations (“EBITDA from Continuing Operations”) and Earnings Before Interest, Taxes, Depreciation, Amortization, and
Impairments, restructuring charges, and other items from Continuing Operations (“EBITDAR from Continuing Operations”); both of these are non-GAAP financial measures. Management believes that these non-GAAP financial measures, when taken together with the corresponding GAAP measure, provide incremental insight into the underlying factors and trends affecting our performance. However, EBITDA from Continuing Operations and EBITDAR from Continuing Operations, as defined below, should be viewed as supplemental data, rather than as a substitute or an alternative to the comparable GAAP measure. The table below presents a reconciliation of EBITDA from Continuing Operations and EBITDAR from Continuing Operations from our Net loss.
RECONCILIATION OF EBITDA FROM CONTINUING OPERATIONS AND EBITDAR FROM CONTINUING OPERATIONS FROM NET LOSS
(in millions)
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| Three Months Ended March 31, |
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Net loss | $ | (11.1 | ) | | $ | (8.4 | ) |
Loss from discontinued operations, net of tax | 3.3 |
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Tax expense | 0.1 |
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Interest expense | 2.3 |
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Interest income | (0.4 | ) | | (0.3 | ) |
Operating loss | (5.8 | ) | | (5.4 | ) |
Depreciation and amortization | 6.4 |
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EBITDA FROM CONTINUING OPERATIONS | $ | 0.6 |
| | $ | 3.9 |
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Impairments, restructuring charges and other items | 4.1 |
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EBITDAR FROM CONTINUING OPERATIONS | $ | 4.7 |
| | $ | 7.3 |
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CONFERENCE CALL INFORMATION
Tecumseh will broadcast its financial results conference call live over the Internet on Monday, May 12, 2014, at 1:00 p.m. Eastern Time, and it expects to post, before the conference call, a slide presentation to be used in connection with the conference call. Webcast information can be found in the Investor Relations section of our website at www.tecumseh.com. About Tecumseh Products Company
Tecumseh Products Company is a global manufacturer of hermetically sealed compressors for residential and specialty air conditioning, household refrigerators and freezers, and commercial refrigeration applications, including air conditioning and refrigeration compressors, as well as condensing units, heat pumps and complete refrigeration systems. Press releases and other investor information can be accessed via the Investor Relations section of Tecumseh Products Company's Website at www.tecumseh.com.
Cautionary Statements Relating to Forward-Looking Statements
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act that are subject to the safe harbor provisions created by that Act. In addition, forward-looking statements may be made orally in the future by or on behalf of us. Forward-looking statements can be identified by the use of terms such as “expects,” “should,” “may,” “believes,” “anticipates,” “will,” and other future tense and forward-looking terminology. Our forward-looking statements generally relate to our future performance, including our anticipated operating results and liquidity sources and requirements, our business strategies and goals, and the effect of laws, rules, regulations, new accounting pronouncements and outstanding litigation, on our business, operating results, and financial condition.
Readers are cautioned that actual results may differ materially from those projected as a result of certain risks and uncertainties, including, but not limited to, i) our history of losses and our ability to maintain adequate liquidity in total and within each foreign operation; ii) our ability to develop successful new products in a timely manner; iii) the success of our ongoing effort to improve productivity and restructure our operations to reduce costs and bring them in line with projected production levels and product mix; iv) the extent of any business disruption that may result from the restructuring and realignment of our manufacturing operations and personnel or system implementations, the ultimate cost of those initiatives and the amount of savings actually realized; v) loss of, or substantial decline in, sales to any of our key customers; vi) current and future global or regional political and economic conditions and the condition of credit markets, which may magnify other risk factors; vii) increased or unexpected warranty claims; viii) actions of competitors in markets with intense competition; ix) financial market changes, including fluctuations in foreign currency exchange rates and interest rates; x) the ultimate cost of defending and resolving legal and environmental matters, including any liabilities resulting from the regulatory antitrust investigations commenced by the United States Department of Justice Antitrust Division and the Secretariat of Economic Law of the Ministry of Justice of Brazil, both of which could preclude commercialization of products or adversely affect profitability and/or civil litigation related to such investigations; xi) local governmental, environmental, trade and energy regulations; xii) availability and volatility in the cost of materials, particularly commodities, including steel, copper and aluminum, whose cost can be subject to significant variation; xiii) significant supply interruptions or cost increases; xiv) loss of key employees; xv) the extent of any business disruption caused by work stoppages initiated by organized labor unions; xvi) risks relating to our information technology systems; xvii) impact of future changes in accounting rules and requirements on our financial statements; xviii) default on covenants of financing arrangements and the availability and terms of future financing arrangements; xix) reduction or elimination of credit insurance; xx) potential political and economic adversities that could adversely affect anticipated sales and production; xxi) in India, potential military conflict with neighboring countries that could adversely affect anticipated sales and production; xxii) weather conditions affecting demand for replacement products; and xxiii) the effect of terrorist activity and armed conflict. These forward-looking statements are made only as of the date of this release, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
©2014 Tecumseh Products Company Q1 2014 Shareholder Update May 12, 2014 These slides should be reviewed in connection with the Q1 2014 audio presentation Exhibit 99.2
Agenda Operational Overview Q1 2014 Financial Overview & Liquidity Business Update Closing Remarks / Q&A 2 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Disclaimer 3 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor provisions created by that Act. In addition, forward-looking statements may be made orally in the future by or on behalf of us. Forward-looking statements can be identified by the use of terms such as “expects,” “should,” “may,” “believes,” “anticipates,” “will,” and other future tense and forward-looking terminology, or by the fact that they appear under the caption “Business Update.” Our forward-looking statements generally relate to our future performance, including our anticipated operating results and liquidity sources and requirements, our business strategies and goals, and the effect of laws, rules, regulations, new accounting pronouncements and outstanding litigation, on our business, operating results, and financial condition. Readers and listeners are cautioned that actual results may differ materially from those projected as a result of certain risks and uncertainties, including, but not limited to, i) our history of losses and our ability to maintain adequate liquidity in total and within each foreign operation; ii) our ability to develop successful new products in a timely manner; iii) the success of our ongoing effort to improve productivity and restructure our operations to reduce costs and bring them in line with projected production levels and product mix; iv) the extent of any business disruption that may result from the restructuring and realignment of our manufacturing operations and personnel or system implementations, the ultimate cost of those initiatives and the amount of savings actually realized; v) loss of, or substantial decline in, sales to any of our key customers; vi) current and future global or regional political and economic conditions and the condition of credit markets, which may magnify other risk factors; vii) increased or unexpected warranty claims; viii) actions of competitors in markets with intense competition; ix) financial market changes, including fluctuations in foreign currency exchange rates and interest rates; x) the ultimate cost of defending and resolving legal and environmental matters, including any liabilities resulting from the regulatory antitrust investigations commenced by the United States Department of Justice Antitrust Division and the Secretariat of Economic Law of the Ministry of Justice of Brazil, both of which could preclude commercialization of products or adversely affect profitability and/or civil litigation related to such investigations; xi) local governmental, environmental, trade and energy regulations; xii) availability and volatility in the cost of materials, particularly commodities, including steel, copper and aluminum, whose cost can be subject to significant variation; xiii) significant supply interruptions or cost increases; xiv) loss of key employees; xv) the extent of any business disruption caused by work stoppages initiated by organized labor unions; xvi) risks relating to our information technology systems; xvii) impact of future changes in accounting rules and requirements on our financial statements; xviii) default on covenants of financing arrangements and the availability and terms of future financing arrangements; xix) reduction or elimination of credit insurance; xx) potential political and economic adversities that could adversely affect anticipated sales and production; xxi) in India, potential military conflict with neighboring countries that could adversely affect anticipated sales and production; xxii) weather conditions affecting demand for replacement products; and xxiii) the effect of terrorist activity and armed conflict. These forward-looking statements are made only as of the date of this presentation, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Agenda Operational Overview Q1 2014 Financial Overview & Liquidity Business Update Closing Remarks / Q&A 4 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Operational Overview Q1 2014 Sales -- $179.3m Q1 2013 -- $207.6m Q1 2014 Gross Profit -- $17.1m or 9.5% of net sales Q1 2013 -- $22.1m or 10.6% of net sales Q1 2014 S & A expense -- $23.0m or 12.8% of net sales Q1 2013 – $29.1m or 14.0% of net sales March 31, 2014 cash and cash equivalents -- $43.1m March 31, 2013 -- $41.9m December 31, 2013 -- $55.0m 5 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Operational Overview - Key Objectives Focused product portfolio (value add) Focused market approach Rationalize manufacturing capacity Fixed cost containment efforts Advanced technology Improved profitability Enhanced liquidity 6 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Celseon ® Low Profile AJ AE2 Compressor “Midi” TA Compressor “Mini” Masterflux 48V Variable Speed Compressor
Operational Overview 7 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Operational Overview 8 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Operational Overview 9 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
Negative FX impact of $7.8m 9.9% decrease excluding FX Primarily net decreases in volume & mix partially offset by price increases 10 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Operational Overview - Sales 179.3 22.0 7.8 1.5 207.6 0 50 100 150 200 250 Q1 2013 Price Volume/Mix FX Q1 2014 Sales
Commercial 64% R&F 21% Air Conditioning 15% Sales % by Market Q1 2014 115.3 26.0 38.0 118.6 47.0 42.0 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 Commercial Air Conditioning R&F Sales by Market Q1 2014 Q1 2013 Commercial 57% R&F 20% Air Conditioning 23% Sales % by Mark t Q1 2013 11 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Operational Overview - Sales 115.3 3.2 0.2 0.1 118.6 0 25 50 75 100 125 Q1 2013 Volume/Mix Price FX Q1 2014 Commercial Market Sales
Commercial 64% R&F 21% Air Conditioning 15% Sales % by Market Q1 2014 115.3 26.0 38.0 118.6 47.0 42.0 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 Commercial Air Conditioning R&F Sales by Market Q1 2014 Q1 2013 Commercial 57% R&F 20% Air Conditioning 23% Sales % by Mark t Q1 2013 12 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Operational Overview - Sales 38.0 5.5 0.4 1.1 42.0 0 25 50 Q1 2013 Volume/Mix Price FX Q1 2014 R&F Market Sales
Commercial 64% R&F 21% Air Conditioning 15% Sales % by Market Q1 2014 115.3 26.0 38.0 118.6 47.0 42.0 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 Commercial Air Conditioning R&F Sales by Market Q1 2014 Q1 2013 Commercial 57% R&F 20% Air Conditioning 23% Sales % by Mark t Q1 2013 13 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Operational Overview - Sales 26.0 19.2 2.1 0.3 47.0 0 25 50 Q1 2013 Volume/Mix Price FX Q1 2014 A/C & Other Market Sales
Agenda Operational Overview Q1 2014 Financial Overview & Liquidity Business Update Closing Remarks / Q&A 14 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
15 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Q1 2014 Financial Overview Q1 2014 – 9.5% of net sales Q1 2013 – 10.6% of net sales 17.1 22.1 2.2 1.5 4.3 4.2 0.2 0 5 10 15 20 25 30 Q1 20 13 FX Pric e Oth mt rl & mf g Vol um e / mix Com mo diti es Q1 20 14 Gross Profit
16 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Q1 2014 Financial Overview 23.0 29.1 - 10.0 20.0 30.0 Q1 2014 Q1 2013 Selling and administrative expenses 4.2 5.0 - 2.0 4.0 6.0 8.0 10.0 Q1 2014 Q1 2013 Other Income (expense), net 4.1 3.4 - 2.0 4.0 6.0 8.0 10.0 Q1 2014 Q1 2013 Impairments, restructuring charges, and other items
17 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Q1 2014 Financial Overview * While the Generally Accepted Accounting Principles in the United States of America (“GAAP”) results provide significant insight into our operations and financial position, Tecumseh management supplements its analysis of the business using Earnings Before Interest, Taxes, Depreciation and Amortization from Continuing Operations (“EBITDA”) and Earnings Before Interest, Taxes, Depreciation, Amortization, and Impairments, restructuring charges, and other items from Continuing Operations (“EBITDAR”); both of these are non-GAAP financial measures. Management believes that these non-GAAP financial measures, when taken together with the corresponding GAAP measure, provide incremental insight into the underlying factors and trends affecting our performance. However, EBITDA from Continuing Operations and EBITDAR from Continuing Operations, as defined above, should be viewed as supplemental data, rather than as a substitute or an alternative to the comparable GAAP measure. The table above presents a reconciliation of EBITDA from Continuing Operations and EBITDAR from Continuing Operations from our Net loss. RECONCILIATION OF EBITDA FROM CONTINUING OPERATIONS AND EBITDAR FROM CONTINUING OPERATIONS FROM NET LOSS 2014 2013 Net loss ($11.1) ($8.4) Loss from discontinued operations, net of tax 3.3 0.9 Tax expense 0.1 0.1 Interest expense 2.3 2.3 Interest income (0.4) (0.3) Operating loss ($5.8) ($5.4) Depreciation and amortization 6.4 9.3 EBITDA FROM CONTINUING OPERATIONS* $0.6 $3.9 Impairments, restructuring charges and other items 4.1 3.4 EBITDAR FROM CONTINUING OPERATIONS* $4.7 $7.3 % of net sales 2.6% 3.5% Three Months Ended March 31,
18 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Q1 2014 Liquidity NOTE: The reader should review this slide in connection with our Form 10-Q and related disclosures for 2014 filed today Mar-14 Dec-13 Mar-13 Unrestricted Cash 43.1$ 55.0$ 41.9$ Borrowing Availability 26.2 22.0 16.3 Total Cash and Borrowing Availability 69.3$ 77.0$ 58.2$ % Sales - Trailing Four Quarters 8.7% 9.3% 6.9% Weighted Average Interest 8.8% 8.1% 8.3%
19 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Q1 2014 Liquidity NOTE: The above cash flow statement is a condensed format. The reader should review this slide in connection with our Form 10-Q and related disclosures for 2014 filed today Cash used in operating activities: $19.2m use of cash primarily related to net losses & working capital (AR & inventory offset somewhat by payables) Cash provided by investing activities: $13.4m source of cash mainly related to release of restricted funds pertaining to the PNC term loan & proceeds from asset sales somewhat offset by capital expenditures Cash used in financing activities: $5.9m use of cash mainly related to the pay down of debt utilizing the asset sale proceeds and the PNC term loan amortization 2014 2013 Net loss ($11.1) ($8.4) Depreciation and amortization 6.4 9.3 Non-cash employee retirement benefits 0.1 (3.5) Other non-cash items (3.7) 0.5 Changes in operating assets and liabilities: Accounts receivable (5.0) (8.7) Inventories (9.4) (24.5) Payables and accrued expenses 3.8 21.9 Recoverable non-income taxes (1.0) 4.7 Other 0.7 (1.5) Cash used in operating activities (19.2) (10.2) Cash provided by (used in) investing activities 13.4 (1.4) Cash used in financing activities (5.9) (2.2) Effect of exchange rate changes on cash (0.2) 0.4 Decrease in cash and cash equivalents ($11.9) ($13.4) Cash and cash equivalents - Beginning of Period 55.0 55.3 Cash and cash equivalents - End of Period 43.1 41.9 Cash paid for interest 2.1 2.3 Cash paid for taxes 0.1 0.2 Three Months Ended March 31,
Agenda Operational Overview Q1 2014 Financial Overview & Liquidity Business Update Closing Remarks / Q&A 20 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
21 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Business Update • Share recapitalization approved – one share class now trading as TECU • Continued focus on lean manufacturing initiatives, quality improvements, and manufacturing process improvements • New strategic restructuring process commenced with the hiring of CRO • 2015 targets outlined in May 2013 are not achievable
Agenda Operational Overview Q1 2014 Financial Overview, Liquidity & Outlook Business Update Closing Remarks / Q&A 22 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014
23 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Closing Remarks / Q & A • Continue the turnaround process • Revamp our strategic restructuring • Continue to expand and improve the product line • Thank you for attending Tecumseh Products Company’s Q1 2014 Shareholder Update • We will now take any questions you might have
24 Tecumseh Products Company Q1 2014 Shareholder Update - May 12, 2014 Contact Information – Today’s Speakers Ms. Janice Stipp Executive Vice President, CFO & Treasurer Tecumseh Products Company 5683 Hines Drive Ann Arbor, MI 48108 Mr. Jim Connor President & Chief Executive Officer Tecumseh Products Company 5683 Hines Drive Ann Arbor, MI 48108 E-Mail: investor.relations@tecumseh.com Phone: 1 (734) 585 9507
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