Volume 13, Issue 6 - November/December 2011

AGR Reports
breaking news

FINANCIAL NEWS
North American Replacement Profits Up for Pilkington North America

NSG Group has announced that its Pilkington Automotive North American auto glass replacement market increased its profits for the first quarter of fiscal year 2012, due to “higher prices in North America.” Specific figures have not been released, but worldwide the company reports positive results in the replacement market, describing the results as “robust with average price levels being higher than in the previous year.”

Despite the positive news in the replacement market, NSG reported an overall worldwide drop in both profits and revenues for the quarter for the automotive business. The company attributes the drops to the March 2011 Japan earthquake, though company officials say the earthquake’s “financial impact was less than expected.”

Worldwide Pilkington Automotive reports revenue of approximately $840.5 million (66.2 billion Japanese Yen) for the quarter, down from approximately $981.0 million (71.3 billion Japanese Yen) for the same quarter last year. Likewise, profits fell from approximately $57.1 million (4.5 billion Japanese Yen) to around $25.4 million (2.0 billion Japanese Yen) for the fiscal first quarter. According to the latest NSG financial report, company officials had expected to achieve profits of $12.7 million (1,000 million Japanese Yen) higher than the actual final figure.

In North America, the company also saw a drop in both OE profits and revenues. “Vehicle inventories held by manufacturers and dealers fell during the quarter, offsetting relatively strong consumer demand,” writes the company. In addition, the Japanese automotive manufacturers in the North American market also suffered from component shortages related to the earthquake, “and consequently had to restrict vehicle production levels during the period,” according to NSG.

In Europe, the company reports the OE demand was up—and therefore so was revenue, though specific figures are not provided in the report. Despite the increase in demand European profits also fell, “due to increasing input costs and greater demand volatility arising from the effects of the Japan earthquake on the availability of components to European car manufacturers.”

In Japan, both revenues and profits also were significantly below last year, “as customers reduced their production levels in response to component shortages.”

Company officials say demand gradually improved, though, throughout the quarter, and they look to return to normal levels during the second quarter.

In the rest of the world, NSG reports an increase in revenues with further growth in volume, particularly in South America. Though profits fell in South America, company officials say they “were still at satisfactory levels.”

In other news at Pilkington, the company has made plans to expand its original-equipment automotive glass plant in Versailles, Ky. The expansion project is expected to cost approximately $55.3 million and create 56 jobs, according to state records.

Boyd Closes Financing Deal
Boyd Income Fund, which owns Boyd Autobody and Glass, Gerber Collision and Glass and Gerber National Glass Services, has closed a financing deal in which 1,963,231 shares were sold to a group of investors. The investors included a syndicate of underwriters led by Cormark Securities Inc. and CIBC World Markets Inc., acting as co-leads and joint bookrunners, along with National Bank Financial and Octagon Capital Corp. The purchased units included 1,300,000 trust units from the company’s treasury; 463,231 units being sold from entities under the control or direction of Terry Smith, executive chairman of Boyd Group Income Fund; and the 200,000 units being sold by Gerber’s glass division chief executive officer, Eddie Cheskis, at a price of $10.75 per unit. The units were offered to the public by way of short form prospectus, according to a statement from Boyd.

The net proceeds of deal will be used “to reduce debt levels and position the Fund for future growth and development,” according to Boyd.


COMPANY NEWS
Binswanger Returns to Its Roots

During a recent interview, Binswanger Glass’s new president, Arturo Carrillo, advised AGRR™ magazine/glassBYTEs.com™ that the retailer has returned to its original independent roots since its former parent company, Vitro America, was sold to a private equity firm in June (see related story in July/August AGRR magazine, page 12). Carrillo served as president and chief executive officer of the former Vitro America (now part of the newly formed Trulite) prior to that company’s sale to Sun Capital Partners.

“Binswanger for the first time in many years is independent of a fabricator. It is its own stand-along legal entity with its own stand-alone management,” says Carrillo. “With this acquisition Binswanger comes back to its original roots, so we’re pretty excited to run Binswanger in an independent manner and continue to be a successful and long-term company.”

Among the changes has been the consolidation of several branches. According to Carrillo, only a small percentage of the company’s stores across the United States were affected.

“We have consolidated a few facilities—not many; about 5 percent of locations,” Carrillo says. “That already has happened for the most part. Most consolidation we were going to do already happened.”

Some of these have been positive moves, he says. “We’re moving a few other branches to better and bigger locations,” he says. “We’re able to use part of the [capital from] the acquisition to re-negotiate with our landlords and that’s what led to the consolidation to new facilities, [moving to] facilities that were in better parts of town, etc.”

Carrillo offers the following response to the speculation that Binswanger could be sold again in the near future.

“Binswanger has been a long-standing company. It’s been around for [more than] 100 years and it has a lot of long-term [leaders] running it,” says Carrillo. “Over the last 100 years it has been owned by different people, so now it’s owned by Sun Capital and Sun Capital intends to run it and have it as a successful company. Will they sell it in the future? It’s probable. But would this affect the employees? It wouldn’t.”

He adds, “It’s an interesting discussion, but from the day-to-day operations it should be an irrelevant question.”

SUPPLIER NEWS
Carlex Distribution Center Resumes Normal Business
The Carlex distribution center in Lebanon, Tenn., recently resumed normal operations six months after a tornado disabled it on February 24.

“The damages sustained to the north end of the building were rather significant,” said Jim Skrabacz, director of Carlex Aftermarket Distribution. “All of our offices and a large portion of the Center’s bulk storage was either damaged or completely destroyed. We are proud to have been able to keep things going and look forward to returning to normal operations.”

Much of the center’s inventory and operations had been relocated to a nearby building, according to Carlex, but, as of September 1, the building was repaired and all inventory was relocated to its original location. Over the next several months, the company also plans to create additional office space in the building to accommodate aftermarket employees who are transferring to the location from Allen Park, Mich.

briefly …

Guardian Automotive opened a new distribution center in Tucson, Ariz., in August … Dow Automotive Systems is in the process of moving its aftermarket distribution center from Dayton, Ohio, to Hillsdale, Mich.


AGRR
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