Remy International, Inc. Announces First Quarter 2014 Results

PENDLETON, Ind., May 6, 2014 /PRNewswire/ — Remy International, Inc.
(NASDAQ: REMY), a leading worldwide manufacturer, remanufacturer, and
distributor of starter motors and alternators for light vehicle and commercial
vehicle applications, multi-line products and hybrid electric motors, today
announced its financial results for the first quarter ended March 31, 2014.

Financial Results Three
months
ended
March 31,
—————–

2014 2013
—- —-

Net sales $300.3 million $281.7 million

Net income $9.5 million $1.8 million

Diluted earnings per
share $0.30 $0.04

Adjusted net income $11.4 million $9.3 million

Adjusted diluted
earnings per share $0.36 $0.28

Net cash used in
operating
activities $(9.2) million $(16.3) million

Adjusted EBITDA $33.5 million $31.3 million

First Quarter Highlights

— Net sales of $300.3 million for the first quarter of 2014, an increase
of 7% compared to $281.7 million for the first quarter of 2013.
— Adjusted EBITDA of $33.5 million for the first quarter of 2014 compared
to $31.3 million for the first quarter of 2013.
— Adjusted net income was $11.4 million for the first quarter of 2014
compared to $9.3 million for the first quarter of 2013.
— On January 13, 2014, we acquired substantially all of the assets of
United Starters and Alternators Industries, Inc. (“USA Industries”). USA
Industries is a leading North American distributor of premium quality
remanufactured and new alternators, starters, constant velocity (CV)
axles and disc brake calipers for the light-duty aftermarket.
— On April 30, 2014, the Board of Directors declared a quarterly dividend
of $0.10 per share payable on May 30, 2014 to stockholders of record as
of May 16, 2014.
“Our sales were strong compared to last year with increased heavy duty and
aftermarket sales offsetting the light duty sales headwinds. Last year’s
investments in China and Light Duty Aftermarket are paying dividends as we
realized a 25% increase in North America Light Duty Aftermarket sales and a 72%
increase in China sales compared to last year,” stated Fred Knechtel, Remy
International, Inc. Sr. Vice President, CFO and Treasurer.

Jay Pittas, Remy International, Inc. President and CEO commented, “Looking
forward, Remy is well positioned to build on its accomplishments. We see signs
of improvement in the global economy and anticipate stronger sales in 2014. Long
term industry fundamentals remain favorable and support continued global growth
in vehicle and component sales. Our customer, product and regional
diversification, OE and aftermarket mix, combined with our strategic investments
to capture growth in the rapidly expanding markets of the world, provide a solid
foundation for the future.”

About Remy International, Inc.

Founded by the Remy Brothers in 1896, Remy International, Inc. is a leading
global manufacturer and remanufacturer of alternators, starter motors and
electric traction motors. Headquartered in Pendleton, IN, with global operations
across five continents and 10 countries, Remy International markets products
under the Delco Remy®, Remy®, World Wide Automotive®and USA Industries® brands.
Known for innovation, efficiency, quality, and best-in-class customer service
and support, Remy International’s products are integrated by leading industrial,
specialty, automotive and heavy-duty OEMs, and aftermarket providers worldwide.
We Start the World & Keep It Running(TM).

Conference Call

Remy will host a call with investors and analysts to discuss first quarter 2014
results on Thursday, May 1, 2014 beginning at 9:00 a.m. Eastern Time. A live
webcast of the conference call will be available on the Remy Investor Relations
website at http://www.remyinc.com. The conference call replay will also be
available via webcast through the Remy Investor Relations website at
http://www.remyinc.com.

Use of Non-U.S. GAAP Financial Information

Accounting principles generally accepted in the United States (U.S. GAAP) is the
standard framework of guidelines for financial accounting. U.S. GAAP includes
the standards, conventions, and rules accountants follow in recording and
summarizing transactions and in the preparation of financial statements. In
addition to reporting financial results in accordance with U.S. GAAP, Remy has
provided Adjusted net income, Adjusted diluted earnings per share, and Adjusted
EBITDA, non-U.S. GAAP financial measures, which are frequently used by
management, analysts, investors and other interested parties. Management
believes that the non-U.S. GAAP financial measures presented provide a useful
measure of Remy’s financial performance since they exclude certain items which
do not reflect ongoing operations. A reconciliation of U.S. GAAP net income to
Adjusted net income and Adjusted diluted earnings per share is provided herein.
Adjusted EBITDA is defined by the Company as net income attributable to common
stockholders before (i) interest expense-net, (ii) income tax expense, (iii)
depreciation and amortization, (iv) stock-based compensation expense, (v) net
income attributable to noncontrolling interest, (vi) restructuring, other
charges and other impairment charges, (vii) loss on extinguishment of debt and
refinancing fees, (viii) executive officer separation cost, (ix) certain
purchase accounting finished goods inventory step-up costs and (x) other
adjustments. Adjusted EBITDA as defined by the Company may differ from non-U.S.
GAAP measures used by other companies and is not a measurement under U.S. GAAP.
There are limitations inherent in non-U.S. GAAP financial measures in that they
exclude a variety of charges and credits that are required to be included in a
U.S. GAAP presentation, and therefore do not present the full measure of the
Company’s recorded costs against its revenue. Accordingly, in analyzing Remy’s
future financial performance, non-U.S. GAAP results presented should be
considered together with U.S. GAAP results, rather than as an alternative to
U.S. GAAP basis financial measures. Reconciliations of non-U.S. GAAP measures to
related U.S. GAAP measures are presented in the financial schedules which
accompany this release.

Forward Looking Statements

This press release contains forward-looking statements. Forward-looking
statements provide our current expectations or forecasts of future events.
Forward-looking statements include statements about our expectations, beliefs,
plans, objectives, intentions, assumptions and other statements that are not
historical facts. Such forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
anticipated results. We undertake no obligation to publicly revise any
forward-looking statement to reflect circumstances or events to reflect the new
information, future events, or otherwise. The risks and uncertainties which
forward-looking statements are subject to include, but are not limited to,
future financial results and liquidity, development of new products and
services, the effect of competitive products or pricing, the effect of commodity
and raw material prices, the impact of supply chain cost management initiatives,
restructuring risks, customs duty claims, litigation uncertainties and warranty
claims, conditions in the automotive industry, foreign currency fluctuations,
costs related to re-sourcing and outsourcing products, the effect of economic
conditions, and other risks identified in the “Special note regarding
forward-looking statements”, “Risk Factors” and other sections of the Company’s
previously filed most recent Annual Report on Form 10-K, subsequent Quarterly
Reports on Form 10-Q and other filings with the Securities and Exchange
Commission.

A copy of the first quarter 2014 Form 10-Q will be available on the Remy
International Website at:
http://www.remyinc.com under Investor Relations.

Investor Contact: Fred Knechtel, Sr. Vice President, CFO and Treasurer

Knechtel.Fred@remyinc.com

(765) 778-6871

Remy International, Inc.

Index of consolidated financial information

Consolidated balance sheets as of
March 31, 2014 (unaudited) and
December 31, 2013 A-2

Consolidated statements of operations
(unaudited) for the three months
ended March 31, 2014 and March 31,
2013 A-3

Consolidated statements of cash flows
(unaudited) for the three months
ended March 31, 2014 and March 31,
2013 A-4

Reconciliation of non-U.S. GAAP
financial measures (unaudited) for
the three months ended March 31, 2014
and March 31, 2013 A-5

Reconciliation of U.S. GAAP net income
to adjusted net income (unaudited)
for the three months ended March 31,
2014 A-6

Reconciliation of U.S. GAAP net income
to adjusted net income (unaudited)
for the three months ended March 31,
2013 A-7

The accompanying unaudited consolidated financial information and reconciliation
schedules should be read in conjunction with the Remy International, Inc. Annual
Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on
Form 10-Q for the period ended March 31, 2014, which were filed with the United
States Securities and Exchange Commission.

Remy International, Inc.

Consolidated balance sheets

March 31, December 31,

(In thousands,
except share
information) 2014 2013
————– —- —-

Assets: (unaudited)

Current assets:

Cash and cash
equivalents $55,827 $114,884

Trade accounts
receivable (less
allowances of
$1,635 and
$1,583) 237,991 191,548

Other receivables 21,338 21,023

Inventories 178,685 159,340

Deferred income
taxes 38,491 36,329

Prepaid expenses
and other current
assets 10,689 11,151
—— ——

Total current
assets 543,021 534,275

Property, plant
and equipment 253,457 249,326

Less accumulated
depreciation and
amortization (108,943) (103,715)
——– ——–

Property, plant
and equipment,
net 144,514 145,611

Deferred financing
costs, net of
amortization 3,635 3,802

Goodwill 286,233 271,418

Intangibles, net 99,653 89,909

Other noncurrent
assets 77,568 72,040
—— ——

Total assets $1,154,624 $1,117,055
========== ==========

Liabilities and Equity:

Current liabilities:

Short-term debt $5,265 $2,369

Current maturities
of long-term
debt 3,390 3,392

Accounts payable 194,924 168,491

Accrued interest 101 92

Accrued
restructuring 284 1,026

Other current
liabilities and
accrued expenses 116,191 110,179
——- ——-

Total current
liabilities 320,155 285,549

Long-term debt,
net of current
maturities 293,075 293,835

Postretirement
benefits other
than pensions 1,573 1,628

Accrued pension
benefits 18,591 19,103

Deferred income
taxes 1,120 1,000

Other noncurrent
liabilities 26,796 24,783

Equity:

Remy International, Inc.
stockholders’ equity:

Common stock, Par
value of $0.0001;
31,995,332 shares
outstanding at
March 31, 2014,
and 31,981,544
shares
outstanding at
December 31, 2013 3 3

Treasury stock, at
cost; 457,107
treasury shares
at March 31,
2014, and 267,924
treasury shares
at December 31,
2013 (3,981) (1,477)

Additional paid-
in capital 323,023 320,687

Retained earnings 219,747 213,418

Accumulated other
comprehensive
loss (45,478) (41,474)
——- ——-

Total Remy
International,
Inc.
stockholders’
equity 493,314 491,157

Total liabilities
and equity $1,154,624 $1,117,055
========== ==========

Remy International, Inc.

Consolidated statements of operations

(Unaudited)

Three months
ended March
31,
————-

(In thousands, except per
share amounts) 2014 2013
————————- —- —-

Net sales $300,294 $281,726

Cost of goods sold 245,827 226,747
——- ——-

Gross profit 54,467 54,979

Selling, general, and
administrative expenses 33,339 40,150

Restructuring and other
charges 314 681
— —

Operating income 20,814 14,148

Interest expense-net 5,636 6,337

Loss on extinguishment of debt
and refinancing fees – 4,256
— —–

Income before income taxes 15,178 3,555

Income tax expense 5,711 1,712
—– —–

Net income 9,467 1,843

Less net income attributable
to noncontrolling interest – 563
— —

Net income attributable to
common stockholders $9,467 $1,280
====== ======

Basic earnings per share:

Earnings per share $0.30 $0.04

Weighted average shares
outstanding 31,379 31,104
====== ======

Diluted earnings per share:

Earnings per share $0.30 $0.04
===== =====

Weighted average shares
outstanding 31,550 31,261
====== ======

Dividends declared per common
share $0.10 $0.10
===== =====

Remy International, Inc.

Consolidated statements of cash flows

(Unaudited)

Three months
ended March
31,
————-

(In thousands) 2014 2013
————- —- —-

Cash flows from operating activities:

Net income $9,467 $1,843

Adjustments to reconcile net income
to cash used in operating
activities:

Depreciation and amortization 8,655 8,213

Amortization of debt issuance
costs 249 360

Loss on extinguishment of debt
and refinancing fees – 4,256

Stock-based compensation 1,219 1,497

Deferred income taxes 908 (4,133)

Accrued pension and
postretirement benefits, net (434) (21)

Restructuring and other
charges 314 681

Cash payments for
restructuring charges (1,056) (2,163)

Other 528 38

Changes in operating assets and
liabilities, net of restructuring
charges:

Accounts receivable (39,451) (21,247)

Inventories (5,449) (12,428)

Accounts payable 21,237 7,086

Other current assets and
liabilities, net (3,145) 1,528

Other noncurrent assets and
liabilities, net (2,200) (1,841)
—— ——

Net cash used in operating
activities (9,158) (16,331)

Cash flows from investing activities:

Purchases of property, plant
and equipment (6,437) (5,720)

Net proceeds on sale of assets 39 28

Acquisition of USA Industries,
Inc., net of cash acquired of
$109 (40,391) –
——- —

Net cash used in investing
activities (46,789) (5,692)

Cash flows from financing activities:

Change in short-term debt and
revolver 2,934 1,689

Payments made on long-term
debt, including capital
leases (844) (287,870)

Proceeds from issuance of
long-term debt – 299,250

Dividend payments on common
stock (3,397) (3,197)

Purchase of treasury stock (2,504) (1,225)

Debt issuance costs – (3,443)

Other 1,142 –

Net cash (used in) provided by
financing activities (2,669) 5,204

Effect of exchange rate
changes on cash and cash
equivalents (441) (1,879)
—- ——

Net decrease in cash and cash
equivalents (59,057) (18,698)

Cash and cash equivalents at
beginning of period 114,884 111,733
——- ——-

Cash and cash equivalents at
end of period $55,827 $93,035
======= =======

Supplemental information:

Noncash investing and financing
activities:

Purchases of property, plant
and equipment in accounts
payable $1,634 $2,630

Remy International, Inc.

Reconciliation of non-U.S. GAAP financial measures

(Unaudited)

Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. We use adjusted EBITDA as a supplement
to our U.S. GAAP results in evaluating our business. Other companies in our industry define adjusted EBITDA differently from
us and, as a result, our measure is not comparable to similarly titled measures used by other companies in our industry.

We define adjusted EBITDA as net income attributable to common stockholders before interest expense-net, income tax expense,
depreciation and amortization, stock-based compensation expense, net income attributable to noncontrolling interest,
restructuring, other charges and other impairment charges, loss on extinguishment of debt and refinancing fees, executive
officer separation cost, certain purchase accounting finished goods inventory step-up costs and other adjustments as set
forth in the reconciliations provided below.

Adjusted EBITDA is one of the key factors upon which we assess performance. As an analytical tool, adjusted EBITDA assists us
in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not
believe reflect our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative
to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed
by U.S. GAAP. There are limitations to using non-U.S. GAAP measures such as adjusted EBITDA. Although we believe that
adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not
reflect our ongoing operations, adjusted EBITDA excludes certain financial information that some may consider important in
evaluating our performance.

The following table sets forth a reconciliation of adjusted EBITDA to its most directly comparable U.S. GAAP measure, net
income attributable to common stockholders.

Three months
ended March
31,

(In thousands) 2014 2013
————- —- —-

Net income attributable to common stockholders $9,467 $1,280

Adjustments:

Interest expense-net 5,636 6,337

Income tax expense 5,711 1,712

Depreciation and amortization 8,655 8,213

Stock-based compensation expense 1,219 1,497

Net income attributable to noncontrolling interest – 563

Restructuring and other charges 314 681

Loss on extinguishment of debt and refinancing fees – 4,256

Executive officer separation – 7,000

Purchase accounting finished goods inventory step-up 2,509 –

Other – (264)
— —-

Total adjustments 24,044 29,995

Adjusted EBITDA $33,511 $31,275
===== =====

Remy International, Inc.

Reconciliation of U.S. GAAP net income to adjusted net income

(Unaudited)

(In thousands, Three Non-GAAP Three
except per months months
share amounts) ended ended
Adjustments
March 31, March 31,
2014 2014

(As
Reported) (Adjusted)

Net sales $300,294 $ – $300,294

Cost of goods
sold 245,827 (2,792) (a) 243,035
——- —— ——-

Gross profit 54,467 2,792 57,259

Selling,
general, and
administrative
expenses 33,339 – 33,339

Restructuring
and other
charges 314 (314) (b) –
— —- —

Operating
income 20,814 3,106 23,920

Interest
expense-net 5,636 – 5,636

Loss on
extinguishment
of debt and
refinancing
fees – –

Income before
income taxes 15,178 3,106 18,284

Income tax
expense 5,711 1,156 (c) 6,867
—– —– —–

Net income 9,467 1,950 11,417

Less net income
attributable
to
noncontrolling
interest – – –
— — —

Net income
attributable
to common
stockholders $9,467 $1,950 $11,417
====== ====== =======

Basic earnings per share:

Earnings per
share $0.30 $0.36
===== =====

Weighted
average shares
outstanding 31,379 31,379
====== ======

Diluted earnings per
share:

Earnings per
share $0.30 $0.36
===== =====

Weighted
average shares
outstanding 31,550 31,550
====== ======

(a) Represents the elimination of finished goods inventory step-up of $2,509,000, customer
relationships amortization of $237,000 and lease intangible amortization of $46,000.

(b) Represents the elimination of restructuring and other charges.

(c) Represents the tax impact of Non-GAAP adjustments by using the appropriate tax rate of the
jurisdictions where the charges were incurred.

Remy International, Inc.

Reconciliation of U.S. GAAP net income to adjusted net income

(Unaudited)

(In thousands, Three Non-GAAP Three
except per months months
share amounts) ended ended

March 31, Adjustments March 31,
2013 2013

(As
Reported) (Adjusted)

Net sales $281,726 $ – $281,726

Cost of goods
sold 226,747 – 226,747
——- — ——-

Gross profit 54,979 – 54,979

Selling,
general, and
administrative
expenses 40,150 (7,000) (a) 33,150

Restructuring
and other
charges 681 (681) (b) –
— —- —

Operating
income 14,148 7,681 21,829

Interest
expense-net 6,337 – 6,337

Loss on
extinguishment
of debt and
refinancing
fees 4,256 (4,256) (c) –

Income before
income taxes 3,555 11,937 15,492

Income tax
expense 1,712 4,479 (d) 6,191
—– —– —–

Net income 1,843 7,458 9,301

Less net income
attributable
to
noncontrolling
interest 563 – 563
— — —

Net income
attributable
to common
stockholders $1,280 $7,458 $8,738
====== ====== ======

Basic earnings per share:

Earnings per
share $0.04 $0.28
===== =====

Weighted
average shares
outstanding 31,104 31,104
====== ======

Diluted earnings per
share:

Earnings per
share $0.04 $0.28
===== =====

Weighted
average shares
outstanding 31,261 31,261
====== ======

(a) Represents the lump sum cash payment of $7,000,000 pursuant to the terms of the Transition,
Noncompetition and Release Agreement with John H. Weber, our former President and Chief Executive
Officer, effective February 28, 2013.

(b) Represents the elimination of restructuring and other charges.

(c) Represents the loss on extinguishment of debt and refinancing fees of $4,256,000 as a result of
the refinancing of our Term B Loan syndication.

(d) Represents the tax impact of Non-GAAP adjustments by using the appropriate tax rate of the
jurisdictions where the charges were incurred.

SOURCE Remy International, Inc.

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