Exide lowers guidance amid mixed earnings for fiscal 2Q20

Exide Technologies lowered its EBITDA and revenue guidance for its 2020 fiscal year last week as it reported mixed earnings for 2Q20, according to two sources familiar with the situation. The company cited higher input costs as a drag on earnings, the sources said.

The company, which makes and recycles lead acid batteries, gave midpoint guidance of USD 2.625bn for revenue, USD 127.5m for EBITDA and a cash burn of USD 52.5m. The midpoint of previous guidance was USD 2.725bn for revenue, USD 134m for EBITDA and a cash burn of USD 47.5m, said the sources.

For the quarter ended 30 September—Exide’s fiscal 2Q20—the company reported revenue of USD 572m, an 18% drop from the prior year period. Exide booked around USD 28m of EBITDA, compared to USD 22m year-over-year and USD 17.4m sequentially. The company said higher input costs, in particular lead prices, were the main driver of the mixed results, sources said.

Lead prices hit a recent peak at the end of October at USD 1.02 per pound before falling as low as USD 0.89 per pound earlier this week. As of today, prices have risen slightly to USD 0.91 per pound—in line with prices from this time last year.

The company expects lead prices to rise again, translating to lower revenue and EBITDA generation for the year. Management said that dynamic contributed roughly a third of the reduction in the company’s guidance, according to one of the sources.

As of 30 September, Exide’s liquidity totaled USD 85m through USD 32m of cash and USD 53m of revolver availability. The company is 9.7x levered, based on USD 123.3m of LTM EBITDA and USD 1.2bn of total debt.

Management did not give a material update on its previously announced plans to sell the company’s European segment, which makes up more than 60% of Exide’s EBITDA, the sources said.

The company’s capital structure contains a USD 150m 4.5% PIK/10.75% cash super-priority note due 2021, a USD 375m 11% PIK/3% cash exchange priority note due 2024, a USD 159m 11% PIK/3% cash first lien note due 2024, and a USD 290m 7.25% PIK 1.5 lien note due 2027.

Exide did not respond to a request for comment.

2019 Debtwire

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