Associated Materials reduces ABL facility balance to $10 million with help from improved cash flow

By Jennifer Lanning Drey

Portland, Ore., March 12 - Associated Materials, Inc. significantly improved its cash flow in 2009, allowing the company to reduce borrowings on its asset-based lending facility to $10 million at the Jan. 2 end of the fiscal year, Stephen Graham, chief financial officer of Associated Materials, said Friday during the company's year-end earnings conference call.

The outstanding ABL balance compared to $56 million outstanding at the end of 2008.

Graham said Associated Materials' continued focus on working capital initiatives in 2009 allowed the company to improve its cash flow from operations to $146.1 million for the year. Cash flow from operations was $16.3 million in 2008.

Associated Materials ended 2009 with a cash balance of $55.9 million, compared to a cash balance of $6.7 million at the end of the prior year.

Availability under the ABL facility was $139.8 million at Jan. 2.

Regarding the company's cash priorities, Graham noted Associated Materials will have about $68 million of cash interest expense on an annual basis beginning in 2010. The CFO also mentioned cash being used for capital spending and to cover working capital fluctuations.

As previously reported, during the fourth quarter, Associated Materials issued $200 million of 9 7/8% senior secured second-lien notes. Proceeds were used to redeem $165 million of 9¾% senior notes that were due to mature on April 15, 2012 and $20 million of 15% senior notes due to mature on July 15, 2012.

The company's next major debt maturity is now its ABL facility, which matures on Oct. 3, 2013.

For the fourth quarter, Associated Materials posted net sales of $274 million, down from $275.6 million for the same period in 2008. Full-year 2009 net sales were $1.05 billion, compared to $1.13 billion in 2008.

Fourth-quarter adjusted EBITDA was $28.4 million, compared to adjusted EBITDA of $15.7 million for the same period in 2008.

Associated Materials is a Cuyahoga Falls, Ohio-based manufacturer of exterior building products.

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