Disclosures

Accuride Corp.

I, Jimmy Baker , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC, or any of its affiliates, does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Ratings Distribution as of August 22, 2017
Rating Number of Companies Percent of Total
Buy 146 74.9%
Neutral 48 24.6%
Sell 1 0.5%
Total 195 100%
% with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 23 88.5%
Neutral 3 11.5%
Sell 0 0.0%
Total 26 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect “Buy” rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy the securities at the current valuation.
  • Neutral: We generally believe “Neutral” rated stocks will have an average risk-adjusted total return over the next 12 months.
  • Sell: We generally expect “Sell” rated stocks to have a below-average risk-adjusted total return over the next 12 months. We recommend that investors reduce their positions until the valuation or fundamentals become more compelling.

Risks and Considerations

  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Liquidity and Solvency - The Company has a significant debt load and interest expense, which may hamper its ability to invest in the business. Also, the Company may need to raise additional capital in the future and access to such capital is difficult to predict.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Future Capital Raises - The company may need to raise additional capital to fund its growth initiatives.  This presents a risk of dilution to existing shareholders if the company does not deliver sufficient returns on the additional capital.
      • History of Negative Cash Flow - The company has a long history of negative cash flow.  While this has improved somewhat of late, there can be no assurance it will remain cash flow positive.
      • International Expansion - The company is pursuing international expansion opportunities.  This presents additional execution risk as it will be entering markets that it is presumably less familiar with.
      • Decrease in Commercial Vehicle Production - Ultimately, the company is dependent upon production levels of Class 8 trucks, Class 5-7 trucks, and trailers.  Any slowdown in production rates of these products is likely to harm the company's sales, margins, and profitability.
      • Pricing Pressures in Steel Wheels - As North American demand shifts from steel to aluminum, the steel wheel market may experience a period of pricing pressure stemming from excess capacity.  This could be exarcerbated if steel wheel producers currently serving the light truck market move into the commercial vehicle market due to a demand shift away from light trucks and into more fuel efficient automobiles.
      • Gunite Quality Failure - The company may suffer additional quality spills at Gunite (or other divisions) which could impact both near and long-term performance should the quality spill be severe enough to trigger customer attrition.
      • Inability to Pass Through Non-material Price Increases - A concentrated customer base of commercial vehicle OEMs may be resistive to price increases, which could inhibit the company's ability to grow margins throughout the up cycle.