Proliance Achieves Operating Income Forecast For FY08; Provides Update on Refinancing

NEW HAVEN, Conn.--(Business Wire)--
Proliance International, Inc. (NYSE Amex: PLI), a leading global manufacturer
and distributor of aftermarket heat exchange and temperature control products
for automotive and heavy-duty applications, today announced results for the
fourth quarter and year ended December 31, 2008.

* Net income for the fourth quarter of $0.2 million, or $0.01 per share,
compared to a net loss of $4.4 million, or $0.28 per share, in the similar
period last year, a $4.6 million improvement. Net sales were $76.0 million
compared to $84.3 million in the year-ago period.
* A decline in the net loss for the year to $4.1 million, or $0.27 per share,
from a net loss of $16.8 million, or $1.18 per share, for 2007, on net sales of
$350.1 million compared to $393.9 million a year ago.
* Operating income for the fourth quarter increased to $4.3 million from an
operating loss of $0.2 million in the year-ago period, and for the year,
increased to $16.6 million from an operating loss of $0.3 million in 2007.
* The Company`s forecast of $20 million of adjusted operating income was
achieved. (Adjusted operating income and related measures herein are non-GAAP
financial measures. See attached Supplementary Information table for
reconciliation to GAAP.)

Comment

Compared to year-ago periods, net sales for the quarter and the year declined
due to the adverse effects of the February 2008 tornadoes that destroyed
Proliance`s Southaven, MS heat exchange products distribution facility, in
addition to the Company`s change in strategy to sales through wholesalers for
certain products and away from direct sales through branches.

However, operating income increased as a result of the Company`s continuing cost
reduction program, which lowered operating expenses and product costs. This
improvement was partially offset by lower margins due to lost sales, higher
product related costs and higher operating expenses, all of which were
attributable to the Southaven casualty event, net of insurance proceeds.

Proliance`s senior lender required the Company to apply a significant portion of
the Southaven casualty event insurance proceeds to pay down borrowings. As a
result, total debt of $44.8 million at December 31, 2008 was $22.6 million less
than at December 31, 2007.

"As in previous quarters, profitability continued to improve due to our domestic
cost reduction initiatives, including our product cost improvements, overhead
reductions and branch strategy," said Charles E. Johnson, President and CEO.
"Our international business also had a very strong year in 2008. In all cases,
our Associates have achieved our public earnings objectives even under very
difficult business conditions. This increase in performance was achieved despite
the restrictions placed on us by our senior lender, which have made it difficult
to secure enough replacement inventories to meet the strong customer demand we
have been experiencing."

"This points to our biggest immediate challenge, which is refinancing our debt.
While we have been working diligently on this, we have experienced continued
delays resulting in part from the current financial environment. To mitigate
this to the greatest extent possible, we have continued to implement new cost
cutting strategies to further improve operating performance. In addition, we
have retained a new investment banking firm to assist us in pursuing a
refinancing. Given the uncertainties in today`s financial environment, the
banker will also assist Proliance in actively evaluating all available
alternatives."

Fourth Quarter 2008 Financial Analysis

(All comparisons are to the corresponding year-ago period unless otherwise
indicated)

Domestic net sales of $49.2 million declined 14%, primarily due to the
aftereffects of the Southaven casualty event and the change in branch
distribution strategy. The Company operated 34 branches at the close of 2008,
compared to 46 at the end of 2007 and 94 at the end of 2006. International sales
of $26.8 million declined 2%, primarily reflecting exchange rate differences
from the stronger U.S. dollar.

Consolidated gross margin was 18.5% of sales compared to 20.4%. Domestic gross
margin reflected the impact of the Southaven casualty event and lower average
selling prices, in part attributable to the change in distribution strategy,
which were partially offset by lower manufacturing costs as a result of product
innovations and production efficiencies. International gross margin was slightly
higher due to cost reductions.

Selling, general and administrative expenses (SG&A) declined to $9.7 million or
12.8% of sales compared to $16.4 million or 19.5% of sales a year ago. SG&A in
the fourth quarter of 2008 was favorably impacted by $4.6 million of other
income associated with the Southaven casualty event, which partially offset
costs associated with the event included in gross margin. Excluding the impact
of the Southaven casualty event, domestic overhead was lower, reflecting the
change in distribution strategy as well as general expense reductions.

Interest expense decreased slightly as lower average debt levels and lower
discounting expense associated with customer sponsored payment programs more
than offset the impact of higher average interest rates and higher amortization
of deferred debt costs.

Opinion of Independent Accountants

Due to the possibility that a loan covenant violation could result in future
periods, requiring, at the lender`s discretion, the retirement of the entire
amount of indebtedness at that time, amounts payable under Proliance`s credit
agreement have been classified in current liabilities at December 31, 2008 and
2007. As a result, the Company`s independent accountants have included an
explanatory paragraph in their audit opinion in Proliance`s 2008 Annual Report
on Form 10-K, concerning the Company`s ability to continue as a going concern.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA) of $8.6 million for the quarter increased from $3.1 million in
the year-ago quarter, and for the year, increased to $27.7 million from $14.5
million in 2007.

Adjusted EBITDA and related measures herein constitute "non-GAAP financial
measures" as defined by the rules of the Securities and Exchange Commission. A
separate tabular presentation of this information is provided below, to indicate
how the non-GAAP financial measure was determined and to reconcile the non-GAAP
financial measure to net income. The Company has provided the foregoing data as
it believes that it provides the marketplace with supplemental information with
respect to the comparative baseline performance of its business operations.
Although Adjusted EBITDA should not serve as a substitute for operating income
or net income, the Company believes that the marketplace may find this non-GAAP
financial measure to be useful as a supplement to the GAAP financial information
provided. Specifically, Adjusted EBITDA for the periods presented excludes: (1)
restructuring charges, which we believe to be non-recurring in nature and not
reflective of the baseline performance of the Company`s business; (2) the gain
on the sale of an unused building, which does not reflect the results of the
Company`s core automotive parts business; (3) an arbitration earn-out decision,
which we believe to be non-recurring in nature and not reflective of the
baseline performance of the Company`s business; and (4) the estimated operating
loss impact due to the February 5, 2008 tornadoes that destroyed the Company`s
Southaven, MS distribution center, which we believe does not accurately reflect
the Company`s core operating performance under normalized business conditions.

Conference Call

Proliance will host a conference call today at 4:30 PM ET with Charles E.
Johnson, President and CEO, and Arlen F. Henock, CFO, to discuss the results for
the fourth quarter and year ended December 31, 2008. The call will be accessible
live via a webcast on Proliance`s Investor Relations Webcast page at
http://www.pliii.com/39-webcasts?side or http://www.wsw.com/webcast/pli/. A
webcast replay will be available shortly thereafter.

About Proliance International, Inc.

Proliance International, Inc. is a leading global manufacturer and distributor
of aftermarket heat transfer and temperature control products for automotive and
heavy-duty applications serving North America, Central America and Europe.

Forward Looking Statements

Statements included in this press release, which are not historical in nature,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Statements relating to the
future financial performance or liquidity of the Company are subject to business
conditions and growth in the general economy and automotive and truck business,
the impact of competitive products and pricing, changes in customer product mix,
failure to obtain new customers or retain old customers or changes in the
financial stability of customers, changes in the cost of raw materials,
components or finished products, the discretionary actions of its suppliers and
lenders, and changes in interest rates. Such statements are based upon the
current beliefs and expectations of Proliance management and are subject to
significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements. When used in this press release, the
terms "anticipate," "believe," "efforts," "estimate," "expect," "goal," "may,"
"objective," "plan," "possible," "potential," "project," "proposal," "pursue,"
"will" and similar expressions identify forward-looking statements.

Factors that could cause Proliance's results to differ materially from those
described in the forward-looking statements include the effects of the financial
crisis and turmoil in the capital markets, the absence of refinancing
commitments, the global recession and other factors identified in Proliance`s
2007 Annual Report on Form 10-K and Proliance's other subsequent filings with
the SEC. The forward-looking statements contained in this press release are made
as of the date hereof, and Proliance does not undertake any obligation to update
any forward-looking statements, whether as a result of future events, new
information or otherwise.

PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)

Three Months Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007

Net sales $ 75,986 $ 84,257 $ 350,067 $ 393,942
Cost of sales 61,926 67,106 284,671 310,963
Gross margin 14,060 17,151 65,396 82,979
Selling, general and administrative expenses 9,735 16,429 48,611 76,031
Arbitration earn-out decision - - - 3,174
Restructuring charges - 925 172 4,117
Operating income (loss) 4,325 (203 ) 16,613 (343 )
Interest expense 3,634 3,679 15,764 13,838
Debt extinguishment costs 7 - 2,829 891
Income (loss) before income taxes 684 (3,882 ) (1,980 ) (15,072 )
Income tax provision 509 485 2,082 1,732
Net income (loss) $ 175 ($4,367 ) ($4,062 ) ($16,804 )
Net income (loss) per common share - basic $ 0.01 ($0.28 ) ($0.27 ) ($1.18 )
Net income (loss) per common share - diluted $ 0.01 ($0.28 ) ($0.27 ) ($1.18 )
Weighted average common shares - basic 15,756 15,668 15,748 15,368
Weighted average common shares - diluted 25,304 15,668 15,748 15,368

PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

December 31, 2008 December 31, 2007

Cash and cash equivalents $ 2,444 $ 476
Accounts receivable, net 57,005 60,153
Inventories 84,586 106,756
Other current assets 5,198 7,645
Net property, plant and equipment 21,886 21,164
Other assets 16,086 12,699
Total assets $ 187,205 $ 208,893

Accounts payable $ 64,788 $ 48,412
Accrued liabilities 18,546 24,649
Total debt 44,837 67,453
Other long-term liabilities 16,845 5,353
Stockholders` equity 42,189 63,026
Total liabilities and stockholders` equity $ 187,205 $ 208,893

PROLIANCE INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION
(in thousands)
(unaudited)

Three Months Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007

SEGMENT DATA:
Net sales:
Domestic $ 49,202 $ 56,993 $ 227,876 $ 286,665
International 26,784 27,264 122,191 107,277
Total net sales $ 75,986 $ 84,257 $ 350,067 $ 393,942

Operating income (loss):
Domestic $ 4,543 $ 573 $ 18,457 $ 11,105
Restructuring charges - (1,164 ) (172 ) (3,891 )
Domestic total 4,543 (591 ) 18,285 7,214
International 817 1,001 5,662 3,690
Restructuring charges - 239 - (226 )
International total 817 1,240 5,662 3,464
Corporate income (expenses) (1,035 ) (852 ) (7,334 ) (7,847 )
Arbitration earn-out decision - - - (3,174 )
Total operating income (loss) $ 4,325 ($203 ) $ 16,613 ($343 )

NET CAPITAL EXPENDITURES $ 946 (a)(b) $ 1,276 (a) $ 5,156 (a)(b) $ 3,018 (a)

(a) Excludes proceeds from sale of building and insurance recovery on damaged fixed assets in 2008 and from sale of facility in 2007.

(b) Excludes $2,176 for racking acquired through capital lease.

PROLIANCE INTERNATIONAL, INC.
SUPPLEMENTARY INFORMATION
(in thousands)
(unaudited)

NON-GAAP FINANCIAL MEASURE -
ADJUSTED OPERATING INCOME
OPERATING INCOME AND
ESTIMATED OPERATING LOSS FROM TORNADOES

Three Months Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007

Net income (loss) $ 175 ($4,367 ) ($4,062 ) ($16,804 )
Income tax provision 509 485 2,082 1,732
Debt extinguishment costs 7 - 2,829 891
Interest expense 3,634 3,679 15,764 13,838
Operating income (loss) 4,325 (203 ) 16,613 (343 )
Estimated operating loss from tornadoes(a) 2,313 - 4,788 -
Adjusted Operating Income(b) $ 6,638 ($203 ) $ 21,401 ($343 )

(a) Estimated operating loss from tornadoes includes margin less related expenses on lost sales, costs net of insurance recovery and gains from asset conversions due to the February 5, 2008 tornado damage to the Southaven, Mississippi distribution facility.

(b) Operating income excluding the estimated operating loss from the tornadoes ("Adjusted Operating Income"), constitutes a "non-GAAP financial measure" as defined by the rules of the Securities and Exchange Commission. The Company has provided the foregoing data as it
believes that it provides the marketplace with additional information useful in evaluating the financial performance of the Company during the three and twelve months ended December 31, 2008 and 2007.

PROLIANCE INTERNATIONAL, INC.
SUPPLEMENTARY INFORMATION
(in thousands)
(unaudited)

NON-GAAP FINANCIAL MEASURE - ADJUSTED
EBITDA - EBITDA BEFORE RESTRUCTURING,
GAIN ON SALE OF BUILDING, ARBITRATION
EARN-OUT DECISION AND ESTIMATED
OPERATING LOSS FROM TORNADOES

Three Months Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007

Net income (loss) $ 175 ($4,367 ) ($4,062 ) ($16,804 )
Income tax provision 509 485 2,082 1,732
Debt extinguishment costs 7 - 2,829 891
Interest expense 3,634 3,679 15,764 13,838
Operating income (loss) 4,325 (203 ) 16,613 (343 )
Depreciation and amortization(a) 1,982 2,403 7,675 8,260
EBITDA 6,307 2,200 24,288 7,917
Restructuring charges - 925 172 4,117
Gain on sale of building - - (1,538 ) (750 )
Arbitration earn-out decision - - - 3,174
Estimated operating loss from tornadoes(b) 2,313 - 4,788 -
Adjusted EBITDA(c) $ 8,620 $ 3,125 $ 27,710 $ 14,458

(a) Depreciation and amortization does not include amortization of deferred debt costs that are classified as interest expense.

(b) Estimated operating loss from tornadoes includes margin less related expenses on lost sales, costs net of insurance recovery and gains from asset conversions due to the February 5, 2008 tornado damage to the Southaven, Mississippi distribution facility.

(c) Earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA less restructuring charges, gain on sale of building, arbitration earn-out decision and estimated operating loss from the tornado ("Adjusted EBITDA"), constitute "non-GAAP financial measures" as defined by the rules of the Securities and Exchange
Commission. The Company has provided the foregoing data as it believes that it provides the marketplace with additional information useful in evaluating the financial performance of the Company during the three and twelve months ended December 31, 2008 and 2007.

Proliance International, Inc.
Arlen F. Henock, 203-859-3626
Chief Financial Officer
or
Anreder & Company
Steven Anreder
steven.anreder@anreder.com
or
Gary Fishman
gary.fishman@anreder.com
212-532-3232

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