Ducati Announces Record Results
14 September 1999
First-Half Net Income Rises to $6.3 million; EBITDA Increases 36.5% to $34.5 million; Ducati Locks in 1999 World Superbike Championship BOLOGNA, Italy, Sept. 14 / -- Ducati Motor Holding S.p.A., a leading manufacturer
of high performancemotorcycles, today announced record financial results for the
six months ended June 30, 1999, with net income at an all-time high of Lit. 11.8
billion (US$6.3 million).
As previously reported, the Company announced six-month consolidated sales
of Lit.330.9 billion (US$176.5 million), a 23.0% increase over the
Lit. 268.9 billion (US$143.4 million) for the first half of last year.
For the first six months, gross margin increased to 38.7% from 37.7% as
robust sales of high-margin accessories and apparel and stronger distribution
efficiencies offset pressure on average motorcycle margins resulting from the
continuing success of the Monster family which carries a lower-than-average
margin. First-half EBITDA (earnings before interest, tax, depreciation and
amortization) increased 36.5% to Lit. 64.7 billion (US$34.5 million) from
Lit. 47.4 billion (US$25.3 million) in the comparable period last year.
EBITDA as a percent of sales increased to 19.5% from 17.6%, making Ducati's
margin one of the highest EBITDA margins in the industry.
Net income for the six months was Lit.11.8 billion (US$6.3 million)
compared to Lit. 0.5 billion (US$0.2 million) in the prior year period. The
Company noted that net income for the first half of 1999 was impacted by
foreign exchange losses equivalent to Lit. 4.6 billion pre-tax
(US$2.5 million) due to a decision in the fall of 1998 to sell forward U.S.
Dollars and Pound Sterling to avoid currency risk. Net income for the first
half of 1998 was affected by non-recurring charges equal to Lit. 17.5 billion
pre-tax (US$9.3 million).
"We are extremely pleased with our record first-half results. The growing
awareness of the Ducati brand, particularly in key markets, drove strong
top-line gains that validate the sustained growth pattern that we achieved
over the past three years since the 1996 acquisition," said Carlo Di Biagio,
Ducati Chief Financial Officer. "Our brand-building efforts have allowed us
to include younger Ducatisti while at the same time maintaining our stronghold
with discriminating enthusiasts, all the while preserving the integrity of the
Ducati brand. Additionally, we are proving that our strategy of assuming
control over our distribution networks ensures a strong Ducati presence at the
local level and generates greater profitability. We remain pleased with our
success to date and are confident that our strategies position us correctly
for sustained future growth."
Ducati has experienced a significant rise in registrations, a measure of
retail sales, in those regions where the Company has greater control over its
distribution network. While final official data are not yet available, during
the first six months of 1999, unofficial registrations grew 17% on a global
basis, including approximately 37% in the U.S., 26% in Japan and Italy, 23% in
Germany, and 38% in the Benelux region.
Ducati's net debt decreased to Lit.186 billion (US$99 million) at June 30,
1999 from Lit.290 billion (US$154.7 million) at December 31, 1998. The
Company's net debt to total net capitalization ratio was 42.7% as of June 30,
1999.
Finally, on Sunday, September 12, at the Hockenheim racetrack in Germany,
Ducati locked in the 1999 World Superbike Championship in both the riders' and
manufacturers' categories with a stunning year-long performance by Ducati lead
rider Carl Fogarty, who won his fourth World Superbike title.
Founded in 1926, Ducati builds racing-inspired motorcycles characterized
by unique engine features, innovative design, advanced engineering and overall
technical excellence. Ducati has won eight of the last ten World Superbike
Championship titles and more individual victories than the competition put
together. The Company produces motorcycles in four market segments which vary
in their technical and design features and intended customers: Superbike,
Supersport, Monster and SportTouring. The Company's motorcycles are sold in
more than 40 countries worldwide, with a primary focus in the Western European
and North American markets.
Ducati Motor Holding S.p.A.
Consolidated Statements of Operations Data
(Lire in millions, US$ in thousands, except per share and share amounts)
Six Months Ended Six Months Ended
June 30, June 30, June 30, June 30, Percent
1999 1998 1999 1998 Change
Net sales Lit. 330,918 Lit. 268,938 US$176,510 US$143,450 +23.0%
Cost of
goods sold (202,829) (167,557) (108,188) (89,374)
Gross profit 128,089 101,381 68,322 54,076 +26.3%
Other operating
revenues 3,901 1,237 2,081 660
SG&A expenses (68,710) (54,934) (36,650) (29,302)
Other operating
income 1,293 -- 690 --
Depreciation &
amortization (21,956) (17,803) (11,711) (9,496)
Operating
income/(loss) 42,617 29,881 22,732 15,938 +42.6%
Financing
expense, net (17,642) (11,744) (9,410) (6,264)
Other non-
operating
income/
(expense),
net(1) 148 (17,789) 79 (9,488)
Profit/(loss)
before income
taxes and min.
interest 25,123 348 13,401 186
Income taxes (12,996) 246 (6,932) 131
Minority
interest (289) (138) (155) (74)
Net profit/
(loss) Lit.11,838 Lit.456 US$6,314 US$243
Earnings per
share Lit.74.94 Lit.3.26 US$0.04 US$0.00
Shares
outstanding157,962,963 140,000,000 157,962,963 140,000,000
Percent
Other Financial Data Change
Motorcycles
Produced
(Units) 19,006 14,270 +33.2%
Motorcycles
Sold (Units) 20,073 16,704 +20.2%
Unofficial
Registrations 19,200 16,442 +16.8%
(Units)
EBITDA 64,721 47,398 34,522 25,282 +36.5%
EBITDA Margin 19.5% 17.6%
(1) Extraordinary item in 1998 principally related to non-recurring
expenses for the cash settled warrant rights granted to the credit
institutions that arranged financing prior to the Company's initial public
offering and the write-off of debt issuance costs.
Note: On June 30, 1999, US$1 = 1,874.78 Italian lire.
On January 1, 1999, the conversion rate was fixed such that
Euro 1 = 1,936.27 Italian lire.
Ducati Motor Holding S.p.A.
Reclassified Consolidated Balance Sheet Data
(Lire in millions, except per share and share amounts)
Periods of six months ended Year ended
6/30/99 6/30/98 12/31/98
Lm % Lm % Lm %
Current assets
Cash and cash
equivalents 41,044 22,964 15,288
Trade receivables,
net 120,189 103,334 94,936
Inventories 107,375 76,121 111,110
Other current
assets 14,183 20,293 10,824
Total current
assets 282,791 42.2% 222,712 35.6% 232,158 38.4%
Non current assets
Property, plant and
equipment - net 90,574 84,292 87,422
Intangible fixed
assets, net 294,993 282,479 283,407
Equity investments 163 3 163
Other long-term
assets 1,216 35,675 957
Total non current
assets 386,946 57.8% 402,449 64.4% 371,949 61.6%
Total assets 669,737 100.0% 625,161 100.0% 604,107 100.0%
Current liabilities
Short-term bank
borrowings 10,041 30,289 50,661
Current portion of
long-term debt 11,938 9,437 12,738
Accounts payable
- trade 127,316 104,289 103,513
Income and other
taxes payables 18,095 10,204 5,108
Other current
liabilities 16,309 36,272 8,862
Provisions for risks
and charges -
current portion 14,811 24,999 21,186
Total current
liabilities 198,510 29.6% 215,490 34.5% 202,068 33.4%
Long-term liabilities
Long-term debt,
net of current
portion 204,791 218,504 242,327
Employees' leaving
entitlement 6,558 7,765 8,344
Deferred income
taxes 5,262 604 2,475
Other long-term
liabilities 57 34,534 62
Provisions for risks
and charges -
long-term portion 4,50 4,500 9,096
Total long-term
liabilities 221,168 33.0% 265,907 42.5% 262,304 43.4%
Total liabilities419,678 481,397 464,372
Total Group
shareholders'
equity 249,170 37.2% 143,223 22.9% 139,056 23.0%
Minority interests 889 541 679
Total shareholders'
equity 250,059 37.3% 143,764 23.0% 139,735 23.1%
Total liabilities
and shareholders'
equity 669,737 100% 625,161 100% 604,107 100%
Ducati Motor Holding S.p.A.
Reclassified Consolidated Balance Sheet Data
(US$ in thousands, except per share and share amounts)
Year
Periods ended of six months ended
6/30/99 6/30/98 12/31/98
US$ % US$ % US$ %
Current assets
Cash and cash
equivalents 21,893 12,249 8,155
Trade receivables,
net 64,108 55,118 50,638
Inventories 57,274 40,603 59,266
Other current
assets 7,565 10,824 5,773
Total current
assets 150,840 42.2% 118,794 35.6% 123,832 38.4%
Non current assets
Property, plant and
equipment - net 48,311 44,961 46,631
Intangible fixed
assets, net 157,348 150,673 151,168
Equity investments 87 1 87
Other long-term
assets 649 19,029 510
Total non current
assets 206,395 57.8% 214,664 64.4% 198,396 61.6%
Total assets 357,235 100% 333,458 100% 322,228 100%
Current liabilities
Short-term bank
borrowings 5,356 16,156 27,022
Current portion of
long-term debt 6,368 5,034 6,794
Accounts payable -
trade 67,910 55,627 55,213
Income and other
taxes payables 9,652 5,443 2,725
Other current
liabilities 8,699 19,347 4,727
Provisions for risks
and charges -
current portion 7,900 13,334 11,301
Total current
liabilities 105,885 29.6% 114,941 34.5% 107,782 33.4%
Long-term liabilities
Long-term debt,
net of current
portion 109,235 116,549 129,256
Employees' leaving
entitlement 3,498 4,142 4,451
Deferred income
taxes 2,807 322 1,320
Other long-term
liabilities 30 18,421 33
Provisions for risks
and charges -
long-term portion 2,400 2,400 4,852
Total long-term
liabilities 117,970 33.0% 141,834 42.5% 139,912 43.4%
Total liabilities 223,855 256,775 247,694
Total group
shareholders'
equity 132,906 37.2% 76,394 22.9% 74,172 23.0%
Minority interests 474 289 362
Total shareholders'
equity 133,380 37.3% 76,683 23.0% 74,534 23.1%
Total liabilities
and shareholders'
equity 357,235 100% 333,458 100% 322,228 100%
