Elamex Reports Fourth Quarter Results
EL PASO, Texas--Feb. 15, 2001--Elamex S.A. de C.V. announced today results for the quarter and year ended Dec. 31, 2000.Sales of $40 million for the fourth quarter of 2000 decreased by $7.9 million (17%) compared to the fourth quarter 1999. Sales during the fourth quarter 1999 included sales from the divested EMS operation of $20 million, therefore, sales of the Company's continued operations in the fourth quarter of 2000 compared to the same quarter of 1999, increased by $12 million, a 43% increase.
Net loss for the fourth quarter was $166,000, compared with net income of $2.7 million for the same quarter of the prior year. Net loss per share for the quarter was $0.02 compared with net income of $0.40 for the same quarter in 1999.
For the year, sales increased to $175 million from $160 million in the prior year. Excluding sales from the EMS operation of $26 million in 2000 and $68 million in 1999, sales from continued operations grew from $92 million to $148 million, a 61% increase. Full year recognition of revenue from our Kentucky operation combined with strong internal growth in our operations drove the growth in sales.
Net income increased to $17.4 million compared with 4.3 million in the prior year. Earnings per share were $2.53 compared with $0.63 in the prior year. Weighted average shares outstanding were 6,866,100 in both fiscal 1999 and 2000. The results for the year included a $20.5 million pretax gain on the sale of the EMS operation in the second quarter, and an income tax benefit of $3.2 million for the year.
Gross profit for fourth quarter 2000 compared to the fourth quarter 1999 decreased by $4.4 million to a deficit gross profit of $256,000. This decrease resulted from continued operating problems in the Company's joint venture with General Electric (GE) in Cd. Juarez and from the loss of gross margin contribution from the sale of our EMS operation.
Gross profit for fiscal year 2000 of $2.6 million was significantly reduced when compared to $14.8 million for 1999. This $12.2 million decrease is the result of a $6.2 million decrease in contribution from the divestiture of the EMS operations and another $6 million decrease in gross profit primarily due to operating inefficiencies in our joint venture operation and to costs related to ramp up of new projects.
Operating expenses of $3.6 million for the fourth quarter decreased $161,000 from fourth quarter 1999. Operating expenses for fiscal year 2000 of $15 million (or 8.6% of sales) were similar as a percentage of sales when compared to operating expenses for 1999 with $13.3 million (or 8.3% of sales).
Total other income for the fourth quarter was primarily generated from $443,000 from recoveries of inventories from the sale of the EMS operation, $320,000 of additional earn out from the 1999 sale of Optimag and the remainder from other services. The increase of $20.9 million in other income from $2.2 million for 1999 to $23.1 million is primarily due to the gain of $20.5 million attributable to the divestiture of the Company's EMS operation during the second quarter of fiscal year 2000.
The remaining $3.4 million in other income was generated during fiscal year 2000 primarily from additional income earned from recoveries of obsolete inventories of $1 million, the Optimag earn out for $826,000, $600,000 from providing other non-recurring services, and the sale of securities for $475,000.
Hector M. Raynal, chief operating officer of the Company, commented that, "even though corrective actions have been taken and results are beginning to accrue, the results for the quarter of the Company were still disappointing. We are however moving aggressively to restore the company to operational profitability."
In particular, during the quarter, the Company focused its attention to turning its joint venture operation around on several fronts including:
| -- | Operations reduced personnel by 33 percent and re-implemented operational control processes, which resulted in immediate improvement trends in scrap generation and regrind usage, as well as reduction in overtime and operational expenses. |
| -- | Ariel Reyes joined the Company in November 2000 as the new general manager of the joint venture operations. He has had 33 years experience in manufacturing, including the start-up of new operations in several locations in Mexico. In addition, the joint venture hired a new controller in November 2000. |
| -- | An agreement was negotiated with a major customer to phase out two significantly non-profitable projects. |
| -- | The joint venture significantly improved its delivery performance with its major customers completely eliminating the need for air freight deliveries. |
| -- | The new facility in Celaya started its plastic molding operations at the end of the fourth quarter and is expected to generate significant growth during 2001. |
Fourth quarter results also reflect the operating costs associated with the start-up of two large projects in the Company's non-electronic contract assembly business. In order to further cut costs, the Company is tightening its manufacturing services focus to only encompass existing core competencies and increasing emphasis in selling labor services and facilities in Mexico, which has traditionally been its most profitable area of business.
The Kentucky metal stamping operation has largely worked out its material supply problems and is currently realizing improvements in operating efficiency, as well as reductions in overtime and air freight charges.
"During the past year we have refined our business model. We have identified areas requiring significant improvements in operational performance. We completed the year with record sales. We also reported significant operational losses. In response to these losses, we have implemented significant cost cutting measures. While these cost-cutting measures will result in restructuring charges in the first quarter, we anticipate a return to operational profitability by mid year," said Raynal.
As previously announced on Jan. 22, 2001, Richard P. Spencer, joined the Company as president and CEO, effective Feb. 1.
Elamex will host a conference call on Friday, Feb. 16, at 10:00 a.m. EST to discuss fourth quarter earnings. To participate, please call Dolores Sierra at 915/774-8252.
ELAMEX S.A. DE C.V. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In Thousands of U. S. Dollars)
(Unaudited)
Dec. 31, Dec. 31,
2000 1999
-------- --------
Assets
Current assets $ 76,775 $ 63,884
Property, plant and equipment, net 55,108 52,875
Other assets, net 10,485 10,465
-------- --------
$142,368 $127,224
======== ========
Liabilities and Stockholders' Equity
Current liabilities $ 41,313 $ 35,004
Long-term debt and liabilities 19,810 27,115
-------- --------
Total liabilities 61,123 62,119
Minority interest 474 1,677
Stockholders' equity 80,771 63,428
-------- --------
$142,368 $127,224
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ELAMEX S.A. DE C.V. AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands of U. S. Dollars, except per share amounts)
(Unaudited)
13 Weeks ended 52 Weeks ended
-------------------- ----------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
-------------------- ----------------------
Net sales $39,967 $47,899 $174,664 $160,051
Cost of sales 40,223 43,712 172,084 145,262
------- ------- -------- --------
Gross (loss) profit (256) 4,187 2,580 14,789
------- ------- -------- --------
Operating expenses:
General and
administrative 3,151 3,278 13,108 10,274
Selling 417 452 1,874 1,838
Research and development -- -- -- 1,228
------- ------- -------- --------
Total operating expenses 3,568 3,730 14,982 13,340
------- ------- -------- --------
Operating (loss) income (3,824) 457 (12,402) 1,449
Other income (expense):
Interest income 504 43 1,797 623
Interest expense (363) (649) (2,556) (1,375)
Other, net 1,110 27 3,351 397
Gain on sale
of subsidiaries -- 2,627 20,535 2,627
------- ------- -------- --------
Total other
income (expense) 1,251 2,048 23,127 2,272
------- ------- -------- --------
(Loss) income before
income taxes and
minority interest (2,573) 2,505 10,725 3,721
Income tax (benefit)
provision (1,150) (297) (3,203) 245
------- ------- -------- --------
(Loss) income before
minority interest (1,423) 2,802 13,928 3,476
Minority interest in loss
of subsidiaries 1,257 (65) 3,453 860
------- ------- -------- --------
Net (loss) income $(166) $2,737 $17,381 $4,336
======= ======= ======== ========
Basic and diluted (loss)
income per common share $(0.02) $0.40 $2.53 $0.63
Weighted average
shares outstanding 6,866,100 6,866,100 6,866,100 6,866,100
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