Denison International Ends Year with Solid Performance; Q4 Net Income and EPS More than Doubled
MARYSVILLE, Ohio--Feb. 20, 2001--Denison International plc today reported solid results for its fourth quarter and year ended ended December 31, 2000. The Company reports results both pre and post the Riva Calzoni Oleodinamica S.p.A. ("Calzoni") acquisition, which was completed in April 2000.Quarterly Results
For the current quarter ended December 31, 2000, the Company's net sales increased 15% to $39.4 million, or 5% on a pre-acquisition basis, from $34.3 million recorded in the fourth quarter of 1999. Restated to mitigate the impact of foreign currency exchange rates, net pre-acquisition sales were up 16% to $39.7 million and up 26% to $43.2 million on a post-acquisition basis. Current fourth quarter sales performance reflects gains across all of the Company's operating segments, with particular strength in the Asia-Pacific region.
Gross margin as a percent of sales, increased more than two full percentage points to 34.1% in the current fourth quarter, from 32.0% a year ago in the fourth quarter, as a result of leveraging fixed expenses against higher volume and manufacturing productivity gains. SG&A, as a percent of sales, was nearly equal to the prior year at 22.8% from 22.4% recorded in the year earlier fourth quarter.
Net income more than doubled from a year ago for the current quarter to $3.5 million, or $0.32 per diluted share, compared to net income of $1.6 million and diluted earnings per share of $0.14 for the comparable quarter a year ago. Net income, restated at 1999 exchange rates, increased 143% to $4.0 million, or $0.37 per diluted share.
The company generated strong free cash flow from operations of $3.6 million (after adjusting for currency translations) for its current fourth quarter and $14.8 million for the full year 2000. The strong cash flow permitted the Company to repurchase 475,000 of its shares in the current quarter at a cost of $6.4 million and 550,000 shares for total consideration of $7.4 million for the full year 2000.
Order receipts continued strong in the fourth quarter, growing 11% (23% on a currency-adjusted basis) from a year ago to $37.0 million. Order backlog at year end also increased a robust 37% to $32.5 million, versus 1999 order backlog of $23.7 million.
The company also noted that its effective tax rate dropped from 48.7% to 32.3% in the current fourth quarter, as a result of increased profitability in certain regions where the company was able to offset income with previously unrecognized net operating loss carryforwards.
Commenting on the results, President and CEO David Weir said, "Denison was able to post healthy sales growth of nearly 15% in the current quarter, despite the negative currency impact created by the weak Euro. Equally important, as a result of improved operating efficiencies and a higher gross margin, we were able to double both our net income and EPS for the fourth quarter."
Full Year Results
For the year ended December 31, 2000, net sales increased 13% to $153.1 million (6% on a pre-acquisition basis), versus sales of $135.5 million for the comparable period of 1999. Restated at 1999 exchange rates, pre-acquisition sales were up 13% for the full year 2000, and 21% on a post-acquisition basis.
Gross margin as a percent of sales, increased to 34.7% for the calendar year 2000, from 33.3% a year ago, also the result of production and cost efficiencies. SG&A, as a percent of sales, declined to 22.7% from 23.6% recorded for 1999, principally resulting from higher volume and cost reductions previously noted.
Net income for the current year increased 66% to $13.8 million, or $1.25 per diluted share, compared with $8.3 million, or $0.74 per diluted share for the comparable 1999 period. Net income per diluted share for the year 2000, restated at 1999 exchange rates, increased to $1.38.
Segment Results
Sales in North America rose 7% to $11.1 million for the current quarter. Sales in the Asia-Pacific region were exceptionally strong, up nearly 40% to $6.4 million, reflecting improving economic conditions in the region and increased penetration in the Asian marketplace. Post-acquisition sales in Europe increased by 13% in the current quarter versus 1999, but were down by nearly 5% on a pre-acquisition basis as a result of the weakening Euro. After adjusting for the change in currency rates, pre-acquisition sales were, in fact, up nearly 13%.
North America reported a near breakeven operating income of ($0.16) million for the current quarter, compared to operating income of $0.5 million for the fourth quarter of 1999. Operating income in the Asia-Pacific region was $0.6 million compared to $0.04 million recorded in the fourth quarter 1999. European operating income increased over 46%, or $1.3 million, to $4.0 million for the current quarter from $2.7 million recorded a year ago. On a currency adjusted, pre-acquisition basis, European operating income for the fourth quarter was up 67%, or $1.8 million, versus 1999.
Year to date sales in North America rose by 20% or by $8.0 million, to $48.9 million versus of $40.9 million in 1999. Sales in the Asia-Pacific region increased 20%, or by $3.5 million to $21.0 million. Post-acquisition sales in Europe increased by 8% year to date 2000 versus 1999, but were down by 5% on a pre-acquisition basis as a result of the weakening Euro. After adjusting for the change in currency rates, pre-acquisition European sales increased by 8%.
North America reported operating income of $2.9 million for the current year, compared to operating income of $0.6 million for 1999. Operating income in the Asia-Pacific region was $1.2 million compared to an operating loss of ($0.02) million recorded in 1999. European operating income increased 13% to $14.2 million from $12.6 million recorded a year ago. On a currency adjusted, pre-acquisition basis, European operating income for the current year was $15.2 million, a 21% increase over 1999.
CEO Comments and Outlook
Weir continued, "Denison's performance rebounded nicely from 1999 -- both from a topline and a bottom line perspective. We were successful in reducing our cost structure and increasing both our manufacturing efficiency and gross margin, all the while keeping up with demand in a year of double-digit sales growth. Our Calzoni acquisition, which was accretive in its first year, has also proven to be an excellent strategic and financial fit."
Weir concluded, "We ended the year with a strong order backlog, no long-term debt and over $32 million in cash and investments. While we are cautious regarding how the perceived general economic slowdown in the US will impact us, at the present time we have not experienced any slowdown in our North American business. In fact, order backlog remains quite strong for this market segment - up 21% over the backlog at 1999 year end. We believe, assuming no deterioration of our North American business, that with our geographic sales diversity and financial stability, we can achieve continued growth. With a healthy balance sheet and strong cash flow, we will continue to pursue opportunistic acquisitions to improve our global market position, and invest in the internal development of new products, both of which should build value for all of our stakeholders."
Denison International plc , with executive offices in Marysville, Ohio and London, England is an industrial manufacturer and servicer of highly engineered hydraulic fluid power systems and components. The Company, which employs more than 1,000 associates at its manufacturing and sales operations in 16 countries, services a broad array of original equipment manufacturers, hydraulic distributors and end-users. Denison products are used in a multitude of end use applications from mobile equipment used in the construction, demolition, agricultural, mining and utility industries to machinery used in industrial manufacturing processes and marine equipment used in both commercial and military sea vessels. For more information about our products and services, please visit us at www.denisonhydraulics.com
NOTICE: Denison will hold a conference call on Wednesday, February 21, 2001 at 10 a.m. to discuss its fourth quarter and full year results. Denison President and CEO, David L. Weir and Bruce A. Smith, Denison Chief Financial Officer, will host the call. The call will be broadcast live over the Internet and can be accessed at http://www.denisonhydraulics.com. If you are unable to participate during the live webcast, the call will be archived and available at the same address. The Company will also continue to offer its traditional conference call telephonic replay from approximately 12:30 p.m. February 21, 2001 through 12:30 p.m. Eastern Standard Time on February 26, 2001. The phone number for the replay is (888) 203-1112 (International investors dial: (719) 457-0820). Enter confirmation number 747544 to access the replay.
Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Act of 1995. Such forward-looking statements, including statements in the CEO Comments paragraph regarding future prospects and performance, are subject to certain risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
USD-(000's)
(Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Net Sales $ 39,359 $ 34,289 $ 153,095 $ 135,543
Cost of Sales 25,944 23,319 99,993 90,430
--------- --------- --------- ---------
Gross Profit 13,415 10,970 53,102 45,113
% 34.1% 32.0% 34.7% 33.3%
S,G&A 8,982 7,674 34,735 31,966
--------- --------- --------- ---------
Operating Income 4,433 3,296 18,367 13,147
% 11.3% 9.6% 12.0% 9.7%
Other Income /
(expense) 109 (251) 279 (693)
Net Interest Income 555 155 1,030 354
--------- --------- --------- ---------
Income Before
Taxes 5,097 3,200 19,676 12,808
Tax Provision 1,648 1,558 5,917 4,522
--------- --------- --------- ---------
Net Income $ 3,449 $ 1,642 $ 13,759 $ 8,286
========= ========= ========= =========
Basic Earnings
per Share $ 0.32 $ 0.15 $ 1.25 $ 0.75
Diluted Earnings
per Share $ 0.32 $ 0.15 $ 1.25 $ 0.74
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
USD-(000's)
December 31, December 31,
2000 1999
--------- ---------
Current assets:
Cash & cash equivalents $ 32,097 $ 31,174
Accounts receivable, net 33,387 28,267
Inventories 37,968 31,453
Other current assets 4,495 3,566
--------- ---------
Total current assets 107,947 94,460
Property, plant & equipment, net 24,341 24,519
Other assets 12,106 9,841
--------- ---------
Total assets $ 144,394 $ 128,820
========= =========
Current liabilities:
Notes payable to bank $ 6,560 $ 5,586
Accounts payable and other
accrued liabilities 33,575 22,341
--------- ---------
Total current liabilities 40,135 27,927
Noncurrent liabilities 19,301 19,833
Shareholders equity:
Retained earnings 96,450 82,691
Other shareholders equity (11,492) (1,631)
--------- ---------
Total shareholders equity 84,958 81,060
Total liabilities and
shareholders equity $ 144,394 $ 128,820
========= =========
Denison International plc
Segment Information
Three Months Twelve Months
($000) Ended December 31 Ended December 31
-------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
Net Sales
---------
Europe 21,911 19,349 83,130 77,116
North America 11,052 10,354 48,933 40,923
Asia-Pacific 6,396 4,586 21,032 17,504
-------- -------- -------- --------
Consolidated 39,359 34,289 153,095 135,543
Gross Earnings
--------------
Europe 8,839 6,842 33,275 30,799
North America 2,222 2,702 12,584 9,013
Asia-Pacific 2,354 1,426 7,243 5,301
-------- -------- -------- --------
Consolidated 13,415 10,970 53,102 45,113
Operating Income
----------------
Europe 3,974 2,722 14,222 12,558
North America (155) 533 2,926 608
Asia-Pacific 614 41 1,219 (19)
-------- -------- -------- --------
Consolidated 4,433 3,296 18,367 13,147