Hastings Manufacturing Announces 2000 Results
HASTINGS, Mich., March 12 Hastings Manufacturing Company
(Amex: HMF) today announced its financial results for the year ended December
31, 2000.
The Hastings, Mich.-based manufacturer of piston rings and other
automotive products reported net sales of $35.3 million for 2000, compared
with net sales of $37.4 million in 1999. The Company attributed the decline
to overall softness in the North American automotive market, which was
partially offset by a modest increase in export volume. The sales decrease in
2000 also reflects a reduction in Casite(R) additive sales, which are now
recorded through a joint venture rather than through the Company's net sales.
Hastings Manufacturing reported a net loss of $459,156, or $0.61 per
share, in 2000, compared with net income of $326,770, or $0.42 per share, in
1999. In addition to the lower sales volume, the Company said that higher
operating and interest expense, along with a shift in its sales mix to lower-
margin markets, contributed to the net loss. The results were in line with a
statement issued by the Company in February 2001.
"Automotive manufacturers and, by extension their suppliers, suffered from
a downturn in the domestic market during the fourth quarter, and Hastings
Manufacturing was no exception," said Andrew Johnson, co-chief executive
officer. "This downturn, in combination with an increase in our expenses,
contributed to reduced margins. We have taken the necessary cost-containment
steps to return to profitability which, in concert with the shift to lean
manufacturing begun in 1999 and an increased investment in sales and
marketing, are aimed at helping us post improved results in 2001."
In February 2001, the Hastings' board of directors voted to suspend
indefinitely the Company's regular quarterly cash dividend. The Company also
announced temporary layoffs and permanent staff reductions in an effort to
eliminate more than $1 million in costs. Restructuring costs associated with
the staff reductions are expected to be non-material. The board noted that
increased healthcare and legal expenses, along with slower sales in the second
half of 2000, prompted the cost-containment measures.
"We are investing in marketing and sales programs designed to broaden our
distribution and increase the mix of products we sell to our customers," said
Mark Johnson, co-chief executive officer. "Hastings is working to implement
an alliance similar in nature to our existing Canadian marketing program that
will allow us to expand our product offering to the domestic aftermarket. We
will continue to explore opportunities that will allow us to improve our
product penetration in key market segments."
The Company's gross profit margin remained comparable to the prior year at
27.0 percent. A shift in the sales mix to lower-margin markets, combined with
adjustments to the Hasting's labor standard costs during the fourth quarter,
put pressure on the Company's realized gross margin. The gross profit margin
during the fourth quarter of 2000 was 16.9 percent, down from 30.0 percent in
1999, due to the change in sales mix, the change in the labor standard costs,
increases in overhead costs, and higher group-health insurance costs. The
Company anticipates an improved gross profit performance through 2001.
Operating expenses increased slightly during 2000, reflecting increased
investment in advertising, travel and selling support, as well as higher
health insurance costs and legal fees. These increases were offset by lower
printed material and trade advertising costs, as well as significant decreases
in personnel support costs during the latter half of 2000. During the fourth
quarter of 2000, operating expenses were 5.5 percent lower, primarily due to
decreases in agents' commissions, professional and legal fees, and general
personnel costs.
"In light of continued softness in the automotive market, we must continue
to find ways to maximize our operating efficiencies while not losing momentum
on our sales and marketing initiatives," Andy Johnson said. "Our focus on
lean manufacturing and continuous improvement serve as an excellent roadmap
for all our associates, and we rely on each of them to help pinpoint areas
where we can drive waste out of our systems."
Hastings Manufacturing noted that production slowdowns and plant closures
in the automotive industry during the fourth quarter will likely have a
negative impact in its sales during the first quarter of 2001. The Company
expects lower demand as original equipment manufacturers reduce their
inventory to meet softening consumer demand.
Hastings Manufacturing Company serves the automotive parts market with
piston rings, mechanics' specialty tools and additives for engines,
transmissions and fuel systems. The piston rings and mechanics' specialty
tools, available under the "HASTINGS" brand name, are marketed primarily
through independent warehouse distributors, retailers, and on a limited basis,
direct to original equipment manufacturers. The additives products available
under the "CASITE(TM)" brand name are marketed through The Casite Company, a
joint venture that markets both directly and through independent
representatives. Canadian distribution of all products is handled through a
wholly owned subsidiary, Hastings, Inc. located in Barrie, Ontario. During
1999, Hastings began to distribute and administer products for other U.S.-
based suppliers into the Canadian market. These products complement the
current piston ring offerings as to both distribution channels and customer
base.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this news release include certain
predictions and projections that may be considered forward-looking statements
under securities laws. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices.
Hastings Manufacturing Company And Subsidiaries
Condensed Consolidated Statements of Operations
Year ended December 31,
2000 1999
Net Sales $35,255,428 $37,411,532
Cost of Sales 25,741,410 27,251,022
Gross Profit 9,514,018 10,160,510
Operating Expenses:
Advertising 277,397 276,042
Selling 3,121,756 3,076,052
General & Administrative 5,609,458 5,592,600
Total Operating Expenses 9,008,611 8,944,694
Operating Income (Loss) 505,407 1,215,816
Other Expenses (Income):
Interest expense 753,679 671,723
Other, net (60,116) (32,677)
Total Other Expenses (Income) 693,563 639,046
Income (Loss) Before Taxes (188,156) 576,770
Income Tax Expense (Benefit) 271,000 250,000
Net Income (Loss) (459,156) 326,770
Net Income Per Share of Common Stock:
Basic (0.61) 0.42
Diluted (0.61) 0.42
Average Shares Outstanding:
Basic 748,653 775,046
Diluted 748,653 775,046
