Amcast Reports Fiscal 2001 Second Quarter Results
DAYTON, Ohio--March 23, 2001--Amcast Industrial Corporation, today reported significant sales and earnings declines for its fiscal 2001 second quarter, ending March 2, as previously forecast, according to Byron O. Pond, recently-elected president and chief executive officer.Sales for the quarter were $123.0 million compared to $150.0 million in 2000. Net income was a loss of $6.7 million (80 cents per diluted share) compared to a profit of $0.3 million (3 cents per diluted share) in the comparable period of fiscal 2000.
For the first six months of fiscal 2001, sales were $260.9 million compared to $296.1 million in the first six months of 2000. Net income for the first six months of fiscal 2001 was a loss of $6.7 million (79 cents per diluted share) compared to a profit of $2.6 million (28 cents per diluted share) in the comparable period of 2000.
"Results for the third fiscal quarter ending May 31 also are expected to show a loss but one of lesser magnitude," Mr. Pond said. "Due to the losses, it is unlikely that the company will be in a position to declare any future cash dividends for at least the remainder of fiscal 2001."
Leo W. Ladehoff, chairman of the board, concurred saying, "Amcast will actively seek to change the form of the company's financing programs to better fund operations, pursue attractive growth prospects and enable resumption of dividends to shareholders as earnings improve."
While the company is current in its payment obligations under its $150 million bank credit agreement, the financial results for the quarter caused the company to be out of compliance with certain financial covenants in the agreement, Mr. Ladehoff said. The returned former chairman stated that the company has received a proposal from its banks to provide additional borrowings required by the company under temporary financing arrangements while the company is arranging alternative long-term financing. The company is presently negotiating the terms of such temporary arrangements. The company anticipates that only limited additional borrowings may be required in its third quarter.
Mr. Pond joined the company as CEO on February 14, replacing John H. Shuey, who resigned. As previously reported, Mr. Pond said current weak market demand is depressing sales for Amcast's Engineered Components Segment. Declining automotive production in North America and auto manufacturers' new model launch delays in Europe are having an important impact on the company's performance. Additionally, Amcast's Flow Control Products segment is being adversely affected by slowness in construction markets and increased price competition. The company also attributed lower results to higher medical and benefit costs, certain expenses related to the management change, increased energy surcharges in North America and Europe and adjustments to the provision for Italian taxes.
Mr. Pond said, "We are coping with a major downturn in U.S. auto production which show no signs of abating soon. Thus, we have trimmed our automotive work force 25 percent to synchronize sales volume and manpower levels. Our inventories will be aggressively reduced to bring them into line over the next few months. These actions will negatively impact second-half operating performance, but they will strengthen our balance sheet. Also, our re-energized, company-wide, cost reduction program aims to significantly lessen spending rates and variable costs during the balance of our fiscal year."
Flow Control products, primarily copper and brass plumbing items, which mainly service plumbing wholesalers and mass merchandisers, suffered from competitive pricing skirmishes during the quarter, Mr. Pond said. "We are the market share leader in this usually-excellent-return, niche business and expect market conditions to return to higher levels of profitability for Amcast and the industry in the near future."
The new CEO, a seasoned auto industry operating executive, said he has completed a thorough analysis of Amcast's North American and European manufacturing facilities. Affirming the company's long-term growth potential, he said, "I have been favorably impressed by the talents of our people and many of the initiatives underway to improve performance. Many areas of the company's operations offer major opportunities for still greater efficiency gains."
Mr. Pond continued, "This company is in promising businesses serving important sectors of the economy. Automotive aluminum content continues to grow in response to energy conserving vehicle design initiatives. Amcast, an aluminum technology leader, stands to benefit from new applications for its products."
STATEMENTS OF INCOME
($ in thousands except per share amounts)
Three Months Ended Six Months Ended
---------------------- ---------------------
March 4 February 27 March 4 February 27
2001 2000 2001 2000
---------- ---------- ---------- ----------
Net sales $ 122,966 $ 150,009 $ 260,910 $ 296,088
Cost of sales 112,998 131,378 234,654 259,146
---------- ---------- ---------- ----------
Gross Profit 9,968 18,631 26,256 36,942
Selling, general and
administrative expenses 15,848 15,006 28,045 28,609
---------- ---------- ---------- ----------
Operating Income (Loss) (5,880) 3,625 (1,789) 8,333
Equity in (income) loss of
joint venture and other
(income) and expense 855 (389) 1,610 (637)
Interest expense 3,321 3,547 6,520 6,370
---------- ---------- ---------- ----------
Income (Loss) before Income
Taxes and Cumulative Effect
of Accounting Change (10,056) 467 (9,919) 2,600
Income taxes (3,319) 183 (3,264) 1,021
---------- ---------- ---------- ----------
Income (Loss) before
Cumulative Effect of
Accounting Change (6,737) 284 (6,655) 1,579
Cumulative effect of
accounting change 983
---------- ---------- ---------- ----------
Net Income (Loss) $ (6,737) $ 284 $ (6,655) $ 2,562
========== ========== ========== ==========
Basic earnings per share
before cumulative effect
of accounting change $ (0.80) $ 0.03 $ (0.79) $ 0.18
========== ========== ========== ==========
Basic earnings per share $ (0.80) $ 0.03 $ (0.79) $ 0.28
========== ========== ========== ==========
Diluted earnings per share
before cumulative effect
of accounting change $ (0.80) $ 0.03 $ (0.79) $ 0.18
========== ========== ========== ==========
Diluted earnings
per share $ (0.80) $ 0.03 $ (0.79) $ 0.28
========== ========== ========== ==========
Average number of shares
outstanding- Basic 8,413 8,949 8,409 8,952
Average number of shares
outstanding- Diluted 8,417 8,956 8,414 8,959
CONDENSED BALANCE SHEETS
($ in thousands)
March 4 August 31
2001 2000
----------- -----------
Current Assets
Cash and cash equivalents $ 7,955 $ 3,062
Accounts receivable 79,280 85,041
Inventories 90,626 77,512
Other current assets 20,243 16,304
----------- -----------
198,104 181,919
Property, Plant and Equipment 228,257 226,857
Goodwill 49,032 49,707
Other Assets 22,866 21,903
----------- -----------
$ 498,259 $ 480,386
=========== ===========
Current Liabilities
Current debt $ 136,692 $ 4,628
Accounts payable 76,595 84,285
Other current liabilities 35,415 38,013
----------- -----------
248,702 126,926
Long-Term Debt 52,457 147,273
Deferred Liabilities 52,152 50,233
Shareholders' Equity 144,948 155,954
----------- -----------
$ 498,259 $ 480,386
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