Margate Reports Higher Year-End Sales,
Earnings
Net earnings increased 110% in 2000; Company warns of auto-related sales
slowdown in 2001
YALE, Mich., March 29 Boosted by increased productivity
and a growing customer base, Margate Industries, Inc. today
announced sharply higher earnings and increased sales for the year ended
December 31, 2000.
The Yale, Mich.-based provider of specialty services to the foundry
industry said net income more than doubled to $695,402, or $0.40 per share, on
net sales of $10.8 million in 2000, compared with net income of $331,839, or
$0.22 per share, on net sales of $9.6 million in 1999. Net income improved
110 percent and earnings per share grew 82 percent on a 12 percent increase in
sales over the prior year. The Company does not report fourth-quarter results
separately from year-end figures.
Margate attributed the earnings improvement in 2000 to higher sales and
increased efficiency at its foundry services operations, which provide
cleaning and finishing of foundry castings. The addition of a major new
customer, Waupaca Foundry, and increased business from other midwestern
foundries resulted in higher sales levels versus the prior year. Investments
in new equipment and technology helped the Company improve its efficiency and
quality in 2000, contributing to higher gross-margin levels compared with the
prior year.
Gross margin improved to 16.7 percent of sales in 2000, versus 10.8
percent of sales in 1999, reflecting efficiency gains from increased use of
automated equipment as well as improved productivity on the part of Margate's
employees. Operating income grew 216 percent versus the year-ago period,
reflecting improved gross profit levels and the Company's cost-management
efforts.
"I am very pleased with our results for the year 2000," said William H.
Hopton, president and chief executive officer of Margate Industries. "Our
efforts to improve service generated strong returns, which allowed us to
bolster our balance sheet and further strengthen the Company's operations.
Over the past few years, we have benefited from the trend toward increased
quality and testing requirements in the auto industry because many foundries
have chosen to outsource their finishing operations. As the economy slows, we
are well positioned to weather the downturn that is being forecast for the
automotive and heavy-equipment markets that many of our foundry customers
supply."
The Company said it expects sales at its foundry-services operations to be
lower in the first half of 2001, due mostly to the slowdown in the North
American automotive industry. Margate said it expects lower service revenues
in the coming year from its largest customer, New Haven Foundry, which makes
gray iron castings primarily for DaimlerChrysler. The Company said it has
moved aggressively to manage costs and increase sales from other customers,
but expects to post break-even performance at its services units in the first
two quarters of 2001.
Margate also reported that it is proceeding with its previously announced
strategy to merge with c-Spectra, Inc., a New York City-based provider of
broadband wireless telecommunications and Internet access systems. c-Spectra
is developing a technologically advanced global wireless network capable of
providing "last mile" Internet access in underdeveloped regions of the globe
where wire-based telecommunications infrastructure is lacking. Initial
deployment of its network has begun in Buenos Aires, Argentina and, after the
merger is completed, c-Spectra plans to expand its network in major South
American and European markets.
"The board of directors believes the proposed merger with c-Spectra
represents an excellent opportunity to enhance value for shareholders," Hopton
said. "The transaction will allow Margate shareholders to participate in an
attractive, early-stage broadband wireless telecommunications business. It
also enables us to diversify our operations and position the Company for
outside capital financing for growth."
Margate Industries employs approximately 200 at two wholly owned
subsidiaries, Yale Industries and Fort Atkinson Industries, which provide
cleaning, grinding, chipping and finishing of iron castings.
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 law. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially
including, but not limited to, the performance of the automotive industry,
certain customers and affiliated companies, as well as other economic,
competitive and technological factors involving the Company's operations,
markets, services, products and prices.
Margate Industries, Inc. and Subsidiaries
Consolidated Income Statements
Years Ended December 31, 2000, 1999, 1998
2000 1999 1998
Net Sales $10,757,042 $9,615,470 $9,627,510
Cost of Sales 8,959,043 8,568,312 8,851,386
Gross Profit 1,797,999 1,047,158 776,124
Selling, General &
Administrative Expenses 1,065,076 813,439 835,573
Related Party Services and
Sales Commissions 1,966 4,323
Operating Income 732,923 231,753 63,681
Dividend & Interest Income -
Net 156,902 103,643 87,893
Interest Expense (9,467) (31,445) (67,896)
Loss on abandonment of
leasehold improvements (143,214)
Other Income (Expense) 214,728 210,588 156,800
Earnings before Equity
Investment & Taxes 1,095,086 514,539 30,098
Provision for Federal Income
Taxes 399,684 182,700 (10,000)
Net Earnings (Loss) before
extraordinary item 695,402 331,839 (20,098)
Extraordinary Item -- gain on
sale of equity investee (net
applicable income taxes of
$84,000) 1,991,214
Net Income $695,402 $331,839 $1,971,116
Earnings per share (before
extraordinary item) $0.40 $0.22 $(0.01)
Extraordinary Item $1.31
Earnings per share $0.40 $0.22 $1.30