Newcor Reports Fourth Quarter and Full Year Results
BLOOMFIELD HILLS, Mich., March 30 Newcor, Inc. (Amex: NER)
announced today that sales for the quarter ended December 31, 2000 were $46.3
million, a decrease of $21.4 million or 32% compared with sales of $67.6
million for the same period of 1999. Market conditions softened in three of
the four markets serviced by the Company during the last quarter of 2000. The
decrease in sales is primarily due to a decline in sales in the heavy-duty
truck market of $10.2 million, or 51%, from the fourth quarter of the prior
year. Decreased sales in the automotive market of $9.0 million, or 26%, from
the prior year's fourth quarter also contributed significantly to the
shortfall. A decrease in the Company's Special Machines Group revenues of
$3.3 million, or 44%, from the prior year also affected sales in this year's
fourth quarter. These decreases were partially offset by an increase in the
Company's agricultural machined component sales of $1.2 million, or an
increase of 25% from the prior year.
For the year ended December 31, 2000, sales were $238.1 million as
compared to $258.5 million in the comparable period of 1999. The sales
decreases noted above accounted for the decline in sales for the full year
ended 2000 as compared to 1999. For the year ended December 31, 2000 as
compared to 1999, sales in the automotive market declined $6.4 million, or 5%,
sales in the heavy-duty truck market declined $19.6 million, or 26%, and sales
in the Company's Special Machines Group declined $3.3 million, or 13%. Sales
to the agricultural market increased $8.9 million, or 43%, which offset a
portion of the decline in the other three markets served by the Company.
Gross margin in the fourth quarter of 2000 was $3.0 million, or 6.5% of
sales, as compared to $8.8 million, or 13.1% of sales, in the fourth quarter
of 1999. The decreased margin and margin percentage from the prior year is
primarily due to the decline in sales in the heavy-duty truck market and in
the Company's Special Machines Group noted above. The Company has significant
fixed costs, particularly depreciation, amortization and operating lease
expenses, which cannot be adjusted as sales decline. Gross margins were
significantly affected by these fixed costs. For the year ended December 31,
2000, gross margin was $32.9 million or 13.8% of sales, compared with $39.8
million or 15.4% of sales for the same period in 1999. Factors affecting full
year results were similar to those affecting the quarter.
Selling, general and administrative expenses were reduced to $4.9 million
in the quarter ended December 31, 2000 as compared to $5.3 million for the
comparable quarter of 1999. Selling, general and administrative expenses
declined $4.7 million or 19% for the full year ended December 31, 2000 as
compared to 1999.
The Company recorded a charge of $1.3 million in the fourth quarter of
2000 for plant closure costs related to the consolidation of its Turn-Matic
subsidiary into another of the Company's operations.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
before non-recurring items (plant consolidation costs and impairment charges)
were $0.5 million for the fourth quarter as compared to $5.7 million in the
fourth quarter of 1999. The decline in EBITDA is primarily due to the
decreased sales and gross margin noted above. EBITDA before non-recurring
items was $21.8 million for the year ended December 31, 2000 compared to $23.1
million for the comparable 1999 period. EBITDA margin to sales before non-
recurring items was 9.2% for the full year of 2000, an improvement from 8.9%
in 1999, despite the sales decline of 8% for these periods.
Net income for the fourth quarter was a loss of $5.9 million or $(1.19)
per share as compared to a loss of $9.6 million or $(1.96) per share in the
quarter ended December 31, 1999. Net income and earnings per share for the
year ended December 31, 2000 were a loss of $6.6 million or $(1.33) per share
as compared to a loss of $11.6 million or $(2.36) per share in the prior year.
On January 25, 2001 and March 28, 2001, the Company amended its Senior
Credit Facility, extending the maturity date of the agreement to March 31,
2002 and easing certain restrictive covenants. The amended agreement reduced
the total commitment by the Company's lender reducing fees but left the
borrowing availability under the facility in place. As of December 31, 2000,
the Company had no borrowings and had $19.3 million of available credit under
its facility.
Cash flow for the full year showed continued diligence in monitoring
expenses, as at December 31, 2000 the Company had no borrowings under the
credit facility. EBITDA before non-recurring items of $21.8 million for the
year ended December 31, 2000 was used to finance capital expenditures of $7.6
million, to make scheduled term loan payments of $2.0 million and to make cash
interest payments of $13.8 million. Working capital contributed $1.5 million
of cash during the year ended December 31, 2000.
"Although we are disappointed with the losses in 2000, we are pleased that
even after considering the significant decline in sales experienced in the
fourth quarter, the EBITDA margin before non-recurring items increased from
1999 to 2000," stated James J. Connor, President and Chief Executive Officer
of Newcor, Inc. "We are encouraged by our progress to reduce costs and will
continue to aggressively reduce waste as the result of our implementing lean
manufacturing principles across the organization."
Looking forward, Mr. Connor noted, "The Company is facing a difficult year
in 2001. We expect the softness experienced during the fourth quarter of 2000
in the automotive and heavy-duty truck markets to continue or worsen in 2001.
In addition, we are seeing some indication of slowness in our agricultural
market sales. We will continue to aggressively reduce costs and to actively
pursue new business opportunities to offset the impact on operating margins
caused by the lower sales, however, adequate liquidity from our senior credit
facility will be of paramount importance in the coming year."
Further information can be obtained from the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, which was filed with the
Securities and Exchange Commission today.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2000 1999 2000 1999
Sales $46,258 $67,637 $238,115 $258,483
Cost of sales 43,257 58,791 205,257 218,709
Gross margin 3,001 8,846 32,858 39,774
SG&A expenses 4,908 5,321 20,028 24,736
Amortization expense 1,031 1,197 4,135 4,626
Impairment charge 8,521 8,521
Plant consolidation costs and
other 1,277 1,277 350
Operating income (loss) (4,215) (6,193) 7,418 1,541
Interest expense (3,630) (3,515) (14,403) (14,006)
Other professional fees (900) (2,450)
Other income (expense), net (142) (190) (540) (548)
Loss before income taxes (8,887) (9,898) (9,975) (13,013)
Income tax benefit (3,021) (306) (3,393) (1,433)
Net loss $(5,866) $(9,592) $(6,582) $(11,580)
Per share amounts:
Net loss - basic and diluted $(1.19) $(1.96) $(1.33) $(2.36)
Weighted average shares
outstanding 4,949 4,900 4,945 4,897
Other information:
Depreciation $2,357 $2,196 $8,924 $8,051
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Dec 31, 2000 Dec 31, 1999
Assets:
Current assets $52,897 $64,024
Property, plant and
equipment, net 54,609 58,777
Cost in excess of assigned
value of
acquired companies, net 67,812 71,947
Other assets 13,994 9,783
$189,312 $204,531
Liabilities and Shareholders'
Equity:
Current portion of long-term
debt $2,312 $2,000
Other current liabilities 36,175 46,121
Current liabilities 38,487 48,121
Long-term debt 134,943 133,933
Other liabilities 9,074 9,421
182,504 191,475
Shareholders' equity 6,808 13,056
$189,312 $204,531
