Hastings Manufacturing Announces First-Quarter Results
HASTINGS, Mich., April 30 Hastings Manufacturing Company
(Amex: HMF) today announced financial results for the first quarter ended
March 31, 2001.
The Hastings, Mich.-based manufacturer and marketer of piston rings and
other engine products reported net income of $67,621, or $0.09 per share, on
net sales of $8.7 million for the first quarter of 2001, compared with net
income of $282,551, or $0.37 per share, on net sales of $9.1 million for the
same period in 2000.
The Company attributed the decrease in sales to softness in the North
American original equipment and automotive-replacement parts markets.
Hastings said slightly higher export sales helped offset the decline in North
American volumes. Lower sales volumes, combined with a shift in the product
mix and increased marketing and employee-related expenses, contributed to
lower earnings versus the year-ago first quarter.
Hastings said the gross margin was 29.2 percent for the first quarter of
2001, compared with 30.7 percent for the same period last year, reflecting
lower overall sales and a change in the mix of products sold. Operating
expenses increased 6.3 percent in the 2001 first quarter, due primarily to
higher health insurance and employee-severance costs, as well as increased
investment in advertising and marketing. Hastings said the first-quarter
operating expenses included restructuring costs related to staff reductions as
well as marketing expenses for the launch of its new alliance to sell pistons.
"The entire automotive industry continues to face a difficult environment
in early 2001," said Andrew Johnson, co-chief executive officer of Hastings
Manufacturing. "Despite these difficult conditions, Hastings Manufacturing is
making steady progress in its efforts to maximize operating efficiencies and
improve profitability. The Company's move to lean manufacturing is helping us
perform more efficiently and our cost-containment plan, announced in February
2001, provided some initial benefits in the first quarter."
In February 2001, Hastings announced a plan to trim more than $1 million
in annual operating expenses and improve profitability. The plan included
temporary layoffs and permanent staff reductions, as well as other operational
improvements.
"We are gaining momentum in implementing these measures," said Mark
Johnson, co-chief executive officer. "Moving forward, we believe these cost-
containment measures, along with our continued focus on lean manufacturing,
should have a more significant impact on profitability in future quarters. At
the same time, we are continuing to invest in sales and marketing initiatives
aimed at increasing our market share during a time when other suppliers are
struggling."
During the first quarter of 2001, Hastings Manufacturing signed an
agreement with Karl Schmidt Unisia to market and distribute Zollner(R) brand
pistons in the domestic aftermarket and Mexico. Hastings said it would use
its nationwide sales force and distribution infrastructure to begin selling
Zollner pistons alongside its own well-known Hastings(R) brand of piston
rings.
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Operations
First quarter ended March 31,
2001 2000
Net Sales 8,704,362 9,067,402
Cost of Sales 6,166,855 6,283,916
Gross Profit 2,537,507 2,783,486
Operating Expenses:
Advertising 109,948 62,710
Selling 788,890 785,739
General & Administrative 1,413,230 1,327,174
Total Operating Expenses 2,312,068 2,175,623
Operating Income (Loss) 225,439 607,863
Other Expenses (Income):
Interest expense 170,498 151,772
Other, net (58,680) (18,460)
Total Other Expenses (Income) 111,818 133,312
Income (Loss) Before Taxes 113,621 474,551
Income Tax Expense (Benefit) 46,000 192,000
Net Income (Loss) 67,621 282,551
Net Income Per Share of Common Stock:
Basic 0.09 0.37
Diluted 0.09 0.37
Average Shares Outstanding:
Basic 745,046 759,551
Diluted 745,046 759,551
