Elamex Reports First Quarter 2001 Results
EL PASO, Texas--May 2, 2001--Elamex, S.A. de C.V. announced today its results for the quarter ended March 30, 2001.Sales decreased 30.3% to $35.8 million from $51.3 million in the first quarter of the previous year. Net loss for the quarter increased to $7.0 million from the $509,000 net loss reported for the same quarter one year ago. Net loss per share for the first quarter was $1.03 compared to the net loss per share of $0.07 for the same period of last year. There were 6,866,100 outstanding shares at the end of first quarter 2000 and 2001.
The decrease in net sales was primarily due to the elimination of the EMS net sales of $17.1 million in the first quarter of 2000, the EMS operation was sold in the second quarter of 2000. Sales from the first quarter of 2001,excluding EMS sales, increased by $1.6 million, or 4.6%, to $35.8 million from the $34.2 million reported for the same period in 2000, primarily in the assembly business.
The operating loss of $14.4 million for the first quarter of 2001 represents a $13.7 million increase in operating loss from the $678,000 operating loss reported for the first quarter of 2000. The operating loss for the first quarter 2001 is before minority interest of $4.4 million as shown on the attached consolidated income statement.
The increase in the operating loss for the first quarter of 2001 was primarily the result of the following:
| -- | A reserve of $5.6 million for the net cost associated with the closing of the Juarez plant belonging to the Company's joint venture with GE and previously announced in the press release dated April 27. Elamex's share of this pretax loss is approximately $2.8 million after the minority interest adjustment. |
| -- | The allowance for obsolete inventories in the same joint venture was increased by $1.0 million as a result of the same plant closing. This reserve is classified as a cost of goods sold on the consolidated income statement. Elamex's share of this pretax loss is approximately $501,000. |
| -- | An impairment charge of $2.4 million, primarily related to the JD Edwards computer system installation costs incurred in 1998. The current Company business structure does not require the full utilization of the JD Edwards system. |
| -- | A reserve of $1.3 million for severance costs resulting from a significant reduction in personnel at all levels of the Company. |
| -- | Net loss of $904,000 in the first quarter resulting from the ramp-up of the new plant in Celaya which belongs to the Company's joint venture with GE. The sales volume of this plant has not reached expectations due to lower than expected demand from its primary customer. Elamex's share of this pretax loss is approximately $450,000 after minority interest. |
| -- | An increase in allowance for bad debts of $650,000. |
| -- | A net increase of $1.8 million in operating losses from the Company's operating units. The increase in the operating loss in the first quarter 2001 was primarily due to the loss of revenue in the Company's turnkey/shelter operations associated with expired contracts or contracts which experienced reduced volumes due to economic conditions. Furthermore, the Company did not adequately reduce its expense base subsequent to the EMS sale in anticipation of growing its non-electronic manufacturing business, which did not materialize as planned. As reported in this first quarter 2001 earnings release, the Company has taken significant steps to reduce this excess expense base. The Company also incurred operating losses associated with a specific turnkey contract which experienced losses at the gross margin level, this contract is being terminated during the second quarter. Additionally, the Company experienced increased operating expenses associated with the ramp-up of a new assembly operation at its Kentucky metal stamping operation. |
Other income of $2.1 million for the first quarter of 2001 represents an increase of $2.5 million from the $416,000 loss reported for the same period a year ago. The increase of $2.5 million reflects the recognition of $2.4 million from the final Optimag earn-out and the reduction in net interest expense of $700,000, offset by a reduction of $600,000 related to a gain on the sale of securities and other income recorded in the first quarter of 2000.
"While we recognize the significance and impact of the net loss of $7.0 million reported in the first quarter, it is important to point out that the actions taken by the Company is consistent with its plan to dispose of non-productive operations and eliminate assets with questionable long-term value. We believe that a substantial portion of the restructuring charges have been identified and, where permitted by U.S. GAAP rules, reserved in the first quarter.
"In the second quarter 2001 it is anticipated that additional costs associated with severance payments and other costs of operations in process of closure and restructure have been identified and will impact Elamex's bottom line in the approximate amount of $1.1 million. It is the Company's intent to bring its expense base in line with revenues, streamline operations and identify business opportunities that will provide long-term value to its shareholders," said Richard P. Spencer, president and CEO of Elamex.
Elamex will conduct a group conference call on Thursday, May 3, 2001, at 11 a.m. ET to discuss first quarter 2001 results.
Elamex is a Mexican manufacturing service provider. The Company, in addition to production of plastic and stamped metal components, delivers high-quality finished assemblies to U.S. and Canadian Original Equipment Manufacturers (OEM) in the consumer, telecommunications, computer, industrial, medical and automotive industries. Elamex participates in a high-growth industry, where its unique competitive advantage results from its demonstrated capability to leverage low cost, highly productive labor, strategic North American locations, recognized world-class quality and proven ability to combine high technology with labor intensive manufacturing processes.
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(In Thousands of U.S. Dollars, except per share amounts)
(Unaudited)
13 Weeks ended
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March 30, March 31,
2001 2000
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Net sales $ 35,757 $ 51,326
Cost of sales 37,048 48,750
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Gross (loss) profit (1,291) 2,576
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Operating expenses:
General and administrative 3,351 2,729
Selling 513 525
Re-structuring charges 9,249 --
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Total operating expenses 13,113 3,254
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Operating loss (14,404) (678)
Other income (expense):
Interest income 485 112
Interest expense (634) (957)
Other, net (138) 429
Gain on sale of subsidiaries 2,368 --
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Total other income (expense) 2,081 (416)
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Loss before income taxes
and minority interest (12,323) (1,094)
Income tax benefit (854) (220)
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Loss before minority interest (11,469) (874)
Minority interest in loss
of subsidiaries 4,421 365
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Net loss $ (7,048) $ (509)
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Basic and diluted loss
per common share $ (1.03) $ (0.07)
Weighted average shares
outstanding 6,866,100 6,866,100
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ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In Thousands of U.S. Dollars)
(Unaudited)
March 30, December 31,
2001 2000
----------- -----------
Assets
Current assets $ 73,644 $ 76,775
Property, plant and
equipment, net 52,804 55,108
Other assets, net 10,380 10,485
----------- -----------
$ 136,828 $ 142,368
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Liabilities and Stockholders' Equity
Current liabilities $ 38,602 $ 34,667
Long-term debt and liabilities 28,477 26,455
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Total liabilities 67,079 61,122
Minority interest (3,947) 474
Stockholders' equity 73,696 80,772
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$ 136,828 $ 142,368
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