Newcor Reports First Quarter Results
BLOOMFIELD HILLS, Mich., May 10 Newcor, Inc. (Amex: NER)
announced today that sales for the quarter ended March 31, 2001, were $45.8
million, a decrease of $23.4 million, or 34.0%, compared with sales of $69.2
million for the same period of 2000. Sales declined in the automotive market
$12.9 million, a decrease of 33.0% from the prior year, and in the heavy-duty
truck market $6.2 million, or 37.0%. In addition, sales declined in the
agricultural market $2.1 million, or 28.0%, and in the Company's Special
Machines Group $2.2 million, or 36.0%.
Gross margin was $3.8 million, or 8.2%, of sales in the first quarter of
2001, as compared to gross margin in the first quarter of 2000 of $10.4
million or 15.0% of sales. The decreased gross margin from the prior year is
primarily due to the decline in sales, partially offset by cost reductions
implemented during the period. The gross margin percentage improved in the
heavy-duty truck market, due to a one-time expense of $0.7 million recorded in
the first quarter of 2000 from an early union contract settlement.
Selling, general and administrative expenses declined $1.2 million, or
20.0%, to $4.6 million in the quarter ended March 31, 2001, as compared to
$5.8 million for the comparable quarter of 2000. The decline in selling,
general and administrative expenses is due to ongoing cost reduction efforts.
The Company also incurred $300 thousand of professional fees related to
certain shareholder matters. Such matters have been resolved.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
were $1.4 million for the first quarter as compared to $7.1 million in the
first quarter of 2000. The reduction in EBITDA is primarily due to the
decline in sales across all markets. As of March 31, 2001, the Company had
borrowings under its bank line of credit of $8.5 million, and had $11.0
million of available credit remaining under its revolving credit agreement.
Net income for the first quarter was a loss of $(3.9) million, or $(0.79)
per share, as compared to a loss of $(0.1) million, or $(0.02) per share, in
the quarter ended March 31, 2000.
"As anticipated, we experienced softening in all markets this quarter as
compared to last year. This softening, coupled with certain lost business,
which occurred in the middle of last year, resulted in our sales decline for
the first quarter," stated James J. Connor, President and Chief Executive
Officer of Newcor, Inc. "We are continuing to actively pursue new business
opportunities to offset the impact on operating margins caused by the lower
sales. We are pleased by our progress with cost reductions and will continue
to focus on improving the Company's liquidity and cash flow."
Looking forward into the remainder of the year, Mr. Connor noted, "We see
continued softening in the heavy-duty truck market throughout the year. The
automotive market, after adjusting production for high inventory levels in the
first quarter, should show a slower decline for the balance of the year.
Agricultural sales are just starting to show some weakness as inventory
adjustments by OEMs will begin to take effect in the second quarter of 2001.
In our special machines segment, potential new orders are less likely as
pricing pressures are escalating and new machine orders are being deferred.
Our challenges for the remainder of the year will be to continue our
aggressive implementation of lean manufacturing principles throughout the
organization, eliminate waste and improve our cost structure."
Further information can be obtained from the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2001, which was filed with the
Securities and Exchange Commission today.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended
Mar 31, 2001 Mar 31, 2000
Sales $45,797 $69,179
Cost of sales 42,044 58,777
Gross margin 3,753 10,402
SG&A expenses 4,592 5,765
Amortization expense 1,034 1,030
Operating income (loss) (1,873) 3,607
Interest expense (3,642) (3,650)
Other professional fees (300) -
Other expense, net (139) (134)
Loss before income taxes (5,954) (177)
Income tax benefit (2,025) (60)
Net loss $(3,929) $(117)
Per share amounts:
Net loss - basic and diluted $(0.79) $(0.02)
Weighted average shares
outstanding 4,949 4,934
Other information:
Depreciation $2,287 $2,431
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Mar 31, 2001 Dec 31, 2000
Assets:
Current assets $53,309 $52,897
Property, plant and equipment, net 52,826 54,609
Cost in excess of assigned
value of acquired companies, net 66,778 67,812
Other assets 14,242 13,994
$187,155 $189,312
Liabilities and Shareholders' Equity:
Current portion of long-term debt $2,312 $2,312
Other current liabilities 30,179 36,175
Current liabilities 32,491 38,487
Long-term debt 142,812 134,943
Other liabilities 8,973 9,074
184,276 182,504
Shareholders' equity 2,879 6,808
$187,155 $189,312
