Shiloh Industries Reports Second-Quarter and First Six-Months
Results
CLEVELAND, May 30 Shiloh Industries, Inc. ,
a leading manufacturer of engineered and welded blanks, stamped components and
modular systems for the automotive and heavy truck industries, today reported
results for the second quarter and the first six months of fiscal 2001. The
Company also announced it has signed an agreement for the sale of certain
assets and liabilities of its steel processing subsidiary, Valley City Steel.
For the second quarter ended April 30, 2001, net income decreased 71.7% to
$1.6 million, or $0.11 per basic and diluted share, from $5.5 million, or
$0.40 per basic and diluted share, for the second quarter of fiscal 2000.
Operating income for the second quarter of fiscal 2001 decreased by 35.0% to
$7.8 million, from $11.9 million in the second quarter of fiscal 2000.
Revenues for the second quarter of fiscal 2001 increased 4.3% to $172.8
million, from $165.7 million in the comparable period of fiscal 2000.
For the first six months ended April 30, 2001, net income decreased by
73.0% to $2.6 million, or $0.18 per basic and diluted share, compared with net
income of $9.7 million, or $0.69 per basic and diluted share, for the first
six months of fiscal 2000. Operating income for the first six months of
fiscal 2001 decreased by 29.0% to $14.6 million from $20.6 million for the
first six months of fiscal 2000. Revenues for the first six months of fiscal
2001 increased 10.6% to $339.1 million from $306.5 million for the first six
months of fiscal 2000.
During the second quarter of fiscal 2001, Shiloh identified an alternative
to its previously announced 100% sale of Valley City Steel. Rather than sell
100% of Valley City Steel as originally announced, Shiloh will sell certain
assets and liabilities in Valley City Steel and Shiloh will contribute certain
additional assets to a joint venture, which is contemplated by the purchase
agreement. As a result, during the second quarter of fiscal 2001 the Company
reduced its estimated asset impairment loss associated with the assets of
Valley City Steel being held for sale, which resulted in a $6.5 million after
tax increase to net income for the second quarter of fiscal 2001. The loss on
disposition is subject to adjustment upon closing of the Valley City Steel
transaction, which is expected to occur during the fourth quarter of fiscal
2001, and upon completion of a working capital audit. Net income was also
impacted during the quarter by operating losses of approximately $1.6 million
at Valley City Steel and Canton Tool & Die whose assets are being held for
sale. In addition, bad debt expense of $0.7 million was primarily incurred in
connection with certain steel industry customers.
The revenue increase primarily reflects additional revenue from the
Dickson Manufacturing acquisition and the start up of the Mexico facility --
Saltillo Welded Blank. Most of the Company's remaining operations experienced
revenue decreases as a result of a decline in sales in the automotive, light
truck and heavy truck industries, weakness in the steel industry and softness
in the tool & die sector.
Jack F. Falcon, President and CEO, said, "Our second quarter and first
half were disappointing. The primary challenge we face has to do with the mix
and volume of our products and services, given the softness in the auto sector
and precarious vehicle-production schedules. Our focus is to manage capital,
cash and debt and to align our operating costs with lower revenues from lower
production volumes. On the positive side, we saw revenue growth as a result
of the Dickson acquisition and the Saltillo start-up. We have also launched
the majority of our new products at Ohio Welded Blank. Costs in the rapidly
growing engineered welded blank business have been substantial during the
first six months of the year and we are focusing on stabilizing such costs, as
we position Shiloh in this growing market."
The Company recently signed an asset purchase agreement for the sale of
certain assets and liabilities of its steel-processing subsidiary, Valley City
Steel Company, to Viking Industries, a privately held Minority Business
Enterprise, headquartered in Cleveland, Ohio.
In connection with this transaction, Shiloh and Viking will form a joint
venture in which Shiloh will own a minority interest and Viking will own a
majority interest in the new entity. Subject to certain working capital
adjustments, Shiloh is selling for $12.4 million in cash certain assets of
Valley City Steel Company to Viking, which Viking will contribute to the joint
venture. Shiloh will also contribute certain assets and liabilities of Valley
City Steel to the joint venture. Shiloh will retain ownership of the land and
building where the operations of the joint venture will take place, and lease
these facilities to the joint venture. The transaction is expected to close
in the fourth quarter of fiscal 2001.
Valley City Steel is a full service steel processor t
hat had been owned by
Shiloh Industries since 1977. It is located in Valley City, Ohio and employs
approximately 115 people. Shiloh anticipates that the joint venture will
continue operations at this facility without significant personnel or
facilities changes. After the closing of the transaction the new entity will
continue to provide steel processing services to Shiloh Industries, Inc.
Commenting on the Valley City Steel transaction, Mr. Falcon said, "The
transaction involving Valley City Steel represents a pivotal step in the
Company's strategic restructuring program to reposition its resources to focus
on producing welded, stamped and engineered-metal products for the automotive
and light-truck sector. This is a win-win situation for everyone involved.
Our customers will benefit as Shiloh focuses its energies and resources on its
core business, while Viking Industries focuses on improving services and
increasing business volume at Valley City Steel as a Minority Business
Enterprise."
SHILOH INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands)
Three months ended Six months ended
April 30, April 30,
2001 2000 2001 2000
Revenues $172,836 $165,666 $339,078 $306,494
Cost of sales 160,812 140,094 307,394 260,701
Gross profit 12,024 25,572 31,684 45,793
Selling, general and
administrative expenses 15,028 13,642 27,821 25,215
Asset impairment (10,756) --- (10,756) ---
Operating income 7,752 11,930 14,619 20,578
Interest expense 5,476 3,220 11,090 6,698
Interest income 35 13 61 51
Other income (expense), net 28 65 310 1,534
Income before income
taxes 2,339 8,788 3,900 15,465
Provision for income taxes 772 3,247 1,287 5,784
Net income $1,567 $5,541 $2,613 $9,681
Earnings per share:
Basic Earnings
Per Share $ .11 $ .40 $ .18 $ .69
Basic Weighted Average Number
of Common Shares 14,798 13,973 14,798 13,973
Diluted Earnings
Per Share $ .11 $ .40 $ .18 $ .69
Diluted Weighted Average Number
of Common Shares 14,827 13,993 14,839 13,982
SHILOH INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
April 30, October 31,
2001 2000
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $8,103 $1,173
Accounts receivable, net 124,361 127,573
Income tax receivable 635 1,340
Inventories, net 81,883 69,006
Net assets held for sale 11,179 32,706
Deferred income taxes 8,998 13,492
Prepaid expenses 6,590 5,039
Total current assets 241,749 250,329
Property, plant and equipment, net 344,706 308,315
Goodwill, net 3,721 3,794
Other assets 12,704 10,447
Total assets $602,880 $572,885
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 88,991 $ 89,615
Short-term debt 4,045 ---
Advanced billings 1,293 581
Other accrued expenses 16,803 21,376
Total current liabilities 111,132 111,572
Long-term debt 280,100 251,545
Deferred income taxes 21,541 22,884
Long-term benefit liabilities 6,855 6,296
Other liabilities 866 815
Total liabilities 420,494 393,112
Stockholders' equity:
Common stock 148 148
Paid-in capital 53,924 53,924
Retained earnings 128,656 126,043
Other comprehensive income (loss) (342) (342)
Total stockholders' equity 182,386 179,773
Total liabilities and
stockholders' equity $602,880 $572,885
