Denison International Posts Strong Quarterly and Year to Date Revenues; Q2 and Year to Date Net Income Up 12% and 19% Versus 2000
MARYSVILLE, Ohio--July 24, 2001--Denison International plc today reported results for its second quarter and six months ended June 30, 2001.Quarterly Results
For the current quarter ended June 30, 2001, the Company's net sales increased 2.8% to $41.1 million from $40.0 million recorded in the second quarter of 2000. Restated at 2000 foreign currency exchange rates, net sales were up 8.7% to $43.4 million.
Net income increased to $4.3 million as compared to net income of $3.9 million for the comparable quarter a year ago. Diluted earnings per share for the second quarter increased 17% to $0.41 as compared to $0.35 per share for the comparable quarter a year ago.
Commenting on second quarter results, President and CEO David Weir said, "This was a strong quarter for Denison, which was achieved despite a slow down in the North American marketplace and further strengthening of the dollar against the Euro and Asian currencies. Our main concern as we proceed forward through the remainder of the fiscal year is the overall weakness in the North American economy and its impact on the economies in our Europe and Asia-Pacific operations. Our decline in North American orders in the quarter was less than the stated results of our competition as strength in the oil, gas drilling and mining sectors helped to offset the weakness of the general economy in the North American markets."
Gross margin as a percent of sales, decreased to 33.7% in the current second quarter, from 35.1% a year ago in the second quarter, as a result of additional spending for R&D versus a year ago, and the impact of the strengthening US dollar and its impact on the cost of US dollar based products in the Company's European and Asia-Pacific operations. SG&A, as a percent of sales, was 20.2% versus 22.1% recorded in the year earlier second quarter.
Order receipts slowed in the second quarter versus previously recorded gains, declining 13.3% (8.0% on a currency-adjusted basis) from a year ago to $37.4 million. North American order receipts were down versus the second quarter of 2000 by 12.3%, while European orders decreased 13.5% and Asia-Pacific orders declined 14.8%. On a volume basis, excluding the impact of the strengthening dollar, European orders decreased by 5.7% and Asia-Pacific orders decreased by 6.9%. Order backlog at June 30, 2001 was $29.1 million as compared to $34.5 million at June 30, 2000.
Six Month Results
For the six months ended June 30, 2001, net sales increased 8.8% to $83.8 million versus sales of $77.0 million for the comparable period of 2000. Restated at 2000 exchange rates, net sales were up 15.1% for the six months ended June 30, 2001 as compared to the previous year.
Gross margin, as a percent of sales, decreased to 34.1% for the six months ended June 30, 2001, from 35.6% a year ago, also the result of the increased R&D spending and higher cost of US dollar based products that impacted margins in the second quarter. SG&A, as a percent of sales, declined to 20.5% from 23.0% recorded for 2000, principally resulting from cost reductions mainly in the Company's US operations.
Net income for the six months ended June 30, 2001 increased to $8.3 million compared with $7.0 million for the comparable 2000 period. Net income per diluted share for the six months ended June 30, 2001 increased 25% to $0.79 per share as compared to $0.63 per share for the same period in 2000. Net income per diluted share for the six months ended June 30, 2001, restated at 2000 exchange rates, increased 32% to $0.83 per share.
Year to date order receipts were $81.7 million, down 3.4% versus the first six months of 2000. On a volume basis, after adjusting the order receipts to 2000 currency rates, year to date 2001 order receipts were 2.3% favorable to the same period in 2000. Year to date North American order receipts were down versus the same period of 2000 by 6.2%, while European orders decreased 3.1% and Asia-Pacific orders were equal to 2000 results. On a volume basis, excluding the impact of the strengthening dollar, European orders increased by 4.3% and Asia-Pacific orders increased by 10.7%.
Segment Results
Sales in North America rose 9.4% to $13.6 million for the current quarter. Sales in the Asia-Pacific region were strong, up nearly 12% to $5.8 million (sales adjusted for currency exchange rates were up 23.3% for the current quarter to $6.4 million), reflecting improving economic conditions in the region and increased penetration in the Asian marketplace. Sales in Europe decreased by 3% in the current quarter versus 2000, but, after adjusting for the change in currency rates, European net sales were, in fact, up by over 4%.
North America reported operating income of $0.8 million for the current quarter, compared to operating income of $1.1 million for the second quarter of 2000, resulting from increased R&D spending versus 2000. Operating income in the Asia-Pacific region was $0.7 million compared to operating income in the second quarter of 2000 of $0.4 million. European operating income increased 8.5%, or $.3 million, to $4 million for the current quarter from $3.7 million recorded a year ago.
Year to date North American sales increased by 8.8% to $27.8 million, while Asia-Pacific sales rose 9.4% to $10.4 million from 2000 levels (net sales rose 20.8% to $11.5 million on a currency rates adjusted basis). Year to date European net sales were $45.6 million, an 8.7% increase over the same period of 2000. Currency rates adjusted European net sales were $49.1 million, a 17% increase over the first six months of 2000.
North America reported operating income of $1.8 million for the first six months of 2001 versus $2.5 million for the same period in 2000, reflecting the increase in R&D spending versus 2000. Year to date operating income for the Company's European operations was $8.7 million, up $1.9 million or 27% from the same period in 2000. The Company's Asia-Pacific operations recorded operating income of $.9 million, up 134% from the operating income reported for the same period in 2000.
CEO Comments and Outlook
Weir continued, "We are pleased with our strong gains in revenues and income for both the quarter and year to date considering the state of the North American economy and the continued impact on our results from the strengthening dollar. With the third quarter being historically our lowest quarter for revenues and earnings, we do not expect at this time to have any major fluctuation from market estimates. While we have limited visibility into the fourth quarter at this time, we are hopeful that we can achieve the range of earnings for 2001 previously stated. The continued decline or improvement in the North American economy, and its impact on the economies in Europe and Asia will be a critical determining factor as we proceed into the final stages of our fiscal year. Our cash generation is good to date for 2001 with additional free cash generated of $4.0 million after adjusting for currency rates and payments on the Lokomec acquisition earnout. We continue to closely manage our North American costs against the reducing incoming order trend."
Denison International plc , with executive offices in Marysville, Ohio and London, England is an industrial manufacturer and servicer of highly engineered hydraulic fluid power systems and components. The Company, which employs more than 1,000 associates at its manufacturing and sales operations in 16 countries, services a broad array of original equipment manufacturers, hydraulic distributors and end-users. Denison products are used in a multitude of end use applications from mobile equipment used in the construction, demolition, agricultural, mining and utility industries to machinery used in industrial manufacturing processes and marine equipment used in both commercial and military sea vessels. For more information about our products and services, please visit us at www.denisonhydraulics.com
NOTICE: Denison will hold a conference call on Wednesday, July 25, 2001 at 10 a.m. to discuss its second quarter results. Denison President and CEO, David L. Weir and Bruce A. Smith, Denison Chief Financial Officer, will host the call. The call will be broadcast live over the Internet and can be accessed at http://www.denisonhydraulics.com. If you are unable to participate during the live webcast, the call will be archived and available at the same address. The Company will also continue to offer its traditional conference call telephonic replay from approximately 12:30 p.m. July 25, 2001 through 12:30 p.m. Eastern Standard Time on July 30, 2001. The phone number for the replay is (888) 203-1112 (International investors dial: (719) 457-0820). Enter confirmation number 763237 to access the replay.
Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Act of 1995. Such forward-looking statements, including statements in the CEO Comments paragraph regarding future prospects and performance, are subject to certain risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
USD-(000's)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Net Sales $ 41,071 $ 39,959 $ 83,788 $ 76,992
Cost of Sales 27,232 25,930 55,241 49,619
--------- --------- --------- ---------
Gross Profit 13,839 14,029 28,547 27,373
% 33.7% 35.1% 34.1% 35.6%
S,G&A 8,298 8,821 17,217 17,695
--------- --------- --------- ---------
Operating Income 5,541 5,208 11,330 9,678
% 13.5% 13.0% 13.5% 12.6%
Other Income/(expense) (9) 41 (36) 143
Net Interest Income 337 35 474 133
--------- --------- --------- ---------
Income Before Taxes 5,869 5,284 11,768 9,954
Tax Provision 1,560 1,427 3,444 2,935
--------- --------- --------- ---------
Net Income $ 4,309 $ 3,857 $ 8,324 $ 7,019
========= ========= ========= =========
Basic Earnings per Share $ 0.41 $ 0.35 $ 0.79 $ 0.63
Diluted Earnings per Share $ 0.41 $ 0.35 $ 0.79 $ 0.63
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
USD-(000's)
June 30, December 31,
2001 2000
----------- -----------
Current assets:
Cash & cash equivalents $ 32,976 $ 32,097
Accounts receivable, net 33,897 33,387
Inventories 37,402 37,968
Other current assets 3,490 4,495
----------- -----------
Total current assets 107,765 107,947
Property, plant & equipment, net 24,314 24,341
Other assets 13,269 12,106
----------- -----------
Total assets $ 145,348 $ 144,394
=========== ===========
Current liabilities:
Notes payable to bank $ 7,254 $ 6,560
Accounts payable and other
accrued liabilities 33,378 33,575
----------- -----------
Total current liabilities 40,632 40,135
Noncurrent liabilities 17,462 19,301
Shareholders equity:
Retained earnings 97,709 89,385
Other shareholders equity (10,455) (4,427)
----------- -----------
Total shareholders equity 87,254 84,958
Total liabilities and shareholders equity $ 145,348 $ 144,394
=========== ===========
Denison International plc
Segment Information
($000) Three Months Ended Six Months Ended
June 30 June 30
------------------- ------------------
2001 2000 2001 2000
--------- --------- -------- ---------
Net Sales
---------
Europe 21,633 22,302 45,555 41,913
North America 13,628 12,453 27,821 25,562
Asia-Pacific 5,810 5,204 10,412 9,517
--------- --------- -------- ---------
Consolidated 41,071 39,959 83,788 76,992
Gross Earnings
--------------
Europe 8,891 8,526 18,935 16,499
North America 2,980 3,743 6,192 7,666
Asia-Pacific 1,968 1,760 3,420 3,208
--------- --------- -------- ---------
Consolidated 13,839 14,029 28,547 27,373
Operating Income
----------------
Europe 4,029 3,713 8,653 6,797
North America 818 1,080 1,825 2,517
Asia-Pacific 694 415 852 364
--------- --------- -------- ---------
Consolidated 5,541 5,208 11,330 9,678