Hastings Manufacturing Reports Improved Second-Quarter
Results
HASTINGS, Mich., Aug. 7 Fueled by strong operational
improvements, Hastings Manufacturing Co. (Amex: HMF) today reported sharply
higher net income on comparable sales for the second quarter ended June 30,
2001.
The Hastings, Mich.-based manufacturer and distributor of piston rings and
other engine products reported net income increased 96.7 percent to $450,111,
or $0.60 per share, in the second quarter of 2001, compared with net income of
$228,811, or $0.31 per share, in the second quarter of 2000. The Company
attributed the increase to improved productivity, operating efficiencies
achieved through its transition to lean manufacturing, and the effects of the
cost containment measures implemented in early 2001. Hastings said a shift in
the sales mix to higher-margin products also contributed to the earnings
improvements.
Net sales increased 1.2 percent to $9.9 million during the just-completed
quarter, up from $9.8 million in the same period in 2000. The increase
reflects growth in the domestic aftermarket, which was offset slightly by
decreases in other markets.
"Despite challenging conditions in the automotive markets, we were able to
nearly double our net income during the second quarter, which demonstrates
that our focus on cost containment and operational improvements was the right
course to follow," said Andrew Johnson, co-chief executive officer of Hastings
Manufacturing. "We were pleased to see increased sales activity in the second
quarter, and look for continued improvements in the second half of the year,
as we sharpen our focus on managing costs and improving profitability."
Hastings improved its gross margin to 32.3 percent during the just-
completed quarter, up from 30.2 percent in the same period in 2000. The
Company also reduced its operating expenses 6.7 percent on a quarter-over-
quarter basis by trimming advertising and general and administrative expenses.
Its operating margin improved from 5.7 percent in the year-ago quarter to 9.7
percent in the second quarter of 2001.
For the six months ended June 30, 2001, Hastings reported net income of
$517,732, or $0.69 per share, on sales of $18.6 million, compared with net
income of $511,362, or $0.68 per share, on sales of $18.9 million. The
Company credited its strong performance in the second quarter with offsetting
a weaker first quarter.
The increase helped Hastings Manufacturing pay down $1.2 million in debt
during the first half of 2001. The Company also generated $1.6 million in
cash from operations, a five-fold increase over the same period in 2000.
"The cost-containment measures put into place earlier this year have had a
positive impact on earnings and cash flow, and have strengthened our balance
sheet," said Mark Johnson, co-chief executive officer of Hastings
Manufacturing.
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
2001 2000 2001 2000
Net Sales $9,926,684 $9,809,855 $18,631,046 $18,877,257
Cost of Sales 6,722,492 6,850,208 12,889,347 13,134,124
Gross Profit 3,204,192 2 ,959,647 5,741,699 5,743,133
Operating Expenses:
Advertising 59,115 64,143 169,063 126,853
Selling 814,977 798,531 1,603,867 1,584,270
General &
Administrative 1,365,242 1,538,703 2,778,472 2,865,877
Non-recurring
restructuring and
relocation costs - - - -
Total Operating Expenses 2,239,334 2,401,377 4,551,402 4,577,000
Operating Income (Loss) 964,858 558,270 1,190,297 1,166,133
Other Expenses (Income):
Interest expense 182,147 179,227 352,645 330,999
Interest Income - - - -
Other, net 2,600 (4,768) (56,080) (23,228)
Total Other Expenses
(Income) 184,747 174,459 296,565 307,771
Income (Loss) Before Taxes 780,111 383,811 893,732 858,362
Income Tax Expense
(Benefit) 330,000 155,000 376,000 347,000
Net Income (Loss) 450,111 228,811 517,732 511,362
Net Income Per Share of
Common Stock:
Basic 0.60 0.31 0.69 0.68
Diluted 0.60 0.31 0.69 0.68
Average Shares Outstanding:
Basic 745,046 745,046 745,046 752,299
Diluted 745,046 745,046 745,046 752,299
Dividends Per Share of
Common Stock - 0.080 - 0.160
