Denison International Meets Q3 2001 Analysts' Earnings Expectations; Q3 2001 EPS equal to Q3 2000, Year to Date 2001 EPS up 17% versus 2000
MARYSVILLE, Ohio--Oct. 23, 2001--Denison International plc today reported results for its third quarter and nine months ended September 30, 2001.Quarterly Results
For the current quarter ended September 30, 2001, the Company's net sales were $36.6 million, very similar to net sales recorded in the third quarter of 2000 of $36.7 million. Restated at 2000 foreign currency exchange rates, third quarter 2001 net sales increased to $37.6 million, a 2.4% increase over 2000 results.
Net income was $3.2 million, also very similar to net income of $3.3 million recorded for the comparable quarter a year ago. Diluted earnings per share for the third quarter of $0.30 were equal to third quarter 2000 results for the comparable quarter a year ago.
Commenting on third quarter results, President and CEO David Weir said, "Results for the quarter were similar with results for last year and in line with our original targets, despite a rapid deterioration in the North American market and continued slowing in Europe. Business in our Asia-Pacific operations remained quite buoyant."
Gross margin as a percent of sales increased to 35.2% in the current third quarter, from 34.7% a in the third quarter a year ago. Efficiencies and cost reductions in the manufacturing facilities, partially offset by the impact of higher cost US products overseas and increased R&D spending, were the primary reasons for the margin increase in the third quarter of 2001 versus 2000. SG&A, as a percent of sales, was 23.6% for the third quarter of 2001 versus 23.1%.
Order receipts slowed in the third quarter declining 9.1% (6.3% on a currency-adjusted basis) from a year ago to $35.8 million. North American order receipts were down versus the third quarter of 2000 by 26.4%, while European orders decreased 10.2%. Orders and business gains continued in the third quarter for the Company's Asia-Pacific operations, recording order receipts favorable to 2000 of 44.5%. On a volume basis, excluding the impact of the strong dollar, European orders decreased by 8.1%, and the gain in order for the Asia-Pacific region grew to 56.1%. Order backlog at September 30, 2001 was $28.6 million as compared to $35.3 million at September 30, 2000.
Nine Month Results
For the nine months ended September 30, 2001, net sales increased 5.9% to $120.4 million versus net sales of $113.7 million for the comparable period of 2000. Restated at 2000 exchange rates, net sales were up 11.0% for the nine months ended September 30, 2001 as compared to the previous year.
Gross margin, as a percent of sales, increased to 35.3% for the nine months ended September 30, 2001, from 34.9% a year ago. The year-to-date 2001 gross margin reflects the impact of cost efficiencies partially offset by increased R&D spending and higher cost of US dollar based products. SG&A, as a percent of sales, declined to 22.4% from 22.6% recorded for 2000.
Net income for the nine months ended September 30, 2001 increased to $11.5 million compared with $10.3 million for the comparable 2000 period. Net income per diluted share for the nine months ended September 30, 2001 increased 17% to $1.09 per share as compared to $0.93 per share for the same period in 2000.
Year to date order receipts were $117.7 million, down 5% versus the first nine months of 2000. On a volume basis, after adjusting the order receipts to 2000 currency rates, year to date 2001 order receipts were only 0.3% unfavorable to the same period in 2000. Year to date North American order receipts were down versus the same period of 2000 by 12.5%, while European orders decreased 5.3% and Asia-Pacific orders were favorable to the same period of 2000 by 13.4%. On a volume basis, excluding the impact of the strong dollar, European orders increased by 0.5% and Asia-Pacific orders increased by 23.9%.
Segment Results
Sales in North America declined 14.3% to $10.6 million for the current quarter. Sales in the Asia-Pacific region were up 4.7% to $5.4 million (sales adjusted for currency exchange rates were up 14.3% for the current quarter to $5.9 million), reflecting improving economic conditions in the region and increased penetration in the Asian marketplace. Sales in Europe increased by 6.8% in the current quarter versus 2000 to $20.7 million, and were favorable to third quarter 2000 by 9.0% after adjusting for the change in currency rates.
North America reported operating income of $0.4 million for the current quarter, compared to operating income of $.5 million for the third quarter of 2000, resulting from increased R&D spending versus 2000. Operating income in the Asia-Pacific region was $0.5 million compared to operating income in the third quarter of 2000 of $0.2 million. European operating income decreased 1.4%, or $.1 million, to $3.3 million for the current quarter from $3.4 million recorded a year ago.
Year to date North American sales increased by 1.4% to $38.4 million, while Asia-Pacific sales rose 7.8% to $15.8 million from 2000 levels (net sales rose 18.6% to $17.4 million on a currency rates adjusted basis). Year to date European net sales were $66.2 million, an 8.2% increase over the same period of 2000. Currency adjusted European net sales were $70.1 million, a 14.6% increase over the first nine months of 2000.
North America reported operating income of $2.3 million for the first nine months of 2001 versus $2.9 million for the same period in 2000, reflecting the increase in R&D spending year to date 2001 versus 2000. Year to date operating income for the Company's European operations was $12.1 million, up $2.1 million or 21.5% from the same period in 2000. The Company's Asia-Pacific operations recorded operating income of $1.4 million, up 157% from the operating income reported for the same period in 2000.
CEO Comments and Outlook
Weir continued, "We are pleased with the revenue and profit gains in the year to date results despite the strong US dollar and poor economic conditions. With the current state of the global economy and world political situations, forecasting future results with any certainty is practically impossible. Nevertheless, we expect the results for the full year of 2001 to exceed those of 2000. Great attention is being paid to managing our manufacturing and operating costs and inventories to the fluctuating demand for products. Our balance sheet is strong with cash exceeding borrowings by over $30 million."
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, October 24, 2001 at 10 a.m. to discuss its third 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. October 24, 2001 through 12:30 p.m. Eastern Standard Time on October 29, 2001. The phone number for the replay is (888) 203-1112 (International investors dial: (719) 457-0820). Enter confirmation number 426353 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.
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DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
USD-(000's)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------------
2001 2000 2001 2000
---------- ------------------------- -----------
Net Sales $ 36,612 $ 36,744 $ 120,400 $ 113,736
Cost of Sales 23,739 24,005 77,934 74,049
---------- ---------- ----------- -----------
Gross Profit 12,873 12,739 42,466 39,687
% 35.2% 34.7% 35.3% 34.9%
S,G&A 8,653 8,483 26,916 25,753
---------- ---------- ----------- -----------
Operating Income 4,220 4,256 15,550 13,934
% 11.5% 11.6% 12.9% 12.3%
Other Income /
(expense) 207 27 171 170
Net Interest Income 233 342 707 475
---------- ---------- ----------- -----------
Income Before Taxes 4,660 4,625 16,428 14,579
Tax Provision 1,441 1,334 4,885 4,269
---------- ---------- ----------- -----------
Net Income $ 3,219 $ 3,291 $ 11,543 $ 10,310
========== ========== =========== ===========
Basic Earnings
per Share $ 0.31 $ 0.30 $ 1.09 $ 0.93
Diluted Earnings
per Share $ 0.30 $ 0.30 $ 1.09 $ 0.93
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
USD-(000's)
September 30, December 31,
2001 2000
-------------- ------------
Current assets:
Cash & cash equivalents $ 38,284 $ 32,097
Accounts receivable, net 33,713 33,387
Inventories 39,870 37,968
Other current assets 3,879 4,495
------------------------------
Total current assets 115,746 107,947
Property, plant & equipment, net 26,773 24,341
Other assets 13,759 12,106
------------- -------------
Total assets $ 156,278 $ 144,394
============= =============
Current liabilities:
Notes payable to bank $ 8,123 $ 6,560
Accounts payable and other
accrued liabilities 35,012 33,575
------------- -------------
Total current liabilities 43,135 40,135
Noncurrent liabilities 18,251 19,301
Shareholders equity:
Retained earnings 100,928 89,385
Other shareholders equity (6,036) (4,427)
------------------------------
Total shareholders equity 94,892 84,958
Total liabilities and
shareholders equity $ 156,278 $ 144,394
============= =============
Denison International plc
Segment Information
($000) Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ---------------------
2001 2000 2001 2000
-------- -------- -------- --------
NET SALES
Europe 20,668 19,344 66,223 61,215
North America 10,574 12,342 38,395 37,881
Asia-Pacific 5,370 5,130 15,782 14,637
Corporate - (72) - 3
-------- -------- -------- --------
Consolidated 36,612 36,744 120,400 113,736
GROSS EARNINGS
Europe 8,113 7,937 27,247 24,370
North America 3,080 3,119 10,432 10,323
Asia-Pacific 1,877 1,683 5,324 4,875
Corporate (197) - (537) 119
-------- -------- -------- --------
Consolidated 12,873 12,739 42,466 39,687
OPERATING INCOME
Europe 3,328 3,375 12,076 9,943
North America 410 494 2,280 2,894
Asia-Pacific 520 224 1,368 533
Corporate (38) 163 (174) 564
-------- -------- -------- --------
Consolidated 4,220 4,256 15,550 13,934