Denison International Meets Q4 2001 Earnings Expectations; Q4 2001 EPS lower than Q4 2000, 2001 EPS up 4% versus 2000
MARYSVILLE, Ohio--Feb. 20, 2002--Denison International plc today reported results for its fourth quarter and twelve months ended December 31, 2001.Quarterly Results
For the current quarter ended December 31, 2001, the Company's net sales were $35.0 million, 11% lower than net sales recorded in the fourth quarter of 2000 of $39.4 million.
Net income was $2.2 million, or $1.2 million lower than net income of $3.4 million recorded for the comparable quarter a year ago. Diluted earnings per share for the fourth quarter of $.21 were $.11 per share lower than fourth quarter 2000 results.
Commenting on fourth quarter results, President and CEO David Weir said, "Results for the quarter were in line with our revised expectations and reflect the slowing economy in both North America and Europe. We realized that we would not be able to maintain the results of the same period of last year, which were a record for our fourth quarter in both revenues and earnings."
Gross margin as a percent of sales increased to 36.4% in the current fourth quarter, from 34.1% in the fourth quarter a year ago. Efficiencies and cost reductions in the manufacturing facilities, partially offset by the impact of higher cost US products overseas, were the primary reasons for the margin increase in the fourth quarter of 2001 versus 2000. SG&A, as a percent of sales, was 27.9% for the fourth quarter of 2001 versus 22.8% for the fourth quarter of 2000, as the Company experienced increased insurance premiums on its casualty policies and expenses related to its manufacturing operations in China, not in operation in the fourth quarter of 2000.
Order receipts slowed in the fourth quarter declining 15.4% from a year ago to $31.3 million. North American order receipts were down versus the fourth quarter of 2000 by 19.4%, while European orders decreased 15.4% and Asia-Pacific orders decreased 5.7%. On a volume basis, excluding the impact of currency fluctuations, European orders decreased by 16.8%, and the decrease in order receipts for the Asia-Pacific region reversed to a gain of 1.0%. Order backlog at December 31, 2001 was $24.2 million as compared to $28.6 million at September 30, 2001.
Twelve Month Results
For the twelve months ended December 31, 2001, net sales increased 1.5% to $155.4 million versus net sales of $153.1 million for the comparable period of 2000. Restated at 2000 exchange rates, net sales were up 5.4% for the twelve months ended December 31, 2001 as compared to the previous year.
Gross margin, as a percent of sales, increased to 35.5% for the twelve months ended December 31, 2001, from 34.7% a year ago. The increased 2001 gross margin reflects the impact of cost and manufacturing efficiencies partially offset by increased R&D spending and higher cost of US dollar based products. SG&A, as a percent of sales, increased to 23.6% from 22.7% recorded for 2000, resulting from the increased expenses incurred in the current fourth quarter.
Net income for the twelve months ended December 30, 2001 declined slightly to $13.7 million compared with $13.8 million for the comparable 2000 period. Net income per diluted share for the twelve months ended December 30, 2001 increased 4.0% to $1.30 per share as compared to $1.25 per share for the same period in 2000, resulting from the impact of the Company's repurchase of 475,000 of its shares late in 2000.
2001 order receipts were $149.1 million, down 7.4% versus 2000. On a volume basis, after adjusting the order receipts to 2000 currency rates, 2001 order receipts were 3.7% unfavorable to the same period in 2000. 2001 North American order receipts were down versus the same period of 2000 by 14.1%, while European orders decreased 7.6% and Asia-Pacific orders were favorable to the same period of 2000 by 9.2%. On a volume basis, excluding the impact of the strong dollar, European orders declined by 3.5% and Asia-Pacific orders increased by 18.9%.
Cash flow from operations for the twelve months ended December 31, 2001 was strong, totaling $21.2 million versus $16.6 million for the twelve months ended December 31, 2000.
Segment Results
Sales in North America declined 12.0% to $9.7 million for the current quarter. Sales in the Asia-Pacific region declined 2.4% to $6.2 million; however, sales adjusted for currency exchange rates were up 3.7% for the current quarter to $6.6 million. The increase in business volume for the Company's Asia-Pacific region reflects improving economic conditions in the region and increased penetration by the Company in the Asian marketplace. Sales in Europe declined by 12.9% in the current quarter versus 2000 to $19.1 million.
North America reported an operating loss of $0.7 million for the current quarter, compared to an operating loss of $0.2 million for the fourth quarter of 2000, resulting from increased R&D spending and lower production versus 2000. Operating income in the Asia-Pacific region was $0.6 million for the fourth quarter of 2001, equal to the results recorded for the same period of 2000. European operating income decreased 30.4%, or $1.2 million, to $2.7 million for the current quarter from $3.9 million recorded a year ago, resulting from lower production at the Company's manufacturing facilities, partially offset by cost reductions implemented.
For the twelve months ended December 31, 2001 North American sales decreased by 1.7% to $48.1 million, while Asia-Pacific sales rose 4.7% to $22.0 million from 2000 levels (net sales rose 14.1% to $24.0 million on a currency rates adjusted basis). Full year 2001 European net sales were $85.3 million, a 2.6% increase over the same period of 2000. Currency adjusted European net sales were $88.8 million, a 6.9% increase over the same period of 2000.
North America reported operating income of $1.6 million for the twelve months ended December 31, 2001 versus $2.7 million for the same period in 2000, reflecting the impact of lower sales and production and a increase in R&D spending year to date 2001 versus 2000. Full year 2001 operating income for the Company's European operations was $14.8 million, up $1.0 million or 6.9% from the same period in 2000. The Company's Asia-Pacific operations recorded operating income of $2.0 million, up 77.9% from the operating income reported for the same period in 2000.
CEO Comments and Outlook
Weir continued, "Our strong start to 2001 helped offset the effects of the very weak fourth quarter and enabled us to achieve sales revenues up 1.5% for the year with a 4% increase in earnings per share. These results were achieved against an industry background that was down 10%-15% in 2001. In the fourth quarter we acquired the California operations of a US distributor and also further strengthened our balance sheet with cash now exceeding borrowings by $32 million. This puts us in a good position to weather any further uncertainties in the economy."
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 Thursday, February 21, 2001 at 10 a.m. to discuss its fourth quarter and 2001 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. February 21, 2002 through 12:30 p.m. Eastern Standard Time on February 26, 2002. The phone number for the replay is (888) 203-1112 (International investors dial: (719) 457-0820). Enter confirmation number 495682 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)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------- ---------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net Sales $ 35,046 $ 39,359 $155,446 $153,095
Cost of Sales 22,273 25,944 100,207 99,993
-------- -------- -------- --------
Gross Profit 12,773 13,415 55,239 53,102
% 36.4% 34.1% 35.5% 34.7%
S,G&A 9,773 8,982 36,689 34,735
-------- -------- -------- --------
Operating Income 3,000 4,433 18,550 18,367
% 8.6% 11.3% 11.9% 12.0%
Other Income /(expense) (62) 109 109 279
Net Interest Income 551 555 1,258 1,030
-------- -------- -------- --------
Income Before Taxes 3,489 5,097 19,917 19,676
Tax Provision 1,310 1,648 6,195 5,917
-------- -------- -------- --------
Net Income $ 2,179 $ 3,449 $ 13,722 $ 13,759
-------- -------- -------- --------
-------- -------- -------- --------
Basic Earnings per Share $ 0.21 $ 0.32 $ 1.30 $ 1.25
Diluted Earnings per Share $ 0.21 $ 0.32 $ 1.30 $ 1.25
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
USD-(000's)
December 31, December 31,
2001 2000
------------ ------------
Current assets:
Cash & cash equivalents $ 43,245 $ 32,097
Accounts receivable, net 27,715 33,387
Inventories 39,257 37,968
Other current assets 4,680 4,495
------------ ------------
Total current assets 114,897 107,947
Property, plant & equipment, net 27,912 24,341
Other assets 14,006 12,106
------------ ------------
Total assets $ 156,815 $ 144,394
------------ ------------
------------ ------------
Current liabilities:
Notes payable to bank $ 10,545 $ 6,560
Accounts payable and other
accrued liabilities 31,729 33,575
------------ ------------
Total current liabilities 42,274 40,135
Noncurrent liabilities 18,316 19,301
Shareholders equity:
Retained earnings 103,107 89,385
Other shareholders equity (6,882) (4,427)
------------ ------------
Total shareholders equity 96,225 84,958
Total liabilities and
shareholders equity $ 156,815 $ 144,394
------------ ------------
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Denison International plc
Segment Information
($000) Three Months Ended Twelve Months Ended
December 31 December 31
--------------------- ---------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Net Sales
---------
Europe 19,082 21,911 85,305 83,126
North America 9,723 11,052 48,118 48,933
Asia-Pacific 6,241 6,396 22,023 21,033
Corporate -- -- -- 3
--------- --------- --------- ---------
Consolidated 35,046 39,359 155,446 153,095
Gross Earnings
--------------
Europe 7,612 8,725 34,859 33,095
North America 2,242 2,165 12,674 12,488
Asia-Pacific 2,818 2,321 8,142 7,196
Corporate 101 204 (436) 323
--------- --------- --------- ---------
Consolidated 12,773 13,415 55,239 53,102
Operating Income
----------------
Europe 2,710 3,892 14,786 13,835
North America (709) (196) 1,571 2,698
Asia-Pacific 630 590 1,998 1,123
Corporate 369 147 195 711
--------- --------- --------- ---------
Consolidated 3,000 4,433 18,550 18,367