Amcast Reports Fiscal 2002 Second Quarter Results
DAYTON, Ohio--March 26, 2002--Amcast Industrial Corporation, today reported financial results for its fiscal 2002 second quarter ended March 3, 2002.Second quarter sales were $137.0 million, up 11% compared with $123.0 million in the fiscal 2001 second quarter. The Company began consolidating Casting Technology Company (CTC) after purchasing its minority partner's interest during the fiscal 2001 fourth quarter. If Amcast had consolidated CTC for the full prior year, sales would have increased by 6% in the second quarter.
Revenue increased due to newly-introduced products to U.S. automotive customers and a favorable global automotive product mix. This was partly offset by lower plumbing product sales due to overall demand, pricing and continued weakness in the commercial and industrial construction industries. Sales at Speedline, the Company's European operation, grew by 8% due to favorable volume and mix, which were slightly offset by foreign exchange. By segment for the quarter, Flow Control sales declined by 14% and Engineered Components sales rose by 23%. If CTC were consolidated in the prior-year quarter, Engineered Components sales would have increased by 14%.
The Company incurred a net loss of $4.9 million, or $0.57 per diluted share, in the fiscal second quarter versus a net loss of $6.7 million, or $0.80 per diluted share, in the comparable period of fiscal 2001. The prior-year quarter included unusual expense items of $1.9 million after tax. Profit growth from new product shipments to the U.S. automotive industry was more than offset by the impact of lower sales to the construction industry, manufacturing inefficiencies at Speedline and higher interest expense.
Year-to-date sales of $272.2 million were up 4% over the prior year. After adjusting CTC's consolidated sales to a comparable basis, sales would have decreased by 2%. This six-month sales shortfall resulted from the sales decline in the fiscal first quarter of this year due to a weaker global economy which was compounded by the September 11 terrorist attack. By segment, Flow Control showed a 12% drop in sales. The Engineered Components segment had an 11% sales increase, which becomes a 1% increase after adjusting for consolidating CTC. The year-to-date net loss of $10.4 million, or $1.21 per diluted share, compares unfavorably with the net loss of $6.7 million, or $0.79 per diluted share in the prior year.
The year-to-date pretax loss for the first six months was $13.8 million compared to a pretax loss of $9.9 million for the same period last year. Excluding unusual items, last year's pretax loss was $6.9 million. There were two major reasons for the $6.9 million unfavorable deviation to last year. The first was the $13.0 million inventory decline this year versus the $13.1 million inventory increase last year. This caused an absorption loss of approximately $4.6 million this year versus last year. The second reason was that interest expense was $2.5 million higher this year as compared to last year due mainly to higher interest rates because of our debt covenant non-compliance at the end of fiscal 2001's second quarter.
Byron O. Pond, President and Chief Executive Officer said, "The overall economy, while only recently beginning to show improvement, was still weak in our fiscal second quarter. North American light vehicle production decreased by 7% in our fiscal second quarter versus the first quarter. Even though quarterly operating earnings improved from the prior year our overall results are still disappointing."
Mr. Pond added, "We are continuing to keep our emphasis on lowering costs, improving quality, and building a stronger competitive edge. Currently, we are reorganizing our administrative functions in the U.S. to eliminate redundancy and increase our purchasing leverage. Also, progress continues in implementing the Amcast Production System as 27% of the U.S. workforce has been trained since the program began eight months ago. Our workforce is embracing these lean manufacturing principles and is implementing them in our production processes."
Leo W. Ladehoff, Chairman of the Board, remarking about the Company's financing said, "We are very close to finalizing a term sheet with our bank group that will extend the credit facilities' maturity date to September 2003. We expect this to occur within the next week. Further, we anticipate having the formal loan agreement finalized within four weeks of the term sheet approval. Most of our debt is now reported as a current liability at the end of the second quarter. If the debt maturities had been extended at the end of the quarter, our current debt would be reported as $32.6 million instead of $186.1 million that is reflected in the attached statements."
Mr. Pond concluded, "While there is still a lot of work ahead of us, there is evidence that the cost, quality, and improvement programs are starting to bear fruit. The North American operations approached break-even operating income in the second quarter, and the Company earned an operating profit in February."
A conference call to discuss the fiscal 2002 second quarter financial performance will be held Thursday, March 28 at 10 a.m. EST. The webcast can be accessed through www.amcast.com.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others; general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor availability and relations at the company and its customers.
STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
Three Months Ended Six Months Ended
------------------- -------------------
March 3 March 4 March 3 March 4
2002 2001 2002 2001
-------- -------- -------- --------
Net sales $136,989 $122,966 $272,169 $260,910
Cost of sales 125,969 112,998 250,597 234,654
-------- -------- -------- --------
Gross Profit 11,020 9,968 21,572 26,256
Selling, general
and administrative
expenses 13,714 15,848 27,369 28,045
-------- -------- -------- --------
Operating Loss (2,694) (5,880) (5,797) (1,789)
Other (income)
expense (492) 855 (991) 1,610
Interest expense 4,191 3,321 8,985 6,520
-------- -------- -------- --------
Loss before Income
Taxes (6,393) (10,056) (13,791) (9,919)
Income tax benefit (1,511) (3,319) (3,386) (3,264)
-------- -------- -------- --------
Net Loss $(4,882) $(6,737) $(10,405) $(6,655)
======== ======== ======== ========
Basic loss per share $ (0.57) $ (0.80) $ (1.21) $ (0.79)
======== ======== ======== ========
Diluted loss per
share $ (0.57) $ (0.80) $ (1.21) $ (0.79)
======== ======== ======== ========
Average number of
shares outstanding
- Basic 8,587 8,417 8,582 8,409
Average number of
shares outstanding
- Diluted 8,587 8,417 8,582 8,409
CONDENSED BALANCE SHEETS
($ in thousands)
March 3 August 31
2002 2001
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 7,024 $ 14,981
Accounts receivable 65,061 64,408
Inventories 45,175 58,193
Other current assets 12,207 13,846
--------- ----------
Total Current Assets 129,467 151,428
Property, Plant and Equipment 234,632 242,292
Goodwill 47,678 48,353
Other Assets 19,157 16,617
--------- ----------
Total Assets $ 430,934 $ 458,690
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current debt $ 186,071 $ 28,694
Accounts payable 58,858 66,032
Other current liabilities 36,212 38,014
--------- ----------
Total Current Liabilities 281,141 132,740
Long-Term Debt 5,675 170,296
Deferred Liabilities 39,359 40,142
Shareholders' Equity 104,759 115,512
--------- ----------
Total Liabilities and Shareholders' Equity $ 430,934 $ 458,690
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