Transpro, Inc. Reports First Quarter 2002 Results; Exceeding Previous Guidance, Company Reports Operating Income for the First Quarter 2002
NEW HAVEN, Conn.--April 30, 2002--Transpro, Inc. today announced results for the first quarter ended March 31, 2002."We are pleased to report operating income of $0.9 million for the first quarter of 2002 versus a loss of $3.3 million a year ago. These results exceeded our previously provided guidance which indicated we would significantly reduce our operating loss versus the first quarter 2001," said Charles E. Johnson, President and Chief Executive Officer of Transpro. "This marks the third consecutive quarter of improved operating results before restructuring and other special charges on a quarter over quarter basis. We continue to attribute our success to the disciplined focus of our people on our performance improvement initiatives."
Net sales grew 11.5% to $51.0 million in the first quarter 2002 compared with $45.7 million in the first quarter 2001. As previously announced, in the quarter the Company began to report its financial results in accordance with its new business segments: Automotive and Light Truck, and Heavy Duty.
Automotive and Light Truck Group revenue was $36.4 million, a 20.6% increase from $30.2 million in the first quarter 2001. Heat Exchange product sales were 12% above last year as revenue benefited from new program initiations that had been postponed from the fourth quarter of 2001 by several major customers as well as improved underlying sell through of our heat exchange products. Temperature Control product sales were up 102% reflecting the addition of several new customers.
Heavy Duty Group revenue was $14.5 million, 6.2% lower than the $15.5 million in the first quarter 2001. Despite continuing market pressure, Heavy Duty OEM sales were 3% higher reflecting the impact of price changes. Heavy Duty Aftermarket sales were 15% lower than last year reflecting a sluggish industrial products market.
Consolidated gross margin was $9.6 million, or 18.8% of revenue, in the first quarter 2002, compared to $5.3 million, or 11.7% of revenue, in the first quarter 2001. Gross margins benefited primarily from manufacturing cost reductions and lower raw material costs.
The Company's operating expenses were $8.6 million, or 16.9% of revenue, in the first quarter 2002, which compared favorably to $8.6 million, or 18.9% of revenue, in the first quarter 2001. The same level of expenses supported sales levels which were 11.5% over the year before as a result of the favorable ongoing impact of our cost reduction programs.
Consolidated operating income was $0.9 million versus a loss of $3.3 million last year. The results for 2002 include $0.1 million of restructuring and other special charges associated with the initiative programs begun during the second half of 2001. The Automotive and Light Truck Group reported operating income of $2.4 million versus a loss of $1.0 million a year ago. This improvement resulted from increased sales and the benefits of the initiative programs implemented during the second half of 2001. Despite lower sales levels, the Heavy Duty Group reduced its operating loss to $0.1 million versus $2.0 million last year. As part of this, our Heavy Duty OEM Business Unit reflected operating income for the period, the first time this has occurred since the second quarter of 1995. Improved factory utilization, cost reductions and price changes accounted for the year over year improvement. Despite lower sales, the Heavy Duty Aftermarket Unit reported an operating loss slightly lower than last year, reflecting their cost reduction actions, operational improvements and pricing actions. This is a seasonally weak sales period for the Heavy Duty Aftermarket Unit.
The Company recognized a $3.8 million tax benefit in the first quarter 2002 resulting from the tax legislation enacted during March 2002 that included a provision allowing pre-tax losses incurred in 2001 and 2002 to be carried-back for a period of five years instead of two years.
Income before the cumulative effect of the write-off of goodwill and extraordinary item in the first quarter 2002 was $3.8 million or $0.54 per basic share compared to a loss in 2001 of $3.2 million or $0.49 per basic share. In 2002, the Company reported a $0.1 million pretax operating income as well as a net tax benefit of $3.7 million. A year ago, the Company had a $4.5 million operating loss offset by a $1.3 million income tax benefit.
As a result of the adoption of FASB Statement No. 142, the Company, as previously announced, recorded a $4.7 million non-cash write-down in the value of its goodwill in the first quarter 2002. Amortization of goodwill in the first quarter of 2001 was $0.1 million.
The net loss for the first quarter 2002 was $0.9 million or $0.13 per basic share versus a net loss of $3.6 million or $0.55 per basic share in the first quarter last year.
In the quarter, the Company reduced inventories by an additional $2.6 million, while accounts receivable levels increased $8.2 million due to the higher sales levels and a shift in receivables mix towards longer payment cycles.
Mr. Johnson commented, "We remain focused on strengthening our financial and competitive position. Our sales strategy of leveraging current customer relationships and targeting new customers is proving effective. In this context, we recently announced significant new business wins with CSK Automotive and Advance Auto Parts, both key players in our industry. In addition, we achieved significant line expansions with several other major customers."
Mr. Johnson further commented, "Our annual report recently introduced our `Strategic Corporate Values', which will provide a platform for our future business activities. These values include Exemplary Corporate Citizenship, Employing Exceptional People, World-Class Quality Standards, Market Leadership through Superior Customer Service and Exceptional Financial Performance."
"Going forward, we intend to act on our continuous improvement activities within the framework of our corporate values in order to achieve our goals," commented Mr. Johnson. "Although we still have much hard work ahead of us to fully achieve our potential, our performance and achievements in the quarter as well as recent new business wins demonstrate the momentum at Transpro. Indeed, we have previously indicated that we expect operating profit before restructuring and other special charges in the second and third quarter as well as for the full year 2002."
Transpro, Inc. is a manufacturer and supplier of heating and cooling systems and components for a variety of Aftermarket and OEM automotive, truck and industrial applications.
Forward-Looking Statements
Statements included in this news release, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's Annual Report on Form 10-K contains certain detailed factors that could cause the Company's actual results to materially differ from forward-looking statements made by the Company. In particular, statements relating to the future financial performance of the Company are subject to business conditions and growth in the general economy and automotive and truck business, the impact of competitive products and pricing, changes in customer product mix, failure to obtain new customers or retain old customers or changes in the financial stability of customers, changes in the cost of raw materials, components or finished products and changes in interest rates.
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(unaudited)
Three Months
March 31,
------------------------
2002 2001
--------- --------
Net sales $50,962 $45,707
Cost of sales 41,361 40,374
--------- --------
Gross margin 9,601 5,333
Operating expenses 8,613 8,630
Restructuring and other special charges 67 0
--------- --------
Operating income (loss) 921 (3,297)
Interest expense 818 1,171
--------- --------
Income (loss) before taxes,
cumulative effect of accounting
change, and extraordinary item 103 (4,468)
Income tax benefit (3,653) (1,260)
--------- --------
Income (loss) before cumulative effect
of accounting change and extraordinary item 3,756 (3,208)
Cumulative effect of accounting change (4,671) 0
Loss on debt extinguishment 0 (380)
--------- --------
Net loss $ (915) $ (3,588)
========= ========
Shares outstanding:
Basic 6,982 6,579
Diluted 7,162 6,579
Income (loss) per share before
cumulative effect of accounting
change and extraordinary item
Basic $ 0.54 $ (0.49)
Diluted $ 0.52 $ (0.49)
Note:
Certain prior year amounts have been reclassified to conform to
the current year presentation.
TRANSPRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
March 31, Dec. 31,
2002 2001
--------- --------
Accounts receivable, net $39,094 $ 30,940
Inventories, net 57,628 60,180
Other current assets 8,500 4,824
Net property, plant and equipment 24,510 24,469
Goodwill, net 0 4,671
Other assets 4,618 4,599
--------- --------
Total assets $134,350 $129,683
========= ========
Accounts payable $20,180 $ 20,316
Accrued liabilities 16,119 14,458
Total debt 41,747 37,663
Other long-term liabilities 8,277 8,281
Stockholders' equity 48,027 48,965
--------- --------
Total liabilities and stockholders' equity $134,350 $129,683
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TRANSPRO, INC.
SUPPLEMENTARY INFORMATION
(in thousands)
(unaudited)
Three Months Ended
March 31,
-----------------------
2002 2001
-------- --------
SEGMENT DATA
Trade sales:
Automotive and light truck $36,433 $30,212
Heavy duty 14,529 15,495
Intersegment transfers:
Automotive and light truck 888 825
Heavy duty 39 8
Eliminations (927) (833)
-------- --------
Total $50,962 $45,707
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Operating income (loss):
Automotive and light truck $2,370 $ (969)
Restructuring and other special charges (16) 0
-------- --------
Automotive and light truck total 2,354 (969)
-------- --------
Heavy duty (94) (2,033)
Restructuring and other special charges (51) 0
-------- --------
Heavy duty total (145) (2,033)
-------- --------
Corporate expenses (1,288) (295)
-------- --------
Total $ 921 $(3,297)
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CAPITAL EXPENDITURES $1,175 $ 583
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