Amcast Reports Fiscal 2002 Fourth Quarter and Total Year Results
DAYTON, Ohio--Oct. 16, 2002--Amcast Industrial Corporation, today reported financial results for its fiscal 2002 fourth quarter and full year ended August 31, 2002.Fiscal fourth quarter sales of $152.6 million were up by over 15% versus $132.3 million in the prior year. The net loss for the quarter was $9.1 million, or $1.05 per diluted share, versus a prior-year quarterly net loss of $11.2 million, or $1.31 per diluted share. Excluding unusual items of $5.3 million, the net loss for the prior-year quarter would have been $5.9 million or $0.69 per diluted share.
The quarterly sales increase was due to strong automotive demand in both North America and Europe. North American Automotive sales grew by 30% over the prior-year quarter. Sales at Speedline, the Company's European operation, were up almost 18% versus the prior-year quarter. Flow Control segment sales declined by almost 11% in the fourth quarter versus last year, primarily due to a weak market and competitive pricing pressures.
Amcast's quarterly net loss of $9.1 million compared favorably to last year's fourth quarter loss by $2.1 million. Excluding unusual items of $5.9 million in last year's quarter, the current-quarter loss increased by $3.2 million. The main causes of the increased loss were non-operational. Taxes increased by $2.1 million because of a lower tax benefit. In addition, non-operating expenses in our Italian operation were unfavorable to last year by $0.9 million, and interest expense was higher than last year by $0.3 million.
For fiscal year 2002, sales were $576.2 million, up almost 9% from the prior year's $529.4 million. After adjusting the prior year to include a full year of sales for the Company's CTC operation, total sales grew by about 4%. Last year, CTC was a joint-venture accounted for as an equity investment until Amcast purchased 100% of the venture in the fourth fiscal quarter of last year. The net loss for the year was $21.1 million, or $2.45 per diluted share, compared with a loss of $37.1 million, or $4.38 per diluted share, last year.
The prior year included unusual items of $20.9 million, or $2.46 per diluted share. Excluding unusual items, the current-year net loss was $4.9 million unfavorable to last year. The two main reasons for the increased loss were higher interest expenses of $2.4 million and a lower tax benefit of $2.4 million.
Joseph R. Grewe, President and Chief Operating Officer, said, "Signs of operational improvement continued during the year, although the full-year financial results were far below expectations mostly due to $7 million in unplanned new product launch costs at our Richmond, Indiana plant and continuing poor performance at Speedline. In addition, Flow Control operating income declined by 51% from the prior year. This segment's declining performance was due to lower overall market demand, the cost of a new computer system, and weak raw material costs that resulted in depressed pricing. Automotive sales were strong and product quality improved due to more management focus. More importantly, our Wapakoneta, Ohio plant became consistently profitable in the third fiscal quarter and posted a positive annual operating profit for the first time since the plant opened in 1995."
Mr. Grewe continued, "One of the most important internal initiatives that is improving operating and financial performance is the Amcast Production System. Plants with the most experience implementing this system show much better results. The Amcast Production System is a lean manufacturing training and certification process for manufacturing cells. The Amcast Production System was instrumental in achieving a significant productivity improvement during the year as output per person increased by over 12%, and total labor cost as a percent of sales declined by more than 5%. More specifically in our North American wheel business, where we have been most aggressive in implementing the Amcast Production System, the results have been encouraging. On a 25% increase in revenue, the North American wheel plants more than doubled their operating income. A 21% reduction in scrap, a 26% increase in output per person, and a 37% improvement in safety further enhanced wheel performance. In addition, inventory turnover tripled, and net assets employed in the wheel business actually declined by 20%."
Byron O. Pond, Chairman and Chief Executive Officer, said, "In the fiscal fourth quarter, we successfully extended our current loan agreements to September, 2003 for the bank group and to November, 2003 for the senior lenders. This provides the Company with operating capital while we prepare for longer-term debt financing. During fiscal 2002, we successfully reduced net operating assets by $28.6 million even while sales increased. In addition, we repaid $19.5 million in debt in compliance with our loan agreements. We accomplished this through cost reduction programs, effective working capital management, and controls on capital spending. During the year, Amcast held capital spending to less than 66% of depreciation."
Mr. Grewe added, "Even with the operational improvements achieved during the fiscal year, much remains to be done. The current focus is to improve profitability through the Amcast Production System, reduce scrap, improve quality, and continue a company-wide SG&A cost reduction program. In addition, we will concentrate on improving operations at the Richmond, Indiana plant and at Speedline."
Mr. Pond concluded, "I want to thank the Amcast associates for their continuing effort to raise Amcast's performance level and increase our commitment to improvement. Also, everyone at Amcast is very appreciative of the support given to us by our lenders, investors, customers, and suppliers. We are looking forward to a much-improved fiscal 2003."
A conference call to discuss the year's performance will be held Thursday, October 17, 2002 at 3 p.m. EDT. 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 Year Ended ---------------------- --------------------- August 31 August 31 August 31 August 31 2002 2001 2002 2001 ----------- ----------- ----------- ---------- Net sales $ 152,568 $ 132,305 $ 576,160 $ 529,373 Cost of sales 141,054 123,852 526,778 488,580 ----------- ----------- ----------- ---------- Gross Profit 11,514 8,453 49,382 40,793 Selling, general and administrative expenses 14,711 18,764 55,516 71,183 ----------- ----------- ----------- ---------- Operating Income (Loss) (3,197) (10,311) (6,134) (30,390) Other (income) expense 57 (938) (768) 1,644 Interest expense 5,294 6,411 18,506 17,532 ----------- ----------- ----------- ---------- Income (Loss) before Income Taxes (8,548) (15,784) (23,872) (49,566) Income tax expense (benefit) 562 (4,551) (2,787) (12,435) ----------- ----------- ----------- ---------- Net Income (Loss) $ (9,110) $ (11,233) $ (21,085) $ (37,131) ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------- Basic income (loss) per share $ (1.05) $ (1.31) $ (2.45) $ (4.38) ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------- Diluted income (loss) per share $ (1.05) $ (1.31) $ (2.45) $ (4.38) ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------- Average number of shares outstanding- Basic 8,653 8,577 8,604 8,482 Average number of shares outstanding- Diluted 8,653 8,577 8,604 8,482 CONDENSED BALANCE SHEETS ($ in thousands) August 31 August 31 2002 2001 --------- --------- ASSETS Current Assets Cash and cash equivalents $ 19,158 $ 14,981 Accounts receivable 70,941 64,408 Inventories 51,983 58,193 Other current assets 4,834 12,098 --------- --------- Total Current Assets 146,916 149,680 Property, Plant and Equipment 237,956 244,040 Goodwill 47,000 48,353 Other Assets 18,338 16,617 --------- --------- Total Assets $450,210 $458,690 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current debt $ 22,914 $ 28,694 Accounts payable 74,281 66,032 Other current liabilities 42,069 38,014 --------- --------- Total Current Liabilities 139,264 132,740 Long-Term Debt 175,791 170,296 Deferred Liabilities 43,810 40,142 Shareholders' Equity 91,345 115,512 --------- --------- Total Liabilities and Shareholders' Equity $450,210 $458,690 --------- --------- --------- ---------