Amcast Reports Fiscal 2003 First Quarter Results
DAYTON, Ohio--Dec. 16, 2002--Amcast Industrial Corporation, today reported financial results for its fiscal 2003 first quarter ended December 1, 2002.Fiscal first quarter sales of $155.8 million increased by over 15% versus $135.2 million in the prior year. The net loss, before the cumulative effect of an accounting change, for the quarter was $7.2 million, or $0.83 per diluted share, versus a prior-year quarterly net loss of $5.5 million, or $0.64 per diluted share. Including the cumulative effect of an accounting change of $46.5 million after tax, the net loss for the quarter was $53.7 million, or $6.16 per diluted share. The accounting change was due to adopting SFAS No.142. This caused the Company to write off goodwill which was primarily at the Company's European operation.
The quarterly sales increase was due to strong automotive demand in both North America and Europe. North American Automotive sales grew by 29% over the prior-year quarter. Sales at Speedline, the Company's European operation, were up by 13% versus the first quarter last year. Flow Control segment sales declined by 9% in the first quarter versus last year, primarily due to a weaker market and competitive pricing pressures.
Amcast's quarterly net loss of $7.2 million, before the cumulative effect of an accounting change, was unfavorable to last year's first quarter loss by $1.7 million. Most of the increased loss was non-operational. Taxes were higher by $1.1 million because of a lower tax benefit mainly associated with the Company's European operation, and the pension benefit was lower by $0.4 million. As a result of adopting SFAS No.142 which ceased goodwill amortization, income improved by $0.3 million. Operationally, strong performance in North American Automotive plants, led by wheel plants and the Wapakoneta, Ohio aluminum components plant, were able to offset continuing, but declining, new-product launch costs at the Richmond, Indiana plant. This did not, however, offset lower performance at Flow Control and Speedline. Flow Control, while profitable, reported lower income due to competitive market pricing. Speedline continues to reflect operational difficulties.
Joseph R. Grewe, President and Chief Operating Officer, said, "During the quarter, we continued to see operational improvements at the plant level. Eight of our eleven units earned an operating profit in the quarter compared with only two profitable units in the prior-year quarter. This performance shows that management's emphasis on building manufacturing productivity and controlling costs is bearing fruit. Sixty percent of Amcast's North American workforce is now trained in Amcast Production System. The Amcast Production System, a lean manufacturing training and certification program, is having its intended effect of improving performance. For example, productivity grew by almost 7% and labor cost as a percent of sales declined by 1.5 percentage points versus last year. Operating expenses in the quarter decreased by almost 2% compared to last year while sales increased by over 15%. As a percent of sales, operating expenses were 8.6% versus 10.1% in the fiscal first quarter last year."
Byron O. Pond, Chairman and Chief Executive Officer, said, "We continued to control capital spending and working capital in the quarter. Net operating assets excluding goodwill at the end of the quarter dropped by $13.4 million, or 6%, including an operating working capital decrease of $7.9 million, or 70%, versus the levels at the beginning of the quarter. Amcast held capital expenditures to 43% of depreciation during the quarter. We made $2.6 million of debt payments in the quarter, and these payments were three months ahead of the schedule established in our loan agreements. Amcast has a cash balance of $12.6 million; plus there is $7 million in cash reserved for debt principal and interest payments. Additionally, the Company is in the initial stages of marketing most of our U.S. automotive aluminum components business through Lincoln Partners LLC and Speedline through Robert W. Baird. These actions are important while we prepare for longer-term debt financing. Our debt agreements expire in September and November, 2003 which is why most of our debt is classified as a current liability."
Mr. Grewe concluded, "The operational improvements achieved this quarter are encouraging. However, much remains to be done. Going forward, we will intensify our focus on under-performing units to improve operations at the Richmond, Indiana plant and at Speedline along with addressing market conditions at Flow Control. At the same time, we will further employ the Amcast Production System and other operating actions that have been successful at several plants to reduce scrap, improve quality, control costs, and minimize capital spending."
A conference call to discuss the year's performance will be held Wednesday, December 18, 2002 at 2 p.m. CST. 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
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December 01 December 02
2002 2001
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Net sales $ 155,756 $ 135,180
Cost of sales 146,006 124,628
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Gross Profit 9,750 10,552
Selling, general and
administrative expenses 13,439 13,655
--------- ---------
Operating Income (Loss) (3,689) (3,103)
Other (income) expense (56) (499)
Interest expense 4,301 4,794
--------- ---------
Income (Loss) before Income Taxes and
Cumulative Effect of Accounting Change (7,934) (7,398)
Income taxes (742) (1,875)
--------- ---------
Income (Loss) before Cumulative Effect
of Accounting Change (7,192) (5,523)
Cumulative effect of accounting change
net of tax of $464 (46,536) --
--------- ---------
Net Income (Loss) $ (53,728) $ (5,523)
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Basic earnings (loss) per share
before cumulative effect of
accounting change $ (0.83) $ (0.64)
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Basic earnings (loss) per share $ (6.16) $ (0.64)
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Diluted earnings (loss) per share
before cumulative effect of
accounting change $ (0.83) $ (0.64)
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Diluted earnings (loss) per share $ (6.16) $ (0.64)
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Average number of shares
outstanding- Basic 8,717 8,577
Average number of shares
outstanding- Diluted 8,717 8,577
CONDENSED BALANCE SHEETS
($ in thousands)
December 01 August 31
2002 2002
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Current Assets
Cash and cash equivalents $ 12,566 $ 19,158
Accounts receivable 66,225 70,941
Inventories 48,671 51,983
Other current assets 10,826 4,834
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138,288 146,916
Property, Plant and Equipment 233,202 237,956
Goodwill -- 47,000
Other Assets 17,094 18,338
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$388,584 $450,210
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Current Liabilities
Accounts payable $ 76,106 $ 74,281
Current debt 190,012 20,058
Other current liabilities 40,134 42,069
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306,252 136,408
Long-Term Debt 1,395 178,647
Deferred Liabilities 43,246 43,810
Shareholders' Equity 37,691 91,345
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$388,584 $450,210
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