INTERMET Reports 2002 Fourth-Quarter and Year-End Results
Earnings improve for quarter and year; exceed consensus expectations
Solid results from new technology implementation
Strong cash flow; continued debt reduction
TROY, Mich., Feb. 6 -- INTERMET Corporation , one of the world's leading manufacturers
of cast-metal automotive components, today reported a 2002 fourth-quarter net
income of $430 thousand, or 2 cents per diluted share, compared with a 2001
fourth-quarter net loss of $9.0 million, or 35 cents per diluted share.
Analyst consensus estimates were for breakeven earnings. The company also
reported 2002 fourth-quarter sales of $194 million, matching the same period
last year. Gross profit increased $4.3 million compared to fourth-quarter
2001. The results included a $1.7 million pre-tax charge for a legal
settlement with a consulting company resulting from a dispute over fees.
Excluding this charge, fourth-quarter 2002 net earnings would have been
reported at 6 cents per diluted share.
INTERMET's net income for the year was $9.0 million, or 35 cents per
diluted share. This compared with a 2001 net loss of $8.7 million, or 34
cents per diluted share, which included a net loss of 33 cents per share from
a plant closure. Full-year 2002 sales were $815 million, down $28 million
from full-year 2001 sales of $843 million. However, excluding $39 million in
sales from the plant closed at the end of 2001, full-year 2002 sales increased
approximately $11 million year over year.
John Doddridge, Chairman and Chief Executive Officer, said, "We have been
successful in improving results during a challenging year for the company. We
continued to make progress with key performance metrics, including working
capital and gross margin, and our capital structure strengthened considerably.
Once again, we ended the quarter with strong cash flow, reducing debt by $18
million. INTERMET lowered its debt-to-capital to 52 percent, which is 7
percentage points lower than a year ago."
The company's total debt was reduced by $83 million in 2002 and by $119
million over the last two years. For the year, cash flow from operations
totaled $89 million. Total capital spending for 2002 was $9.4 million,
reflecting rigorous controls on capital spending. INTERMET's effective tax
rate was 15 percent for the year, reflecting tax benefits associated with
overseas operations. Depreciation and amortization for 2002 was reported at
$50 million.
The INTERMET Board of Directors voted to approve a quarterly dividend of
4 cents per share, payable April 1, 2003, to shareholders of record as of
March 1, 2003.
"Despite a weak European automotive market and the loss of market share by
certain key customers, we are pleased that sales actually increased $7 million
compared with the fourth quarter of 2001, after excluding revenue from the
plant closed at the end of last year," Doddridge continued. "We have enhanced
both operating and financial performance by ongoing implementation of our lean
manufacturing principles coupled with strict controls on capital. Even though
2002 total revenue was $28 million lower than last year, gross profit
increased by nearly $9 million, a direct reflection of our improved
fundamental earning power."
INTERMET President and COO Gary F. Ruff said, "Technology also is playing
a vital role in the gains we're seeing in manufacturing efficiencies, product
improvement and our ability to capture new business. INTERMET customers are
welcoming the added value we now offer in manufacturing process and technology
solutions. As an example, the tremendous success we have had with our new
PCPC(TM) technology at the Stevensville, Michigan, plant, which nearly doubled
its sales over 2001, has led to two additional PCPC process programs, one set
to launch in the second quarter of this year and another in the first quarter
of 2004. And our Blue Sand(TM) and new rheocasting processes are currently
being readied for production launches, paving the way for future growth.
Along with this, inroads are being made in capturing more business from the
New American Manufacturers. These customers have been attracted to INTERMET
by our application and implementation of lean manufacturing concepts, as well
as by our advanced technology base."
First-Quarter 2003 Outlook
According to INTERMET Vice President of Finance and CFO Bob Belts, the
company is cautious in its outlook for the first quarter and the year 2003.
"Underlying economic trends are difficult to predict at this point, and we
believe there is some downside risk to automotive production estimates. In
2003, INTERMET will remain focused on growing its position with the Big 3 and
Tier 1 manufacturers, and on further diversification efforts with European and
Asian manufacturers, both in the U.S. and Europe. We also will continue to
give a high priority to debt reduction while balancing this with capital
spending for future growth," he said.
"For the first quarter, we expect sales in the $200-205 million range, and
diluted earnings per share between 10 and 14 cents," added Belts. "The tax
rate in the first quarter is expected to be about 38 percent and we expect
depreciation and amortization to be $13 million with capital spending of $4
million."
INTERMET will hold a Conference Call today at 11:45 a.m. ET to discuss
fourth-quarter and year-end results as well as the outlook for the first
quarter and 2003. Investors and interested parties can listen to a live
webcast by visiting http://www.intermet.com and clicking on the "Financial/Investor
Information" link on the home page. It is recommended that access to the live
webcast be established 10-15 minutes prior to the scheduled start time. A
replay of the webcast briefing also is expected to be available on the
company's web site beginning two hours after completion of the briefing
through March 6, 2003.
With headquarters in Troy, Michigan, INTERMET Corporation is a
manufacturer of powertrain, chassis/suspension and structural components for
the automotive industry. INTERMET's strategy is to be the world's leading
supplier of cast-metal automotive components. The company has more than 6,000
employees at facilities located in North America and Europe. More information
is available on the Internet at http://www.intermet.com .
This news release may include forecasts and forward-looking statements
about INTERMET, its industry and the markets in which it operates. Forward-
looking statements and the achievement of any forecasts or projections are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed or denied. Such risks and
uncertainties are fully detailed as a preface to the Management's Discussion
and Analysis of Financial Condition in the company's 2001 Annual Report for
the year ended December 31, 2001.
INTERMET Corporation Condensed Consolidated Statements of Operations
(In thousands, except per share data)
For three months ended For twelve months ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
Net sales $194,314 $194,180 $814,932 $843,173
Cost of sales 179,661 183,858 744,769 781,650
Gross profit 14,653 10,322 70,163 61,523
Selling, general
and administrative 7,096 5,909 31,870 29,177
Goodwill amortization - 1,830 - 6,328
Other operating
(income) expense 1,815 13,209 1,592 13,427
Operating profit
(loss) 5,742 (10,626) 36,701 12,591
Interest expense,
net (7,541) (6,698) (27,914) (31,025)
Other income, net 1,876 1,955 1,992 4,431
Income (loss) before
income taxes 77 (15,369) 10,779 (14,003)
Income tax expense
(benefit) (353) (6,406) 1,654 (5,300)
Net income (loss)
before extraordinary
item and cumulative
effect of a change
in accounting
principle 430 (8,963) 9,125 (8,703)
Extraordinary item,
net of tax - - (603) -
Cumulative effect of
a change in accounting
principle, net of tax - - 481 -
Net income (loss) $430 $(8,963) $9,003 $(8,703)
Earnings (loss) per
common share:
Basic
Earnings (loss)
before extraordinary
item and cumulative
effect of a change
in accounting
principle $0.02 $(0.35) $0.36 $(0.34)
Extraordinary item - - (0.02) -
Cumulative effect of
a change in
accounting principle - - 0.01 -
Earnings (loss)
per common
share - basic $0.02 $(0.35) $0.35 $(0.34)
Diluted
Earnings (loss)
before extraordinary
item and cumulative
effect of a change
in accounting
principle $0.02 $(0.35) $0.35 $(0.34)
Extraordinary item - - (0.02) -
Cumulative effect
of a change in
accounting
principle - - 0.02 -
Earnings (loss) per
common share -
diluted $0.02 $(0.35) $0.35 $(0.34)
Weighted average
shares outstanding:
Basic 25,473 25,362 25,441 25,359
Diluted 25,783 25,362 25,878 25,359
INTERMET Corporation Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2002 2001
Assets:
Current assets:
Cash and cash equivalents $3,298 $13,866
Accounts receivable 86,779 112,040
Inventory 65,456 71,857
Other current assets 24,875 30,140
Total current assets 180,408 227,903
Property, plant and equipment, net 332,034 370,756
Goodwill, net of amortization 217,016 217,016
Other non-current assets 34,640 24,864
Total assets $764,098 $840,539
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable $70,933 $81,244
Accrued liabilities 65,205 66,603
Long term debt due within one year 1,567 173,352
Total current liabilities 137,705 321,199
Non-current liabilities:
Long term debt due after one year 278,536 190,070
Other non-current liabilities 90,288 75,990
Total non-current liabilities 368,824 266,060
Shareholders' equity 257,569 253,280
Total liabilities and
shareholders' equity $764,098 $840,539
INTERMET Corporation Condensed Consolidated Statements of Cash Flow
(In thousands)
Year ended Year ended
December 31, December 31,
2002 2001
Cash provided by operating activities $89,212 $71,594
Additions to property,
plant and equipment (9,445) (36,368)
Additions to property, plant and
equipment from insurance - (3,389)
Proceeds from insurance for
replacement of property, plant
and equipment - 3,389
Cash used in investing activities (9,445) (36,368)
Net increase in revolving
credit facility - 9,000
Proceeds from term loan - 182,750
Proceeds from debt offering 175,000 -
Repayments of term loans (171,750) (211,000)
Repayment of an unsecured note - (15,000)
Net decrease in other debt (86,646) (1,494)
Payments of debt issue costs (6,022) -
Issuance of common stock 537 -
Purchase of common stock for
deferred compensation plan - (349)
Dividends paid (4,075) (3,183)
Cash used in financing activities (92,956) (39,276)
Effect of exchange rate changes
on cash and cash equivalents 2,621 (1,821)
Net decrease in cash and
cash equivalents (10,568) (5,871)
Cash and cash equivalents,
beginning of year 13,866 19,737
Cash and cash equivalents, end of year $3,298 $13,866