R&B, Inc. Reports 2002 Fourth Quarter Earnings of $0.39 Per Share and Fiscal 2002 EPS of $1.23; Comments on Future Outlook
COLMAR, Pa., Feb. 14 -- R&B, Inc. today announced financial results for the fourth quarter and year ended December 28, 2002. For the fourth fiscal quarter ended December 28, 2002, sales increased 12% to $55.1 million from $49.3 million in the same period last year. Fourth quarter sales increased 15% after excluding sales associated with the specialty fastener business sold in the second quarter of 2002. Diluted earnings per share in the fourth fiscal quarter increased 56% to $0.39 from $0.25 excluding goodwill amortization in the same period last year. Net income in the fourth fiscal quarter totaled $3.5 million compared to net income of $2.2 million excluding goodwill amortization in the prior year.
For the year ended December 28, 2002, sales increased 7% to $215.5 million from $201.7 million in the same period last year. Net sales for the year ended December 28, 2002 increased 9% after excluding sales associated with the specialty fastener business. Diluted earnings per share in the year ended December 28, 2002 increased 68% to $1.23 from $0.73 excluding goodwill amortization in the same period last year. Net income in the year ended December 28, 2002 totaled $11.0 million compared to net income of $6.3 million excluding goodwill amortization in the prior year. Results for the year ended December 28, 2002 reported above exclude a second quarter after-tax gain of $1.3 million, or $0.15 per share, on the sale of the Company's specialty fastener business.
Overall fiscal 2002 sales growth was driven by higher levels of product line updates to existing customers, the introduction of new product lines and continued strong reorder patterns on recently introduced new products. Fourth quarter sales in fiscal 2002 also benefitted from shipments to a new customer for the Company's Allparts brake business as well as certain one time sales related to customer inventory builds. Fourth quarter sales grew 4% after adjusting for the specialty fastener business sale and the benefit of one time sales related to these customer inventory builds.
The Company adopted SFAS No. 142 effective December 30, 2001, the start of its 2002 fiscal year. SFAS No. 142 specifies that goodwill will no longer be amortized but instead will be subject to periodic impairment testing. As a result, the Company ceased amortizing its goodwill in fiscal 2002. Prior year results presented in this press release have been adjusted to exclude goodwill amortization expense of $0.4 million ($0.3 million after-tax, or $0.03 per share) and $1.6 million ($1.1 million after-tax, or $0.13 per fully diluted share) in the fourth quarter and year ended December 29, 2001, respectively. The Company has completed impairment testing as required by SFAS No. 142, which did not result in an impairment charge.
The Company continued to generate strong cash flow, which enabled it to further reduce net borrowing levels in 2002. Net debt (total debt less cash and short term investments) declined $9.0 million to $34.3 million at year end from $43.3 million at the beginning of the year.
Mr. Richard Berman, Chairman, President and Chief Executive Officer said, "We are pleased with our growth, and especially with the value our customers are receiving from our intensified investment in new products and building links to the professional installer. Initial sales of new products as well as reorder patterns on recently introduced lines were particularly encouraging. We feel we have established a solid base from which to continue to grow and expand our business for the long term. We remain committed to continued investment in new product development and promotion efforts, building a better link with professional installers and further reducing the cost of doing business."
The Company's two-year plan provides for a continued intense focus on new product development and further expansion of its existing core businesses. Management expects these efforts to result in annual sales growth of between 4% and 8% and growth in fully diluted earnings per share of between 8% and 13% annually. However, the Company may continue to experience significant fluctuations from quarter to quarter in its results of operations due to the timing of new product introductions and orders placed by its customers.
Following is a reconciliation of results reported herein to results reported in accordance with generally accepted accounting principles (GAAP):
13 Weeks 52 Weeks
12/28/02 12/29/01 12/28/02 12/29/01
Fully Diluted Earnings Per Share:
As reported in press
release $ 0.39 $ 0.25 $ 1.23 $ 0.73
Gain on sale of specialty
fastener business - - 0.15 -
Goodwill amortization - (0.03) - (0.13)
In accordance with
GAAP $ 0.39 $ 0.22 $ 1.38 $ 0.60
Net Income (in thousands):
As reported in press
release $ 3,487 $ 2,191 $ 11,028 $ 6,293
Gain on sale of specialty
fastener business - - 1,329 -
Goodwill amortization - (266) - (1,064)
In accordance with
GAAP $ 3,487 $ 1,925 $ 12,357 $ 5,229
R&B, Inc. is a leading supplier of OE Dealer "Exclusive" automotive replacement parts, automotive hardware and brake products to the automotive aftermarket and household hardware to the general merchandise markets. R&B's products are marketed under more than thirty proprietary brand names, through its Motormite, Dorman, Allparts, Scan-Tech, MPI and Pik-A-Nut businesses.
Forward looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward looking statements which speak only as of the date hereof. Factors that cause actual results to differ materially include, but are not limited to, those factors discussed in the Company's Annual Report on Form 10-K under "Business - Investment Considerations."
R&B, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Fourth Quarter (unaudited) 12/28/02 Pct. 12/29/01(A) Pct.
Net sales $55,100 100.0 $49,271 100.0
Cost of goods sold 33,823 61.4 31,267 63.5
Gross profit 21,277 38.6 18,004 36.5
Selling, general and
administrative expenses 14,970 27.2 13,634 27.6
Income from operations 6,307 11.4 4,370 8.9
Interest expense, net 853 1.5 1,009 2.1
Income before income taxes 5,454 9.9 3,361 6.8
Provision for income taxes 1,967 3.6 1,170 2.4
Net income 3,487 6.3 2,191 4.4
Earnings per share
Basic $ 0.41 - $ 0.26 -
Diluted $ 0.39 - $ 0.25 -
Average shares outstanding
Basic 8,497 - 8,590 -
Diluted 8,961 - 8,906 -
52 Weeks 52 Weeks
Fiscal Year 12/28/02(B) Pct. 12/29/01(A) Pct.
Net sales $215,524 100.0 $201,668 100.0
Cost of goods sold 136,321 63.3 132,353 65.6
Gross profit 79,203 36.7 69,315 34.4
Selling, general and
administrative expenses 58,213 27.0 55,424 27.5
Income from operations 20,990 9.7 13,891 6.9
Interest expense, net 3,931 1.8 4,289 2.2
Income before income taxes 17,059 7.9 9,602 4.7
Provision for income taxes 6,031 2.8 3,309 1.6
Net income 11,028 5.1 6,293 3.1
Earnings per share
Basic $ 1.30 - $ 0.74 -
Diluted $ 1.23 - $ 0.73 -
Average shares outstanding
Basic 8,487 - 8,529 -
Diluted 8,948 - 8,647 -
(A) Prior year information is presented as if SFAS 142 had been adopted on
December 31, 2000. Results have been adjusted to exclude goodwill
amortization expense of $0.4 million ($0.3 million after-tax, or $0.03
per share) and $1.6 million ($1.1 million after-tax, or $0.13 per fully
diluted share) in the fourth quarter and year ended December 29, 2001,
respectively.
(B) Fiscal 2002 results exclude a second quarter after-tax gain of
$1.3 million, or $0.15 per share, on the sale of the Company's specialty
fastener business.
R&B, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
12/28/02 12/29/01
Assets:
Cash and short term investments $ 19,171 $ 21,689
Accounts receivable 48,769 36,700
Inventories 47,217 45,036
Prepaid expenses and other 9,046 8,821
Total current assets 124,203 112,246
Property & equipment 16,591 18,744
Goodwill 28,607 30,422
Other assets 727 1,751
Total assets $170,128 $163,163
Liability & Shareholders' Equity:
Current portion of long-term debt$ 9,291 $ 11,481
Accounts payable 11,813 8,327
Accrued expenses and other 11,759 11,370
Total current liabilities 32,863 31,178
Long-term debt 44,218 53,511
Deferred income taxes 3,475 3,312
Shareholders' equity 89,572 75,162
Total Liabilities and Equity $170,128 $163,163
Selected Cash Flow Information:
(in thousands) 13 Weeks 52 Weeks
12/28/02 12/29/01 12/28/02 12/29/01
Depreciation and
amortization(A) $ 1,198 $1,515 $ 5,560 $ 6,480
Capital
Expenditures $ 1,032 $ 341 $ 3,543 $ 1,924
EBITDA(B) $ 7,505 $5,885 $26,550 $20,371
(A) Excludes goodwill amortization of $1.6 million in 2001.
(B) Fiscal 2002 excludes impact of second quarter after-tax gain of
$1.3 million on the sale of the Company's specialty fastener business.
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