Universal Automotive Reports Record Earnings for 2002
ALSIP, Ill., March 26 -- Universal Automotive today announced its financial results for the quarter and fiscal year ended December 31, 2002. Revenues for the quarter ended December 31, 2002 were $14,641,000, a 17% decrease over revenues of $17,635,000 for the quarter ended December 31, 2001. The sales decrease over the same period in 2001 can be attributed to several factors; (1) The absence of a major customer rollout which took place during the fourth quarter of 2001; (2) The loss of several customers due to industry consolidation and; (3) Increased brake drum and rotor pricing compression.
Net loss for the quarter ended December 31, 2002 was $190,000, representing $0.02 basic and diluted EPS compared to a net loss of $1,667,000 and $0.27 basic and diluted EPS for the quarter ended December 31, 2001. The reduction in net loss for the quarter ending December 31, 2002 over the quarter ended December 31, 2001 of $1,477,000 was a result of the absence of one-time charges of $1,143,000 included in the 2001 results and lower operating costs in 2002 resulting from the cost containment programs established during the year.
Revenues for fiscal 2002 were $69,856,000, a 2.8% decrease over revenues of $71,823,000 for fiscal 2001. Net profit for fiscal 2002 was $491,000, with $0.06 basic and $.04 diluted EPS compared to a net loss of $2,978,000 and $.45 basic and diluted EPS for fiscal 2001. Included in the 2002 results were one- time charges of $85,000 relating to expenses associated with the termination of the Creative Friction Strategic Alliance and a state tax audit of prior years. Without these one-time charges, the proforma net profit for the year was $577,000, or $.07 per share. Gross margin was 17.7% for the year ended December 31, 2002, which is above the gross margin of 16.4% for fiscal year 2001. The increase in gross margin is a result of the absence of a one-time sales discount to a major client in the amount of $350,000, which adversely affected margins for the 2001 year and cost reduction programs established during 2002. Exclusive of this extraordinary sales discount, pro-forma gross margin for the year ended December 31, 2001 was 16.8%.
According to Arvin Scott, President and CEO of Universal Automotive Industries, Inc., "The operational, management and financial restructuring initiatives that were put in place through out 2001 laid the foundation for our success in 2002. I'm pleased with the cost reduction initiatives that contributed to the $1,353,000 or 13.1% reduction in selling, general and administrative expenses on slightly lower sales in 2002 over the same period in 2001. The successful relocation of our rotor manufacturing plant to our corporate headquarters in the fourth quarter will result in additional saving for 2003. These initiatives are ongoing. The launch of our 'Evolution' line of ceramic disc pads late in the fourth quarter and significant new customer and group wins in the fourth quarter of 2002 and first quarter of 2003 will provide a strong basis for growth in 2003."
"We are disappointed that the Company's success is not reflected in the value of our market capitalization. We are committed to improving shareholder value; the management and Board of Directors of Universal will continue to explore ways to increase shareholder value. And lastly and most importantly, I would like to express my gratitude to the entire Universal team for their dedication, contribution of new ideas and hard work."
Summary Financial Information
Quarter Ended
December 31, Year Ended December 31,
2002 2001 2002 2001
Net Sales
Brake Parts $12,998 $16,067 $62,568 $66,261
Non-Brake Parts 1,643 1,568 7,288 5,562
Total $14,641 $17,635 $69,856 $71,823
Gross Margin:
Brake Parts $1,686 $1,509 $11,348 $11,132
Non Brake Parts 218 183 978 612
Total $1,904 $1,692 $12,326 $11,744
13.0% 9.6% 17.6% 16.4%
Selling, General and
Administrative Expenses 1,844 2,633 10,317 11,670
Other Operating (Income) Expense (63) 793 98 793
(Income) Loss from Hungarian
operations 71 (385) 71 295
Income (loss) from operations $52 $(1,349) $1,840 $(1,014)
Other expense (income)
Interest Expense 291 699 1,398 2,503
Loss (Gain) on disposition of
assets (49) (49)
Other income (loss) - (9) 149
Income (loss) before provision
(benefit) for income taxes and
extraordinary gain $(190) $(2,057) $491 $(3,368)
Income tax provision (benefit) - 440 - 440
Income (loss) before extraordinary
gain from Continuing Operations $(190) $(2,497) $491 $(3,808)
Extraordinary Item:
Gain on debt restructuring - 830 - 830
Net Income (Loss) $(190) $(1,667) $491 $(2,978)
Issuance of preferred stock with
beneficial conversion feature and
warrants - 431 - 431
Net income (loss) available to
common stockholders $(190) $(2,098) $491 $(3,409)
Earnings (loss) per share
Basic net income (loss) per
common share
Before extraordinary item $(0.02) $(0.38) $0.06 $(0.56)
Extraordinary gain - 0.11 - 0.11
$(0.02) $(0.27) $0.06 $(0.45)
Diluted net income (loss) per
common share
Before extraordinary item $(0.02) $(0.38) $0.04 $(0.56)
Extraordinary gain - 0.11 - 0.11
$(0.02) $(0.27) $0.04 $(0.45)
Weighted-average common shares
outstanding 8,198,174 7,553,141
Effect of dilutive securities
Conversion of preferred stock 3,014,380
11,212,554 7,553,141
Forward-Looking Statements
The nature of Universal's operations is subject to changing economic, competitive and regulatory conditions, risks and uncertainties. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Universal provides the following cautionary remarks regarding important factors which, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. These include statements about our management confidence and strategies for performance; expectations for new or existing products, technologies and opportunities; expectations for market segment, product line and/or industry growth; and expectations for sales, earnings and other financial measures.
These factors include but are not limited to; (1) changes in worldwide business environment in which the Company operates, including general economic conditions, particularity in the steel, metals and chemicals industries; currency exchange rates, interest rates and capital costs; (2) changes in government laws and regulations, including taxes; (3) market and competitive changes, including pricing pressures, market demand, consolidation of existing customers and acceptance for new products and technologies; (4) effects of unstable governments and business conditions in emerging economies; (5) impact of product liability litigation and (6) other risk factors listed from time to time in the Company's SEC reports. The Company does not intend to update this information and disclaims any legal liability to the contrary.
Universal Automotive Industries, Inc. is a manufacturer and distributor of brake rotors, drums disc brake pads, relined brake shoes, wheel cylinders and brake hoses for the automotive aftermarket.
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