Glendale RV's More Than Doubles First Quarter Earnings
OAKVILLE, Ontario--April 1, 2003--Glendale International Corp. (TSX:GIN) today reported net earnings of $1.6 million ($0.13 per share) for the first quarter ended February 28, 2003 compared with $663,000 ($0.05 per share) for the first quarter ended March 1, 2002, an increase of 142%. Sales for the period were 17% higher at $39.8 million, up from $34.1 million last year.The results reflect the sustained growth of the RV Division and the continuing improved performance of the Electronics Division.
Edward C. Hanna, Glendale President and Chief Executive Officer, said, "We were pleased with this strong start to fiscal 2003. All of our operating divisions were profitable, and the continued penetration of the U.S. market by the RV Division and the much improved profitability of the Electronics Division were highlights of the year-over-year performance."
The RV Division benefited from the addition of several new dealers late in 2002 as well as the ongoing success of the Glendale Titanium luxury fifth wheel product, outpacing overall growth in the industry. Sales for the first quarter were $28.5 million, 37% higher than the same period last year. Operating earnings were $2.6 million, an 88% increase over the $1.4 million recorded in 2002.
Fernau Avionics, the Corporation's Nav Aids Division, reported sales of $4.5 million for the period, compared with $6.4 million last year, which included higher than normal early deliveries from the strong opening backlog with which Fernau began the 2002 fiscal year. Operating earnings for the first quarter were $239,000 compared with $549,000 last year.
The Electronics Division reported sales of $6.1 million for the first quarter, which was level with last year. The $600,000 turnaround in operating earnings from a loss of $262,000 in the first quarter of 2002 to operating earnings of $338,000 in 2003, reflect the positive effects of the cost improvements following the integration of Quantaflex into the Edgelit operations in January last year. In addition, military orders enabled each business to post strong performances, with Precision benefiting from its well-established reputation in the sector, and Edgelit successfully establishing a presence. The commercial aviation sector remained weak for both units.
Quality Plastics results for the first quarter were steady with last year, posting sales of $714,000 compared with $719,000 in 2002 and operating earnings of $56,000 compared with $57,000 in 2002.
Mr. Hanna said the results were also pleasing in light of uncertain economic conditions. "The RV Division's performance was achieved against a backdrop of overall declining consumer confidence in the U.S. and growing concern about conflict in the Middle East. These issues and rising gasoline prices had some effect on the RV sector, although the long-term outlook remains positive with favourable demographics and the growing popularity of RVs. Glendale's success is a result of our strategic expansion into the U.S. marketplace with excellent product offerings. Fernau has been able to maintain healthy sales levels from its backlog and is aggressively pursuing new sales. The Electronics Division is having success in developing new markets in the military sector for Edgelit by capitalizing on the synergies with Precision and at the same time keeping a tight control on costs. The Division is investing in future growth with the acquisition of new capital equipment in the first quarter that will improve productivity and competitiveness."
Glendale International Corp. is a diversified Canadian company that operates through autonomous subsidiaries in Canada and the U.K. The Corporation is the largest Canadian manufacturer of recreational vehicles (RVs) and sells its extensive product range through dealers in Canada and the U.S. Glendale's other subsidiaries include U.K.-based Fernau Avionics, Quality Plastics and Firan Technology Group, which operates Graphico Edgelit and Graphico Precision. Glendale trades on the Toronto Stock Exchange under the symbol GIN.
This release contains certain forward-looking statements that reflect management's expectations regarding the Corporation's future growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements.
Financial Highlights
(in thousands of dollars except per share amounts)
(prepared without audit)
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Three Months Ended
Feb 28,2003 Mar 1,2002
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Sales $39,781 $34,072
Net Earnings $1,605 $663
Basic Net Earnings per Share $0.13 $0.05
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CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(prepared without audit)
Period Ended
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CURRENT ASSETS Feb 28,2003 Nov 30,2002 Mar 1,2002
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Cash and cash equivalents $5,061 $8,405 -
Accounts receivable 18,001 23,310 22,970
Inventories 19,963 14,746 17,104
Deposits and prepaid expenses 596 684 689
Due from shareholders 833 629 831
Future income taxes 785 785 561
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45,239 48,559 42,155
Property, Plant and Equipment (net) 15,423 15,117 15,529
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$60,662 $63,676 $57,684
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CURRENT LIABILITIES
Bank indebtedness - - $1,961
Accounts payable and accrued
liabilities 23,769 25,575 23,071
Income taxes payable 141 2,052 157
Dividends payable 1,227 - 736
Current portion of long-term debt 1,900 1,900 1,900
Current portion of capital leases 23 23 48
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27,060 29,550 27,873
Long-Term Debt 4,505 5,050 6,400
Capital Leases 60 70 135
Future Income Taxes 2,963 2,963 3,144
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34,588 37,633 37,552
SHAREHOLDERS' EQUITY
Share capital 21,489 21,489 21,489
Cumulative translation adjustment 599 946 146
Retained earnings/(deficit) 3,986 3,608 (1,503)
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26,074 26,043 20,132
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$60,662 $63,676 $57,684
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CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of dollars except per share amounts)
(prepared without audit) Three Months Ended
Feb 28,2003 Mar 1,2002
----------------------
Sales $39,781 $34,072
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Costs and Expenses
Manufacturing, selling and administration 36,347 32,224
Depreciation and amortization 617 664
Research and development 394 345
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37,358 33,233
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Operating Earnings 2,423 839
----------------------
Other Income (Expenses)
Interest income 96 47
Interest expense (104) (141)
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(8) (94)
Earnings Before Income Taxes 2,415 745
Provision for Income Taxes 810 82
----------------------
Net Earnings $1,605 $663
----------------------
----------------------
Basic Net Earnings per Share $0.13 $0.05
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----------------------
Diluted Net Earnings per Share $0.13 $0.05
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(prepared without audit) Three Months Ended
----------------------
Feb 28,2003 Mar 1,2002
----------------------
Operating Activities
Net earnings $1,605 $663
Items not affecting cash
Depreciation and amortization 617 664
Unrealized translation loss (347) -
Gain on sale of property, plant and equipment (20) -
Changes in non-cash operating items (3,537) (805)
----------------------
(1,682) 522
Investing Activities
Purchase of property, plant and equipment (930) (374)
Proceeds on sale of property, plant and equipment 27 -
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(903) (374)
Financing Activities
Repayment of long-term debt (545) (550)
Proceeds from operating loans - 598
Repayment of capital leases (10) (20)
Due from shareholders (204) (176)
----------------------
(759) (148)
Net Cash Flow (3,344) -
Net Cash and Cash Equivalents, Beginning of Period 8,405 -
----------------------
Net Cash and Cash Equivalents, End of Period $5,061 -
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Supplemental disclosures of cash flows:
Payments for interest 91 133
Payments for income taxes 2,703 974
Refunds for income taxes - 818
Notes to the Consolidated Financial Statements
1. Significant accounting policies
The accompanying Financial Statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those followed in the most recent audited financial statements. These Financial Statements do not include all the information and note disclosures required by generally accepted accounting principles for annual financial statements and therefore should be read in conjunction with the said audited annual financial statements and the notes below.
2. Contingency
Pursuant to the sale of its subsidiary Denro on February 26, 1999, various purchase price disputes arising between the parties were resolved by an arbitrator in his report dated September 28, 2000. On October 31, 2000, the purchaser advised the Corporation of a new claim for damages of US$20 million arising from the purchase. In accordance with the terms of the purchase agreement, the matter is in the course of being arbitrated.
Management disputes the purchaser's allegations and strongly believes that the Corporation's position will be upheld. Payments pertaining to a future settlement, if any, will be recorded in the year when the matter is finally resolved.
3. Income taxes
The estimated income tax provision for the period ended February 28, 2003 varies from that expected based on the Corporation's combined federal and provincial tax rate of 40%. This is due primarily to the Corporation's U.K. subsidiary (Fernau - Nav Aids) generating approximately $239 thousand of earnings for which no tax provision is necessary. At February 28, 2003, the Corporation's U.K. subsidiary had operating losses carried forward totaling approximately $7.7 million that are available indefinitely for application against future taxable income. No recognition has been given to the potential benefit of the losses available in the U.K. in the consolidated financial statements.
4. Comparative figures
Certain comparative figures have been reclassified to conform to the current period's presentation.
5. Segmented information
The Corporation's Recreational Vehicles Division experiences seasonal fluctuations in revenues with the second and fourth quarters typically being higher, the first quarter is generally the lowest.
SEGMENTED INFORMATION
(in thousands of dollars)
(prepared without audit)
OPERATING SEGMENTS
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Three Months Recreational Nav Elec- Other Corporate Total
Ended Vehicles Aids tronics Office
February 28, 2003
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Sales $28,516 $4,479 $6,072 $714 - $39,781
Costs and expenses 25,924 4,240 5,734 658 802 37,358
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Operating earnings 2,592 239 338 56 (802) 2,423
Net interest expense - - - - (8) (8)
Income taxes - - - - (810) (810)
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Net earnings $2,592 $239 $338 $56 ($1,620) $1,605
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Total and identifiable
assets 25,598 11,989 14,956 1,329 6,790 60,662
Capital expenditures 80 11 835 4 - 930
Depreciation and
amortization 113 58 383 21 42 617
Three Months Ended
March 1, 2002
Sales $20,856 $6,398 $6,099 $719 - $34,072
Costs and expenses 19,479 5,849 6,361 662 882 33,233
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Operating earnings/
(loss) 1,377 549 (262) 57 (882) 839
Net interest expense - - - - (94) (94)
Income taxes - - - - (82) (82)
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Net earnings/(loss) $1,377 $549 ($262) $57 ($1,058) $663
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Total and identifiable
assets 23,368 11,413 14,259 959 7,685 57,684
Capital expenditures 168 124 71 2 9 374
Depreciation and
amortization 116 79 403 23 43 664