Riviera Tool Returns to Profitability in the Second Quarter of Fiscal 2003
GRAND RAPIDS, Mich., April 15 -- Fueled by sharply higher sales, Riviera Tool Co. (AMEX:RTC) today reported that it had returned to profitability in the second quarter of fiscal 2003.
The Grand Rapids, Mich. designer and manufacturer of stamping die systems reported net income of $231,348, or $0.07 per diluted share, for the quarter ended Feb. 28, 2003, reversing a loss of $687,990, or $0.20 per diluted share, for the same period in fiscal 2002. Riviera noted that profit in the just- completed second quarter was largely a result of the increased revenue generated from its record contract backlog.
For the second quarter of fiscal 2003, Riviera reported that net sales rose 141 percent to $8.3 million, compared with net sales of $3.5 million for the same period in fiscal 2002. The Company attributed the increase to new contracts for stamping die systems that were awarded in the second half of fiscal 2002. These new contracts, in addition to more than $16 million in orders secured during the just-completed quarter, allowed the Company to report record backlog of $32.7 million as of Feb. 28, 2003.
"We are very pleased to report revenue and bottom-line improvements for the second quarter of fiscal 2003," said Kenneth K. Rieth, president and chief executive officer of Riviera Tool. "While the last several years have proven to be challenging for our industry, we have adjusted our business model to meet the changing demands. Our investments in new technology and new processes have allowed us to secure substantial new contracts and return to profitability.
"With record backlog and continued strong quoting activity, we anticipate that fiscal 2003 should be a good year for Riviera Tool. We appreciate the continuing support of our shareholders, and remain focused on winning new orders and improving our operating performance in order to maximize shareholder value."
During the just-completed second quarter, Riviera Tool announced that it had secured more than $16 million in new contracts for work on vehicles for Mercedes Benz, Daimler Chrysler, Ford Motor Co., International Truck and Freightliner. Riviera will serve as a program manager for the Mercedes M- class sport utility vehicle, leading the work of 10 West Michigan tooling suppliers.
Riviera has increased its workforce 31 percent since the beginning of the fiscal 2003 year, adding new engineers, program managers and die makers to meet production demands.
"We look to grow in a controlled and sensible way that will allow us to improve our margins while we take on substantial new contracts," Rieth said. "We also look to grow and expand our partnership with other tooling suppliers in West Michigan. By joining together, we can demonstrate the collective strength and abilities of the domestic tooling industry and maintain these important jobs right here at home."
For the six months ended February 28, 2003, Riviera Tool posted net income of $42,434, or $0.01 per diluted share compared to a net loss of $1.5 million, or $0.44 per diluted share, from the first six months of fiscal 2002. Net sales rose 85.5 percent to $12.6 million for the first six months of fiscal 2003, compared with net sales of $6.8 million for the same period in fiscal 2002.
Riviera reported a gross margin of 10.4 percent for the second quarter of fiscal 2003, marking a significant improvement over the year-ago period. The Company said its focus on controlling manufacturing overhead expenses, in combination with increased revenues, allowed it to improve its gross margin.
While direct labor expense increased in dollar amount during the just- completed quarter, it decreased as a percent of sales from 24.5 percent to 17.2 percent in the year-ago period. The same was true for manufacturing overhead, which increased in dollar amount yet decreased from 43.7 percent for the 2002 second quarter to 20.5 percent for the just-completed quarter.
"We reduced our selling, general and administrative expense, as a percentage of sales, from 12 percent in the first two quarters of fiscal 2002 to 5 percent in the first two quarters of fiscal 2003, resulting in much- improved operating margins," said Peter C. Canepa, chief financial officer for Riviera Tool. "Over the past several years, we have put in place a number of cost-containment and improvement measures that allowed us to weather lean times and maintain a strong balance sheet. These measures will keep us focused on reducing expenses and improving efficiency as we grow both our top and bottom lines."
About Riviera Tool:
Riviera Tool Co. (www.rivieratool.com ) designs, develops and manufactures large-scale, custom metal stamping die systems used in the high-speed production of sheet metal parts and assemblies for the global automotive industry. A majority of Riviera's sales are to DaimlerChrysler, GM, Ford Motor Co. and their Tier One suppliers.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this news release include certain predictions and projections that may be considered forward-looking statements under securities laws. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially, including but not limited to economic, competitive, governmental and technological.
RIVIERA TOOL COMPANY
FINANCIAL STATEMENTS
BALANCE SHEETS
ASSETS February 28, August 31,
2003 2002
CURRENT ASSETS (unaudited) (audited)
Cash $- $2,337,743
Accounts receivable 9,719,006 2,899,075
Costs in excess of billings
on contracts in process 1,444,959 3,988,346
Inventories 250,569 250,569
Prepaid expenses and other
current assets 377,531 184,313
Total current assets 11,792,065 9,660,046
PROPERTY, PLANT AND EQUIPMENT, NET 13,611,261 14,471,879
PERISHABLE TOOLING 582,251 548,606
OTHER ASSETS 325,198 303,060
Total assets $26,310,775 $24,983,591
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $226,720 $-
Notes payable 7,593,937 10,354,499
Accounts payable 4,271,608 1,694,779
Accrued liabilities 532,896 448,171
Total current
liabilities 12,625,161 12,497,449
LONG-TERM DEBT 1,174,561 -
ACCRUED LEASE EXPENSE 658,212 675,735
Total liabilities 14,457,934 13,173,184
PREFERRED STOCK - no par value,
$100 mandatory redemption value:
Authorized - 5,000 shares
Issued and outstanding -
no shares - -
STOCKHOLDERS' EQUITY:
Preferred stock - no par value,
Authorized - 200,000 shares
Issued and outstanding - no
shares - -
Common stock - No par value:
Authorized - 9,785,575 shares
Issued and outstanding -
3,379,609 shares
at February 28, 2003 and
August 31, 2002 15,115,466 15,115,466
Retained deficit (3,262,625) (3,305,059)
Total stockholders'
equity 11,852,841 11,810,407
Total liabilities and stockholders'
equity $26,310,775 $24,983,591
RIVIERA TOOL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three Months For The Six Months
Ended Ended
February 28,
2003 2002 2003 2002
SALES $8,304,121 $3,452,082 $12,642,723 $6,815,756
COST OF SALES 7,434,664 3,593,381 11,479,929 7,138,957
GROSS PROFIT (LOSS) 869,457 (141,299) 1,162,794 (323,201)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 416,712 377,939 738,605 843,806
INCOME/(LOSS) FROM
OPERATIONS 452,745 (519,238) 424,189 (1,167,007)
OTHER EXPENSE
Interest expense 141,534 156,711 298,985 312,001
Other expense 79,863 12,041 82,770 24,767
TOTAL OTHER EXPENSE 221,397 168,752 381,755 336,768
INCOME/(LOSS) BEFORE
INCOME TAX 231,348 (687,990) 42,434 (1,503,775)
INCOME TAXES - - - -
NET INCOME/(LOSS)
AVAILABLE FOR COMMON
SHARES $231,348 $(687,990) $42,434 $(1,503,775)
BASIC AND DILUTED
INCOME/(LOSS)
PER COMMON SHARE $.07 $(.20) $.01 $(.44)
BASIC AND DILUTED
COMMON SHARES
OUTSTANDING 3,379,609 3,379,609 3,379,609 3,379,609
RIVIERA TOOL COMPANY
STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Three Months For the Six Months
Ended Ended
February 28,
2003 2002 2003 2002
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income/(loss) $231,348 $(687,990) $42,434 $(1,503,775)
Adjustments to
reconcile net income/
(loss) to net cash
from operating
activities:
Depreciation and
amortization 460,482 477,441 920,964 954,882
(Increase) decrease
in assets:
Accounts receivable (1,915,394) (1,026,388) (6,819,931) (2,033,814)
Costs in excess of
billings on
contracts in
process (106,658) 618,911 2,543,387 124,473
Perishable tooling (33,796) 12,122 (33,645) 38,202
Prepaid expenses and
other current assets (204,158) (2,218) (193,218) (35,426)
Increase (decrease)
in liabilities:
Accounts payable 2,693,668 200,433 2,576,829 (233,739)
Accrued lease expense (8,762) (4,090) (17,523) (8,180)
Accrued liabilities (32,818) 69,815 84,725 213,052
Net cash provided by/
(used in) operating
activities $1,083,912 $(341,964) $(895,978) $(2,484,325)
CASH FLOWS FROM
INVESTING ACTIVITIES
Increase in other
assets - (42,290) (22,138) (42,290)
Additions to property,
plant and equipment (58,122) (23,821) (60,346) (37,917)
Net cash used in
investing activities $(58,122) $(66,111) $(82,484) $(80,207)
CASH FLOWS FROM
FINANCING ACTIVITIES
Net borrowings
(repayments) on
revolving credit line (872,730) 987,000 (872,730) 3,356,728
Issuance of debt 3,367,948 - 3,367,948 -
Principal payments
on notes payable
to bank and non-
revolving equipment
line of credit (3,521,008) (431,991) (3,854,499) (927,983)
Net cash provided by/
(used in) financing
activities $(1,025,790) 555,009 $(1,359,281) $2,428,745
NET INCREASE/
(DECREASE) IN CASH $- 146,934 $(2,337,743) $(135,787)
CASH - Beginning of
Period - - 2,337,743 282,721
CASH - End of Period $- 146,934 $- $146,934