MSX International Announces First Quarter 2003 Financial Results
SOUTHFIELD, Mich., May 12, 2003 -- MSX International, a provider of technical business services, announced sales totaling $183.4 million for the first quarter of 2003, which ended March 30, 2003. This compares to $205.5 million in the same quarter one year ago. The 11% decline in net sales reflects the removal of sales from under-performing businesses that were exited in 2002 and lower demand for automotive engineering and human capital management services.
Gross profit in the first quarter of 2003 was $20.2 million, or 11.0% of net sales. This compares to $26.7 million, or 13.0% of net sales one year earlier. Reduced gross profit was due to lower sales, price decreases for selected services, and costs associated with underutilized equipment and facilities. Actions in late 2002 to reduce direct and indirect operating costs resulted in savings that had a favorable impact on gross profit totaling more than $2 million in the first quarter of 2003.
Selling, general and administrative expenses decreased $4.2 million to $15.7 million in the first quarter of 2003, reflecting cost savings achieved in these activities since the first quarter of 2002. Actions taken in 2002 to realign these costs to support current business levels are expected to produce annualized savings of about $12 million in 2003.
The company's operating income of $3.0 million for the quarter also included $1.4 million of additional restructuring and severance costs. These costs relate to the restructuring program that began in the fourth quarter of 2002. Excluding these costs, MSX International's operating income in the first quarter was $4.5 million, compared to $6.8 million one year earlier. A net first quarter loss of $3.6 million includes a modest increase in interest expense due primarily to recent changes to credit arrangements.
Commenting on the results, Frederick K. Minturn, executive vice president and chief financial officer, stated, "Our results in the first quarter reflect the positive impact of late 2002 cost reduction plans, which are now substantially implemented. We are on track to achieve our 2003 business plan."
MSX International will host a conference call at 10:00 a.m. EDT on Tuesday, May 13, to review these results. To listen to the call, dial 212-676-5386 and provide reservation number 21141191. A replay of the call will be available beginning at 12:00 p.m. EDT Tuesday, May 13, at 800-633-8284 (Domestic) or 402-977-9140 (International), with the same reservation number.
MSX International, headquartered in Southfield, Mich., is a global provider of technical business services. The company combines innovative people, standardized processes and today's technologies to deliver a collaborative, competitive advantage on a global basis. With annual sales of over $800 million, MSX International has 8,000 employees in 26 countries. Visit their Web site at http://www.msxi.com/ .
Certain of the statements made in this press release including the success of restructuring activities and other operational improvements constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current management projections and expectations. They involve significant risks and uncertainties. As such, they are not guarantees of future performance. MSX International disclaims any intent or obligation to update such statements.
Actual results may vary materially from those in the forward-looking statements as a result of any number of factors, many of which are beyond the control of management. These important factors include: our leverage and related exposure to changes in interest rates; our reliance on major customers in the automotive industry and the timing of their product development and other initiatives; the market demand for our technical business services in general; our ability to recruit and place qualified personnel; delays or unexpected costs associated with cost reduction efforts; risks associated with operating internationally, including economic, political and currency risks; and risks associated with our acquisition strategy. Additional information concerning these and other factors are discussed under the heading "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K (dated March 27, 2003), and in other filings with the Securities and Exchange Commission.
MSX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
for the fiscal quarters ended March 30, 2003 and March 31, 2002
Fiscal Quarter Ended
March 30, March 31,
2003 2002
(in thousands)
Net sales $183,351 $205,473
Cost of sales 163,174 178,820
Gross profit 20,177 26,653
Selling, general and
administrative expenses 15,704 19,865
Restructuring and severance costs 1,431 278
Operating income 3,042 6,510
Interest expense, net 6,675 6,261
Income (loss) before income
taxes, minority interests and
equity in Affiliates (3,633) 249
Income tax provision 101 101
Less minority interests and equity
in affiliates, net of taxes (174) 238
Loss before cumulative effect of
accounting change for
goodwill impairment (3,560) (90)
Cumulative effect of accounting
change for goodwill impairment,
net of taxes of $9,745 - (38,102)
Net loss (3,560) (38,192)
Preferred stock dividends (2,194) (1,905)
Net loss available to
common shareholders $(5,754) $(40,097)
MSX INTERNATIONAL, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
for the fiscal quarters ended March 30, 2003 and March 31, 2002
Fiscal Quarter Ended
March 30, 2003 March 31, 2002
(in thousands)
Reconciliation of EBITDA:
Operating income $3,042 $6,510
Michigan Single Business and
similar taxes 875 891
EBIT, as defined 3,917 7,401
Depreciation 4,759 4,517
Severance costs 1,431 278
EBITDA before severance, as defined $10,107 $12,196
Capital Expenditures $2,246 $2,030
As of
Selected Balance Sheet Data: March 30, 2003 December 29, 2002
Cash and cash equivalents $3,886 $10,935
Accounts receivable, net 219,587 211,957
Notes payable and current
portion of long-term debt 14,979 14,671
Long-term debt 237,029 220,003
Total debt $252,008 $234,674