R&B, Inc. Reports Sales and Earnings for the Second Quarter Ended June 28, 2003
COLMAR, Pa., July 25 -- R&B, Inc. today announced financial results for the second quarter ended June 28, 2003. For the second quarter ended June 28, 2003, sales increased 5% to $58.1 million from $55.5 million in the same period last year. Diluted earnings per share in the second quarter of 2003 were $0.39 compared to $0.46 in the same period last year, which included an after-tax gain of $0.15 per share on the sale of the Company's specialty fastener business. Net income in the second quarter of 2003 was $3.5 million compared to net income of $4.1 million in the same period last year, which included the above-mentioned after-tax gain of $1.3 million. Excluding the gain for comparison purposes, fully diluted earnings per share increased 26% in the second quarter.
For the six months ended June 28, 2003, sales increased 2% to $108.3 million from $106.5 million in the same period last year. Diluted earnings per share for the first six months of 2003 were $0.64 compared to $0.70 in the same period last year, which included the after-tax gain of $0.15 per share. Net income for the first six months of 2003 was $5.8 million compared to net income of $6.3 million in the same period last year, which included the above- mentioned after-tax gain of $1.3 million. Excluding the gain for comparison purposes, fully diluted earnings per share increased 16% for the first six months of 2003.
Sales volume in 2003 increased as a result of shipments to a new customer for the Company's Allparts brake business, but this growth was partially offset by lower levels of new product introductions and line updates earlier in the year. The favorable effects of foreign currency exchange resulted in a 2% year over year increase in sales, however this benefit was offset by the elimination of $2.1 million in revenues from the specialty fastener business sold in May 2002.
Net debt (total debt less cash and short-term investments) increased $0.2 million in the quarter to $36.4 million. The slightly higher net borrowing level was due to an increase in accounts receivable as a result of higher sales in the second quarter. Inventory levels during the quarter were flat, but have increased $5.0 million since year end due to inventory builds for customer programs scheduled to ship in the third quarter and higher safety stock levels given recent world events. Inventories are expected to decline in the second half of the year as safety stocks are reduced and customer programs ship.
Mr. Richard Berman, Chairman, President and Chief Executive Officer, said, "We are pleased to be able to report solid results despite the challenging economic climate. Second quarter sales benefited from seasonally higher order levels and an increased level of line updates and new product introductions. We believe that these new product introductions as well as the releases we have slated for the rest of this year will continue to drive future sales growth. We remain committed to our strategy of accelerating opportunities for our customers and our businesses through continued investment in new product development, initiatives designed to create and grow aftermarket demand for new and existing products, and supply chain excellence to ensure that the right parts are available at the right time."
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 - Risk Factors."
R&B, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Second Quarter (unaudited) 6/28/03 Pct. 6/29/02 Pct.
Net sales $58,068 100.0 $55,455 100.0
Cost of goods sold 36,885 63.5 35,106 63.3
Gross profit 21,183 36.5 20,349 36.7
Selling, general and
administrative expenses 14,811 25.5 14,949 27.0
Other income (1) - - (2,143) (3.9)
Income from operations 6,372 11.0 7,543 13.6
Interest expense, net 884 1.5 1,111 2.0
Income before income taxes 5,488 9.5 6,432 11.6
Provision for income taxes 1,963 3.4 2,317 4.2
Net income $3,525 6.1 $4,115 7.4
Earnings per share
Basic $0.41 - $0.48 -
Diluted $0.39 - $0.46 -
Average shares outstanding
Basic 8,627 - 8,485 -
Diluted 9,033 - 8,939 -
26 Weeks 26 Weeks
Second Quarter (unaudited) 6/28/03 Pct. 6/29/02 Pct.
Net sales $108,340 100.0 $106,535 100.0
Cost of goods sold 68,559 63.3 67,780 63.6
Gross profit 39,781 36.7 38,755 36.4
Selling, general and
administrative expenses 29,071 26.8 29,034 27.3
Other income (1) - - (2,143) (2.0)
Income from operations 10,710 9.9 11,864 11.1
Interest expense, net 1,775 1.7 2,136 2.0
Income before income taxes 8,935 8.2 9,728 9.1
Provision for income taxes 3,185 2.9 3,466 3.2
Net income $5,750 5.3 $6,262 5.9
Earnings per share
Basic $0.67 - $0.74 -
Diluted $0.64 - $0.70 -
Average shares outstanding
Basic 8,564 - 8,479 -
Diluted 8,996 - 8,917 -
(1) In the second quarter of 2002, the Company sold its specialty fastener business, resulting in a pre-tax gain of $2.1 million, which is reported as other income. The gain after-tax was $1.3 million, or $0.15 per fully diluted share.
R&B, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
6/28/03 12/28/02
Assets: (Unaudited)
Cash and short term investments $16,506 $19,171
Accounts receivable 53,682 48,769
Inventories 52,237 47,217
Prepaid expenses and other 9,608 9,046
Total current assets 132,033 124,203
Property & equipment 16,486 16,591
Goodwill 28,850 28,607
Other assets 873 727
Total assets $178,242 $170,128
Liability & Shareholders' Equity:
Current portion of long-term debt $9,144 $9,291
Accounts payable 12,607 11,813
Accrued expenses and other 11,882 11,759
Total current liabilities 33,633 32,863
Long-term debt 43,785 44,218
Deferred income taxes 4,127 3,475
Shareholders' equity 96,697 89,572
Total Liabilities and Equity $178,242 $170,128
Selected Cash Flow Information:
(in thousands) 13 Weeks 26 Weeks
6/28/03 6/29/02 6/28/03 6/29/02
Depreciation and
amortization $1,227 $1,569 $2,419 $3,155
Capital Expenditures $1,418 $636 $2,303 $1,122
Reconciliation of Non-GAAP Measures (Unaudited):
In the second quarter of fiscal 2002, R&B, Inc. sold its specialty fastener business, resulting in an after-tax gain of $1.3 million. The gain from the sale has been excluded from comparisons to net income and earnings per share to enhance comparability due to the size and infrequent nature of this gain.
(In thousands)
13 Weeks 13 Weeks Pct.
6/28/03 06/29/02 Change
Fully diluted earnings
per share (as reported) $0.39 $0.46 -15%
Less: gain on sale, net of tax - (0.15)
_____ _____ ___
Net Income (as adjusted) $0.39 $0.31 26%
26 Weeks 26 Weeks Pct.
6/28/03 06/29/02 Change
Fully diluted earnings
per share (as reported) $0.64 $0.70 -9%
Less: gain on sale, net of tax - (0.15)
_____ _____ ___
Net Income (as adjusted) $0.64 $0.55 16%