Bell Industries Reports Second Quarter Results
EL SEGUNDO, Calif.--Aug. 5, 2003--Bell Industries, Inc. (AMEX:BI) today reported financial results for the three- and six-month periods ended June 30, 2003.Net revenues for the 2003 second quarter totaled $39.4 million, compared with $41.3 million in the prior-year period. Bell reported net income of $220,000, or $0.03 per diluted share, compared with $438,000, or $0.05 per diluted share, in the second quarter of 2002.
Revenues at Bell's Tech.logix Group (BTL), the company's largest operating unit, totaled $23.6 million in the current second quarter, compared with $25.7 million a year earlier. Services revenues increased 57 percent over the second quarter last year and represented 38 percent of BTL's total revenues, up from 22 percent a year ago. BTL recorded an operating loss for the 2003 second quarter of $235,000, compared with operating income of $247,000 a year ago.
"The substantial growth in BTL's services revenues underscores our strategy to move into a higher margin area in the technology sector," said Tracy A. Edwards, chairman, president and chief executive officer of Bell Industries. "The increase was more than offset, however, by a 27 percent decline in technology product deliveries, reflecting the continued weak technology market, as well as the trend of major suppliers increasingly marketing their products directly to end-user customers.
"Operating results for the second quarter also were impacted by expenses in connection with infrastructure and related items to integrate new client engagements," Edwards said. "While we remain cautious as to the near-term outlook, with businesses still reserved about IT investments and services sales subject to long selling cycles, we are pleased to have won new accounts in the second quarter. We believe our efforts to build BTL's strategic sourcing practice are beginning to show progress and we are aggressively working to further strengthen key alliances and create more opportunities, while remaining focused on improving the profitability of existing engagements."
Bell's Recreational Products Group (RPG) posted modestly lower sales of $14.0 million for the three months ended June 30, 2003, compared with $14.1 million in the prior-year period. Operating income increased 11 percent to $941,000 from $850,000 in the 2002 second quarter, reflecting slightly reduced selling and administrative expenses during the period.
Sales at J.W. Miller, Bell's electronic components operation, increased on higher product demand to $1.8 million from $1.5 million in the 2002 second quarter. Operating income nearly doubled to $315,000 from $160,000 last year, primarily as a result of increased sales. In addition, in the prior year, the company increased certain inventory reserves in light of the difficult market conditions at the time.
For the first six months of 2003, Bell recorded net sales of $71.5 million, compared with $73.5 million a year earlier. The company incurred a net loss of $692,000, or $0.08 per share, compared with $1.8 million, or $0.20 per share, for the 2002 six-month period. The 2002 results include a goodwill write-off of $2.1 million, equal to $1.3 million after tax, or $0.14 per share, in connection with the adoption of a new accounting standard.
Bell continues to maintain a strong balance sheet with no bank debt. At June 30, 2003, Bell had net working capital of $19.6 million and cash and cash equivalents of $9.9 million. Seasonally comparable amounts at the end of last year's second quarter were $21.9 million and $9.2 million, respectively. Shareholders' equity totaled $24.7 million, or $2.95 per share, at June 30, 2003.
Bell's primary business, the Tech.logix Group, provides information technology lifecycle services, including planning, product sourcing, migration, support and disposal services. Recurring support services include help desk and on-site expertise for desktop and mobile devices, business software applications and network infrastructures. Bell also distributes after-market parts and accessories to the recreational vehicle market. In addition, Bell manufactures and distributes a variety of standard and custom magnetic components used in electronic applications for computer, medical and telecommunication equipment.
Certain matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, general business conditions and economic uncertainty, reduced technology product sales as major suppliers increasingly sell directly to end-users, decreased margins due to price competition, delays and costs associated with new client engagements, realizing business opportunities as the economy improves, and other factors described in the company's public filings from time to time.
Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
(Unaudited)
Three months Six months
ended ended
June 30, June 30,
2003 2002 2003 2002
Net revenues
Products $30,398 $35,643 $53,966 $62,087
Services 8,977 5,706 17,486 11,379
39,375 41,349 71,452 73,466
Costs and expenses
Cost of products sold 24,721 29,410 43,728 51,453
Cost of services provided 6,998 4,094 13,970 8,408
Selling and administrative 7,366 7,157 14,789 14,509
Interest, net (44) (37) (66) (93)
39,041 40,624 72,421 74,277
Income (loss) before income taxes
and cumulative effect of
accounting change 334 725 (969) (811)
Income tax expense (benefit) 114 287 (277) (319)
Income (loss) before cumulative
effect of accounting change 220 438 (692) (492)
Cumulative effect of accounting
change, net of income tax benefit
of $836 (1,280)
Net income (loss) $ 220 $ 438 $ (692) $(1,772)
Basic and diluted share data
Income (loss) before cumulative
effect of accounting change per
share $ .03 $ .05 $ (.08) $ (.06)
Net income (loss) per share $ .03 $ .05 $ (.08) $ (.20)
Weighted average common stock 8,367 8,900 8,367 8,895
OPERATING RESULTS BY BUSINESS
SEGMENT
Net revenues
Technology Solutions
Products $14,652 $20,019 $25,961 $35,452
Services 8,977 5,706 17,486 11,379
23,629 25,725 43,447 46,831
Recreational Products 13,995 14,125 24,635 23,909
Electronic Components 1,751 1,499 3,370 2,726
$39,375 $41,349 $71,452 $73,466
Operating income (loss)
Technology Solutions $ (235) $ 247 $(1,220) $ (772)
Recreational Products 941 850 1,002 925
Electronic Components 315 160 620 236
Corporate costs (731) (569) (1,437) (1,293)
290 688 (1,035) (904)
Interest, net 44 37 66 93
Income tax benefit (expense) (114) (287) 277 319
Cumulative effect of accounting
change, net (1,280)
Net income (loss) $ 220 $ 438 $ (692) $(1,772)
Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
(Unaudited)
June 30, December 31,
2003 2002
ASSETS
Current assets
Cash and cash equivalents $ 9,850 $10,079
Accounts receivable, net 20,672 13,078
Income tax receivable 2,400
Inventories 10,715 12,349
Prepaid expenses and other 2,751 3,051
Total current assets 43,988 40,957
Fixed assets, net 4,663 5,436
Other assets 2,896 2,997
$51,547 $49,390
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $13,270 $10,687
Accrued payroll and liabilities 11,145 10,661
Total current liabilities 24,415 21,348
Long-term liabilities 2,417 2,496
Shareholders' equity 24,715 25,546
$51,547 $49,390