SPS Technologies Announces Third Quarter Earnings
JENKINTOWN, Pa., Oct. 22, 2003 -- SPS TECHNOLOGIES, INC. reports that net earnings for the third quarter of 2003 were $4.6 million or $0.35 per diluted share compared with the loss of $6.3 million or $0.48 per diluted share reported for the third quarter of 2002. Results for the third quarter of 2003 include $2.0 million in pre-tax costs ($1.3 million after-tax or $0.10 per diluted share) associated with the Company's pending acquisition by Precision Castparts Corp. announced on August 18, 2003. Results for the third quarter of 2002 include a pre-tax charge of $16.0 million ($11.2 million after tax or $0.85 per diluted share) recorded in connection with the Company's 2002 restructuring plan and pre-tax restructure related costs of $0.4 million ($0.3 million after tax or $0.02 per diluted share). Proforma net earnings before acquisition related costs for the third quarter of 2003 were $5.9 million or $0.45 per diluted share. This compares to proforma net earnings before restructure related costs of $5.2 million or $0.39 per diluted share reported for the third quarter of 2002. A reconciliation of proforma net earnings before acquisition and restructure related costs to reported net earnings appears in the financial schedules that accompany this news release.
Net sales for the third quarter were $203.9 million compared to $205.1 million last year. For the third quarter, the impact of changes in foreign exchange rates, particularly in the UK and Eurozone currencies, increased revenues over the same period a year ago by $3.5 million. This impact along with increased sales by the Specialty Materials and Alloys segment and the U.K. operations of the Aerospace Fasteners and Components segment were offset by lower revenues of the Magnetic Products segment and the North American operations of the Aerospace Fasteners and Components segment in comparison to the same period a year ago. The Company realized operating margin improvement in comparison to the same period a year ago in spite of the volume declines, particularly in the Magnetic Products segment.
Incoming orders for the third quarter were $196.2 million, a 2% decline from the $200.4 million reported a year ago. This reduction was primarily due to reductions in orders in the Magnetic Products segment, where orders were down $4.0 million, or 15%, from the level recorded in the third quarter of 2002 and in the Specialty Materials and Alloys segment, where orders were down $2.4 million, or 8%, from the third quarter of 2002. The effect of exchange rate changes improved reported orders by $3.0 in comparison to last year. Orders for the Engineered Products segment, excluding currency impacts were down $3.5 million, or 5% from 2002 levels but orders for Aerospace Fasteners and Components, excluding currency impacts, were up $2.9 million, or 4%, over the same period a year ago. The book to bill ratio for the third quarter was 0.96 and the absolute value of orders was down $4.2 million, or 2%, from the second quarter of 2003. Backlog at September 30, 2003 was $279.0 million, essentially unchanged from backlog reported at December 31, 2002.
For the nine months ended September 30, 2003, incoming orders were $623.5 million compared to $620.9 million for the same period a year ago. The impact of exchange rate changes increased incoming orders by $10.4 million versus the first nine months of 2002. Net sales were $630.7 million compared to $628.8 million for the first nine months of 2002. The impact of exchange rate changes increased net sales for the nine months ended September 30, 2003 by $10.8 million versus the same period in 2002. Year-to-date net earnings for the nine months ended September 30, 2003 were $15.7 million or $1.20 per diluted share compared to $2.4 million or $0.18 per diluted share for the same period in 2002. Proforma net earnings before acquisition and restructure related costs for the first nine months of 2003 were $17.9 million or $1.37 per diluted share. This result compares to proforma net earnings of $17.6 million or $1.33 per diluted share for the same period a year ago, which excludes restructure related costs and legal settlement impacts. A reconciliation of proforma net earnings before restructure related costs and legal settlement impacts to reported net earnings appears in the financial schedules that accompany this news release.
As of September 30, 2003, the Company had cash balances of $74.8 million and total debt of $224.4 million. The ratio of net debt to total capitalization was 28% at September 30, 2003, down from 30% at the end of the second quarter of 2003. Condensed Balance Sheet information is included in the financial schedules that accompany this news release.
Cash provided by operating activities for the third quarter was $5.0 million, compared with $9.0 million for the same period a year ago. Cash provided by operating activities for the third quarter included pension contributions for the Company's U.S. defined benefit pension plans of $11.8 million, compared with a contributions of $1.0 million for the same period a year ago. The 2003 contributions include discretionary pension contributions of approximately $7.0 million over required funding levels in order to improve the funded status of the plans. Net cash flow for the third quarter was $6.2 million, compared to a net cash outflow of $24.3 million for the same period in 2002. Capital expenditures for the third quarter were $6.4 million, compared to $3.8 million for the third quarter of 2002. The Company received $5.7 million in proceeds from the exercise of stock options in the third quarter of 2003.
Year-to-date cash provided by operating activities was $11.6 million compared with $28.5 million for the same period a year ago. Year-to-date net cash flow is a net outflow of $1.2 million compared with a net cash outflow of $24.9 million for the same period in 2002. Year-to-date capital expenditures were $18.6 million for the period ended September 30, 2003 compared to $17.4 million for the same period in 2002.
This news release contains statements, which may constitute forward- looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect SPS Technologies' current views about future events and financial performance. Investors should not rely on forward-looking statements because they are subject to a variety of assumptions, risks and uncertainties that could cause actual results, performance or achievements of SPS Technologies to differ materially from the Company's expectations. The Company's actual results could differ materially from those mentioned in such forward-looking statements as a result of the risks associated with the Company's business, changes in general economic conditions, and changes in the assumptions used in making the forward-looking statements. The Company expressly does not undertake any duty to update forward-looking statements and does not undertake any obligation to publicly release any forward-looking information to reflect anticipated or unanticipated events or circumstances after the date of this news release. Additional information regarding these risk factors and uncertainties is detailed in the Company's Securities and Exchange Commission filings.
SPS TECHNOLOGIES, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited--Thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net sales $203,911 $205,125 $630,721 $628,783
Cost of goods sold 165,949 170,275 517,904 520,407
Gross Profit 37,962 34,850 112,817 108,376
Selling, general and
administrative expense 27,468 24,534 77,753 75,466
Restructurings &
impairments 0 13,600 0 14,500
Operating earnings
(loss) 10,494 (3,284) 35,064 18,410
Other income (expense):
Interest income 229 201 688 619
Interest expense (4,018) (4,569) (12,237) (13,841)
Other, net (145) (1,094) (505) (1,324)
Earnings (loss) before
income taxes 6,560 (8,746) 23,010 3,864
Provision (benefit) for
income taxes 1,940 (2,436) 7,300 1,494
Net earnings (loss) $4,620 ($6,310) $15,710 $2,370
Earnings Per Share:
Basic $0.36 ($0.48) $1.21 $0.18
Diluted $0.35 ($0.48) $1.20 $0.18
Shares used to compute:
Basic EPS 12,969 13,162 12,987 13,145
Diluted EPS 13,120 13,216 13,080 13,246
SPS TECHNOLOGIES, INC.
PROFORMA STATEMENTS OF CONSOLIDATED OPERATIONS
EXCLUDING CHARGES LISTED BELOW
(Unaudited--Thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net sales $203,911 $205,125 $630,721 $628,783
Cost of goods sold 165,949 168,775 517,904 518,907
Gross Profit 37,962 36,350 112,817 109,876
Selling, general and
administrative expense 25,468 24,092 74,413 70,264
Operating earnings 12,494 12,258 38,404 39,612
Other expense, net 3,934 4,562 12,054 13,646
Earnings before income
taxes 8,560 7,696 26,350 25,966
Provision for income
taxes 2,640 2,530 8,402 8,402
Proforma net earnings $5,920 $5,166 $17,948 $17,564
Proforma diluted EPS $0.45 $0.39 $1.37 $1.33
Reconciliation of Proforma to Reported Net Earnings
Proforma net earnings $5,920 $5,166 $17,948 $17,564
Net of tax:
Restructurings &
impairments 0 (11,216) 0 (11,906)
Other restructure
related charges 0 (260) (938) (1,960)
Expenses to Sell
Company (1,300) 0 (1,300) 0
Legal settlement
charges 0 0 0 (1,328)
Reported net earnings $4,620 ($6,310) $15,710 $2,370
Diluted EPS $0.35 ($0.48) $1.20 $0.18
Shares used to compute:
Diluted EPS 13,120 13,216 13,080 13,246
SPS TECHNOLOGIES, INC.
SEGMENT INFORMATION
(Unaudited--Thousands of dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Incoming Orders:
Aerospace Fasteners
and Components $72,548 $68,674 $226,635 $212,877
Engineered Fasteners
and Components 74,267 75,927 231,395 227,462
Specialty Materials
and Alloys 26,578 28,985 97,528 94,430
Magnetic Products 22,774 26,812 67,983 86,092
$196,167 $200,398 $623,541 $620,861
Net Sales:
Aerospace Fasteners
and Components $77,353 $76,123 $230,312 $230,823
Engineered Fasteners
and Components 74,783 73,966 232,804 221,001
Specialty Materials
and Alloys 29,466 28,547 95,058 94,297
Magnetic Products 22,309 26,489 72,547 82,662
$203,911 $205,125 $630,721 $628,783
Operating earnings (loss):
Aerospace Fasteners
and Components $7,390 $5,216 $19,286 $17,469
Engineered Fasteners
and Components 3,049 (7,598) 10,854 (1,744)
Specialty Materials
and Alloys 3,902 3,393 12,169 11,928
Magnetic Products 1,403 (945) 4,565 397
Unallocated
Corporate Cost (5,250) (3,350) (11,810) (9,640)
$10,494 ($3,284) $35,064 $18,410
SPS TECHNOLOGIES, INC.
SEGMENT INFORMATION
(Unaudited--Thousands of dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Proforma operating
earnings excluding
expenses and wind-down
losses related to
restructure actions,
expenses to sell the
Company and legal
settlement charges:
Aerospace Fasteners
and Components $7,390 $7,225 $19,286 $21,130
Engineered Fasteners
and Components 3,049 3,320 12,094 10,764
Specialty Materials
and Alloys 3,902 3,702 12,169 12,237
Magnetic Products 1,403 1,161 4,665 4,921
Unallocated
Corporate Cost (3,250) (3,150) (9,810) (9,440)
12,494 12,258 38,404 39,612
Expenses and wind-down
losses related to
restructure actions 0 (15,542) (1,340) (19,052)
Expenses to Sell
Company (2,000) 0 (2,000) 0
Legal settlement
charges 0 0 0 (2,150)
Reported operating
earnings $10,494 ($3,284) $35,064 $18,410
SPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited--Thousands of dollars)
September 30, December 31,
2003 2002
Cash 74,753 75,982
Other current assets 328,503 313,895
Property, plant and equipment, net 213,811 216,406
Other assets 245,057 232,332
Total assets 862,124 838,615
Current liabilities 154,367 158,043
Deferred income taxes 22,358 20,237
Long-term debt 209,082 213,074
Other liabilities 99,606 100,327
Shareholders' Equity 376,711 346,934
Total liabilities and shareholders' equity 862,124 838,615