R&B, Inc. Reports Sales and Earnings for the Third Quarter Ended September 27, 2003; Comments on 2003 Outlook
COLMAR, Pa., Oct. 27, 2003 -- R&B, Inc., today announced financial results for the third quarter ended September 27, 2003. For the third quarter ended September 27, 2003, sales increased 8% to $58.2 million from $53.9 million in the same period last year. Net income in the third quarter of 2003 was $3.7 million compared to net income of $2.6 million in the same period last year. Diluted earnings per share in the third quarter increased 41% to $0.41 from $0.29 in the same period last year.
For the nine months ended September 27, 2003, sales increased 4% to $166.5 million from $160.4 million in the same period last year. Diluted earnings per share for the first nine months of 2003 were $1.05 compared to $0.99 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 for the first nine months of 2003 was $9.5 million compared to net income of $8.9 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 25% for the first nine months of 2003.
Sales volume in 2003 increased as a result of several successful new product introductions and shipments to new customers for the Company's Allparts brake and Pik-A-Nut home hardware businesses. These sales increases were partially offset by a decline in sales volume in the Company's Swedish subsidiary due to the weak U.S. dollar. On a year to date basis, the favorable effects of foreign currency exchange resulted in a 2% year over year increase in sales; however, this benefit was largely offset by the elimination of $2.1 million in revenues from the specialty fastener business sold in May 2002 and sales volume declines in the Swedish business.
Net debt (total debt less cash and short-term investments) was reduced by $8.5 million during the quarter as a result of strong operating cash flow. Net debt at September 27, 2003 was $28.0 million, down $6.4 million since the start of the fiscal year.
Mr. Richard Berman, Chairman, President and Chief Executive Officer, said, "We are pleased with our third quarter results and our continued progress. The pace of new product introductions has accelerated in the last two quarters as a result of the investments we have made in additional product development resources and promotional efforts. These new products have been well received by our customers. We recently completed a 30,000-square-foot addition to our Allparts brake facility as a result of the continued growth of this business. We are completing plans for an 80,000-square-foot addition to our central distribution center in Warsaw, Kentucky to accommodate current and expected future growth of our exciting new Dorman OE Solutions line of hard parts. 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."
Full Year 2003 Outlook:
Sales in the fourth quarter of the prior year benefited from over $4 million in one-time sales related to customer inventory builds. As a result, the Company expects reported fourth quarter 2003 sales and earnings per share to be below prior-year levels. Sales growth for fiscal 2003 after adjusting for exchange, the specialty fastener sale and the one-time sales described above is expected to be on the low end of the Company's previously announced two-year growth target of 4% to 8% annually. Growth in fully diluted earnings per share in fiscal 2003, excluding an after-tax gain of $0.15 per share on the sale of the Company's specialty fastener business in the prior year, is expected to be within the Company's previously announced range of 8% to 13%.
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
Third Quarter (unaudited) 9/27/03 Pct. 9/28/02 Pct.
Net sales $58,183 100.0 $53,889 100.0
Cost of goods sold 37,357 64.2 34,718 64.4
Gross profit 20,826 35.8 19,171 35.6
Selling, general and
administrative expenses 14,216 24.4 14,209 26.4
Income from operations 6,610 11.4 4,962 9.2
Interest expense, net 846 1.5 942 1.7
Income before income taxes 5,764 9.9 4,020 7.5
Provision for income taxes 2,047 3.5 1,412 2.7
Net income $ 3,717 6.4 $ 2,608 4.8
Earnings per share
Basic $ 0.43 - $ 0.31 -
Diluted $ 0.41 - $ 0.29 -
Average shares outstanding
Basic 8,717 - 8,493 -
Diluted 9,098 - 8,965 -
39 Weeks 39 Weeks
Third Quarter (unaudited) 9/27/03 Pct. 9/28/02 Pct.
Net sales $166,523 100.0 $160,424 100.0
Cost of goods sold 105,916 63.6 102,498 63.9
Gross profit 60,607 36.4 57,926 36.1
Selling, general and
administrative expenses 43,287 26.0 43,243 26.9
Other income (1) - - (2,143) (1.3)
Income from operations 17,320 10.4 16,826 10.5
Interest expense, net 2,621 1.6 3,078 1.9
Income before income taxes 14,699 8.8 13,748 8.6
Provision for income taxes 5,232 3.1 4,878 3.1
Net income $ 9,467 5.7 $ 8,870 5.5
Earnings per share
Basic $ 1.10 - $ 1.05 -
Diluted $ 1.05 - $ 0.99 -
Average shares outstanding
Basic 8,610 - 8,484 -
Diluted 9,026 - 8,944 -
(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)
9/27/03 12/28/02
Assets: (Unaudited)
Cash and short term investments $ 16,309 $ 19,171
Accounts receivable 51,358 48,769
Inventories 50,199 47,217
Prepaid expenses and other 10,098 9,046
Total current assets 127,964 124,203
Property & equipment 16,598 16,591
Goodwill 28,931 28,607
Other assets 746 727
Total assets $174,239 $170,128
Liability & Shareholders' Equity:
Current portion of long-term debt$ 9,055 $ 9,291
Accounts payable 11,884 11,813
Accrued expenses and other 12,550 11,759
Total current liabilities 33,489 32,863
Long-term debt 35,213 44,218
Deferred income taxes 4,151 3,475
Shareholders' equity 101,386 89,572
Total Liabilities and Equity $174,239 $170,128
Selected Cash Flow Information:
(in thousands) 13 Weeks 39 Weeks
9/27/03 9/28/02 9/27/03 9/28/02
Depreciation and
amortization $ 933 $1,207 $ 3,352 $ 4,362
Capital Expenditures $ 1,040 $1,389 $ 3,343 $ 2,511
Reconciliation of Non-GAAP Measures (Unaudited):
In the second quarter of 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)
39 Weeks 39 Weeks Pct.
9/27/03 9/28/02 Change
Fully diluted earnings
per share (as reported) $1.05 $0.99 6%
Less: gain on sale, net of tax - (0.15)
_____ _____ ___
Net Income (as adjusted) $1.05 $0.84 25%