Hastings Manufacturing Reports Third-Quarter Results
HASTINGS, Mich., Nov. 13, 2003 -- Hastings Manufacturing Co. (AMEX:HMF) today announced results for the third quarter ended September 30, 2003.
The Hastings, Mich.-based piston ring manufacturer and engine-products specialist reported a net loss of $130,522, or $0.18 per diluted share, on net sales of $10.8 million for the third quarter of 2003, compared with net income of $146,352 or $0.19 per diluted share, on net sales of $8.7 million in the same period last year. The 2003 third-quarter figures include operating results from Toronto-based Ertel Manufacturing Corp. and its affiliate Syzygy Auto Distribution Inc., which were acquired in March of this year.
The company said revenues increased 24.7 percent versus the third quarter of last year, due primarily to the inclusion of sales from the recently acquired Canadian operations. The newly acquired Canadian operations contributed approximately $2.8 million to third-quarter revenues, helping offset lower sales of piston rings and a decrease in revenues related to the sale of Zollner(TM) pistons and ACL(R) engine components versus last year's third quarter. The Company said softness in the global replacement-parts market had a negative impact on its sales results in the third quarter of 2003.
Hastings said direct costs associated with the acquisition and a change in product mix resulted in lower gross margin for the third-quarter of 2003. Hastings reported a gross margin of 24.1 percent for the quarter, compared with 31.5 percent in the same period last year.
Operating expenses increased 7 percent, driven by increased costs related to the acquisition. The Company said it has initiated several cost reduction initiatives over the past six months to help relieve pressure on margins and align expenses with current marketing conditions. In spring 2003, the Company reduced expenses through a combination of voluntary and involuntary layoffs, as well as reductions in operating expenses. In October, the Company filed the appropriate documents to voluntarily delist its common stock from the American Stock Exchange and to terminate its registration with the Securities and Exchange Commission.
"We face many short-term challenges both internally and externally, but have initiated several important initiatives to help us weather these difficult conditions while building a foundation for growth," said Mark Johnson, chairman and chief executive officer of Hastings Manufacturing. "We are continuously examining opportunities where we can reduce costs and improve profitability in all areas of the Company. Additionally, we are investing in opportunities to expand the range of products we can offer customers and improve our distribution in the U.S., Canada and overseas."
The acquisition of Ertel and Syzygy have enabled Hastings to increase sales and expand its market share throughout Canada. Additionally, the Company recently announced plans to introduce its new line of pistons under the Hastings(R) brand in early 2004, offering broader coverage and increased availability to engine-parts warehouses, engine rebuilders and aftermarket retailers.
As noted above, in October Hastings began the process of delisting its common stock from the American Stock Exchange and terminating its status as a reporting company under the Securities Exchange Act. Hastings said it expects to complete this process within the next week and that its common stock should be immediately eligible for trading through the Pink Sheets (www.pinksheets.com ), an electronic quotation service for over-the-counter securities. The Company reported it would continue to explore options to provide continued trading and liquidity for shareholders.
Hastings Manufacturing Co. serves the automotive parts market with a complete line of internal engine products including piston rings and pistons sold under the HASTINGS(R) brand name; and gaskets, import pistons, engine bearings and a variety of other engine components sold under the ACL brand. Hastings also markets engine additives sold under the CASITE(R) brand through The Casite Company, a joint venture that markets both directly and through independent representatives. Canadian distribution of all products is handled through a wholly owned subsidiary, Hastings, Inc. located in Barrie, Ontario.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Income
Three months ended Nine months ended
September 30, 2003 2002 2003 2002
Net Sales $10,786,503 $8,650,938 $31,348,154 $27,874,118
Cost of Sales 8,182,462 5,926,189 23,276,407 18,986,410
Gross profit 2,604,041 2,724,749 8,071,747 8,887,708
Operating Expenses
Advertising 43,326 50,698 120,242 160,025
Selling 829,242 789,027 2,540,943 2,300,255
General and
administrative 1,690,874 1,553,520 5,103,822 4,737,747
2,563,442 2,393,245 7,765,007 7,198,027
Operating income 40,599 331,504 306,740 1,689,681
Other Expenses (Income)
Interest expense 265,620 96,848 651,553 305,617
Net gain on foreign
currency transactions (35,861) 1,222 (224,284) (3,729)
Other, net 23,362 (5,918) 42,680 (11,254)
253,121 92,152 469,949 290,634
Income (Loss) before
income tax expense (212,522) 239,352 (163,209) 1,399,047
Income Tax Expense (82,000) 93,000 (61,000) 557,000
Net Income (Loss) (130,522) 146,352 (102,209) 842,047
Basic Earnings Per
Share of Common Stock
(Note 4) $(.18) $.20 $(.14) $1.13
Diluted Earnings Per
Share of Common Stock
(Note 4) $(.18) $.19 $(.14) $1.12