Starcraft Reports Results for Fiscal Second Quarter; Affirms Full Year Outlook
GOSHEN, Ind.--May 6, 2004--Starcraft Corporation announced today the following results for the fiscal 2004 second quarter ended March 28, 2004.Net sales for the second quarter of fiscal 2004 were $39.2 million, versus $47.2 million for the second quarter of fiscal 2003. Net loss for the quarter was $47.3 million or $5.83 per fully diluted share, versus net income of $2.9 million or $0.54 per fully diluted share, for the second quarter ended March 30, 2003.
Sales decreased principally because of lower sales from Starcraft's Tecstar operations, most notably its facility in Oshawa, Ontario that opened in January 2003. New Jersey and Louisiana facilities also declined compared to prior year due to expiration of second stage programs at each facility. The H2 Hummer parts supply business declined in relation to the overall decline in H2 vehicle sales.
Net loss was impacted by costs associated with the Wheel to Wheel acquisition including goodwill impairment and amortization of intangibles, marketing costs associated with new business development, and higher than anticipated costs at its Canadian paint facility.
Michael H. Schoeffler, Co-CEO of Starcraft, said, "Despite those costs, and the unanticipated slowdown in our Oshawa facility, our business overall operated profitably for the quarter prior to our goodwill impairment and amortization. With these costs now behind us, we expect to achieve improved results in our fiscal second half."
Net loss before income taxes for the fiscal second quarter was $47.3 million, down from income of $3.1 million in the second quarter last year. Excluding a $47.9 million charge for impairment of goodwill, and $360,000 for amortization of intangible assets associated with the Wheel to Wheel merger, adjusted pre-tax earnings were $.9 million for the quarter.
For the first half of fiscal 2004, revenues decreased 4.7 percent to $83.0 million. Net loss generated during the first half of fiscal 2004 was $46.0 million, or $6.96 per fully diluted share, down from earnings of $4.9 million, or $0.91 per fully diluted share for the first half of fiscal 2003. Net loss before income taxes for the first half of fiscal 2004 was $45.8 million, down from income of $5.3 million in the first half of fiscal 2003. Starcraft's adjusted pre-tax earnings (excluding the impairment of goodwill and intangibles amortization) were $2.5 million for the first half of fiscal 2004.
Jeffrey P. Beitzel, Co-CEO of Starcraft, said, "Our focus for fiscal 2004 will remain on extending both our product and engineering service capabilities to capture second-stage manufacturing assignments with new and existing customers. We are confident that we are on the right track."
Starcraft reaffirmed the updated guidance for fiscal 2004 that it provided on April 10, 2004, and expects fully diluted earnings per share to be in a range of ($4.90) to ($4.95) for fiscal 2004, as calculated under Generally Accepted Accounting Principles. Excluding the effect of goodwill impairment and amortization associated with intangibles of ($5.95), fully diluted earnings per share are expected to be in a range of $1.00 to $1.05. Also, Starcraft expects fiscal 2004 revenues to approximate $185 million, which is consistent with the previously updated outlook.
INVESTOR CONFERENCE CALL
The Company will host a conference call on May 10, 2004, at 8:30 a.m. Eastern Time to discuss its second quarter results. Investors may participate in the teleconference call by calling (800) 299-9630 and providing the conference ID number 67340538. A tape replay of the call will be available two hours after the conclusion of the conference call through May 1, 20047, 2004, by dialing (888) 286-8010 and providing the replay passcode, 69117254.
NON-GAAP FINANCIAL INFORMATION
In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included within this press release, Starcraft Corporation has provided pre-tax earnings and projected earnings per share prior to goodwill impairment and amortization of intangible assets, which are considered non-GAAP financial measures. Such information is reconciled to its closest GAAP measure (net loss before income taxes and projected earnings per share respectively) in accordance with SEC Rules.
Management believes that their non-GAAP financial measures are useful to both management and Starcraft shareholders in their analysis of the company's business and operating performance. Management also uses this information of operation planning and decision-making purposes. In particular, providing our pre-tax earnings data excluding these acquisition related non-cash charges, provides a more realistic view of the company's actual results from operations for the periods in question.
Non-GAAP financial measures should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by Starcraft Corporation may not be comparable to similarly titled measures reported by other companies.
Starcraft Corporation is a leading supplier to the OEM automotive supply market. It also supplies after-market parts and accessories to wholesale and retail customers throughout the United States.
This news release contains forward-looking statements regarding Starcraft's business operations and outlook, prospective revenue, earnings and earnings per share, and for new business. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, level of customer demand, competitive pressures and other important factors detailed in the Company's Form 10-K for fiscal 2003 filed with the Securities and Exchange Commission.
STARCRAFT CORPORATION
CONSOLIDATED FINANCIAL RESULTS
FIRST QUARTER, FISCAL 2004
Dollars in Thousands, except EPS
----------------------- ---------------------- ----------------------
Three Months Ended Six Months Ended
---------------------- ----------------------
Statement of Operations March 28, March 30, March 28, March 30,
(unaudited): 2004 2003 2004 2003
----------------------- --------- ---------- --------- ----------
Net Sales $ 39,156 $ 47,171 $ 82,954 $ 87,052
Cost of Goods Sold 33,493 36,700 69,645 67,715
-------- -------- -------- --------
Gross Profit 5,663 10,471 13,309 19,337
Selling and
Promotion Expenses 719 468 1,348 851
General and
Administrative
Expenses 4,666 4,022 8,683 8,511
Goodwill Impairment 47,900 - 47,900 -
Amortization of
Intangibles 360 - 360 -
Operating
Income (loss) (47,982) 5,981 (44,982) 9,975
Nonoperating
Income (Expense):
Interest, net (141) (103) (214) (216)
Other, net - (24) - 19
-------- -------- -------- --------
(141) (127) (214) (197)
Income (loss) Before
Income Taxes and
Minority Interest (48,123) 5,854 (45,196) 9,778
Income Taxes 24 203 221 441
-------- -------- -------- --------
Income (loss) after
Income Taxes and
Before Minority
Interest (48,147) 5,651 (45,417) 9,337
Minority Interest in
Income of Subsidiary (798) 2,746 610 4,480
-------- -------- -------- --------
NET INCOME(LOSS) $(47,349) $ 2,905 $(46,027) $ 4,857
======== ======== ======== ========
Basic Earnings
Per Share (5.83) $ 0.58 (6.96) $ 0.98
======== ======== ======== ========
Diluted Earnings
Per Share $ (5.83)(a) $ 0.54 $ (6.96)(a) $ 0.91
======== ======== ======== ========
Weighted Average
Number of Basic
Common Shares
Outstanding 8,115 4,970 6,608 4,945
======== ======== ======== ========
Weighted Average
Number of Diluted
Common Shares
Outstanding 8,115 5,408 6,608 5,361
======== ======== ======== ========
(a) Calculation does not reflect the effect of incentive stock options
since their effect is antidilutive
March 28, Sept. 28, March 30,
2004 2003 2003
----------- ----------- -----------
Balance Sheets: (Unaudited) (Audited) (Unaudited)
---------------------------------- ----------- ----------- -----------
Current Assets:
Cash $ 308 $ 836 $ 538
Accounts and Other Receivables 28,476 29,182 32,564
Inventories 16,817 10,060 10,101
Other Current Assets 8,128 9,002 4,109
---------- ---------- ----------
Total Current Assets 53,729 49,080 47,312
Property and Equipment, net 12,416 9,136 7,169
Goodwill and Intangibles, net 91,383 0 0
Other Assets 1,446 514 524
---------- ---------- ----------
$ 158,974 $ 58,730 $ 55,005
========== ========== ==========
Current Liabilities:
Current Maturities &
Notes Payable $ 454 $ 0 $ 704
Accounts Payable, Trade 21,727 19,549 23,810
Accrued Expenses 3,140 7,572 4,134
---------- ---------- ----------
Total Current Liabilities 25,321 27,121 28,648
Long-term Debt 27,768 9,148 15,454
Minority Interest 0 9,821 5,475
Deferred Taxes 5,297 0 0
Shareholders' Equity 100,588 12,640 5,428
---------- ---------- ----------
$ 158,974 $ 58,730 $ 55,005
========== ========== ==========