Amcast Reports Fiscal 2004 Third Quarter Results
DAYTON, Ohio--June 29, 2004--Amcast Industrial Corporation (OTCBB:AICO) today reported financial results for its fiscal 2004 third quarter ended May 3, 20040, 2004.Third quarter sales were $111.4 million, slightly below the third quarter of last year. Higher plumbing product sales were offset by lower revenues from automotive customers, primarily in gravity-cast aluminum components. By segment for the quarter, Flow Control sales rose 42%, and Engineered Components sales declined by 16%.
Operating income of $5.5 million in the third quarter increased by almost 23% over the prior-year quarter. This profit improvement came from better gross margins due to increased manufacturing efficiencies and from lower selling, general and administrative expenses. Third quarter net income of $1.9 million, or $0.20 per diluted share, was favorable to net income from continuing operations for the prior-year quarter, which was $0.7 million, or $0.08 per share. The prior-year quarter included a loss from discontinued operations relating to the sale of Speedline, the Company's European wheel business.
Year-to-date sales were $318.7 million, down by 1% compared with the prior year. Flow Control segment sales rose by 23%, while Engineered Component's sales decreased by 11%. Year-to-date operating income was $12.8 million, about 77% above last year. This increase of $5.6 million in operating income was due to $2.6 million in improved gross margin and $3.0 million in reduced selling, general and administrative costs. Year-to-date, the Company's net income was $1.7 million, or $0.18 per diluted share, compared with a net loss from continuing operations of $2.5 million, or a loss of $0.28 per diluted share, in the prior year. The first nine months of fiscal 2003 included discontinued operations and the cumulative effect of a change in accounting principle. These items combined to produce a net loss of $111.5 million, or a loss of $12.58 per diluted share.
Joseph R. Grewe, President and Chief Executive Officer, said, "The net income and operating income growth reflects the continuing success of the Company's cost reduction and manufacturing improvement programs. Gross margins increased from 12.2% of sales last year to 12.7% in the third quarter and from 11.1% last year to 12.0% for the first nine months. In addition selling, general and administrative expenses declined by 5% in the third quarter to 7.8% of sales this year versus 8.2% last year. Year to date selling, general and administrative expenses have declined more than 10% to 8.0% of sales, and year-to-date labor productivity improved by 14%. We were very pleased to be able to achieve these performance improvements without revenue growth."
Mr. Grewe continued, "We have reduced debt by $5.0 million during this fiscal year, but we still remain highly leveraged with debt totaling $172.7 million. Our cash position has improved somewhat during the year, and we remain current with our suppliers. However, our net worth remains negative at $40.1 million. In compliance with our loan agreements, and as previously reported, the Company is required to use its best efforts to either refinance the bank debt and senior notes or sell substantially all of its assets by September 1, 2004. The Company is continuing to have very serious confidential negotiations with parties who have expressed an interest in acquiring one or more of our business units. Since these discussions are in various stages of completion, the Company cannot predict if the results of these negotiations will produce acceptable offers. However, it is our expectation that one or more of these situations will result in a transaction. It is also not certain at this point what effect any potential divestiture might have on the financial condition of the Company or our ability to refinance the remaining debt."
In conclusion Mr. Grewe said, "Amcast returned to positive net income during the third quarter. This quarter is the tenth consecutive quarter in which we achieved positive operating income. To help improve our performance, management is continuing to implement the Amcast Production System. This initiative has had a positive impact on our working capital management, product quality, and overall operating cost."
A conference call to discuss the fiscal 2004 third quarter financial performance will be held Wednesday, June 30 at 11 a.m. EDT. The webcast can be accessed through www.amcast.com.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others: general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, competitive pricing pressures in the Company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international transactions, labor availability and relations at the company and its customers, the impact of homeland security measures, and the ability of the Company to satisfy obligations under and to comply with the provisions of its loan documents.
STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
Three Months Ended Nine Months Ended
------------------- --------------------
May 30 June 1 May 30 June 1
2004 2003 2004 2003
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Net Sales $111,367 $111,829 $318,747 $323,196
Cost of sales 97,196 98,227 280,447 287,463
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Gross Profit 14,171 13,602 38,300 35,733
Selling, general, and
administrative expenses 8,666 9,123 25,468 28,486
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Operating Income 5,505 4,479 12,832 7,247
Other (income) expense (14) (665) (32) (688)
Interest expense 3,689 4,061 11,240 11,920
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Income (Loss) Before Income
Taxes, Discontinued
Operations and Cumulative
Effect of Accounting Change 1,830 1,083 1,624 (3,985)
Income taxes (benefit) (36) 391 (40) (1,500)
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Income (Loss) From Continuing
Operations 1,866 692 1,664 (2,485)
Discontinued Operations
Loss from operations, net
of tax - (1,906) - (12,024)
Loss on sale, net of tax - (601) - (50,423)
--------- --------- --------- ----------
Income (Loss) Before
Cumulative Effect of
Accounting Change 1,866 (1,815) 1,664 (64,932)
Cumulative effect of
accounting change, net of tax - - - (46,536)
--------- --------- --------- ----------
Net Income (Loss) $1,866 $(1,815) $1,664 $(111,468)
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Basic and Diluted Income
(Loss) Per Share
Continuing operations $0.20 $0.08 $0.18 $(0.28)
Discontinued operations - (0.28) - (7.05)
--------- --------- --------- ----------
Before cumulative effect of
accounting change 0.20 (0.20) 0.18 (7.33)
Cumulative effect of
accounting change - - - (5.25)
--------- --------- --------- ----------
Net income (loss) $0.20 $(0.20) $0.18 $(12.58)
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Average number of shares
outstanding - Basic 9,305 9,016 9,288 8,861
Average number of shares
outstanding - Diluted 9,351 9,016 9,291 8,861
CONDENSED BALANCE SHEETS
($ in thousands)
May 30 August 31
2004 2003
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents $7,550 $5,697
Accounts receivable 43,843 39,979
Inventories 19,426 19,004
Other current assets 5,548 5,338
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Total Current Assets 76,367 70,018
Fixed Assets (net) 126,104 139,397
Restricted Cash 6,000 7,078
Deferred Taxes 4,206 4,204
Other Assets 8,212 9,627
--------- ---------
Total Assets $220,889 $230,324
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable $26,557 $31,419
Current debt 1,456 2,456
Other current liabilities 21,766 21,011
--------- ---------
Total Current Liabilities 49,779 54,886
Long-Term Debt 171,208 175,184
Deferred Liabilities 39,996 42,189
Shareholders' Deficit (40,094) (41,935)
--------- ---------
Total Liabilities and Shareholders' Deficit $220,889 $230,324
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