Starcraft Reports Results for Fiscal Third Quarter
GOSHEN, Ind.--Aug. 5, 2004--Starcraft Corporation announced today the following results for the fiscal 2004 third quarter ended June 27, 2004.Net sales for the third quarter of fiscal 2004 were $45.1 million, versus $62.1 million for the third quarter of fiscal 2003. Net income for the quarter was $74 thousand or $0.01 per diluted share, versus net income of $4.1 million or $0.74 per diluted share, for the third quarter ended June 29, 2003. Excluding amortization and goodwill charges associated with the Wheel to Wheel merger, net income for the current quarter totaled $0.6 million, or $0.07 per diluted share.
Sales decreased principally because of lower sales from Starcraft's Tecstar operations which were hurt by the overall decline in the automotive industry, most notably its facility in Oshawa, Ontario which experienced an 88 percent decline in revenue. The New Jersey facility contributed minimal sales due to the previously announced expiration of a second stage program. The Haslet, Texas facility declined 19 percent due to lower sales at the OE level and a temporary interruption in chassis flow from its customer. This compared to a 27 percent decline in OE production levels of these vehicles. The Shreveport, Louisiana facility increased sales by 285 percent due to the launch of the previously announced ESV program and returned this plant to profitability. The parts supply business showed solid improvement over the same period last year with sales increasing 38 percent, primarily due to the wheel distribution program which started in the second quarter of fiscal 2003. This offset a 10 percent decline in H2 sales tied directly to H2 vehicle sales. Sales from acquisitions contributed $4.1 million in the third quarter.
The decline in net income before amortization and goodwill impairment was driven primarily by the decline in volume, costs associated with new business development, acquired businesses' performance, and costs associated with a new Wheel to Wheel Powertrain facility.
Year-to-date fiscal 2004, revenues decreased 14.2 percent to $128.1 million. Net loss through three quarters of fiscal 2004 totaled $46.0 million, or ($6.25) per diluted share, down from earnings of $8.9 million, or $1.65 per diluted share for the first three quarters of fiscal 2003. Excluding the impairment of goodwill and intangibles amortization, net income equaled $2.8 million for the first three quarters of 2004, or $0.36 per diluted share.
Jeffrey P. Beitzel, Co-CEO of Starcraft, said, "Tecstar continues to seek opportunities to expand its engineering and manufacturing expertise in the second stage market. Our Haslet facility recently was awarded the new two-wheel drive derivative of the Z71 Tahoe program which should allow us to expand our volume in this facility, and we are extremely excited about the prospects for this program going forward." Mr. Beitzel also added, "We spent a considerable amount of time and effort with our customer to reposition the Oshawa second stage facility, and expect improved results heading into 2005."
Starcraft updated guidance for fiscal 2004 that it provided on May 6, 2004, and now expects diluted loss per share to be in a range of ($6.00) to ($6.05) for fiscal 2004. Excluding the full year effect of goodwill impairment and amortization associated with intangibles of ($6.36), diluted earnings per share are expected to be in a range of $0.30 to $0.32. Also, Starcraft expects fiscal 2004 revenues to approximate $168 - $170 million.
Starcraft co-CEO Michael H. Schoeffler commented, "We had anticipated a recovery in demand at our Oshawa, Ontario facility, which unfortunately did not materialize during the quarter. Although we are disappointed with the results realized during this most recent quarter, we are optimistic about our long-term growth prospects going forward. With the capital provided by our recent convertible debt placement, we are in better financial condition to pursue our growth initiatives such as the recently announced Powertrain Integration joint venture. As always, we are in constant communication with other OE's regarding new second stage programs. We are pleased with our progress on several of these fronts and are confident that the future holds exciting opportunities for our company."
INVESTOR CONFERENCE CALL
The Company will host a conference call on August 6, 2004, at 11:00 a.m. Eastern Time to discuss its third quarter results. Investors may participate in the teleconference call by calling (888) 412-9257 and providing the conference ID number 9143978. A tape replay of the call will be available two hours after the conclusion of the conference call through August 13, 2004, by dialing (800) 642-1687 or (706) 645-9291 and providing the replay passcode, 9143978.
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.
STARCRAFT CORPORATION
CONSOLIDATED FINANCIAL RESULTS
Dollars in Thousands, except EPS
Three Months Ended
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Statement of Operations (unaudited): June 27, 2004 June 29, 2003
------------------------------------ ------------- -------------
Net Sales $45,099 $62,117
Cost of Goods Sold 39,971 46,910
------------- -------------
Gross Profit 5,128 15,207
Selling and Promotion Expenses 764 526
General and Administrative Expenses 3,689 3,695
Goodwill Impairment - -
Amortization of Intangibles 540 -
Operating Income (Loss) 135 10,986
Nonoperating Income (Expense):
Interest, net (240) (91)
Other, net - (1)
------------- -------------
(240) (92)
Income (Loss) Before Minority Interest
and Income Taxes (105) 10,894
Minority Interest in Income of Subsidiary - 4,161
------------- -------------
Income (Loss) before Income Taxes (105) 6,733
Income Taxes (Benefits) (179) 2,680
------------- -------------
NET INCOME(LOSS) $74 $4,053
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Basic Earnings (Loss) Per Share 0.01 $0.81
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Diluted Earnings (Loss) Per Share $0.01 $0.74
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Weighted Average Number of
Basic Common Shares Outstanding 8,853 4,991
============= =============
Weighted Average Number of
Diluted Common Shares Outstanding 9,258 5,497
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Nine Months Ended
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Statement of Operations (unaudited): June 27, 2004 June 29, 2003
------------------------------------ -------------- --------------
Net Sales $128,053 $149,170
Cost of Goods Sold 109,616 114,625
-------------- --------------
Gross Profit 18,437 34,545
Selling and Promotion Expenses 2,112 1,377
General and Administrative Expenses 12,372 12,206
Goodwill Impairment 47,900 -
Amortization of Intangibles 900 -
Operating Income (Loss) (44,847) 20,962
Nonoperating Income (Expense):
Interest, net (454) (307)
Other, net - 18
-------------- --------------
(454) (289)
Income (Loss) Before Minority Interest
and Income Taxes (45,301) 20,673
Minority Interest in Income of Subsidiary 610 8,641
-------------- --------------
Income (Loss) before Income Taxes (45,911) 12,032
Income Taxes (Benefits) 42 3,121
-------------- --------------
NET INCOME(LOSS) $(45,953) $8,911
============== ==============
Basic Earnings (Loss) Per Share (6.25) $1.80
============== ==============
Diluted Earnings (Loss) Per Share $(6.25) (a) $1.65
============== ==============
Weighted Average Number of
Basic Common Shares Outstanding 7,357 4,961
============== ==============
Weighted Average Number of
Diluted Common Shares Outstanding 7,873 5,414
============== ==============
(a) Calculation does not reflect the effect of incentive stock options
since their effect is antidilutive
June 27, 2004 September 28, 2003 June 29, 2003
----------------- ------------------ -----------------
Balance Sheets: (Unaudited) (Audited) (Unaudited)
--------------- ----------------- ------------------ -----------------
Current Assets:
Cash $672 $836 $4,483
Accounts and
Other
Receivables 31,900 29,182 36,325
Inventories 15,218 10,060 9,316
Other Current
Assets 5,953 9,002 3,762
----------------- ------------------ -----------------
Total Current
Assets 53,743 49,080 53,886
Property and
Equipment, net 13,416 9,136 8,842
Goodwill and
Intangibles,
net 90,843 0 0
Other Assets 1,441 514 723
----------------- ------------------ -----------------
$159,443 $58,730 $63,451
================= ================== =================
Current
Liabilities:
Current
Maturities &
Notes Payable $390 $0 $0
Accounts
Payable, Trade 20,597 19,549 26,840
Accrued
Expenses 3,101 7,572 7,202
----------------- ------------------ -----------------
Total Current
Liabilities 24,088 27,121 34,042
Long-term Debt 29,594 9,148 11,639
Minority
Interest 0 9,821 8,133
Deferred Taxes 5,092 0 0
Shareholders'
Equity 100,669 12,640 9,637
----------------- ------------------ -----------------
$159,443 $58,730 $63,451
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