T.J.T., Inc. Sales up 20 Percent in First Quarter, Higher Costs Cause Net Loss
EMMETT, Idaho--Feb. 1, 20056, 2005--T.J.T., Inc. (OTCBB:AXLE), a supplier of recycled axles, tires and aftermarket accessories to the manufactured housing industry, today reported strong sales growth in the first quarter ended December 31, 2004, compared to the same period a year ago.Despite the sales growth, the company incurred a loss as a result of higher operating costs.
Sales were $5.3 million in the first 2005 quarter, up 20 percent from $4.4 million in the comparable period last year. The gain stemmed from 15 percent higher sales of axles and tires and a 37 percent increase in the company's accessories and siding segment.
Higher sales were offset by a 26 percent increase in cost of goods sold. Supply shortages of used tire and axle components resulted in higher purchase and transportation costs during the quarter, contributing to a 4 percent decline in gross margin to 20.3 percent from 24.3 percent in the same quarter in 2004. Lower gross margin, combined with higher selling, general and administrative expenses, resulted in a net loss of $67,000, or $0.01 per basic and fully diluted share. In the prior year's quarter, net income was $55,000, or $0.01 per basic and fully diluted share.
In the first quarter, the company's share of undistributed income in a joint venture contributed $35,000 to operating income compared to a net loss of $1,000 in the 2004 first quarter.
"It was a quarter of mixed results that included solid progress on recent initiatives," said Terrence Sheldon, president and chief executive officer of T.J.T. "The company's successful expansion into market opportunities in its aftermarket accessories segment in the past few months fueled, in part, the 20 percent sales growth quarter-over-quarter."
The challenges T.J.T. encountered in the first quarter of 2005 related to higher costs have a bright side, according to Sheldon. "Demand for reconditioned axles and tires improved in the first quarter as manufactured housing shipments in the company's market area jumped 14 percent over the same quarter last year. That contributed to a shortage of axle and tire components, driving up costs and requiring purchases outside our normal market areas. We expect that recent sales price increases for our product will contribute to gross margin improvement in the future."
Established in 1977, T.J.T. is a major provider of recycled axles and tires to the manufactured housing industry. It operates recycling facilities in Idaho, Washington, California and Colorado and serves 13 western states. In addition to the recycling business, T.J.T. manufactures steel hangers and framing components at its Oregon facility. The company also sells aftermarket products to manufactured housing industry, recreational vehicle industry and residential markets. This release contains certain forward-looking statements, which are based on management's current expectations including, but not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values and competition changes in legislation or regulations, and other economic, competitive, governmental, regulatory and technological factors affecting the company's operations, pricing, products and services.
T.J.T., INC.
BALANCE SHEETS (Unaudited)
(Dollars in thousands)
Dec. 31 Sept. 30
2004 2004
---------- -----------
Current assets:
Cash and cash equivalents $ 496 $ 843
Accounts receivable (net of allowances and
discounts of $81 and $23) 1,052 1,349
Current portion of notes receivable 103 105
Inventories 3,009 2,847
Prepaid expenses and other current assets 148 202
---------- -----------
Total current assets 4,808 5,346
Property, plant and equipment, net of
accumulated depreciation 720 728
Notes receivable, net of current portion 334 338
Real estate held for investment 223 224
Investment in joint venture 711 676
Other assets 214 212
Deferred tax asset 218 179
---------- -----------
Total assets $ 7,228 $ 7,703
========== ===========
Current liabilities:
Accounts payable $ 483 $ 556
Accrued liabilities 303 640
---------- -----------
Total current liabilities 786 1,196
Deferred income and other noncurrent
obligations 59 57
---------- -----------
Total liabilities 845 1,253
Shareholders' equity:
Preferred stock, $.001 par value; 5,000,000
shares authorized; 0 shares issued and
outstanding - -
Common stock, $.001 par value; 10,000,000
shares authorized; 4,504,939 shares issued
and outstanding 5 5
Capital surplus 5,791 5,791
Retained earnings 587 654
---------- -----------
Total shareholders' equity 6,383 6,450
---------- -----------
Total liabilities and shareholders'
equity $ 7,228 $ 7,703
========== ===========
T.J.T., INC.
STATEMENTS OF OPERATION (Unaudited)
(Dollars in thousands except per share amounts)
For the three months ended December 31, 2004 2003
---------- ----------
Sales (net of returns and allowances):
Axles and tires $ 3,813 $ 3,326
Accessories and siding 1,441 1,051
---------- ----------
Total sales 5,254 4,377
Cost of goods sold
Axles and tires 3,190 2,592
Accessories and siding 997 721
---------- ----------
Cost of goods sold 4,187 3,313
---------- ----------
Gross profit 1,067 1,064
Selling, general and administrative expenses 1,229 1,028
---------- ----------
Operating income (loss) (162) 36
Interest income 16 14
Investment property income - 31
Undistributed equity interest in joint venture
income 35 (1)
Rental income 4 11
Other income 1 -
---------- ----------
Income (loss) before taxes (106) 91
Income taxes (benefit) (39) 36
---------- ----------
Net income (loss) $ (67) $ 55
========== ==========
Net income (loss) per common share
Basic and diluted:
Continuing operations $ (0.01) $ 0.01
---------- ----------
Net income (loss) per common share $ (0.01) $ 0.01
---------- ----------
Weighted average shares outstanding 4,504,939 4,504,939
========== ==========
T.J.T., INC.
STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
For the three months ended December 31, 2004 2003
------- --------
Cash flows from operating activities:
Net income (loss) $ (67) $ 55
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 42 51
Gain on sale of assets (1) (31)
Undistributed equity earnings in joint venture (35) 1
Change in accounts receivables 297 489
Change in inventories (162) (45)
Change in prepaid expenses and other current
assets 54 (2)
Change in accounts payable (73) (487)
Change in taxes (39) 36
Change in other assets and liabilities (336) (241)
------- --------
Net cash used by operating activities (320) (174)
Cash flows from investing activities:
Purchases of property, plant and equipment (32) (163)
Repayments received on notes receivable 4 10
Proceeds from sale of assets 1 -
Land purchased for investment - (11)
Proceeds from sale of land held for investment - 36
------- --------
Net cash used by investing activities (27) (128)
Net change in cash and cash equivalents (347) (302)
Cash and cash equivalents at October 1 843 1,072
------- --------
Cash and cash equivalents at December 31, $ 496 $ 770
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Supplemental information:
Cash paid for interest $ - $ 1