Aftermarket Technology Corp. Reports Third Quarter 2005 Results
-- Net sales for the quarter reached a record $123.2 million
-- Logistics Segment achieved record net sales of $41.8 million
-- Earnings per share from continuing operations of $0.40 exceeded guidance of $0.35-$0.39
DOWNERS GROVE, Ill., Oct. 26 -- Aftermarket Technology Corp. , today reported financial results for the quarter ended September 30, 2005.
For the quarter, ATC achieved record net sales of $123.2 million, which increased from $107.6 million in the third quarter of 2004. Income from continuing operations increased to $8.6 million in the third quarter of 2005 compared to $8.4 million for the third quarter of 2004, while income from continuing operations per diluted share of $0.40 for the third quarter of 2005 matched last year's third quarter. The Company ended the quarter with $50.4 million in net debt.
Management Comments
In commenting on the Company's results, Don Johnson, Chairman, President and CEO said, "I am pleased to report that during the third quarter we achieved record revenues, driven primarily by substantial growth in our Logistics Segment. As a result, our third quarter earnings from continuing operations per diluted share of $0.40 exceeded the top of our guidance range of $0.35-$0.39."
"Within our Drivetrain Segment, we recorded sales of $75.7 million during the quarter compared to $74.2 million in the third quarter of last year. We experienced generally stable volumes in our base transmission business with Honda, Ford, and Chrysler and, as expected, weakness in our European engine business, and some ancillary programs and services, which was offset by a one- time sale of transmission component parts."
"Additionally, Drivetrain Segment profit of $10.4 million, or 13.7% of segment revenues, was in line with our guidance for the quarter. This reflected the costs for the new medium- and heavy-duty truck remanufactured transmission program launch, ongoing business development initiatives, and initial development of CVP transmissions for various customer applications. Strong performance in our lean and continuous improvement cost reduction program partially offset these costs."
"Our Logistics Segment delivered its strongest quarterly revenue in history with net sales of $41.8 million, representing a 50% increase over the third quarter of 2004. Strength in the quarter came from volumes associated with the rollout and ramp-up of our new returns, test and repair center, and the implementation of other new business, coupled with continued organic growth. Segment profit for the quarter improved 23% to $5.3 million compared to the same period last year. Segment margin of 12.7% was in line with our guidance and continues to reflect gradual improvement with the start-up costs in our new facility largely behind us."
"In our Independent Aftermarket business, sales of $5.6 million in the third quarter were essentially flat with the prior year's third quarter, resulting in an operating loss of $0.8 million compared to a loss of $1.1 million in the third quarter of 2004. Year-to-date we have narrowed our losses by 64% compared to 2004."
Mr. Johnson concluded, "As we look towards the balance of the year, we expect our fourth quarter 2005 earnings per share from continuing operations to be in the range of $0.41-$0.45, including $0.03 per share related to potential unclaimed research and development tax credits. We expect our results to be driven by continued strength in Honda volumes, the ramp-up of our medium- and heavy-duty remanufactured transmission program, and growth in our Logistics Segment resulting from seasonal strength and implementation of new business. Our lean and continuous improvement cost reduction program remains on track to achieve its year-end goal of $21 million in savings and we expect to end the year with net debt below our initial $60 million goal."
"For the full year, our guidance is $1.41-$1.45 earnings per diluted share from continuing operations, including $0.03 per share related to the potential research and development tax credits. We remain committed to investing in new business and product development to grow and diversify ATC's revenues, customers, products, and markets."
For further information, please see the Company's most recent Form 10-Q filed with the Securities and Exchange Commission.
ATC is headquartered in Downers Grove, Illinois. The Company provides outsourced engineered solutions and supply chain logistics services to the light vehicle (cars and light trucks) aftermarket and consumer electronics industries.
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the three For the nine
months ended months ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Net sales:
Products $81,383 $79,730 $215,474 $218,696
Services 41,800 27,871 106,790 72,039
Total net sales 123,183 107,601 322,264 290,735
Cost of sales:
Products 63,944 59,872 165,681 165,527
Services 31,239 19,511 79,888 49,514
Total cost of sales 95,183 79,383 245,569 215,041
Gross profit 28,000 28,218 76,695 75,694
Selling, general and administrative
expense 12,986 12,951 38,802 38,738
Amortization of intangible assets 31 31 94 94
Exit, disposal, certain severance
and other charges 89 488 548 3,964
Operating income 14,894 14,748 37,251 32,898
Interest income 177 681 1,387 1,893
Other income (loss), net 24 (9) 624 (2)
Equity in income of investee - 89 - 140
Interest expense (1,840) (1,757) (5,711) (5,369)
Income from continuing operations
before income taxes 13,255 13,752 33,551 29,560
Income tax expense 4,645 5,314 12,053 11,110
Income from continuing operations 8,610 8,438 21,498 18,450
Loss from discontinued operations,
net of income taxes (643) (17,505) (727) (17,173)
Net income (loss) $7,967 $(9,067) $20,771 $1,277
Per common share - basic:
Income from continuing operations $0.40 $0.41 $1.01 $0.87
Net income (loss) $0.37 $(0.44) $0.98 $0.06
Loss from discontinued operations $(0.03) $(0.84) $(0.03) $(0.81)
Weighted average number of common
shares outstanding 21,414 20,786 21,280 21,126
Per common share - diluted:
Income from continuing operations $0.40 $0.40 $1.00 $0.86
Net income (loss) $0.37 $(0.43) $0.97 $0.06
Loss from discontinued operations $(0.03) $(0.83) $(0.03) $(0.80)
Weighted average number of common
and common equivalent shares
outstanding 21,655 21,048 21,494 21,458