IMPCO Reports 2005 Third Quarter Results
CERRITOS, Calif., Nov. 21, 2005 -- IMPCO Technologies, Inc. today reported results for its third quarter ended September 30, 2005.
IMPCO completed the acquisition of BRC S.r.l. ("BRC") on March 31, 2005, resulting in the full consolidation of BRC results beginning in the second quarter of 2005. Revenues during the third quarter of 2005 increased $19.0 million or 63.2% to $49.1 million from $30.1 million during the third quarter of 2004. Revenues for the nine months ended September 30, 2005 increased $31.6 million or 34.6% to $122.7 million from $91.1 million during the same period in the prior year. The increase in revenues during the three and nine months periods ended September 30, 2005, was primarily due to the inclusion of BRC revenues on a fully consolidated basis beginning with the second quarter of 2005.
Consolidated gross profit for the third quarter increased $6.2 million compared to the same period in 2004 primarily due to the addition of BRC revenues.
Consolidated operating expenses increased $8.2 million during the third quarter of 2005 to $13.9 million from $5.7 million during the same period in the prior year, primarily due to:
* $6.3 million increase in operating expenses associated with BRC,
including $1.9 million in increased amortization costs for intangible
assets acquired;
* $1.5 million increase in allowance for doubtful receivables from our
affiliates; and
* $0.5 million increase in R&D costs related to the Seattle facility
closure.
As a result of the above, consolidated operating income decreased $1.9 million during the third quarter of 2005 to $0.5 million from $2.4 million during the same period in the prior year.
For the nine months ended September 30, 2005, consolidated gross profit increased $9.9 million compared to the same period in 2004 primarily due to the addition of BRC revenues.
Consolidated operating expenses for the nine months ended September 30, 2005 increased $16.8 million to $33.3 million from $16.5 million during the same period in 2004, primarily due to:
* $9.4 million increase in operating expenses associated with BRC,
including $1.9 million in increased amortization costs for intangible
assets acquired;
* $2.2 million in higher compensation and benefit costs related to two
former officers;
* $1.6 million in higher outside professional fees;
* $1.5 million increase in R&D costs related to the Seattle facility
closure;
* $1.5 million increase in allowance for doubtful receivables from our
affiliates; and
* $0.3 million in higher equipment leasing costs.
As a result, consolidated operating income for the nine months ended September 30, 2005 decreased $6.9 million to $0.9 million from $7.8 million during the same period in 2004.
Other income of $1.0 million for the nine month period ended September 30, 2005 consisted primarily of net unrealized foreign exchange gains as a result of movements between the U.S. dollar and the euro. Income tax expense for the third quarter and nine months ended September 30, 2005 included an $8.7 million non-cash charge associated with an increase in the valuation allowance for deferred tax assets related to domestic operations.
Net loss for the third quarter of 2005 was $9.2 million or $0.32 per diluted share compared to net income of $0.5 million or $0.03 per diluted share in the third quarter of 2004. Net loss for the nine months ended September 30, 2005, was $10.2 million or $0.39 per diluted share compared to net income of $2.0 million or $0.10 per diluted share for the same period in 2004.
Mariano Costamagna, President and CEO, said, "We are pleased that we achieved our consolidated revenue and gross margin goals for the third quarter. Our revenue growth continues to be driven largely by the demand for our new fuel injection technology that enables light duty vehicles to operate on economical and clean burning alternative fuels rather than higher cost fuels like gasoline or diesel. He continued: "Earlier this year when I became CEO, I committed to our shareholders to promote a corporate environment in which shareholders find our financial statements clear and understandable, and our performance attractive and predictable. Our work towards this goal and our activities to integrate IMPCO and BRC continued through the third quarter. We expect to enter 2006 in a position to capitalize on operating efficiencies that will allow us to continue to take advantage of commercial growth opportunities while at the same time improving our profitability and to have more consistency in our financial performance."
Third Quarter 2005 Conference Call
IMPCO will host a conference call to discuss financial results on Monday, November 21, 2005 at 9:00 a.m. EST, 6:00 a.m. PST. All shareholders and other interested parties are invited to dial into the call, which may be accessed by calling (706) 679-3125. In order to ensure participation, please dial in 15 minutes prior to the scheduled time. A recording of the call will be available for 24 hours and can be accessed by calling (800) 642-1687 or (706) 645-9291, reference code #2523382.
About IMPCO Technologies:
IMPCO designs, manufactures, markets and supplies advanced product and systems to enable internal combustion engines to run on clean burning gaseous fuels such as natural gas, propane and biogas. IMPCO is leader in the heavy duty, industrial, power generation and stationary engines sectors. Headquartered in Cerritos, California, IMPCO has offices throughout Asia, Europe, Australia and North America. More information can be found at IMPCO's web site, http://www.impco.ws/
About BRC Gas Equipment:
BRC produces a complete range of systems for converting vehicles to gaseous fuel to meet market requirements. BRC is a leader in the light duty and automobile alternative fuel sectors and has established alliances with several major car-makers for OEM projects. Headquartered in Cherasco, Italy, BRC has offices throughout Asia, Europe and South America. More information can be found at BRC's web site, http://www.brc.it/
Except for historical or factual information, other matter discussed in this press release, including anticipated improvements in operating efficiencies from the integration and consolidation of IMPCO and BRC, revenue growth, are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in any forward-looking statement. Factors that could cause or contribute to such differences included, but are not limited to, prevailing market and global economic conditions; changes in environmental regulations that impact the demand for the Company's products; the Company's ability to manage its leverage and address operating covenant restrictions relating to its indebtedness; the Company's ability to negotiate and comply with waivers pertaining to existing loan covenant defaults; the Company's ability to design and market advanced fuel metering, fuel storage and electronic control products; the company's ability to meet OEM specifications; and the level and success of the Company's development programs with OEMs. Readers also should consider the risk factors set forth in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, those contained in "Management's Discussion & Analysis of Financial Condition and Results of Operation - Risk Factors" section of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2004. The company does not undertake to update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.
For further information, please contact Dale Rasmussen, Vice President, Investor Relations. Phone: +1-206-315-8242
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2005* 2004 2005*
Revenue $30,064 $49,073 $91,146 $122,683
Costs and expenses:
Cost of revenue 21,933 34,749 66,874 88,463
Research and development
expense 1,189 2,488 3,190 6,503
Selling, general and
administrative expense 4,552 9,348 13,282 24,728
Amortization of
intangible assets -- 1,905 -- 1,905
Acquired in-process
technology -- 129 -- 204
Total costs and expenses 27,674 48,619 83,346 121,803
Operating income 2,390 454 7,800 880
Other income (expense) 10 (22) 3 957
Interest expense, net (1,504) (126) (4,163) (506)
Income before income
taxes and equity share in
income of unconsolidated
affiliates 896 306 3,640 1,331
Equity share in income
of unconsolidated
affiliates 435 138 718 990
Income tax expense (483) (9,282) (1,499) (11,649)
Income (loss) before
minority interests and
cumulative effect
of a change in
accounting principle 848 (8,838) 2,859 (9,328)
Minority interest in
income of consolidated
subsidiaries 343 264 853 783
Income (loss) before
cumulative effect of a change
in accounting principle 505 (9,102) 2,006 (10,111)
Cumulative effect of a
change in accounting
principle, net of
taxes -- (117) -- (117)
Net income (loss) $505 $(9,219) $2,006 $(10,228)
Net income (loss) per
share before cumulative
effect of a change in
accounting principle:
Basic net income (loss) $0.03 ($0.32) $0.11 $(0.38)
Diluted net income (loss) $0.03 ($0.32) $0.10 $(0.38)
Per share effect of the
cumulative effect of a
change in accounting
principle:
Basic net income (loss) $ -- $ -- $ -- $(0.01)
Diluted net income (loss) $ -- $ -- $ -- $(0.01)
Net income (loss) per share:
Basic net income (loss) $0.03 ($0.32) $0.11 $(0.39)
Diluted net income (loss) $0.03 ($0.32) $0.10 $(0.39)
Number of shares used in
per share calculation:
Basic 18,617 28,679 18,595 26,335
Diluted 19.478 28,679 19,704 26,335
* The results of the three and nine months ended September 30, 2005,
include the consolidation of BRC's statement of operations following the
acquisition of the remaining 50% of BRC on March 31, 2005.
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
December 31, September 30,
2004 2005*
(Restated) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $8,418 $22,265
Accounts receivable less allowance
for doubtful accounts of $1,687
and $2,637 18,072 35,775
Inventories:
Raw materials and parts 8,624 24,565
Work-in-process 233 1,265
Finished goods 3,747 5,061
Total inventories 12,604 30,891
Deferred tax assets 182 901
Other current assets 1,956 3,635
Related party receivables 2,746 3,730
Total current assets 43,978 97,197
Equipment and leasehold improvements
Dies, molds and patterns 7,174 7,155
Machinery and equipment 8,039 12,660
Office furnishings and equipment 7,809 9,923
Automobiles and trucks 409 994
Leasehold improvements 3,474 3,485
26,905 34,217
Less accumulated depreciation and
amortization 19,702 23,111
Net equipment and leasehold improvements 7,203 11,106
Goodwill 7,973 29,018
Deferred tax assets, net 8,183 --
Investment in affiliates 27,046 2,776
Intangible assets, net -- 25,372
Business acquisition costs 788 --
Other assets 2,430 2,100
Non-current related party receivable 851 3,748
Total Assets $98,452 $171,317
*Includes the consolidation of BRC's balance sheet at September 30, 2005.
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
December 31, September 30,
2004 2005*
(Restated) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,914 $22,888
Accrued payroll obligations 2,889 5,556
Other accrued expenses 5,624 13,706
Current revolving line of credit 7,680 5,940
Current maturities of term debt 140 3,087
Current portion of related party
long-term debt 2,600 --
Deferred tax liability -- 1,446
Related party payables -- 3,619
Total current liabilities 28,847 56,242
Term loans -- 8,538
Related party term loan 19,400 --
Related party long-term liabilities -- 195
Capital leases 151 191
Deferred tax liabilities -- 9,042
Other liabilities 2,316 4,479
Minority interest 2,907 2,960
Stockholders' equity:
Preferred stock, $.001 par value, authorized
500,000 shares; none issued
and outstanding for each period -- --
Common stock, $.001 par value, authorized
100,000,000 shares; 18,737,437 issues and
outstanding at December 31, 2004 and
28,900,791 issued and outstanding at
September, 2005 19 29
Additional paid-in capital 135,291 192,049
Shares held in treasury (528) (617)
Accumulated deficit (90,872) (101,100)
Accumulated other comprehensive income
(loss) 921 (691)
Total stockholders' equity 44,831 89,670
Total Liabilities and Stockholders'
Equity $98,452 $171,317
*Includes the consolidation of BRC's balance sheet at September 30, 2005.