T.J.T., Inc. Reports Third Quarter Results for Fiscal Year 2009
EMMETT, Idaho--T.J.T., Inc. (the Company), (Pink Sheets:AXLE), a major supplier of axles, tires, and set-up supplies to the manufactured housing industry announced a net loss of $261,000, or $.06 per diluted share, for the third quarter of fiscal year 2009.
Net sales decreased 37 percent in the three month period ending June 30, 2009 as compared to the same three month period a year ago. Net sales are down 43 percent for the nine month period ending June 30, 2009 as compared to the same period a year ago. The decrease is primarily due to an unprecedented decline of shipments of manufactured homes in the Company’s market area estimated to be 51 percent in the third quarter of 2009 as compared to the same quarter of 2008. The market decline is a result of the current economic downturn and the lack of retail sales of residential real estate. The Company sold unprocessed inventory at wholesale prices outside of its market area throughout the 2009 and 2008 nine month periods. Excluding wholesale sales made out of the area, net sales decreased 39 percent in the three month period and 46 percent in the nine month period when comparing 2009 and 2008.
Gross margin dropped to 15 percent in the 3rd quarter of 2009 compared to gross margin of 24 percent in the same quarter a year ago. Gross margin for the nine months ended June 30, 2009 declined to 19 percent compared to 24 percent in the same 2008 period. The decline in both periods is primarily due to the axle and tire segment. Axle and tire margins declined as a result of lower sales volume combined with a higher volume of wholesale sales to reduce inventory levels in Arizona, and an inventory write-down associated with inventory held in Arizona. Accessories gross margin decreased primarily due to lower sales volumes resulting from the decline in shipments of manufactured homes in 2009 compared to 2008.
Consolidated selling, general, and administrative (SG&A) expense decreased 33 percent and 29 percent during the three and nine month periods, respectively, when compared to the same 2008 periods. The decrease in both periods is a result of cost cutting measures implemented throughout the Company, including but not limited to reductions in wages, legal expenses, and expenses associated with the joint ventures TJT Realty, L.L.C. and Ladder Lift Systems, L.L.C. The Company closed the TJT Realty L.L.C. office effective July 2008 and Ladder Lift Systems L.L.C. operations were suspended in September 2008. Operations of Ladder Lift Systems, L.L.C. are consolidated within the financial statements for the Company. During the nine months ended June 30, 2009, wages, commissions, and bonuses declined $315,000, legal and other professional fees dropped $223,000, and joint venture expenses were reduced by $136,000.
The Company’s net loss for the third quarter of 2009 was $261,000 compared to $136,000 in the same 2008 quarter. The net loss for the first nine months of 2009 was $868,000 compared to $622,000 in 2008. The net loss in both periods is primarily due to lower sales volumes associated with the deteriorating market conditions.
Terrence Sheldon, President and Chief Executive Officer of the Company, noted that, “As the manufactured housing industry continues its downward spiral, and lenders remain firm in their reticence toward participation in any form of manufactured home mortgage lending, the outlook for the remainder of 2009 becomes increasingly bleak. We are constantly on the look-out for other opportunities to exploit our resources. We have curtailed expenses wherever possible through expense controls, personnel cuts, 401 K match suspension, and salary reductions. We will continue to focus on providing adequate liquidity by reducing inventories, and further cost cutting measures wherever and whenever possible.”
Established in 1977, T.J.T., Inc. 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 14 western states. In addition to the recycling business, T.J.T. also sells aftermarket products to manufactured housing, recreational vehicle, 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, competition, and changes in legislation or regulations, and other economic, competitive, governmental, regulatory, and technological factors affecting the company’s operations, pricing, products, and services. Any forward looking statement speaks only as of the date on which the statement is made, and the Company undertakes no obligation to update any forward looking statement.
Copies of this report and additional financial information can be found at www.pinksheets.com, or you may contact:
| Larry B. Prescott |
| Senior Vice President and Chief Financial Officer |
| T.J.T., Inc. |
| 208-365-5321 |
| T.J.T., INC. | |||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||
| (Dollars in thousands) | |||||
|
June 30 |
Sept. 30 | ||||
| 2009 | 2008 | ||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 718 | $ | 158 | |
|
Accounts receivable (net of allowances and discounts of $58 and $41) |
714 | 1,177 | |||
| Current portion of notes receivable | 16 | 10 | |||
| Inventories | 4,269 | 5,775 | |||
| Prepaid expenses and other current assets | 97 | 14 | |||
| Income tax receivable | 404 | 325 | |||
| Deferred tax asset | 87 | 86 | |||
| Total current assets | 6,305 | 7,545 | |||
|
Property, plant and equipment, net of accumulated depreciation |
432 | 739 | |||
| Notes receivable, net of current portion | 96 | 21 | |||
| Real estate held for sale | 204 | - | |||
| Real estate held for investment | 877 | 899 | |||
| Other assets | 402 | 379 | |||
| Deferred tax asset | 198 | 72 | |||
| Total assets | $ | 8,514 | $ | 9,655 | |
| Current liabilities: | |||||
| Accounts payable | $ | 317 | $ | 731 | |
| Accrued liabilities | 367 | 497 | |||
| Total current liabilities | 684 | 1,228 | |||
| Loan from insurance policy | 200 | - | |||
| Deferred income and other noncurrent obligations | 81 | 16 | |||
| Total liabilities | 965 | 1,244 | |||
| Non-controlling interest | 4 | 9 | |||
| 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; 4,532,862 issued and outstanding |
5 | 5 | |||
| Capital surplus | 5,856 | 5,845 | |||
| Retained earnings | 1,684 | 2,552 | |||
| Total shareholders' equity | 7,545 | 8,402 | |||
| Total liabilities and shareholders' equity | $ | 8,514 | $ | 9,655 | |
| T.J.T., INC. | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATION (Unaudited) | |||||||||||||||
| (Dollars in thousands except per share amounts) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| June 30 | June 30 | ||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Sales (net of returns and allowances): | |||||||||||||||
| Axles and tires | $ | 1,874 | $ | 2,838 | $ | 4,713 | $ | 8,426 | |||||||
| Accessories and siding | 651 | 1,148 | 1,851 | 3,112 | |||||||||||
| Total sales | 2,525 | 3,986 | 6,564 | 11,538 | |||||||||||
| Cost of goods sold | |||||||||||||||
| Axles and tires | 1,692 | 2,287 | 4,037 | 6,739 | |||||||||||
| Accessories and siding | 462 | 763 | 1,257 | 2,081 | |||||||||||
| Total cost of goods sold | 2,154 | 3,050 | 5,294 | 8,820 | |||||||||||
| Gross profit | 371 | 936 | 1,270 | 2,718 | |||||||||||
| Selling, general and administrative expenses | 798 | 1,190 | 2,706 | 3,818 | |||||||||||
| Operating loss | (427 | ) | (254 | ) | (1,436 | ) | (1,100 | ) | |||||||
| Interest income (expense) | (1 | ) | 3 | 2 | 28 | ||||||||||
| Investment property income | - | - | - | 15 | |||||||||||
| Undistributed equity interest in joint venture income | - | - | - | - | |||||||||||
| Rental income | 3 | 2 | 11 | 5 | |||||||||||
| Other income | 9 | - | 21 | 11 | |||||||||||
| Loss before non-controlling interest and taxes | (416 | ) | (249 | ) | (1,402 | ) | (1,041 | ) | |||||||
| Non-controlling interest (income) loss | (1 | ) | 12 | 5 | 36 | ||||||||||
| Loss before taxes | (417 | ) | (237 | ) | (1,397 | ) | (1,005 | ) | |||||||
| Income tax benefit | (156 | ) | (101 | ) | (529 | ) | (383 | ) | |||||||
| Net loss | $ | (261 | ) | $ | (136 | ) | $ | (868 | ) | $ | (622 | ) | |||
| Net loss per common share: | |||||||||||||||
| Continuing operations | |||||||||||||||
| Basic | $ | (.06 | ) | $ | (.03 | ) | $ | (.19 | ) | $ | (.14 | ) | |||
| Diluted | $ | (.06 | ) | $ | (.03 | ) | $ | (.19 | ) | $ | (.14 | ) | |||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 4,532,862 | 4,532,862 | 4,532,862 | 4,532,862 | |||||||||||
| Diluted | 4,533,420 | 4,562,750 | 4,538,519 | 4,585,359 | |||||||||||
| T.J.T., INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
| (Dollars in thousands) | ||||||||
| For the nine months ended June 30, | 2009 | 2008 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (868 | ) | $ | (622 | ) | ||
|
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
||||||||
| Depreciation and amortization | 132 | 171 | ||||||
| Loss (gain) on sale of assets | (21 | ) | (11 | ) | ||||
| Stock compensation | 11 | 13 | ||||||
| Non-controlling interest | (5 | ) | 50 | |||||
| Change in accounts receivables | 463 | (96 | ) | |||||
| Change in inventories | 1,506 | (1,100 | ) | |||||
| Change in prepaid expenses and other current assets | (83 | ) | (19 | ) | ||||
| Change in accounts payable | (414 | ) | (78 | ) | ||||
| Change in taxes | (206 | ) | (455 | ) | ||||
| Change in other assets and liabilities | (155 | ) | 33 | |||||
| Net cash provided (used) by operating activities | 360 | (2,114 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (29 | ) | (124 | ) | ||||
| Investment property purchases | (1 | ) | (27 | ) | ||||
| Sale of land held for investment | 13 | - | ||||||
| Issuance of notes receivable | (7 | ) | (32 | ) | ||||
| Repayments received on notes receivable | 7 | 169 | ||||||
| Proceeds from sale of assets | 17 | 44 | ||||||
| Net cash provided by investing activities | - | 30 | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | - | 294 | ||||||
| Proceeds from loan against life insurance policy | 200 | - | ||||||
| Net cash provided by financing activities | 200 | 294 | ||||||
| Net increase (decrease) in cash and cash equivalents | 560 | (1,790 | ) | |||||
| Cash and cash equivalents at October 1 | 158 | 1,834 | ||||||
| Cash and cash equivalents at June 30 | $ | 718 | $ | 44 | ||||
| Supplemental information: | ||||||||
| Issuance of note receivable for sale of fixed assets | $ | - | $ | 10 | ||||
| Issuance of note receivable for sale of land held for investment | 81 | - | ||||||