Wescast Industries Inc. Reports Earnings
22 July 1997
Wescast Industries Inc. Positive Earnings Trend Continues
BRANTFORD, Ontario, July 22 -- Wescast Industries Inc.,
(Toronto: WCS.A; Nasdaq: WCSTF), the leading exhaust manifold producer in
North America, announces strong second quarter profits.
Highlights
-- Net income increased 48% to $10.4 million compared to the 1996 second
quarter of $7.0 million. Even with a 20% dilution as a result of a share
offering in late 1996, earnings per share increased 23% over 1996 from $.65 to
$.80.
-- General Motors presented Wescast with a prestigious "Supplier of the
Year" award for the fourth consecutive year and the Brantford foundry joined
the Wingham foundry, and the Wingham machining operations in becoming a
certified Ford "Q1" supplier.
Sales
By continuing to increase its share of the exhaust manifold market, sales
rose by 18% to $59.4 million from $50.4 million.
Operating Results
The continued change to more internally machined castings, the focus on
quality, and improved productivity, combined with the sales increase of 18%,
resulted in a Gross Profit increase of 39% to $21.4 million in Q2 1997 from
$15.5 million in Q2 1996. Second quarter Operating Earnings increased 40% to
$15.7 million. Earnings for the first six months of 1997 are $19.8 million,
49% higher than $13.2 million in the same period 1996.
Balance Sheet and Financial Position Results
As of June 30, 1997 the Company had a strong working capital ratio of
4.3:1. The Company has cash reserves of $43 million, including part of the
December 1996 share offering, that is available for future opportunities.
Capital spending totalled $4.8 million in the second quarter compared to
$5.6 million last year. The Company plans to invest approximately $45 million
(compared to $28.6 million in 1996) for installation of new machine lines,
improvements to production equipment and a new plant for the Magalloy
operation.
Resignation of Director
The Company's Board of Directors recently accepted the resignation of
Donald S. Mills, Q.C. from his position as a Director of Wescast.
Dividend Declaration
Wescast Industries Inc. has declared a dividend on its common shares in
the amount of US$0.03 per Common Share, and that such dividend shall be
payable on August 20, 1997 to shareholders of record at the close of business
on August 5, 1997.
A conference call has been arranged for Tuesday, July 22, 1997 at
1:00 p.m. EST. To participate in this call, please dial 416-620-7116.
Wescast Industries Inc. Financial Statements
Balance Sheet
(in thousands of Canadian dollars)
(unaudited Cdn GAAP)
As at
June 29 December 29
1997 1996
Current assets
Cash and short term
investments $42,990 $35,863
Receivables 41,775 37,399
Inventories 9,084 10,017
Prepaid expenses 360 278
Due from affiliated companies 194 0
Total 94,403 83,557
Property and equipment 105,078 101,952
Intangibles and other 3,274 3,390
TOTAL $202,755 $188,899
Current liabilities
Payables and accruals $16,556 $21,779
Income taxes payable 4,866 5,969
Current portion of
long term debt 337 302
Total 21,759 28,050
Long term debt 831 3,021
Accrued pension benefits 2,625 1,750
Deferred income taxes 3,616 3,390
TOTAL 28,831 36,211
Shareholders' equity
Capital stock 104,443 101,910
Retained earnings 69,481 50,778
Total 173,924 152,688
TOTAL $202,755 $188,899
Wescast Industries Inc. Financial Statements
Statement of Changes in Financial Position
(in thousands of Canadian dollars)
(unaudited Cdn GAAP)
Three months ended Six months ended
June 29 June 30 June 29 June 30
1997 1996 1997 1996
Cash derived from
(applied to)
Operating activities
Net income $10,355 $7,000 $19,769 $13,242
Add (deduct) items not
requiring cash:
Depreciation and
amortization 3,564 3,149 6,797 5,902
Amortization of
foreign exchange 0 (73) 0 (56)
Deferred income taxes 109 237 226 428
(Gain)/loss on disposal
of assets 5 0 30 5
Pension expense 438 106 875 106
Total 14,471 10,419 27,697 19,627
(Increase)decrease in
non-cash working
capital (7,602) 518 (10,045) (355)
Total cash from
operations 6,869 10,937 17,652 19,272
Financing activities
Reduction of long term
debt 0 (5,453) 0 (5,453)
Assets financed under
capital lease 104 0 494 0
Payment of obligations
under capital lease (132) 0 (268) 0
Conversion of debenture 0 0 (2,381) 0
Issuance of share capital
on conversion of
debenture 0 0 2,381 0
Issuance of share capital
under Stock Option
Plan 152 0 152 0
Dividends paid (539) (437) (1,066) (730)
Total financing
activities (415) (5,890) (688) (6,183)
Investment activities
Purchase of property
and equipment (4,675) (5,642) (9,991) (12,884)
Proceeds on disposal
of assets 69 1 154 11
Total investment
activities (4,606) (5,641) (9,837) (12,873)
Net increase/(decrease)
in cash 1,848 (594) 7,127 216
Cash and short term investments
Beginning of period 41,142 2,100 35,863 1,290
End of period $42,990 $1,506 $42,990 $1,506
Wescast Industries Inc. Financial Statements
Statement of Earnings
(in thousands of Canadian dollars, except per share figures)
(unaudited Cdn GAAP)
Three months ended Six months ended
June 29 June 30 June 29 June 30
1997 1996 1997 1996
Sales $59,395 $50,439 $115,571 $96,649
Cost of sales 38,042 34,951 74,498 67,159
Gross profit 21,353 15,488 41,073 29,490
Selling, general
and administration 5,644 4,247 10,856 8,215
Operating income 15,709 11,241 30,217 21,275
Other (income) expense
Interest expense 18 376 56 692
Investment and other
income (698) (92) (1,186) (130)
Income before
income taxes 16,389 10,957 31,347 20,713
Income taxes 6,034 3,957 11,578 7,471
Net income $10,355 $7,000 $19,769 $13,242
Net earnings per share
-- basic $0.80 $0.65 $1.52 $1.23
-- fully diluted $0.77 $0.63 $1.47 $1.19
Notes to Financial Statements
Note 1: Basic earnings per share is calculated based on the weighted
average number of common shares outstanding (1997 -- 13,017,755 shares; 1996
-- 10,741,486 shares). Fully diluted earnings per share is calculated based
on the fully diluted weighted average number of common shares outstanding
(1997 -- 13,633,841 shares; 1996 -- 11,315,927 shares).
SOURCE Wescast Industries Inc.