Deflecta-Shield Reports Fifth Consecutive Quarterly Earnings Increase
25 July 1997
Deflecta-Shield Reports Fifth Consecutive Quarterly Earnings Increase
Net Income Advances 34 Percent from Year-Ago Second Quarter
INDIANOLA, Iowa, July 25 -- Deflecta-Shield Corporation
, a leader in the manufacture and distribution of add-on truck
accessories, today announced results for the second quarter of 1997.
Russ Stubbings, President and CEO, said net sales for the second quarter
of 1997 were in line with management's strategy of repositioning the company's
products in the marketplace to generate healthier margins.
Continued gross margin improvements and expense reductions led to a 34.0%
increase in second quarter net income versus the same quarter of 1996.
Deflecta-Shield Corporation
Results Summary
(In thousands except per share)
Quarters Ended June 30,
1997 1996 Change
Net Sales $18,425 $18,255 +0.9%
Net Income $1,282 $957 +34.0%
Net Income (Loss) Per Share $0.27 $0.20 +34.0%
Weighted Shares O/S 4,800 4,800 --
"Net sales for the three months, ended June 30, 1997, rose 0.9% to $18.4
million compared to $18.3 million for the comparable period in 1996," said Mr.
Stubbings. "During the period, we introduced new applications to existing
product lines as well as publishing and distributing a new aluminum products
catalog to the trade. Second quarter net income increased 34% to $1.3
million, or $0.27 per share, versus $957,000, or $0.20 per share for the same
quarter of 1996.
"First half sales were 2.6% lower at $35.3 million, compared to $36.3
million for the comparable period in 1996 which was a result of our product
repositioning strategy and a soft light truck accessory market," said Mr.
Stubbings. "First half net income increased 28.8% to $2.2 million, or $0.45
per share, versus $1.7 million, or $0.35 per share for the same period of
1996."
For the second quarter, the manufacturing efficiencies and product mix
shifts increased gross profit margin to 36.8% vs. 34.7% for the second quarter
of 1996. The gross profit margin in the second quarter of 1997 was the
highest since first quarter of 1995. Meanwhile second quarter selling expense
was decreased to $2.5 million, or 13.5% of sales, versus $2.6 million, or
14.5% of sales, a year earlier. The preparations and staffing for
restructuring manufacturing and system improvements boosted general and
administration expenses to $2.0 million, or 10.8% of sales, compared to $1.9
million, or 10.4% of sales, for the second quarter of 1997. Second quarter
interest expense was reduced to $125,000, down from $241,000 for the second
quarter of 1996. The quarter's effective tax rate reached 41.0% compared to
37.9% for the second quarter a year earlier.
At June 30, 1997, our current ratio was 3.2:1, compared to 3.1:1 at
December 31, 1996. Long term debt was $7.4 million, versus $8.0 million at
year-end 1996. Long-term debt amounted to 19.4% of total capital (long-term
debt plus equity) at June 30, 1997, versus 22.0% at December 31, 1996.
Stockholders' equity increased to $30.7 million at the end of the second
quarter from $28.5 million at year end 1996.
"The results of the second quarter," explained Stubbings, "continue to
reflect our new management philosophy at Deflecta-Shield. Cutting costs and
waste while accelerating new product introductions is now a part of our
corporate culture. Deflecta-Shield intends to continue with its transition to
a more efficient customer responsive company. Our strategic plans include
facilities improvements and new manufacturing processes that should result in
additional cost savings and efficiencies, but these programs could hold back
earnings growth in the short term."
About the Company
Deflecta-Shield is a leading supplier to the $2.7 billion*
truck accessories market. The company's growth strategy is outlined in its
five base priorities:
1. Develop new products and broader offerings;
2. Reposition products to achieve higher return;
3. Decrease manufacturing and distribution cost;
4. Better asset management, and
5. Better utilization of overhead.
Deflecta-Shield's common stock is traded on The Nasdaq Stock Market under
the symbol TRUX.
Pursuing these priorities during the last 18 months, Management has
increased net income 128% in 1996 vs. 1995 and 29% in the first half of 1997
vs. 1996. During the last 18 months, management reduced debt 47%.
* Market statistics on light truck accessories markets are from SEMA.
DEFLECTA-SHIELD CORPORATION
CONDENSED STATEMENT OF INCOME
(In thousands except per share)
Quarters Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Net Sales $18,425 $18,255 $35,318 $36,278
Cost of Sales 11,646 11,917 22,586 24,150
Gross Profit 6,779 6,338 12,732 12,128
Selling Expense 2,488 2,648 4,791 5,295
General and Administrative Expense 1,993 1,907 3,957 3,544
Income From Operations 2,298 1,783 3,984 3,289
Interest Expense 125 241 319 549
Income Before Tax 2,173 1,542 3,665 2,740
Income Tax 891 585 1,503 1,061
Net Income $1,282 $957 $2,162 $1,679
Net Income Per Share $0.27 $0.20 $0.45 $0.35
Weighted Average Shares Outstanding 4,800 4,800 4,800 4,800
Discussions in this news release of Deflecta-Shield's belief that
improvements can be gained in manufacturing efficiencies, and the intention to
introduce new products contain forward-looking statements that involve risks
and uncertainties, including but not limited to general economic conditions,
the sale of new light and heavy trucks, which are cyclical; difficulties which
may be encountered in the consolidation of manufacturing and distribution
facilities and implementing new processes; competitive factors and other risks
detailed from time to time in the Company's SEC reports, including the report
on Form 10-K for the year end December 31, 1996. Actual results may vary
materially from those anticipated.
SOURCE Deflecta-Shield Corporation