Durakon Reports Second Quarter 1997 Results
5 August 1997
Durakon Reports Second Quarter 1997 Results
* Second quarter 1997 results were down from the year-ago quarter.
* Strategies to improve results are in place and on schedule:
* Vehicle Accessories: Market penetration continues to increase. New
cost reduction and productivity programs are being implemented to
offset continued margin pressures.
* Towing & Recovery: New state-of-the-art wrecker plant is fully
operational. Additional distribution is in place to increase volume.
Second Quarter 1997 and 6-Month Highlights
($ in thousands, except per share data)
2nd Quarter Ended 6-Months Ended
6/30/97 6/30/96 Change 6/30/97 6/30/96 Change
Net Sales $46,198 $49,430 (7)% $86,814 $93,325 (7)%
Operating
Income $626 $4,271 (85)% $1,018 $7,671 (87)%
Net Income $390 $2,757 (86)% $647 $4,895 (87)%
Net Income per
Share $0.06 $0.42 (86)% $0.10 $0.74 (87)%
Average Shares
Outstanding 6,309 6,661 -- 6,309 6,661 --
Vehicle Accessories
segment
-- Sales $25,324 $24,026 5% $46,364 $44,524 4%
-- Operating
Income $640 $2,683 (76)% $838 $4,540 (82)%
Towing & Recovery
segment
-- Sales $20,874 $25,404 (18)% $40,450 $48,801 (17)%
-- Operating
Income $(14) $1,588 N/M $180 $3,131 (94)%
"Soft market conditions combined with strong competitive pressures
continue in both of our business segments, which have had a negative impact on
our second quarter results. Fortunately, the programs we initiated earlier
this year are beginning to offset these conditions."
-- David W. Wright, President and
Chief Executive Officer
Durakon Reports Second Quarter 1997 Results
LAPEER, Mich., Aug. 5 -- Durakon Industries, Inc.
reported net income for the second quarter ended June 30, 1997,
of $0.4 million or $0.06 per share, compared with $2.8 million or $0.42 per
share in the second quarter of 1996. Net sales decreased 7% to $46.2 million
from $49.4 million in the year-ago quarter.
For the first six months of 1997, net income was $0.7 million or $0.10 per
share compared to $4.9 million or $0.74 per share in the first half of 1996.
Net sales decreased 7% to $86.8 million from $93.3 million in the same period
a year ago.
"Many of the same market and competitive conditions we experienced in the
first quarter continue today," said David W. Wright, President and Chief
Executive Officer of Durakon Industries. "We are continuing to implement new
programs to improve results. Combined with our strong fundamentals, we
believe these initiatives will expand our market leadership positions."
Vehicle Accessories Segment
Second quarter 1997 operating income in the Vehicle Accessories segment
was $0.6 million compared to $2.7 million in the second quarter of 1996. Unit
sales increased 7% during the second quarter compared to the same period a
year ago despite continued soft sales of pickup trucks. Dollar sales
increased 5% to $25.3 million from $24.0 million in 1996; this was less than
unit growth, primarily due to continued competitive pricing pressures.
For the first six months of 1997, operating income in the Vehicle
Accessories segment was $0.8 million compared to $4.5 million a year ago.
Unit sales increased 8% for the first six months and dollar sales increased 4%
to $46.4 million compared to $44.5 million in 1996.
Wright commented that in addition to pickup truck sales being soft, over-
capacity exists within the bedliner industry that has created margin pressure
in all channels of distribution. "We are implementing a number of new
programs to offset the impact of lower pricing levels and are laying the
foundation for long-term profitable growth," added Wright.
Among the major programs are the following:
* Aggressive cost reduction and manufacturing productivity programs are in
process.
* New product programs are in their initial launch stage and will
contribute to earnings increases in the near future.
* Bedliner prices were increased in the second quarter.
* The one-time start-up costs associated with the Ford contract are
completed and distribution efficiencies are now in place.
Towing & Recovery Segment
Jerr-Dan's second quarter 1997 operating income was near break-even
compared with $1.6 million in the year-ago quarter. Net sales decreased 18%
to $20.9 million from $25.4 million in the second quarter of 1996. For the
first six months of 1997, Jerr-Dan's operating income was $0.2 million
compared to $3.1 million a year ago. Unit sales decreased 21% and dollar
sales decreased 17% to $40.5 million compared to $48.8 million for the first
six months of 1996.
Wright said that Jerr-Dan has completed its transfer of the towing vehicle
manufacturing operation to the new more cost-efficient plant. "Jerr-Dan's
market remains very soft, and although sales and acceptance of our new medium-
duty wrecker and power grids have been excellent, these new products have not
been able to offset the market softness," said Wright.
Forward-Looking Statements
The discussion above contains forward-looking statements about the
company's future growth, profitability and competitive position. Any such
statements are subject to risks and uncertainties, including changes in
economic and market conditions, industry competition, the success of new
product introductions, the realization of expected economies from productivity
programs and plant expansions, management of growth and other factors outside
the company's control, including factors discussed from time to time in the
company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K. Readers are cautioned not to place undue reliance
on forward-looking statements, which reflect management's analysis only as of
the date hereof. The company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances that may arise
after the date hereof or to reflect actual results.
Durakon Industries is the world's leading producer and distributor of
pickup truck bedliners and rollback car carriers, and is a leader in the
production of wheel-lift towing vehicles and distribution of vehicle
accessories. Headquartered in Lapeer, Michigan, the company's common stock is
traded on the Nasdaq Stock Market under the ticker symbol DRKN.
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
($ in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Net sales $46,198 $49,430 $86,814 $93,325
Cost of products sold 38,053 37,972 71,193 71,711
Gross profit 8,145 11,458 15,621 21,614
Selling, general and
administrative expenses 7,351 7,019 14,265 13,607
Goodwill 168 168 338 336
Operating income 626 4,271 1,018 7,671
Interest income, net 31 129 91 295
Interest expense (30) (50) (49) (100)
Other Income (Expense) (18) (6) (63) (45)
Net Income Before Taxes 609 4,344 997 7,821
Provision for Income Tax 219 1,587 350 2,926
Net Income $390 $2,757 $647 $4,895
Net income per share of
common stock $0.06 $0.42 $0.10 $0.74
Weighted average shares (in 000's) 6,309 6,667 6,309 6,661
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands)
June 30, December 31,
1997 1996
ASSETS
Current assets:
Cash and equivalents $3,310 $8,597
Accounts receivable, net 20,394 20,175
Inventories:
Raw materials and work in process 8,361 4,362
Finished goods 10,930 14,065
Total inventories 19,291 18,427
Prepaid expenses and other 2,368 2,005
Deferred income taxes 2,168 2,245
Total current assets 47,531 51,449
Property, plant and equipment, net 22,275 20,754
Goodwill 10,938 11,278
Patents, net 337 406
Other assets 230 192
Total $81,311 $84,079
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $183 $251
Accounts payable 11,113 9,940
Other current liabilities 5,951 6,108
Total current liabilities 17,247 16,299
Long-term debt 758 795
Deferred income taxes 982 1,050
Minority interest 478 175
Total liabilities 19,465 18,319
Shareholders' equity:
Common stock, without par value -
15,000,000 shares authorized; 6,245,292
and 6,565,292 shares issued
and outstanding 17,257 21,820
Currency translation (287) (289)
Retained earnings 44,876 44,229
Total shareholders' equity 61,846 65,760
Total $81,311 $84,079
DURAKON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in thousands) Six Months Ended
June 30, June 30,
1997 1996
Cash flows from operating activities:
Net income $647 $4,895
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,342 3,887
Loss on sale of property,
plant and equipment 24 0
Net Increase of other assets (38) 0
Increase in deferred income taxes 224 0
Increase/(decrease) due to changes in
current items:
Accounts receivable (219) (3,962)
Inventories (864) (2,426)
Prepaid expenses and other current items (363) (271)
Accounts payable 1,173 (51)
Other current liabilities (157) (2,047)
Net cash provided by operating
activities 2,769 25
Cash flows from investing activities:
Purchases of property, plant and equipment (3,479) (2,251)
Proceeds from sale of property,
plant and equipment 2 150
Net cash used in investing activities (3,477) (2,101)
Cash flows from financing activities:
Repayment of long-term debt (105) (714)
Increase/(decrease) in minority
interest, net 303 59
Retirement of common stock (5,200) 0
Cash proceeds from exercise of
stock options 422 0
Net cash used in financing activities (4,580) (655)
Effect of exchange rate changes on cash 2 11
Cash and cash equivalents:
Decrease for the period (5,286) (2,720)
Balance, beginning of period 8,597 12,757
Balance, end of period $3,311 $10,037
SOURCE Durakon Industries, Inc.