Hilite Industries, Inc. Reports Fiscal 1997 Q4 Results
12 August 1997
Hilite Industries, Inc. Reports Fiscal 1997 Fourth Quarter And Year End Results And New Business
CARROLLTON, Texas, Aug. 12 -- Hilite Industries, Inc.
(the "Company" or "Hilite") reported a net loss for its fourth
quarter and 1997 fiscal year due to a fourth quarter restructuring charge
related to the Company's specialty components and assemblies division. In
addition, Hilite announced that it has been awarded over $8,000,000 of new
business for the brake valve and power transmission components division which
significantly improves the outlook for the Company in fiscal year 1998 and
into fiscal 1999.
For the 1997 fiscal year, the Company's net loss was $1,657,000 or $0.34
per share compared to net income of $3,632,000 or $0.74 per share for fiscal
1996. The net loss for the year, which is entirely attributable to the
specialty components and assemblies division, includes a fourth quarter after
tax charge of $1,757,000, or $0.36 per share, related to the restructuring of
the division. The charge includes provisions for the termination of certain
contracts, the write down of certain assets to estimated net realizable value
and other costs related to the reorganization. Excluding the charge for the
fourth quarter, net income would have been $100,000, or $0.02 per share for
the fiscal year. Net sales for the 1997 fiscal year were $73,492,000, a
slight improvement over sales of $72,642,000 in the prior year. Shareholders'
equity at June 30, 1997 was $22,003,000, or $4.49 per share. At June 30, 1996
shareholders' equity was $23,661,000, or $4.83 per share.
The fourth quarter net loss, reflecting the restructuring charge mentioned
above, was $1,421,000 or $0.29 per share. Excluding this charge, the net
income would have been $336,000, or $0.07 per share. Net income for the
fourth quarter of the 1996 fiscal year was $863,000, or $0.18 per share.
Fourth quarter net sales were $20,310,000 for fiscal year 1997 and were
$20,326,000 for fiscal 1996.
Daniel W. Brady, CEO of Hilite Industries, Inc. commented on the year's
results: "Early this fiscal year, we were confronted with a rapidly
deteriorating situation in the specialty components and assemblies division,
resulting from the division's loss of its Q1 quality rating at Ford Motor
Corporation and mounting losses on the start-up of new business. We
responded with a new management team for the division directed to immediately
address the concerns of our customers, focus on the engineering, manufacturing
and quality problems, implement short-term corrective action and develop a
longer term plan for restoring the division to profitability. The plan, which
was approved in the fourth quarter of fiscal 1997 and has already begun,
involves the orderly discontinuance of certain unprofitable commodity-type
products, representing approximately $8,000,000 of fiscal 1997 revenues. As
restructured, the division will focus on value added assemblies, stampings and
specialty springs. It also includes the closure of certain facilities and the
termination of certain contracts. The down sizing, which involves a 60%
reduction in part numbers, will take place over an estimated nine month
period. Because of expected increases in sales of the core products of the
division, especially assemblies for Motorola Cellular Group, Inc., sales for
the division are expected to decrease only 10% in fiscal 1998. Net sales for
this division were $29,535,000 for fiscal 1997 and were $27,200,000 for fiscal
1996. The plan projects substantial near term reductions in the operating
losses of the division, a continued commitment to regaining Q1 status at Ford
Motor Corporation and a return of the division to profitability at the
operating income level by the third quarter of the 1998 fiscal year. We are
confident that when the plan is executed, the result will be a streamlined
operation, focused on quality, engineered products, which fit well with
Hilite's strengths and which will provide a foundation for re-building the
business.
"The other two divisions of Hilite, the brake valve and power transmission
components divisions, lacked sales growth in fiscal 1997 because new business
obtained during the year was not realized soon enough to offset products that
had lower volumes or were being phased out by customers. Net sales for the
power transmission components division were $21,762,000 in fiscal 1997 and
were $21,533,000 in fiscal 1996. Brake valve division net sales were
$22,195,000 in fiscal 1997 and were $23,909,000 in fiscal 1996. Both
divisions were profitable in fiscal 1997. Based on new business committed to
the Company by its customers, strong sales growth is expected for both of
these divisions in fiscal 1998 and 1999. Hilite is pleased to announce new
business with Chrysler Motors Corp. and Borg-Warner Corporation with combined
estimated sales in excess of $8,000,000 annually. Such sales will begin in
the second quarter of fiscal 1998 and will reach full potential in fiscal
1999.
"In the second half of fiscal 1997, Hilite began producing and shipping
brake valves for the "P90" and "W"-cars for General Motors Corp. and, in the
first quarter of fiscal 1998, a new relief valve for Bosch Braking Systems
Corporation will begin shipping. Revenues from these previously announced
programs, when combined with the additional business from Borg-Warner
Corporation and Chrysler Motors Corp. is expected to reach an annualized sales
rate of $14,000,000 during fiscal 1998. After allowing for programs and
models that may be discontinued, net sales are projected to increase for the
brake valve division by approximately 15% in each of fiscal 1998 and 1999 and
for the power transmission components division by approximately 12% in each of
the next two years.
"Looking longer term, we are encouraged about the opportunities for
Hilite's growth and are, therefore, budgeting additional resources for new
product and market development. Our goal is to get back on track with an
aggressive plan for growth and profitability that provides momentum into the
year 2000 and beyond."
Safe harbor for forward-looking statements: Except for historical
information contained herein, there are forward-looking statements in this
release that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties which may cause the Company's actual
results in future periods to differ very materially from forecasted results.
These risks include, among others, risks associated with automotive production
rates, risks associated with the manufacturing process and production yields
and risks related to technological changes in components which affect the life
of the product. There are no assurances that the corrective action program
will be successful or that we will satisfy Ford's requirements in order to
regain Q1 status in the specialty components and assemblies division. These
and other risks are described in the Company's 10-K filed with the Securities
and Exchange Commission (SEC) on September 30, 1996, copies of which are
available from the SEC or may be obtained upon request from the Company.
Hilite Industries, Inc. designs, manufactures and sells a diversified line
of highly-engineered components and assemblies for the automotive industry,
including brake proportioning valves, electromagnetic clutches, machined
components, springs, stampings and assemblies. The Company's customers
include all three domestic automobile manufacturers: Ford Motor Corporation,
General Motors Corp. and Chrysler Motors Corp. and, Bosch Braking Systems
Corporation, Navistar International Transportation Corporation, Honda of
America Mfg., ITT Automotive of North America, Mitsubishi Motor Sales of
America, Inc. and Toyota Motor Sales USA, Inc. For further information call
Investor Relations at (972)466-0475 or access Hilite Industries, Inc.'s
website at http://www.hilite-ind.com .
HILITE INDUSTRIES, INC.
Financial Highlights
(In Thousands, Except Per Share Data)
Three Months Ended Year Ended
June 30, June 30,
1997 1996 1997 1996
Income Statement Data:
Net Sales $ 20,310 $ 20,326 $ 73,492 $ 72,642
Gross Profit 2,449 3,793 9,554 14,931
Operating Income (Loss) (1,850) 1,792 (786) 7,355
Net Income (Loss) (1,421) 863 (1,657) 3,632
Earnings (Loss) Per
Share $ (0.29) $ 0.18 $ (0.34) $ 0.74
Weighted average
number of
shares outstanding 4,900 4,900 4,900 4,900
As of As of
June 30, 1997 June 30, 1996
Balance sheet data:
Working Capital $ 8,103 $ 11,285
Property, plant, equipment,
net 28,654 27,790
Total assets 56,088 56,199
Long-term obligations (1) 20,748 19,533
Total liabilities 34,085 32,538
Shareholders' equity 22,003 23,661
(1)Includes noncurrent portion of long-term debt
SOURCE Hilite Industries, Inc.