Newcor Announces Expected First Quarter Results
22 January 1998
Newcor Announces Expected First Quarter Results
BLOOMFIELD HILLS, Mich., Jan. 22 -- W. John Weinhardt,
president and chief executive officer of Newcor, Inc. ,
announced today that Newcor expects to report a net loss of approximately $1.1
to $1.3 million or $.22 to $.26 per share, on sales of approximately $29.0 to
$31.0 million for the first quarter ended January 31, 1998, compared with net
income of $.4 million, or $.07 per share, on sales of $28.0 million for the
first quarter of fiscal year 1997.
Sales for the first quarter of fiscal year 1998 are expected to be higher
than the prior year's first quarter due to the acquisitions of Plastronics
Plus, Inc., which was completed January 10, 1997, and Machine Tool & Gear,
Inc., which was completed December 23, 1997. The increase in sales from the
acquisitions will be largely offset by estimated sales decreases for the
Special Machines segment and, to a lesser extent, the remainder of the
Precision Machined Products segment.
A net loss is anticipated for the first quarter of fiscal year 1998, as
compared with net income reported for the same period one year ago for several
reasons, including: (i) lower than anticipated sales by the Special Machines
segment due to not receiving a significant order that had been anticipated, as
well as delays associated with certain new orders pending final customer
approval; (ii) lower than anticipated sales by the Precision Machined Products
segment due to a temporary build-up of inventory at a significant customer
during the previous quarter; (iii) profitability at the Rubber and Plastic
segment being adversely affected by increased scrap, high training costs and
productivity issues (due to high hourly labor turnover caused by full
employment in local economies) and, to a lesser extent, by pricing issues on
certain coated metal parts produced by the segment; and (iv) costs associated
with the acquisition of Machine Tool & Gear and the pending acquisitions of
the Deco Group and Turn-Matic, Inc., as well as start-up costs on a
significant new program that has been awarded to Machine Tool Gear.
Certain of the factors impacting first quarter year 1998 results,
including the Machine Tool & Gear, Deco Group and Turn-Matic transactions and
the start-up costs associated with the new product launch at Machine Tool &
Gear, are short-term and/or nonrecurring in nature. Management is
implementing certain actions in response to the lower than expected results by
the Special Machines and Rubber and Plastic segments, and believes such
actions should begin to favorably impact the performance of those segments
during the second quarter of fiscal year 1998.
In December 1997, Newcor announced definitive agreements to acquire
Machine Tool & Gear and the Deco Group, and in January 1998, Newcor announced
a definitive agreement to acquire Turn-Matic. Except for approximately one
month of results for Machine Tool & Gear, acquired on December 23, 1997,
Newcor's expected results for the first quarter of fiscal year 1998 will not
include the revenues or profits of these three companies. In the twelve
months ended September 30, 1997, sales for these three companies aggregated
approximately $112 million, as compared to Newcor's reported fiscal year 1997
sales of approximately $131 million. Newcor expects the acquisitions of the
Deco Group and Turn-Matic to be completed during the second quarter of fiscal
year 1998.
Newcor, headquartered in Bloomfield Hills, Michigan, designs and
manufactures precision machined and molded rubber and plastic products as well
as custom machines and manufacturing systems. Newcor is listed on the Nasdaq
Stock Market under the symbol NEWC.
Cautionary Statements Under the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995:
This press release and the information concerning the Company's expected
performance in the first quarter of fiscal 1998 and the expected impact of
management actions thereafter constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. A number
of factors could cause actual results to differ materially from those included
in or suggested by such forward-looking statements, including without
limitation: the cyclical nature of the industries served by the Company, all
of which have encountered significant downturns in the past; the level of
production by and demand from the Company's principal customers, upon which
the Company is substantially dependent, including the three major domestic
automobile manufacturers and Deere & Company; whether, when and to what extent
expected orders materialize; whether the Company will be able to successfully
complete its planned acquisitions of the Deco Group and Turn-Matic and the
related financing, and whether the Company will be able to successfully
integrate such businesses and other recent acquisitions such as Machine Tool &
Gear and Plastronics into the Company's pre-existing operations and operate
them profitably; whether the Company's recent initiatives to improve upon the
recent labor turnover experienced in its Rubber and Plastic segment will be
successful and cost-effective; the duration of the start-up phase of Machine
Tool & Gear's new program and the extent to which it is successful; the impact
on the Company of actions by its competitors, some of which are significantly
larger and have greater financial and other resources than the Company; and
developments with respect to contingencies, including environmental matters,
litigation and retained liabilities from businesses previously sold by the
Company. All forward-looking statements in this press release are qualified
by such factors. The Company disclaims any obligation to update any such
forward-looking statements.
SOURCE Newcor, Inc.