Defiance, Inc. Reports Second Quarter Fiscal 1998 Results
23 January 1998
Defiance, Inc. Reports Second Quarter Fiscal 1998 Results
CLEVELAND, Jan. 23 -- Defiance, Inc. today
reported net earnings for its second fiscal quarter ended December 31, 1997 of
$916,000, or $0.15 per share, compared with $1,509,000, or $0.23 per share,
for the same period last year. Sales for the quarter were $21,772,000,
compared with $22,794,000 for the same period last year.
Year-to-date net earnings were $1,178,000, or $0.19 per share, compared
with $2,219,000, or $0.34 per share, for the same period last year. Year-to-
date sales were $42,373,000, compared with $44,861,000 for the same period
last year.
Prior-year sales included $104,000 for the quarter and $1,307,000 for the
year-to-date from business units sold or closed last year.
Jerry A. Cooper, president and chief executive officer, said, "Sales from
ongoing operations declined by 4 percent for the quarter and 3 percent for the
year to date. Strong sales in our bearings business helped offset continued
weakness in tooling and testing. Bearings sales were up 12 percent for the
quarter and year to date over last year, primarily from increased sales to
Eaton Corporation for new Chrysler automotive requirements. Continued delays
in the release of new prototype and tooling programs from Ford and Chrysler
reduced tooling revenues for the quarter 28 percent and for the year-to-date
25 percent below year-ago levels. We have also seen testing revenues decline
16 percent this quarter and 12 percent for the year to date due to scaled-back
demand from OEMs and Tier One suppliers.
"Operating margins from ongoing operations this quarter were 8.0 percent
of sales compared with 11.5 percent last year, and year-to-date operating
margins were 5.8 percent of sales compared with 9.7 percent last year.
Margins were negatively affected by soft demand for tooling and testing work.
On the positive side, cam follower roller and axle production levels and
efficiencies have increased significantly at our Upper Sandusky, Ohio,
facility, contributing to higher operating margins in our bearings business.
"We continued to pay down interest-bearing debt, reducing our debt to
total capitalization ratio to just over 30 percent at December 31, 1997,
compared with 34 percent at June 30, 1997, and 39 percent at December 31,
1996. As a result, interest expense was lower by $91,000 for the quarter and
$229,000 for the year-to-date compared with last year.
"Looking at the second half of the fiscal year, we expect improving
margins in our bearings business on continued strong sales. In our tooling
business, Ford and Chrysler are now releasing new prototype programs,
specifically as relates to die design, pattern, fixture and cutter path work.
We also anticipate strengthening demand for testing from OEMs and Tier One
suppliers during the second half. Assuming the year unfolds as we now see it,
we look for a much stronger second half and continue to believe fiscal 1998
earnings will exceed those of last year."
Defiance, headquartered in Cleveland, is a supplier of tooling systems,
testing services, and specialty anti-friction bearings and precision-machined
products to the U.S. motor vehicle industry.
This press release contains forward-looking statements within the meaning
of the Private Litigation Reform Act of 1995. Actual results may differ
materially from anticipated results due to certain risks and uncertainties,
including but not limited to general economic conditions in the markets in
which Defiance operates, fluctuations in the production of vehicles for which
Defiance is a supplier, fluctuations in the level of new model development
activity at Defiance's significant customers, labor disputes involving
Defiance or its significant customers, and other risks detailed from time to
time in Defiance's Securities and Exchange Commission filing.
DEFIANCE, INC.
Consolidated Financial Highlights
Three Months Ended Six Months Ended
Operations and Cash Flow 12/31/97 12/31/96 12/31/97 12/31/96
Net sales $21,772,000 $22,794,000 $42,373,000 $44,861,000
Cost of goods sold 17,680,000 17,193,000 34,657,000 34,822,000
Selling and
administrative expenses 2,355,000 2,895,000 5,243,000 5,770,000
Operating earnings 1,737,000 2,706,000 2,473,000 4,269,000
Interest expense - net 323,000 414,000 646,000 875,000
Earnings before
income tax
provision 1,414,000 2,292,000 1,827,000 3,394,000
Income tax provision 498,000 783,000 649,000 1,175,000
Net earnings $916,000 $1,509,000 $1,178,000 $2,219,000
Basic and diluted
earnings per share $0.15 $0.23 $0.19 $0.34
Average common outstanding
shares:
Used for basic
earnings per share 6,095,744 6,427,254 6,256,766 6,416,131
Used for diluted
earnings per share 6,143,757 6,509,383 6,294,152 6,545,527
Cash dividends per share $0.04 $0.04 $0.08 $0.08
Depreciation and
amortization $1,878,000 $1,745,000 $3,722,000 $3,483,000
Capital expenditures $605,000 $505,000 $1,098,000 $2,637,000
Financial Condition
12/31/97 6/30/97
Current assets $22,882,000 $28,974,000
Property - net 35,780,000 37,822,000
Goodwill 4,745,000 4,871,000
Other assets 1,287,000 2,152,000
Total assets $64,694,000 $73,819,000
Current liabilities $12,928,000 $17,193,000
Long-term obligations 11,960,000 14,968,000
Deferred income taxes 3,262,000 3,267,000
Stockholders' equity 36,544,000 38,391,000
Total liabilities and
stockholders' equity $64,694,000 $73,819,000
Funded (interest-bearing) debt $16,200,000 $19,797,000
Debt to total capitalization ratio 30.7% 34.0%
SOURCE Defiance, Inc.