Elamex 1997 Sales Up 11 Percent to $131.9 Million; EPS $0.99
29 January 1998
Elamex 1997 Sales Up 11 Percent to $131.9 Million; EPS $0.99
EL PASO, Texas, Jan. 29 -- Elamex S.A. de C.V.
reported today preliminary unaudited numbers for fiscal 1997
year showing an 11 percent rise in sales to $131.9 million compared with sales
of $118.9 million in 1996, net income of $7.3 million compared to $7.9 million
in the prior year, and earnings per share of $0.99 in 1997 compared to EPS of
$1.15 reported in 1996 ($1.07 based upon an equal number of shares).
Sales for the quarter were 31.4 million down marginally from $32.2 million
in 4Q96. Gross profit for the quarter was $3.8 million, compared to $4.2 in
4Q96. Net income for the quarter was $1.8 million, versus $2.1 million for
4Q96. Fourth quarter earnings per share were $0.24 compared with $0.29 per
share the prior year.
"Increased activity with new 1997 customers, allowed us to compensate in
the fourth quarter for most of the sales impact caused by previously reported
ending projects," Hector Raynal, Elamex's CEO said today. "For the year,
although we faced the postponement of two important projects until 2Q98 due to
product redesign by customers, we were able to increase our revenues by 11
percent."
Operating income decreased from 8.7% in 1996 to 6.8% in 1997, due mainly
to wage inflation that was not offset by depreciation of the Mexican peso,
increased overhead expenses due to plant expansion that is not yet fully
utilized and competitive pressures in the business. Going forward we see a
steadier depreciation of the Mexican peso, in accordance with underlying
economic factors; better operating leverage as our new projects increase in
volume; and improvements in our competitive position derived from a planned
strong capital investment program that gives us more capacity and economies of
scale. Management directives to control cost during 1997 led to increased
productivity of SG&A expenses, which went down from a 7.0% of sales during
1996 to a 6.6% in 1997.
During the quarter Elamex sold an underutilized building it owned in
Guadalajara. Mr. Raynal said: "we are not in the business of owning brick and
mortar and decided to accept an attractive offer. We are now seeking leased
space better suited to the requirements of our local on-going operations".
This asset sale contributed $0.3 million to the fourth quarter's Other Income.
Net income for the Quarter came out better than anticipated, as a result
of a smaller income tax provision, due mainly to exchange rate adjustments.
Liquidity of $17.1 million was available at Quarter end to fund planned
growth, as the Company remains committed to pursue the start-up of new
programs, as well as complementary growth through acquisitions.
In a significant operating development, Elamex also announced today the
acquisition of 51 percent of Optimag, Inc., a California based start-up non-
invasive inspection technology company which will become a subsidiary of
Elamex.
Mr. Raynal said of the acquisition: "Today's electronic products are
shrinking in size while growing in complexity. As a manufacturing service
provider, Elamex has a strong interest in automation that improves production
efficiency. Optimag's Executives and Engineers have had extensive experience
in developing successful inspection products, including X-ray inspection of
printed circuit boards, high-speed optical inspection of film webs, and
computerized X-ray inspection products used in the testing of disk drive
components."
Mr. Raynal added, "Long term, we see Optimag's inspection products
addressing a growing market place, as well as potentially benefiting our
production and test operations. In the near term this relationship gives us
access to a strong engineering team which can support inspection and test
technology, an area that is becoming increasingly important in electronics
manufacturing."
David T. Cornaby, Optimag's President and CEO, declared: "Optimag is
dedicated to developing cost-effective, reliable, high-throughput optical and
electronic inspection test equipment. Our initial products will focus on
optical inspection of small, complex parts such as disk drive heads and
semiconductors."
Elamex's initial investment in Optimag is estimated at $1.3 million, of
which $0.6 million was recently funded. This investment is expected to be
incurred as an R&D expense during 1998. Although we are very optimistic about
the long term potential of this investment, the project is not expected to
generate revenues during 1998.
Elamex is a Mexican contract manufacturing service provider. The Company
delivers high quality finished assemblies to U.S. and Canadian Original
Equipment Manufacturers (OEM's) in the consumer, telecommunications, computer,
industrial, medical and automotive industries. Elamex participates in an
accelerating growth industry, where its unique competitive advantage results
from its demonstrated capability to leverage low cost, highly productive
labor, strategic North American locations, recognized world class quality, and
proven ability to combine high technology with labor intensive manufacturing
processes.
This press release includes forward-looking statements that involve risks
and uncertainties, including, but not limited to, risks associated with the
company's future growth and profitability, the ability of the Company to
continue to increase sales to existing customers and to new customers and the
effects of competitive and general economic conditions.
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In U.S. Dollars)
13 weeks ended December 31, Year ended December 31,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Net sales $ 31,420,370 32,160,838 131,934,436 118,918,913
Cost of sales 27,651,827 27,973,792 114,248,733 100,236,384
Gross Profit 3,768,543 4,187,046 17,685,703 18,682,529
Operating expenses:
General and
administrative 1,918,160 2,318,372 7,994,450 7,630,870
Selling 240,326 155,110 749,739 685,544
Total operating
expenses 2,158,486 2,473,482 8,744,189 8,316,414
Operating income 1,610,057 1,713,564 8,941,514 10,366,115
Other income (expense):
Interest income 359,077 63,951 669,418 255,362
Interest expense (73,057) (84,051) (223,842) (944,003)
Other, net 344,874 303,592 779,965 825,076
Total other income
(expense) 630,894 283,492 1,225,541 136,435
Income before
income taxes 2,240,951 1,997,056 10,167,055 10,502,550
Income tax provision 468,945 (146,679) 2,846,776 2,575,079
Net income $ 1,772,006 2,143,735 7,320,279 7,927,471
Net income per
common share $ 0.24 0.29 0.99 1.15
Weighted average
shares
outstanding 7,400,000 7,400,000 7,400,000 6,880,548
See accompanying notes to consolidated financial statements.
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Balance Sheets
(In U.S. Dollars)
December 31, December 31,
1997 1996
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 17,149,972 $ 6,269,825
Receivables:
Trade accounts, less allowance for
doubtful accounts ($528,250 in
1997 and $525,029 in 1996) 14,190,710 13,944,948
Other receivables 2,292,198 2,047,019
Total receivables 16,482,908 15,991,967
Inventories, net 13,415,409 16,200,149
Prepaid expenses 806,731 492,933
Total current assets 47,855,020 38,954,874
Property, plant and equipment, net 28,326,923 28,610,719
Other assets, net 1,060,655 410,460
$ 77,242,598 $ 67,976,053
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 0 0
Accounts payable 7,422,295 8,886,613
Accrued expenses 3,266,951 2,292,682
Current installments of long-term debt 0 0
Current obligations of capital leases 414,134 564,216
Taxes payable 1,589,849 1,286,132
Deferred income taxes, net 1,379,783 1,379,783
Due to related parties 45,480 86,743
Total current liabilities 14,118,492 14,496,169
Long-term debt, excluding
current installments -- --
Capital lease obligations, excluding
current obligations 736,517 923,273
Other liabilities 245,704 212,403
Deferred income taxes, net 4,957,798 2,480,399
Total liabilities 20,058,511 18,112,244
Stockholders' equity:
Preferred stock, authorized
50,000,000 shares, none issued
or outstanding -- --
Common stock 22,500,000 authorized
and 7,400,000 shares
issued outstanding 35,010,468 35,010,468
Retained earnings 22,173,619 14,853,341
Total stockholders' equity 57,184,087 49,863,809
Commitments and contingencies -- --
$ 77,242,598 $ 67,976,053
SOURCE Elamex S.A. de C.V.