Delco Remy Reports Strong Increases in Second Quarter Net Sales and Earnings
23 February 1998
Delco Remy Reports Strong Increases in Second Quarter Net Sales and Earnings
ANDERSON, Ind., Feb. 23 -- Delco Remy International, Inc.
, today reported its financial results for the quarter and six
months ended January 31, 1998.
Net sales for second quarter of fiscal year 1998 increased 19% to
$193.3 million from $162.2 million for the comparable period last year.
Proforma net sales for the second quarter were up 9% over the prior year
quarter. Net income before non-recurring charges for the second quarter was
$4.1 million, or $0.16 per share, compared to $.9 million, or $0.03 per share,
for the prior year second quarter.
For the first six months of fiscal year 1998, net sales improved 21% to
$402.3 million compared to $332.0 million for the prior year. Proforma net
sales for the first six months increased 10% compared to the previous year.
Net income before non-recurring charges for the first six months was
$7.1 million, or $0.27 per share, compared to $3.8 million, or $0.15 per
share, for the same period last year.
Net income, after non-recurring charges, for the second quarter was
$.7 million, or $0.03 per share, compared to $.8 million, or $0.05 per share,
for the prior year. For the first six months, net income was $3.7 million, or
$0.19 per share, an increase from the $1.1 million, or $0.06 per share,
reported for the same period last year.
Harold K. Sperlich, Chairman, stated, "We are pleased with the progress we
made during the second quarter, our first as a public company. We are
dedicated to pursuing our strategic initiatives for growth and the
restructuring of our OEM business."
The Company's aftermarket sales improved in the second quarter as strong
gains in the powertrain/drivetrain products were partially offset by softness
in starters and alternators. During the quarter, the Company launched a new
marketing initiative to provide a full line of remanufactured domestic and
import automotive starters and alternators to the aftermarket. This program
is expected to generate benefits in future quarters. Other planned marketing
initiatives for the aftermarket involve expanding the Company's strong
position in the three major channels of distribution: dealers, retail chains
and warehouse distributors.
The Company's OEM sales benefited from the overall strength of the heavy
duty market and improved automotive demand from GM based on the success of new
models and higher truck sales. The Company continues to actively pursue new
OEM business opportunities in Europe, Asia-Pacific and Latin America.
During the second quarter, the Company opened two new OEM focus factories
and currently has five operational. The Company is shifting its OEM
production from old, vertically-integrated manufacturing plants to new,
smaller and more efficient focus factories. During the third quarter, the
Company plans to vacate two of the original facilities leased from GM.
On December 22, 1997, the Company raised $192.7 million with an initial
public offering of stock concurrent with senior notes. The funds were used to
reduce leverage and refinance existing debt at lower rates. On the same date,
the Company acquired Ballantrae, primarily a manufacturer of traction control
systems which compliment the Company's powertrain/drivetrain product line.
Delco Remy International designs, manufactures and distributes electrical,
powertrain/drivetrain and related components for automobiles and light trucks,
medium and heavy duty trucks and other heavy duty vehicles. The Company's
products include starter motors, alternators, engines, transmissions, traction
control systems and fuel systems. The Company serves the aftermarket and the
original equipment manufacturer market, principally in North America as well
as in Europe, Latin America and Asia-Pacific.
Statements in this press announcement that are not strictly historical are
"forward-looking" statements within the meaning of the Safe Harbor provisions
of the federal securities laws. Investors are cautioned that such statements
are solely predictions and speak only as of the date of the release. Actual
results may differ materially due to risks and uncertainties that are
described in the Company's Form S-1.
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millons, except per share amounts)
For The Three months For The Six months
Ended January 31 Ended January 31
1998 1997 1998 1997
Net sales $193.3 $162.2 $402.3 $332.0
Cost of goods sold 154.1 130.6 325.0 262.1
Gross profit 39.2 31.6 77.3 69.9
Selling, engineering, and
administrative expense 21.2 19.8 42.1 43.0
Operating income 18.0 11.8 35.2 26.9
Interest expense 10.2 9.3 20.7 18.7
Income from continuing
operations before income
taxes, preferred dividend
requirements of subsidiary,
minority interest and
deemed dividend on
preferred stock conversion 7.8 2.5 14.5 8.2
Minority interest in
income of subsidiary 0.5 0.1 1.0 0.2
Income taxes 3.0 1.1 5.8 3.4
Non-recurring deemed dividend
on preferred stock
conversion (A) 1.6 -- 1.6 --
Preferred dividend requirements
of subsidiary 0.2 0.4 0.6 0.8
Income from continuing
operations 2.5 0.9 5.5 3.8
Discontinued operations:
Loss from operations of
discontinued businesses
(less applicable tax benefit) -- 0.1 -- 0.3
Extraordinary items:
Write-off of debt issuance
costs (less applicable
tax benefit) 1.8 -- 1.8 2.4
Net income $0.7 $0.8 $3.7 $1.1
Earnings per share
Basic $0.04 $0.05 $0.22 $0.07
Diluted 0.03 0.05 0.19 0.06
Adjusted net income
Net income $0.7 $0.8 $3.7 $1.1
Non-recurring charges:
Deemed dividend on preferred
stock conversion (A) 1.6 -- 1.6 --
Loss from discontinued
operations -- 0.1 -- 0.3
Extraordinary items: 1.8 -- 1.8 2.4
Adjusted net income $4.1 $0.9 $7.1 $3.8
Adjusted earnings per share
Adjusted net income $0.16 $0.03 $0.27 $0.15
Adjusted weighted shares
outstanding (B) 26.1 26.1 26.1 26.1
(A) Non-recurring, non-cash charge resulting from the offerings.
(B) Adjusted weighted shares outstanding assumes exercise of warrants and,
all shares outstanding for all periods
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in millions)
January 31, July 31,
1998 1997
Assets
Cash and equivalents $4.4 $10.1
Trade accounts receivable 126.3 110.2
Other receivables 7.2 13.4
Inventories 195.5 164.4
Other current assets 29.1 26.1
Total current assets 362.5 324.2
Net property, plant and equipment 143.2 120.3
Goodwill 109.3 86.6
Net assets held for disposal 25.2 25.3
Other non-current assets 27.3 14.2
Total assets $667.5 $570.6
Liabilities and equity:
Accounts payable $97.3 $88.6
Other accrued liabilities 47.5 44.1
Accrued restructuring charges 34.8 37.4
Total current liabilities 179.6 170.1
Other non-current liabilities 30.4 22.9
Long term debt 355.7 363.3
Minority interest 9.2 8.0
Redeemable exchangeable preferred
stock of subsidiary -- 16.1
Equity 92.6 (9.8)
Total liabilities and equity $667.5 $570.6
SOURCE Delco Remy International, Inc.