Defiance, Inc. Reports Third Quarter Fiscal 1998 Results
20 April 1998
Defiance, Inc. Reports Third Quarter Fiscal 1998 Results
CLEVELAND, April 20 -- Defiance, Inc. today
reported net earnings for its third fiscal quarter ended March 31, 1998
reached $1,629,000, or $0.26 per share, up from $753,000, or $0.12 per share,
for the same period last year. The third quarter last year included a pretax
charge of $632,000 ($0.06 per share on a pro-forma basis) to close out a
pension plan. Sales for the quarter were $23,236,000, up from $22,314,000 for
the same quarter last year.
Year-to-date net earnings were $2,807,000, or $0.45 per share, compared
with $2,972,000, or $0.46 per share, in the prior year. Year-to-date sales
were $65,609,000, compared with $67,175,000 for the same period last year.
Prior year sales included $1,307,000 from business units sold or closed during
the first half last year.
Jerry A. Cooper, president and chief executive officer, said, "Sales from
ongoing operations increased 4 percent for the quarter and were consistent
with last year for the year-to-date. Strong sales in our bearings business
combined with improved demand for tooling helped offset continued weakness in
testing this quarter. Bearings sales were up 22 percent this quarter and 15
percent for the year to date primarily from increased sales of cam follower
rollers and axles to Eaton Corporation for their Chrysler automotive
requirements. Sales of diesel engine rollers and axles were also up,
reflective of the overall heavy-duty truck market. Tooling revenues for the
quarter were consistent with last year as a result of new work started in the
second quarter for Ford. However, they remained 16 percent behind year-ago
levels as a result of delays in the release of new prototype and tooling
programs from both Ford and Chrysler during the first half this year. Testing
revenues were down 24 percent this quarter and 16 percent for the year-to-date
due to continued scaled-back demand from automotive OEM and Tier One
suppliers.
"Operating margins from ongoing operations this quarter rose to 12.0
percent of sales compared with 9.5 percent last year. The 22 percent growth
in bearings sales, supported by continued increases in production levels and
efficiencies at our Upper Sandusky, Ohio, facility, contributed to
substantially improved margins in our bearings business. Tooling margins also
improved slightly this quarter, though testing margins remained behind last
year due to soft demand. On a year-to-date basis, operating margins stayed
slightly lower than last year, running at 8.0 percent of sales compared with
9.6 percent, largely due to delays in the release of automotive tooling and
prototype programs in the first half and soft demand for testing work.
"We have continued to pay down debt, reducing our debt to total
capitalization ratio to 27.6 percent from 34 percent at last fiscal year end
and nearly 40 percent the year before. The resulting interest expense was
lower by $117,000 for the quarter and $346,000 for the year to date.
"Looking ahead at the final quarter of the fiscal year, sales and margins
in our bearings business should remain well ahead of last year. We also
anticipate continued new prototype and tooling programs at normal levels,
though demand for testing is expected to remain slow. Assuming the last
quarter unfolds as we now see it, we continue to look for fiscal 1998 earnings
to 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. The Internet address for
Defiance is http://www.defiance-inc.com.
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 filings.
DEFIANCE, INC.
Consolidated Financial Highlights
Operations and Cash Flow Three Months Ended Nine Months Ended
3/31/98 3/31/97 3/31/98 3/31/97
Net sales $23,236,000 $22,314,000 $65,609,000 $67,175,000
Cost of goods sold 17,749,000 17,812,000 52,406,000 52,634,000
Selling and
administrative
expenses 2,697,000 2,388,000 7,940,000 8,158,000
Other charges -- 632,000 -- 632,000
Operating earnings 2,790,000 1,482,000 5,263,000 5,751,000
Interest expense - net 277,000 394,000 923,000 1,269,000
Earnings before
income tax
provision 2,513,000 1,088,000 4,340,000 4,482,000
Income tax provision 884,000 335,000 1,533,000 1,510,000
Net earnings $1,629,000 $753,000 $2,807,000 $2,972,000
Basic and diluted
earnings per share $0.26 $0.12 $0.45 $0.46
Average common outstanding
shares:
Used for basic
earnings per share 6,066,038 6,437,900 6,194,118 6,423,282
Used for diluted
earnings per
share 6,118,688 6,457,266 6,236,517 6,516,537
Cash dividends per share $0.04 $0.04 $0.12 $0.12
Depreciation and
amortization $1,862,000 $1,863,000 $5,584,000 $5,346,000
Capital expenditures $493,000 $504,000 $1,591,000 $3,141,000
Financial Condition 3/31/98 6/30/97
Current assets $26,138,000 $28,974,000
Property - net 34,703,000 37,822,000
Goodwill 4,682,000 4,871,000
Other assets 1,314,000 2,152,000
Total assets $66,837,000 $73,819,000
Current liabilities $14,841,000 $17,193,000
Long-term obligations 10,718,000 14,968,000
Deferred income taxes 3,287,000 3,267,000
Stockholders' equity 37,991,000 38,391,000
Total liabilities and
stockholders' equity $66,837,000 $73,819,000
Funded (interest-bearing) debt $14,496,000 $19,797,000
Debt to total capitalization ratio 27.6% 34.0%
SOURCE Defiance, Inc.