Delco Remy Reports Strong Improvement in Third Quarter
21 May 1998
Delco Remy Reports Strong Improvement in Third Quarter Net Sales and Earnings
ANDERSON, Ind., May 21 / PRNewswire/ -- Delco Remy International, Inc.
, today reported its financial results for the third quarter and
nine months ended April 30, 1998.
Net sales for the third quarter of fiscal year 1998 improved 22% to
$217.1 million from $177.7 million for the same period last year. Net income
before non-recurring charges for the third quarter was $5.9 million, or
$.23 per share, compared to $2.5 million, or $.10 per share, for the prior
year third quarter.
For the first nine months of fiscal year 1998, net sales increased to
$619.4 million, a 22% gain over the $509.7 million reported for the previous
year. Net income before non-recurring charges for the first nine months was
$13.0 million, or $.50 per share, up from the $6.3 million, or $.24 per share,
reported for the comparable period in fiscal year 1997.
Net income, after non-recurring charges, for the third quarter was
$5.9 million, or $.23 per share, compared to $2.3 million, or $.09 per share
for the prior year period. For the first nine months, net income, after non-
recurring charges, was $9.6 million, or $.37 per share, compared to
$3.4 million, or $.13 per share for the previous year.
Harold K. Sperlich, Chairman, stated, "We are pleased with the financial
results for the third quarter. During the quarter, we made substantial
progress with our restructuring strategy and completed two strategic
acquisitions."
The Company's aftermarket remanufacturing sales improved for the third
quarter based on strong gains from powertrain/drivetrain products and new
marketing initiatives for Electrical Systems products.
OEM sales for the third quarter improved on the continuing strength of the
heavy duty market and increased automotive business attributable to higher
demand from GM.
The Company's OEM restructuring strategy involves closing old vertically
integrated facilities originally leased from GM and transferring production to
new focus factories. During the quarter, two of the three facilities
originally leased from GM were closed, and production was transferred to new
focus factories. The Company now has five focus factories fully operational.
The Company's growth strategy focuses, in part, on expanding the business
through acquisitions. During the quarter, the Company acquired two
aftermarket remanufacturing businesses: LucasVarity's starter and alternator
remanufacturing operation in the U.K., and Atlantic Reman Limited, in Canada.
LucasVarity is the leading supplier of remanufactured starters and alternators
to the U.K. independent aftermarket. Atlantic Reman remanufactures and
distributes engines, starters, alternators and water pumps to Ford dealers in
the maritime provinces of Canada, as well as General Motors and Chrysler
dealers.
During the third quarter, the Company received the prestigious General
Motors Supplier of the Year Award for the second consecutive year. Delco Remy
was one of 182 suppliers to receive this award out of a total supplier base of
over 30,000 companies.
Delco Remy International designs, manufactures, remanufactures 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, which are not historical facts, are
forward-looking statements that involve certain risks and uncertainties,
including, but not limited to risks associated with the uncertainty of future
financial results, acquisitions, additional financing requirements,
development of new products and services, the effect of competitive products
or pricing, the effect of economic conditions and other uncertainties detailed
in the Company's filings with the Securities and Exchange Commission.
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
For The Three Months For The Nine Months
Ended April 30 Ended April 30
1998 1997 1998 1997
Net sales $217.1 $177.7 $619.4 $509.7
Cost of goods sold 172.3 139.6 497.2 401.7
Gross profit 44.8 38.1 122.2 108.0
Selling, engineering,
and administrative
expense 24.5 22.7 66.8 65.8
Operating income 20.3 15.4 55.4 42.2
Interest expense 9.8 10.2 30.4 28.8
Income from continuing
operations before income
taxes, preferred
dividend requirements
of subsidiary, minority
interest and deemed
dividend on preferred
stock conversion 10.5 5.2 25.0 13.4
Minority interest in
income of subsidiary 0.5 0.4 1.5 0.6
Income taxes 4.1 1.9 9.9 5.3
Non-recurring deemed
dividend on preferred
stock conversion (A) -- -- 1.6 --
Preferred dividend
requirements of
subsidiary 0.0 0.4 0.6 1.2
Income from continuing
operations 5.9 2.5 11.4 6.3
Discontinued operations:
Loss from operations
of discontinued
businesses less
applicable tax
benefit) -- 0.2 -- 0.5
Extraordinary items:
Write-off of debt
issuance costs
(less applicable tax
benefit) -- -- 1.8 2.4
Net income $5.9 $2.3 $9.6 $3.4
Earnings per share
Basic $0.25 $0.16 $0.59 $0.24
Diluted 0.23 0.14 0.51 0.20
Adjusted net income
Net income $5.9 $2.3 $9.6 $3.4
Non-recurring charges:
Deemed dividend on
preferred stock
conversion (A) -- -- 1.6 --
Loss from discontinued
operations -- 0.2 -- 0.5
Extraordinary items -- -- 1.8 2.4
Adjusted net income $5.9 $2.5 $13.0 $6.3
Adjusted earnings per share
Adjusted net income $0.23 $0.10 $0.50 $0.24
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)
April 30, July 31,
1998 1997
Assets:
Cash and equivalents $9.1 $10.1
Trade accounts receivable 140.4 110.2
Other receivables 12.8 13.4
Inventories 195.7 164.4
Other current assets 28.2 26.1
Total current assets 386.2 324.2
Net property, plant and equipment 144.7 120.3
Goodwill 110.1 86.6
Net assets held for disposal 23.5 25.3
Other non-current assets 30.7 14.2
Total assets $695.2 $570.6
Liabilities and equity:
Accounts payable $93.9 $88.6
Other accrued liabilities 55.3 44.1
Accrued restructuring charges 26.5 37.4
Total current liabilities 175.7 170.1
Other non-current liabilities 33.0 22.9
Long term debt 378.5 363.3
Minority interest 9.3 8.0
Redeemable exchangeable preferred
stock of subsidiary -- 16.1
Equity 98.7 (9.8)
Total liabilities and equity $695.2 $570.6