Citation Corporation Reports Q3 Results
16 July 1998
Citation Corporation Reports Record $0.54 EPS for Third Fiscal Quarter
Business Editors
BIRMINGHAM, Ala.--July 15, 1998--Citation
Corporation today announced all-time record sales and
earnings for its fiscal third quarter and nine months ended
June 28, 1998.
-- Sales for the third fiscal quarter of 1998 were $196.4
million, a 10.5 percent increase from third quarter
sales of $177.9 million last year.
-- Earnings for the 1998 quarter were $9.7 million versus
$7.8 million in the third quarter of fiscal 1997, a
24.3 percent increase.
-- Diluted earnings per share (EPS) for the 1998 third
quarter was $0.54 versus $0.44 in the third quarter of
1997. This is the largest EPS for any quarter since
Citation became a public company.
-- For the fiscal nine months, sales were $559.8
million, a 14.5 percent increase over fiscal 1997
nine months sales of $488.8 million.
-- Earnings for the 1998 nine months were $23.2
million, a 31.5 percent increase over last year's
nine months's earnings of $17.7 million.
-- Diluted EPS for the 1998 fiscal nine months was
$1.29 versus last year's nine months of $0.99.
This equals the $1.29 diluted EPS for the full
year of fiscal 1997.
-- The sales increase for the third quarter was
attributable to the acquisitions in fiscal 1998.
Excluding the impact of acquisitions, sales for
the "same store" units were flat for the quarter.
For the nine months, same store sales increased by
5 percent.
-- Operating margins for the 1998 third quarter were
10.2 percent versus 9.3 percent in the third
quarter of fiscal 1997. The improvement in margins
was attributable to improved operating
efficiencies of the divisions. In addition, sales,
general and administrative (SG & A) expenses
declined as a percentage of sales.
-- Although SG & A increased from $15.6 million in
the third quarter of fiscal 1997 to $15.9 million
in the corresponding quarter this year, SG & A as
a percentage of sales declined to 8.1 percent in
the fiscal 1998 third quarter versus 8.8 percent
in the same quarter last year. This improvement
results from the sales growth in the quarter
without a corresponding increase in headquarters
and administrative personnel head count.
During the quarter, Citation added a fifth operating group - the
Aluminum Group - which consists of Southern Aluminum, Bohn Aluminum,
Dycast, Inc. Citation Precision and Oberdorfer Industries. Previously,
the aluminum operations had been combined with the Special Foundry
Group. The Special Foundry Group now consists of Texas Steel, Castwell
Products and the proposed joint venture foundry with Caterpillar in
Mexico. The joint venture foundry will begin construction in late
1998.
Citation also has a High Volume Foundry Group, a Medium Volume
Foundry Group and a Forging Group.
T. Morris Hackney, Chairman and CEO, said, "It is very gratifying
for Citation to continue its record sales and earnings performance,
particularly given that our third quarter last year was relatively so
strong a quarter.
"Automotive demand, despite the General Motors labor dispute, and
heavy truck demand were strong in the quarter. Construction equipment,
mining equipment, and oil tools, which were fairly strong early in the
quarter, softened somewhat in the latter part of the quarter.
"The softness in construction equipment, mining equipment and oil
tools, if it continues, would primarily impact performance of
Interstate Forging, Texas Steel, and Mabry Foundry.
"While General Motors is not nearly as significant a customer to
Citation as Ford and Chrysler, the strikes at GM facilities and the
resulting shut down of assembly plants did have limited impact on
operations at Texas Foundries, Bohn Aluminum and Dycast in the third
quarter.
"However, our forecast for the fourth quarter includes ramp up of
several new programs which primarily affect our High Volume Group.
Should the GM strikes continue significantly beyond the shutdown
periods in July, it is possible Citation's financial results would
show some impact. It is impossible to predict the possible effect at
this time because new car sales have been very strong and we expect
that increased orders from Ford and Chrysler would offset a portion of
any GM reduced business.
"Despite this," Mr. Hackney said, "we believe we will continue
our strong performance into next year. New programs that will begin in
the next year should take us to a higher level of capacity than
currently. Further, there appears to be a good market with many
opportunities for acquisitions, and, where appropriate, we hope to
take advantage of that," he said.
Citation Corporation is a metal components supplier to capital
and durable goods industries. The company currently operates 19
manufacturing divisions in 10 states and employs more than 6,500
employees. Sales for fiscal 1997 were $649 million.
Note: The statements in this news release that are not historical
fact are forward-looking statements that involve risks and
uncertainties including, but not limited to, changes in the economy,
demand for durable goods, pricing by competitors, entry of new
competitors, and other risks detailed in the Company's 10-K for the
year ended September 28, 1997, the 10-Q for the quarter ended
March 29, 1998, and other filings with the Securities and Exchange
Commission.
-O-
CITATION CORPORATION
Financial Highlights
(All figures except share and per share data are in
(Thousands)(Unaudited)
Three Months Ended
June 28, June 29,
1998 1997
---- ----
Sales $196,446 $177,858
Gross Profit 35,965 32,221
S,G & A Expenses 15,943 15,648
Operating Income 20,022 16,573
Interest Expense 4,115 3,778
Other Expense 1 -
Income Before Tax 15,906 12,795
Income Taxes 6,203 4,990
Net Income $ 9,703 $ 7,805
Earnings per Share
-- Basic $ 0.54 $ 0.44
Weighted Avg. Number
Shares Outstanding
-- Basic 17,880,558 17,734,427
Earnings per Share
-- Diluted $ 0.54 $ 0.44
Weighted Avg. Number
Shares Outstanding
-- Diluted 18,123,034 17,937,900
Nine Months Ended
June 28, June 29,
1998 1997
---- ----
Sales $559,760 $488,779
Gross Profit 97,053 83,929
S,G&A Expenses 48,168 43,743
Operating Income 48,885 40,186
Interest Expense 11,040 11,131
Other Expense (Income) (230) 91
Income Before Tax 38,075 28,964
Income Taxes 14,849 11,296
Net Income $ 23,226 $ 17,668
Earnings per Share
-- Basic $ 1.30 $ 1.00
Weighted Avg. Number
Shares Outstanding
-- Basic 17,821,750 17,725,929
Earnings per Share
-- Diluted $ 1.29 $ 0.99
Weighted Avg. Number
Shares Outstanding
-- Diluted 18,066,793 17,889,442