Intermet Sets Second Quarter Sales and Earnings Records
16 July 1998
Intermet Sets Second Quarter Sales and Earnings Records
TROY, Mich., July 16 -- Intermet Corporation
today reported second quarter sales of $219.9 million, setting an all-time
sales record for any second quarter in the company's history. Sales increased
$9.0 million compared with the same period last year. Sales for continuing
operations increased 5.7 percent over the second quarter of 1997. Net income
rose 11 percent to $12.3 million, a second quarter record. Diluted earnings
per share were a record 47 cents for the second quarter of 1998 compared with
43 cents per share in 1997.
John Doddridge, chairman and chief executive officer of Intermet, said
that a strong showing from the foundry group contributed to the higher sales
and earnings numbers. "Our iron foundries have been operating at high
capacity levels and we are having good success in bringing down costs."
Doddridge added that the improved performance was instrumental in bringing
Intermet's year-to-date gross margin to an improved 14.5 percent, on a like-
kind basis. This was up from the prior year margin of 13.4 percent for the
same period.
Record sales and earnings continued for the first six months of 1998.
Sales for the first six months of 1998 were $443.9 million, up $23.5 million,
or 5.6 percent, compared with the first six months of last year. First half
net income of $23.6 million set a six-month record compared with $22.1 million
for the same period a year ago. Record first half diluted earnings per share
totaled 91 cents compared with 86 cents per share for the first six months of
1997.
"We are pleased with our second quarter results," said Doddridge. "We
expect our sales and earnings growth to continue as new programs begin
launching at a number of our plants." He also said that capacity issues are
being addressed. "The PortCast joint venture in Portugal strengthened our
capacity in Europe and our domestic foundries are tweaking their systems to
gain more capacity.
"The General Motors strike has had a slight effect on the company for the
second quarter, but we still expect to launch several new programs in the
third quarter. However, if the GM strike continues, we will see some impact
to our third quarter earnings. In 1997, GM-related business was about 8% of
our total revenues. Subject to customer approval, we are attempting to move
some work around to help equalize overall production across our foundries
during the strike."
Doddridge continued: "We ended the second quarter with a debt-to-capital
ratio of about 41 percent, which could have been lower had we not built nearly
$7 million of additional inventory to allow for several of our plants to make
renovations during July."
The Intermet board of directors voted to approve a quarterly dividend of 4
cents per share, payable September 30, 1998, to shareholders of record as of
September 1, 1998.
On May 21, 1998, Intermet announced the joint venture agreement with
Portuguese Grupo Jorge de Mello for PortCast, a foundry in Porto, Portugal,
which added much needed capacity in Europe.
Also during the quarter, Intermet ended the joint venture agreement with
IWESA GmbH and sold its Industrial Powder Coatings (IPC) subsidiary to
Industrial Powder Coatings Acquisitions Corporation. IPC accounted for less
than 8 percent of Intermet's 1997 sales. Doretha Christoph, Intermet's vice
president-finance and chief financial officer, said that the termination of
the IWESA joint venture and the sale of IPC "had minimal impact on second
quarter earnings."
With headquarters in Troy, Michigan, Intermet Corporation and its
subsidiaries design and manufacture precision iron and aluminum cast
components for automotive and industrial equipment manufacturers worldwide.
Intermet also produces precision machined components and manufactures cranes
and specialty service vehicles. The company has more than 5,700 employees at
sixteen locations in North America and Europe. The company's internet address
is http://www.intermet.com.
This news release may include forecasts and forward-looking statements
about Intermet, its industry and the markets in which it operates. Forward-
looking statements and the achievement of any forecasts or projections are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed or denied. Such risks and
uncertainties are fully detailed as a preface to the Management's Discussion
and Analysis of Financial Condition in the Company's 1997 Annual Report for
the year ended December 31, 1997.
Intermet Corporation Condensed Consolidated Income Statements
(In thousands, except per share data)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Net sales $219,857 $210,898 $443,890 $420,389
Cost of sales 188,357 182,639 382,415 364,537
Gross profit 31,500 28,259 61,475 55,852
Operating expenses 9,730 8,144 17,531 15,619
Operating profit 21,770 20,115 43,944 40,233
Other expense, net 3,641 3,635 6,245 6,044
Income before income
taxes and minority
interest 18,129 16,480 37,699 34,189
Provision for income
taxes 5,897 5,344 14,503 12,103
Income before minority
interest 12,232 11,136 23,196 22,086
Minority interest 105 - 412 -
Net income $12,337 $11,136 $23,608 $22,086
Earnings per share
(basic) $0.48 $0.44 $0.93 $0.88
(diluted) $0.47 $0.43 $0.91 $0.86
Weighted average
shares outstanding
(basic) 25,606 25,203 25,507 25,191
(diluted) 26,012 25,648 25,946 25,637
Intermet Corporation Condensed Consolidated Balance Sheets (in thousands)
June 30, December 31,
1998 1997
(unaudited)
Assets:
Cash and cash equivalents $3,224 $7,022
Other current assets 190,210 186,260
Property plant and
equipment (net) 202,277 241,899
Other noncurrent assets 109,188 103,624
Total assets $504,899 $ 538,805
Liabilities and shareholders'
equity:
Current liabilities $122,023 $135,954
Long-term debt 123,839 167,295
Other long-term liabilities 55,863 57,791
Total liabilities 301,725 361,040
Minority interest 2,337 2,337
Shareholders' equity 200,837 175,428
Total liabilities and
shareholders' equity $504,899 $538,805