Walbro Corporation Reports Q2 Results
20 July 1998
Walbro Corporation Reports Second Quarter Results, Notes Significant Gains in Earnings From Operations
CASS CITY, Mich., July 20 -- Frank E. Bauchiero, President
and Chief Executive Officer, Walbro Corporation , reported
earnings per share from operations of $0.18 on sales of $168,136,000 for the
second quarter ended June 30, 1998, compared with earnings per share from
operations of $0.14 on sales of $153,841,000 for the second quarter of 1997.
"The second quarter marked a nine percent increase in sales and a 67
percent increase in earnings from operations versus the same period in 1997,"
Bauchiero said in announcing the results. "Year-to-date, sales have increased
10 percent while earnings from operations have increased 26 percent. This is
strong evidence that our cost-reduction efforts, combined with the positive
effects of the restructuring announced last year, have begun to pay off."
"The Company's improved second quarter operating results were achieved
despite the General Motors strike that affected three weeks of the quarter,
reducing sales by approximately $3 million and operating earnings by about
$0.5 million," Bauchiero said. "It should be noted that the second quarter of
1997 was affected by a strike at Chrysler Corporation that reduced sales by $4
million and operating earnings by $1 million."
"While income from operations rose dramatically in the quarter, net income
was affected by increased interest expense and reduced profits from joint
ventures," Bauchiero said. "The higher interest expense is the result of
Walbro's recent expansion of its global technical and manufacturing
capabilities, which is now essentially complete. The lower profits from joint
ventures were the result of start-up costs at VITEC, our joint venture in
Detroit's Empowerment Zone, and reduced earnings at all other joint ventures."
Income before extraordinary item was $1,568,000 for the second quarter of
1998 compared with $1,184,000 for the same period in 1997. Income per share
before extraordinary item was $0.18 for the second quarter of 1998 compared
with $0.14 per share for the same period in 1997. The extraordinary item
resulted from the early payment premium of $2.2 million ($1.5 million net of
tax) or $0.17 per share for repayment of the 2004 Senior Notes in the second
quarter of 1998.
Net income was $95,000 for the second quarter of 1998 compared with
$1,184,000 for the same period in 1997. Net income per share was $0.01 for
the second quarter of 1998, compared with $0.14 for the same period in 1997.
Average shares outstanding for the second quarter were 8,685,590 in 1998 and
8,655,313 in 1997.
"Sales of automotive products were up eight percent for the second
quarter," Bauchiero said. "Automotive sales increased 42 percent in North
America with the start-up of new programs at our Ossian, Indiana, and Meriden,
Connecticut, plants."
"While the dollar level of automotive sales in Europe declined versus
year-ago levels mostly due to currency adjustments, gross margins at our
European fuel tank plants have improved as cost reduction programs took
effect. Profitability at our fuel tank facilities in Ossian and in Cacapava,
Brazil, has also improved," he said. "In addition, we have completed the sale
of our steel fuel rail facility in Ligonier, Indiana, which was an
under-performing operation."
"Worldwide sales of small engine products rose 17 percent in the second
quarter," Bauchiero noted. "Carburetor sales rose 16 percent while shipments
of ignition systems grew by 18 percent. Walbro's Asia-Pacific operations
performed well in the quarter, despite economic problems in the region. Sales
of carburetors from our plants in China and Japan increased significantly."
"Shipments of Walbro's aftermarket products rose by three percent in the
second quarter," Bauchiero added.
"The second quarter results reflect continued improvement in Walbro's
operations," Bauchiero said. "We remain committed to enhancing the efficiency
of our operations around the world, and are now in the process of
consolidating our small engine carburetor manufacturing operations to further
improve efficiency and customer service," Bauchiero said. "We have also taken
steps to reduce our exposure in Asia by withdrawing from an automotive
component joint venture in Korea."
"As a result of our ongoing efforts to increase efficiency at all of our
operations, we expect continued improvement throughout the year. It must be
noted, however, that a prolonged strike at General Motors could affect
earnings in the third quarter," the Walbro chief executive concluded.
Walbro Corporation is a designer and manufacturer of precision fuel
systems and products for automotive and small engine markets. Walbro
Corporation has subsidiaries and joint ventures throughout the world,
including North and South America, Europe and Asia. Walbro common stock is
traded on the Nasdaq National Market under the symbol WALB.
This press release contains forward-looking statements within the meaning
of the Private Securities 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 Walbro operates, fluctuations in the production of vehicles
for which Walbro is a supplier, labor disputes involving Walbro or its
significant customers, risks associated with conducting business in foreign
countries and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings.
WALBRO CORPORATION
(In thousands, except share data)
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
Net Sales $168,136 $153,841 $337,428 $307,861
Income Before
Extraordinary item 1,568 1,184 2,140 3,546
Extraordinary Item, Net (1,473) -- (1,473) --
Net Income $95 $1,184 $667 $3,546
Income Per Share
Before Extraordinary Item $.18 $.14 $.25 $.41
Extraordinary Item
Per Share (.17) -- (.17) --
Net Income Per Share $.01 $.14 $.08 $.41
Average Shares
Outstanding 8,685,590 8,655,313 8,684,104 8,654,032
EBITDA* $19,710 $15,169 $39,172 $32,918
*Earnings before interest and taxes, plus depreciation and amortization.