Turbodyne Reports Q2 1998 Results
14 August 1998
Turbodyne Reports Second Quarter 1998 Results
WOODLAND HILLS, Calif., Aug. 14 -- Turbodyne Technologies
Inc. (Nasdaq: TRBD; EASDAQ) today announced financial results for its second
quarter ended June 30, 1998.
The company's revenues for the six months ended June 30, 1998 rose
3 percent to $20.75 million from $20 million for the six months ended June 30,
1997. The net loss for the period was $7.8 million, ($0.23 per share),
compared to a net loss of $5 million, ($0.26 per share), for the year ago
period. Sales in these periods were primarily attributable to the Light
Metals Division. The start-up sales attributable to the Engine Technology
Division were minimal during these periods.
For the quarter ended June 30, 1998, net sales remained essentially flat
at $11.0 million compared to $11.1 million for the quarter ended June 30,
1997. The net loss for the quarter ended June 30, 1998 was $3.7 million,
($0.11 per share), compared to a net loss of $3.1 million, ($0.15 per share),
for the second quarter 1997.
The strength of the Company's balance sheet has improved substantially
from December 31, 1997 to June 30, 1998. Cash on hand has increased by
$10.2 million to $11.1 million. Total current assets have increased by
$13.5 million or 77.6 percent to $30.9 million, while total assets of the
company have increased by $14.9 million or 30 percent to $64.6 million.
Current liabilities have remained flat at $8.9 million resulting in a very
strong current ratio of 3.5 compared to 2 on December 31, 1997. Shareholders'
equity increased by $11.9 million, or 38.5 percent to $42.7 million over the
same period.
"The less than expected sales for the first half were due to weaker than
expected aftermarket wheel orders," said Walter F. Ware, Turbodyne's President
& CEO. "Although the automotive components segment of the Light Metals
Division grew faster than expected in the first half, it did not grow fast
enough to offset the decline in the aftermarket wheel segment experienced in
the first half of the year."
The greater than expected increase in orders in the automotive engine
components segment in the first six months of 1998, further supports the Light
Metals Division strategy to grow this segment to be the dominant component of
the Division. However, these orders came earlier than expected and required
delivery prior to completion of the relocation of the components manufacturing
operations to the newly acquired facility in Ensenada, Mexico, and therefore
the company incurred unexpected interim costs to ensure that customers' orders
were timely met.
"The extraordinary efforts made in conjunction with the manufacturing
relocation and the modernization of the Ensenada facility will payoff in the
long term as we work to shift the distribution of sales revenues from wheels
to the more stable and growing engine and vehicle components segment," said
Ware.
"The ramping up of production activities at Turbodyne relating to the
Turbopac(TM) 2500 product line, in order to satisfy the company's commitments
under its contract with Detroit Diesel Corporation, also impacted costs in the
first half of the year," Ware continued. "The company continues to ramp up
production of the Turbopac(TM) product during the third quarter of this year,
in preparation for further shipments to Detroit Diesel and for initial
deliveries to the TransBusiness Group of Moscow, Russia pursuant to its recent
purchase order. The first shipment to the TransBusiness Group is currently
anticipated to begin in the fourth fiscal quarter, assuming all of the
financing arrangements can be completed within that time frame."
Turbodyne Systems, the Engine Technology Division of Turbodyne, develops,
manufactures, designs, markets and develops patented pollution-reduction, fuel
economy and performance enhancing products for internal combustion engines in
the automotive, transportation, construction, marine, agriculture, mining,
military and power generation industries. Turbodyne's light metals division
is a manufacturer of machined aluminum castings and a leading supplier to the
automotive industry.
Offices and plants are located in Carpinteria, La Mirada, Encinitas and
Woodland Hills, Calif.; Ensenada and Mexico City, Mexico; Northants, England;
Frankfurt, Germany; Vancouver, Canada; and Paris, France.
Turbodyne's world wide web address is: http://www.turbodyne.com.
Except for the historical information contained in this news release, the
matters discussed herein include forward-looking statements that involve risks
and uncertainties. Among the important factors that could cause actual
results to differ from those indicated in the forward-looking statements are:
the availability and acceptance of the Turbodyne products; the impact of
competitive products and pricing; the performance by the company under
existing purchase contracts and the ability to obtain new contracts; the
ability of the company to contain expenses, conditions within the global
automotive market, general economic conditions and political changes both
domestically and overseas.
TURBODYNE TECHNOLOGIES INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Net sales $11,024,000 11,108,000 $20,750,000 20,153,000
Cost of goods sold 9,233,000 8,919,000 17,534,000 15,716,000
Gross profit 1,791,000 2,189,000 3,216,000 4,437,000
Selling, research,
general and
administrative
expenses 5,226,000 4,776,000 10,376,000 8,626,000
Loss from
operations (3,435,000) (2,587,000) (7,160,000) (4,189,000)
Other expense (income):
Interest expense,
net 296,000 223,000 581,000 371,000
Other, net 4,000 (10,000) 4,000 (21,000)
Loss before income
taxes (3,735,000) (2,800,000) (7,745,000) (4,539,000)
Income tax expense 16,000 257,000 24,000 489,000
Net loss $(3,751,000) (3,057,000) $(7,769,000) (5,028,000)
Net loss per common share:
Basic loss
per share $(0.11) (0.15) $(0.23) (0.26)
Diluted loss
per share (0.11) (0.15) (0.23) (0.26)
Weighted average shares
used for basic
and diluted
loss per share 34,736,000 20,250,000 33,704,000 19,709,000
TURBODYNE TECHNOLOGIES INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(Unaudited)
Assets
Current Assets:
Cash 11,127,000 949,000
Trade accounts
receivable, net 10,807,000 9,214,000
Employee advances
receivable 834,000 568,000
Inventories 7,243,000 5,469,000
Prepaid expenses
and other current
assets 860,000 1,191,000
Total current assets 30,871,000 17,391,000
Property, Plant
and Equipment,
at cost, net 19,771,000 18,122,000
Goodwill, net 13,366,000 13,740,000
Other Assets 603,000 473,000
Total 64,611,000 49,726,000
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities
of long term debt 486,000 607,000
Current maturities of
obligations under
capital leases 712,000 1,035,000
Accounts payable 5,326,000 5,283,000
Accrued liabilities 2,320,000 1,850,000
Income taxes payable 24,000 86,000
Total current
liabilities 8,868,000 8,861,000
Long term debt,
less current maturities 10,008,000 8,155,000
Obligations under
capital leases,
less current maturities 3,009,000 1,867,000
Total 21,885,000 18,883,000
Stockholders' Equity;
Class A preferred stock,
no par value
Authorized 100,000,000 shares;
none issued -- --
Class B preferred stock,
no par value
Authorized 100,000,000 shares;
none issued -- --
Preferred stock, no par value.
Authorized and issued 10,000
Series One Class A, 7%
cumulative convertible -- 9,604,000
Common stock, no par value.
Authorized 100,000,000 shares;
issued and outstanding
40,034,423 shares in 1998 and
29,961,612 shares in 1997 -- --
Additional paid in
capital 74,765,000 45,290,000
Cumulative other
comprehensive income (34,000) 22,000
Accumulated deficit (32,005,000) (24,073,000)
Total Stockholders'
Equity 42,726,000 30,843,000
Total 64,611,000 49,726,000