BlueStar Announces Q3 Results
18 August 1998
BlueStar Announces Record Third Quarter Results and Year-To-Date Revenues of $100 Million
VANCOUVER, BRITISH COLUMBIA--Aug. 18, 1998-- BlueStar Battery(Alberta Stock Exchange:BHW.) BlueStar Battery Systems International Corp. ("BlueStar") today announced revenues of approximately $100 million for the nine-months ended June 30, 1998 and revenues of approximately $36 million and earnings before interest, tax and amortization ("EBITDA") of $0.5 million for the third quarter.For the three month period ended June 30, 1998 revenues were $35.6 million, an increase of $23.4 million (192 percent), when compared to revenues of $12.2 million for the corresponding period in 1997. The Company reported EBITDA for the third quarter of $0.5 million, as compared to a loss of $0.1 million for the corresponding period in 1997. The loss after interest, tax and amortization for the three months ended June 30, 1998 amounted to $1.6 million, as compared to a loss of $1.3 million for the same period in 1997.
"The strong revenue growth continued throughout the third quarter and is expected to continue in the Company's fourth quarter due to the full impact of the strategic acquisitions made over the past twelve months, as well as continuous growth in our market share in the United States and Canada," says Mikel Rhodes, Chief Financial Officer of BlueStar.
"The initiatives implemented to capitalize on the synergies and the benefits of the BlueStar integrated participant network continue to reap benefits for the Company. Gross margins have improved quarter over quarter, with overall gross margins for the third quarter of 7.7 percent versus 6.4 percent for the second quarter and 6.3 percent in the first quarter. These increasing margins and EBITDA are the result of lower product costs from volume purchases, freight reductions and streamlining our distribution infrastructure across North America."
Nine-month revenues were $99.6 million, a 564 percent increase over revenues of $15.0 million for the same period in 1997. The Company reported a loss before interest, tax and amortization for the nine-month period of $0.4 million, as compared to $1.4 million loss for the corresponding period in 1997. This improvement is attributable to increased product margins and the lithium battery manufacturing division nearing its full-production capacities. Included in the determination of operating expenses for the nine-month period are the research and development costs of BlueStar Advanced Technology Corporation for the continuing development of large lithium ion batteries for aircraft and spacecraft, and the development of high- energy pouch cell batteries for the US Army. The loss for the nine-months ended June 30, 1998 was $5.7 million, compared to $3.2 million loss in the corresponding nine-month period in 1997. The loss per share was $0.26 compared to a loss per share of $0.20 for the same period in 1997.
"Consolidation in the battery industry continues to provide significant growth and strategic partnering opportunities for the BlueStar organization and its participant network throughout the United States. This was clearly shown with the announcement in May of the strategic marketing alliance with AC Delco, General Motors Corporation's parts and service division," says Darwin Sauer, President & CEO of BlueStar. "The BlueStar participant network has been further strengthened with the recent signing of AMWAY in Canada and the US Army for its automotive battery needs, as customers and network participants."
"With the significant growth of the BlueStar participant network in the United Sates, approximately 60 percent of the Company's revenues are now generated from this region," says Mikel Rhodes. "The recent decline in the Canadian Dollar against the US Dollar had no significant impact on the third quarter operations of BlueStar. The average foreign exchange rate for the nine-month period used for the translation of the operations in the United States for financial reporting purposes was $1.4353 Canadian per US Dollar."
BlueStar is a developer, specialized manufacturer, assembler and marketer of an extensive range of products sold in the international marketplace and has evolved into one of North America's largest integrated sourcing networks ("ISN") of batteries and battery related-products. The ISN gives the BlueStar participant network sales, marketing and distribution representation and capabilities in substantially every State of the United States, Province of Canada and virtually every major city in North America. BlueStar, through its network, markets over 8,000 different battery products and automotive electric components from more than 165 suppliers. The Company anticipates that its product lines will continue to be enhanced through further strategic alliances with the world's leading cell and battery pack manufacturers, along with the continued expansion and strengthening of the BlueStar participant network throughout North America.
BLUESTAR BATTERY SYSTEMS INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND 1997
(unaudited) ($ in thousands)
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1998 1997
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ASSETS
Current assets $ 49,675 $ 24,179
Capital assets 10,161 8,313
Advanced battery technology 5,277 4,891
Goodwill and customer lists 40,056 26,502
Contract deposits and
deferred costs 7,179 2,534
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$ 112,348 $ 66,419
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 37,890 $ 19,106
Long-term debt and capital
leases 3,292 2,555
Convertible debentures 17,540 3,000
Deferred payable 3,480 3,480
Shareholders' equity
Share capital 66,440 46,684
Currency translation
adjustment 68 -
Deficit (16,362) (8,406)
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$ 112,348 $ 66,419
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) ($ in thousands, except per share amounts)
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3-months 3-months 9-months 9-months
ended ended ended ended
June 30 June 30 June 30 June 30
1998 1997 1998 1997
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Revenue $ 35,558 $ 12,210 $ 99,557 $ 15,039
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Operating expenses
Cost of products 32,811 10,998 92,748 13,570
Research and
development 131 230 395 799
Sales and
marketing 1,133 478 2,754 834
General and
administrative 1,020 618 4,070 1,188
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35,095 12,324 99,967 16,391
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(Earnings) Loss
before interest
and amortization (463) 114 410 1,352
Other expenses
Interest expense 723 375 1,895 498
Amortization 1,300 799 3,422 1,357
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2,023 1,174 5,317 1,855
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Loss before
income taxes 1,560 1,288 5,727 3,207
Income taxes - - 143 -
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Loss for the period $ 1,560 $ 1,288 $ 5,870 $ 3,207
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Loss per share $ 0.26 $ 0.20
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The Alberta Stock Exchange has neither approved nor disapproved the information contained herein.