UNOVA Announces Expected Q3 and Q4 Results
21 September 1998
UNOVA Expects Weaker Third, But Stronger Fourth Quarter Results
BEVERLY HILLS, Calif.--Sept. 21, 1998--UNOVA, Inc. , the California-based industrial technologies company, announced today that it expects a shift in its earnings improvement from the third to the fourth quarter of this year. While the third quarter will fall short of current analyst expectations, the Company believes it will be able to make up most of the shortfall in the last quarter of this year."Although this development is disappointing, it reflects more a timing issue than a fundamental change in our business," said Alton J. Brann, Chairman and CEO of UNOVA. "In fact, our outlook for a strong 1999 remains unchanged."
Third quarter earnings per share (EPS) will still be up on a sequential basis and compared to the $0.22 in the third quarter of last year, but UNOVA now expects to report EPS in a range of $0.23 to $0.26, below the analysts' forecasted $0.30. On the other hand, the Company believes its fourth quarter EPS could be better than analysts' current expectations.
The slower-than-anticipated third quarter earnings growth is based primarily on timing issues in the Company's industrial business segment and on information systems problems that impacted the performance of the Automated Data Systems segment.
In the Industrial Automation segment, revenues have been building slower as bookings for some contracts in the Company's faster turning grinding and consumables activities have been delayed to the last two quarters of 1998. While bookings in the segment reached $700 million by the end of August, almost double the rate for the same period in 1997, these longer-term contracts comprise primarily large systems business which tends to translate into revenue and profit growth only as these contracts move into their systems integration phase. The positive effect of these projects will begin to show in the fourth quarter and then continue in 1999.
The Automated Data Systems segment was impacted by several factors related to the Company's change in the structure of its business. None has to do with the fundamental outlook of the automated data collection market, which continues to be strong in both the U.S. and Europe.
Throughout the year Intermec had to add additional employees to implement manual processes which augment numerous information system problems associated with the larger volume of business from the integration of the Norand and UBI activities into Intermec. The limited capabilities of these interim systems have affected the segment's sales, order and production processes, impacting revenues and profits in the third quarter. These problems are expected to be resolved with the move to a new automated enterprise-resource-planning (ERP) system for North America at Intermec in Everett, Wash. The new ERP system is progressing as scheduled and Intermec plans to `go live' late this year. While Intermec will not reach its originally planned revenue and profit targets for the third quarter, segment results for the three-month period will continue to represent a major improvement over the same period last year.
"We have always stated that 1998 will be a transition year for us, where each quarter would be tight," added Brann. "Record bookings, which seem probable for our industrial business this year, continue to add confidence to our 1999 outlook."
UNOVA is a global market leader in the design and production of sophisticated manufacturing systems for the automotive, truck and diesel engine industries, and the development and installation of automated data collection, mobile computing and wireless networking products for industrial customers.
Certain forward-looking statements in this release (as defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934) relate to matters that are not historical facts. They include, but are not limited to, statements about the demand for the Company's products and services, the Company's ability to profitably exploit new technologies acquired or developed, and the Company's ability to realize its intentions with respect to the future performance of operations being acquired. Such forward-looking statements involve and are dependent upon certain risks and uncertainties. These include, but are not limited to,the following which are beyond the Company's control: the presence of competitors with greater financial and other resources; technological changes and developments; regulatory uncertainties; worldwide political stability and economic conditions; operating risks associated with international activities; the risk that the Company's due diligence procedures may have failed to reveal undisclosed material information concerning acquired operations; and other risks and uncertainties described more fully in the Company's filings with the Securities and Exchange Commission.