Hastings Announces Third Quarter, Nine Month 1998 Results
29 October 1998
Hastings Announces Third Quarter, Nine Month 1998 Results
HASTINGS, Mich., Oct. 29 -- Hastings Manufacturing Company
(Amex: HMF) today reported the results of its third quarter and nine month
periods ended September 30, 1998, highlighted by continued gains in net sales
and net income.
The Hastings, Mich.-based manufacturer and marketer of automotive-related
products posted net sales of $9.3 million in the 1998 third quarter, compared
with net sales of $8.8 million in the same period of the prior year. Hastings
attributed the 4.7 percent increase in net sales to growth in its domestic
aftermarket and export piston ring businesses.
The Company posted net income of $255,538, or $0.33 per diluted share, in
the third quarter of 1998, versus net income of $232,349, or $0.30 per diluted
share, in the 1997 third quarter. The ten percent increase in net income
marked the seventh consecutive quarter of profitability for Hastings.
"We continued to grow our business profitably in the third quarter,
despite experiencing short-term growing pains related to the significant
increase in sales volume generated in the prior two quarters," said Hastings
Co-CEO Mark Johnson. "We are taking the steps to meet the increased demand
for our piston rings, which should allow us to continue our solid results for
the year."
Gross profit as a percentage of sales for the third quarter ended
September 30, 1998 was 29.7 percent, as compared with 32.2 percent posted in
the prior year period. The decrease is partially due to a shift in the
Company's product mix toward export piston rings, which have lower gross
margins. Piston rings sold overseas also typically have lower support costs,
which offset the lower gross margins. Hastings also attributed the margin
decline to certain product-driven distribution and support costs.
Hastings' operating expenses as a percentage of sales declined to 23.6
percent in the third quarter 1998, versus 26.3 percent in the prior year third
quarter, reflecting the Company's ability to reduce its operating costs and
generate sales growth in its core piston ring business.
"We remain committed to growing our business in an efficient and
profitable manner," said Hastings Co-CEO Andrew Johnson. "We are evaluating
our capacity to manufacture our piston rings to make certain we continue to
meet increased demand over the long haul."
For the nine months ended September 30, 1998, Hastings reported net income
of $1.2 million, or $1.55 per diluted share, on net sales of $29.8 million,
versus net income of $790,190, or $1.03 per diluted share, on net sales of
$27.2 million in the same period in 1997. Hastings attributed the sales
growth to increased piston ring sales volume in all areas of its business:
domestic aftermarket, private brand and export.
Hastings' gross profit for the nine months ended September 30, 1998 was
31.1 percent of sales, as compared with 31.9 percent of sales posted in the
first nine months of 1997. The Company reduced its operating expenses as a
percentage of sales to 23.2 percent for the 1998 nine-month period, versus
25.7 percent in the same period in the prior year.
The Company's solid sales growth and operating income contributed to
Hastings' 52 percent increase in net income for the first nine months of 1998
compared with the prior year period. Hastings' earnings per share results for
the current and prior year incorporate a 2-for-1 stock split, which was
completed on March 23, 1998.
"To put our profit improvement into perspective, our net income for the
first nine months of 1998 is $0.31 per diluted share higher than our entire
bottom line posted for all four quarters of 1997," said Mark Johnson. "1998
is shaping up to be a solid year for Hastings, and we are excited for our
opportunities for continued growth."
Hastings Manufacturing is a leading manufacturer and marketer of piston
rings and specialty tools under the Hastings Brand, and additives for engines,
transmissions, cooling systems and fuel systems under the Casite Brand.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this news release include certain
predictions and projections that may be considered forward-looking statements
under securities laws. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices.
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Operations
For The Three Months Ended For The Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Net Sales $9,255,806 $8,838,664 $29,829,994 $27,193,053
Cost of Sales 6,503,789 5,990,310 20,538,990 18,519,107
Gross Profit 2,752,017 2,848,354 9,291,004 8,673,946
Operating Expenses:
Advertising 50,234 107,343 240,288 306,485
Selling 717,858 749,305 2,311,676 2,282,202
General &
Administrative 1,417,429 1,469,236 4,365,661 4,401,980
Total Operating
Expenses 2,185,521 2,325,884 6,917,625 6,990,667
Operating Income 566,496 522,470 2,373,379 1,683,279
Other Expenses (Income):
Interest expense 114,223 127,899 336,793 385,022
Interest income (16,205) (8,670) (35,982) (31,449)
Other, net (5,060) 17,892 (5,261) 13,516
Total Other Expenses 92,958 137,121 295,550 367,089
Income Before Taxes 473,538 385,349 2,077,829 1,316,190
Income Tax Expense 218,000 153,000 879,000 526,000
Net Income $255,538 $232,349 $1,198,829 $790,190
Net Income Per Share
of Common Stock:
Basic $0.33 $0.30 $1.55 $1.03
Diluted $0.33 $0.30 $1.55 $1.03
Average Shares Outstanding:
Basic 771,496 768,516 771,496 768,516
Diluted 772,332 768,516 772,562 768,516
Dividends Per Share
of Common Stock $0.08 $0.075 $0.235 $0.175