RB Rubber Reports 12% Increase in Year-to-date Revenues
11 November 1998
RB Rubber Reports 12% Increase in Year-to-date Revenues; Third Quarter Margins Improve Over Second Quarter
MCMINNVILLE, Ore.--Nov. 11, 1998--RB Rubber Products Inc. , an integrated tire recycler and producer of rubber mats and fitness equipment, today reported revenues rose 5% to $2.0 million for the third quarter of 1998, compared to $1.9 million in the year ago period.Revenues for 1998's first nine months grew 12% to $5.9 million, from $5.2 million in the first nine months of 1997.
While continuing to integrate its recently acquired molded products division, RB Rubber's net loss narrowed sequentially to $27,000, or $.01 per share, from 1998's second quarter net loss of $147,000, or $.07 per share. In the third quarter of 1997, the company had a net profit of $126,000, or $.06 per share. The net loss for the first nine months of 1998 was $44,000, or $.02 per share, compared to net income of $393,000, or $.18 per share for the first nine months of 1997.
"We're encouraged that, as the molded products operations are being assimilated with our existing business, our margins are back on the upswing," said Ron Bogh, president and CEO. "While RB Rubber's core business remains strong, we are working on bringing the production processes and product quality of the molded products division up to our standards.
"The third quarter gross margin of 27% showed marked improvement over the 18% gross margin in the preceding quarter," Bogh noted. "One year ago, the gross margin was 36%. The decline from 1997 levels was primarily due to the molded products acquisition, which had a negative gross margin during the quarter, as well as increased raw material and maintenance costs overall."
RB Rubber acquired its molded products division -- which consists of certain assets, technology and products from Iowa Mat Company -- for approximately $800,000 in cash and stock in April 1998. The new product line includes recycled rubber paving tiles, playground fall protection tiles and molded rubber barbell plates. The acquisition also included equipment and proprietary processes.
"Due to heightened product promotion and advertising, as well as additions to the sales force, selling expenses as a percent of sales increased slightly quarter over quarter, to 11% in the third quarter of 1998 from 10% in the like quarter a year ago," Bogh said. "General and administrative expenses also increased slightly as a percent of sales to 15% in the third quarter of 1998 from 14% in the third quarter of last year. This was primarily due to one-time costs related to our Iowa Mat acquisition."
Mike Highland, most recently was an audit manager at the 'Big Five' accounting firm of PricewaterhouseCoopers LLP, has joined RB Rubber as corporate controller. Highland has over seven years experience in public accounting, with particular experience in manufacturing. He replaces Brian Allen, who resigned to pursue other business opportunities.
"Mike brings strong experience in manufacturing and cost-accounting and we're happy to have him join our team," Bogh noted. "We also want to recognize Brian Allen for his valuable contributions during RB Rubber's first few years as a public company. We wish him the best."
RB Rubber Products Inc. is an integrated recycler and manufacturer that transforms scrap tires and rubber into high quality, durable rubber mats, protective surfacing and other rubber products. Applications of the company's products include surfacing for agribusiness, sports and fitness facilities and other commercial and industrial uses. RB is the leader in the black rubber mat market.
This news release contains forward-looking statements that involve a number of risks and uncertainties. Some of the factors that could cause actual results to differ materially, include competitive pressures, increased demand for, or diminished supply of the company's raw materials, and unanticipated difficulties in integrating acquired technologies or businesses. Investors are directed to the company's filings with the Securities and Exchange Commission, including the company's 1997 10-KSB for additional information on the risks and uncertainties as well as other aspects of the company's business.
-- tables follow --
RB RUBBER PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Sept. 30, Dec. 31,
1998 1997
Assets
Current Assets:
Cash and cash equivalents $158,047 $291,990
Accounts receivable, net 807,883 910,480
Income taxes receivable, net 20,779 --
Inventories, net 902,816 692,073
Prepaid expenses and other 96,527 37,738
Deferred tax benefit 30,753 --
--------- ---------
Total Current Assets 2,016,805 1,932,281
Property, Plant and Equipment, net 5,691,627 4,066,562
Other Assets 517,648 276,693
--------- ---------
Total Assets $8,226,080 $6,275,536
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable - bank $336,230 $--
Notes payable - other 33,459 --
Accounts payable 825,997 404,210
Payroll and related benefits payable 88,180 68,747
Interest payable -- 4,363
Income taxes payable -- 19,180
Current portion of long-term debt 276,086 134,507
--------- ----------
Total Current Liabilities 1,559,952 631,007
Long-Term Debt, net of
current portion 1,579,180 772,866
Deferred Income Taxes 280,889 238,034
Shareholders' Equity:
Common stock, no par value,
20,000,000 shares authorized;
2,239,167 and 2,172,500 shares
issued and outstanding 4,014,110 3,797,442
Additional paid-in capital 282,849 282,849
Retained earnings 509,100 553,338
--------- ---------
Total Shareholders' Equity 4,806,059 4,633,629
--------- ---------
Total Liabilities and
Shareholders' Equity $8,226,080 $6,275,536
========== ==========
RB RUBBER PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Net sales $1,993,712 $1,896,997 $5,885,271 $5,249,377
Cost of sales 1,457,962 1,213,708 4,225,722 3,197,187
--------- --------- --------- ---------
Gross profit 535,750 683,289 1,659,549 2,052,190
--------- --------- --------- ---------
Operating expenses:
Selling 216,318 192,572 646,897 509,842
General and
administrative 300,978 269,364 994,295 866,796
--------- --------- --------- ---------
517,296 461,936 1,641,192 1,376,638
--------- --------- --------- ---------
Income from operations 18,454 221,353 18,357 675,552
Other income (expense)
Interest income 851 760 5,769 760
Interest expense (55,848) (32,936) (108,129) (85,432)
Gain on sale of assets -- -- 13,100 555
Other income, net 9,972 4,379 17,988 8,009
--------- --------- --------- ---------
(45,025) (27,797) (71,272) (76,108)
--------- --------- --------- ---------
Income (loss) before provision
for income taxes (26,571) 193,556 (52,915) 599,444
Provision for (benefit from)
income taxes 280 67,629 (8,677) 206,686
--------- --------- --------- ---------
Net income (loss) $(26,851) $125,927 $(44,238) $392,758
========= ========= ========= =========
Basic and diluted net income
(loss) per share $(0.01) $0.06 $(0.02) $0.18
========= ========= ========= =========