T.J.T., Inc. Sales Increase 34 Percent for Year to $34.1 Million
25 November 1998
T.J.T., Inc. Sales Increase 34 Percent for Year to $34.1 Million; Stock Buy Back Announced
EMMETT, Idaho--Nov. 25, 1998--T.J.T., Inc. (Nasdaq SmallCap:AXLE), a supplier of recycled axles and inspected tires to the manufactured housing industry, today reported a 7 percent decline in net income for the year ended September 30, 1998 on 34 percent higher sales.The year was affected by less-than-anticipated performance in the fourth quarter.
Sales for the year rose to a record $34.07 million from $25.44 million a year ago. The gain stemmed from the acquisition of Leg-it Tire Co. Inc. in July 1997 and growth in axle and tire sales of 10 percent or more in all market areas.
Gross profit increased 38 percent to $6.13 million from $4.44 million last year, resulting in a higher gross margin of 18.0 percent compared to 17.4 percent in 1997. Operating income for fiscal 1998 was $725,000, up 14 percent from $635,000 in the prior year. Higher selling, general and administrative expenses and $107,000 less in interest income and other income contributed to the decline in net income to $446,000 from $477,000 a year ago. On a per share basis, earnings decreased to $0.09 per share from $0.11 per share last year on 7 percent more weighted average shares outstanding.
Sales for the fourth quarter ended September 30, 1998 rose 9 percent to $9.54 million from $8.72 million in the same period last year. The quarter-over-quarter increase in demand for axle and tires combined with the additional sales from the June 1998 acquisition of Hanger Enterprises to produce the increase.
Gross profit for the quarter improved 3 percent to $1.63 million from $1.59 million for the same period last year while gross margin decreased 1.2 percent to 17.1 percent. The decline in gross margin was partially the result of a $35,000 charge on the value of seven-inch tires as a result of revised transportation regulations. Net income, affected by higher selling, general and administrative expenses and lower gross margin, declined to $71,000, 74 percent below $274,000 reported in the comparable 1997 quarter. Earnings were $0.01 per share for the quarter compared to $0.06 per share in last year's same period on virtually the same number of shares outstanding.
"We are disappointed with our financial results for the fourth quarter and the year," said Terrence Sheldon, president and chief executive officer of T.J.T. "We achieved revenue growth, but experienced some operating inefficiencies related to the integration of the Leg-it Tire acquisition and the start up of the Colorado facility. We believe that the majority of the problems of integrating Leg-it are behind us and we are extremely focused on the Colorado operation."
Sheldon said that improving earnings in the coming year is a top management priority. "We are restructuring reporting lines within the company to streamline operations as part of this initiative," he said. In addition, a total of $100,000 base pay for the company's two highest paid executives will be shifted to incentive pay in fiscal 1999. T.J.T. also closed its unprofitable Eugene retail operation in August 1998 and is evaluating other locations for possible closure.
The company also announced that its board of directors approved a plan to buy back up to 5 percent, or 240,000 shares, of the outstanding stock from time to time over the next two years. The plan is effective immediately and purchases will be made at management's discretion. "T.J.T.'s stock has been trading recently below tangible book value," said Sheldon. "With the current price about two thirds of book value, we believe that repurchasing the stock is a good use of the company's capital resources." Any purchases will be funded by cash from operations or from T.J.T.'s revolving credit facility.
This release may contain certain forward-looking statements, which are based on management's current expectations. Factors that could cause future results to vary materially from these expectations include, but are not limited to, general economic conditions; changes in interest rates, deposit flows, real estate values and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting the company's operations, pricing, products and services.
Established in 1977, T.J.T. is a major provider of recycled axles and inspected tires to the manufactured housing industry and has recycling operations in Idaho, Oregon, Washington, California and Colorado. In addition to effectively recycling these serviceable steel and rubber products, the company also sells aftermarket accessories to the manufactured housing industry and vinyl siding to the housing industry. T.J.T. has no long-term debt and 11 consecutive years of profitability while growing with the expanding manufactured housing industry.
T.J.T., Inc.
STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Year Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Sales (net of returns and
allowances):
Axles and tires $ 6,804 $ 6,641 $ 25,673 $ 18,610
Accessories and siding 2,731 2,074 8,400 6,831
Total sales 9,535 8,715 34,073 25,441
Cost of goods sold 7,901 7,124 27,946 21,004
Gross profit 1,634 1,591 6,127 4,437
Selling, general and
administrative expenses 1,522 1,163 5,402 3,802
Operating income 112 428 725 635
Interest income 12 20 62 112
Income on investment property 16 3 23 81
Other expense -- (1) -- (1)
Income before taxes 140 450 810 827
Income taxes 69 176 364 350
Net income $ 71 $ 274 $ 446 $ 477
Net income per common share $ .01 $ .06 $ .09 $ .11
Weighted average shares
outstanding 4,843,832 4,841,256 4,844,704 4,514,679
T.J.T, Inc.
BALANCE SHEETS
(Dollars in thousands)
Sept. 30 Sept. 30,
1998 1997
Current assets
Cash and cash equivalents $ 204 $ 835
Accounts receivable and notes receivable 2,111 1,738
Inventories 3,774 3,480
Prepaid expenses and other current assets 517 253
Total current assets 6,606 6,306
Property, plant and equipment, net of
accumulated depreciation 1,944 1,318
Notes receivable 348 434
Real estate held for investment 390 275
Deferred charges and other assets 326 411
Goodwill 1,440 1,396
Total assets $ 11,054 $ 10,140
Current liabilities:
Accounts payable $ 1,117 $ 616
Accrued liabilities 809 708
Income taxes payable 10 146
Total current liabilities 1,936 1,470
Deferred credits and other noncurrent
obligations 136 146
Deferred income taxes 53 53
Total liabilities 2,125 1,669
Shareholders' equity:
Common stock, $.001 par value; 10,000,000
shares authorized; 4,854,739 shares
issued and outstanding 5 5
Common stock warrants 113 113
Capital surplus 6,068 6,068
Retained earnings 3,181 2,735
Treasury stock (10,906 and 7,991 shares
at cost) (44) (39)
Stock subscriptions receivable (394) (411)
Total shareholders' equity 8,929 8,471
Total liabilities and shareholders'
equity $ 11,054 $ 10,140
