Hilite Industries, Inc. Announces Earnings Growth of 24% for the Q2
26 January 1999
Hilite Industries, Inc. Announces Earnings Growth of 24% for the Second Quarter and 36% Year to Date
CARROLLTON, Texas, Jan. 26 -- Hilite Industries, Inc.
(the "Company" or "Hilite") reported strong sales and earnings
for the second fiscal quarter of 1999. Sales for the quarter ended
December 31, 1998 were $21,267,000, an increase of $641,000 or 3% over sales
of $20,626,000 for the second fiscal quarter of 1998. Earnings in the second
quarter were $1,162,000 or $0.24 per share, increasing 24% over the earnings
of $938,000 ($0.19 per share) in the second quarter last year. Sales for the
six months ended December 31, 1998 were $42,583,000, increasing 2% over sales
of $41,656,000 for the same period of the prior year. Earnings for the six-
month period were $2,357,000 ($0.48 per share) compared to earnings of
$1,730,000 ($0.35 per share) in the prior year. Shareholders equity per
share was $5.77 at December 31, 1998, an increase over $5.34 per share at June
30, 1998.
The Board of Directors approved a cash dividend of $0.025 per share for
the second quarter. The record date has been set for February 8, 1999, and it
is expected to be distributed on or about February 22, 1999. Future quarterly
dividends will depend upon future operating results.
The Company also announced a favorable resolution of the previously
reported contingency related to a part manufactured by the Company's specialty
components and assemblies division that was involved in a recall of certain
Ford Motor Company 1997 model vehicles. The Company has been released by
Visteon, a subsidiary of Ford, from any legal responsibility and the matter
has been resolved in a manner not materially adverse to the Company.
Daniel W. Brady, CEO of Hilite Industries, commented, "These are exciting
times for Hilite. Both automotive and heavy truck build rates are strong,
substantial new business is being obtained and quoting opportunities are
promising for future growth.
"For the second quarter and six-month period of fiscal 1999, the Company
achieved earnings improvement of 24% and 36%, respectively, on less than a 3%
improvement in sales, as compared to the same periods last year. This
improvement in earnings is primarily attributable to the brake valve division
which attained a 34% increase in sales in the second quarter and a
31% increase so far this year. The division is benefiting from new products
introduced in the 1998 fiscal year and from more models using the Company's
existing products. Most of the sales increases are associated with products
used on General Motors and Chrysler vehicles.
"As we reach the mid-point of our 1999 fiscal year, the power transmission
components division is also well on the way to an excellent year. A sales
improvement of 23% in the second quarter and 25% for the first six months is
attributable to a combination of strong heavy truck and SUV production rates,
expansion of clutch applications for heavy truck customers and increased sales
of transfer case components used on SUV's due to new products which went into
production last year.
"Specialty components sales decreased approximately 30% this year for both
the second quarter and for six months. This is primarily due to the product
rationalization program substantially completed earlier this year. Division
sales are also being affected by decreased non-automotive sales due to lower
customer requirements and to some lost business from price competition.
Operationally division management is in the process of downsizing and
consolidating the division and is incurring start-up costs on a new automotive
assembly for Visteon. During this transition period, the specialty components
and assemblies division is not expected to have a major effect on operating
profits, either positively or negatively. More importantly, the brake valve
and power transmission components divisions are contributing to improving
operating margins.
"Looking ahead, we are encouraged by the strong growth of the brake valve
and power transmission components divisions from which we are now expecting
improvements of 25% and 15%, respectively, for the fiscal year ending 1999
over the prior year. Specialty components and assemblies division sales are
now projected at approximately $24 million for the fiscal year. Of course,
these forward looking statements assume continued strong automotive and heavy
truck build rates and are subject to the risk factors identified below.
"The outlook beyond fiscal 1999 is beginning to take shape. So far the
brake valve division has been awarded an estimated $9 million of new business
for start up in the year 2000 or beyond. Promising engineering projects and
quoting opportunities support our goal of 8% to 12% overall annual internal
sales growth."
Except for historical information, certain statements contained herein are
forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," or variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements are not
guarantees of future performance and involve unknown risks and uncertainties,
which may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, among others, risks
associated with changes in automotive and non-automotive build rates as well
as risks associated with the manufacturing process and start-up of new
products and risks related to technological changes in components which affect
the life of the product. These and other risks are described in the Company's
Form 10-K filed with the Securities and Exchange Commission (SEC) on
September 28, 1998 and Forms 10-Q filed quarterly with the SEC, copies of
which are available from the SEC or may be obtained upon request from the
Company. The Company does not undertake any obligation to update or revise
any forward-looking statements
Hilite Industries, Inc. designs, manufactures and sells a diversified line
of highly engineered components and assemblies for the automotive industry
including brake proportioning valves, electromagnetic clutches, machined
components such as mounting brackets and pulleys, and specialty components and
assemblies such as stampings, specialty springs and automated assemblies. The
Company's customers include all three domestic automotive companies: Ford
Motor Company, General Motors Corporation and Chrysler Corporation as well as
other original equipment manufacturers such as Navistar International
Transportation Corporation and non-automotive companies such as Motorola, Inc.
The Company also sells products to first-tier suppliers of the automotive
industry including Borg-Warner Corporation, Bosch Braking Systems Corporation,
Denso of Los Angeles, Inc. and ITT Automotive of North America, Inc.
For further information call Investor Relations at 972-466-0475 or access
Hilite Industries, Inc.'s website at http://www.hilite-ind.com.
HILITE INDUSTRIES, INC.
Financial Highlights
(In Thousands, Except Share and Per Share Data)
Three Months Ended Six Months Ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
Income Statement Data:
Brake Valves $ 8,853 $ 6,586 $ 16,441 $ 12,560
Power Transmission Components 5,956 4,838 13,285 10,598
Specialty Comp. and
Assemblies 6,458 9,202 12,857 18,498
Net Sales 21,267 20,626 42,583 41,656
Gross Profit 4,379 4,222 8,924 8,286
Operating Income 2,228 1,915 4,476 3,575
Net Income 1,162 938 2,357 1,730
Earnings (Loss) Per Share $ 0.24 $ 0.19 $ 0.48 $ 0.35
Weighted average number of
shares outstanding 4,900 4,900 4,900 4,900
Balance sheet data: Dec. 31, 1998 June 30, 1998
Working capital $ 13,328 $ 10,569
Property, plant, equipment, net 27,603 27,616
Total assets 58,136 57,356
Long-term obligations (A) 13,475 12,957
Total liabilities 29,875 31,209
Shareholders' equity 28,261 26,147
(A) Includes noncurrent portion of long-term debt