Insilco Holding Co. Reports Fourth Quarter and Full Year 1998 Results
11 February 1999
Insilco Holding Co. Reports Fourth Quarter and Full Year 1998 Results
COLUMBUS, Ohio, Feb. 10 -- Insilco Holding Co.
(OTC BULLETIN BOARD: INSL) today reported sales and operating results for the
fourth quarter and full year ended December 31, 1998.
Sales were $113.2 million for the 1998 fourth quarter, compared to
$120.6 million recorded in the year ago fourth quarter. For the twelve months
of 1998 sales were $535.6 million, compared to $528.2 million recorded in the
comparable twelve months of 1997.
The Company reported adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization, other income, merger-related expenses and other
non-recurring expenses plus cash dividends received from Thermalex, the
Company's 50% owned joint venture) of $11.5 million for the 1998 fourth
quarter, compared to $15.5 million recorded in the 1997 fourth quarter. The
Company's adjusted EBITDA for the 1998 and 1997 fourth quarters excludes
$2.1 million and $0.2 million, respectively, of restructuring charges and
other non-recurring expenses related primarily to severance and legal
expenses.
For the twelve months of 1998, the Company reported adjusted EBITDA of
$64.9 million, compared to $71.4 million recorded in the year ago twelve
months ended December 31, 1997. The Company's adjusted EBITDA for the twelve
months of 1998 excludes $25.5 million of merger-related expenses and $5.3
million of other non-recurring charges related primarily to severance and
legal expenses. The 1997 full year adjusted EBITDA excludes non-recurring
legal fees of $0.4 million.
BUSINESS DISCUSSION
The Company's Automotive Components Group reported sales of $58.8 million
for the 1998 fourth quarter, compared to $59.1 million reported in the year
earlier fourth quarter. Adjusted EBITDA for the Group was $8.1 million and
$9.0 million for the fourth quarters of 1998 and 1997, respectively. Group
results were impacted by significantly lower performance, the result of weak
demand, at the Company's McKenica division, which produces tube mills for the
automotive heat exchanger market. Excluding McKenica, the Group recorded
sales of $57.0 million and adjusted EBITDA of $8.2 million for the 1998 fourth
quarter, compared to sales of $57.0 million and adjusted EBITDA of
$8.4 million in the year ago fourth quarter. The relatively flat performance
by the core businesses reflects improved operating margins at the Group's
transmission components stamping unit offset by pricing pressures and weaker
demand for aftermarket and industrial radiators.
The Company's Technologies Group reported sales of $45.0 million in the
1998 fourth quarter compared to $50.9 million recorded in the 1997 fourth
quarter. While sales of connector products were up 8% in the quarter, fourth
quarter sales reflect a continuing slowdown in the global electronics markets
and weak demand from certain telecommunications customers. Adjusted EBITDA
for the Technologies Group was $5.7 million in the 1998 fourth quarter,
compared to $8.0 million recorded in the 1997 fourth quarter. Group
performance was negatively impacted by sales declines at the Company's power
transformer, cable assembly and precision stamping businesses in a difficult
economic environment. Conversely, operating margins improved for the
Company's connector business unit.
Sales at Taylor Publishing, in its seasonally slow fourth quarter, were
$9.4 million in 1998, compared to $10.6 million recorded in the year ago
fourth quarter. Taylor's adjusted EBITDA was ($0.6) million for the 1998
fourth quarter, compared to adjusted EBITDA of $0.4 million in the year ago
fourth quarter, primarily due to lower sales and the timing of the recognition
of certain expenses.
The Company also reported that it recorded a fourth quarter restructuring
charge of $1.5 million for severance expense related to the reduction in
salaried headcount by 48 within its Technologies Group and Taylor Publishing
business segments during the quarter. The Company said that this amounted to
a 7.5% reduction of the salaried positions within the two business segments.
The Company further stated that this was the first step toward its objective
of significantly lowering its cost structure in all of its business segments
and that further cost reduction initiatives and productivity enhancements
would be implemented over the course of 1999.
CEO COMMENTS
Robert L. Smialek, Insilco Chairman and CEO, said, "While we made positive
strides in several of our business units, on balance, 1998 was a disappointing
year in terms of operating performance. In particular, our fourth quarter
results fell below expectations. We were very pleased with the full year
performance of our automotive heat exchanger and tubing businesses, which
posted a 15% year-over-year sales gain. However, our McKenica unit's
performance masked the achievement of the automotive components group for the
year."
"We do not believe fourth quarter performance, nor the slowdown in demand
from the electronics and telecommunications markets, is indicative of a long
term trend. As evidence, we are experiencing continued sales growth in the
connector business despite an industry wide slowdown. During 1999, while
maintaining an aggressive focus on top line growth, we are also implementing
significant operational improvements and restructuring initiatives across all
business segments to reduce our cost structure."
"We were pleased to report in early 1999 that we acquired EFI, a precision
stamping business that will allow us to cross-sell products and gain
efficiencies by combining certain operations with our Stewart Stamping
business unit."
"Our focus remains on rationalizing our core businesses and maximizing
operating efficiencies to meet the global challenges of 1999 and beyond. We
continue to look for additional acquisition opportunities that offer
operational synergies with our core businesses. We are also exploring a
number of other strategies to rapidly reduce our debt level," Smialek
concluded.
REPORTED RESULTS
Including the merger-related and other charges, the Company reported a net
loss of ($9.4) million, applicable to common shares, for its fourth quarter
ended December 31, 1998, compared to net income of $3.5 million recorded a
year ago in the fourth quarter. The 1998 fourth quarter included an
extraordinary charge of $5.9 million related to the Company's fourth quarter
debt refinancing and a $2.1 million charge for severance and significant legal
expenses. Loss applicable to common shares for the fourth quarter of 1998 was
($9.65) per diluted share (of which ($3.72) was attributed to the
extraordinary charge) compared to income applicable to common shares of $0.85
per diluted share in the prior year.
For the twelve months ended December 31, 1998, the Company recorded a net
loss of ($20.1) million, applicable to common shares, compared to net income
of $81.6 million recorded in the year ago twelve months. The twelve months of
1998 included $25.5 million of merger-related expenses and $5.3 million of
legal expenses and restructuring charges. Net income for the full year 1997
included an after tax gain of $57.8 million, or $7.87 per diluted share, on
the sale of the Rolodex business unit. Loss applicable to common shares for
the twelve months ended December 31, 1998 was ($8.21) per diluted share
(including ($1.86) from the extraordinary charge) compared to income
applicable to common shares of $11.12 per diluted share recorded the prior
year.
The pro forma results reflect the 1997 share repurchase, the sale of the
office products business in 1997, the mergers and merger financing of August
1998 and the refinancing of November 1998, in each case as if they occurred at
the beginning of the relevant period.
Insilco Holding Co., based in suburban Columbus, Ohio, is a diversified
manufacturer of industrial components and a supplier of specialty
publications. The Company's industrial business units serve the automotive,
electronics, telecommunications and other industrial markets, and its
publishing business serves the school yearbook market. The Company had 1998
revenues in excess of $535 million.
The statements made in this press release which are not historical facts
may be deemed forward looking statements, and, as such, are subject to certain
risks and uncertainties, including statements with respect to the Company's
long-term outlook; growth prospects; slowdown in the electronics markets; the
ability to improve operating efficiencies and to reduce expenses, possible
acquisitions and divestitures, as well as the ability of the Company's
businesses to maintain their leadership position. It is important to note
that results could differ materially from those projected in such forward-
looking statements. Factors which could cause results to differ materially
include, but are not limited to the following: delays in new product
introductions, lack of market acceptance for new products, changes in demand
for the Company's products, changes in market trends, general competitive
pressures from existing and new competitors, changes in interest rates, and
adverse economic conditions which could affect the amount of cash available
for debt servicing and capital investments. Further information concerning
factors that could cause actual results to differ materially from those in the
forward-looking statements are contained from time to time in the Company's
SEC filings, including but not limited to the Company's report on Form 10-K
for the year ended December 31, 1997 and the Company's report on Form 10-Q for
September 30, 1998. Copies of these filing may be obtained by contacting the
Company or the SEC.
INSILCO HOLDINGS CO.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in millions)
For the Quarter Ended
Actual Pro forma
December 31, December 31,
1998 1997 1998 1997
Sales $113.2 $120.6 $113.2 $120.6
Cost of sales, excluding
depreciation 84.5 87.6 84.5 87.6
Selling, general and administrative
expenses, excluding depreciation 17.2 17.5 17.2 17.5
Depreciation and amortization
expense 4.4 4.0 4.4 4.0
Significant legal expenses 0.6 0.2 0.6 0.2
Restructuring expenses 1.5 -- 1.5 --
Operating income 5.0 11.3 5.0 11.3
Interest expense, net (10.2) (7.1) (10.9) (11.5)
Equity in net income of Thermalex 0.7 0.5 0.7 0.5
Other income (expense), net 0.7 0.6 0.7 0.6
Income (loss) before income taxes (3.8) 5.3 (4.5) 0.9
Income tax benefit (expense) 1.7 (1.8) 1.5 (0.4)
Income (loss) before extraordinary
item (2.1) 3.5 (3.0) 0.5
Extraordinary item, net of tax (5.9) -- -- --
Net income (loss) (8.0) 3.5 (3.0) 0.5
Preferred stock dividend (1.4) -- (1.5) (1.5)
Net income (loss) available
(applicable) to common $(9.4) $3.5 $(4.5) $(1.0)
Cash dividend from Thermalex $ -- $ -- $ -- $ --
Earnings before other income,
interest, taxes, depreciation,
amortization, and one-time items,
plus cash dividend from Thermalex $11.5 $15.5 $11.5 $15.5
Capital expenditures $4.4 $8.6 $4.4 $8.6
Diluted earnings per share available:
Income (loss) from continuing
operations $(5.93) $0.85 $(2.87) $(0.62)
Discontinued operations -- -- -- --
Extraordinary item (3.72) -- -- --
Net income (loss) per share $(9.65) $0.85 $(2.87) $(0.62)
INSILCO HOLDINGS CO.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in millions)
For the Year Ended
Actual Pro forma
December 31, December 31,
1998 1997 1998 1997
Sales $535.6 $528.2 $535.6 $528.2
Cost of sales, excluding
depreciation 382.6 370.8 382.6 370.8
Selling, general and administrative
expenses, excluding depreciation 89.4 87.5 89.4 87.5
Depreciation and amortization expense 20.2 18.4 20.2 18.4
Significant legal expenses 2.1 0.4 2.1 0.4
Restructuring expenses 3.2 -- 3.2 --
Merger expenses 25.5 -- -- --
Operating income 12.6 51.1 38.1 51.1
Interest expense, net (31.9) (17.7) (44.8) (47.0)
Equity in net income of Thermalex 2.9 2.6 2.9 2.6
Other income (expense), net 3.0 0.8 3.0 0.8
Income (loss) before income taxes (13.4) 36.8 (0.8) 7.5
Income tax benefit (expense) 1.3 (13.4) (0.1) (3.2)
Income (loss) from continuing
operations (12.1) 23.4 (0.9) 4.3
Discontinued operations, net of tax -- 58.9 -- --
Income (loss) before extraordinary
item (12.1) 82.3 (0.9) 4.3
Extraordinary item, net of tax (5.9) (0.7) -- --
Net income (loss) (18.0) 81.6 (0.9) 4.3
Preferred stock dividend (2.1) -- (5.7) (5.7)
Net income (loss) available
(applicable) to common $(20.1) $81.6 $(6.6) $(1.4)
Cash dividend from Thermalex $1.3 $1.5 $1.3 $1.5
Earnings before other income,
interest, taxes, depreciation,
amortization, and one-time items,
plus cash dividend from Thermalex $64.9 $71.4 $64.9 $71.4
Capital expenditures $20.2 $23.6 $20.2 $23.6
Diluted earnings per share available:
Income (loss) from continuing
operations $(6.35) $3.19 $(4.16) $(0.85)
Discontinued operations -- 8.03 -- --
Extraordinary item (1.86) (0.10) -- --
Net income (loss) per share $(8.21) $11.12 $(4.16) $(0.85)
INSILCO HOLDINGS CO.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in millions)
As of December 31,
1998 1997
Assets
Current assets:
Cash and cash equivalents $ 7.4 $ 10.7
Receivables, net 84.2 70.7
Inventories, net 64.6 60.7
Current portion of deferred taxes 6.2 0.3
Prepaid expenses 4.4 2.7
Total current assets 166.8 145.1
Property, plant and equipment, net 114.7 114.0
Goodwill, net 13.6 13.4
Deferred taxes 1.9 1.0
Other assets and deferred charges 29.3 29.2
Total assets $326.3 $302.7
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 34.5 $ 39.8
Accrued expenses and other 55.5 50.6
Accrued interest payable 4.2 8.0
Current portion of long-term debt 1.3 1.7
Current portion of long-term obligations 1.9 5.4
Total current liabilities 97.4 105.5
Long-term debt 383.1 256.1
Other long-term obligations 46.3 43.4
Preferred stock 34.1 --
Stockholders' equity (deficit) (234.6) (102.3)
Total liabilities and
stockholders' equity (deficit) $326.3 $302.7