Wescast Reports Record Fourth Quarter And Year
16 February 1999
Wescast Reports Record Fourth Quarter And Year: Fourth Quarter Net Income Increased By 38%
BRANTFORD, ONTARIO--Feb. 16, 1999--Wescast Industries Inc. (TSE:WCS.A.)
Highlights
-Wescast Industries Inc., the Wingham, Ontario based auto parts manufacturer announced fiscal year 1998 net earnings of $47.9 million or $3.65 per common share ($3.53 per fully diluted common share) compared to fiscal year 1997 net earnings of $39.4 million or $3.02 per common share ($2.91 per fully diluted common share). Fourth quarter 1998 net earnings were $15.4 million or $1.17 per common share ($1.13 per fully diluted common share) compared to fourth quarter 1997 net earnings of $11.1 million or $.85 per common share ($.82 per fully diluted common share).
-Gain sharing and profit sharing cheques averaged $4,700 per employee in 1998.
-In December, 1998, United Machining Inc., the 49 percent owned minority joint venture in Michigan issued a $7 million low interest Michigan State Fund bond to fund the 1998 and 1999 capital expenditures of the plant.
-Wescast will be included as part of the TSE 300 Composite Index, effective February 19, 1999
-In December 1998, a donation of $2 million was made to the Town of Wingham for the construction of a new community recreation complex.
Sales
Fourth quarter sales increased 29 percent over 1997. 1998 sales of $284.9 million increased 24 percent compared to $229.5 million in 1997. Operating Results
Strong casting sales, an increase in internal machining and improved plant productivity helped Wescast to increase its 1998 fourth quarter gross profit by $10.9 million to $31.3 million. Operating earnings for the fourth quarter increased 53 percent to $23.7 million. 1997 results had been reduced by the write-off of $3 million of goodwill for the 1995 Magalloy acquisition.
Balance Sheet and Financial Position
As at December 28, 1998, the Company had a very strong cash position of $65.8 million compared to $60.5 million at the end of 1997. The net proceeds generated from the December, 1996 warrant offering after debt repayment have been retained to help fund the capital expenditure programs in 1999. Capital expenditures of $41.1 million were lower than anticipated, due to the delay until 1999 of construction of the new casting facility in Wingham, Ontario.
Appointment to Board
Richard W. LeVan is pleased to announce that Mr. Hugh W. Sloan, Jr. has been appointed to the Board of Directors. Mr. Sloan is the Deputy Chairman of the Board of the Woodbridge Group of Detroit, Michigan. Woodbridge is the largest supplier of molded polyurethane foam products for the automotive market. His many years of global automotive experience will help the Company's strategic planning initiatives of the future.
Dividend Declaration
The Company has declared a dividend on its common shares in the amount of $.08 per common share (Canadian dollars), and such dividend shall be payable on March 19, 1999 to shareholders of record at the close of business on March 5, 1999.
A conference call has been arranged for Tuesday, February 16, at 11:00 a.m. EST. To participate in this call, please dial (416) 620-8644.
Wescast Industries Inc., is the largest manufacturer and supplier of exhaust manifolds for passenger cars and light trucks in the world. In addition, the Company produces pressure retaining high-alloy cast steel pump components for the petrochemical, pulp and paper and food processing industries. The Company has five facilities throughout Southwestern Ontario and employs about 1,500 people.
Wescast Industries Inc. Financial Statements
Consolidated Statement of Changes in Financial Position
(in thousands of Canadian dollars) (Canadian GAAP)
Three months Twelve months
ended ended
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December December December December
27 28 27 28
1998 1997 1998 1997
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Cash derived from
(applied to)
Operating
Net income $15,396 $11,137 $47,856 $39,364
Add (deduct) items not
requiring cash:
Depreciation and
Amortization 4,791 6,810 16,598 17,128
Deferred income taxes (30) (813) 997 (471)
(recovered)
Loss on disposal of
Equipment 3 101 89 171
Pension expense 585 32 1,737 1,344
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20,745 17,267 67,277 57,536
(Increase) decrease
in non-cash working
capital (6,170) 280 (18,469) (4,413)
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Total cash from
operations 14,575 17,547 48,808 53,123
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Financing
Issue of long term
debt 5,832 0 5,832 0
Repayment of long
term debt (369) 0 (369) 0
Assets financed
under capital
lease 154 274 243 769
Payment of obligations
under
capital lease (99) (86) (453) (449)
Increase in Employee
Share
Purchase Plan loans (85) 0 (1,006) 0
Dividends paid (1,049) (553) (4,192) (2,158)
Conversion of convertible
debenture 0 0 0 (2,381)
Issue of common shares 274 273 1,256 2,959
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Total financing
activities 4,658 (92) 1,311 (1,260)
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Investment
Purchase of equipment
and real estate (10,573) (11,678) (41,063) (28,036)
Restricted cash from
long-term debt (3,946) 0 (3,946) 0
Proceeds on disposal of
equipment 38 616 157 793
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Total investment
activities (14,481) (11,062) (44,852) (27,243)
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Net increase in cash
and short
term investments 4,752 6,393 5,267 24,620
Cash and short term
investments
Beginning of period 60,998 54,090 60,483 35,863
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End of period $65,750 $60,483 $65,750 $60,483
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Wescast Industries Inc. Financial Statements
Consolidated Statement of Earnings
(in thousands of Canadian dollars, except per share figures)
(Canadian GAAP)
Three months Twelve months
ended ended
December December December December
27 28 27 28
1998 1997 1998 1997
--------------------------------------------------------------
Sales $79,538 $61,746 $284,861 $229,478
Cost of sales 48,205 41,266 192,902 155,613
Gross profit 31,333 20,480 91,959 73,865
Selling, general
and
administration 6,963 4,725 18,439 14,524
Research,
development
and design 665 287 3,060 862
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Operating
earnings 23,705 15,468 70,460 58,479
Other (income)
expense
Interest
expense 42 50 104 135
Other (1,223) (3,009) (4,717) (4,841)
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Income before
income taxes 24,886 18,427 75,073 63,185
Income taxes 9,490 7,290 27,217 23,821
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Net income $15,396 $11,137 $47,856 $39,364
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Net earnings
per share
- basic $1.17 $0.85 $3.65 $3.02
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- fully
diluted $1.13 $0.82 $3.53 $2.91
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Notes to Financial Statements
Note 1:
Basic earnings per share is calculated based on the
weighted average number of common shares outstanding
(1998 - 13,101,699 shares; 1997 - 13,043,005 shares).
Fully diluted earnings per share is calculated based on
the fully diluted weighted average number of common
shares outstanding (1998 - 13,744,341 shares; 1997 -
13,644,986 shares).
Note 2:
Certain figures for 1997 have been reclassified to
conform with the presentation adopted in 1998.
Note 3:
The consolidated financial statements include the results
of the Company's 49 percent owned joint venture, United Machining
Inc., accounted for on a proportionate consolidation
basis.
Wescast Industries Inc. Financial Statements
Consolidated Balance Sheet
(in thousands of Canadian dollars) (Canadian GAAP)
As at
-------------------------------------------------------------
December 27 December 28
1998 1997
-------------------------------------------------------------
Assets
Current
Cash and short term
Investments $65,750 $60,483
Receivables 53,270 41,510
Inventories 16,793 15,645
Prepaids 351 219
-------------------------------------------------------------
136,164 117,857
Property and
equipment 139,069 115,039
Other 5,134 225
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$280,367 $233,121
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Liabilities
Payables and accruals $23,379 $22,836
Income taxes payable 4,038 10,179
Current portion of long term
debt 1,295 389
-------------------------------------------------------------
28,712 33,404
Long term debt 5,220 873
Accrued pension benefits 4,746 3,072
Deferred income taxes 3,916 2,919
-------------------------------------------------------------
42,594 40,268
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Shareholders' equity
Capital stock 106,125 104,869
Retained earnings 131,648 87,984
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237,773 192,853
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$280,367 $233,121
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