Williams Controls' Net Earnings From Continuing Operations Up 21%
17 February 1999
Williams Controls' Net Earnings From Continuing Operations Up 21% on 18% Sales Increase in First Quarter
PORTLAND, Ore., Feb. 16 -- Williams Controls, Inc.
announced its results for its fiscal first quarter ended
December 31, 1998, including a 21% increase in net earnings from continuing
operations and an 18% increase in sales.
Net earnings from continuing operations were $1,031,000, or $.05 per
diluted share, compared to $851,000, or $.05 per diluted share, during the
comparable period one year ago on higher diluted shares outstanding. Net
earnings for the quarter ended December 31, 1998 were $1,031,000, or $.05 per
diluted share, a 49% increase over the $694,000, or $.04 per diluted share
reported in the first quarter of the prior year. The prior year net earnings
included a net loss from discontinued operations of $157,000, or $.01 per
diluted share outstanding. Diluted shares outstanding increased to 21,312,041
from 18,392,485 in the prior fiscal year primarily as a result of a preferred
stock offering completed in April 1998.
Sales for the first quarter of 1999 reached $14,925,000, an increase of
18% compared to the $12,698,000 reported in the first quarter of 1998. The
increase in sales was primarily driven by the solid increases in the Company's
Vehicle Components Business, which serves the heavy- and medium-duty truck
markets, as well as the automotive market.
Earnings in the quarter ended December 31, 1998 were affected by
approximately $112,000 of pre-tax costs related to the exercise of an option
to repurchase the Company's Portland plant. The repurchase will save the
Company approximately $100,000 per year in operating and interest costs.
The increase in earnings was driven by a continued growth in sales and
improving overall gross profit margins for the Company. Gross profit margins
increased to 31.5% during the quarter, up from 30.5% during the first quarter
of fiscal 1998. This was the result of a continued focus on controlling costs
throughout the Company, as well as an improved mix of higher margin electronic
throttle control product sales. It was also accomplished while research and
development spending increased 39% during the quarter. Research and
development expenses as a percent of sales increased from 4.4% in the first
quarter of fiscal 1998 to 5.2% in the current fiscal quarter. These
additional R&D expenditures were primarily directed toward the Company's move
into the automotive and light truck market segments, as the Company seeks to
penetrate that market with its electronic throttle control technologies and
other products currently sold to its traditional markets.
Williams Controls chairman and CEO Thomas W. Itin stated, "These financial
results reflect the continued progress we are making in our core
transportation business. The 21% increase in net earnings from continuing
operations in the latest quarter is especially gratifying because it was
achieved while we had nearly a 40% increase in our research and development
expenditures. Our total research and development expenditures cost the
Company $.02 per share, but were made to support our long term strategic
investment plan toward the automotive and light truck markets."
Mr. Itin continued, "Our investment in Premier Plastic Technologies
("PPT") is beginning to show results. A month ago, we announced that PPT had
been awarded the 1998 Jeep Grand Cherokee service lighting business and we
hope to have an announcement on the status of other automotive bids in the
near future. We expect PPT to make a positive contribution to operating
profits by the end of this fiscal year."
Williams Controls CFO Gerard A. Herlihy added, "We believe that domestic
automobiles, light trucks and sports utility vehicles will be converting to
ETC over the next three-to-five years and that international markets will
follow the U.S. markets. We are actively bidding on the initial passenger
vehicle ETC conversions, including several domestic programs and one in
Europe, and we expect to continue this effort over the next few years. We
believe that the Company's twelve years of ETC experience, which helped the
Company win a preeminent position in the heavy truck market, will be a
significant advantage in winning our fair share of the ETC market for
passenger vehicles."
Williams Controls is a leading manufacturer and integrator of innovative
sensors, controls and communications systems for the transportation and
communication industries. For more information, you can find the Company at
http://www.wmco.com on the World Wide Web.
Forward-looking statements in this news release, if any, are made under
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Certain important factors could cause results to differ materially from
those anticipated by the statements, including the impact of changing economic
or business conditions, the impact of competition, the availability of
financing, the success of products in the marketplace, other factors inherent
in the industry and other factors discussed from time to time in reports filed
by the Company with the Securities and Exchange Commission.
Williams Controls, Inc.
Unaudited Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Three Months
Ended 12/31/98 Ended 12/31/97
Sales $14,925 $12,698
Cost of sales 10,226 8,825
Gross margin 4,699 3,873
Operating expenses 2,375 1,869
Earnings from continuing operations 2,324 2,004
Other expenses 650 622
Earnings from continuing operations
before income taxes 1,674 1,382
Income tax expense 643 531
Net earnings from continuing
operations 1,031 851
Loss from operations of discontinued
agricultural equipment segment -- (157)
Net earnings 1,031 694
Dividends on preferred stock 150 --
Net earnings available to
common shareholders $881 $694
Net earnings per common share from
continuing operations - basic .05 .05
Loss per common share from
discontinued operations - basic -- (.01)
Net earnings per common share - basic .05 .04
Net earnings per common share from
continuing operations - diluted .05 .05
Loss per common share from
discontinued operations - diluted -- (.01)
Net earnings per common share - diluted .05 .04
Weighted avg. shares used in per share
calculation - basic 18,248,760 17,816,294
Weighted avg. shares used in
per share calculation - diluted 21,312,041 18,392,485