Walbro Corporation Reports 1998 Results
18 February 1999
Walbro Corporation Reports 1998 Results
CASS CITY, Mich., Feb. 18 -- Frank E. Bauchiero, President
and Chief Executive Officer, Walbro Corporation , reported sales
of $677,990,000 for the year ended December 31, 1998, compared with sales of
$619,905,000 for 1997, a nine percent increase.
The Company posted net income of $3,718,000 in 1998, compared with a loss
of $36,627,000 in 1997. Net income per share was $.43 for 1998 compared with
a loss of $4.23 per share in 1997. Average shares outstanding were 8,686,213
in 1998 and 8,661,432 in 1997.
"While sales rose modestly, income from operations rose dramatically in
1998," Bauchiero noted in announcing the results.
"Worldwide sales of Walbro's automotive products were up nine percent for
the year," Bauchiero said. "North American automotive sales were up 11
percent, despite the General Motors strike that affected the second and third
quarters. Sales of Walbro's automotive products in Europe were up five
percent for the year. However, sales in Brazil were down 10 percent due to
unstable economic conditions and reduced vehicle sales in that market."
"Overall sales of small engine products increased 13 percent in 1998,"
Bauchiero said. "Sales of carburetors in China rose substantially, posting an
80 percent gain. Walbro's Aftermarket Division posted a 13 percent sales gain
for 1998 compared with 1997," he added.
"Income from operations increased significantly in 1998," Bauchiero noted.
"Gross margin from North American automotive operations increased 54 percent,
helped by higher volume and improved efficiency at both of Walbro's U.S. fuel
tank system facilities."
"Operating income at our European automotive operations improved 26
percent overall with only a modest increase in volume, even factoring in
start-up costs for multi-layer tank production at Walbro's plant in Belgium.
In addition, profits from small engine operations were up 24 percent overall
and aftermarket operations posted a 21 percent gain in gross margin for the
year," Bauchiero said.
"While operating income increased significantly in 1998, net income was
affected by increased interest expense and reduced profits from joint
ventures. The higher interest expense is the result of Walbro's expansion of
its global operations, a process which is now substantially complete,"
Bauchiero noted.
"Profits from joint ventures were reduced by start-up costs at VITEC, our
joint venture in Detroit's Empowerment Zone, and by reduced earnings at other
automotive joint ventures around the world, which were adversely affected by
the strong U.S. dollar. Walbro's South American joint ventures were also
affected by the economic crisis in that region," he added.
"Walbro took several steps to eliminate under-performing operations in
1998," Bauchiero said. "These included reducing its exposure in Korea by
withdrawing from its automotive joint venture there and by divesting itself of
its metal fuel rail plant in Ligonier, Indiana.
"The past year represented an important period of transition as Walbro's
fuel storage and delivery system strategy, backed by several years of heavy
investment in plants and people worldwide, began to pay off and the Company
returned to profitability," Bauchiero said.
"Walbro has gone through challenging times in recent years as it developed
its global organization," the Walbro chief executive noted. "However, in the
process Walbro's style has grown from that of a small, entrepreneurial company
to a company with a blend of entrepreneurial spirit and financial discipline.
As a result, Walbro is well-positioned for an exciting future."
Walbro Corporation is a designer and manufacturer of precision fuel
systems and products for automotive and small engine markets. Walbro
Corporation is headquartered in Auburn Hills, Michigan, and has subsidiaries
and joint ventures throughout the world, including North and South America,
Europe and Asia. Walbro common stock is traded on the Nasdaq National Market
under the symbol WALB.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from anticipated results due to certain risks and
uncertainties, including but not limited to general economic conditions in the
markets in which Walbro operates, fluctuations in the production of vehicles
for which Walbro is a supplier, labor disputes involving Walbro or its
significant customers, risks associated with conducting business in foreign
countries and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings.
WALBRO CORPORATION
(in thousands, except share data)
Three Months Ended Twelve Months Ended
December 31 December 31
1998 1997 1998 1997
Net Sales $174,914 $165,512 $677,990 $619,905
Income Before
Extraordinary Item 2,513 (38,987) 5,191 (36,627)
Extraordinary Item, Net 0 0 (1,473) 0
Net Income 2,513 (38,987) 3,718 (36,627)
Income Per Share Before
Extraordinary Item .29 (4.50) .60 (4.23)
Extraordinary Item
Per Share 0 0 .17 0
Net Income Per Share .29 (4.50) .43 (4.23)
Average Shares
Outstanding 8,688,294 8,673,034 8,686,213 8,661,432
EBITDA* $20,281 $(34,774) $79,421 $11,317
* Earnings before interest and taxes, plus depreciation and amortization.
Walbro Corporation's Annual Meeting will be held at 10 a.m. CDT on
Tuesday, May 4, 1999 at the offices of Katten, Muchin & Zavis, 525 West
Monroe, Chicago. Illinois.