RB Rubber Fourth Quarter Revenues Increase 23% to Record $2.7M
22 February 1999
RB Rubber Fourth Quarter Revenues Increase 23% to Record $2.7 Million
MCMINNVILLE, Ore.--Feb. 22, 1999--RB Rubber Products, Inc. , an integrated tire recycler and producer of rubber mats and molded products, today reported fourth quarter revenues rose 23% to a record $2.7 million, compared to $2.2 million in the like quarter a year ago. Revenues for all of 1998 grew 15% to $8.6 million, from $7.4 million in 1997.Excluding a $396,000 one-time charge related to the last year's acquisition of Iowa Mat, net income for the quarter would have increased 63% to $220,000, or $.10 per diluted share, compared to $135,000, or $.06 per diluted share, in the fourth quarter of 1997. Following the one-time charge, the company lost $41,000, or $.02 per diluted share, in the fourth quarter of 1998.
Excluding the charge, RB Rubber would have earned $175,000, or $.08 per diluted share, for the full year, compared to $528,000, or $.24 per diluted share in 1997. Following the one-time charge, the company lost $85,000 or $.04 per diluted share in 1998.
"Our results for the quarter are promising," said Ron Bogh, president and CEO. "Sales reached a new high, our margins are returning to historic levels and excluding the one-time charge for Iowa Mat, our earnings were up significantly.
"In another move to strengthen our operations, in February we acquired the Portland tire processing plant from our primary raw material supplier, Waste Recovery (OTC BB:WRII). By managing the entire tire recycling process we should be better able to control the flow of low-cost raw materials -- positively impacting our margins in the long-term," Bogh added. "We had been looking at vertically integrating our business when this opportunity was presented to us. And, the due diligence process indicated we are heading in the right direction."
The fourth quarter gross margin of 32% improved sequentially from the 27% gross margin in the preceding quarter, and is nearing year ago levels of 35%. The decline from 1997 levels was due to the new molded products division as well as increased labor and maintenance costs overall.
"By implementing cost-cutting measures and spreading our fixed costs over a higher revenue base, we have reduced general and administrative expenses as a percent of sales. In the fourth quarter G&A accounted for 11% of sales, compared to 14% in the fourth quarter a year ago," said Bogh. "Selling expenses were level quarter over quarter at 8% and down sequentially from 11% in the third quarter of 1998."
On January 29, 1999, RB Rubber completed the acquisition of the Portland tire recovery and processing plant from Waste Recovery for $750,000. The cash acquisition was initially funded through a loan and cash from operations. During the second quarter of this year, the company intends to execute a sell/lease-back transaction with its bank, as it has done with other major equipment acquisitions. Because of its recycling efforts, RB Rubber is eligible for State of Oregon Business Energy Tax Credits, which it exchanges with the bank for more favorable lease terms.
RB Rubber acquired its molded products division -- which consists of certain assets, technology and products from Iowa Mat Company -- for approximately $815,000 in cash and stock in April 1998. The new product line includes recycled rubber paving tiles, playground fall protection tiles and molded rubber barbell plates. The acquisition also included equipment and proprietary processes.
RB Rubber Products, Inc. is an integrated recycler and manufacturer that transforms scrap tires and rubber into high quality, durable rubber mats, protective surfacing and other rubber products. Applications of the company's products include surfacing for agribusiness, sports and fitness facilities and other commercial and industrial uses. RB is the leader in the black rubber mat market.
This news release contains forward-looking statements that involve a number of risks and uncertainties. Some of the factors that could cause actual results to differ materially include: increased demand for, or diminished supply of the company's raw materials, and unanticipated difficulties in integrating acquired technologies or businesses. Investors are directed to the company's filings with the Securities and Exchange Commission, including the company's 1997 10-KSB for additional information on the risks and uncertainties as well as other aspects of the company's business.
R-B RUBBER PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months For the years
ended ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
Sales, net $2,707,097 $2,196,026 $8,592,368 $7,445,403
Cost of sales 1,833,547 1,428,483 6,059,269 4,625,670
Gross profit 873,550 767,543 2,533,099 2,819,733
Operating expenses:
Selling 224,986 170,978 871,883 680,820
General and
administrative 294,164 300,223 1,288,459 1,167,019
Loss on impairment
of goodwill 396,050 -- 396,050 --
915,200 471,201 2,556,392 1,847,839
Operating income
(loss) (41,650) 296,342 (23,293) 971,894
Other income (expense):
Interest income 171 584 5,940 1,344
Interest expense (43,290) (39,681) (151,419) (125,113)
Loss on sale of
equipment (19,079) (560) (5,979) (5)
Other income, net 15,250 45 33,238 8,054
(46,948) (39,612) (118,220) (115,720)
Income (loss) before
income taxes (88,598) 256,730 (141,513) 856,174
Income tax benefit
(expense) 47,668 (121,345) 56,345 (328,031)
Net income (loss) $ (40,930) $ 135,385 $ (85,168) $ 528,143
Basic net income
(loss) per share $ (0.02) $ 0.06 $ (0.04) $ 0.24
Basic weighted
average shares 2,239,167 2,172,500 2,222,363 2,172,500
Diluted net income
(loss) per share (0.02) $ 0.06 $ (0.04) $ 0.24
Diluted weighted
average shares 2,250,857 2,219,392 2,254,729 2,223,164