Hastings Announces Year-End Results Fiscal 1998
2 March 1999
Hastings Announces Year-End Results Fiscal 1998 Marked by Strong Increase in Net Income
HASTINGS, Mich., March 2 -- Hastings Manufacturing Company
(Amex: HMF) today reported the results of its fiscal year ended December 31,
1998, highlighted by a nine percent gain in net sales and an 81 percent
increase in net income.
The Hastings, Mich.-based manufacturer and marketer of automotive-related
products recorded net sales of $38.8 million in 1998, compared to $35.6
million in the prior year. Hastings attributed the increase in net sales to
strong gains in its domestic aftermarket, private brand and export piston ring
markets.
The Company posted net income of $1.7 million, or $2.24 per diluted share,
in 1998, compared with net income of $955,233, or $1.24 per diluted share, in
the prior year. This marked eight consecutive quarters of profitability for
Hastings.
"The increased demand for our piston ring products contributed to our
strong performance in 1998," said Hastings Co-CEO Mark Johnson. "Our sales in
the latter part of the year, however, were somewhat impacted by product
shortages. We have now taken the initial steps to improve our manufacturing
processes, which should offer support in 1999 as we prepare for the
historically strong second and third quarters. Net sales in the first quarter
of 1999 may not exceed the strong sales of the prior year's first quarter as
we address our short-term supply issues."
Gross profit as a percentage of sales for the year ended December 31, 1998
was 32.7 percent, as compared with 31.7 percent posted in the prior year
period. The margin improvement was primarily attributable to the increased
distributor volume for domestic piston rings, which tend to have higher gross
margins.
Hastings' total operating expenses as a percentage of sales declined to
24.1 percent in 1998, versus 25.8 percent in the prior year. This marked
three consecutive years that the Company has reduced its operating costs
relative to the gains made in net sales.
"We anticipate additional changes to our operations in 1999 as we embrace
lean manufacturing practices," said Hastings Co-CEO Andrew Johnson. "The
results from this program are expected to improve customer service and enhance
shareholder value over the long-term."
For the fourth quarter ended December 31, 1998, Hastings reported its best
quarter of net income since exiting the filter business in 1996. The Company
recorded net income of $531,598, or $0.69 per diluted share, compared to net
income of $165,043, or $0.21 per diluted share in the same period in 1997.
Hastings posted net sales of $8.9 million, which is a 6.4 percent increase
over the $8.4 million in net sales for the same period in 1997.
Hastings' gross profit for the 1998 fourth quarter was 37.7 percent of
sales, as compared with 31.2 percent of sales posted in the last three months
of 1997. The margin improvement is due in part to cost reductions related to
higher volumes for both purchased and manufactured components. In addition,
general price reductions for various purchased materials resulted in a
favorable fourth quarter impact. Future gross profit results should more
closely track with the lower historical levels. Operating expenses as a
percentage of sales increased to 27.2 percent for the 1998 fourth quarter,
versus 26.2 percent in the same period in the prior year.
Hastings' earnings per share results for the current and prior year
incorporate the retroactive application of a 2-for-1 stock split, which was
completed on March 23, 1998.
Hastings Manufacturing is a leading manufacturer and marketer of piston
rings and automotive specialty tools under the Hastings Brand, and additives
for engines, transmissions, cooling systems and fuel systems under the Casite
Brand.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this news release include certain
predictions and projections that may be considered forward-looking statements
under securities laws. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices.
HASTINGS MANUFACTURING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For The Three Months Ended For The Year Ended
December 31, December 31,
1998 1997 1998 1997
Net Sales $8,922,110 $8,381,901 $38,752,104 $35,574,954
Cost of Sales 5,555,409 5,766,090 26,094,399 24,285,197
Gross Profit 3,366,701 2,615,811 12,657,705 11,289,757
Operating Expenses:
Advertising 84,782 66,496 325,070 372,981
Selling 628,802 838,013 2,940,478 3,120,215
General and
Administrative 1,709,929 1,291,195 6,075,590 5,693,175
Total Operating Expenses 2,423,513 2,195,704 9,341,138 9,186,371
Operating Income 943,188 420,107 3,316,567 2,103,386
Other Expenses (Income):
Interest Expense 234,981 125,300 571,774 510,322
Interest Income 0 (15,613) (35,982) (47,062)
Other, net 1,609 49,377 (3,652) 62,893
Total Other Expenses 236,590 159,064 532,140 526,153
Income Before Income
Tax Expense 706,598 261,043 2,784,427 1,577,233
Income Tax Expense 175,000 96,000 1,054,000 622,000
Net Income $531,598 $165,043 $1,730,427 $955,233
Net Income Per Share of Common Stock:
Basic $0.69 $0.21 $2.24 $1.24
Diluted $0.69 $0.21 $2.24 $1.24
Average Shares Outstanding:
Basic 771,496 768,516 771,496 768,516
Diluted 774,074 769,171 772,694 768,680