Durakon Reports Strong Fourth Quarter and Year-End Results
4 March 1999
Durakon Reports Strong Fourth Quarter and Year-End Results
-- Fourth quarter diluted EPS rose to $0.47 from $0.18, with the strongest
operating income since 1994.
-- Full-year diluted EPS increased to $1.27 from $0.18 on higher operating
profitability and record sales.
-- In the fourth quarter, Durakon completed the divestiture of Duraliner
USA as planned.
Comparative Fourth Quarter and 12-Month Highlights
(Amounts in thousands, except per share data)
4th Quarter Ended 12-Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
Net Sales $48,664 $47,885 $192,358 $179,908
Operating Income $4,226 $607 $12,368 $735
Net Income $2,893 $1,090 $7,909 $1,103
Net Income per
Share (diluted) $0.47 $0.18 $1.27 $0.18
Weighted Avg. Shares
Outstanding (diluted) 6,220 6,287 6,247 6,304
Vehicle Accessories segment
-- Sales $22,263 $22,885 $92,122 $92,250
-- Operating Income $2,543 $242 $8,517 $77
Towing & Recovery segment
-- Sales $26,401 $25,000 $100,236 $87,658
-- Operating Income $1,683 $365 $3,851 $658
"Our fourth quarter results are indicative of Durakon's strengthened
earnings capability. During the past year, we have made fundamental
improvements in both of our business segments: reducing costs, increasing
productivity and eliminating underperforming operations. As a result, we are
now in a significantly stronger operating position and look forward to further
progress."
-- David W. Wright, President and Chief Executive Officer
LAPEER, Mich., March 4 -- Durakon Industries, Inc.
today announced substantially stronger fourth quarter and full-
year earnings compared with a year-ago due to continued profit progress in
both of its business segments.
Fourth Quarter Results
Net income for the fourth quarter ended December 31, 1998, was
$2.9 million or $0.47 diluted net income per share, compared with net income
of $1.1 million or $0.18 diluted net income per share in last year's fourth
quarter. The earnings improvement was mainly due to stronger operating
income, which was the highest of any fourth quarter since 1994. Operating
income rose to $4.2 million, up from $607,000 in the year-ago quarter. The
improvement was mainly due to reduced SG&A expenses and higher gross margin.
Net sales increased 2% to $48.7 million.
Both business segments contributed to the strong fourth quarter results.
Vehicle Accessories operating income rose to $2.5 million from $242,000 a year
ago, primarily due to lower SG&A expenses and higher gross margin. Sales
decreased 3% to $22.3 million in Vehicle Accessories, as stronger domestic
sales were offset by the completed divestiture of Duraliner USA and lower
international sales primarily as a result of weakness in certain Latin
American economies.
Fourth quarter Towing & Recovery operating income increased to
$1.7 million from $365,000. Jerr-Dan continued to reduce SG&A expenses
despite the introduction of two new products during the quarter: a 30-ton
towing vehicle and an entry-level, light duty towing vehicle. Management
expects sales of both products to begin during the first quarter of 1999.
Towing & Recovery sales increased 6% to $26.4 million, as Jerr-Dan's expanded
distribution base continued to increase its market share.
During the fourth quarter, Durakon completed the divestiture of its
Duraliner USA sales and distribution outlets. Durakon divested two outlets in
the fourth quarter, after divesting eight outlets during the year. In
calendar 1997, Duraliner USA had an operating loss of $2.5 million.
"We are very proud of our 1998 performance," said David W. Wright,
President and Chief Executive Officer of Durakon Industries, Inc. "A lot of
things went wrong -- the GM strike, challenging markets, and weakness in
international sales -- yet we still delivered record sales and strong
earnings. Equally important, we achieved substantial cost reductions and
improved productivity, and completed the divestiture of Duraliner USA on
schedule. As a result, Durakon is now in a fundamentally stronger position
for the years ahead."
Fiscal 1998 Results
For the year ended December 31, 1998, Durakon's net income was
$7.9 million or $1.27 diluted net income per share, compared with $1.1 million
or $0.18 diluted net income per share in the year-ago period. Sales increased
7% to $192.4 million, paced by a 14% increase in Towing & Recovery sales.
Vehicle Accessories sales were even with the prior year, as domestic sales
growth was offset by the planned divestiture of Duraliner USA, soft
international sales and the GM strike, which ended in the third quarter.
Operating income increased to $12.4 million from $735,000, on substantial
improvements in both business segments.
Forward-Looking Statements
The discussion above contains forward-looking statements about the
company's future growth, profitability and competitive position. Any such
statements are subject to risks and uncertainties, including changes in
economic and market conditions, industry competition, the success of new
product introductions, the realization of expected economies from productivity
programs and plant expansions, management of growth and other factors outside
the company's control, including factors discussed from time to time in the
company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K. Readers are cautioned not to place undue reliance
on forward-looking statements, which reflect management's analysis only as of
the date hereof. The company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances that may arise
after the date hereof or to reflect actual results.
Durakon Industries is the world's leading producer and marketer of pickup
truck bedliners, and is a leader in the production and marketing of rollback
car carriers and wheel-lift towing vehicles. Durakon's world headquarters and
a major manufacturing facility are in Lapeer, Mich. Other manufacturing
plants are in Greencastle, Pa.; Clinton, Tenn.; and Lerma, Mexico. Durakon's
common stock is traded on the Nasdaq Stock Market under the ticker symbol
DRKN.
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Twelve months ended Three months ended
December 31, December 31,
($ in 000's, except per share data)
1998 1997 1998 1997
Net sales $192,358 $179,908 $48,664 $47,885
Cost of products sold 157,529 149,555 39,584 39,895
Gross profit 34,829 30,353 9,080 7,990
Selling, general and
administrative expenses 22,461 29,618 4,854 7,383
Operating income 12,368 735 4,226 607
Interest income, net 411 69 174 25
Other (expense), net (675) (361) (242) (186)
Income before income taxes 12,104 443 4,158 446
Provision for income/(loss)
taxes 4,195 (660) 1,265 (644)
Net income $7,909 $1,103 $2,893 $1,090
Basic net income per share of
common stock $1.28 $0.18 $0.47 $0.18
Diluted net income per share
of common stock $1.27 $0.18 $0.47 $0.18
Weighted average basic shares 6,161 6,255 6,125 6,245
Weighted average diluted shares 6,247 6,304 6,220 6,287
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(Unaudited)
($ in 000's, except share data) 1998 1997
ASSETS
Current assets:
Cash and equivalents $15,434 $7,907
Accounts receivable, less allowances
of $1,005 and $1,252 22,739 20,039
Inventories 16,216 16,748
Prepaid expenses and other current assets 1,530 2,401
Deferred income taxes 1,934 2,973
Total current assets 57,853 50,068
Property, plant and equipment, net 19,945 21,943
Goodwill 9,923 10,601
Patents, net 139 270
Other assets 191 210
TOTAL ASSETS $88,051 $83,092
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations $178 $248
Accounts payable 9,301 10,308
Other current liabilities 6,258 7,831
Total current liabilities 15,737 18,387
Long-term obligations 894 554
Deferred income taxes 1,976 1,184
Minority interest 541 681
Total long-term liabilities 3,411 2,419
Shareholders' equity:
Preferred stock, $1 par value - 100,000 shares
authorized; none issued -- --
Common stock, without par value -
15,000,000 shares authorized;
6,125,200 and 6,245,292 shares
issued and outstanding 16,059 17,244
Accumulated other comprehensive loss (397) (290)
Retained earnings 53,241 45,332
Total shareholders' equity 68,903 62,286
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $88,051 $83,092
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
(Unaudited)
($ in 000's) 1998 1997
Cash flows from operating activities:
Net income $7,909 $1,103
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,692 4,984
Increase/(decrease) in minority
interest, net (140) 506
Increase/(decrease) in deferred
income taxes 1,831 (379)
Gain/(loss) on disposal of property,
plant and equipment (62) 74
Net decrease/(increase) of other assets 19 (18)
Increase/(decrease) due to changes in operating
assets and liabilities:
Accounts receivable (2,700) 136
Inventories 532 1,679
Prepaid expenses and other current assets 871 (396)
Accounts payable (1,007) 368
Accrued expenses and other current
liabilities (1,573) 1,723
Net cash provided by operating activities 11,372 9,780
Cash flows used in investing activities:
Purchases of property, plant and equipment (2,946) (5,622)
Proceeds from sale of property, plant and
equipment 123 188
Net cash used in investing activities (2,823) (5,434)
Cash flows used in financing activities:
Decrease in long-term debt (265) (244)
Borrowing of long-term debt 535 --
Repurchase of common stock (1,185) (5,200)
Cash proceeds from exercise of stock options 409
Net cash used in financing activities (915) (5,035)
Effect of exchange rate changes on cash (107) (1)
Cash and equivalents:
Increase/(decrease) for year 7,527 (690)
Balance, beginning of year 7,907 8,597
Balance, end of year $15,434 $7,907