MS Acquisition Corp Reports Fourth Quarter Results
15 April 1999
MS Acquisition Corp Reports Fourth Quarter Results
CENTER LINE, Mich., April 15 -- MS Acquisition Corp,
consisting of wholly owned subsidiaries AETNA Industries, Inc. and Sofedit SA,
announced financial results for the fourth quarter and twelve months ended
December 31, 1998. This discussion first presents the consolidated proforma
results of MS Acquisition Corp, consisting of Sofedit SA and AETNA Industries,
Inc., and then follows with a separate analysis of AETNA Industries, Inc.'s
financial performance.
MS Acquisition Corp's total net sales for the fourth quarter of 1998 were
$237.7 million, or 32.2%, higher than fourth quarter 1997 sales of $179.8
million.
Gross profit was $18.0 million, or 7.6% of net sales, for the fourth
quarter of 1998 compared to $19.6 million, or 10.9% of net sales, for the same
period in 1997.
SG&A expenses for the fourth quarter of 1998 were $13.6 million, or 5.7%
of net sales, compared to $17.1 million, or 9.5% of net sales, for the same
period in 1997.
Interest expense for the fourth quarter of 1998 was $8.0 million, or 3.4%
of net sales, compared to $4.9 million or 2.7% of net sales for the same
period in 1997. Interest expense was impacted by higher levels of borrowings
to support product launches plus the assumption of promissory notes related to
the combination of Sofedit and AETNA.
The income tax credit in the fourth quarter of 1998 was $1.6 million
compared to income tax expense of $0.1 million for the same period in 1997.
EBITDA was $7.9 million for the three months of the fourth quarter
compared to $17.4 million for the same period in 1997.
MS Acquisition Corp's total net sales for the twelve months ended
December 31, 1998 were $763.9 million, up from the $693.6 million reported for
the twelve months ended December 28, 1997. Europe's sales were up $54.1
million or 11.1% over last year.
Gross profit was $72.2 million, or 9.5% of net sales, for the twelve
months ended December 31, 1998 compared to $82.1 million, or 11.9% of net
sales, for the same period in 1997.
SG&A expenses for the twelve months ended December 31, 1998 were $57.3
million, or 7.5% of net sales, compared to $57.9 million, or 8.3% of net
sales, for the same period in 1997.
Interest expense for the twelve months ended December 31, 1998 was $27.5
million, or 3.6% of net sales, compared to $24.2 million or 3.5% of net sales
for the same period in the prior year.
The income tax credit for the twelve months ended December 31, 1998 was
$2.5 million compared to a credit of $0.8 million for the same period last
year.
EBITDA was $45.2 million for the twelve months ended December 31, 1998,
compared to $63.2 million for the same period in 1997.
MS Acquisition Corp's principal capital requirements for the twelve months
ended December 31, 1998 were the renovation of AETNA's Plant 7, which will be
used to stamp the majority of the new Saturn LS jobs, the purchase of
equipment for the launch of the AETNA Manufacturing Canada plant in London,
Ontario serving CAMI's J II platform, and modifications at AETNA's Plant 8 and
renovations at Plant 10 which services the Jeep Grand Cherokee.
AETNA Industries, Inc. recorded net sales for the fourth quarter of 1998
of $89.4 million, or 58.7% higher than fourth quarter 1997 sales of $56.4
million. Production sales of $48.6 million in the fourth quarter of 1998 were
down $7.3 million from $55.9 million in the fourth quarter of 1997 primarily
due to lost GM large pickup truck revenues and Chrysler Mini Van sales, and
the phase out of short term customer factory assist work.
Gross profit was $5.7 million, or 6.4% of net sales, for the fourth
quarter of 1998 compared to $5.7 million, or 10.2% of net sales, for the same
period in 1997. As a percent of net sales, the decrease in both sales and
profit was primarily the result of the impact of the ramp-up of the Grand
Cherokee production, and the loss of higher margin products such as the GM
large pick-up truck.
SG&A expenses for the fourth quarter of 1998 were $4.5 million, or 5.0% of
net sales, compared to $5.2 million, or 8.7% of net sales, for the same period
in 1997. The increase as a percent to sales is due principally to ongoing
launch costs for Saturn, WJ and CAMI platforms.
Interest expense for the fourth quarter of 1998 was $4.2 million, or 4.7%
of net sales, compared to $2.5 million or 4.4% of net sales for the same
period in 1997. Higher levels of short-term debt used to finance the launch
of the Saturn platform and other working capital requirements affected
interest expense.
The income tax expense in the fourth quarter of 1998 was $0.1 million as
compared to a credit of $0.4 million for the same period in 1997.
EBITDA was $3.7 million for the fourth quarter of 1998 compared to $4.9
million for the same period in 1997.
AETNA Industries, Inc.'s net sales for the twelve months ended
December 31, 1998 were $222.0 million, up $16.2 million from the $205.8
million reported for the twelve months ended December 28, 1997. Production
sales decreased $30.2 million, while tooling and prototype sales increased
$46.4 million.
Gross profit was $17.1 million, or 7.7% of net sales, for the twelve
months ended December 31, 1998 compared to $24.4 million, or 11.9% of net
sales, for the same period in 1997. The decline in gross profit was due
primarily to the strike at GM and the adverse impact of Chrysler's
model/factory change over of the Jeep Grand Cherokee. The eight week GM
strike that occurred from June through early August resulted in approximately
$5.3 million of lost revenue with an estimated $0.8 million loss in earnings
before interest and taxes (EBIT).
SG&A expenses for the twelve months ended December 31, 1998 were $18.2
million, or 8.2% of net sales, compared to $17.6 million, or 8.6% of net
sales, for the same period in 1997. As a percent of net sales, the decrease
was due to the interruption of production sales during the GM strike, along
with ongoing launch costs for Saturn, WJ and CAMI programs, and costs
associated with quoting a worldwide OEM platform launching in model year 2002.
Interest expense for the twelve months ended December 31, 1998 was $13.9
million, or 6.3% of net sales, compared to $11.1 million or 5.4% of net sales
for the same period in the prior year. Working capital requirements necessary
to fund tooling expenditures relating to three major program launches resulted
in higher interest expense year over year. The effect on sales of these new
jobs will be realized in 1999 as two of the new platforms were launched in the
4th quarter 1998 and the third platform is planned to launch in the 2nd
quarter 1999.
The income tax credit for the twelve months ended December 31, 1998 was
$4.0 million, with an effective tax rate of 26.4% compared to a credit of $1.4
million with an effective tax rate of 31.8% for the same period in the prior
year.
EBITDA was $7.9 million for the twelve months ended December 31, 1998,
down $8.9 million from $16.8 million for the same period in 1997.
AETNA's principal capital requirements for the twelve months ended
December 31, 1998 were the renovation of Plant 7, which will be used to
produce new Saturn LS components, the purchase of equipment for AETNA's
Canadian operations serving CAMI's J II platform, modifications in Plant 8 and
renovations in Plant 10 servicing the Grand Cherokee.