Wescast Industries Inc. Posts 43 Percent Higher Q1 Profits
20 April 1999
Wescast Industries Inc. Posts 43 Percent Higher Q1 Profits
BRANTFORD, Ontario--April 20, 1999--Wescast Industries Inc., (TSE - WCS.A, Nasdaq - WCSTF), the world's largest exhaust manifold producer announces first quarter profits.Highlights
1999 first quarter net income increased 43 percent to $14.9 million compared to $10.4 million in 1998. Basic earnings per share were $1.13 compared to the 1998 first quarter earnings per share of $.80.
Sales and production were at record levels.
Wescast was honored with two customer awards during the quarter:
| - | GM awarded 184 global suppliers the "GM Supplier of the Year Award" for 1998. Wescast was one of only 6 suppliers to receive the GM Supplier of the Year Award for the sixth year. |
| - | Wescast was one of 47 global suppliers to Ford to receive the first annual World Excellence Award - Silver for two categories, quality and cost |
Sales in Q1 1999 of $84.1 million represent a 31 percent increase over the first quarter of 1998 due to new program launches and continued strong automotive sales. In Q1 1999, the Company sold 3.4 million manifolds compared to 2.9 million in Q1 1998.
Operating Results
Wescast's 1999 Q1 operating income totaled $23.9 million compared to 1998's Q1 income of $15.6 million. In Q1 1999 the Company machined 57 percent or 1.9 million of the manifolds produced during the quarter. This compares to 51 percent or 1.5 million in Q1 1998. This significant change in product mix, the additional volume of manifolds sold, and a continued focus on quality and improved productivity helped offset the ramp-up costs of new machine lines.
Balance Sheet and Financial Position Results
As of March 28, 1999, Wescast had a strong working capital ratio of 4:1 and a cash position of $82 million.
Capital spending totaled $10.0 million in Q1 1999 compared to $12.0 million in Q1 1998. The Company plans to invest approximately $110 million in 1999 for the new foundry, new machine lines, and improved production equipment. These investments will enable the Company to generate additional machining and casting revenues and provide further opportunity for continued operating efficiencies.
Wescast Industries Inc. is the largest manufacturer and supplier of exhaust manifolds for passenger cars and light trucks in the world. In addition, the Company produces pressure retaining high-alloy cast steel pump components for the petrochemical, pulp and paper and food processing industries. The Company has five facilities throughout Southwestern Ontario and employs about 1,600 people.
A conference call has been arranged for Tuesday, April 20, at 1:00 p.m. EST. (416) 641-6714.
Wescast Industries Inc. Financial Statements
Consolidated Statement of Earnings
(in thousands of Canadian dollars, except per share figures)
(Unaudited Canadian GAAP)
Three months ended
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March 28 March 29
1999 1998
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Sales $84,099 $64,397
Cost of sales 54,573 4
-------- --------
Gross profit 29,526 19,997
Selling, general and administration 5,175 3,635
Research, development and design 484 742
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Operating income 23,867 15,620
Other (income) expense
Interest expense 147 19
Investment income (1,134) (811)
Other income and expenses 939 329
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Income before income taxes 23,915 16,083
Income taxes 9,018 5,683
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Net income $14,897 $10,400
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Net earnings per share
- basic $1.13 $0.80
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-------- --------
- fully diluted $1.08 $0.77
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NOTES TO FINANCIAL STATEMENTS
Note 1: Basic earnings per share is calculated based on the
weighted average number of common shares outstanding (1999 -
13,155,255 shares; 1998 - 13,085,779 shares). Fully diluted
earnings per share is calculated based on the fully diluted
weighted average number of common shares outstanding (1999 -
13,994,292 shares; 1998 - 13,715,612 shares).
Note 2: Certain figures for 1998 have been reclassified to
conform with the presentation adopted in 1999.
Wescast Industries Inc. Financial Statements
Consolidated Balance Sheet
(in thousands of Canadian dollars)
(Unaudited Canadian GAAP)
As at
--------------------
March 28 March 29
1999 1998
--------------------
Current Assets
Cash and cash equivalents $82,002 $21,306
Short term investments 0 21,550
Receivables 53,886 53,424
Inventories 16,664 18,248
Prepaids 219 227
Due from affiliated companies 0 11
-------- --------
152,771 114,766
Property and equipment 144,830 123,590
Intangibles and other 4,063 224
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$301,664 $238,580
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-------- --------
Current liabilities
Payables and accruals $30,382 $26,809
Income taxes payable 3,422 1,605
Current portion of long term debt 1,218 408
Due to affiliated companies 109 0
-------- --------
35,131 28,822
Long term debt 5,189 827
Accrued pension benefits 4,830 3,456
Deferred income taxes 4,189 3,258
-------- --------
49,339 36,363
-------- --------
Shareholders' equity
Capital stock 106,833 104,880
Retained earnings 145,492 97,337
-------- --------
252,325 202,217
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$301,664 $238,580
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Wescast Industries Inc. Financial Statements
Consolidated Statement of Cash Flows
(in thousands of Canadian dollars) (Unaudited Canadian GAAP)
Three months ended
-----------------------
March 28 March 29
1999 1998
-----------------------
Cash derived from (applied to)
Operating activities
Net income $14,897 $10,400
Add (deduct) items
not requiring cash:
Depreciation and amortization 4,458 3,428
Amortization of bond issue costs 7 0
Deferred income taxes 273 339
(Gain)/loss on disposal of assets 1 (6)
Pension expense 85 384
------- -------
19,721 14,545
(Increase)/decrease in
non-cash working capital 6,883 (18,692)
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Total cash from operations 26,604 (4,147)
------- -------
Financing activities
Issue of long term debt 140 0
Repayment of long term debt (211) 0
Payment of obligations
under capital lease (117) (115)
Issuance of share capital under
Employee Share Purchase Plan 98 0
Payments from Employee's Share
Purchase Plan loans 3 0
Issuance of share capital
under Stock Option Plan 525 11
Dividends paid (1,051) (1,047)
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Total financing activities (613) (1,151)
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Investment activities
Purchase of property and equipment (10,070) (11,904)
Purchase of short term investments 0
Purchase of licence (74)
Restricted cash from long term debt 1,119 0
Proceeds on sale of
short term investments 36,892 10,016
Proceeds on disposal of assets 13 20
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Total investment activities 27,880 (1,868)
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Net increase in cash
and cash equivalents 53,871 (7,166)
Cash and cash equivalents
Beginning of period 28,131 28,472
End of period $82,002 $21,306
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NOTES TO FINANCIAL STATEMENTS
Note 1: The Consolidated Statement of Cash Flows for the
three month period ended March 28, 1999 have been restated to
reflect the retroactive adoption of the CICA's revised
guidelines for cash flow statements.