Citation Corporation Q2 EPS Higher Than Analyst Expectations
20 April 1999
Citation Corporation Second Fiscal Quarter EPS Higher Than Analyst Expectations
BIRMINGHAM, Ala.--April 20, 1999--Citation Corporation today reported fully diluted earnings per share (EPS) for its fiscal second quarter of $0.37 versus analyst expectations for the quarter of $0.36. This is the second consecutive quarter in fiscal 1999 that Citation has reported results better than analyst expectations. EPS for the fiscal 1998 second quarter was $0.47.Sales for the fiscal second quarter were $213.4 million, a $20.3 million increase or 10.5 percent over the $193.1 million reported in the fiscal 1998 second quarter. Excluding the effect of companies acquired after the beginning of the second quarter of fiscal 1998, sales for the second quarter declined by 8.3 percent from the prior year period.
Citation had previously indicated that revenue from construction and mining equipment, farm implement, and oil tool markets declined beginning late in fiscal 1998 and continuing in fiscal 1999. Automotive, heavy truck, and aerospace shipments continue to be very strong.
Net income for the second fiscal quarter was $6.6 million, versus $8.4 million in the second quarter of fiscal 1998, a reduction of $1.8 million or 22 percent. Net income for the Automotive Group increased by $1.1 million during the quarter versus last fiscal years second quarter, on a sales increase of approximately $16.2 million. This includes Citation - Marion, acquired December 28, 1998.
"We are pleased by the improvement in our operations despite continuing softness in some of our markets," F.F. "Rick" Sommer, President and CEO, said. "Our Automotive Group is performing at a high level of capacity with sales before acquisitions up about eight percent. We have been successful in starting up a number of new products. Further, Citation - Marion, acquired at the end of December is doing somewhat better than expectations.
"Both the Industrial Iron and Industrial Steel Groups are affected strongly by the decline in construction equipment, mining equipment, farm implements, and oil tool markets. Overall in these two groups, pre-acquisition sales are off approximately $22 million. However, we are beginning to see the operations strengthen and we are expecting new work late in the year to further improve operations. Custom Products, acquired this year, is performing to expectations although we don't expect it to be accretive to earnings until fiscal 2000.
"Looking forward," Mr. Sommer said, "we continue to be optimistic. Organizational moves we took at the beginning of this year are beginning to bear fruit. We have improved financial controls and are making more efficient use of our information systems. Our centralized marketing effort is bringing in new work that should begin to have a positive impact in the fourth quarter.
"Automotive, heavy truck, and aerospace business continues very strong and our operations are generally improving performance even in the industrial areas where heavy capital goods markets have been slow. While we don't expect a significant pick up of business in the heavy capital goods sector this year, new business that I have previously mentioned should begin to overcome some of the softness before the end of the year. On an operating basis, we continue to anticipate that we will meet expectations for the year," Mr. Sommer said.
For the first half of fiscal 1999, Citation EPS was $0.57 versus $0.75 for the first half of fiscal 1998, a 24 percent decrease.
Sales for the first half of fiscal 1999 set a new all-time record of $398.2 million, a $34.9 million increase or 9.6 per cent, over $363.3 million in fiscal 1998. Excluding the effect of acquisitions, sales were down 6.8 percent or approximately $25 million.
Net income for the first half of fiscal 1999 was $10.2 million versus $13.5 million for the first six months of fiscal 1998, a decrease of 24.9 percent.
"In the Aerospace and Technology Groups, Citation Precision continues to work at a high level of capacity as demand for aerospace investment castings is strong.
Citation Corporation is a supplier of aluminum, iron, and steel castings, steel forgings, and machined and assembled components to capital and durable goods industries. The Company currently operates 21 manufacturing divisions in 10 states and employs more than 7,000 employees. Sales for fiscal 1998 were $724 million.
Note: The statements in this news release that are not historical
fact are forward-looking statements that involve risks and
uncertainties including, but not limited to, changes in the
economy, demand for durable goods, pricing by competitors, entry
of new competitors, the effect of acquisitions, and other risks
detailed in the Company's Form 10-K for the fiscal year ended
September 27, 1998, and other filings with the Securities and
Exchange Commission.
CITATION CORPORATION
Earnings Highlights
(All figures in Thousands except Earnings Per Share and Shares
Outstanding)
(Unaudited)
Three Months Ended
March 28, March 29,
1999 1998
---- ----
Sales $213,383 $193,091
Gross Profit 35,293 34,090
S,G&A Expenses 18,749 16,613
Operating Income 16,544 17,477
Interest Expense 5,614 3,700
Income Before Tax 10,930 13,777
Income Taxes 4,372 5,373
Net Income $6,558 $8,404
====== ======
Earnings per Share-Basic $0.37 $0.47
===== =====
Weighted Avg. Number of
Shares Outstanding-Basic 17,889,113 17,803,366
Earnings per Share-
Fully Diluted $0.37 $0.47
===== =====
Weighted Avg. Number of
Shares Outstanding-Diluted 17,945,092 18,051,353
Six Months Ended
March 28, March 29,
1999 1998
---- ----
Sales $398,243 $363,314
Gross Profit 61,961 61,088
S,G&A Expenses 34,784 31,994
Operating Income 27,177 29,094
Interest Expense 10,257 6,925
Income Before Tax 16,920 22,169
Income Taxes 6,798 8,646
Net Income $10,152 $13,523
======= =======
Earnings per Share-Basic $0.57 $0.76
===== =====
Weighted Avg. Number of
Shares Outstanding-Basic 17,889,113 17,792,346
Earnings per Share-
Fully Diluted $0.57 $0.75
===== =====
Weighted Avg. Number of
Shares Outstanding-Diluted 17,942,775 18,031,138