Johnstown America Reports Record Q1 Revenues and Earnings
26 April 1999
Johnstown America Reports Record First Quarter Revenues and Earnings
CHICAGO--April 26, 1999--Johnstown America Industries, Inc. today reported revenues of $298.4 million and net income of $14.6 million, or $1.44 per share, for the first quarter ended March 31, 1999. In the first quarter of 1998, revenues were $231.2 million, and net income was $14.0 million, or $1.40 per share, including a one-time gain of $10.0 million (net of tax), or $1.00 per share, from the settlement of patent infringement litigation.Earnings for the current quarter included an extraordinary non-cash charge (net of tax) of $0.3 million, or 3 cents per share, from the write-off of deferred financing costs in connection with the prepayment of $20 million in senior debt. Excluding the impact of non-recurring and extraordinary items, net income more than tripled in the first quarter of 1999 to $14.9 million, or $1.47 per share, compared to $4.0 million, or 40 cents per share, in the same period last year.
"Our record first quarter performance, following full year 1998 results that were our best ever, has positioned Johnstown America strongly for the future," said Thomas M. Begel, chairman, president and chief executive officer. "With the results we are generating, JAII continues to substantially reduce debt, while pursuing strategic acquisitions that strengthen our current operations and capitalize more fully on the opportunities resulting from outsourcing and supplier consolidation trends in the heavy-duty truck industry.
"A strong example of our acquisition strategy is the recently announced agreement to acquire Imperial Group, Inc., a leading supplier of body and chassis components to the heavy-duty truck industry. In addition to providing sales growth from synergies in marketing and distribution with our current truck components operations, Imperial broadens our presence in providing heavy-duty truck components and provides a platform for future acquisitions," he added. The Imperial acquisition is expected to close later this week.
JAII's Truck Components segment, which includes Gunite Corporation, Brillion Iron Works, Bostrom Seating and Fabco Automotive, recorded sales of $117.3 million for the first quarter of 1999 compared to $113.8 million a year ago. Operating income for the Truck Components segment was $14.0 million for the quarter, compared to $12.2 million a year ago.
"The companies that comprise our Truck Components segment continue to perform well. Currently, we are evaluating options for increasing capacity at Gunite, which has been operating at capacity for some time. Given the continued strength of the heavy-duty truck market, we feel it is critical to invest in opportunities that will allow us to better serve original equipment manufacturers, improve operating efficiencies and increase market share in the higher margin aftermarket business," Begel said.
Revenues from the Freight Car segment were $181.1 million in the first quarter of 1999, an increase of 54 percent over the $117.4 million reported a year ago. Freight Car segment operating income was $18.9 million for the quarter versus operating income of $4.6 million in last year's first quarter, excluding the non-recurring gain from a patent litigation settlement. The improvement in operating income was primarily due to increased selling values and higher volume.
First quarter 1999 shipments of 3,027 new and rebuilt freight cars were up 44 percent from the year-earlier total of 2,087. The order backlog on March 31, 1999 was 8,282 cars, compared to 9,462 at December 31, 1998 and 4,625 cars at the end of last year's first quarter. "Although backlog declined in the quarter for both our freight car operations and the industry overall, our production was at a record level and our backlog remains strong relative to historical periods," Begel said.
At March 31, 1999, the company had $36.5 million in cash on hand and there were no outstanding borrowings under the company's $75.0 million revolving credit facility. During the quarter, cash provided from operations was used to prepay $20 million of long-term senior bank debt. The company's debt to total capitalization ratio has improved from 69.7 percent at December 31, 1998 to 65.1 percent at March 31, 1999. Excluding non-recurring items, earnings before interest, taxes, depreciation and amortization in the current quarter were $38.9 million, up from $22.8 million in the prior year.
JAII, headquartered in Chicago, Illinois, has two operating segments. The Truck Components segment's current product lines include Gunite heavy-duty wheel-end components, Brillion custom iron castings, Bostrom truck and bus seating systems, and Fabco steerable drive axles and gearboxes. JAII's Freight Car segment, which includes Johnstown America Corporation, Freight Car Services, Inc. and JAIX Leasing Co., builds, rebuilds and leases freight cars used for hauling coal, autos, and agricultural and mining products.
The statements herein, which are not historical facts, including statements about future expectations, are "forward-looking statements" that involve certain risks and uncertainties that could cause actual future results to differ materially from those stated. These risks are spelled out more fully in the company's SEC filings. The company assumes no obligation to update its forward-looking statements. In addition, industry data included herein has been compiled by independent industry sources and accordingly the company assumes no responsibility for such data.
JOHNSTOWN AMERICA INDUSTRIES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended
March 31,
--------------------------
1999 1998
---- ----
Net manufacturing sales $295,882 $228,814
Leasing revenue 2,478 2,379
------------ ------------
Total revenue 298,360 231,193
Cost of sales-manufacturing 248,049 199,161
Cost of leasing 1,406 1,487
------------ ------------
Gross profit 48,905 30,544
Operating expenses (income):
Selling, general and administrative 14,360 13,162
Amortization 2,098 2,139
Gain on sale of leased freight cars -- (1,223)
Patent litigation settlement -- (16,750)
------------ ------------
Operating income 32,447 33,217
Interest expense, net 6,728 8,053
Interest expense-leasing 218 569
------------ ------------
Income before income taxes
and extraordinary item 25,501 24,595
Income taxes 10,585 10,552
------------ ------------
Net income before extraordinary item 14,916 14,043
Extraordinary item, net
of income taxes (299) --
------------ ------------
Net income $14,617 $14,043
============ ============
Diluted weighted average
equivalent shares outstanding 10,148 10,062
============ ============
Diluted earnings per share
before extraordinary items $1.47 $1.40
============ ============
Diluted earnings per share $1.44 $1.40
============ ============
JOHNSTOWN AMERICA INDUSTRIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
----------------------
1999 1998
---- ----
Cash Flows from Operating Activities:
Net income $14,617 $14,043
Depreciation 4,022 3,864
Amortization 2,731 3,130
Accrued postretirement benefits 708 696
Gain on sale of leased freight cars -- (1,223)
Patent litigation settlement -- (16,750)
Extraordinary item net of taxes 299 --
Deferred income taxes (312) (273)
------- -------
22,065 3,487
Change in operating assets
and liabilities (1,453) (14,404)
------- -------
Net cash provided (used) by
operating activities 20,613 (10,917)
Cash Flows from Investing Activities:
Capital expenditures (1,758) (1,797)
Leased assets additions (1,260) (2,249)
Sales of leased freight cars -- 24,320
Other 13 17
------- -------
Net cash provided (used)
by investing activities (3,005) 20,291
------- -------
Cash Flows from Financing Activities:
Revolving credit facility, net -- --
Payments of term loans
and capital lease (20,053) (881)
Leased assets loan facility, net (114) (19,649)
Deferred financing costs (205) --
Other 195 20
------- -------
Net cash used by financing activities (20,177) (20,510)
------- -------
Net decrease in cash
and cash equivalents (2,569) (11,136)
Cash and cash equivalents,
beginning of period 39,112 30,875
------- -------
Cash and cash equivalents,
end of period $36,543 $19,739
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JOHNSTOWN AMERICA INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
1999 1998
--------- ------------
Assets:
Cash and cash equivalents $36,543 $39,112
Accounts receivable, net 97,328 81,740
Inventories 63,512 66,678
Prepaid expenses and other 16,261 16,202
------- -------
213,644 203,732
Property, plant and equipment, net 113,088 115,193
Leasing business assets, net 20,599 19,523
Excess costs over assets
acquired and other intangible
assets, net and other 243,101 246,055
------- -------
$590,432 $584,503
======== ========
Liabilities and
Shareholders Equity:
Accounts payable $72,640 $65,583
Accrued expenses and other payables 74,402 71,851
Current maturities of long-term
debt and capital lease 701 9,511
------- ---------
147,743 146,945
Long term debt and capital lease,
less current maturities 43,254 54,486
Leasing business loan facility 8,586 8,711
Senior subordinated notes 182,250 182,338
Deferred income tax liabilities 34,259 34,571
Other long-term liabilities 48,770 47,743
------- -------
317,119 327,849
Shareholders' equity 125,570 109,709
------- -------
$590,432 $584,503
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JOHNSTOWN AMERICA INDUSTRIES, INC.
Supplemental Company and Industry Information
(Dollars in thousands)
Three Months Ended
March 31,
------------------
Company Information: 1999 1998
---- ----
EBITDA (Excluding non-recurring items):
Manufacturing Business $37,843 $20,500
Leasing Business(1) 1,087 2,289
------- -------
Total $38,930 $22,789
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Freight Car Operation Data(2):
Freight car backlog(3) 8,282 4,625
Freight car shipments 3,027 2,087
Industry Information:
Backlog(3) :
Freight cars(4) 55,680 63,453
N.A. Class 8 trucks(5) 257,600 206,921
Production:
Freight cars(4) 21,560 17,773
N.A. Class 8 trucks(5) 77,100 62,474
Orders:
Freight cars(4) 10,850 25,863
N.A. Class 8 trucks(5) 75,900 105,614
(1)Includes gains on sale of leased freight cars
(2)Includes new and substantially rebuilt freight cars
(3)As of end of period
(4)Includes only new freight cars
(5)Company estimate based on industry sources, actual number not
available for 1999