Denison International Reports Results for the First Quarter
29 April 1999
Denison International Reports Results for the First Quarter Ended March 31, 1999
MARYSVILLE, Ohio--April 29, 1999--Denison International plc today reported results for the quarter ended March 31, 1999. Net revenues for the period were down 2.4% from the same period in 1998, while net income declined by 25.5%. Sales for the period were $36.5 million, compared with $37.4 million for 1998. First quarter net income was $2.9 million, or 26 cents per diluted share, compared with $3.9 million, or 35 cents per diluted share, last year.A softening worldwide hydraulics market impacted both sales and income, with income further impacted by management's decision to curtail manufacturing production to reduce inventory levels. During the first quarter inventories were reduced by nearly $2.0 million, or five-percent, versus December 31, 1998 balances.
Denison president and CEO David Weir noted that the softness in the industry was anticipated based on the order receipts for the fourth quarter of 1998. "Based on the order intake in the fourth quarter, we knew that we were going to have a slow start to the year. In the past two months we have seen improvement in the rate of new orders received, which increased 21% over the fourth quarter 1998, and we are anticipating an improvement in revenues and income in the second quarter over the results achieved in the first quarter."
Segment information
On a segment basis versus first quarter 1998 results, sales in Europe were up $2.2 million, or 11.8%, resulting primarily from the results for Lokomec Oy, acquired late in 1998, while sales in North America and the Asia-Pacific region were down by $2.6 million and $0.5 million, or 17.9% and 11.6%, respectively. European net income of $3.0 million was 15.7% ahead of first quarter 1998, primarily due to the results of Lokomec, while net income for North America was $0.1 million, a 94.1% decrease versus the first quarter of 1998, resulting from lower revenues from distributors combined with the impact of curtailing production to reduce inventories. The Asia-Pacific region recorded a loss of $0.3 million, as compared with breakeven results for the first quarter of 1998.
"Our European business performed well in the quarter," says Weir, "but in North America shipments were down due to de-stocking by distributors. However, new orders received from distributors were up sharply from last quarter, hopefully indicating that this process is complete. In the quarter we invested $2.9 million in capital equipment and spending on new product development was one and one half cents per share higher than the same quarter last year. This, combined with the reductions in the company's cost base, positions Denison well for the expected upturn in the hydraulics market."
Weir also added, "We are extremely pleased with the results from the Lokomec acquisition; to date they have exceeded our expectations. With our strong cash and liquidity position, one of our main focuses for the remainder of 1999 is to complete additional accretive acquisitions."
Denison International plc designs, manufactures, distributes and services highly engineered fluid power systems and components. Denison distributes its products and services globally to a diverse group of original equipment manufacturers and end users in a broad array of industrial applications, including machine tools and material handling equipment, mobile construction, agricultural and utility equipment, and marine applications, including military equipment.
Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Shareholder, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
USD-(000's) Three Months Ended March 31
1999 1998
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Net Sales $ 36,469 $ 37,371
Cost of Sales 23,908 23,509
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Gross Profit 12,561 13,862
% 34.4% 37.1%
S,G&A 8,625 8,540
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Operating Income 3,936 5,322
% 10.8% 14.2%
Other Income - -
Net Interest Income 71 158
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Income Before Taxes 4,007 5,480
Tax Provision 1,121 1,603
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Net Income $ 2,886 $ 3,877
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Basic Earnings per Share $ 0.26 $ 0.35
Diluted Earnings per Share $ 0.26 $ 0.35
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
USD-(000's) March 31, December 31,
1999 1998
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Current assets:
Cash & cash equivalents $ 25,699 $ 35,799
Accounts receivable, net 30,689 29,716
Inventories 36,361 38,236
Other current assets 4,301 4,513
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Total current assets 97,050 108,264
Property, plant & equipment, net 25,774 24,726
Other assets 9,097 10,467
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Total assets $131,921 $143,457
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Current liabilities:
Notes payable to bank $ 4,511 $ 12,532
Accounts payable and other
accrued liabilities 28,413 29,300
Total current liabilities 32,924 41,832
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Noncurrent liabilities 21,831 23,098
Shareholders equity:
Retained earnings 77,291 74,405
Cumulative translation adjustment (6,822) (2,575)
Other shareholders equity 6,697 6,697
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Total shareholders equity 77,166 78,527
Total liabilities and
shareholders equity $131,921 $143,457
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