Bonded Motors Inc. Announces First Quarter Results
30 April 1999
Bonded Motors Inc. Announces First Quarter Results
LOS ANGELES, Calif.--April 29, 1999--Cost Reduction Programs Continuing;
Industrial Development Bond Approved;
Interactive Web Site Developed
Aaron Landon, Chairman of the Board and Chief Executive Officer of Bonded Motors Inc. Thursday announced operating results for the first quarter ended March 31, 1999.
Revenues rebounded in the first quarter, increasing 14% to $9.7 million for the quarter vs. $8.5 million for the quarter ended March 31, 1998, and increasing 30% over the fourth quarter ended Dec. 31, 1998. Loss from operations for the first quarter was $246,875 and the net loss for the quarter was $270,265, or $.09 per share.
Commenting on the results, Landon noted: "The solid quality improvement and cost reduction programs we have put in place, together with robust sales, have enabled us to launch into 1999 with strong momentum.
"We are continuing our expansion plans for the purchase of property adjacent to our Los Angeles manufacturing facility. The State of California has approved our issuance of a $5.1 million Industrial Development Bond to finance this project, and we expect the bond transaction to close in the second quarter.
"Recently, Bonded Motors initiated an online order entry system (www.bondedmotors.com) which we believe makes us the first engine remanufacturer with such a system. The order entry system is currently being tested with select customers. By year's end, wholesale customers will be able to look up and order engines, check inventory levels and even download installation tips.
"While e-commerce of remanufactured engines will never match revenues of someone like Amazon.com , we believe that online ordering in the automotive aftermarket will grow significantly in coming years.
"During the first two months of the quarter production was reduced in order to get back to the basics of producing a quality engine. This lower production caused labor and overhead content to rise somewhat on a per unit basis, and the high level of repair of defective engines also caused labor and overhead to rise. Production was increased in March, and we expect to see lower manufacturing costs in the coming quarters.
"Selling and distribution expense continued to remain high. Improvements have been made, and we expect continued progress in this area. Freight cost is the biggest single expense item in this category.
"General and Administrative expense actually declined slightly from the year ago quarter. While there is still a long road ahead, we expect, for the balance of 1999, to see a return to profitability, further quality improvements and cost savings, and continued growth," Landon concluded.
Bonded Motors will hold a conference call Thursday, April 29, at 5 p.m. ET (2 p.m. PT) to discuss operation results with investors. To participate, dial 800/388-8975 a few minutes before the call begins.
Bonded Motors is a remanufacturer of car and light truck engines with headquarters in Los Angeles, manufacturing facilities in California and Georgia, and Distribution Centers in California, Washington, Colorado, Ohio, New York, and Georgia.
The company's principal customers are automotive parts chain stores, such as Pep Boys -- Manny, Moe and Jack ; CSK Automotive (Checker, Schucks, Kragen); Paccar Automotive (Grand's and Al's Auto Parts) ; and Genuine Parts/NAPA .
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: The statements in this release regarding management changes, identification of production difficulties, future expectations and the expansion of the company's facilities and markets are subjective or forward looking statements that include risks and uncertainties, including but not limited to product demand and development, technological advancements, impact of competitive products and pricing, growth in targeted markets, manufacturing capacity, risks of foreign operations, ability to integrate and leverage acquisitions, and other information detailed from time to time in the company's Securities and Exchange Commission filings.
BONDED MOTORS INC.
Statement of Earnings
(Unaudited)
For the Three Months Ended
March 31
1999 1998
Net sales $ 9,766,974 8,508,042
Cost of sales 8,545,083 6,984,237
Gross profit 1,221,891 1,523,805
Selling, general and
administrative expenses 1,468,766 1,082,596
Earnings (loss) from operations (246,875) 441,209
Other (expense) income:
Interest expense (164,696) (110,424)
Interest income 2,079 2,085
Other -- (1,896)
Earnings (loss) before
income taxes (409,492) 330,974
Income tax benefit (expense) 139,227 (125,280)
Net earnings (loss) $ (270,265) 205,694
Basic earnings (loss) per share $ (0.09) 0.07
Diluted earnings (loss) per share (0.09) 0.06
Weighted average common shares
outstanding - basic 3,067,000 3,039,000
Weighted average common and common
equivalent shares outstanding
- diluted 3,067,000 3,188,000
BONDED MOTORS, INC.
Balance Sheets
March 31, 1999
(Unaudited)
Assets
Current assets:
Cash $ 129,850
Trade accounts receivable (less allowance
for doubtful accounts of $399,293) 4,920,160
Inventories:
Parts 2,303,543
Work in process 1,117,511
Finished goods 5,097,196
8,518,250
Deferred tax assets 692,745
Prepaid expenses and other current assets 521,589
Prepaid income taxes 556,957
Total current assets 15,339,551
Property and equipment, at cost:
Machinery and equipment 3,431,564
Furniture and fixtures 626,029
4,057,593
Less accumulated depreciation 1,667,846
Net property and equipment 2,389,747
Goodwill, less accumulated
amortization of $ 34,430 177,449
Deferred tax assets 1,812,124
Other assets 17,407
$ 19,736,278
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of notes
payable to bank $ 338,505
Accounts payable 2,846,548
Accrued expenses 635,339
Accrued warranty obligations 1,203,829
Current installments of capital lease
obligations 9,160
Total current liabilities 5,033,381
Notes payable to bank, excluding
current installments 333,116
Long-term debt 7,167,879
Capital lease obligations, excluding
current installments 11,976
Shareholders' equity
Preferred stock, no par value.
Authorized 1,000,000 shares;
none issued and outstanding --
Common stock, no par value.
Authorized 10,000,000 shares;
issued and outstanding 3,067,140 shares 5,040,719
Additional paid-in capital 104,000
Retained earnings 2,145,207
Notes receivable from exercise of
stock options (100,000)
Total shareholders' equity 7,189,926
$ 19,736,278