Insilco Holding Co. Reports First Quarter 1999 Results
5 May 1999
Insilco Holding Co. Reports First Quarter 1999 Results
COLUMBUS, Ohio, May 4 -- Insilco Holding Co.
(OTC BULLETIN BOARD: INSL), today reported sales and results for its first
quarter ended March 31, 1999.
Sales were up 8% to $126.9 million for the 1999 first quarter, compared to
$117.3 million recorded in the year earlier first quarter. First quarter 1999
sales included $9.3 million from three acquisitions, Eyelets For Industry
("EFI"), a manufacturer of precision metal stampings, which was completed in
January 1999, and two Ireland-based cable assembly manufacturers which were
completed during the second half of 1998.
The Company reported EBITDA (earnings before interest, taxes,
depreciation, amortization, non-recurring income and expense, plus cash
dividends received from Thermalex, the Company's 50% owned joint venture) of
$16.4 million for the 1999 first quarter, compared to $16.0 million recorded
in the 1998 first quarter. First quarter 1999 results included $0.3 million
of EBITDA from the acquisitions.
BUSINESS DISCUSSION
The Company's Automotive Components Group reported 4% sales growth in the
1999 first quarter to $56.9 million, from $54.5 million reported in the year
earlier first quarter. EBITDA for the Group was $8.2 million and $8.6 million
for the first quarters of 1999 and 1998, respectively. The Group operating
performance reflects improved operating margins on sales of transmission
components and specialty vehicle heat exchangers. However, continued weak
demand for industrial radiators and aftermarket heat exchanger tubing resulted
in slightly lower EBITDA for the Group.
Thermalex, the Company's 50/50 joint venture with Mitsubishi Aluminum,
reported a 14% sales increase in the 1999 first quarter and $1.0 million of
equity income compared to $0.7 million in the first quarter last year. The
Company also reported that it received a $2.9 million cash dividend from
Thermalex in the first quarter, compared to a dividend of $1.3 million
received in the first quarter last year.
The Technologies Group reported sales of $55.4 million in the 1999 first
quarter compared to $50.2 million last year. The 1999 first quarter included
sales of $9.3 million from the EFI and Ireland acquisitions. Data-grade
connector sales were up 9%, reflecting higher sales of new products. However,
combined sales of power transformers and precision stamped parts were down 14%
in the quarter reflecting continuing weak demand world-wide for passive
electronic components. EBITDA for the Technologies Group was $7.0 million in
the quarter, compared to $8.1 million last year. First quarter 1999 results
include EBITDA of $0.3 million from the acquisitions. Performance was
negatively impacted by lower sales of precision stamped parts and power
transformers, as well as a small loss at the recently acquired Ireland
facilities, which was expected as those operations are integrated into the
Group and production is ramped up.
First quarter 1999 sales at Taylor Publishing were $6.5 million in its
seasonally weak first quarter, compared to $5.0 million recorded in the year
earlier first quarter. Taylor's EBITDA was ($0.4) million for the 1999 first
quarter, compared to EBITDA of ($0.2) million in the year ago first quarter,
primarily due to timing of the recognition of certain expenses.
The Company also reported sales of $8.1 million and $7.6 million in the
first quarter of 1999 and 1998, respectively, from its Other Business segment,
which includes operating units that fall below the quantitative reporting
thresholds for FAS 131 segment reporting. EBITDA for the segment was $0.7
million in the 1999 first quarter, compared to $0.4 million recorded in the
year earlier first quarter. The improvement in EBITDA was largely the result
of a smaller loss compared to a year ago recorded by the Company's McKenica
division, which manufactures tube mill capital equipment.
The company also noted that its cash flow from operating activities for
the 1999 first quarter was ($0.6) million, versus ($11.2) million in the year
earlier first quarter, primarily the result of improved working capital
management.
CEO COMMENTS
Robert L. Smialek, Insilco Chairman and CEO, said, "We were encouraged by
the higher operating margin earned on sales of transmission components in the
quarter. However, lower demand for both industrial radiators and higher
margin automotive aftermarket products overshadowed this performance
improvement. As we look forward, we are beginning to see some improvement in
the level of business activity in our industrial radiator markets, which have
been weak since the first quarter of last year. Also, we believe the slowdown
in aftermarket sales is temporary.
"We continue to be pleased with the solid growth of connector products
sales despite the continuing weakness in the global electronics markets.
Unfortunately, this weakness has substantially impacted sales of power
transformers and precision metal stampings. In response, we are continuing to
move forward with our restructuring initiatives aimed at reducing the cost
structure for the entire Technologies Group."
"At Taylor Publishing, current indications are that we are on target for
a solid yearbook season, both from an operational and a profitability
viewpoint. We look forward to reporting improved results for Taylor's
seasonally important second quarter."
Smialek concluded, "We continue to make progress in achieving our goal of
significantly reducing operating expenses in 1999. As evidence, the Company
has eliminated approximately 6% of its salaried positions since the 1998 third
quarter and we expect to achieve further reductions in our cost structure
throughout 1999. We are also pursuing a number of activities aimed at
lowering our outstanding debt."
REPORTED RESULTS
The Company reported a net loss of ($2.3) million applicable to common
shares, for its first quarter ended March 31, 1999, compared to net income of
$2.8 million and pro forma net income of ($1.6) million, recorded a year ago
in the first quarter. Loss applicable to common shares for the first quarter
of 1999 was ($1.47) per share compared to income applicable to common shares
of $0.66 per diluted share and ($1.00) pro forma per share in the prior year.
The statements made in this press release which are not historical facts
may be deemed forward looking statements, and, as such, are subject to certain
risks and uncertainties, including statements with respect to the Company's
long-term outlook; growth prospects; slowdown in either the automotive parts
or the electronics markets; the ability to improve operating efficiencies and
to further reduce expenses, possible acquisitions and divestitures, and
prospects for a strong second quarter at Taylor Publishing. It is important
to note that results could differ materially from those projected in such
forward-looking statements. Factors which could cause results to differ
materially include, but are not limited to the following: delays in new
product introductions, lack of market acceptance for new products, changes in
demand for the Company's products, changes in market trends, general
competitive pressures from existing and new competitors, adverse changes in
operating performance, changes in interest rates, and adverse economic
conditions which could affect the amount of cash available for debt servicing
and capital investments. Further information concerning factors that could
cause actual results to differ materially from those in the forward-looking
statements are contained from time to time in the Company's SEC filings,
including but not limited to the Company's report on Form 10-K for the
year ended December 31, 1998. Copies of the Company's SEC filings may be
obtained by contacting the Company or the SEC.
Insilco Holding Co., based in suburban Columbus, Ohio, is a diversified
manufacturer of industrial components and a supplier of specialty
publications. The Company's industrial business units serve the automotive,
electronics, telecommunications and other industrial markets, and its
publishing business serves the school yearbook market. It had revenues in
1998 of $535.6 million.
INSILCO HOLDINGS CO.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in millions)
For the Quarter Ended
Actual Pro forma (a)
March 31, March 31,
1999 1998 1998
Sales $126.9 $117.3 $117.3
Cost of sales, excluding
depreciation 96.0 85.6 85.6
Selling, general and
administrative
expenses, excluding
depreciation 17.4 17.0 17.0
Depreciation and amortization
expense 4.9 4.2 4.2
Significant legal expenses -- 0.3 0.3
Restructuring expenses 0.3 0.4 0.4
Operating income 8.3 9.8 9.8
Interest expense, net (11.2) (6.8) (11.3)
Equity in net income of Thermalex 1.0 0.7 0.7
Other income (expense), net 0.1 0.6 0.6
Income (loss) before
income taxes (1.8) 4.3 (0.2)
Income tax benefit (expense) 0.9 (1.5) --
Net income (loss) (0.9) 2.8 (0.2)
Preferred stock dividend (1.4) -- (1.4)
Net income (loss) available to
common $ (2.3) $ 2.8 $ (1.6)
Cash dividend from Thermalex $2.9 $1.3 $1.3
Earnings before other income,
interest, taxes, depreciation,
amortization, and one-time
items, plus cash dividend
from Thermalex $ 16.4 $ 16.0 $ 16.0
Capital expenditures $ 3.3 $ 5.8 $ 5.8
Income (loss) per share available
to common $(1.47) $ 0.66 $ (1.00)
(a) Pro forma to show results as if the August 17, 1998 merger with DLJ
Merchant Banking Partners occurred as of the beginning of the year.
INSILCO HOLDINGS CO.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in millions)
3/31/99 3/31/98 12/31/98
Assets
Current assets:
Cash and cash equivalents $ 8.5 7.8 7.4
Receivables, net 86.6 77.5 84.2
Inventories, net 81.4 72.6 64.6
Current portion of deferred taxes2.1 0.4 6.2
Prepaid expenses 11.5 9.0 4.4
Total current assets 190.1 167.3 166.8
Property, plant and equipment, net 117.8 114.8 114.7
Goodwill, net 23.9 13.2 13.6
Deferred taxes 6.7 0.6 1.9
Investment in unconsolidated
subsidiaries 9.9 9.4 9.0
Other assets and deferred charges 21.3 18.1 21.3
Total assets 369.7 323.4 327.3
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 39.3 39.1 34.5
Accrued expenses and other 73.5 61.6 58.2
Accrued interest payable 2.6 3.1 4.2
Current portion of long-term debt1.3 1.1 1.3
Current portion of long-term
obligations 1.0 5.1 1.9
Total current liabilities 117.7 110.0 100.1
Long-term debt 408.9 267.7 383.1
Other long-term obligations 46.0 41.9 46.3
Preferred stock 35.5 -- 34.1
Stockholders' deficit (238.4) (96.2) (236.3)
Total liabilities and
stockholders' deficit $ 369.7 323.4 327.3
INSILCO HOLDINGS CO.
(Unaudited)
(Amounts in millions)
Supplemental Segment Data
Quarter Ended
March 31,
1999 1998
Sales
Industrial Businesses:
Technologies Group $ 55.4 $ 50.2
Automotive Components 56.9 54.5
Total Industrial Businesses112.3 104.7
Specialty Publishing 6.5 5.0
Other 8.1 7.6
Total Sales $126.9 $117.3
EBITDA
Industrial Businesses:
Technologies Group $ 7.0 $ 8.1
Automotive Components 8.2 8.6
Total Industrial Businesses 15.2 16.7
Specialty Publishing (0.4) (0.2)
Other 0.7 0.4
Unallocated Corporate (2.0) (2.2)
Thermalex Cash Dividend 2.9 1.3
Total EBITDA $ 16.4 $ 16.0
Sales Growth vs. Prior Year
Industrial Businesses:
Technologies Group 10.4% --
Automotive Components 4.4% --
Total Industrial Businesses 7.3% --
Specialty Publishing 30.0% --
Other 6.6% --
Total Sales 8.2% --
EBITDA % of Sales
Industrial Businesses:
Technologies Group 12.6% 16.1%
Automotive Components 14.4% 15.8%
Total Industrial Businesses 13.5% 16.0%
Specialty Publishing -6.2% -4.0%
Other 8.6% 5.3%
Unallocated Corporate -- --
Thermalex Cash Dividend -- --
Total EBITDA 12.9% 13.6%