Autocam Reports Third Quarter and Nine-Month Results
10 May 1999
Autocam Reports Third Quarter and Nine-Month Results
KENTWOOD, Mich., May 10 -- Autocam Corporation
today reported its financial results for the three and nine months ended
March 31, 1999. The Kentwood, Michigan-based manufacturer of precision-
machined parts reported net income for the three months ended March 31, 1999
of $2,042,000, or 32 cents per diluted share, on sales of $51,181,000, versus
net income of $2,482,000, or 38 cents per diluted share, on sales of
$24,790,000 for the three months ended March 31, 1998. For the nine months
ended March 31, 1999, the Company earned $4,319,000, or 66 cents per diluted
share, on sales of $129,605,000, versus earnings of $5,722,000, or 88 cents
per diluted share, on sales of $64,014,000 for the nine months ended March 31,
1998.
The doubling of sales when comparing the third fiscal quarters reported
was due primarily to the acquisition of Frank & Pignard SA ("F&P"), a French
manufacturer of precision-machined components, in October 1998. F&P added $25
million and $51 million in sales, primarily of diesel fuel, power steering and
braking system components, during the three and nine months ended March 31,
1999, respectively, versus the same period in fiscal 1998. Results for the
fiscal 1999 third quarter reflect a 6 cents per diluted share benefit due to a
reduction of the Company's deferred tax liability as a result of a reduction
in the French Federal statutory income tax rate from 41.67% to 40%.
Autocam President John C. Kennedy indicated that the results were better
than the Company had anticipated three months ago. "We improved our operating
margins over those reported in the second quarter through continuous
improvement efforts that led to improved manufacturing efficiencies and
reductions in temporary labor and premium freight charges," Kennedy said. "We
are encouraged by the cost improvements on new programs and look forward to
continued margin expansion on these programs as volumes increase and
additional process efficiencies are realized."
The Company's continuous improvement efforts have already begun to take
hold at F&P where employment has been reduced over 10% since October 1998 due
to process related improvements. "Although our new European operations have
strong technical capabilities and are highly-regarded by its customers, there
exists an opportunity for significant margin improvement through the
implementation of the principles of Toyota Production Systems (TPS), including
synchronous and cellular manufacturing concepts," Kennedy said. "The costs of
implementing these concepts through the reconfiguration of our manufacturing
operations and training of employees adversely impacted profits in the current
quarter, but should result in marked improvement in profitability in fiscal
2000."
The Company announced that it will close its Gaffney, South Carolina
facility by September 1999 in a move that will eliminate approximately
$750,000 in annual costs. The Company plans to move the production of
products currently manufactured in Gaffney to its Dowagiac, Michigan facility.
Kennedy indicated that no expansion of the Dowagiac facility was necessary to
accommodate the relocated business. The Company will record an after-tax
charge of approximately $210,000 (3 cents per share) during the fourth quarter
of fiscal 1999 in connection with the closing to cover anticipated severance
and moving costs.
Kennedy remains optimistic that the Company will continue its improvement
of operating margins through the fourth quarter, and that earnings, before
giving effect to the costs to close the South Carolina facility, will match or
slightly exceed fourth quarter fiscal 1998 levels. Management plans to
continue implementation of TPS techniques at all domestic and international
facilities which are expected to reap further benefits in the areas of labor
efficiency and inventory management. Kennedy is also beginning to see the
benefits of Autocam's global market presence in the automotive precision-
machining industry. "Autocam recently received a contract from a major tier-
one supplier for precision components to be used in its electronic power-
assisted steering system," Kennedy reported. "This new program is expected to
add in excess of $25 million in sales during fiscal 2003."
Autocam manufactures precision-machined components primarily used in fuel,
power steering and braking systems and electric motor assemblies for the
transportation industry, and ophthalmic and cardiovascular devices for the
medical industry. Autocam's common stock trades on the Nasdaq National Market
under the symbol "ACAM". For more information on the Company, visit our
Internet website at http://www.autocam.com.
This release may contain forward-looking statements relating to future
financial and other results. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements that are other than statements
of historical facts. Such forward-looking statements may be identified by the
use of the words "anticipates," "estimates," "expects," "intends," "plans,"
"predicts," "projects," and similar expressions. These cautionary statements
and any other cautionary statements that may accompany the forward-looking
statements expressly qualify all such statements. Forward-looking statements
involve risk and uncertainties that could cause actual results or outcomes to
differ materially form those expressed in the forward-looking statements.
AUTOCAM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
1999 1998
$$ % $$ %
Sales $51,181 100.0% $24,790 100.0%
Cost of sales 43,149 84.3% 18,286 73.8%
Gross profit 8,032 15.7% 6,504 26.2%
Selling, general and
administrative 2,727 5.3% 1,721 6.9%
Income from operations 5,305 10.4% 4,783 19.3%
Interest and other
expense, net 1,995 3.9% 801 3.2%
Minority interest
in net income 286 0.6% 81 0.4%
Income before tax provision 3,024 5.9% 3,901 15.7%
Tax provision 982 1.9% 1,419 5.7%
Net income $2,042 4.0% $2,482 10.0%
Basic net income per share $0.32 $0.39
Diluted net income per share $0.32 $0.38
Basic weighted average
shares outstanding 6,307 6,350
Diluted weighted average
shares outstanding 6,442 6,581
For the Nine Months Ended
March 31,
1999 1998
$$ % $$ %
Sales $129,605 100.0% $64,014 100.0%
Cost of sales 109,454 84.5% 48,786 76.2%
Gross profit 20,151 15.5% 15,228 23.8%
Selling, general
and administrative 7,199 5.5% 4,145 6.5%
Income from operations 12,952 10.0% 11,083 17.3%
Interest and other
expense, net 5,090 3.9% 2,056 3.2%
Minority interest
in net income 623 0.5% 81 0.1%
Income before tax provision 7,239 5.6% 8,946 14.0%
Tax provision 2,920 2.3% 3,224 5.1%
Net income $4,319 3.3% $5,722 8.9%
Basic net income per share $0.68 $0.90
Diluted net income per share $0.66 $0.88
Basic weighted average
shares outstanding 6,362 6,326
Diluted weighted average
shares outstanding 6,545 6,521
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1999 1998
Assets:
Cash $1,541 $1,644
Accounts receivable 42,408 11,680
Inventories 15,450 6,389
Other current assets 1,586 1,088
Total current assets 60,985 20,801
Fixed assets, net 132,460 64,421
Goodwill and other
intangible assets 26,376 14,366
Other assets 12,877 13,861
Total assets $232,698 $113,449
Liabilities and
shareholders' equity:
Current maturities of
long-term debt $2,437 $6,554
Accounts payable 22,548 7,831
Accrued liabilities 11,298 3,290
Total current liabilities 36,283 17,675
Long-term obligations,
net of current maturities 118,496 37,851
Deferred taxes 26,394 10,051
Other liabilities 5,619 561
Minority interest 2,382 2,250
Shareholders' equity 43,524 45,061
Total liabilities and
shareholders' equity $232,698 $113,449