Universal Automotive Industries, Inc. First Quarter Sales Climb
17 May 1999
Universal Automotive Industries, Inc. First Quarter Sales Climb
CHICAGO, May 14 -- Universal Automotive Industries, Inc.
today announced that first quarter
1999 net sales increased 4.6% to $15.2 million compared to the first quarter
of 1998 sales of $14.5 million. Core business sales of brake parts rose 1%
compared to the same period of the previous year which was achieved by more
than overcoming a sales shortfall due to the bankruptcy in early 1998 of APS,
Inc. formerly one of the Company's largest customers. In the non-brake
category, sales of the Company's wholesale commodity business increased
76% compared to the first quarter of 1998. This was offset by a 21% decrease
in sales of the Company's UBP Csepel Iron Foundry compared to the 1998 first
quarter. Net loss for the quarter ended March 31, 1999 stood at $585 thousand
or $0.09 per share compared to net income of $42 thousand or $0.01 per share
in the same quarter of the previous year.
The overall gross profit margin for the first quarter of 1999 of 16.2%
is down compared to the 20.3% gross profit margin of the same 1998 quarter.
The first quarter reduction in gross profit was due to the Hungarian foundry
whose sales were adversely impacted by the economic crisis in Russia. A large
customer ceased orders for castings used in its end product destined for sale
in Russia. However, the foundry has received commitments for new business and
the Company believes that the losses will be substantially reduced in the
second quarter of 1999 and that the foundry will return to profitability
later in 1999.
Also contributing to the overall decline in gross profit was a decline,
compared to the first quarter of 1998, of the gross profit margin of the core
brake parts business as the Company secured two national buying groups as
customers in late 1998 at lower pricing in consideration of the groups'
selection of the Company as their exclusive value line drum and rotor supplier
for both groups, and friction supplier for one of the groups. Once all
members complete their switch to the Company's products within the next
few months, the Company believes that the additional sales volume will offset
the lower margins.
Arvin Scott, President and CEO, commented, "The substantial progress
achieved in the first quarter in growing the U.S. brake business was masked by
poor results in Hungary and the Canadian brake distribution business. The 1%
sales growth in the brake business was achieved in the face of the challenge
of replacing sales lost in 1999, as compared to the first quarter of 1998, due
to the bankruptcy of APS, Inc. and of compensating for the sales decline in
the Canadian market primarily due to adverse weather conditions. The net 1%
growth was the result of new business secured through the addition of
two national aftermarket groups in late 1998. Gross profit margins improved
consecutively month to month in the 1st quarter of 1999 in the core U.S. brake
business. I anticipate margins to recover to the historical levels in the
upcoming months. We believe Universal is emerging as one of the winners in
the ongoing consolidation in the industry."
This news release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to
be covered by safe harbors created hereby. Such forward-looking statements
involve known and unknown risks, uncertainties (including those risk factors
referenced in the Company's filings with the Securities and Exchange
Commission), and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance, or achievements of the Company expressed or implied by
such forward-looking statements.
The Company, headquartered in Chicago, specializes in the distribution
and manufacture of brake rotors and other brake parts, under its trademarks
"UBP - Universal Brake Parts(TM)," and "Ultimate(TM)" in the United States and
Canada.
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
Summary of Financial Results
(000's) except per share data
Three Months Ended March 31
1999 1998
Net Sales:
Brake parts $11,755 $11,648
Non-brake $3,444 $2,876
Total $15,199 $14,524
Gross profit $2,457 $3,032
Gross profit percent 16.2% 20.9%
Selling, general, and
administrative expenses $2,727 $2,459
Income (loss) from operations ($270) $573
Interest expense and other, net 511 475
Pretax income (loss) ($781) $98
Income tax provision (benefit) (196) 56
Net income (loss) (585) 42
Basic net income (loss)
per share ($0.09) $0.01
Weighted average shares
outstanding 6,771,647 6,769,425