BlueStar Announces Second Quarter Revenues of $39 Million
19 May 1999
BlueStar Announces Second Quarter Revenues of $39 Million
VANCOUVER, British Columbia--May 18, 1999-- BlueStar Battery Systems International Corp. (ASE:BHW.) ("BlueStar") announces revenues for the six months ended March 31, 1999, of $83.1 million and earnings before interest, income taxes and amortization ("EBITDA") of $3.0 million. Cash flows from operations amounted to $1.1 million for the first six months of fiscal 1999.Revenues were $39.2 million for the three-month period ended March 31, 1999, a 33.9 percent increase, when compared to $29.3 million for the corresponding period in 1998. This increase in revenues reflects the Company's continued internal growth and growing market share of the North American aftermarket.
Average gross margins, after adjusting for research and development expenditures, increased to 14.25 percent for the Second Quarter of 1999, as compared to 6.5 percent for the corresponding second Quarter of 1998. During the past eighteen months, average gross margins, after adjusting for research and development expenditures, have continued to increase quarter over quarter, increasing from 5.45 percent for the first quarter of 1998; to 6.51 percent for the second Quarter; 7.36 percent for the third Quarter; to 8.94 percent in the fourth Quarter of 1998; to 11.89 percent for the first Quarter of 1999 and increasing to 14.25 percent for the second Quarter of fiscal 1999. These increasing margins are a result of lower product costs from volume purchases, freight reductions and streamlining of the Company's infrastructure across North America. Gross margins for the six months ended March 31, 1999, amounted to $10.8 million, as compared to $3.8 Million for the same period in 1998.
"There has been a tremendous improvement in the gross margins over the past eighteen months. Gross margin improvements and increasing operating earnings are expected to continue on a quarter over quarter basis as efficiencies, created by the size and increased volume purchasing power of the BlueStar ISN and its customer base, are achieved," states Mikel Rhodes, the Company's Chief Financial Officer.
The Company reports EBITDA of $3.0 million for the six-month period, as compared to a loss of $0.9 million for the same period in 1998. Cash flow from operations reflects a positive swing of $1.1 million, and reflects a positive swing of $3.3 million, from the negative cash flow from operations of $2.2 million for the corresponding period in 1998. These improvements are a result of overall general improvements in the Company's business units and the overall better working capital management.
"In addition to the impact of completing the integration of the North American operations, improved financial results can be achieved through better control over selling and administrative costs and inventory levels, as well as through operational efficiencies and economies of scale to capitalize on the network of approximately 350 sales and service locations currently in the BlueStar ISN," added Mikel Rhodes.
"We are very encouraged by the tremendous results for the first six months of the 1999 fiscal year. The integration process continues to identify opportunities to streamline the North American operations and further enhance BlueStar's profitability," says Darwin Sauer, President and CEO of BlueStar.
"Our business to business customer base continues to expand with the recent signing of Waste Management in Canada, and the addition of Amptralease in the United States as participants and customers of the BlueStar ISN," adds Darwin Sauer.
"The customer and supplier base are being rationalized with the integration of the Company's operations, and the development and implementation of the E-based ISN initiatives. Over the past six months, we have added major customers such as United Parcel Services ("UPS") and Amway of Canada in the First Quarter and Waste Management in Canada and Amptralease in the Second Quarter," added Darwin Sauer.
BlueStar is a developer, specialized manufacturer, assembler and marketer of an extensive range of products sold in the international marketplace. Over the past two years, BlueStar's distribution and marketing sector has implemented a consolidation and acquisition strategy, resulting in the organization being introduced to new quality product lines and establishing new relationships with leading worldwide manufacturers of battery and battery-related products. During this period, the Company has evolved into one of North America's largest integrated sourcing networks, providing the BlueStar organization and its supplier and customer participants with sales, marketing and distribution representation and capabilities in substantially every State in the United States, Province of Canada and virtually every major city in North America. The Company, through its network, markets over 11,000 different battery products and automotive electric components, from many of the world's finest manufacturers. The Company continues to enhance its product lines through strategic alliances with the world's leading cell and battery pack manufacturers, along with the strengthening of the BlueStar participant network throughout North America.
BLUESTAR BATTERY SYSTEMS INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND 1998
(unaudited)
($ in thousands)
1999 1998
ASSETS
Current assets 57,475 54,092
Capital assets 12,312 9,910
Advanced battery technology 5,333 5,103
Goodwill and customer lists 49,729 40,312
Contract deposits and deferred costs 7,001 3,325
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131,850 112,742
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 59,344 38,327
Long-term debt and capital leases 3,202 3,411
Convertible debentures 18,396 3,000
Debenture subscription - 13,925
Deferred payable 3,559 3,480
Shareholders' equity
Share capital 69,248 65,360
Currency translation adjustment 12 41
Deficit (21,911) (14,802)
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131,850 112,742
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) ($ in thousands, except per share amounts)
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3-months ended 6-months ended
March 31 March 31
1999 1998 1999 1998
Revenue 39,215 29,291 83,119 63,999
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Operating expenses
Cost of products 33,260 27,413 71,669 59,937
Research and development 366 (28) 640 263
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33,626 27,385 72,309 60,200
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Gross margin 5,589 1,906 10,810 3,799
Other expenses
Sales and marketing 1,377 768 2,679 1,622
General and administrative 2,800 1,773 5,178 3,050
Interest expense 1,067 810 1,943 1,173
Amortization 1,767 1,119 3,614 2,121
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7,011 4,470 13,414 7,966
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Loss before income taxes 1,422 2,564 2,604 4,167
Income tax - - - 144
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Loss for the period 1,422 2,564 2,604 4,311
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Loss per share $ 0.05 $ 0.08 $ 0.11 $ 0.19
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