Delco Remy Reports Record Sales and Earnings for Q3 of Fiscal 1999
20 May 1999
Delco Remy International Reports Record Sales and Earnings for the Third Quarter of Fiscal 1999
ANDERSON, Ind., May 20 -- Delco Remy International, Inc.
, a leading supplier of aftermarket and OEM electrical systems and
powertrain/drivetrain products for automotive and heavy duty applications,
today reported record sales and earnings for the third quarter ending
April 30, 1999.
Key financial highlights for the third quarter compared to last year are
as follows:
-- Net sales growth 15 percent
-- Earnings per share growth 39 percent
-- Operating income growth 25 percent
-- Operating margin improvement from 9.0 percent to 9.8 percent
-- Cash flow generated for the quarter of $10 million was used to pay
down the senior credit facility
Major strategic initiatives completed during the quarter include:
-- Extended our exclusive supply contract with General Motors to provide
starting motors through 2008
-- Joint venture with Continental AG for the exclusive production of
motors for use in the newly developed ISAD system (Integrated Starter
Alternator Damper)
Harold K. Sperlich, Chairman, commented, "We made excellent progress
during the quarter and we continue to benefit from our growth and
restructuring initiatives. We were particularly pleased with our cash flow
progress which enabled us to reduce our leverage."
Net income for the third quarter was $8.2 million, or $.32 per share, a
39 percent improvement over net income of $5.9 million, or $.23 per share,
reported for the same period last year. Operating income for the quarter was
$24.4 million, up 25 percent from the $19.4 million reported last year.
Operating income as a percent of sales increased to 9.8 percent from
9.0 percent for the prior year third quarter.
Net sales for the third quarter were $248.8 million, representing a
15 percent growth rate over net sales of $217.1 million for the same quarter
last year. Sales growth was driven by stronger demand for the Company's
aftermarket and original equipment products as well as acquisitions. Sales in
the Company's aftermarket sales channels were up solidly over the prior year
for both electrical and powertrain/drivetrain products. The improvement was
primarily due to the addition of new customers, new distribution and
acquisitions. Sales growth attributable to the Company's OEM products was
driven by strong demand from both automotive and heavy duty customers.
For the first nine months of fiscal 1999, adjusted net income improved to
$19.4 million compared to $13.0 million reported for the prior year. Adjusted
earnings per share for the nine month period increased to $.75 compared to
$.50 last year, a 50 percent improvement. Adjustments to net income are non-
recurring charges associated with the Company's IPO and senior notes offering
in the second quarter of fiscal 1998. Adjusted shares outstanding assumes the
exercise of all warrants and that all shares were outstanding for all periods.
Net sales for the nine months were $703.9 million, up 14 percent over the
$619.4 million reported the previous year.
Delco Remy International designs, manufactures, remanufactures and
distributes electrical, powertrain/drivetrain and related components for
automobiles, light trucks, medium and heavy duty trucks and other heavy duty
vehicles. The Company's products include starter motors, alternators,
engines, transmissions, torque converters, fuel systems and traction control
systems. The Company serves the aftermarket and original equipment
manufacturer market, principally in North America, as well as in Europe, Latin
America and Asia Pacific.
Statements in this press announcement, which are not historical, are
forward-looking statements that involve certain risks and uncertainties,
including, but not limited to risks associated with the uncertainty of future
financial results, acquisitions, additional financing requirements,
development of new products and services, the effect of competitive products
or pricing, the effect of economic conditions and other uncertainties detailed
in the Company filings with the Securities and Exchange Commission.
DELCO REMY INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for per share amounts)
Three Month Period Nine Month Period
Ended April 30 Ended April 30
1999 1998 1999 1998
Net sales $248.8 $217.1 $703.9 $619.4
Cost of goods sold 196.3 172.4 562.9 497.3
Gross profit 52.5 44.7 141.0 122.1
Selling, engineering and
administrative expenses 28.1 25.3 77.3 67.9
Operating income 24.4 19.4 63.7 54.2
Interest expense (12.7) (9.7) (34.3) (30.4)
Income before income taxes,
minority interest in income
of subsidiaries, income
from unconsolidated joint ventures,
preferred dividend requirement
of subsidiary and deemed
dividend on preferred stock
conversion 11.7 9.7 29.4 23.8
Income taxes 4.6 4.1 11.5 9.8
Minority interest in income
of subsidiaries (0.7) (0.5) (2.3) (1.6)
Income from unconsolidated
joint ventures 1.8 0.8 3.8 1.2
Preferred dividend requirement
of subsidiary -- -- -- (0.6)
Deemed dividend on preferred
stock conversion -- -- -- (1.6)
Income before
extraordinary item 8.2 5.9 19.4 11.4
Extraordinary item (write-off
of debt issuance costs) -- -- -- (1.8)
Net income $ 8.2 $ 5.9 $19.4 $9.6
Basic earnings per
common share:
Income before
extraordinary item $0.34 $0.25 $0.81 $0.70
Extraordinary item (write-
off of debt
issuance costs) -- -- -- (0.11)
Net income $0.34 $0.25 $0.81 $0.59
Diluted earnings per
common share:
Income before
extraordinary item $0.32 $0.23 $0.75 $0.61
Extraordinary item (write-
off of debt
issuance costs) -- -- -- (0.10)
Net income $0.32 $0.23 $0.75 $0.51
Adjusted net income:
Net income $ 8.2 $ 5.9 $19.4 $9.6
Deemed dividend on
preferred stock
conversion -- -- -- 1.6
Extraordinary item (write-
off of debt
issuance costs) -- -- -- 1.8
Adjusted net income $ 8.2 $ 5.9 $19.4 $13.0
Adjusted earnings per
common share $0.32 $0.23 $0.75 $0.50
Adjusted weighted
shares outstanding (A) 25.9 25.9 25.9 25.9
(A) Adjusted weighted shares outstanding assumes exercise of all warrants
and that all shares were outstanding for all periods.
DELCO REMY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
April 30, July 31,
1999 1998
ASSETS
Current Assets
Cash and cash equivalents $7.7 $8.1
Trade accounts receivable, net 155.5 126.9
Inventories 224.8 198.4
Other current assets 39.0 36.2
Total Current Assets 427.0 369.6
Property and equipment, net 174.1 158.0
Goodwill, net 135.0 115.4
Deferred financing costs 11.6 10.8
Net assets held for disposal 14.5 14.9
Other assets 21.1 16.3
Total Assets $783.3 $685.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $111.5 $ 85.8
Other accrued liabilities 50.2 46.9
Accrued restructuring charges 24.2 35.5
Current portion of long-term debt 2.9 2.0
Total Current Liabilities 188.8 170.2
Long-term debt 450.1 393.8
Other noncurrent liabilities 27.4 26.3
Minority interest in subsidiaries 12.8 10.5
Stockholders' equity 104.2 84.2
Total Liabilities and Stockholders' Equity $783.3 $685.0