Ivaco Reports First Quarter Results
21 May 1999
Ivaco Reports First Quarter Results
MONTREAL--May 20, 1999--Ivaco Inc. (ME:IVA.A.) (TSE:IVA.A.) (ME:IVA.B.) (TSE:IVA.B.) today reported a net loss of $3,170,000 or $0.24 per share for the first quarter ended March 31, 1999 compared to net earnings of $6,136,000 or $0.07 per share last year. Sales for the first quarter were $264.1 million compared to $290.7 million last year.Paul Ivanier, President and Chief Executive Officer said that sales and earnings for the first quarter were impacted by the two week shutdown at Ivaco Rolling Mills in January for the implementation of phase two of the upgrade program and the ensuing start-up of the rod mill in February. Production levels now being achieved are approaching the levels of expected rated capacity.
Despite the first quarter results and pricing pressures for wire rod and fabricated steel products, the Company expects 1999 to be profitable overall. Mr. Ivanier said: "A wire rod price increase of US$15 per tons announced in March would not benefit earnings until late in the second quarter. Sales at our rod mill and downstream fabricated steel products segments remain strong and the plastic pipe and fittings and precision machined components segments continue to perform well".
On May 12th, the U.S. International Trade Commission made an affirmative injury determination in respect of the Section 201 petition filed in late December last year by U.S. wire rod producers. NAFTA countries like Canada were excluded from the petition. The International Trade Commission's report with recommendations for remediation of injury is expected by mid July.
Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products, plastic pipe and fittings and precision machined components. Ivaco has operations in Canada and the United States. Shares of Ivaco are traded on The Toronto Stock Exchange and The Montreal Exchange (IVA).
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
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Thousands of dollars except per share amounts
Three months ended
March 31, 1999 March 31, 1998
------------------------- ------------------ ------------------
Net Sales $264,144 $290,682
------------------------- ------------------ ------------------
Cost of sales and
operating expenses 236,061 252,243
------------------------- ------------------ ------------------
Operating earnings
(EBITDA) before: 28,083 38,439
------------------------- ------------------ ------------------
Amortization (15,264) (12,967)
Share of loss of equity
accounted investments (202) (780)
------------------------- ------------------ ------------------
Earnings from operations
before interest and
other items 12,617 24,692
Net interest expense (12,436) (10,444)
Dividends on Series 5,
Second Preferred Shares (1,506) (1,291)
------------------------- ------------------ ------------------
Earnings (loss) from
operations before
income taxes (1,325) 12,957
Income taxes 1,845 6,821
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Net earnings (loss) $(3,170) $6,136
------------------------- ------------------ ------------------
Net earnings (loss)
per share (Note 1) $(0.24) $0.07
------------------------- ------------------ ------------------
SEGMENT REPORTING (Unaudited)
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Three months ended
Thousands of dollars March 31, 1999
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BUSINESS SEGMENTS
Fabricated Plastic
Steel Steel Pipe and
Products Fittings
------------------- ---------- ------------- -----------------
Net sales -
external $64,550 $142,846 $37,903
------------------- ---------- ------------- -----------------
Net sales -
intersegment $32,051 $106 -
------------------- ---------- ------------- -----------------
Operating earnings
(EBITDA) $8,599 $16,670 $6,633
------------------- ---------- ------------- -----------------
Assets identifiable
by segment $365,439 $503,732 $168,038
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Three months ended
Thousands of dollars March 31, 1998
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BUSINESS SEGMENTS
Fabricated Plastic
Steel Pipe and
Steel Products Fittings
------------------- ---------- ------------ ------------------
Net sales -
external $108,952 $123,825 $35,135
------------------- ---------- ------------ ------------------
Net sales -
intersegment $25,767 $105 -
------------------- ---------- ------------ ------------------
Operating earnings
(EBITDA) $11,012 $22,120 $6,124
------------------- ---------- ------------ ------------------
Assets identifiable
by segment $389,127 $496,541 $135,366
------------------- ---------- ------------ ------------------
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Three months ended
Thousands of dollars March 31, 1999
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BUSINESS SEGMENTS
Precision
Machined Corporate Total
Components cost
------------------- ----------- ----------- ------------------
Net sales -
external $18,845 - $264,144
------------------- ----------- ----------- ------------------
Net sales -
intersegment - - $32,157
------------------- ----------- ----------- ------------------
Operating earnings
(EBITDA) $1,842 $(5,661) $28,083
------------------- ----------- ----------- ------------------
Assets identifiable
by segment $45,991 $229,632 $1,312,832
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Three months ended
Thousands of dollars March 31, 1998
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BUSINESS SEGMENTS
Precision
Machined Corporate Total
Components cost
------------------- ----------- ----------- ------------------
Net sales -
external $22,770 - $290,682
------------------- ----------- ----------- ------------------
Net sales -
intersegment - - $25,872
------------------- ----------- ----------- ------------------
Operating earnings
(EBITDA) $3,911 $(4,728) $38,439
------------------- ----------- ----------- ------------------
Assets identifiable
by segment $45,693 $268,309 $1,335,036
------------------- ----------- ----------- ------------------
Notes:
1. Per share amounts are after deducting preferred dividends of
$4,103,000 (1998 - $4,117,000) and are based on an average of
30,738,022 (1998 - 30,717,022) shares outstanding.
2. The 1998 amounts have been restated to conform to the
presentation adopted in 1999.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
---------------------------------------------------------------
(Unaudited) (Audited)
Thousands of dollars March 31, 1999 December 31, 1998
---------------------- ------------------ ------------------
Current Assets
Cash and short-term
investments $3,026 $13,739
Accounts receivable 162,491 151,554
Inventories 332,394 350,545
Prepaid expenses 11,251 7,804
---------------------- ------------------ ------------------
Total Current Assets 509,162 523,642
---------------------- ------------------ ------------------
Current Liabilities
Bank indebtedness,
partly secured 52,140 46,427
Accounts payable and
accrued liabilities 181,031 197,962
Income taxes payable 1,322 706
Current maturities of
long-term debt 54,533 46,328
---------------------- ------------------ ------------------
Total Current
Liabilities 289,026 291,423
---------------------- ------------------ ------------------
Working Capital 220,136 232,219
Investments, at cost 114,860 114,860
Investments, at equity 21,352 21,793
Property, plant
and equipment 539,602 523,571
Other assets 127,856 128,664
---------------------- ------------------ ------------------
Total Investment 1,023,806 1,021,107
---------------------- ------------------ ------------------
Deduct:
Long-term debt 499,248 490,077
Series 5, Second
Preferred Shares 54,892 51,789
Deferred income taxes 71,925 72,955
---------------------- ------------------ ------------------
626,065 614,821
---------------------- ------------------ ------------------
Shareholders' Equity $397,741 $406,286
---------------------- ------------------ ------------------
Represented by:
Capital stock $460,805 $460,805
Retained earnings
(deficit) (81,995) (74,722)
Cumulative translation
adjustment 18,931 20,203
---------------------- ------------------ ------------------
Shareholders' Equity $397,741 $406,286
---------------------- ------------------ ------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
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Three months ended
Thousands of dollars March 31, 1999 March 31, 1998(Note 2)
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OPERATING ACTIVITIES
Working capital
provided from
operations $11,130 $19,998
Increase in non-cash
working capital items (12,548) (29,168)
Deferred preproduction
and development costs (8,903) (2,894)
Other items (1,123) 3,096
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Cash used in operating
activities (11,444) (8,968)
----------------------------------------- -------------------
FINANCING ACTIVITIES
Dividends (1,000) (2,561)
Additional long-term debt 37,091 30,757
Repayment of long-term debt (13,893) (8,735)
Increase in bank
indebtedness 5,713 431
Other items (237) (802)
----------------------------------------- -------------------
Cash provided by
financing activities 27,674 19,090
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INVESTING ACTIVITIES
Net additions to property,
plant and equipment (21,249) (11,737)
Additions to construction
in progress (5,694) (3,846)
Proceeds on disposal of
business - 14,841
Other items - (5,763)
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Cash used in investing
activities (26,943) (6,505)
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Decrease (increase) in cash
and cash equivalents (10,713) 3,617
Cash and cash equivalents,
January 1 13,739 26,983
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Cash and cash equivalents,
March 31 $3,026 $30,600
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