UNIDYNE Corporation Reports First-Quarter Loss
1 June 1999
UNIDYNE Corporation Reports First-Quarter Loss
Equipment-maker expects new financing package, profit in second quarter
EXTON, Pa., June 1 -- UNIDYNE Corporation
today reported results for the first quarter ended March 31, 1999.
The Exton, Penn.-based manufacturer of specialty equipment reported a net
loss of $459,000, or $0.05 per share, on net sales of $5.7 million in the
first quarter of 1999, compared with a net loss of $345,000, or $0.04 per
share, on net sales of $6.3 million in the same period last year.
UNIDYNE said initial shipments of emissions-testing equipment for the New
Jersey Enhanced Emissions Inspection & Maintenance program offset decreased
sales of the Company's motor controls and electric motor products in the first
quarter of 1999. Sales of emissions-testing equipment increased 92% percent
versus the year-ago period, spurred by demand from service stations and retail
automotive chains. Sales of electric motors and variable speed drives,
manufactured at the Company's Kenosha, Wisc.-based Dynamatic Corporation
facility, decreased 12% versus the year-ago period. Sales decreased 38% at
the Company's Sabina Industries Inc. unit, which manufactures motor controls
and related systems.
"Our first-quarter financial results mask the considerable progress we
have made in 1999," said C. Eugene Hutcheson, chairman and chief executive
officer. "We have addressed key issues related to management, manufacturing
and sales. We have installed new management at key operating and corporate
posts, and continued to invest in product-development and added capabilities.
These changes, combined with increased demand for emissions-testing systems
and service, have put us on track for improved profitability in the near-
term."
Commenting on the financial results, President and Chief Financial Officer
Wayne R. Lorgus said: "Gross income decreased to $1.8 million in the 1999
first quarter, reflecting lower sales levels and increased production costs at
Sabina. Continued focus on cost-management and the integration of Sabina,
which was acquired in late 1997, allowed UNIDYNE to decrease selling, general
and administrative expense by $457,000 -- or 17% -- versus the year-ago first
quarter. Additionally, we continued to invest in research, development and
expanded capabilities at our Sabina and Dynamatic units, in order to make the
most of opportunities in the niches they serve."
Lorgus added that UNIDYNE has been in discussions with a financial
institution to obtain up to $10 million in credit for working capital as well
as additional funds for acquisitions. The Company expects to finalize the
financing package during the second quarter of 1999.
UNIDYNE also announced that Nasdaq had granted the Company's request for
an oral hearing to discuss its strategy for continued listing on The Nasdaq
Stock Market(TM). UNIDYNE officials are scheduled to present to the Nasdaq
Listing Qualifications Panel on June 17, 1999. Trading in the Company's
common stock, which was halted April 7, will remain halted until after the
hearing.
Hutcheson concluded: "While Wayne Lorgus and I are working closely with
our auditors and counsel to address the issues related to Nasdaq, the rest of
our associates are focused on increasing sales, managing costs and improving
quality. The launch of the New Jersey emissions-testing program, combined
with sales and service opportunities in all product segments, should enable
UNIDYNE to post increased profitability and comparable sales to last year's
second quarter."
Exton, Penn.-based UNIDYNE Corporation and its subsidiaries manufacture,
sell, service and finance a variety of products, including vehicle emissions
testing systems, specialized electric motors, and variable speed drives and
controls. UNIDYNE also manufactures engine and chassis dynamometer testing
systems for a variety of large industrial customers, primarily in the
automotive and heavy equipment industries. The Company employs approximately
217 people at facilities in Kenosha, WI; San Francisco, CA; Anaheim, CA;
Hazelton, PA; and Exton, PA.
The statements contained in this news release include certain predictions
and projections that may be considered forward-looking statements under
securities law. These statements involve a number of important risks and
uncertainties that could cause actual results to differ materially, including,
but not limited to, the performance of the emissions testing industry, certain
customer and affiliated companies, as well as other economic, competitive,
governmental and technological factors involving the Company's operations,
markets, services, products and prices.
UNIDYNE CORPORATION
Consolidated Statements of Income
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended
3/31/99 3/31/98
Net Sales $ 5,712 $ 6,267
Cost of sales 3,885 3,845
Gross income 1,827 2,422
Selling, general & administrative expense 2,210 2,667
Research & development expense 71 25
2,281 2,692
(Loss) from Operations (454) (270)
Interest Expense 165 160
(Loss) before income tax
(benefit) provision (619) (430)
Income tax (benefit) provision (247) (172)
Net (Loss) (372) (258)
Preferred dividends (87) (87)
Loss Applicable to Common Stockholders (459) (345)
Basic and diluted (loss) per share $ (0.05) $ (0.04)
Weighted average number of
shares of common stock 9,335,352 9,335,354