Sales Exceed Quarter Billion As Tesma Announces Best Ever Quarter
4 June 1999
Sales Exceed Quarter Billion As Tesma Announces Best Ever Quarter
CONCORD, ON, June 3 /CNW-PRN/ - Tesma International Inc. (TSE:TSM.A;
NASDAQ:TSMA) today announced record third quarter sales, income and earnings
per share for the period ended April 30, 1999.
Three Months Ended Nine Months Ended
April 30 April 30
1999 1998 1999 1998
Sales $251.7 $181.7 $647.5 $484.5
Income before income taxes $ 24.9 $ 19.0 $ 62.2 $ 39.3
Net income $ 15.5 $ 11.3 $ 38.6 $ 22.8
Fully diluted earnings per share $ 0.52 $ 0.39 $ 1.30 $ 0.81
All results are reported in millions of Canadian dollars, except per
share figures.
Tesma's sales for the third quarter of fiscal 1999 were $251.7 million,
an increase of 39% over the prior year. For the nine month period, reported
sales were a record $647.5 million, an increase of 34% over the prior year.
``Since Tesma's initial public offering in July 1995, we have reported 15
consecutive quarter over quarter increases in sales and operating income.
Although the Company's third quarter sales were boosted by strong North
American and European production volumes, which increased by 7.8 % and 9.0%,
respectively, over the third quarter of 1998, the bulk of our current sales
growth is attributable to the launch of new products and the inclusion of
sales generated by recently acquired subsidiaries including Triam Sterling
Heights and HAC Corporation'', stated Manfred Gingl, Tesma's President and
CEO. ``We are particularly pleased with the successful launches of several new
water pump contracts and our transmission servo business. These contracts will
be in full production in our fourth quarter, and together with the launch of
other new business, should continue to add to our sales growth. We have
successfully integrated both Triam Sterling Heights and HAC Corporation into
the Tesma organization, and are looking to further sales growth as these
subsidiaries successfully launch awarded business over the next several
quarters.''
For the third quarter, Tesma's income before income taxes was a record
$24.9 million, an improvement of 31% over the $19.0 million reported in the
third quarter of fiscal 1998. ``The Company's record sales, successful launch
of new business and improvements at various manufacturing divisions have
resulted in improved operating performance and contribution to the bottom
line'', stated Anthony Dobranowski, Tesma's Executive Vice President and CFO.
``Included in this group is Toral Cast, our North American aluminum diecasting
and machining facility, which was one of 184 global suppliers awarded the ``GM
Supplier of the Year Award'' for 1998.'' For the nine month period, income
before income taxes increased to $62.2 million from $39.3 million primarily
due to the improvements noted above and the absence of the non-recurring
charge recorded in 1998.
Tesma's fully diluted earnings per share increased 33% to $0.52 from
$0.39 for the third quarter of fiscal 1999 and, excluding the prior year's
litigation settlement, 29% to $1.30 from $1.01 for the nine month period (a
60% increase over the reported amount for 1998).
Cash provided from operations was $26.1 million in the third quarter, an
increase of $6.8 million over fiscal 1998. Net investment activities for the
quarter included $11.2 million for fixed and other asset additions. For the
nine month period, cash provided from operations was $65.8 million, with net
investment activities totalling $97.1 million, primarily for the purchase of
fixed assets required to launch new business and the acquisitions of Triam
Sterling Heights and HAC Corporation.
In accordance with Tesma's Corporate Constitution, the Board of Directors
announced a 43% increase in the Company's quarterly dividend to $0.10 from
$0.07. Accordingly, in respect of the third quarter of fiscal 1999, the Board
declared a dividend of $0.10 per share on the Class A Subordinate Voting and
Class B shares payable on July 15, 1999 to shareholders of record on June 30,
1999.
Tesma is a global supplier of highly engineered engine, transmission and
fueling systems and components for the automotive industry. Tesma's strong
market presence and strategy for continuing growth results from its unique
focus on Innovation, Engineering and Performance. Tesma employs over 3,600
employees in North America, Europe and Asia in 20 manufacturing facilities and
2 research centres.
This press release contains forward looking statements within the meaning
of applicable securities legislation. Such statements involve certain risks
and uncertainties which may cause actual results or objectives to be
materially different from those expressed or implied herein. These factors
include the Company's financial performance, changes in the economic and
competitive markets in which the Company competes, relationships with
customers and other factors as set out in the Company's Form 40-F for its
fiscal year ended July 31, 1998 and subsequent SEC filings.
TESMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian dollars in thousands)
(Unaudited)
As at As at
April 30, July 31,
1999 1998
ASSETS
Cash $ 17,593 $ 43,998
Accounts receivable 148,419 90,340
Inventories 70,162 57,991
Prepaid expenses and other 7,322 5,857
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243,496 198,186
Fixed assets 266,933 186,583
Other assets 32,586 14,562
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$543,015 $399,331
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 47,221 $ 6,002
Accounts payable 77,842 43,897
Accrued salaries and wages 23,448 16,054
Other accrued liabilities 38,044 32,015
Income taxes payable 9,616 310
Long-term debt due within one year 8,673 4,036
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204,844 102,314
Long-term debt 25,517 14,019
Deferred income taxes 23,753 21,525
SHAREHOLDERS' EQUITY
Class A Subordinate Voting Shares 179,629 179,367
Class B Shares 2,583 2,583
Retained earnings 109,705 77,085
Currency translation adjustment (3,016) 2,438
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288,901 261,473
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$543,015 $399,331
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
April 30 April 30
1999 1998 1999 1998
Sales $251,711 $181,711 $647,514 $484,530
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Cost of goods sold 195,560 140,648 502,954 375,216
Depreciation and amortization 9,578 5,894 25,263 17,280
Selling, general and
administrative 17,269 13,381 47,098 36,377
Interest (net) 1,265 66 1,810 (111)
Amortization of discount on
Convertible Series Preferred
Shares - 339 - 1,004
Affiliation fees and other
charges 3,111 2,417 8,177 6,328
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Income before litigation
settlement and income taxes 24,928 18,966 62,212 48,436
Litigation settlement - - - 9,132
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Income before income taxes 24,928 18,966 62,212 39,304
Income taxes 9,395 7,693 23,605 16,523
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Net income for the period 15,533 11,273 38,607 22,781
Dividends on Convertible Series
Preferred Shares (net of return
of capital) - (589) - (1,761)
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 15,533 10,684 38,607 21,020
Retained earnings, beginning of
period 96,168 63,769 77,085 55,721
Dividends on Class A
Subordinate Voting Shares and
Class B Shares (1,996) (1,132) (5,987) (3,420)
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Retained earnings, end of
period $109,705 $ 73,321 $109,705 $ 73,321
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Earnings per Class A Subordinate
Voting Share or Class B Share
Basic $0.54 $0.47 $1.35 $0.92
Fully diluted $0.52 $0.39 $1.30 $0.81
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Average number of Class A
Subordinate Voting Shares and
Class B Shares outstanding (in
millions)
Basic 28.5 23.0 28.5 22.9
Fully diluted 30.1 30.0 30.1 30.0
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED ENDED
April 30 April 30
1999 1998 1999 1998
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES
Net income $ 15,533 $ 11,273 $ 38,607 $ 22,781
Items not involving current
cash flows 10,579 8,076 27,146 19,956
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26,112 19,349 65,753 42,737
Changes in non-cash working
capital (1,659) (8,256) (10,717) (12,438)
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24,453 11,093 55,036 30,299
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INVESTING ACTIVITIES
Fixed asset additions (10,130) (12,802) (52,475) (47,489)
Purchase of subsidiaries - 324 (44,785) (7,947)
Increase in other assets (1,057) (928) (4,595) (4,153)
Proceeds from disposition of
fixed and other assets 66 139 880 1,618
Cash acquired on purchase of
subsidiaries (3) (443) 3,863 2,665
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(11,124) (13,710) (97,112) (55,306)
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FINANCING ACTIVITIES
Repayment of notes receivable
from employees - 6 - 255
Increase (decrease) in bank
indebtedness (11,384) 2,269 31,535 1,648
Issues of long-term debt 232 - 4,004 2,307
Repayments of long-term debt (10,773) (359) (12,851) (4,085)
Issuance of Class A
Subordinate Voting Shares - 1,575 262 2,683
Dividends on Class A
Subordinate Voting Shares and
Class B Shares (1,996) (1,132) (5,987) (3,420)
Dividends on Convertible Series
Preferred Shares - (966) - (2,843)
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(23,921) 1,393 16,963 (3,455)
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Effect of exchange rate changes
on cash (1,444) 74 (1,292) 595
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Net increase (decrease) in
cash during the period (12,036) (1,150) (26,405) (27,867)
Cash, beginning of period 29,629 49,093 43,998 75,810
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Cash, end of period $ 17,593 $ 47,943 $ 17,593 $ 47,943
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(x) Note: The Consolidated Statements of Cash Flows for the three and
nine month periods ended April 30, 1998 have been restated to reflect
the retroactive adoption of the CICA's revised guidelines for cash
flow statements.