Amcast Announces Third Quarter 1999 Results
28 June 1999
Amcast Announces Third Quarter 1999 Results
DAYTON, Ohio--June 25, 1999--Amcast Industrial Corporation today announced sales and earnings for the third quarter of fiscal 1999 ended May 30.As previously announced, demand for the company's products in both its Flow Control and Engineered Components segments remained strong in the third quarter. However, production costs increased due to operating inefficiencies caused by high turnover of skilled labor in two Midwest plants, as well the launch of new suspension products at the company's newest plant in Ohio.
Sales for the quarter were $157.8 million versus $159.3 million in the comparable quarter in 1998. Income before taxes was $6.0 million compared to $9.6 million last year. Net income was $3.7 million (41 cents per diluted share) compared to $5.7 million (61 cents per diluted share) in the third quarter of 1998. The 1998 figures include the company's valve and aerospace businesses that were subsequently sold.
For the nine months, sales were $445.5 million compared to $437.2 million a year ago. Income before taxes increased to $29.8 million for the nine months of 1999 compared to $22.1 million in 1998. Excluding the gain on the sale of the valve business in the first quarter of 1999, current year nine-month income before taxes was $20.8 million, compared to $22.1 million in 1998. Net income for the nine months of 1999 was $18.3 million ($1.98 per diluted share) compared to $15.9 million ($1.71 per diluted share) for the same period last year, excluding the cumulative effect of an accounting change.
In the Flow Control segment, third quarter 1999 sales were $41.2 million compared to $52.7 million last year. Operating income of $7.0 million compares to $8.3 million (before restructuring, asset write-downs, and integration charges) in the third quarter last year. Major factors affecting third quarter sales and operating income compared to the prior year period include the loss of sales and earnings from the first quarter 1999 sale of the valve business, lower average pricing in the copper and brass fittings business, and higher sales volume and earnings at Lee Brass.
For the nine months, Flow Control sales were $115.9 million compared to $130.1 million in 1998. Operating income in 1999 and 1998 was $18.5 million (before the gain on sale of the valve business) and $20.1 million (before restructuring, asset write-downs, and integration charges), respectively. The Lee Brass contribution to sales and income partly offset the loss of sales and income due to the sale of the company's valve business and the impact of lower average pricing in the plumbing fittings industry in 1999.
Engineered Components sales were $116.6 million in the third quarter of 1999 compared to $106.6 million in the third quarter of 1998. Operating income was $5.1 million and $7.5 million (before restructuring, asset write-downs, integration charges, and the gain on sale of the aerospace business) in the respective periods. The year-over-year changes reflect strong demand for all of the company's aluminum products, as well as the cost impact of labor turnover and new-product launch issues referred to earlier.
For the nine months, Engineered Components sales were $329.6 million compared to $307.1 million in 1998. Operating income increased from $18.7 million (before restructuring, asset write-downs, integration charges, and the gain on sale of the aerospace business) in 1998 to $21.0 million in 1999 as a result of improvements in the company's Speedline unit and a successful turnaround at the company's Richmond, Indiana, plant which had been a drain on earnings in 1998. These positive influences on earnings were partially offset by the automotive plant cost and inefficiency issues in the third quarter.
The company expects the current difficulties to be temporary. Management has focused considerable resources on the problem manufacturing areas and is implementing aggressive programs to attract, select, train, and retain new employees. "We are encouraged by the improvements that have been made. While there will be some continuing impact in the fourth quarter, we are optimistic about resuming the upward trend in profitability of the Engineered Components segment," said John H. Shuey, chairman and chief executive officer.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others: general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor relations at the company and its customers.
STATEMENTS OF INCOME
($ in thousands except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
May 30 May 31 May 30 May 31
1999 1998 1999 1998
-------- ------- ------- -------
Net sales $ 157,790 $ 159,267 $ 445,548 $ 437,221
Cost of sales 133,939 133,195 371,735 365,375
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Gross Profit 23,851 26,072 73,813 71,846
Selling, general
and administrative
expenses 14,362 15,426 42,135 42,111
Restructuring
charges - 9,800 - 9,800
Gain on sale
of business - (12,048) (9,023) (12,048)
-------- ------- ------- -------
Operating Income 9,489 12,894 40,701 31,983
Equity in loss of
joint venture and
other (income)
and expense 382 (398) 708 (1,230)
Interest expense 3,076 3,659 10,144 11,109
-------- -------- ------- -------
Income before Income
Taxes and Cumulative
Effect of Accounting
Change 6,031 9,633 29,849 22,104
Income taxes 2,292 3,949 11,579 6,251
-------- ------- ------- -------
Income before
Cumulative Effect of
Accounting Change 3,739 5,684 18,270 15,853
Cumulative effect
of accounting change,
net of tax - - - (8,588)
-------- ------- ------- -------
Net Income $ 3,739 $ 5,684 $ 18,270 $ 7,265
-------- ------- ------- -------
-------- ------- ------- -------
Basic Earnings per Share:
Income before
cumulative effect
of accounting
change $ 0.41 $ 0.62 $ 1.99 $ 1.72
Cumulative effect
of accounting
change - - - (0.93)
-------- ------- ------- -------
Net income $ 0.41 $ 0.62 $ 1.99 $ 0.79
-------- ------- ------- -------
-------- ------- ------- -------
Diluted Earnings per Share:
Income before
cumulative effect
of accounting
change $ 0.41 $ 0.61 $ 1.98 $ 1.71
Cumulative effect
of accounting
change - - - (0.93)
-------- ------- ------- -------
Net income $ 0.41 $ 0.61 $ 1.98 $ 0.78
-------- ------- ------- -------
-------- ------- ------- -------
Average number
of shares
outstanding
- Basic 9,169 9,206 9,187 9,198
Average number
of shares
outstanding
- Diluted 9,188 9,248 9,206 9,258
CONDENSED BALANCE SHEETS
($ in thousands)
May 30 August 31
1999 1998
---------- ----------
Current Assets
Cash and cash equivalents $ 4,133 $ 7,022
Accounts receivable 102,478 111,066
Inventories 75,337 84,255
Other current assets 18,005 20,308
---------- ----------
199,953 222,651
Property, Plant and Equipment 257,743 260,117
Goodwill 61,670 62,555
Other Assets 12,948 18,127
---------- ----------
$ 532,314 $ 563,450
---------- ----------
---------- ----------
Current Liabilities
Accounts payable $ 70,364 $ 72,887
Current debt 11,487 23,248
Other current liabilities 46,365 39,587
---------- ----------
128,216 135,722
Long-Term Debt 184,678 217,199
Deferred Liabilities 45,519 49,715
Shareholders' Equity 173,901 160,814
---------- ----------
$ 532,314 $ 563,450
---------- ----------
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