IMPCO Technologies Announces Fourth-Quarter and Year-End Results
7 July 1999
IMPCO Technologies Announces Fourth-Quarter and Year-End Results
CERRITOS, Calif.--July 7, 1999--IMPCO Technologies Inc. Wednesday announced results for the fourth fiscal quarter and year ended April 30, 1999.Net revenue for the fourth fiscal quarter increased 36 percent to a record $26.8 million from $19.6 million a year ago. Operating income for the same period was $371,000 compared with $2.1 million a year earlier. Net income for the quarter was $348,000, or 5 cents per diluted share, compared with $1.4 million, or 18 cents per diluted share, a year ago.
For the 12 months, net revenue increased 22 percent to a record $86.8 million, compared with $71.1 million for the same period last year. Operating income for fiscal 1999 was $6.9 million compared with $7.1 million in the prior year. Net income for the year rose 36 percent to $5.8 million, or 71 cents per diluted share, from $4.3 million, or 60 cents per diluted share last year.
Results for fiscal 1999 included an 18 cents per share gain on the sale of a 49 percent interest in its European subsidiary to form a joint venture with BERU Aktiengesellschaft to jointly develop and participate in the emerging European alternative fuels industry. BERU is a well-established company that has participated in the European auto industry for more than 85 years.
Reviewing the company's financial performance, Robert M. Stemmler, chairman and chief executive officer, stated, "While fiscal 1999 financial results were disappointing because certain financial projections were not met, our performance compared with fiscal 1998 does show a continued favorable upward trend upon further analysis."
Stemmler noted that EBITDA increased to $12.4 million, including the sale of an interest in IMPCO's European subsidiary; and, to $10.3 million, excluding the European sale. This compares with $9.6 million in fiscal year 1998, a 29 percent and 7 percent increase, respectively. Stockholders' equity increased to $41.4 million, a 21 percent increase over the prior year.
Stemmler also added that the company's effective income tax rate increased from 15 percent to 19 percent, and the number of common shares used in its earnings per share calculation increased by 10 percent to 8.975 million versus 8.155 million last year.
Commenting on the company's joint venture with BERU in Europe, Stemmler said: "Combining the market identity and resources of BERU in Europe with IMPCO represents a major resource for future growth in the region. For IMPCO to establish this identity and level of resources on its own would have taken years at considerable capital and operational costs.
"While global growth of the alternative fuels industry continues to increase as forecasted, growth in the U.S. market has been disappointing and has not kept pace with other world markets.
"Although our U.S. unit volume sales of alternative fuel vehicles increased two-fold this year, we did not reach sufficient unit volume to offset the required manufacturing fixed costs needed for production. We have taken the necessary steps to reduce our fixed costs as much as possible."
Stemmler indicated that he expects U.S. unit sales in fiscal year 2000 to show continued growth, which will result in improved financial performance during the second half of this fiscal year, supported by four model year 2000 alternative-fueled vehicles being introduced by General Motors.
Stemmler also indicated that the market drivers for expansion of the alternative fuel market in the United States will continue to gain momentum, supported by a variety of factors.
These factors include: Increasing availability of alternative fuel vehicles by original equipment manufacturers (OEMs); stringent regulatory requirements requiring significant reductions in harmful emissions from petroleum-based fuels making clean-burning alternative fuels even more attractive; and fuel cost savings realized by fleets utilizing lower-priced alternative fuels are increasing as gasoline prices rise.
Stemmler added that as U.S. demand increases for clean-burning alternative fueled vehicles, the financial investment now being made in this market will yield significant returns.
Stemmler also cited IMPCO's progress in other markets and its recent investment in Mexico through its acquisition of a business base of operations in Mexico City. He noted that Mexico is the fastest-growing global market for clean-burning gaseous fuels.
Government regulations to reduce air pollution and favorable propane fuel prices at one-half the cost of gasoline are driving the conversion to alternative-fueled vehicles at the rate of more than 50,000 vehicles per year. He indicated that IMPCO's sales in Mexico are expected to increase significantly this fiscal year.
Stemmler added that in Australia the 55 percent price advantage of propane and the government's commitment to the Kyoto Environmental Conference has also sparked keen interest in the use of gaseous fuels. General Motors Corp., Ford Motor Co., Mitsubishi, Mazda, Toyota and Isuzu have approved, or are in the process of approving, IMPCO's systems for their vehicles in the Australian market.
Stemmler noted that IMPCO's industrial markets are also expected to remain strong throughout the year. Growth in the global economy and the capital goods sector have kept sales strong in its core materials-handling business, with significant growth also being realized in the stationary-engine market due to increased demand from Southeast Asia and increasing crude oil prices.
Stationary engines are used for pumping and power generation. Sales in the small engine market have increased significantly due to consumer Year 2000 concerns and the desire for small power-generation units. The large stationary and small-engine markets normally represent 15-20 percent of IMPCO's Gaseous Fuel Products Division's sales.
Stemmler also highlighted the strong performance of the company's new Industrial Engine Systems Division in Michigan, created by IMPCO's acquisition of Crusader Engines' industrial product line in December 1998.
The industrial market demand for fully dressed alternative-fueled engines for material handling and water irrigation applications has experienced a three-fold increase in annualized sales to $10 million per year.
Stemmler indicated that IMPCO will continue to invest in and expand its operations throughout Europe, Asia and Latin America in order to capitalize on worldwide demand for alternative fuel products and systems. He added that the company's domestic and international sales mix, excluding upfitting sales, continues to shift with foreign sales now approaching 50 percent.
IMPCO Technologies sells alternative fuel products and services worldwide. With headquarters in Cerritos, the company has additional facilities in Irvine, Calif.; Detroit; Seattle; Australia; Japan; Mexico; the Netherlands; France; Germany and the United Kingdom.
IMPCO is a market leader in the Original Equipment Manufacturer (OEM) marketplace and aftermarket for gaseous fuel management systems and components that allow internal combustion engines to operate on clean gaseous fuels such as propane and natural gas. IMPCO provides conversion systems for motor vehicles, forklifts, other material handling equipment, and small portable to large stationary engines.
Certain matters discussed in this news release contain forward-looking information that involves risks and uncertainties that could cause actual results to differ materially from current trends. These include growth of the alternative fuels market, OEM automotive product sales, competition, the company's ability to design and market new fuel management products, the company's ability to meet OEM specifications, and other such risks as cited in the company's 1998 annual report on Form 10-K and other documents filed with the Securities and Exchange Commission.
IMPCO Technologies, Inc.
Consolidated Financial Summary
(Dollars in thousands, except for per share amounts)
Three Months Ended Twelve Months Ended
April 30, April 30,
1999 1998 1999 1998
Net revenue $ 26,763 $ 19,638 $ 86,826 $ 71,083
Operating income 371 2,074 6,903 7,118
Gain on sale of interest
in subsidiary -- -- 2,169 --
Net income applicable to
common stock $ 348 $ 1,391 $ 5,800 $ 4,270
Net income per share:
Basic $ 0.05 $ 0.20 $ 0.80 $ 0.67
Diluted $ 0.05 $ 0.18 $ 0.71 $ 0.60
Number of shares used
in per share computation:
Basic 7,638,769 7,075,944 7,293,160 6,333,769
Diluted 8,863,022 8,509,117 8,975,629 8,155,476