TransPro, Inc. Reports Strong Second Quarter Results
26 July 1999
TransPro, Inc. Reports Strong Second Quarter Results; Second Quarter Operating Income Increased 62%
Business Editors
NEW HAVEN, Conn.--July 23, 1999--TransPro, Inc.
today reported significantly improved results for the
second quarter ended June 30, 1999.
For the second quarter of 1999, sales increased 7% to $70.1
million, compared with sales of $65.6 million in the second quarter of
1998. Before plant closure costs, 1999 second quarter operating income
increased 62% to $5.3 million, a 7.6% return on sales, compared with
operating income of $3.3 million, a 5.0% return on sales, a year ago.
Earnings for the second quarter of 1999 before plant closure costs and
before a non-recurring item were $2,439,000, or $0.35 per diluted
common share, compared with net income of $1,446,000, or $0.22 per
diluted share a year ago.
During the 1999 second quarter, the Company incurred plant
closure costs of $325,000, or $0.03 per diluted common share after
tax, related to the closure of its Philadelphia, Pennsylvania and
Atlanta, Georgia replacement automotive condenser manufacturing plants
and the move of that condenser manufacturing to the Company's Los
Angeles, California facility. The majority of high volume condenser
manufacturing will be located in Mexico in late 1999 with a new
condenser design, and will be supplemented by the Los Angeles
facility. During the quarter, the Company also recognized a
non-recurring, non-cash deferred tax benefit of $2,858,000, or $0.40
per diluted common share, related to the incorporation of its GO/DAN
Industries partnership. Including this non-recurring tax benefit and
the aforementioned plant closure costs, net income for the 1999 second
quarter was $5,110,000, or $0.72 per diluted common share.
Commenting on the quarter, Hank McHale, President and Chief
Executive Officer, stated, "I am pleased with our results, which
continue to reflect the benefits of our critical mass and product
breadth in the automotive Aftermarket, as well as the progress we have
made in rationalizing the production and distribution of our acquired
businesses. Our air conditioning parts businesses made a significant
contribution to second quarter results and we expect that our
leadership position in the Aftermarket will be strengthened even
further as we continue to expand our distribution of air conditioning
parts. By moving condenser manufacturing to Mexico, we expect annual
cost savings of over $1 million."
Mr. McHale continued, "We are still working to return our OEM
Heat Transfer Systems segment to an acceptable level of profitability,
and have made substantial progress on this front, as can be seen in
our quarterly results. At our Dallas metal fabrication plant, orders
continue to be strong and as we begin to more fully utilize that
plant's capacity, we expect margins in the Specialty Metal Fabrication
segment to increase."
Sales of Aftermarket Heating and Cooling Systems products were 7%
higher than the prior year's second quarter, primarily reflecting the
contribution from Evap, Inc. and A/C Plus, Inc., the two air
conditioning products companies acquired subsequent to the second
quarter of 1998. Radiator and heater sales to the large national
retailers continued to be strong during the second quarter. During the
1999 second quarter, Original Equipment Manufacturing ("OEM") Heat
Transfer Systems sales increased 4% over the prior year's second
quarter due to the robust Class 8 truck and specialty vehicle markets.
In the Specialty Metal Fabrication segment, sales in the second
quarter of 1999 increased 10% due to higher sales of specialty
fabricated enclosures for telecommunications customers. Vehicle
conversion sales were flat.
The overall second quarter 1999 gross margin percentage improved
to 25.8% compared with 23.8% last year. The improvement was driven by
gross margin improvements in the Aftermarket Heating and Cooling
Systems segment reflecting the contribution of the newly acquired air
conditioning parts companies as well as lower material costs and
improved manufacturing efficiencies and in the OEM Heat Transfer
Systems segment as a result of actions the Company has taken to
improve operational efficiencies.
Selling, General and Administrative expenses in the second
quarter of 1999 increased 4% compared with the second quarter of 1998
primarily as a result of the inclusion of expenses associated with
Evap, Inc. and A/C Plus, Inc., but declined as a percentage of sales
from 18.8% to 18.2%.
For the six month period ended June 30, 1999, sales were
$127,423,000, an increase of 10% compared with sales of $116,190,000
in the first six months of 1998. Before plant closure costs, operating
income for the six-month period increased 92% to $7.1 million, a 5.6%
return on sales, compared with operating income of $3.7 million, a
3.2% return on sales, in the prior year period.
Before plant closure costs and before the deferred tax benefit,
earnings for the first six months of 1999 were $2,943,000, or $0.42
per diluted common share, compared with net income of $1,307,000, or
$0.20 per diluted share in the first half of 1998. Including the
aforementioned deferred tax benefit and plant closure costs, net
income for the first half of 1999 was $5,615,000, or $0.79 per diluted
common share.
Mr. McHale concluded, "Going forward, we will continue to focus
on enhancing the capabilities of our Aftermarket production facilities
and distribution network, particularly among the fast growing large
national retailers. We are also encouraged by demand from the
telecommunication industry for our specialty metal fabrication
capabilities and initial orders in Canada for conversion of law
enforcement vehicles."
TransPro, Inc. is a manufacturer and supplier of heat transfer
components and systems, and specialty fabricated metal products for a
variety of Aftermarket and OEM automotive, truck and industrial
applications, and performs vehicle conversions.
FORWARD-LOOKING STATEMENTS
Statements included in this news release which are not historical
in nature are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. The Company's Annual Report on Form 10-K contains certain
detailed factors that could cause the Company's actual results to
materially differ from forward- looking statements made by the
Company. In particular, statements relating to the future financial
performance of the Company are subject to business conditions and
growth in the general economy and automotive and truck business, the
impact of competitive products and pricing, changes in customer
product mix, failure to obtain new customers or retain old customers
or changes in the financial stability of customers, changes in the
cost of raw materials, components or finished products and changes in
interest rates. Statements regarding the Dallas metal fabrication
facility are subject to numerous factors, including but not limited
to, securing additional customer orders and the ramp up of operations.
Statements regarding the outlook for the OEM heat transfer business,
improvements in manufacturing efficiencies and reduction of costs are
subject to a number of factors, including but not limited to, the
ability of management to implement improvements in workforce
efficiencies and reduce manufacturing overhead expenses and the timing
of such improvements. Statements regarding the future expected
performance of Evap and A/C Plus are subject to the same factors that
affect the Company's core Aftermarket business.
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TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Aftermarket Heating and
Cooling Systems $ 45,151 $ 42,393 $ 82,499 $ 72,075
OEM Heat Transfer Systems 9,519 9,177 19,086 19,952
Specialty Metal Fabrication 15,475 14,033 25,838 24,163
Total Sales 70,145 65,603 127,423 116,190
Cost of Sales 52,053 50,013 94,861 89,006
Gross Margin 18,092 15,590 32,562 27,184
Selling, General and
Administrative Expenses 12,792 12,317 25,470 23,481
Income from Operations
Before Plant Closure Costs 5,300 3,273 7,092 3,703
Plant Closure Costs 325 -- 325 --
Income from Operations
After Plant Closure Costs 4,975 3,273 6,767 3,703
Net Interest Expense 1,059 830 1,973 1,495
Income Before Taxes 3,916 2,443 4,794 2,208
Income Tax (Benefit)
Provision(1) (1,194) 997 (821) 901
Net Income $ 5,110 $ 1,446 $ 5,615 $ 1,307
Earnings per Common Share:
Basic $ 0.78 $ 0.22 $ 0.86 $ 0.20
Diluted $ 0.72 $ 0.22 $ 0.79 $ 0.20
Average Common Shares Outstanding
Basic 6,573 6,556 6,573 6,556
Diluted 7,077 6,576 7,077 6,576
(1) The tax provision for the three and six months ended June 30,
1999 include a non-recurring, non-cash deferred tax benefit of
$2,858 related to the incorporation of the Company's GO/DAN
Industries partnership.
TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Basic Earnings per Common Share:
From Operations
Before Plant Closure Costs $0.37 $0.22 $0.45 $0.20
Plant Closure Costs (0.03) -- (0.03) --
From Operations
After Plant Closure Costs 0.34 0.22 0.42 0.20
Deferred Tax Benefit 0.44 -- 0.44 --
Total $0.78 $0.22 $0.86 $0.20
Diluted Earnings per Common Share:
From Operations
Before Plant Closure Costs $0.35 $0.22 $0.42 $0.20
Plant Closure Costs (0.03) -- (0.03) --
From Operations
After Plant Closure Costs 0.32 0.22 0.39 0.20
Deferred Tax Benefit 0.40 -- 0.40 --
Total $0.72 $0.22 $0.79 $0.20
Depreciation and Amortization $1,942 $1,610 $3,754 $3,152
TRANSPRO, INC.
BALANCE SHEET HIGHLIGHTS
(Amounts in thousands)
June 30, 1999 December 31,1998
(Unaudited)
Accounts Receivable, Net $ 43,241 $ 34,173
Inventories $ 73,820 $ 59,775
Net Property, Plant
and Equipment $ 40,078 $ 39,487
Goodwill, Net $ 8,069 $ 6,093
Total Assets $ 178,202 $ 148,527
Current Liabilities $ 38,168 $ 29,958
Long-term Debt $ 58,633 $ 42,197
Total Liabilities $ 105,348 $ 80,660
Stockholders' Equity $ 72,854 $ 67,867
Capital Expenditures $ 3,696 $ 8,582
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