Moto Guzzi Second Quarter 1999 Unit Sales Up 20%
9 August 1999
Moto Guzzi Second Quarter 1999 Unit Sales Up 20%
NEW YORK--Aug. 9, 1999--Moto Guzzi Corporation (OTC BB: GUZI) today announced operating results for the second quarter ended June 30, 1999. Net sales for the three months ended June 30, 1999 were Lit. 23.8 billion (US$ 12.7 million), up 6.3 percent from the comparable 1998 period. Net loss was Lit. 5.1 billion (US$ 2.7 million loss) compared with a loss of Lit. 2.6 billion (US$ 1.4 million loss) for the same period last year.Second quarter unit sales increased 19.8 percent from 1,522 units in 1998 to 1,823 units in 1999. Average selling prices decreased primarily due to a change in the sales mix. In 1999, sales were driven predominantly by the Company's new California Jackal, introduced in April 1999 and its Nevada models which are designed to meet lower price points.
The 1999 sales mix generated lower unit gross margins, offset partly by higher sales volumes. Production and sales had been limited in the first quarter due to lack of liquidity, but were stabilized by the end of May 1999 with cash received through the closing of the merger with North Atlantic Acquisition Corp. (NAAC). Production in the second quarter of 1999 increased by 67.4 percent over the first quarter of 1999 to 1,900 units. Over 800 units were completed in July 1999. Corporate expenses connected with the public status of the Company since March 1999 and selling costs for the Jackal launch contributed to a 21.7 percent increase in selling, general and administrative expenses.
On July 27, Moto Guzzi S.p.A. concluded labor negotiations resulting in a temporary employee downsizing program commencing September 1999. The program will last two years while the Company restructures production processes, overhauls its plant, grows production volumes and improves productivity. These enhancements will enable the Company to return to current employment levels with significantly increased productivity and volumes.
Also in July, Moto Guzzi introduced its V-11 Sport motorcycle, a "retro sport" model with an innovative six-speed gearbox. This motorcycle has been greeted enthusiastically by the trade press with many comparing it with the Company's legendary V-7 Sport from the 1970's. Shipments of this new model are scheduled for September 1999.
John Porter, newly appointed President of Moto Guzzi operations in North America, said: "Our increasing unit sales highlight the strength of the Moto Guzzi brand in the U.S. and we are very pleased with the reception of the California Jackal. With the Jackal adding to a strong range of custom motorcycles and the V-11 Sport arriving in the Fall, we are very well positioned for growth."
Mario Scandellari, Managing Director of Moto Guzzi S.p.A. and Chief Operating Officer of Moto Guzzi Corporation, confirmed: "The U.S. market is important for Moto Guzzi. At the plant, we are focusing on quality and continuing increases in production levels to meet expected demand and growth both in the U.S. and in other key markets."
Mark Hauser, Executive Chairman, added: "Employees at Moto Guzzi's plant in Mandello del Lario, Italy, have done a fantastic job in accelerating production levels in the past 4 months. The downsizing program is a regrettable but essential step in restructuring operations to permit growth and return to profitability. We're confident of our success in this respect."
Moto Guzzi is one of the oldest, most storied motorcycle manufacturers in the world. Headquartered in Mandello del Lario, Italy, the company produces several models of heavyweight and high-performance motorcycles. With unit sales of about 5,700 in 1998, Moto Guzzi sells its products through a network of over 750 wholly and partially owned importers and independent dealers worldwide. In addition to motorcycles for the general consumer, Moto Guzzi also manufactures models targeted at government agencies, national and local police forces and highway patrols.
Current Moto Guzzi models include the California, Nevada Club, V10 Centauro, and 1100 Sport Corsa. New models available in 1999 include the California Jackal and the V11 Sport. Some projects on the longer-term horizon include a new generation for the California family and a new line of motorcycles with a new 750cc engine and chassis.
The information in this press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements.
MOTO GUZZI CORPORATION
Operating Highlights
For the Three Months Ended June 30, 1999
Three Months Ended Three Months Ended
June 30 June 30 June 30 June 30
1999 1998 1999 1998
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In millions of Italian Lire In thousands of US Dollars
Except loss per share except loss per share (a)
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Net sales 23,805 22,403 12,662 11,916
Gross margin 2,808 4,570 1,494 2,431
Operating loss (3,810) (1,330) (2,027) (707)
Finance
costs, net (1,178) (1,096) (627) (583)
Net loss (5,094) (2,548) (2,710) (1,355)
======= ======= ======= =======
Net loss
per share (b) (927) (773) (0.49) (0.41)
======= ======= ======= =======
Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1999 1998 1999 1998
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In millions of Italian Lire In thousands of US Dollars
Except loss per share except loss per share (a)
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Net sales 41,378 47,989 22,010 25,526
Gross margin 2,932 9,234 1,561 4,912
Operating loss (8,073) (853) (4,294) (453)
Finance
costs, net (2,242) (2,082) (1,192) (1,107)
Net loss (10,399) (3,406) (5,531) (1,811)
======= ======= ======= =======
Net loss
per share (b) (2,193) (1,023) (1.17) (0.54)
======= ======= ======= =======
(a) Translated in U.S. Dollar equivalents at the approximate exchange
rate prevailing at June 30, 1999 of $1.00 : Lit. 1,880
(b) Calculated on weighted average number of shares outstanding in
period.