C2, Inc. Reports Improved Financial Results for the Third Quarter
19 October 1999
C2, Inc. Reports Improved Financial Results for the Third Quarter
MILWAUKEE--Oct. 19, 1999--C2, Inc. today announced its financial results for the third quarter and nine months ended September 30, 1999.Net earnings for the quarter ended September 30, 1999 before an extraordinary item were $411,000, or $0.08 per share up 24% over comparable proforma earnings for the prior year's quarter of $332,000, or $0.06 per share. Revenues for the quarter increased 19% to $36,812,000 driven by a 20% gain in logistics revenue at Total Logistic Control and continuing strong demand for Zero Zone's refrigerated merchandizing products. During the quarter, Zero Zone completed a refinancing of its senior debt which entailed the issuance of both non-taxable and taxable industrial revenue bonds and an increase in its bank credit facility. The new debt facilities have significantly extended maturities and will result in annual interest savings exceeding $100,000. An extraordinary charge of $153,000, net of tax and minority interest, related to the debt refinancing was incurred during the quarter. Including the extraordinary item, C2, Inc. reported net earnings for the quarter of $258,000 or $0.05 per share.
For the first nine months of fiscal 1999 revenues totaled $97,694,000, up 18% over last year's comparable proforma for the same period. Net earnings for the period before non-recurring and extraordinary items totaled $966,000, or $0.19 per share versus comparable proforma net earnings of $903,000 for the same period last year, an increase of 7%.
William T. Donovan, Chairman and CFO commented, "C2's third quarter financial results reflect solid growth in both of our operating units. More importantly, we are now beginning to realize the anticipated benefit from substantial capital investment programs and customer recognition for excellence in solution driven services and products. At Zero Zone, expanded manufacturing capacity and new product developments are driving high growth. We continue to achieve record volume in sales, orders and backlog." Donovan further noted, "At TLC, capital programs added new and enhanced systems capabilities to further its presence in the high growth third-party logistics industry. During the quarter, Total Logistic Control was recognized as the nation's fourth ranked third-party logistics provider in customer satisfaction and service excellence. We are operating at high levels of warehouse capacity, expanding our value-added logistic solution services, and leveraging the national recognition we are achieving with new customer development programs."
Total Logistic Control
Total Logistic Control (TLC), based in Zeeland, Michigan, is a national provider of integrated logistic services which include refrigerated and dry warehousing, transportation, transportation/supply chain management, international freight forwarding, food distribution and packaging. Operations are conducted through a network of 12 distribution warehouses of which seven are refrigerated or frozen facilities with an aggregate capacity of 34 million cubic feet. TLC operates a transportation fleet of 190 refrigerated units. C2, Inc. owns 66.7% of TLC.
Operating results of TLC for the third quarter reflect strong growth in revenues, up 20% to $26,817,000 resulting from high utilization of warehouse and transportation capacity and new logistic service programs which are beginning to ramp up. EBITDA for the third quarter of 1999 was $3,058,000 compared to last year's level of $3,485,000. The decline relates to increased costs in transportation operations related to sharply higher fuel costs and maintenance. Fuel cost adjustments were instituted as of October 1st and higher maintenance, older fleet equipment is scheduled for replacement during the fourth quarter. In addition, TLC experienced higher labor costs associated with the implementation of two significantly expanded distribution programs with existing customers, which are now largely operationalized.
For the nine months ended September 30, 1999, TLC's revenues totaled $74,953,000, up 14% over last year's comparable period. EBITDA for the first nine months of fiscal 1999 totaled $9,279,000 versus last year's level of $10,166,000. TLC's EBITDA decline this year is due to increased operating expenses in information systems and personnel related to its growth strategy in developing high volume logisitics management services; higher labor costs in the implementation of two expanded distribution accounts; and increased fuel and maintenance costs in transportation services.
Zero Zone
Zero Zone is a Wisconsin-based manufacturer of refrigerated and freezer display cases used in grocery, convenience and drug store chains for retail merchandising of food, beverage and floral products. C2 purchased 70.6% of Zero Zone on March 12, 1999.
Operating results of Zero Zone for the third quarter reflect continued strong growth in sales and operating earnings. Sales for the three months ended September 30, 1999 totaled $9,995,000 reflecting growth of 16% over the same period last year. Sales volume growth is due to both increased sales to existing accounts, as well as new customers. During the quarter, Zero Zone achieved margin improvement due to realized production efficiencies associated with its recently completed plant expansion plus new product introductions. EBITDA for the third quarter of fiscal 1999 totaled $1,449,000, an increase of 28% over the comparable period last year.
For the six and one-half months since its acquisition, Zero Zone has contributed to C2, Inc. sales revenues of $22,741,000 and EBITDA of $2,957,000.
C2, Inc.
Milwaukee-based C2, Inc. is a new public company principally engaged in third party product distribution services and equipment manufacturing. C2's operating units include Total Logistic Control, a provider of refrigerated and non-refrigerated third party integrated logistic services which include warehousing, transportation, distribution and international freight forwarding; and Zero Zone, a manufacturer of refrigerated and freezer display cases used in grocery, convenience and drug store chains for retail merchandising of food, beverage and floral products.
On October 12, 1999, the investment firm Tucker Anthony Cleary Gull initiated coverage on C2, Inc. common stock. For a copy of the report contact this firm at 1-800-544-9812.
This and other C2, Inc. press releases and additional corporate data can be accessed via the World Wide Web at http://www.c2-inc.com.
This press release contains forward-looking statements within the meaning of the Private Securities Reform Act of 1995 concerning, among other things, C2, Inc.'s prospects for its operations. These risks and uncertainties are more fully described in the C2, Inc. prospectus filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should certain assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.
C2, INC.
Consolidated Statements of Earnings
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, Septemeber 30,
------------------------ ------------------------
1999 1998(1) 1998(2) 1999 1998(1) 1998(2)
Actual Proforma Actual Actual Proforma Actual
------------------------ ------------------------
Revenues:
Logistic Revenues $26,817 $22,370 $22,370 $74,953 $65,835 $65,835
Product Sales 9,995 8,631 -- 22,741 17,304 --
------------------------ ------------------------
$36,812 $31,001 $22,370 $97,694 $83,139 $65,835
Costs and Expenses:
Logistic Expenses 22,324 16,912 16,912 60,801 50,624 50,624
Cost of Product
Sales 7,021 6,271 -- 16,383 12,830 --
Depreciation and
Amortization 1,980 1,923 1,721 5,726 5,480 5,076
SG&A Expenses 3,177 3,435 1,973 9,051 8,004 5,045
------------------------ ------------------------
34,502 28,541 20,606 91,961 76,938 60,745
------------------------ ------------------------
Earnings from
Operations 2,310 2,460 1,764 5,733 6,201 5,090
Other Income(Expense):
Interest Expense (1,268) (1,256) (621) (3,360) (3,455) (1,915)
Merger-Related
Expenses -- -- -- (343) -- --
Other Income
(Expense) (12) (57) (57) (34) (52) (52)
------------------------ ------------------------
(1,280) (1,313) (678) (3,737) (3,507) (1,967)
------------------------ ------------------------
Earnings Before
Income Taxes 1,030 1,147 1,086 1,996 2,694 3,123
Income Tax Provision 403 490 -- 832 1,025 --
------------------------ ------------------------
Net Earnings before
Minority Interest
and Extraordinary
Item 627 657 1,086 1,164 1,669 3,123
Minority Interest 216 325 -- 547 766 --
------------------------ ------------------------
Net Earnings before
Extraordinary Item 411 332 1,086 617 903 3,123
Extraordinary Item net
of Tax and Minority
Interest 153 -- -- 153 -- --
------------------------ ------------------------
Net Earnings $ 258 $ 322 $1,086 $ 464 $ 903 $3,123
------------------------ ------------------------
Basic Net Earnings
per Share $ 0.05 $0.06 $0.21 $0.09 $0.17 $ 0.60
------------------------ ------------------------
Three Months Ended
September 30,
-------------------------------
1999 1998(1) 1998(2)
Actual Proforma Actual
Average Number -------------------------------
of Shares
Outstanding 5,202,664 5,202,664 5,202,664
Nine Months Ended
September 30,
-------------------------------
1999 1998(1) 1998(2)
Actual Proforma Actual
Average Number -------------------------------
of Shares
Outstanding 5,202,664 5,202,664 5,202,664
(1) Proforma September 30, 1998 represents actual results for Total
Logistic Control for the quarter and nine months ended September 30,
1998 adjusted for increased interest expense, minority interest and
income tax provision. Proforma September 30, 1998 results for Zero
Zone include their actual results for the period March 12 through
September 30, 1998 adjusted for increased interest expense, minority
interest and goodwill. An estimate of corporate charges for the period
ended September 30, 1998 are also included.
(2) 1998 actual reflects the comparative operating results for Total
Logistic control only, as presented in Form 10-Q