Amcast Announces Fiscal 1999 Results
20 October 1999
Amcast Announces Fiscal 1999 Results
DAYTON, Ohio--Oct. 20, 1999--Amcast Industrial Corporation today reported financial results for the fourth quarter and the 1999 fiscal year ended August 31.Net sales for fiscal 1999 increased 2.5 percent to $588.9 million from $574.4 million in 1998. Net income was $19.3 million ($2.11 per diluted share) in fiscal 1999 compared to $8.2 million (88 cents per diluted share) in fiscal 1998. The 1998 results reflected $8.6 million (93 cents per diluted share) as the cumulative effect of an accounting change. Income before the cumulative effect of the accounting change was $16.8 million ($1.81 per diluted share) in fiscal 1998.
Sales for the fourth quarter of 1999 were $143.4 million compared to $137.2 million in the comparable quarter of 1998. Net income was $1.0 million (12 cents per diluted share) in the fourth quarter of fiscal 1999 compared to $0.9 million (10 cents per diluted share) in the fourth quarter of 1998.
As management previously reported, the 1999 fourth quarter income was significantly penalized by high costs resulting from employee turnover primarily in two of Amcast's Midwest plants, and by the launch and production scale-up of new automotive suspension components at the company's newest plant in Ohio.
"The costs incurred as the result of labor turnover and the new product launch problems detract from successes in other areas of the business. We clearly are not satisfied with the fourth quarter results and their impact on Amcast's fiscal year, but we have taken decisive action to eliminate the root causes of the earnings shortfall," said John H. Shuey, chairman and chief executive officer.
"For example, we have taken significant actions to attract and retain quality associates at our facilities where turnover has been a problem. We have redesigned and re-engineered critical suspension component tooling and manufacturing processes for the Ohio plant that we expect will resolve most of the high-cost issues by the end of the first quarter. We have also made key management changes in our automotive business," Shuey stated.
In the fourth quarter of 1999, sales in the Flow Control segment were $38.0 million versus $50.5 million in the fourth quarter of 1998. Operating income was $8.4 million in the fourth quarter of fiscal 1999 compared to $7.9 million in the fourth quarter of 1998. The lower sales in 1999 reflect the disposition of the company's valve business earlier in 1999. Overall in the fourth quarter, modestly lower income from lower sales volume and prices was more than offset by lower manufacturing and material costs.
Fourth quarter 1999 sales of Engineered Components were $105.4 million compared to $86.7 million in the fourth quarter of 1998 when a major customer's work stoppage negatively impacted sales. An operating loss of $1.3 million in the fourth quarter was due to the high costs incurred at the Ohio suspension components plant and cost penalties resulting from excessive turnover in two other automotive plants. The prior year fourth quarter operating income was $0.9 million.
For the full fiscal year 1999, Flow Control segment sales were $153.9 million compared to $180.6 million in 1998. Of the difference in sales year over year, $37.5 million is attributable to the disposition of the valve business. Lower prices for copper and brass plumbing fittings and the absence of valve sales were partially offset by the sales from Lee Brass, which was acquired in April 1998, and higher volumes of copper plumbing fittings. "We are pleased that the year ended strongly after pricing issues encountered early in the year abated. We are particularly pleased by the outstanding contribution of Lee Brass to Amcast's results for the year," said Shuey. Operating income in this segment was $26.9 million for fiscal 1999 compared to $27.9 million in 1998. The difference of $1.0 million between the results of 1999 and those of 1998 was mainly due to lower pricing of copper and brass plumbing fittings caused by competitive conditions early in the year as well as the loss of earnings from the sale of the valve business. However, these factors were largely offset by lower copper costs, lower operating costs, and increased volume for the segment's products.
Fiscal 1999 sales of Engineered Components increased to $435.0 million from $393.8 million in fiscal 1998. Volumes increased in 1999 due to strong demand for Amcast wheels and aluminum components, the robust automotive market, and the absence of customer work stoppages. Operating income of $19.7 million in fiscal 1999 was essentially even with the $19.6 million earned in fiscal 1998. The benefits of increased volume were negated by the adverse factors previously discussed--high costs at some plants due to labor shortages and turnover, and difficult launch and ramp-up issues at the Ohio suspension components plant.
Commenting on the company's wheel business, Shuey said, "The market for aluminum wheels surpassed our expectations for 1999 and we see that strength continuing in fiscal 2000 as aluminum wheel penetration in Europe and North America continues upward. Speedline made significant progress year over year in 1999 as our integration efforts continue to bear fruit. We are clearly seeing the benefits of our global presence as best practices are adopted across our North American and European wheel businesses. We expect Amcast's fiscal 2000 wheel operations to continue achieving integration synergies charted at the time of acquiring Speedline."
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others: general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor relations at the company and its customers.
Amcast Industrial Corporation
STATEMENTS OF INCOME
($ in thousands except per share amounts)
Three Months Ended Year Ended
------------------- -------------------
August 31 August 31 August 31 August 31
1999 1998 1999 1998
------------------- -------------------
Net sales $143,385 $137,193 $588,933 $574,414
Cost of sales 124,173 116,035 495,908 481,410
-------- -------- -------- --------
Gross Profit 19,212 21,158 93,025 93,004
Selling, general and
administrative expenses 13,803 15,183 55,938 57,294
Restructuring charges - - - 9,800
Gain on sale of business - - (9,023) (12,048)
-------- -------- -------- --------
Operating Income 5,409 5,975 46,110 37,958
Equity in loss of joint venture
and other (income) and expense 682 1,168 1,390 (62)
Interest expense 3,038 3,936 13,182 15,045
-------- -------- -------- --------
Income before Income Taxes and
Cumulative Effect of
Accounting Change 1,689 871 31,538 22,975
Income taxes 642 (41) 12,221 6,210
-------- -------- -------- --------
Income before Cumulative Effect
of Accounting Change 1,047 912 19,317 16,765
Cumulative effect of accounting
change, net of tax - - - (8,588)
-------- -------- -------- --------
Net Income $ 1,047 $ 912 $ 19,317 $ 8,177
-------- -------- -------- --------
-------- -------- -------- --------
Basic Earnings per Share:
Income before cumulative effect
of accounting change $ 0.12 $ 0.10 $ 2.11 $ 1.82
Cumulative effect of accounting
change - - - (0.93)
-------- -------- -------- --------
Net income $ 0.12 $ 0.10 $ 2.11 $ 0.89
-------- -------- -------- --------
-------- -------- -------- --------
Diluted Earnings per Share:
Income before cumulative effect
of accounting change $ 0.12 $ 0.10 $ 2.11 $ 1.81
Cumulative effect of accounting
change - - - (0.93)
-------- -------- -------- --------
Net income $ 0.12 $ 0.10 $ 2.11 $ 0.88
-------- -------- -------- --------
-------- -------- -------- --------
Average number of shares
outstanding- Basic 9,019 9,207 9,144 9,200
Average number of shares
outstanding- Diluted 9,034 9,223 9,162 9,250
Amcast Industrial Corporation
CONDENSED BALANCE SHEETS
($ in thousands)
August 31 August 31
1999 1998
----------- -----------
Current Assets
Cash and cash equivalents $ 6,928 $ 7,022
Accounts receivable 97,819 111,066
Inventories 77,166 84,255
Other current assets 21,144 20,308
----------- -----------
203,057 222,651
Property, Plant and Equipment 256,758 260,117
Goodwill 61,261 62,555
Other Assets 12,410 18,127
----------- -----------
$ 533,486 $ 563,450
----------- -----------
----------- -----------
Current Liabilities
Accounts payable $ 82,396 $ 72,887
Current debt 10,855 23,248
Other current liabilities 40,851 39,587
----------- -----------
134,102 135,722
Long-Term Debt 174,061 217,199
Deferred Liabilities 54,557 49,715
Shareholders' Equity 170,766 160,814
----------- -----------
$ 533,486 $ 563,450
----------- -----------
----------- -----------