Margate Posts Sharply Higher Third Quarter Earnings
26 October 1999
Margate Posts Sharply Higher Third Quarter Earnings
YALE, Mich., Oct. 26 -- Benefiting from increased efficiency
and continued strength in its automotive-industry business, Margate
Industries, Inc. today reported its third consecutive quarter
of improved results, posting sharply higher profitability in the third quarter
ended September 30, 1999.
The Yale, Mich.-based foundry-services company reported net income of
$93,810, or $0.06 per share, on net sales of $2.5 million in the third quarter
of 1999, compared with net income of $3,202 on net sales of $2.5 million in
the prior year period. Increased operating efficiency helped Margate post
significantly higher net income, despite flat sales.
"I am very pleased with our performance in the third quarter," said
William Hopton, president and CEO of Margate Industries. "Our focus on
efficiency and cost management at our Michigan and Wisconsin plants continues
to drive our profitability, and has put us in position for continued growth."
Margate's gross profit increased 68% to $346,556 in the 1999 third
quarter, due primarily to higher efficiency levels at the Company's Michigan
and Wisconsin facilities, which provide cleaning and finishing services for
foundry castings. Operating income totaled $110,997 in the 1999 third
quarter, versus a loss in the same period a year ago. Dividend and interest
income more than doubled to $18,332 in the 1999 third quarter, versus the
year-ago period. The increase in interest income is the result of earnings
on higher cash levels following last year's one-time gain on the sale of
equity in a former subsidiary.
For the nine-month period, Margate reported net income of $295,982, or
$0.20 per share, on net sales of $7.5 million, compared with net income of
$1.8 million, or $1.18 per share, on net sales of $7.5 million in the same
period of 1998. Last year's nine-month figures include a one-time gain of
$2.1 million related to the sale of equity in a former subsidiary. Excluding
the gain, Margate would have posted a pre-tax loss of $96,983 in the nine-
month period for 1998.
"Our improvements in operations have contributed significantly to our
performance throughout the first three quarters of 1999, as evidenced by
increased profits and margins," Hopton said.
Gross profit increased 51% versus the nine-month period last year, due
primarily to increased efficiency. Income from operations increased more than
630% compared with last year's nine-month period, rising to $373,172.
Hopton said he expects Margate's 1999 fourth quarter to be profitable and
will exceed the Company's loss in last year's fourth quarter, despite expected
reduced fourth-quarter sales. Margate is pursuing additional cleaning and
outsourcing opportunities with other Midwest foundries to offset the
anticipated decline in sales over the next two quarters.
Hopton concluded: "This third consecutive quarter of improved earnings,
combined with the new business opportunities created by the record pace of the
automotive industry, have put Margate in position to finish the year in
profitable fashion. With our increased efficiency and quality, we look
forward to taking on more work from the over-worked foundry industry."
Margate Industries employs approximately 200 at two wholly owned
subsidiaries, Yale Industries and Fort Atkinson Industries, which provide
cleaning, grinding, chipping, painting and finishing of iron castings used
primarily in the manufacture of automotive vehicles, heavy equipment and farm
equipment.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this news release include certain
predictions and projections that may be considered forward-looking statements
under securities law. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially
including, but not limited to, the performance of the automotive industry,
certain customers and affiliated companies, as well as other economic,
competitive and technological factors involving the Company's operations,
markets, services, products and prices.
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
NET SALES $2,477,284 $2,523,248 $7,494,855 $7,453,750
COST OF SALES 2,130,728 2,317,488 6,485,888 6,784,808
GROSS PROFIT 346,556 205,760 1,008,967 668,942
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 235,579 207,368 633,829 613,621
RELATED PARTY SERVICES
AND SALES COMMISSIONS - - 1,966 4,231
INCOME (LOSS) FROM
OPERATIONS 110,977 (1,608) 373,172 51,090
DIVIDEND AND INTEREST
INCOME (EXPENSE)
- NET 18,332 8,690 52,808 (4,859)
OTHER (EXPENSE) 12,501 - 25,002 (143,214)
INCOME (LOSS) BEFORE
PROVISION OF
EXTRAORDINARY ITEM 141,810 7,082 450,982 (96,983)
GAIN ON SALE OF 45%
INTEREST IN NEW HAVEN
FOUNDRY - - - 2,075,000
INCOME (LOSS) BEFORE
PROVISION FOR FEDERAL
INCOME TAX 141,810 7,082 450,982 1,978,017
PROVISION FOR FEDERAL
INCOME TAXES 48,000 3,880 155,000 170,407
INCOME (LOSS) $93,810 $ 3,202 $295,982 $1,807,610
BASIC EARNINGS PER
COMMON SHARE $0.06 $0.00 $0.20 $1.19
WEIGHTED AVERAGE
SHARES
OUTSTANDING 1,514,605 1,517,553 1,497,741 1,522,186