Transportation Technologies Reports Revenues and Earnings for Q3
27 October 1999
Transportation Technologies Reports Strong Revenues and Earnings for Third Quarter and Nine Months
CHICAGO--Oct. 27, 1999--Transportation Technologies Industries, Inc. announced today that revenues for the third quarter ended September 30, 1999 were $141.1 million, compared to $105.7 million in the same quarter of 1998. The increase in revenues was due to the inclusion of the Imperial Group, which was acquired in April 1999, and a 36 percent increase in revenues at Bostrom Seating, partially offset by a 9 percent reduction in revenues at Brillion Iron Works. Income from continuing operations, before extraordinary items, increased more than 50 percent in the 1999 quarter from the prior year, to $4.1 million, or $0.40 per diluted share, compared to $2.7 million, or $0.27 per diluted share in the 1998 quarter. The higher income resulted from the increased revenues and lower interest expense due to substantially lower debt levels. Both revenues and income for the current quarter were negatively affected by a four week strike at a Gunite plant in Elkhart, Indiana, which ended July 23, 1999 with the signing of a new four-year labor contract. The strike reduced third quarter 1999 net income by approximately $1.4 million after-tax.Net income in the third quarter of 1999 was $4.1 million, or $0.40 per diluted share, compared to $8.0 million, or $0.78 per diluted share in the same period of 1998. Third quarter 1998 net income included after-tax income of $5.6 million from discontinued operations (freight car operations were sold on June 3, 1999); and a $0.4 million after-tax charge from the non-cash write-off of deferred financing costs in connection with prepayments of senior debt.
Through the first nine months of 1999, revenues from continuing operations were $392.7 million, up from $328.5 million in the year-earlier period. Nine-month 1999 income from continuing operations, before extraordinary items, was $12.0 million, or $1.17 per diluted share, compared to $6.2 million, or $0.61 per diluted share a year ago. Revenues and operating income were higher in the 1999 period at all operations except for Brillion, reflecting the continued softness of the agricultural and construction equipment markets.
Net income for the first nine months of 1999 was $62.0 million, or $6.08 per diluted share, up from $28.2 million, or $2.78 per diluted share a year ago. Net income for the first nine months of 1999 included after-tax income of $22.7 million from the divested freight car operations; a $29.8 million after-tax gain on the sale of the freight car operations; after-tax extraordinary charges of $2.5 million from the non-cash write-off of deferred financing costs in connection with prepayments of senior debt; and the $1.4 million after-tax cost of the Gunite strike. Net income for the first nine months of 1998 included after-tax income of $23.0 million from the divested freight car operations; a one-time after-tax gain of $1.0 million from the settlement of a former pension plan; and an after-tax extraordinary charge of $1.0 million from the non-cash write-off of deferred financing costs in connection with the prepayment of senior debt.
"While Transportation Technologies continues to perform very well due to the underlying strength of our operating units and to record demand for heavy-duty trucks, 1999 is clearly a transition year," said Thomas M. Begel, chairman, president and chief executive officer.
"We have completed four strategic acquisitions of heavy-duty truck component businesses and the sale of our freight car operations. We are in the process of integrating the acquired businesses to reduce costs and benefit from our strong customer relationships. Transportation Technologies is now positioned as one of the largest suppliers to the medium and heavy-duty truck industry."
"Acquisitions will remain an important element of our growth strategy as we seek to capitalize on the opportunities resulting from the ongoing consolidation of heavy-duty truck components suppliers," Begel said.
"In its first full quarter as a TTII company, our Imperial Group produced record revenues and operating income, and two recent acquisitions will broaden their product line and strengthen their market position," he said.
"In addition, the conversion of EMI's facilities to solely manufacture Gunite wheel-end components is progressing well, and the transfer of job order work to Brillion will be completed in the fourth quarter," Begel said.
"Market forecasts indicate that demand for heavy-duty trucks should continue at a strong pace into 2000, creating an excellent opportunity for continued growth and strong operating performances by each of our business units," Begel said.
At September 30, 1999, the company had $13.5 million of cash on hand, which was down from the prior quarter primarily due to the acquisition of Clark Engineering and the timing of income tax and other working capital payments. Outstanding debt was reduced by $1.8 million during the quarter, and there were no borrowings against the company's $75 million revolving credit line. Total debt to equity stood at 54 percent at quarter-end versus 73 percent a year ago.
Excluding extraordinary and non-recurring items and income from discontinued operations, earnings before interest, taxes, depreciation and amortization (EBITDA) were $21.6 million in the third quarter of 1999, compared to $17.0 million a year earlier. Through nine months of 1999 and 1998, EBITDA were $60.5 million and $49.8 million, respectively.
Transportation Technologies Industries, Inc. is a leading manufacturer of components for heavy-duty and medium-duty trucks and buses and the truck parts aftermarket. Product lines include: Gunite wheel-end components; Brillion custom iron castings; Imperial body and chassis components; Bostrom truck and bus seating systems; and Fabco steerable drive axles and gearboxes. The company is headquartered in Chicago, Illinois and has manufacturing operations in Alabama, California, Illinois, Indiana, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin.
The statements herein which are not historical facts, including statements about future expectations, are "forward-looking statements" that involve certain risks and uncertainties that could cause actual future results to differ materially from those stated. These risks are spelled out more fully in the company's SEC filings. The company assumes no obligation to update its forward-looking statements.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
------ ------ ------ ------
Net Sales $141,057 $105,694 $392,728 $328,525
Cost of Sales 114,586 82,957 313,308 260,991
--------- --------- --------- ---------
Gross Profit 26,471 22,737 79,420 67,534
Operating expense (income):
Selling, general &
administrative 11,229 8,773 32,308 28,529
Amortization 2,022 1,689 5,629 5,080
Pension termination gain - - - (1,688)
--------- --------- --------- ---------
Operating Income 13,220 12,275 41,483 35,613
Interest expense, net 5,749 6,676 19,388 20,806
--------- --------- --------- ---------
Income before income taxes,
extraordinary items and
discontinued operations 7,471 5,599 22,095 14,807
Income taxes 3,352 2,856 10,101 8,627
--------- --------- --------- ---------
Income before extraordinary
items and discontinued
operations 4,119 2,743 11,994 6,180
Extraordinary items, net
of taxes - (399) (2,505) (984)
Discontinued operations:
Income, net of taxes - 5,640 22,728 22,982
Gain on sale, net of taxes - - 29,817 -
--------- --------- --------- ---------
Net income and
comprehensive income $ 4,119 $ 7,984 $ 62,034 $ 28,178
========= ========= ========= =========
Diluted Weighted average
equivalent shares
outstanding 10,292 10,187 10,210 10,138
========= ========= ========= =========
Diluted earnings per share
before extraordinary
items and discontinued
operations $ 0.40 $ 0.27 $ 1.17 $ 0.61
========= ========= ========= =========
Diluted earnings per share $ 0.40 $ 0.78 $ 6.08 $ 2.78
========= ========= ========= =========
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
1999 1998
------------- -------------
Assets:
Cash and cash equivalents $ 13,478 $ 33,382
Accounts receivable, net 74,035 55,550
Inventories 39,045 29,566
Prepaid expenses and other 18,211 16,331
Net assets of discontinued operations - 37,555
------------- -------------
144,769 172,384
Property, plant and equipment, net 123,947 82,402
Excess costs over assets acquired
and other intangible assets,
net and other 267,112 238,217
------------- -------------
$535,828 $ 493,003
============= =============
Liabilities and Shareholders Equity:
Accounts payable $ 33,097 $ 19,601
Accrued expenses and other payables 48,292 51,662
Accrued income taxes on discontinued
operations 7,757 -
Current maturities of long-term debt
and capital lease 1,930 9,039
------------- -------------
91,076 80,302
Long-term debt and capital lease 22,179 49,186
Senior subordinated notes 180,824 182,338
Deferred income tax liabilities 29,987 34,571
Other long-term liabilities 35,263 35,889
------------- -------------
268,253 301,984
Shareholders Equity 176,499 110,717
------------- -------------
$535,828 $ 493,003
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TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
---------------------------
1999 1998
----------- -----------
Cash Flows from Operating Activities:
Net Income $ 62,034 $ 28,178
Deduct income from discontinued
operations 22,728 22,982
----------- -----------
Income from continuing operations 39,306 5,196
Net gain on sale of discontinued
operations (29,817) -
Depreciation 10,293 8,216
Amortization 6,947 7,051
Deferred income taxes (937) (897)
Pension termination gain - (1,688)
Extraordinary items, net of taxes 2,505 984
Accrued post retirement benefits 1,224 1,189
----------- -----------
29,521 20,051
Change in operating assets and
liabilities (27,074) (3,983)
----------- -----------
Net cash provided by operating
activities 2,447 16,068
----------- -----------
Cash Flows from Investing Activities:
Proceeds from the sale of the rail
car businesses 101,348 -
Cash paid for acquisitions (86,331) -
Capital expenditures (11,748) (6,351)
----------- -----------
Net cash provided (used) by investing
activities 3,269 (6,351)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from the issuance of
long-term debt 103,100 -
Payment of term loans and capital
leases (137,216) (26,852)
Retirement of subordinated notes (1,250) -
Deferred financing costs (2,056) -
Other 933 1,138
----------- -----------
Net cash used by financing activities (36,489) (25,714)
----------- -----------
Net decrease in cash from continuing
operations (30,773) (15,997)
Cash provided by discontinued
operations 10,869 17,737
Cash and cash equivalents, beginning
of period 33,382 27,884
----------- -----------
Cash and cash equivalents, end of
period $ 13,478 $ 29,624
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