TransPro, Inc. Reports Significantly Improved Third Quarter Results
27 October 1999
TransPro, Inc. Reports Significantly Improved Third Quarter Results; Third Quarter Operating Income and Net Income Increased 45% and 51%, Respectively
NEW HAVEN, Conn.--Oct. 27, 1999--TransPro, Inc. today reported significantly improved results for the third quarter ended September 30, 1999.For the third quarter of 1999, sales increased 4% to $71,555,000, compared with sales of $68,535,000 in the third quarter of 1998. Third quarter 1999 operating income was $3,807,000 compared with operating income of $2,813,000 a year ago. Excluding legal fees and settlement costs totaling $274,000 associated with the settlement of an employment-related lawsuit, third quarter operating income was $4,081,000, an increase of 45% compared with operating income in the 1998 third quarter. Earnings for the third quarter of 1999 before these costs increased approximately 51% to $1,645,000, or $0.23 per diluted common share, compared with net income of $1,091,000, or $0.16 per diluted common share a year ago. Including these costs, net income for the 1999 third quarter was $1,490,000, or $0.21 per diluted common share.
Sales of Aftermarket Heating and Cooling Systems products were 1% below prior year third quarter, reflecting lower radiator core, heater and condenser sales, offset by higher complete radiator sales and the contribution from air conditioning parts sales resulting from the acquisition of Evap, Inc. in August 1998 and A/C Plus, Inc. in February 1999. During the third quarter of 1999, Original Equipment Manufacturing ("OEM") Heat Transfer Systems sales increased 4% over the prior year's third quarter due to continued strong demand in the Class 8 truck and specialty vehicle markets. In the Specialty Metal Fabrication segment, sales in the third quarter of 1999 increased 30% due to higher sales of specialty fabricated enclosures for telecommunications customers while vehicle conversion sales were flat.
The consolidated third quarter 1999 gross margin percentage improved to 24.7% from 23.9% last year. The continued improvement was once again driven by gross margin improvements in the Aftermarket Heating and Cooling Systems segment reflecting the contribution of higher margin air conditioning parts, as well as lower material costs and improved manufacturing efficiencies. In the OEM Heat Transfer Systems segment, gross margins improved as a result of actions the Company has taken to improve manufacturing efficiencies. Gross margins also improved in the Specialty Metal Fabrication segment as a result of higher sales, particularly shipments from the Dallas metal fabrication plant, which increased the utilization and fixed cost coverage at that operation.
Selling, General and Administrative expenses increased 2% in the third quarter of 1999 compared with the third quarter of 1998 primarily as a result of the aforementioned lawsuit settlement costs. Excluding these costs, Selling, General and Administrative expenses were flat.
Commenting on the quarter, Hank McHale, President and Chief Executive Officer, stated, "Our cost improvement efforts resulted in increased profitability in the Aftermarket operations despite the weakness in demand for heating and cooling systems products in the automotive Aftermarket. Moderate weather patterns in much of the United States were responsible for this weak demand. Sales of heavy duty industrial replacement radiator cores declined due to the weakness in the agricultural and oil production industries."
Mr. McHale added, "We continued to see improvement at our OEM heat transfer systems segment during the third quarter due to better manufacturing efficiencies. Shipments from our Dallas metal fabrication plant accelerated during the quarter and, because that facility is now being utilized more fully, gross margins in the Specialty Metal Fabrication segment improved."
For the nine month period ended September 30, 1999, sales were $198,978,000, an increase of 8% compared with sales of $184,724,000 in the first nine months of 1998. Before plant closure costs associated with the closing of the Company's Philadelphia and Atlanta condenser manufacturing plants, and the aforementioned settlement costs, operating income for the nine- month period increased 71% to $11,174,000, compared with operating income of $6,517,000 in the prior year period. Including these costs, operating income for the 1999 nine-month period was $10,575,000.
Before plant closure and legal settlement costs and a one- time, non-cash, deferred tax benefit associated with the incorporation of the Company's GO/DAN Industries partnership, earnings for the first nine months of 1999 was $4,548,000, or $0.65 per diluted common share, compared with net income of $2,398,000, or $0.36 per diluted common share in the first nine months of 1998. Including these costs and benefit, net income for the first nine months of 1999 was $7,105,000, or $1.00 per diluted common share.
Mr. McHale concluded, "In accordance with our recently announced strategic initiatives, our exclusive focus will be on growing our Aftermarket Heating and Cooling Systems operations. We see significant opportunities for growth in this sector, particularly in the $600 million automotive air conditioning Aftermarket. Our goals in the coming months will be to enhance our leadership position in our traditional heat transfer products business, and to expand our replacement automotive air conditioning parts operations, focusing on the completion of our recently announced $5 million facility for the production of re- manufactured air conditioning compressors. As we move into the seasonally soft fourth quarter, in which our business typically sees modest losses as a result of lower sales volumes, we remain focused on executing on this strategy and enhancing TransPro's position as a premier supplier in the automotive Aftermarket.
TransPro, Inc. is a manufacturer and supplier of heat transfer components and systems, and specialty fabricated metal products for a variety of Aftermarket and OEM automotive, truck and industrial applications, and performs vehicle conversions.
FORWARD-LOOKING STATEMENTS
Statements included in this news release which are not historical in nature are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's Annual Report on Form 10-K contains certain detailed factors that could cause the Company's actual results to materially differ from forward- looking statements made by the Company. In particular, statements relating to the future financial performance of the Company are subject to business conditions and growth in the general economy and automotive and truck business, the impact of competitive products and pricing, changes in customer product mix, failure to obtain new customers or retain old customers or changes in the financial stability of customers, changes in the cost of raw materials, components or finished products and changes in interest rates.
- TABLES FOLLOW -
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Aftermarket Heating and
Cooling Systems $ 48,469 $ 48,923 $ 130,968 $ 120,997
OEM Heat Transfer Systems 9,694 9,328 28,780 29,280
Specialty Metal Fabrication 13,392 10,284 39,230 34,447
Total Sales 71,555 68,535 198,978 184,724
Cost of Sales 53,890 52,135 148,425 141,140
Gross Margin 17,665 16,400 50,553 43,584
Selling, General and
Administrative Expenses 13,858 13,587 39,653 37,067
Income from Operations
Before Plant Closure Costs 3,807 2,813 10,900 6,517
Plant Closure Costs -- -- 325 --
Income from Operations
After Plant Closure Costs 3,807 2,813 10,575 6,517
Net Interest Expense 1,180 971 3,153 2,466
Income Before Taxes 2,627 1,842 7,422 4,051
Income Tax Provision (1) 1,137 751 317 1,653
Net Income $1,490 $ 1,091 $ 7,105 $ 2,398
Earnings per Common Share:
Basic $ 0.23 $ 0.17 $ 1.08 $ 0.37
Diluted $ 0.21 $ 0.16 $ 1.00 $ 0.36
Average Common Shares Outstanding
Basic 6,573 6,562 6,573 6,561
Diluted 7,053 6,898 7,084 6,676
(1) The income tax provision for the nine months ended September
30, 1999 includes a non-recurring, non-cash deferred tax benefit
of $2,858 related to the incorporation of the Company's GO/DAN
Industries partnership.
TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues
Aftermarket Heating and
Cooling Systems $ 48,469 $ 48,923 $130,968 $120,997
OEM Heat Transfer Systems 9,694 9,328 28,780 29,280
Specialty Metal Fabrication 13,392 10,284 39,230 34,447
Consolidated totals $71,555 $ 68,535 $198,978 $184,724
Income from operations
Aftermarket Heating and
Cooling Systems $ 4,737 $ 4,611 $ 13,266 $ 9,118
OEM Heat Transfer Systems (200) (282) (657) (1,303)
Specialty Metal Fabrication 427 (192) 1,754 2,795
Plant closure costs -- -- (325) --
Legal settlement costs (274) -- (274) --
Segment totals 4,690 4,137 13,764 10,610
Corporate expenses (883) (1,324) (3,189) (4,093)
Consolidated totals $3,807 $ 2,813 $ 10,575 $ 6,517
TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Basic Earnings per Common Share:
From Operations
Before Plant Closure
and Legal
Settlement Costs $ 0.25 $ 0.17 $ 0.70 $ 0.37
Plant Closure Costs -- -- (0.03) --
Legal settlement costs (0.02) -- (0.02) --
From Operations
After Plant Closure
and Legal
Settlement Costs 0.23 0.17 0.65 0.37
Deferred Tax Benefit -- -- 0.43 --
Total $ 0.23 $ 0.17 $ 1.08 $ 0.37
Diluted Earnings per Common Share:
From Operations
Before Plant Closure
and Legal
Settlement Costs $ 0.23 $ 0.16 $ 0.65 $ 0.36
Plant Closure Costs -- -- (0.03) --
Legal settlement costs (0.02) -- (0.02) --
From Operations
After Plant Closure
and Legal
Settlement Costs 0.21 0.16 0.60 0.36
Deferred Tax Benefit -- -- 0.40 --
Total $ 0.21 $ 0.16 $ 1.00 $ 0.36
Depreciation and
Amortization $1,777 $1,610 $5,481 $4,762
TRANSPRO, INC.
BALANCE SHEET HIGHLIGHTS
(Amounts in thousands)
September 30, 1999 December 31, 1998
(Unaudited)
Accounts Receivable, Net $ 44,329 $ 34,173
Inventories $ 76,970 $ 59,775
Net Property, Plant
and Equipment $ 40,498 $ 39,487
Goodwill, Net $ 7,978 $ 6,093
Total Assets $ 181,366 $ 148,527
Current Liabilities $ 38,347 $ 29,958
Long-term Debt $ 60,820 $ 42,197
Total Liabilities $ 107,389 $ 80,660
Stockholders' Equity $ 73,977 $ 67,867
Capital Expenditures $ 6,097 $ 8,582