Mark IV Reports Fiscal Year; Third Quarter Results
16 December 1999
Mark IV Reports Fiscal Year; Third Quarter Results
AMHERST, N.Y.--Dec. 15, 1999--Mark IV Industries, Inc. today reported results for its third fiscal quarter and nine months ended November 30, 1999.Operating Results
In the quarter, basic earnings per share from continuing operations increased 19 percent to 51 cents from 43 cents last year (46 cents vs. 40 cents diluted), while income from continuing operations was up slightly to $23.3 million compared to $23.2 million last year. Results from continuing operations exclude the recently divested Industrial Filter Business for all periods presented, and the repositioning charge in fiscal 1999.
Sales from continuing operations for the quarter increased 11 percent, to $500.2 million from $450.9 million last year, while operating income (income from continuing operations before interest expense and taxes) for the quarter increased to $50.1 million from $49.4 million in the same quarter last year. Excluding the effects of acquisitions in the current fiscal year, sales for the quarter were about even with last year.
Basic and diluted weighted average shares outstanding in the quarter decreased 16 and 13 percent, respectively, to 46.0 million and 54.7 million from last year's levels of 54.5 million and 63.0 million, due to the company's share repurchase program.
The number of basic and diluted shares outstanding at quarter's end was 44.3 million and 53.0 million, respectively. All subsequent share and share related amounts are basic, except where otherwise noted.
Net income for the quarter increased to $23.4 million, or 51 cents per share including a $100,000 extraordinary gain from early debt extinguishment, compared to a loss of $13.0 million or $.24 cents per share, in the like period last year. Last year's loss included a repositioning charge of $38.1 million or 70 cents per share and income of $1.9 million or three cents per share from discontinued operations.
For the first nine months of fiscal 2000, earnings per share from continuing operations increased 23 percent to $1.39 from $1.13 last year, ($1.28 vs $1.08 diluted) while income from continuing operations increased to $67.4 million from $65.4 million in the comparable period last year.
Sales from continuing operations for the nine-month period increased 10 percent, to $1.50 billion from $1.37 billion last year. Excluding the effects of acquisitions in fiscal 2000, and elimination of sales of non-core businesses, sales for the period reflect an increase of approximately $18 million (after negative currency impacts of $37 million), or two percent over last year's first nine months. Operating income for the first nine months was up five percent, to $146.5 million from $139.2 million in the first nine months of fiscal 1999, and operating cash flow (operating income before depreciation and amortization) increased nine percent to $215.6 from $197.7 last year.
Net income for the nine months ended November 30, 1999 increased to $70.8 million from $32.2 million last year. Fiscal 2000's net income includes income from discontinued operations of $2.5 million or five cents per share, and an extraordinary gain of $900,000, or two cents per share. Net income in the like period last year includes income from discontinued operations of $7.5 million or 13 cents per share and a repositioning charge of $38.1 million or 66 cents per share. Net income for the third quarter and nine months was reduced by adverse effects of foreign exchange in the amount of two cents and three cents per share, respectively. These adverse currency effects are continuing in the fourth quarter.
In the third quarter we acquired Ruggerini Motori, an Italian-based manufacturer of small diesel engines, which will complement the company's earlier acquisition of Lombardini Motori, located in the same region. Ruggerini produces diesel engines for farm machinery, boats and industrial equipment, as well as small motors for Suzuki and Isuzu. Together these acquisitions give us the leading market share in the production of small diesel engines in Europe.
Commenting on the company's results, Sal H. Alfiero, chairman and chief executive officer, said, "Excluding the effects of the Ruggerini and Lombardini acquisitions, and revenues from the sale of non-core businesses and currency effects, Mark IV's Automotive revenues were up six percent in the quarter and eight percent in the first nine months. Revenue growth for the nine months was led by strength in the Automotive OEM and Automotive Aftermarket business in North America. Revenue growth in the quarter was led by foreign Automotive OEM business and the Automotive Aftermarket business in North America. The primary improvement this year has come from increased domestic automotive sales to a record rate of annualized unit shipments. Industrial revenue for the nine months was down two percent overall, primarily due to the depressed agricultural markets worldwide, a weak demand for products in the petroleum and mining markets and weakness in industrial markets in Europe. Overall, the increasing strength of the U.S. dollar continues to have a negative impact on the company's results, reducing revenues by $19 million in the quarter and $37 million for the nine months, while also reducing earnings by $.02 and $.03 per share in the same periods, respectively.
"We have utilized our improving cash flows, a portion of funds available from sales of non-core businesses, and availability under various credit facilities, to repurchase portions of the company's outstanding common stock and the 7-3/4% Senior Subordinated Notes. In fiscal 2000 alone, the company has repurchased 9.2 million shares of stock at a total cost of $164.4 million (average cost of $17.94 per share), including 3.8 million shares in the third quarter. The company has 5.2 million shares remaining under its currently authorized share repurchase program. Through the end of the third quarter we have also repurchased $130.4 million of our 7-3/4% Senior Subordinated Notes, our highest cost debt.
Mr. Alfiero added, "We are continuing to confront weak markets in the Industrial OEM side of the business, along with a strengthening U.S. dollar, and an increase in some key raw material prices. On the other hand, we are seeing improvement in the economies of Brazil, Argentina, and the rest of South America and Asia. New product developments such as our tensioner, air intake manifold systems and power train businesses will fuel growth in fiscal 2001."
This press release contains forward-looking statements that involve risk and uncertainties as detailed from time to time in the company's SEC reports, including its report on Form 10-K for its fiscal year ended February 28, 1999. These risks and uncertainties could affect the company's actual results and cause them to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the company.
Mark IV Industries, Inc. is a $2.0 billion global manufacturing company headquartered in the Buffalo suburb of Amherst, New York, employing 16,000 people worldwide. The company's core technologies include power transmission, fluid transfer and filtration systems and components for global industrial and automotive markets. For more information on Mark IV, visit the company's web site at http://www.mark-iv.com. -0-
MARK IV INDUSTRIES, INC.
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
November 30, November 30,
1999 1998(a) 1999 1998(a)
----- ------
Sales from
continuing operations $500,200 $450,900 $1,501,500 $1,370,400
======== ======== ========== ==========
Operating income (b) $ 50,100 $ 49,400 $ 146,500 $ 139,200
Interest expense 13,200 13,000 40,200 36,900
-------- -------- --------- ---------
Operating income,
net of interest expense
(before repositioning
charge) $ 36,900 $ 36,400 $ 106,300 $ 102,300
========= ========= =========== =========
Income from continuing
operations (c)
Before repositioning
charge $ 23,300 $ 23,200 $ 67,400 $ 65,400
Repositioning charge (d) - (38,100) - (38,100)
------ -------- ------ -------
Total continuing 23,300 (14,900) 67,400 27,300
Income from discontinued
operations (c) - 1,900 2,500 7,500
Extraordinary gain
(loss) (e) 100 - 900 (2,600)
------ ----- ----- ------
Net income (loss) $ 23,400 $(13,000) $ 70,800 $ 32,200
======== ======== ======== ========
Basic earnings per share:
Continuing operations
Before repositioning
charge $ .51 $ .43 $ 1.39 $ 1.13
Repositioning charge - (.70) - (.66)
----- ------ ------ -----
Total continuing .51 (.27) 1.39 .47
Discontinued operations - .03 .05 .13
Extraordinary gain (loss) - - .02 (.04)
----- ---- ----- -----
Net income (loss) $ .51 $ (.24) $ 1.46 $ .56
===== ======= ======= ======
Diluted earnings per share(f):
Continuing operations
Before repositioning
charge $ .46 $ .40 $ 1.28 $ 1.08
Repositioning charge - (.67) - (.61)
----- ------ ------- ------
Total continuing .46 (.27) 1.28 .47
Discontinued operations - .03 .04 .11
Extraordinary gain (loss) - - .02 (.04)
----- ----- ----- ----
Net income (loss) $ .46 $ (.24) $ 1.34 .54
====== ======= ====== =====
Weighted average number of
shares outstanding:
Basic 46,000 54,500 48,500 57,900
Diluted 54,700 63,000 57,200 66,500
-------------------------------
(a) Restated to reflect the effects of discontinued operations.
(b) Income from continuing operations before interest expense and
taxes, and the repositioning charge in fiscal 1999.
(c) Net of related tax effects.
(d) Represents the pre-tax charge of $62.8 million recognized in the
third quarter of fiscal 1999. An additional $3.2 million
repositioning charge ($1.9 million, net of taxes) is included in
discontinued operations.
(e) Gain(loss) from early debt extinguishment, net of related tax
effects.
(f) As a result of a net loss in the third quarter of fiscal 99, the
full effect of the common stock equivalents would be
antidilutive to earnings from continuing operations. Therefore,
the diluted amounts are limited to be no more than the basic
amount for the quarter and nine months periods ended November
30, 1998.