Williams Controls Reports First Quarter Results
16 February 2000
Williams Controls Reports First Quarter Results; R&D Expenditures Increase 162% to Support New Business
PORTLAND, Ore., Feb. 15 -- Williams Controls, Inc.
announced its results for its fiscal first quarter ended
December 31, 1999. Sales for the first quarter of fiscal 2000 increased 10.3%
to $15,877,000 compared to $14,399,000 reported in the first quarter of 1999.
The increase in sales was primarily driven by increases in the Company's
Vehicle Components Business, including initial sales of automotive electronic
throttle controls.
The net loss was $166,000, or $.02 per diluted share, in the quarter ended
December 31, 1999 compared to net earnings of $1,031,000, or $.05 per diluted
share, during the comparable period one year ago. As expected, research and
development expenditures increased 162% to $1.7 million during the current
year quarter. These expenditures, which are equivalent to $0.05 per share,
were primarily directed at developing adjustable foot pedal and electronic
throttle control (ETC) products for new business that was awarded in fiscal
1999. Research and development expenses as a percent of sales increased from
4.5% in the first quarter of fiscal 1999 to 10.7% in the current fiscal
quarter. The Company expects this high level of R&D to increase further as
the Company continues to be awarded new adjustable foot pedal and ETC
contracts.
Gross margin declined $0.6 million, primarily as a result of decreased
margins of $0.5 million at the Company's Premier Plastic Technologies ("PPT")
subsidiary, and also a $0.2 million increase in management information
services costs associated with Y2K compliance and implementation of an
enterprise resource planning system ("ERP") at the company's Portland
facility. Operating losses, as expected, continued at PPT during the quarter
as the company's operating problems were addressed and $0.7 million of
unprofitable contracts were successfully terminated, which will be effective
in the second quarter.
Williams Controls CFO Gerard A. Herlihy stated, "Our operating results
reflect a heavy investment in R&D to develop products for automotive contracts
which were awarded in 1999. As we have discussed, these contracts require a
substantial upfront investment by the Company in order to obtain the high
volume 3 to 5 year production contracts that have been awarded to us. These
products will begin to add to revenues later this year and should add
substantial revenues and operating profits in fiscal 2001 and 2002."
Mr. Herlihy added, "One year ago, the Company was able to win new
automotive ETC contracts because of its long experience in the heavy and
medium truck markets and because of its creative engineering solutions to
solve design issues for automotive customers. Since that time, the adjustable
pedal has received rapid and immediate consumer acceptance, justifying our
purchase of ProActive Pedals in July. The challenge before us is how to
allocate engineering and capital resources to take advantage of these
opportunities while maintaining strategic focus. This emerging domestic
market could be as large as $300 million, and we will carefully take on
programs that will allow us to satisfy our customers needs with quality
innovative products, and only take on projects that the Company can assimilate
within our engineering and capital constraints."
Mr. Herlihy concluded, "The operating results at Premier Plastics are
significantly affecting our reported corporate earnings. PPT's new management
has successfully terminated certain unprofitable contracts, and continues to
focus on correcting operating problems that are causing high scrap rates. At
the same time, PPT is beginning to ramp up for a substantial book of new
business that has recently been awarded, production of which began in January
2000. Despite these corrective measures and new business, we expect PPT to
continue to report operating losses for the near term."
Williams Controls is a leading manufacturer and integrator of innovative
sensors, controls and communications systems for the transportation and
communication industries. You can reach the Company on the Web at
http://www.wmco.com .
The statements included in this news release concerning predictions of
economic performance and management's plans and objectives constitute forward-
looking statements made pursuant to the safe harbor provisions of Section 21E
of the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1934, as amended. These statements involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Factors which could cause or contribute to such
differences include, but are not limited to, factors detailed in the Company's
Securities and Exchange Commission filings; economic downturns affecting the
operations of the Company or any of its business operations, and the
unavailability of financing to complete management's plans and objectives.
The forward-looking statements contained in this press release speak only as
of the date hereof and the Company disclaims any intent or obligation to
update these forward-looking statements.
Williams Controls, Inc.
Unaudited Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Three Months
Ended 12/31/99 Ended 12/31/98
Sales $15,877 $14,399
Cost of sales 12,131 10,015
Gross margin 3,746 4,384
Research and development 1,697 648
Selling 440 497
Administration 1,107 915
Total operating expenses 3,244 2,060
Earnings from operations 502 2,324
Other expenses 771 650
Earnings (loss) before
income taxes (269) 1,674
Income tax expense (benefit) (103) 643
Net earnings (loss) (166) 1,031
Dividends on preferred stock 147 150
Net earnings (loss) allocable
to common shareholders $(313) $881
Net earnings (loss) per
common share - basic $(.02) $.05
Net earnings (loss) per
common share - diluted $(.02) $.05
Weighted avg. shares used in
per share calculation -
basic 19,776,843 18,248,760
Weighted avg. shares used in
per share calculation -
diluted 19,776,843 21,312,041