Sames Reports 94% Increase in Fourth Quarter Operating Income
18 February 2000
Sames Reports 94% Increase in Fourth Quarter Operating Income; Projects 85% Increase in Operating Income for 2000; Cites Progress in Negotiations With Distribution Partners; in Competition for World Wide Automotive Retrofit Program; Continues Stock Buy Back Program
FRANKLIN PARK, Ill., Feb. 17 -- Sames Corporation (Amex: BIN)
announced today its results for the fourth quarter and the year ended
November 30, 1999. Operating income climbed to $3.1 million in the fourth
quarter of fiscal 1999, as compared to $1.6 million in the fourth quarter of
fiscal 1998. The increase in operating income reflects the timing of
completion of large automotive paint shop installations as well as the effects
of cost containment programs and lower cost of goods resulting from the use of
better purchasing methods.
Fourth quarter sales were $27.8 million, as compared to $36.9 million in
1998. The decrease in sales was primarily driven by fewer large automotive
paint shop installations as well as a decrease in the value of the French
franc versus the U.S. dollar.
Fiscal 1999 pretax income from continuing operations was $4.6 million, as
compared to a loss of $5.8 million in fiscal 1998. Sales decreased to
$93 million versus $122 million in fiscal 1998. Had the value of the French
franc remained constant, sales would have been $95 million.
The Company reported a net loss of $1.8 million for fiscal 1999, which
includes losses from discontinued operations of $4.9 million. In fiscal 1998,
the Company reported a net loss of $13.6 million, which included litigation
settlement costs of $10.7 million ($6.2 million, net of tax benefits) and
losses from discontinued operations of $10.4 million.
Arnold H. Dratt, President and Chief Executive Officer, said, "While our
sales were affected by a decline in the French franc against the US dollar, as
well as customer-requested delays in the start of several new major automotive
contracts which had the effect of increasing our year-end backlog, we believe
we have successfully reorganized our global operating units so that they are
fully aligned with our stockholders' interests. In order to support our
aggressive cost reduction programs at our primary manufacturing and assembly
location in Grenoble, France, we decided to pay the retirement costs
associated with early retirements and added a number of key senior executives
to our staff."
"While our business on a quarter to quarter comparison can fluctuate due
to large automotive contracts, which makes it difficult to predict quarterly
activity as contracts are advanced, it should be noted that fourth quarter
1998 was affected by non-recurring legal costs associated with the settlement
of a patent infringement case, and in the fourth quarter of 1999, the costs of
these retirements increased our SG&A expenses. Notwithstanding these items,
we are clearly containing costs and improving margins," Dratt said.
Dratt also noted that holding company expenses and loss from discontinued
operations are also projected to decline substantially as the Company
continues to reduce costs and resolve and conclude matters relating to the
prior Binks business. "In addition, the global turn toward automotive
waterborne systems, as was just announced by Mitsubishi, and the pace of
system quotations, are expected to drive our sales," Dratt said.
Projects 85% Increase in Operating Income in 2000
"We expect operating income from continuing operations to exceed
$8 million for 2000," Dratt said. He cited an increase in backlog at fiscal
year end to $23.7 million from $18.8 million in 1998 as a further indication
of the Company's strong prospects for profitable growth in 2000. Dratt noted
that the backlog at Sames S.A., its primary manufacturing and assembly
subsidiary, had almost doubled to $21.4 million from $11.6 million.
Progress Cited in Negotiations with Distribution Partners
Sames also announced progress in continuing negotiations for manufacturing
and distribution alliances with partners in North America and Japan for its
general industry products. Dratt noted that general industry was a target
growth market for the Company in both those markets. In North America, Sames
has selected JBI, L.P., a leading manufacturer of paint spray booths, which
will both manufacture Sames powder booths and support the marketing of Sames
general industry products to a distributor network enhanced by JBI's existing
distributors. The completion of the JBI agreements is expected within 30
days.
Supporting this program is a new customer demonstration center at Sames
N.A.'s Livonia, Michigan headquarters, which will include two state-of-the-art
powder booths. The customer demonstration center will highlight Sames liquid
electrostatic and powder applicators, including automatic and manual equipment
in a 6,000 square foot area. JBI was selected to provide the booths and build
out the space at Livonia on a turnkey basis. The center is expected to open
in less than sixty days.
Sames Japan is in talks with Iwata Corporation, which would be a major
distributor for its general industry products in Japan. Iwata Corporation is
the leading distributor of powder spray products for the general industry
market in Japan.
As part of its strategy to penetrate the Japanese automotive market, Sames
has developed a breakthrough product that applies waterborne and solvent borne
paint on car bodies with a dramatic reduction in paint waste as colors are
changed. The product is slated for competitive testing next month with a
global automotive manufacturer and has a market opportunity of more than
$100 million in sales over five years.
Stock Buyback Plan Continues
Sames also announced that it has purchased approximately 33,000 shares of
its common stock, or slightly more than 1% of its outstanding shares, in open
market transactions and intends to continue to purchase additional shares as
market conditions warrant. In addition, Sames will implement, subject to
stockholder approval, an employee stock purchase plan in both the United
States and France, and is pleased that a number of its senior officers in both
countries have, in advance, purchased shares in open market transactions and
are expected to purchase shares when the plans are approved.
The Company has scheduled its 2000 annual meeting for April 25, 2000. The
record date for stockholders entitled to vote at the meeting is March 1, 2000.
Sames Corporation is engaged in the design, manufacture and sale of
high-quality spray finishing and coating application equipment. Sames is
noted for its global leadership position in electrostatic finishing equipment
for the automotive finishing market and for the general industrial finishing
market. The Company's website is http://www.samescorp.com .
This press release contains certain statements regarding the Company's
future operating performance, product development and strategic alternatives
and alliances, which constitute "forward-looking statements" within the
meaning of Section 21E of the Securities exchange Act of 1934. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, there can be no assurance that such expectations
will prove to be correct. Important factors that could cause actual results
to differ materially from the Company's expectations include, without
limitation, adverse changes in the economy or the overall market generally,
increased competition relating to the Company's products and services both
within the United States and globally, lower than expected sales of the
Company's products and services, the Company's inability to successfully
implement manufacturing and cost-reduction programs, adverse results of the
testing of the Company's products and validation programs or the failure of
such products or programs to gain wide market acceptance, the inability of the
Company to enter into or secure new or anticipated strategic alliances, the
inability of the Company to timely or completely fulfill the orders
represented in its year-end backlog, continuing losses resulting from
discontinued operations relating to the resolution and conclusion of the
matters relating to the sale of the Binks business, and fluctuation in sales
revenues caused in part by currency fluctuations and translations. The
Company does not undertake any obligation to update the statements made
herein.
SAMES CORPORATION
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations
Years ended November 30, 1999 and 1998
(in thousands, except per share amounts)
1999 1998
Net sales $92,959 122,370
Cost of goods sold 57,345 83,719
Gross profit 35,614 38,651
Selling, general, and administrative expenses 27,298 29,578
Research and development costs 3,686 3,760
Litigation settlement costs -- 10,675
Operating income (loss) 4,630 (5,362)
Other expense (income):
Interest expense 863 759
Other income, net (848) (299)
15 460
Income (loss) from continuing
operations before income taxes 4,615 (5,822)
Income tax expense (benefit) 1,475 (2,564)
Income (loss) from continuing
operations, net of tax 3,140 (3,258)
Discontinued operations:
Gain on sale of business -- 7,730
Loss from operations, net of tax (4,909) (18,105)
Net loss $(1,769) (13,633)
Income (loss) per share -- basic:
Continuing operations $1.06 (1.10)
Discontinued operations -- gain
on sale of business -- 2.61
Discontinued operations -- loss
from operations (1.66) (6.11)
Net loss $(0.60) (4.60)
Income (loss) per share -- diluted:
Continuing operations $1.05 (1.10)
Discontinued operations -- gain
on sale of business -- 2.61
Discontinued operations -- loss
from operations (1.65) (6.11)
Net loss $(0.60) (4.60)
Average number of shares:
Common shares outstanding 2,966 2,965
Equivalent shares on
outstanding stock options 14 --
Shares applicable to diluted earnings 2,980 2,965