TransPro Reports Significantly Improved Q4 and Full Year Results
28 February 2000
TransPro, Inc. Reports Significantly Improved Fourth Quarter and Full Year Results
NEW HAVEN, Conn.--Feb. 25, 2000 --increase 80% and 125%, respectively --
TransPro, Inc. today reported results for the fourth quarter ended December 31, 1999.
For the fourth quarter of 1999, sales increased 13% to $62,599,000, compared with sales of $55,341,000 in the fourth quarter of 1998. Fourth quarter 1999 operating income was $789,000 compared with operating income of $288,000 in the fourth quarter of 1998, before legal settlement costs of $575,000. The Company reported an operating loss of $287,000 in the fourth quarter of 1998 including the legal settlement costs.
In the fourth quarter of 1999, the Company reported a net loss of $289,000, or $0.04 per diluted share, compared with a net loss in the fourth quarter of 1998 of $425,000, or $0.06 per diluted share, excluding the aforementioned settlement costs. Including the legal settlement costs, the net loss in the fourth quarter of 1998 was $751,000, or $0.11 per diluted share.
Sales of Aftermarket Heating and Cooling Systems products in the 1999 fourth quarter, were essentially flat compared with the prior year period, as higher complete radiator and air conditioning parts sales were offset by lower radiator core, heater and condenser sales as a result of lower demand from the energy producing and agricultural regions of the U.S., as well as unusually mild weather conditions. During the fourth quarter of 1999, Original Equipment Manufacturing ("OEM") Heat Transfer Systems sales increased 6% over the prior year's fourth quarter due to continued strong demand in the Class 8 truck and specialty vehicle markets. In the Specialty Metal Fabrication segment, sales in the fourth quarter of 1999 increased 67% due to higher sales of specialty fabricated enclosures for telecommunications customers as well as higher vehicle conversion sales.
Consolidated fourth quarter gross margins increased 28% to $13,970,000 from $10,954,000 in 1998 due to higher margins in the Aftermarket Heating and Cooling Systems segment, reflecting lower material costs and manufacturing efficiencies. In the OEM Heat Transfer Systems segment, higher gross margins were the result of actions the Company has taken to improve manufacturing efficiencies and reduce costs. Gross margins also increased in the Specialty Metal Fabrication segment as a result of higher production rates to support higher sales of fabricated enclosures. The Consolidated fourth quarter 1999 gross margin percentage improved to 22.3% from 19.8% last year.
Selling, General and Administrative expenses increased in the fourth quarter of 1999 compared with the fourth quarter of 1998, reflecting the increased volume in the OEM Heat Transfer and Specialty Metal Fabrication operations. In addition, the fourth quarter of 1999 included a full complement of operating expenses of the Company's telecommunications enclosure facility in Plano, Texas, which ramped production over the course of the year, and SG&A costs of acquisitions made subsequent to the fourth quarter of 1998.
Operating income improved as a result of increased profitability within the Company's Aftermarket Heating and Cooling Systems and OEM Heat Transfer Systems segments. Operating income of the Specialty Metal Fabrication segment, while slightly below the prior year period, continued to increase from previous quarters as rising sales volumes of telecommunications enclosures more fully covered the overhead of the Plano, Texas production facility.
Commenting on the quarter, Hank McHale, President and Chief Executive Officer, stated, "At GDI, we once again achieved significant unit volume growth in complete radiators, the single most important product in our traditional Aftermarket heat transfer product line, as we enjoyed the benefit of our position as a major radiator supplier to the large national retailers and gained some new business with large traditional warehouse distributors. We also expanded our broad coverage in air conditioning replacement parts to further strengthen our position as a major participant in this segment of the automotive Aftermarket."
Mr. McHale added, "We continued to see improvement at our OEM heat transfer systems segment during the quarter due to better manufacturing efficiencies and lower costs. Strong shipments from our Plano metal fabrication plant and volume increases in vehicle conversions contributed to the sales and gross margin growth at our Specialty Metal Fabrication division. While profitability in this segment was temporarily reduced by the full burden of operating costs at Plano, we see strong demand for our telecommunications enclosures, and expect ongoing profitability improvements as sales at this facility continue to ramp-up."
For the full year, sales were $261,577,000 in 1999, an increase of 9% compared with sales of $240,065,000 in 1998. Before non-recurring items in both years, 1999 operating income increased 80% to $11,963,000 from $6,655,000 in 1998. Including plant closure costs of $325,000 associated with the closing of the Company's Philadelphia and Atlanta condenser manufacturing plants and legal fees and settlement costs of $274,000 associated with the settlement of an employment-related lawsuit, operating income in 1999 was $11,364,000. In 1998, operating income of $6,231,000 included legal settlement costs of $575,000, the receipt of a dividend from the Ohio State Workers' Compensation Fund amounting to $613,000 and the recognition of a reserve of $462,000 against the doubtful collection of a note receivable.
Excluding the aforementioned one-time items, net income for 1999 was $4,301,000, or $0.61 per diluted share, an increase of 125% when compared with net income before one-time items of $1,888,000, or $0.28 per diluted share in the fourth quarter of 1998. 1999 net income including the aforementioned items, as well as a non-recurring, non-cash deferred tax benefit of $2,858,000 related to the incorporation of the Company's GO/DAN Industries partnership, was $6,816,000, or $0.96 per diluted share. Including the aforementioned items in 1998, the Company reported net income of $1,647,000, or $0.24 per diluted share.
Mr. McHale concluded, "We are particularly pleased with the performance of our Aftermarket operation during 1999. While the normal seasonal softness of the business will result in lower sales volumes and consequently lower profits or modest losses early in the year, we remain optimistic that 2000 will continue the positive trends we showed in 1999. We believe that our performance in 1999 and our positive outlook for the future validates our decision to focus our efforts on our Aftermarket Heating and Cooling Systems business, with a particular emphasis on the independent Aftermarket for automotive air conditioning replacement parts."
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.
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Aftermarket Heating
and Cooling Systems $35,267 $35,337 $166,235 $156,335
OEM Heat Transfer Systems 10,548 9,977 39,328 39,257
Specialty Metal Fabrication 16,784 10,027 56,014 44,473
Total Sales 62,599 55,341 261,577 240,065
Cost of Sales 48,629 44,387 197,379 185,547
Gross Margin 13,970 10,954 64,198 54,518
Selling, General and
Administrative Expenses 13,181 11,241 52,509 48,287
Income from Operations
Before Plant Closure Costs 789 (287) 11,689 6,231
Plant Closure Costs -- -- 325 --
Income from Operations
After Plant Closure Costs 789 (287) 11,364 6,231
Net Interest Expense 1,291 860 4,444 3,326
(Loss) Income Before Taxes (502) (1,147) 6,920 2,905
Income Tax (Benefit)
Provision(1) (213) (396) 104 1,258
Net (Loss) Income ($289) ($751) $ 6,816 $ 1,647
Earnings per Common Share:
Basic ($0.04) ($0.11) $1.03 $0.25
Diluted ($0.04) ($0.11) $0.96 $0.24
Average Common Shares
Outstanding
Basic 6,573 6,584 6,573 6,593
Diluted 7,087 6,584 7,089 6,804
(1) The income tax provision for the twelve months ended December 31,
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.
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TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Revenues
Aftermarket Heating and
Cooling Systems $35,267 $35,337 $166,235 $156,335
OEM Heat Transfer Systems 10,548 9,977 39,328 39,257
Specialty Metal Fabrication 16,784 10,027 56,014 44,473
Consolidated totals $62,599 $55,341 $261,577 $240,065
Income from operations
Aftermarket Heating and
Cooling Systems $ 1,123 $ 826 $ 14,389 $ 9,944
OEM Heat Transfer Systems (393) (652) (1,050) (1,955)
Specialty Metal Fabrication 1,248 1,472 3,002 3,655
Plant closure costs -- -- (325) --
Legal settlement costs -- (575) (274) (575)
Workers' compensation dividend -- -- -- 613
Segment totals 1,978 1,071 15,742 11,682
Corporate expenses (1,189) (1,358) (4,378) (4,989)
Note receivable reserve -- -- -- (462)
Consolidated totals $789 ($287) $ 11,364 $ 6,231
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TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Basic Earnings per Common Share:
From Operations
Before Plant Closure and Legal
Settlement Costs ($0.04) ($0.06) $ 0.65 $ 0.29
Plant Closure Costs -- -- (0.03) --
Legal settlement costs -- (0.05) (0.02) (0.05)
Workers' Compensation Dividend -- -- -- 0.05
Note Receivable Reserve -- -- -- (0.04)
From Operations
After Plant Closure, Legal
Settlement Costs, Workers'
Comp. Dividend and
Note Reserve (0.04) (0.11) 0.60 0.25
Deferred Tax Benefit -- -- 0.43 --
Total ($ 0.04) ($0.11) $ 1.03 $ 0.25
Diluted Earnings per Common Share:
From Operations
Before Plant Closure and
Legal Settlement Costs ($0.04) ($0.06) $ 0.61 $ 0.28
Plant Closure Costs -- -- (0.03) (0.05)
Legal settlement costs -- (0.05) (0.02) --
Workers' Compensation Dividend -- -- -- 0.05
Note Receivable Reserve -- -- -- (0.04)
From Operations
After Plant Closure and
Legal Settlement Costs (0.04) (0.11) 0.56 0.24
Deferred Tax Benefit -- -- 0.40 --
Total ($0.04) ($0.11) $0.96 $ 0.24
Depreciation and Amortization $2,060 $2,020 $7,541 $6,782
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TRANSPRO, INC.
BALANCE SHEET HIGHLIGHTS
(Amounts in thousands)
(Unaudited)
Dec. 31, 1999 Dec. 31, 1998
Accounts Receivable, Net $ 41,689 $ 34,173
Inventories $ 85,345 $ 59,775
Net Property, Plant and Equipment $ 40,627 $ 39,487
Goodwill, Net $ 7,632 $ 6,093
Total Assets $185,895 $148,527
Current Liabilities $ 41,749 $ 29,958
Long-term Debt $ 61,928 $ 42,197
Total Liabilities $111,424 $ 80,660
Stockholders' Equity $ 74,471 $ 67,867
Capital Expenditures $ 8,200 $ 8,509