Mark IV Reports Fourth Quarter; Fiscal Year Results
15 March 2000
Mark IV Reports Fourth Quarter; Fiscal Year Results
AMHERST, N.Y.--March 15, 2000--Mark IV Industries, Inc. today reported results for its fourth quarter and fiscal year ended February 29, 2000.Operating Results
Fourth quarter basic earnings per share from continuing operations increased 28 percent to 41 cents from 32 cents last year. The period's sales from continuing operations were $492.2 million, up 15.1 percent from $427.8 million previously. Operating income of $41.2 million and income from continuing operations of $18.2 million were both up five percent compared to prior year amounts of $39.4 million and $17.4 million, respectively. This year's fourth quarter had no special items, whereas last year's period included a loss of $2.0 million (four cents per share) from discontinued operations, reducing net income to $15.4 million or 28 cents per share.
Basic and diluted weighted average shares outstanding decreased 17.5 percent and 14.8 percent, to 44.3 million and 53.0 million, respectively, in the fourth quarter from 53.7 million and 62.2 million, in the prior year.
For the year, fiscal 2000 basic earnings per share from continuing operations before special items increased 23 percent to $1.80 from $1.46, while income from continuing operations before special items increased 3.4 percent to $85.6 million from $82.8 million in the prior year.
Sales from continuing operations in the year increased 10.9 percent, to $1.99 billion from $1.80 billion last year. Fiscal 2000 operating income from continuing operations (income before special items, interest expense and taxes) was up 5.1 percent to $187.7 million from $178.6 million on a comparable basis last year.
Net income for the year increased to $89 million or $1.87 per share from $47.6 million or 84 cents per share last year. Fiscal 2000's net income includes income from discontinued operations of $2.5 million (five cents per share), and an extraordinary gain from early debt extinguishment of $0.9 million (two cents per share). Net income for fiscal 1999 included income from discontinued operations of $5.5 million (ten cents per share), $38.1 million for the repositioning charge (67 cents per share), and a $2.6 million extraordinary charge from early debt extinguishment (five cents per share).
Results for the first half of fiscals 2000 and 1999 have been restated to reflect the sale of the company's industrial filter business in September 1999 as discontinued operations.
Basic and diluted weighted average shares outstanding decreased 16.5 and 14.2 percent, in the year, to 47.5 million and 56.2 million, respectively, from 56.9 million and 65.5 million in fiscal 1999. Actual shares outstanding at year-end were 44.3 million basic and 53.0 million diluted. Unless otherwise noted herein, all share and share-related amounts are basic.
Commenting on the quarter and the year, Mark IV's chairman and chief executive officer, Sal H. Alfiero, said, "Fiscal 2000 had significant operational accomplishments. We completed the restructuring program, begun in fiscal 1997, and have substantially completed our aftermarket repositioning program, which began late in fiscal 1999. The small sized diesel engine and CVT (Continuous Variable Transmission) technologies making up our Power Pac product offerings (combined engine and CVT) were added through the purchase of small diesel engine makers Lombardini and Ruggerini, and the CVT business of Piaggio Inc. during the current year. These moves have made Mark IV the leading manufacturer of small diesel engines in Europe, while also providing significant growth opportunities for our Power Pac product line. During the course of the year, we have added new products at a faster rate than ever before and customer service has risen to peak levels.
"We commenced production of total air intake manifold systems in our new, highly automated, Automotive OEM facility in Montreal, Canada; we've moved into our new rigid components facility in Ivrea, Italy and have begun construction of a new tensioner plant in Springdale, Arkansas. These facilities have been, or are being put in place to satisfy increasing demand, both in the North American and European market places for these systems and components. All start-up costs associated with these facilities have been, or will be absorbed and expensed as they are incurred.
"We are seeking more and better ways to leverage our human resources through global approaches to our materials sourcing, technology and distribution activities. We intend to leverage our rapidly expanding use of the internet to further enhance our information flow with a view to better serving our customers at lower costs.
"These actions, coupled with ongoing cost reduction programs and the sale of our industrial filter business and other non-core assets, have provided the financial strength, flexibility and management focus to grow our core businesses through internal development and "bolt-on" acquisitions. At the same time, we have retired a portion of our highest cost debt and repurchased a significant number of our common shares. Our integration of Lombardini was complete by the end of the fiscal year and as the consolidation of Ruggerini, acquired late in the year, moves to completion, margins in both businesses should improve, adding to fiscal year 2001 results.
"On the negative side, the strength of the U.S. dollar has had a significant impact on the company's results, reducing revenue and per share earnings by approximately $25 million and two cents in the fourth quarter and $60 million and five cents in the year. However, current business conditions remain strong on both the domestic and European fronts, and we believe that the actions taken and completed during fiscal 2000 will facilitate more rapid internal growth and continued success in satisfying our customers."
Concerning Mark IV's share price, Alfiero went on to say, "We think that our share valuation requires additional attention. Like so many, "old economy" companies, we feel our equity is significantly undervalued. In this regard, as previously announced, we have engaged the investment banking firm of Bear, Stearns & Co. Inc. to advise our Board of Directors of our options based upon a review of a wide range of strategic alternatives to maximize shareholder value. This, of course, includes among other things, the possible sale or merger of the company. We are in the process of conducting this review and will report on its progress in the near future.
"During the course of the year, we continued our stock repurchase program. Since March 1997 to date, we have repurchased 33.4 percent of our outstanding common stock, or an aggregate of 22 million shares, including 9.2 million shares during fiscal 2000. There are 5.2 million shares remaining under the company's current buyback authorization. In addition, in February 2000, we announced a 13.6 percent increase in the company's quarterly cash dividend to an annual rate of 25 cents per share from 22 cents currently being paid. This is our 10th consecutive yearly increase and demonstrates the confidence management continues to have in the company's ability to grow its earnings and generate excess cash flow."
Reflecting further on the year, Mr. Alfiero indicated that "On a pro forma basis, adjusting for acquisitions and non-core dispositions and currency exchange, revenue for the quarter and year was up 8.9 percent and 4.8 percent, respectively. Revenue growth was led by strength in the Automotive OEM sector with a 10.6 percent growth rate. Foreign OEM sales led the way in the fourth quarter with a 28.1 percent improvement. The strength of this business in the quarter and year was due to record new car builds in North America, improving market conditions in Europe and South America, and participation in new programs with our fluid transfer and power transmission technologies, both domestic and foreign. Industrial domestic revenue was up 16.7 percent in the quarter and 4.3 percent for the year, led by rapidly growing transportation products. Notwithstanding these industrial revenue increases, this sector's growth still continues to be held back by ongoing weakness in both the agriculture and petroleum related markets throughout the world. Our expectation is that with increasing oil prices, activity in both oil and mining will finally begin to recover. However, on the agricultural front, it's still anybody's guess when significant improvement will occur. But overall we feel that revenue and earnings trends experienced in fiscal 2000 will continue for the foreseeable future. As a result, we believe that the range of earnings expectations in the marketplace of $2.05 to $2.15 basic ($1.87 to $1.95 diluted) per share for fiscal 2001, representing increases of 14 percent to 19 percent, is achievable.
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 and engine-related products; fluid management systems and components; and transportation products and systems. The company's systems and components are marketed for applications in the global industrial and automotive markets. For more information on Mark IV, visit the company's web site at http://www.mark-iv.com.
MARK IV INDUSTRIES, INC.
(Amounts in thousands, except per share data)
Three Months Ended Fiscal Year Ended
The Last Day of February The Last Day of February
------------------------ ------------------------
2000 1999 (A) 2000 1999 (A)
---- -------- ---- --------
Sales from continuing
operations $ 492,200 $ 427,800 $1,993,700 $1,798,200
Operating income (B) $ 41,200 $ 39,400 $ 187,700 $ 178,600
Interest expense $ 13,800 $ 12,300 $ 54,000 $ 49,200
Operating income (before
repositioning charge),
net of interest
expense $ 27,400 $ 27,100 $ 133,700 $ 129,400
Income from
continuing operations (C):
Before repositioning
charge $ 18,200 $ 17,400 $ 85,600 $ 82,800
Repositioning
charge (D) - - - (38,100)
------ ------ ------ -------
Total continuing 18,200 17,400 85,600 44,700
Discontinued
operations (C) - (2,000) 2,500 5,500
Extraordinary
gain (loss) (C) - - 900 (2,600)
------ ------ ------ ------
Net income $ 18,200 $ 15,400 $ 89,000 $ 47,600
====== ====== ====== ======
Basic earnings
per share:
Continuing operations:
Before repositioning
charge $ .41 $ .32 $ 1.80 $ 1.46
Repositioning charge - - - (.67)
------ ------ ----- ------
Total continuing .41 .32 1.80 .79
Discontinued operations - (.04) .05 .10
Extraordinary gain (loss) - - .02 (.05)
------ ------ ----- ------
Net income $ .41 $ 0.28 $ 1.87 $ .84
====== ====== ===== ======
Diluted earnings
per share (E):
Continuing operations:
Before repositioning
charge $ .38 $ .31 $ 1.67 $ 1.39
Repositioning charge - - - (.60)
----- ------ ----- ------
Total continuing .38 .31 1.67 .79
Discontinued operations - (.03) .04 .08
Extraordinary gain (loss) - - .02 (.04)
----- ------ ----- ------
Net income $ .38 $ .28 $ 1.73 $ .83
===== ====== ===== ======
Weighted average number
of shares outstanding:
Basic 44,300 53,700 47,500 56,900
====== ====== ====== ======
Diluted 53,000 62,200 56,200 65,500
====== ====== ====== ======
(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 a 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) As a result of the repositioning charge recognized in the third quarter of fiscal 1999, the conversion calculations have the effect of being anti-dilutive to income from continuing operations. Therefore, the dilutive per share amount for fiscal 1999 has been adjusted to eliminate such anti-dilutive effect.