Amcast Announces Second Quarter 2000 Earnings
24 March 2000
Amcast Announces Second Quarter 2000 Earnings
DAYTON, Ohio--March 23, 2000--Amcast Industrial Corporation today announced sales and earnings for the second quarter of fiscal 2000 ended February 27, 2000.Sales for the quarter were $150.0 million compared to $141.7 million in 1999. Net income was $0.7 million (8 cents per diluted share) compared to $4.5 million (49 cents per diluted share) in the comparable period of fiscal 1999.
For the first six months of fiscal 2000 sales were $296.1 million compared to $287.8 million in the first six months of 1999. Net income for the first six months of fiscal 2000 was $2.2 million (25 cents per diluted share) compared to $14.5 million ($1.58 per diluted share) in the comparable period of 1999. The net income for the first six months of 1999 included a one-time gain on the sale of the company's Superior Valve unit which generated a $9.0 million pretax gain and added 58 cents per share to the diluted share earnings.
Strong sales in the second quarter of fiscal 2000 reflected robust demand in the company's end markets. A combination of temporary internal and external factors depressed operating income for the period, including the inability to pass through certain material costs, loss of two large brass products customer accounts, reduced volumes for certain aluminum wheel styles and higher than expected operating costs at Flow Control. These difficulties offset operating cost improvements which took place during the quarter at the company's newest suspension components plant and its wheel manufacturing operations in Indiana.
In the second quarter of fiscal 2000, sales for the flow control segment were $36.1 million, up from $35.5 million in the second quarter of fiscal 1999. Operating income was $4.8 million, down $1.0 million from $5.8 million in the same period last year. A combination of price and mix of products sold added approximately $2.5 million to sales on a year-over-year basis. Partially offsetting this increase was a sales volume decline of approximately $1.9 million in fiscal 2000 compared to fiscal 1999 primarily due to the loss of two large customers in the commercial cast product line of the company's Lee Brass unit. Operating income benefited from the price improvement, but was adversely affected by higher manufacturing costs and selling expenses in excess of $2 million on a year-over-year basis. In addition, material costs increased by more than $1 million due to higher copper costs and increased outside tube purchases necessitated by unplanned downtime at the company's tube mill in Fayetteville, Arkansas. The sales volume shortfall reduced year-over-year operating income by approximately $0.5 million for the second quarter.
Flow control management has focused its sales and marketing efforts on replacing the lost volume in the brass business as quickly and prudently as possible and its manufacturing organization on reducing expenses, particularly those related to repairs and maintenance. The tube mill returned to full service during the quarter.
Sales in the engineered components segment were $113.9 million compared to $106.2 million in the second quarter of fiscal 1999. Sales volumes and mix were favorable overall by approximately $11.2 million, as sales of control arms and European wheels more than offset a decline in North American wheel sales. Pricing in the form of aluminum cost pass-throughs, added roughly $3.1 million to revenue. The decline in the Italian Lira versus dollar resulted in a reduction of $6.7 million of reported sales in the second quarter of fiscal 2000 compared to the second quarter of fiscal 1999. Operating income in the second quarter of fiscal 2000 was $2.3 million, down $5.5 million from the $7.8 million recorded in the second quarter of fiscal 1999. For the segment as a whole, the volume and mix of products sold had a favorable impact of $1.2 million despite a drag on results of nearly $0.9 million due to reduced demand for certain wheel styles at a major customer. Material costs which could not be passed along to customers in the quarter under existing aluminum pricing formulas, primarily at the company's Speedline unit, resulted in a reduction in operating income of approximately $1.2 million in the second quarter of fiscal 2000 as compared to the same period a year ago.
Comparing the second quarter of fiscal 2000 to the second quarter of fiscal 1999, operating cost increases of $4.9 million have been incurred in the second quarter of fiscal 2000 as a result of inefficiencies in the company's Ohio suspension components plant, one North American wheel plant and a recently expanded factory in Italy. These operating cost issues eased by over $1.0 million in the second quarter of fiscal 2000 compared to the first quarter of fiscal 2000, primarily at the suspension components plant and at the North American wheel plant.
In early March the company implemented an eight percent salaried workforce reduction across all its North American operations. At the same time, restrictions were placed on other controllable operating and administrative costs. The company expects the combination of the workforce and overhead spending reductions to have a significant favorable impact on third and fourth quarter results.
"We are clearly not satisfied with this quarter's results" Shuey said. "We are pleased at the progress made this quarter at both Wapakoneta, Ohio and the Gas City, Indiana wheel plant, but we still have a long way to go to achieve our potential and generate satisfactory results. We are focused on achieving the returns we expect in the businesses and believe that the issues we have encountered, while frustrating, are not insurmountable and do not represent a threat to either our strategy or the long-term success of the business."
Looking ahead to the balance of the year Shuey said, "Demand in our end markets is healthy in both North America and Europe. We expect to continue to make progress throughout the remainder of the year."
During the second quarter the company repurchased 100,000 of its shares in the open market. The company has continuing authorization to purchase another 400,000 shares.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others; general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor availability and relations at the company and its customers.
STATEMENTS OF INCOME
($ in thousands except per share amounts)
Three Months Ended Six Months Ended
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Feb. 27 Feb. 28 Feb. 27 Feb. 28
2000 1999 2000 1999
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Net sales $ 150,009 $ 141,734 $ 296,088 $ 287,758
Cost of sales 130,659 116,619 258,112 237,796
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Gross Profit 19,350 25,115 37,976 49,962
Selling, general and
administrative expenses 15,006 14,096 28,609 27,773
Gain on sale of business -- -- -- (9,023)
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Operating Income 4,344 11,019 9,367 31,212
Equity in (income)
loss of joint venture
and other (income)
and expense (389) 275 (637) 326
Interest expense 3,547 3,483 6,370 7,068
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Income before Income Taxes 1,186 7,261 3,634 23,818
Income taxes 466 2,759 1,428 9,287
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Net Income $ 720 $ 4,502 $ 2,206 $14,531
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Basic earnings per share $ 0.08 $ 0.49 $ 0.25 $ 1.58
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Diluted earnings per share $ 0.08 $ 0.49 $ 0.25 $ 1.58
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Average number of shares
outstanding - Basic 8,949 9,200 8,952 9,196
Average number of shares
outstanding - Diluted 8,956 9,227 8,959 9,215
CONDENSED BALANCE SHEETS
($ in thousands)
February 27 August 31
2000 1999
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Current Assets
Cash and cash equivalents $ 8,840 $ 6,928
Accounts receivable 111,426 97,819
Inventories 82,744 77,166
Other current assets 19,868 21,144
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222,878 203,057
Property, Plant and Equipment 240,882 256,758
Goodwill 60,452 61,261
Other Assets 20,239 12,410
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$ 544,451 $ 533,486
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Current Liabilities
Accounts payable $ 71,723 $ 82,396
Current debt 8,271 10,855
Other current liabilities 38,072 40,851
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118,066 134,102
Long-Term Debt 205,896 174,061
Deferred Liabilities 52,886 54,557
Shareholders' Equity 167,603 170,766
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$ 544,451 $ 533,486
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