INTERMET Reports Record First-Quarter Sales
14 April 2000
INTERMET Reports Record First-Quarter Sales
Please note: A teleconference call for investors and analysts will be
held at 2:30 p.m. on April 13, 2000 (EDT). John Doddridge, INTERMET's
Chairman and CEO, Ronald C. Ryninger Jr., Corporate Controller, and Bytha
Mills, Director of Corporate Affairs, will host the call. If you are
interested in participating in the teleconference, please dial 800-230-1093 at
2:25 p.m. (EDT) and reference the INTERMET First Quarter Conference Call.
TROY, Mich., April 13 INTERMET Corporation (Nasdaq: INMT),
a leading manufacturer of cast-metal automotive components, today reported
record sales of $307 million for the first quarter of 2000, up 25 percent over
1999 first-quarter sales of $245 million. Continuing strong North American
vehicle sales and the company's expanding activity in light-metal casting
drove the sales increase. Net income for the first quarter of 2000 was $9.5
million, or 37 cents per diluted share, down 22 percent compared with 1999
first-quarter net income of $12.1 million, or 47 cents per diluted share.
Costs associated with running INTERMET's Ironton, Ohio, foundry through
the first quarter resulted in a loss of 17 cents per diluted share. The
foundry was closed March 31, 2000. Excluding Ironton, net income would have
been $13.8 million or 54 cents per diluted share.
During the quarter, General Products Corporation, an automotive-component
machining company, in which INTERMET owned a 35 percent minority interest, was
sold. A nominal gain was booked; however, the tax basis of General Products
was low, causing a significant tax gain for INTERMET. The gain was offset by
a higher effective tax rate of 52.8 percent for the quarter compared to a more
typical rate for INTERMET of 42 to 43 percent.
INTERMET's board of directors approved a quarterly dividend of 4 cents per
share, payable on June 30, 2000, to shareholders of record on June 1, 2000.
"On March 5, we had a serious explosion at our New River Foundry, shutting
the plant down for an indefinite period," said John Doddridge, INTERMET's
Chairman and CEO. "Separately, as we previously announced, we had to run the
Ironton plant through the first quarter to satisfy a customer commitment. Our
losses at that plant were almost double of what we anticipated due to very
inefficient productivity. Excluding the Ironton non-recurring costs, first-
quarter earnings were in line with consensus estimates, but we are not
satisfied," continued Doddridge. "These short-term problems are adversely
affecting our normalized earnings power."
Doddridge went on to say that with the loss of the New River plant,
INTERMET has had to overload its remaining ferrous foundries. "The combined
effect will create some earnings turbulence over the next several quarters,"
he said. "However, at this time, we believe we can minimize the impact. As
previously reported, the New River facility, we believe, was adequately
covered by business interruption and property insurance.
"During much of 1999, we were constrained by capacity and had continuing
losses at Ironton," said Doddridge. "At the end of 1999, though, we had
significantly repositioned our company. We added sufficient ferrous capacity
to better serve the industry, to allow for growth, and to manufacture at more
efficient operating costs. We added more 'state-of-the-art' product-design
and engineering-support capability. We announced the closing of Ironton, and
we made strategic acquisitions to give us critical mass in light metals. We
felt that all of this had put us in an excellent position for the year 2000.
However, the New River explosion caused an interim disruption, but we will
replace that capacity as quickly as possible. In spite of these setbacks, our
long-term normalized earnings power should be quite strong. Our technological
leadership in the metal-casting field, along with our variety of casting
materials (ferrous, aluminum, magnesium, and zinc) has resulted in a strong
order board and excellent future business opportunities."
Ferrous Metals Group
First-quarter sales for INTERMET's Ferrous Metals Group, which includes
the company's ductile-iron foundries, were $195 million, down 2 percent
compared with 1999 first-quarter ferrous foundry sales of $199 million.
Excluding the Ironton Foundry first-quarter results from both years, sales in
the Ferrous Metals Group were up 3 percent over 1999 first-quarter sales, and
would have been up nearly 7 percent if the New River Foundry had not shut down
due to the March 5 explosion.
During the first quarter, INTERMET's Ferrous Metals Group was awarded
major new automotive powertrain business, including a ductile-iron crankshaft
program and a differential-carrier program for an OEM customer.
The Ferrous Group experienced a number of significant events during the
first quarter of 2000. The New River Foundry in Radford, Virginia, suffered a
devastating explosion on March 5, unfortunately resulting in the deaths of
three employees as well as several serious injuries. The explosion damaged a
significant portion of the plant and has completely shut down operations
there. The investigation by authorities continues into the cause.
"We have a number of options to replace the lost capacity," said Mike
Ryan, INTERMET's Executive Vice President of Operations. "We can rebuild the
New River Foundry, build a new plant, or buy an existing foundry. Our first
choice is to rebuild at New River. But our decision is subject to the
completion of the investigation and the timely issuance of the appropriate
regulatory permits."
Light Metals Group
With the recent acquisitions, the Light Metals Group first-quarter sales
were $91 million, a substantial increase over INTERMET's aluminum operations
in the first quarter of 1999, which had sales of $25 million. New aluminum
die-casting capacity was added at the Jackson, Tennessee, plant during the
last quarter of 1999, and is expected to contribute significantly to the
performance of the Light Metals Group.
A number of new powertrain and chassis product programs were awarded to
the Light Metals Group during the first quarter of 2000, including an aluminum
transmission transfer-case housing and an innovative aluminum steering
knuckle. The steering knuckle program represents the first time INTERMET has
manufactured an automotive safety component in aluminum.
With headquarters in Troy, Michigan, INTERMET Corporation is a full-
service supplier of powertrain, chassis/suspension and structural components
to the worldwide automotive industry. INTERMET also manufactures cranes and
specialty service vehicles. The company has more than 8,000 employees at
facilities located in North America and Europe. More information about the
company is available on the Internet at http://www.intermet.com .
This news release may include forecasts and forward-looking statements
about INTERMET, its industry and the markets in which it operates. Forward-
looking statements and the achievement of any forecasts or projections are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed or denied. Such risks and
uncertainties are fully detailed as a preface to the Management's Discussion
and Analysis of Financial Condition in the Company's 1999 Annual Report for
the year ended December 31, 1999.
INTERMET Corporation Condensed Consolidated Income Statements
(in thousands, except per share data)
Three months ended
March 31, 2000 March 31, 1999
Net sales $307,433 $245,227
Cost of sales 271,943 211,090
Gross profit 35,490 34,137
Selling, general
and administrative 11,338 9,783
Operating profit 24,152 24,354
Other expense, net 4,051 3,388
Income before
income taxes 20,101 20,966
Provision for
income taxes 10,605 8,833
Net income $9,496 $12,133
Income per common
share - Basic $0.37 $0.47
Income per common
share - Diluted $0.37 $0.47
Weighted average
shares outstanding:
Basic 25,355 25,828
Diluted 25,429 25,940
INTERMET Corporation Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2000 1999
Assets:
Cash and cash equivalents $6,011 $3,416
Other current assets 314,499 301,104
Property, plant and
equipment, net 365,518 369,731
Other noncurrent assets 275,856 283,041
Total assets $961,884 $957,292
Liabilities and
shareholders' equity:
Debt $460,797 $455,040
Other liabilities 250,696 259,875
Total liabilities 711,493 714,915
Total shareholders' equity 250,391 242,377
Total liabilities
and shareholders' equity $961,884 $957,292