Hastings Manufacturing Reports Sharply Higher First-Quarter Earnings
26 April 2000
Hastings Manufacturing Reports Sharply Higher First-Quarter Earnings
HASTINGS, Mich., April 26 Hastings Manufacturing Company
(Amex: HMF) today announced results for the first quarter ended March 31,
2000, highlighted by a strong increase in net income due to improved
manufacturing efficiency.
The Hastings, Mich.-based manufacturer of piston rings and other
automotive products reported net income of $282,551, or $0.37 per diluted
share, on net sales of $8.9 million in the first quarter of 2000, compared
with net income of $45,643, or $0.06 per diluted share, on net sales of $8.96
million in the first quarter of 1999.
The Company attributed the increase in profitability to initial efficiency
and cost benefits from its shift to lean manufacturing in 1999. Improvements
in manufacturing efficiency, and the absence of certain non-recurring costs
incurred during the initial stages of the shift to lean, helped Hastings post
sharply higher profit levels in the first quarter of 2000, despite comparable
sales levels to last year's first quarter. Increased sales in the domestic
and Canadian piston ring markets helped offset a decline in private brand
sales and flat volume in the original equipment market.
"I am pleased with the progress we made in the first quarter of 2000,"
said Andrew F. Johnson, co-chief executive officer of Hastings Manufacturing.
"The investments we made last year to streamline our production processes and
reduce waste are helping us improve quality and delivery to customers. Just
as importantly, the move to cell-based manufacturing is resulting in increased
productivity and improved profit margins. We are particularly encouraged that
our first-quarter gross profit margin has returned to historic levels."
Gross profit increased 18 percent to $2.8 million in the first quarter of
2000, reflecting improvements in operating processes and the absence of non-
recurring charges as noted above. Hastings' gross margin improved to 31.3
percent in the first quarter of 2000, compared with 26.4 percent in last
year's first quarter.
Operating income rose 212 percent versus the year-ago period, reflecting
the higher gross profit level and continued cost-management efforts by
Hastings. Operating expenses were comparable to the year-ago period, despite
increased investment in selling and related sales support.
"We are encouraged that we have been able to improve margins while also
improving the overall quality of our product and our order fill rates,"
Johnson said. "These improvements, combined with our efforts to increase
distribution of our piston ring and specialty tool products around the globe,
offer us significant opportunity for profitable growth in the coming year.
Additionally, our new joint venture company has begun introducing new
automotive additive products that will allow us to leverage the respected
Casite(R) brand name."
Hastings said its 50 percent-owned joint venture company, Casite Intraco,
LLC, began promoting a new line of automotive additive products in March 2000,
complementing the existing Motor Honey(R) and Tranny Honey(R) vehicle
products. The joint venture unit plans to begin distribution of the new
products during the second quarter.
"The improvements in operations, as well as new products and new
distribution opportunities, bode well for Hastings Manufacturing's future,"
said Mark R.S. Johnson, co-chief executive officer. "With this in mind, we
have committed to buy back Hastings' common stock, which trades well below our
book value of $9.51 per share as of March 31, 2000."
Hastings reported that it repurchased 30,000 shares of its common stock
during the first quarter. In February 2000, the Board of Directors of
Hastings authorized the repurchase of up to 100,000 shares, or nearly 13
percent, of the Company's outstanding common stock.
Hastings Manufacturing Company And Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months Ended
March 31,
2000 1999
Net Sales 8,902,223 8,959,131
Cost of Sales 6,118,737 6,597,554
Gross Profit 2,783,486 2,361,577
Operating Expenses:
Advertising 62,710 70,301
Selling 785,739 736,710
General & Administrative 1,327,174 1,360,040
Total Operating Expenses 2,175,623 2,167,051
Operating Income 607,863 194,526
Other Expenses (Income):
Interest expense 151,772 147,087
Other, net (18,460) (37,204)
Total Other Expenses (Income) 133,312 109,883
Income Before Taxes 474,551 84,643
Income Tax Expense 192,000 39,000
Net Income 282,551 45,643
Net Income Per Share of Common Stock:
Basic 0.37 0.06
Diluted 0.37 0.06
Average Shares Outstanding:
Basic 759,551 775,046
Diluted 759,551 775,046
Dividends Per Share of Common Stock 0.080 0.080