TransPro, Inc. Reports First Quarter Results
2 May 2000
TransPro, Inc. Reports First Quarter Results
NEW HAVEN, Conn.--May 1, 2000--TransPro, Inc. (NYSE:TPR) today announced results for the first quarter ended March 31, 2000.Sales from continuing operations increased 3% to $48,430,000, compared with sales of $46,915,000 in the first quarter of 1999. Excluding a one-time charge of $795,000 for the closure of the Company's Houston, Texas regional radiator manufacturing plant and the consolidation of the Company's Santa Fe Springs, California distribution facility into its existing Memphis, Tennessee facility, the Company reported an operating loss from continuing operations of $2,050,000 for the first quarter of 2000, compared with operating income from continuing operations of $1,721,000 in the first quarter of 1999.
In the first quarter of 2000, excluding the aforementioned closure costs, the Company reported a loss from continuing operations of $2,155,000, or $0.33 per diluted share, compared with income from continuing operations in the first quarter of 1999 of $464,000, or $0.07 per diluted share. Including the closure costs, which amounted to $0.08 per diluted share, the loss from continuing operations in the first quarter of 2000 was $2,661,000, or $0.41 per diluted share. Including income from discontinued operations, the net loss for the first quarter of 2000 was $2,221,000, or $0.34 per diluted share compared with net income of $505,000, or $0.07 per diluted share in the prior year quarter.
As previously announced the Company has reclassified its Crown division as discontinued operations in the first quarter of 2000. In the previous announcement, the Company incorrectly stated that a pre-tax gain of approximately $9.3 million would be recorded in the first quarter. This gain will instead be recorded in the second quarter. As a result of the planned sale transaction, the Company will reduce its debt by approximately $30 million, which should result in annual pre-tax interest expense savings of over $2 million. Closing is expected to occur early in the second quarter.
Sales of Aftermarket Heating and Cooling Systems products in the first quarter of 2000 were slightly lower than the prior year first quarter. Higher unit volume in complete radiators and condensers was offset by lower unit volume in air conditioning parts, as mild weather conditions and high customer inventory levels led to lower than usual demand in the pre-season. During the first quarter of 2000, Original Equipment Manufacturing (OEM) Heat Transfer Systems sales increased $2,100,000 million, or 22%, Over the prior year's first quarter due to continued strong demand in the Class 8 truck and specialty vehicle markets.
Consolidated first quarter 2000 gross margins from continuing operations were $9,689,000 versus $12,669,000 in the first quarter of 1999. First quarter 2000 gross margins reflect lower margins in the Aftermarket Heating and Cooling Systems segment primarily as a result of planned actions to improve profits and reduce debt levels in the future. These actions included plans that will significantly reduce inventory levels, and therefore debt, and which resulted in decreased manufacturing cost absorption due to significantly lower rates of production in the quarter. First quarter 2000 results were also affected by the start up of production in Mexico of two new products, plastic tank aluminum core radiators and six-millimeter condensers, resulting in temporary inefficiencies. Lower unit volume in air conditioning parts and pricing activity in response to competitive pressures in the Aftermarket also affected gross margins in the period. In the OEM Heat Transfer Systems segment, gross margins were similar to the comparable prior period.
Selling, General and Administrative expenses from continuing operations increased to $11,739,000 from $10,948,000 in the first quarter of 2000 compared with the first quarter of 1999, reflecting higher freight costs related to increased radiator unit volume and inflation-related employee cost increases.
Commenting on the quarter, Hank McHale, President and Chief Executive Officer, stated, "While some of the factors affecting TransPro's first quarter were the result of planned actions the Company has taken that we believe will improve the second half of 2000 and beyond, the remaining factors involved impacted the entire Aftermarket during the period. Relative to 1998, the summer of 1999 was rather moderate and many of our customers found themselves with high levels of inventory. We do expect the market to pick up if we have typical weather throughout the country this spring and summer."
Mr. McHale continued, "Although competition in the Aftermarket is always lively, it was stimulated in the first quarter by the weak demand seen as a result of the changes in weather conditions. The actions we have taken to reduce costs helped offset some of the pricing pressure during the quarter, and we will continue to focus on low cost production and sourcing, as well as other cost-cutting actions, in order to maintain historical margins in this competitive environment. The closure of our Houston plant and the consolidation of our distribution system into Memphis should result in further cost improvements going forward. Also, production rates should increase through the year as we adjust inventory and production returns to normal levels."
Mr. McHale concluded, "Over the past year, we have taken several actions which we strongly believe will significantly improve TransPro's profitability going forward. The sale of Crown is the first step in our plans to refocus the Company on our heating and cooling systems businesses, particularly the Aftermarket and the faster-growing air conditioning parts segment. We have taken steps to reduce costs and improve profitability as well, including increased sourcing of products offshore, the re-location of manufacturing operations to Mexico, the production of more cost effective six-millimeter condensers and the inclusion of lower-cost plastic tanks in our radiator lines, and the reduction of inventory levels. While some of these actions have affected our results over the short-term, we believe they will benefit the Company as we continue through 2000, with substantial improvements in profitability in the second half of the year as the initiatives we are taking begin to bear fruit."
TransPro, Inc. is a manufacturer and supplier of heat and cooling systems and components for a variety of Aftermarket and OEM automotive, truck and industrial applications.
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
March 31,
2000 1999
Aftermarket Heating and
Cooling Systems $36,755 $37,348
OEM Heat Transfer Systems 11,675 9,567
Total Sales 48,430 46,915
Cost of Sales 38,741 34,246
Gross Margin 9,689 12,669
Selling, General and
Administrative Expenses 11,739 10,948
(Loss) Income from
Continuing Operations
Before Plant Closure
Costs, Interest
and Taxes (2,050) 1,721
Plant Closure Costs 795 --
(Loss) Income from
Continuing Operations
Before Interest and Taxes (2,845) 1,721
Net Interest Expense 1,335 914
(Loss) Income from Continuing
Operations Before Taxes (4,180) 807
Income Tax (Benefit)
Provision (1,519) 343
(Loss) Income from
Continuing
Operations (2,661) 464
Income from Discontinued
Operations 440 41
Net (Loss) Income ($2,221) $505
Earnings from Continuing Operations
per Common Share:
Basic ($0.41) $0.07
Diluted ($0.41) $0.07
Earnings from Discontinued Operations
per Common Share:
Basic $0.07 $0.01
Diluted $0.07 $0.00
Net Earnings per Common Share:
Basic ($0.34) $0.08
Diluted ($0.34) $0.07
Average Common Shares Outstanding
Basic 6,573 6,573
Diluted (1) 7,086 7,071
(1) Because the use of average diluted common shares outstanding would
have an anti-dilutive effect on diluted earnings per share for the
three months ended March 31, 2000, the average basic common shares
outstanding was used in the calculation of diluted earnings per
share for the three months ended March 31, 2000.
TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
2000 1999
Revenues
Aftermarket Heating and
Cooling Systems $36,755 $37,348
OEM Heat Transfer Systems 11,675 9,567
Consolidated totals $48,430 $46,915
(Loss) Income from
Continuing Operations
Before Interest and Taxes
Aftermarket Heating and
Cooling Systems ($ 898) $ 3,015
OEM Heat Transfer Systems ( 119) ( 137)
Plant closure costs ( 795) --
Segment totals ( 1,812) 2,878
Corporate expenses ( 1,033) (1,157)
Consolidated totals ($2,845) $1,721
TRANSPRO, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Amounts in thousands, except for per share data)
(Unaudited)
Three Months Ended
March 31,
2000 1999
Basic Earnings per Common Share:
From Continuing Operations
Before Plant Closure
Costs ($0.33) $0.07
Plant Closure Costs ( 0.08) --
From Continuing Operations
After Plant Closure
Costs ($0.41) $0.07
Diluted Earnings per Common Share:
From Continuing Operations
Before Plant
Closure Costs ($0.33) $0.07
Plant Closure Costs (0.08) --
From Continuing Operations
After Plant
Closure Costs ($0.41) $0.07
Depreciation and
Amortization $1,615 $1,494
TRANSPRO, INC.
BALANCE SHEET HIGHLIGHTS
(Amounts in thousands)
March 31, December 31,
2000 1999
(Unaudited)
Accounts Receivable, Net $ 34,816 $ 31,845
Inventories $ 83,099 $ 76,669
Net Property, Plant and
Equipment $ 26,745 $ 27,156
Goodwill, Net $ 7,157 $ 7,257
Net assets of discontinued
Operations $ 25,545 $ 24,405
Total Assets $ 187,113 $ 176,293
Current Liabilities $ 41,917 $ 34,785
Long-term Debt $ 67,988 $ 61,928
Total Liabilities $ 114,267 $ 100,871
Stockholders' Equity $ 72,846 $ 75,422
Capital Expenditures $ 1,107 $ 8,200