Oakhurst Company Announces Fiscal 2000 Results
18 July 2000
Commencement of Full Commercial Operations At New Heights
WILMINGTON, Del. - Oakhurst Company, Inc. today announced operating
results for its fiscal year ended Feb. 29, 2000, as shown in the attached table.
The Company also announced the commencement of commercial power
production from tires at New Heights Recovery & Power, LLC ("New
Heights"), completing the 18-month operating turnaround of that
facility, and reported that strong performance continues at Sterling
Construction.
Also, in line with the Company's strategy to invest capital in
growth opportunities, it announced the completion of an agreement to
divest Oakhurst's Dowling's Fleet Service subsidiary.
Continuing Operations
Results of continuing operations include the Oakhurst Technology,
Inc. subsidiary ("OTI"), which owns an equity interest in New Heights
(a waste tire collection, tire and glass recycling, and tire-to-energy
company with facilities in Illinois, Indiana and New Jersey), and the
automotive distribution subsidiary, Steel City Products, Inc., ("Steel
City"). OTI also owns a minority equity interest and convertible debt
in Sterling Construction Company ("Sterling") (a pipe-laying and road
construction company in Texas), results of which are carried on a cost
basis and therefore are not reflected in Oakhurst's consolidated
results.
Reflecting the funding for the substantial investments that have
been made by OTI in New Heights and Sterling, aggregating
approximately $10 million through Feb. 29, 2000, the Company recorded
interest expense of approximately $800,000, together with OTI overhead
expenses of about $300,000; these costs accounted for substantially
all of the loss from continuing operations in Fiscal 2000. Also, as
anticipated, the Company recorded OTI's share of the Fiscal 2000
start-up losses at New Heights of $1.7 million. Losses continued
through June, 2000 while New Heights completed its start-up process.
In addition to repermiting the facility, New Heights expanded its
collection capability to over 12 million tires per annum, added crumb
rubber manufacturing capacity of over 40 million pounds per year,
acquired a tire collection and processing company in Indiana and two
tire-derived-fuel processing facilities in Illinois and acquired a
profitable specialty glass processing facility. Furthermore, New
Heights has completed start-up and testing of its 22 megawatt
tire-to-energy facility. New Heights has now completed the first two
phases of its redevelopment including the commencement of commercial
power production from tires and is positioned for future profitable
operations.
The Steel City division achieved an improvement of $263,000 in
operating profits in Fiscal 2000, resulting from an 11% revenue
increase. In July 2000, the Company completed a new three-year $4
million revolving credit agreement for Steel City.
The Company expects to see earnings growth from the commercial
operations at New Heights and continued growth in its Steel City
division.
Investment in Sterling
OTI's equity interest in Sterling (including its convertible
subordinated debt investment) is between 16% and 17%; accordingly,
this investment is carried at its cost of $4.1 million. In its fiscal
year ended September 1999 Sterling reported Earnings Before Interest,
Taxes and Depreciation ("EBITDA") of $8.5 million, net income of $3.4
million, and revenues of $64 million. For the eight months ended May
2000, Sterling's results reflect EBITDA of $6.5 million, net income of
$2.8 million, and revenues of $50 million. Its order backlog currently
stands at a record of more than $100 million.
Recognizing the strong performance at Sterling, and to give
Oakhurst's shareholders the diversity of benefits from the expected
long-term values of both Sterling and New Heights, in July 2000 the
Company completed a modification of its loan agreement with KTI,
confirming the use of approximately $2.7 million of the loan for the
acquisition of the first tranche investment in Sterling, and reducing
OTI's obligation to fund capital in New Heights from $12 million to $9
million (with a concomitant reduction in OTI's equity interest in New
Heights from 50% to 37.5%).
Discontinued Operations
During Fiscal 2000, the Company's automotive radiator distributor,
Dowling's Fleet Service Co., Inc., reported operating losses of
approximately $400,000 and the Board of Directors, as part of its
commitment to refocus the Company's investments into long-term
profitable ventures, decided to dispose of it. An agreement was signed
on June 30, 2000 providing for the sale of the business through its
merger with an importer of radiators, at a price sufficient to repay
the amount expected to be owed at closing to Dowling's working capital
lender. Closing is subject to, among other things, the acquirer
obtaining the necessary financing within 120 days. Dowling's existing
lender has extended its working capital facility for such period, and
until the merger closes the acquirer will provide working capital
support to the business.
Results for Dowling's have been shown as discontinued operations
in the attached table. The Company recorded a loss of $2.0 million on
the disposal, mostly related to the write-off of goodwill associated
with the acquisition of Dowling's in Fiscal 1995, and including an
estimate of losses after Feb. 29, 2000 through the expected date of
disposal.
The Company expects to file its Form 10-K for Fiscal 2000 within
the next several days, and its Form 10-Q for the first quarter of
Fiscal 2001, ended May 31, 2000, shortly thereafter.
OAKHURST COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
Fiscal year Fiscal year
ended ended
Feb. 29, 2000 Feb. 28, 1999
------------- -------------
Revenues $ 20,521 $ 18,503
========== ==========
Loss from continuing operations
before loss on equity investment
and income taxes (1,253) (703)
Loss from equity investment (1,734) (150)
Current income tax expense 10 8
---------- ----------
Loss from continuing operations (2,997) (861)
---------- ----------
Discontinued operations:
Loss from operations of business
segment (428) (185)
Loss on disposal (2,028) --
---------- ----------
Net loss $ (5,453) $ (1,046)
========== ==========
Net loss per share:
Continuing operations $ (0.61) $ (0.25)
Discontinued operations (0.49) (0.05)
---------- ----------
Net loss per share $ (1.10) $ (0.30)
========== ==========
Weighted average number of shares
outstanding used in computing
per share amounts 4,943,018 3,501,075
========== ==========