Insilco Holding Co. 2nd Quarter 2000 Results
28 July 2000
Company Sees Continued Growth in Second Half of Year
COLUMBUS, Ohio - Insilco Holding Co. today reported markedly improved sales
and operating results for its second quarter ended June 30, 2000. The Company
said that results for its automotive segment, which the Company recently
announced it signed an agreement to sell, is being reported as a discontinued
operation and is therefore not included in consoli dated sales and EBITDA
(earnings before interest, taxes, depreciation, amortization and non-operating
items). Included in the Company's consolidated results for 1999 are the results
of its Romac Metals and McKenica operations, which were divested in mid-1999.
The Company reported a 65% increase in second quarter sales from its core
technologies businesses to $92.3 million from $55.8 million recorded last year
due to strong demand for custom assemblies and passive components, and
reflecting the benefit of sales from the Company's recently acquired custom
assembly business. Including sales from divested operations of $6.8 million in
the 1999 second quarter, consolidated sales for the current quarter increased
47% from $62.6 million recorded last year. On a pro forma basis, the Company's
second quarter sales increased 39% from the second quarter last year as
worldwide OEM demand increased for the Company's optical and networking
equipment assemblies and components.
For the current quarter, EBITDA from the technologies businesses more than
doubled to $13.3 million from $5.4 million recorded last year. The Company
reported that consolidated EBITDA for the current quarter increased 138% to
$13.3 million, compared to $5.6 million recorded last year, which included
EBITDA of $0.2 million from divested operations. A favorable sales mix for
higher-margin data grade connector products and improved margins on precision
stampings, as well as the contribution from its recent acquisition, all
contributed to the strong EBITDA performance. The Company's pro forma second
quarter EBITDA increased 41% from the second quarter last year due to the
favorable sales mix and from cost reduction initiatives.
DIVESTITURE/ACQUISITION
As reported on July 17, 2000, the Company announced that it has signed a
definitive agreement to sell to its majority shareholders the assets of its
automotive segment for proceeds of $147 million, subject to closing
adjustments; closing on a commitment for financing; and other customary terms
and conditions.
Proceeds from the transaction, which is expected to close before the end
of the third quarter, will be used to reduce bank debt and to gain financial
flexibility to execute the Company's acquisition strategy. The Company also
announced it signed a definitive agreement to acquire Precision Cable
Manufacturing, a Rockwall, Texas based provider of custom cable and wire
assemblies to telecommunications equipment OEMs.
CEO COMMENTS
David A. Kauer, Insilco President and CEO, said, "We continued to see
strong demand in the second quarter for our technology products, with pro
forma sales and adjusted EBITDA for the first half of 2000 up 38% and 54%,
respectively. We are experiencing strong sales and a strong book-to-bill ratio
in our connector business resulting from new product introductions and strong
market fundamentals in the electronic component industry. We are also very
pleased with the strong demand we are seeing for our optical equipment
assemblies. With the announcement last week of the planned divestiture of our
automotive segment and the acquisition of Precision Cable, we are well
positioned to capitalize on the growing telecommunications and computer
networking markets."
REPORTED RESULTS
After accounting for discontinued operations, the Company reported net
income of $0.7 million for its current second quarter compared to a net loss
of ($5.2) million recorded a year ago in the second quarter. The loss
available to common shareholders for the second quarters of 2000 and 1999 was
($0.65) and ($4.23) per diluted share, respectively.
Insilco Holding Co., based in suburban Columbus, Ohio is a leading global
supplier of cable assemblies, wire harnesses, high-speed network connectors,
power transformers, precision metal stampings and value-added services to the
telecommunications, data processing, medical instrumentation and automotive
markets. Insilco has operations in the United States, Canada, Mexico,
Northern Ireland, Ireland, Puerto Rico and the Dominican Republic.
INSILCO HOLDING CO.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in millions except per share data)
Actual
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Sales $92.3 $62.6 $170.7 $126.2
Cost of sales, excluding
depreciation 66.6 47.4 123.8 95.1
Selling, general and
administrative expenses,
excluding depreciation 12.4 9.6 22.9 19.8
Depreciation and amortization
expense 3.6 2.7 6.7 5.2
Significant legal,
professional and merger fees 0.3 2.4 0.3 2.5
Severance, writedown & other 0.3 3.5 0.8 3.7
Restructuring charge - 5.4 - 5.4
Operating income (loss) 9.1 (8.4) 16.2 (5.5)
Interest expense, net (13.3) (11.7) (25.6) (22.9)
Other income, net (0.1) - (0.4) 0.3
Loss before income taxes,
discontinued operations
and extraordinary item (4.3) (20.1) (9.8) (28.1)
Income tax benefit 0.2 5.7 1.6 8.7
Net loss before
discontinued operations (4.1) (14.4) (8.2) (19.4)
Discontinued operations, net of tax:
Income from operations 4.8 9.2 6.1 13.3
Gain on disposal - - 43.4 -
Income from discontinued
operations 4.8 9.2 49.5 13.3
Net income (loss) 0.7 (5.2) 41.3 (6.1)
Preferred stock dividend (1.7) (1.5) (3.4) (2.9)
Net income (loss)
available to common $(1.0) $(6.7) $37.9 $(9.0)
Earnings before other income,
interest, taxes, depreciation,
amortization, and
one-time items $13.3 $5.6 $24.0 $11.3
Capital expenditures $(1.6) $(2.0) $(3.5) $(3.6)
Income (loss) per share
available to common $(0.65) $(4.23) $24.80 $(5.74)
INSILCO HOLDING CO.
Pro Forma(a) Condensed Consolidated Statements of Earnings (Loss) before
Income Taxes
(Unaudited)
(Amounts in millions except per share data)
Pro Forma(a)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Custom Assemblies $46.6 $26.0 $92.8 $50.8
Precision Stampings 20.5 18.7 41.6 38.3
Passive Components 25.2 21.8 50.0 44.6
Total sales 92.3 66.5 184.4 133.7
Cost of sales, excluding
depreciation 66.6 48.6 132.3 97.4
Selling, general and
administrative expenses,
excluding depreciation 12.4 8.5 24.1 18.1
Depreciation and
amortization expense 3.6 3.6 7.3 7.0
Operating income 9.7 5.8 20.7 11.2
Interest expense, net (9.8) (8.7) (19.1) (16.5)
Other income, net - 0.1 (0.4) 0.3
Earnings (loss) before
income taxes (b) $(0.1) $(2.8) $1.2 $(5.0)
EBITDA (b) $13.3 $9.4 $28.0 $18.2
(a) Pro forma results reflect (i) the acquisitions of EFI (January, 1999)
and TAT (February, 2000) and (ii) the divestitures of Taylor
Publishing, the Automotive Segment (under current definitive
agreement), Romac and McKenica, in each case, as if they occurred at
the beginning of the relevant period, and (iii) the exclusion of non-
operating items.
(b) Earnings (loss) before income taxes and "EBITDA", which is defined as
earnings before interest expense (net), income taxes, depreciation and
amortization and non-operating items, are not intended to represent
and should not be considered more meaningful than, or an alternative
to, operating income, cash flows from operating activities or other
measures of performance in accordance with generally accepted
accounting principles. EBITDA data are included because we understand
that such information is used by certain investors as one measure of
an issuer's historical ability to service debt. While EBITDA is
frequently used as a measure of operations and the ability to meet
debt service requirements, it is not necessarily comparable to other
similarly titled captions of other companies, or used in the Company's
debentures, credit or other similar agreements, due to potential
inconsistencies in the method of calculation.
INSILCO HOLDING CO.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in millions)
June 30, June 30, December 31,
2000 1999 1999
Assets
Current assets:
Cash and cash equivalents $3.7 $10.2 $6.5
Receivables, net 61.2 38.9 40.2
Inventories, net 48.3 35.3 34.9
Current portion of deferred taxes 9.6 2.1 9.6
Net assets of Discontinued Operations 98.6 96.1 94.0
Prepaid expenses 2.1 2.3 2.0
Total current assets 223.5 184.9 187.2
Property, plant and equipment, net 49.6 55.9 49.6
Goodwill, net 87.4 5.4 5.7
Deferred taxes - 8.2 7.3
Other assets and deferred charges 25.5 32.7 30.3
Total assets $386.0 $287.1 $280.1
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $26.2 $18.0 $20.2
Accrued expenses and other 42.3 28.4 19.4
Accrued interest payable 6.7 6.1 7.5
Current portion of long-term debt 1.3 1.3 1.3
Current portion of long-term obligations 0.9 1.0 0.9
Total current liabilities 77.4 54.8 49.3
Long-term debt 432.3 411.9 400.6
Other long-term obligations 35.0 28.8 29.3
Minority interest 0.1 0.1 0.1
Preferred stock 43.5 37.0 40.1
Stockholders' deficit (202.3) (245.5) (239.3)
Total liabilities and
stockholders' deficit $386.0 $287.1 $280.1