R&B, Inc. Reports 2000 Q3 and Nine Month Financial Results
27 October 2000
R&B, Inc. Reports 2000 Third Quarter and Nine Month Financial Results; Continued Debt Reduction
COLMAR, Pa., Oct. 27 R&B, Inc., today
announced financial results for the third quarter and nine months ended
September 23, 2000. For the third fiscal quarter ended September 23, 2000,
sales decreased 16.5% to $49.7 million from $59.5 million in the same period
last year. Net income in the third fiscal quarter was $1.2 million, or $0.14
per fully diluted share, compared to $1.3 million, or $0.15 per fully diluted
share, in the prior year. For the nine months ended September 23, 2000, sales
decreased 17.1% to $152.2 million from $183.5 million in the same period last
year. Net income in the nine months ended September 23, 2000 was
$3.9 million, or $0.46 per fully diluted share, compared to $5.4 million, or
$0.64 per fully diluted share, in the prior year. Net income in the first
quarter of 2000 included a non-recurring gain on the sale of the Company's
lift support business of approximately $1.1 million after tax.
The decline in sales in both periods is the result of continued
consolidation in the automotive aftermarket, inventory adjustments by
customers and the Company's strategic decision to eliminate unprofitable
products. The Company estimates that sales in the nine months ended
September 23, 2000 were reduced by approximately $18.0 million as a result of
it launching fewer but more profitable new initiatives and its 1999 decision
to eliminate unprofitable products in its core business. A portion of the
sales decline was also attributable to the lift support business that was sold
in the first quarter of 2000. Net sales in fiscal 1999 from this program were
approximately $13 million.
During the third quarter of 2000 the Company began shipping its "Pik-a-
Nut" brand of hardware and general use fasteners to Wal-Mart. Annual revenues
from this program as well as other initiatives in the home hardware area are
expected to represent approximately 10% of net sales in 2001. However, as
with most of the Company's new initiatives, the program is not expected to
reach breakeven until next year due to start up costs and the significant
investment associated with the program. Losses from this initiative reduced
fully diluted EPS by $0.04 in the third fiscal quarter and by $0.08 in the
nine months ended September 23, 2000.
The Company continued to strengthen its balance sheet during the third
quarter of 2000 through better working capital management. As a result, total
outstanding debt was reduced by $3.0 million during the quarter. For the nine
months ended September 23, 2000, total outstanding borrowings have been
reduced $25.8 million from $97.2 million at December 25, 1999 to $71.4 million
at September 23, 2000.
Mr. Richard Berman, Chairman, President and Chief Executive Officer said,
"We are happy to report continued progress in strengthening our balance sheet
during the third quarter. Inventory turnover is up, yet fill rates to
customers remain very good across all product lines and segments of our
business. Our cost cutting initiatives have enabled us to remain profitable
despite continued weakness in most of our markets. We continue to believe
that the restructuring and cost saving initiatives we have implemented
together with the success of our debt reduction plan have strengthened the
business and will provide long-term growth opportunities. R&B remains
committed to the automotive aftermarket and developing new hardware
initiatives."
Historically, the Company's business has been seasonal in nature with the
highest shipment levels and net income in the second and third fiscal quarters
and lower sales and net income levels in the first and fourth quarters. The
Company expects this trend to continue for the foreseeable future. Thus, net
income in the fourth quarter will be below that reported in the second and
third fiscal quarters. The Company believes that net sales levels in the
second and third fiscal quarters of 2000 reflect a baseline level of sales for
the foreseeable future given current market conditions and the changes in its
business over the last twelve months.
R&B, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(in thousands, except per-share amounts)
13 weeks ended 9/23/00 Pct. 9/25/99 Pct.
Net sales $49,700 100.0 $59,495 100.0
Cost of goods sold 31,351 63.1 38,620 64.9
Gross profit 18,349 36.9 20,875 35.1
Selling, general and
administrative expenses 15,172 30.5 17,235 29.0
Income from operations 3,177 6.4 3,640 6.1
Interest expense, net 1,322 2.7 1,717 2.9
Income before taxes 1,855 3.7 1,923 3.2
Provision for taxes 644 1.3 663 1.1
Net income 1,211 2.4 1,260 2.1
Earnings per share
Basic $0.14 -- $0.15 --
Diluted $0.14 -- $0.15 --
Average shares outstanding
Basic 8,428 -- 8,392 --
Diluted 8,510 -- 8,462 --
39 weeks ended 9/23/00(A) Pct. 9/25/99 Pct.
Net sales $152,185 100.0 $183,459 100.0
Cost of goods sold 96,591 63.5 115,624 63.0
Gross profit 55,594 36.5 67,835 37.0
Selling, general and
administrative expenses 44,915 29.5 54,329 29.6
Income from operations 10,679 7.0 13,506 7.4
Interest expense, net 4,658 3.0 5,229 2.9
Income before taxes 6,021 4.0 8,277 4.5
Provision for taxes 2,101 1.4 2,886 1.6
Net income 3,920 2.6 5,391 2.9
Earnings per share
Basic $0.47 -- $0.64 --
Diluted $0.46 -- $0.64 --
Average shares outstanding
Basic 8,420 -- 8,369 --
Diluted 8,509 -- 8,418 --
(A) Includes non-recurring gain on sale of product line of $1.1 million
($0.13 per share)
R&B, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
(Unaudited)
Assets 9/23/00 12/25/99
Cash and cash equivalents $ 2,899 $ 1,467
Accounts receivable 41,267 49,979
Inventories 55,185 70,272
Prepaid expenses and other 6,753 7,117
Property & Equipment 24,836 22,919
Intangible and other assets 34,865 36,250
Total Assets $165,805 $188,004
Liabilities and Shareholders' Equity
Current portion of long-term debt $2,948 $11,910
Accounts payable 12,803 12,867
Accrued expenses and other 7,677 7,446
Long-term debt 68,428 85,283
Deferred income taxes 2,372 2,264
Shareholders' equity 71,577 68,234
Total Liabilities and Equity $165,805 $188,004