Insilco Holding Co. Continues Positive Earnings Momentum
6 November 2000
Insilco Holding Co. Continues Positive Earnings Momentum
Reports Sharply Higher Third Quarter 2000 Results From Ongoing Operations
COLUMBUS, Ohio, Nov. 3 Insilco Holding Co.
(OTC Bulletin Board: INSL) today reported strong gains in sales, EBITDA and
operating cash flow for its third quarter ended September 30, 2000. The
Company said that results for its automotive segment, which the Company
divested during the 2000 third quarter, are being reported as discontinued
operations and are therefore not included in consolidated sales and EBITDA
(earnings before interest, taxes, depreciation, amortization and non-operating
items). Also, included in the Company's reported consolidated results for 1999
are the results of the Company's Romac Metals and McKenica operations, which
were divested in the third quarter of 1999. These results are excluded on a
pro forma basis.
THIRD QUARTER RESULTS
Third quarter reported sales increased by 60% to $99.5 million from
$62.0 million recorded last year, fueled by strong demand for the Company's
data grade connector products and reflecting the benefit of sales from the
Company's recently acquired custom assembly businesses. On a pro forma basis
to include acquisitions in the prior year's results, the Company's third
quarter sales increased 34% from the third quarter last year. These pro forma
results reflect a 53% increase in the Company's custom assembly segment due to
increased worldwide demand for the Company's custom assemblies used in OEM
optical and networking equipment. Sales of passive components increased 31%
as demand from networking and communications customers increased for the
Company's integrated connector modules or MagJack components. MagJack
components integrate magnetic interface components within the body of RJ-45
and RJ-11 connectors and are used to connect hardware devices to networking
routers, switches, and servers. Sales from the Company's precision stamping
segment, which stamps high tolerance, engineered electrical contacts, were
down 4% from a year ago reflecting softer sales of automotive electronic and
consumer battery components.
For the current quarter, reported EBITDA more than doubled to
$15.4 million from $7.1 million recorded last year. A favorable sales mix for
higher-margin data grade connector products and performance from its recent
acquisitions contributed to the strong EBITDA performance. The Company's pro
forma third quarter EBITDA increased to $17.7 million from $14.6 million in
the third quarter last year due to strong demand for the Company's custom
assemblies used in optical and networking equipment assemblies and integrated
connector components. Pro forma EBITDA in the current quarter includes
$5.1 million in acquisition related incentives. Excluding these incentives,
pro forma EBITDA would have been $22.8 million in the current quarter.
CEO COMMENTS
David A. Kauer, Insilco President and CEO, said, "Our strong third quarter
performance reflects a continuation of the increased demand we have
experienced year to date for our electronic components, in particular our data
grade connectors and custom cable assemblies. As a result, pro forma sales and
EBITDA for the first nine months of 2000 are up 39% and 43%, respectively.
With a strong order backlog at the end of the third quarter, as well as an
expanded customer base as a result of the Precision Cable acquisition, we
believe we'll see a continuation of the strong market demand for the balance
of this year and look forward to reporting positive results for the fourth
quarter and full year."
REPORTED RESULTS
After accounting for the extra ordinary write-off of 1998 deferred
financing costs and discontinued operations, the Company reported net income
of $19.2 million for its current third quarter compared to net income of
$7.8 million recorded a year ago in the third quarter. Income available to
common shareholders for the third quarters of 2000 and 1999 was $17.4 million,
or $10.94 per diluted share, and $6.3 million, or $4.06 per diluted share,
respectively.
INSILCO HOLDING CO.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in millions, except share and per share data)
Actual
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Sales $99.5 62.0 $270.2 188.2
Cost of sales, excluding
depreciation 70.4 46.7 194.3 141.8
Selling, general and administrative
expenses, excluding depreciation 13.7 8.2 36.6 27.9
Depreciation and amortization
expense 3.7 2.5 10.4 7.7
Significant legal, professional
and merger fees 0.1 - 0.4 2.5
Severance, writedown & other - 0.3 0.8 4.0
Restructuring charge - 0.5 - 5.9
Operating income (loss) 11.6 3.8 27.7 (1.6)
Interest expense, net (12.8) (11.9) (38.4) (34.8)
Other income, net - 10.0 (0.3) 10.2
Income (loss) before income taxes,
extraordinary item and
discontinued operations (1.2) 1.9 (11.0) (26.2)
Income tax benefit 3.9 2.2 1.3 10.9
Income (loss) before
extraordinary item and
discontinued operations 2.7 4.1 (9.7) (15.3)
Extraordinary Item, net of tax (2.9) - (2.9) -
Net income (loss) before
discontinued operations (0.2) 4.1 (12.6) (15.3)
Discontinued operations, net of tax:
Income (loss) from operations (4.1) 3.7 6.2 17.0
Gain on disposal 23.5 - 66.9 -
Income from discontinued operations 19.4 3.7 73.1 17.0
Net income 19.2 7.8 60.5 1.7
Preferred stock dividend (1.8) (1.5) (5.1) (4.4)
Net income (loss) available
to common $17.4 6.3 $55.4 (2.7)
Earnings before other income,
interest, taxes, depreciation,
amortization, and one-time items $15.4 7.1 $39.3 18.5
Capital expenditures ($2.6) (1.6) ($6.1) (5.1)
Basic Shares 1,507 1,552 1,523 1,566
Basic income (loss) per share
available to common $11.56 4.06 $36.37 (1.74)
Diluted Shares 1,593 1,552 1,523 1,566
Diluted income (loss) per share
available to common $10.94 4.06 $36.37 (1.74)
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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Custom Assemblies $63.8 41.7 $185.1 109.1
Precision Stampings 18.7 19.5 60.3 57.7
Passive Components 28.2 21.5 78.1 66.1
Total sales 110.7 82.7 323.5 232.9
Cost of sales, excluding
depreciation 78.8 60.0 232.6 170.3
Selling, general and
administrative expenses,
excluding depreciation 14.2 8.1 39.0 26.2
Depreciation and
amortization expense 4.2 4.2 12.9 12.4
Operating income 13.5 10.4 39.0 24.0
Interest expense, net (12.9) (12.0) (38.7) (35.4)
Other income, net - 9.7 (0.2) 0.3
Earnings (loss) before
income taxes (b) $0.6 8.1 $0.1 (11.1)
EBITDA (b) $17.7 14.6 $51.9 36.4
(a) Pro forma results reflect (i) the acquisitions of EFI (January, 1999),
TAT (February, 2000) and Precision Cable (August, 2000), and (ii) the
divestitures of Taylor Publishing, the Automotive Segment, 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)
September 30, September 30, December 31,
2000 1999 1999
Assets
Current assets:
Cash and cash equivalents $17.5 $11.1 $6.5
Receivables, net 74.9 41.1 40.2
Inventories, net 59.9 33.5 34.9
Current portion of
deferred taxes 9.6 2.0 9.6
Net assets of Discontinued
Operations - 137.2 94.0
Prepaid expenses 7.6 2.1 2.0
Total current assets 169.5 227.0 187.2
Property, plant and
equipment, net 55.9 49.9 49.6
Goodwill, net 126.0 5.4 5.7
Deferred taxes - 8.9 7.3
Other assets and deferred
charges 17.8 17.0 30.3
Total assets $369.2 $308.2 $280.1
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $39.1 $18.4 $20.2
Accrued expenses and other 60.4 21.0 19.4
Accrued interest payable 4.1 2.8 7.5
Current portion of
long-term debt 4.9 1.3 1.3
Current portion of long-term
obligations 0.8 1.0 0.9
Total current
liabilities 109.3 44.5 49.3
Long-term debt 367.3 435.4 400.6
Other long-term obligations 33.6 29.8 29.3
Minority interest - 0.1 0.1
Preferred stock 45.2 38.5 40.1
Stockholders' deficit (186.2) (240.1) (239.3)
Total liabilities and
stockholders' deficit $369.2 $308.2 $280.1