GenCorp Reports Favorable Q4 and Fiscal Year 2000 Results Earnings
17 January 2001
GenCorp Reports Favorable 4th Quarter and Fiscal Year 2000 Results Earnings Per Share up Over 20%
SACRAMENTO, Calif., Jan. 16 GenCorp reported
today substantially improved 2000 full year results over 1999 for continuing
operations. The Company posted 2000 earnings of $1.31 per diluted share,
excluding the one-time net gain recorded as a result of the pension and
post-retirement benefit accounting change made in the first quarter of
2000 ($1.76 per diluted share). Earnings improved more than 20% as compared
to $1.09 per diluted share in 1999. Revenues for continuing operations in
2000 were $1.05 billion compared to $1.07 billion in the prior year.
"I am very pleased with the significant improvement in earnings over
1999 and the steady progress made during the year implementing a number of the
difficult new strategies we outlined at the time of the spin-off of OMNOVA
Solutions Inc. over a year ago," said Chairman and CEO Bob Wolfe.
"Highlights of our progress include:
-- A strong performance turnaround in margins within our automotive
vehicle sealing segment, plus the completion of the acquisition of Draftex in
late December of 2000, which addresses the need for consolidation in this
industry, provides cash flow to fuel growth and solidifies this segment's
competitive global posture.
-- Completion of the strategic alliance between Aerojet Fine Chemicals and
global partner, NextPharma Technologies, which allows us to respond more
effectively to the trend by major customers to outsource more of their
manufacturing needs as part of a leading full-service supplier and grow the
fine chemicals business faster. New management appointed in 2000 at Aerojet
Fine Chemicals is effectively implementing the improved process and
manufacturing efficiencies necessary for improved operational and financial
performance in 2001.
-- Increased operating profits and continued excellent performance on
core contracts at Aerojet-General Corporation, as well as a number of wins on
important competitive bids for emerging new development programs that will
strengthen our business base going forward. Pursuit of growth alternatives,
including acquisitions in related defense areas remains a key strategic
priority at Aerojet.
-- First major step in the process to remove significant portions of
property from the Superfund order at our Sacramento site reached with the
approval from all federal and state regulatory agencies that an initial
3,100 acres is clean of contamination."
"We continue to work at a fast pace moving into 2001 to complete these
and other strategic initiatives in order to deliver enhanced value to our
shareholders," Wolfe said.
For the fourth quarter of 2000, revenues increased 9% to $277 million,
versus $255 million for the same period in 1999. Both the aerospace and
defense and automotive segments experienced increases over the prior year.
Before unusual items, segment operating profit for the fourth quarter of
fiscal 2000 was $30.0 million compared to $9.5 million for the same period of
1999. Included in the fourth quarter of 2000 is $7.5 million of operating
income due to the residual effect of the pension accounting change. Earnings
from continuing operations in the fourth quarter of 2000 were $0.29 per
diluted share compared to $0.10 per diluted share during the fourth quarter of
1999. Pension income, resulting from the accounting change made in the first
quarter of fiscal 2000, contributed $0.13 to earnings per diluted share in the
quarter. The Company recognized a net charge of $5.5 million for unusual
items during the quarter compared to $7.1 million of net income for unusual
items recorded in the fourth quarter of 1999.
Aerospace, Defense and Fine Chemicals
Sales at Aerojet were up, at $149 million in the fourth quarter of
2000 compared to $135 million in the same quarter of 1999. Higher revenues on
the Space Based Infrared (SBIRS) program, the Defense Support Program (DSP)
Post Production, and the Japanese Hope X program accounted for the majority of
the increase, partially offset by lower volume on the Titan and Delta
programs.
Operating profit improved to $16.6 million in the fourth quarter
2000 versus $6.2 million in the fourth quarter of 1999, primarily as a result
of the higher sales volume, contract mix/performance, and other operating
profit increases including pension income.
Highlights at Aerojet during the quarter included a $41 million contract
award from the U.S. Air Force for the DSP Post Production Support with options
through 2003 that could total an additional $82 million; an $8 million
contract modification from the Air Force Research Lab and NASA to develop
technologies for a next-generation reusable launch vehicle; excellent
100% award fees for the DSP and CTTP programs; and a 98% award fee for Titan.
Exciting news was received on December 20, 2000, when NASA awarded Aerojet
a contract worth $207 million, including options, to build the Advanced
Technology Microwave Sounder (ATMS), a next generation state-of-the-art
weather instrument that will significantly improve weather forecasting
capability and further the research of global climate change.
Aerojet funded backlog at year-end remained constant year over year at
$0.7 billion.
Vehicle Sealing
Net sales for the vehicle sealing segment improved 7% to $129 million in
the fourth quarter of 2000, versus $121 million in the fourth quarter of
1999. The sales gain was due to higher volumes in North America on General
Motors' C/K pickup and Ford's full size and compact pickup platforms.
Operating profit in the fourth quarter of 2000 was significantly improved at
$13.4 million, compared to $3.3 million in the fourth quarter of
1999. Operating profit margins improved to 10.4% in the fourth quarter of
2000 compared to 2.7% for the same period in 1999. Operating profit margins
have steadily improved throughout the year as a result of achieving model run
rates and completing launch support efforts, as well as through continuous
process improvement and cost reduction efforts.
The process of integration is already underway at the vehicle sealing
segment for the newly acquired Draftex business. In fact, one week after the
completion of this strategic transaction on December 29, the segment
introduced a new name, GDX Automotive, to reflect its expanded new role as a
global sealing leader in both cars and light trucks. Draftex makes GDX
Automotive the world' second largest automotive sealing supplier and the
largest supplier of highly engineered vehicle sealing systems in North
America. The acquisition doubles sales for the segment to nearly $1 billion
and adds significant global capability in manufacturing, research, design and
development. In addition to its existing five North American and two European
facilities, GenCorp gains Draftex's German-based Worldwide Headquarters and
International European Technical Center and 11 manufacturing facilities in six
countries, including Germany, France, Spain, Czech Republic, China and the
U.S.
GenCorp is already recognized as a leader in North America in the sport
utility and light truck market segments, serving Ford, General Motors and
Mercedes. Draftex adds an important leading European presence in the
passenger car market segment, and global relationships with Volkswagen, BMW,
Mercedes, Renault and Ford.
GDX Automotive expects to realize significant opportunities for future
rationalization of production capacity in both Europe and North America to
achieve better utilization and profitability in its operations.
Other
At November 30, 2000, GenCorp's total debt was $190 million versus
$158 million at November 30, 1999. Interest expense for continuing operations
was $5.4 million in the fourth quarter of 2000 compared to $3.8 million in the
fourth quarter of 1999.
Business Segment Information (Unaudited)
GenCorp Inc.
Three Months Ended Year Ended
(Dollars in millions, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
except per-share data) 2000 1999 2000 1999
Net Sales
Aerospace, defense and
fine chemicals $148.7 $134.7 $562.4 $614.7
Vehicle sealing 128.8 120.8 484.9 456.3
$277.5 $255.5 $1,047.3 $1,071.0
Income from
Continuing Operations
Aerospace, defense and
fine chemicals $16.6 $6.2 $89.9 $61.9
Vehicle sealing 13.4 3.3 33.7 17.6
Unusual items -- 21.3 -- 21.3
Segment Operating
Profit $30.0 $30.8 $123.6 $100.8
Interest expense (5.4) (3.8) (17.5) (5.5)
Corporate other income
and (expense), net -- -- (3.1) (5.0)
Corporate expenses (4.3) (0.6) (7.1) (4.5)
Unusual items (9.2) (9.5) (4.2) (9.5)
Income tax (provision)
benefit (4.5) (5.8) (36.7) (30.0)
Income from
Continuing Operations $6.6 $11.1 $55.0 $46.3
Discontinued operations,
net of tax -- (8.5) -- 26.4
Cumulative effect of
accounting change,
net of tax -- -- 74.0 --
Net Income $6.6 $2.6 $129.0 $72.7
Basic earnings
per common share:
Continuing operations $0.16 $0.27 $1.31 $1.11
Discontinued operations -- (0.21) -- 0.63
Effect of accounting
change -- -- 1.76 --
Total $0.16 $0.06 $3.07 $1.74
Diluted earnings
per common share:
Continuing operations $0.16 $0.26 $1.31 $1.09
Discontinued operations -- (0.20) -- 0.63
Effect of
accounting change -- -- 1.76 --
Total $0.16 $0.06 $3.07 $1.72
Average number of
shares of common stock
outstanding
(in thousands):
Basic 41,967 41,837 41,933 41,740
Diluted 42,124 42,170 42,052 42,148
Capital expenditures $23.5 $25.4 $82.3 $86.2
Depreciation and
amortization $11.6 $8.9 $50.2 $44.4
Condensed Consolidated Balance Sheet (Unaudited)
GenCorp Inc.
Nov. 30, Nov. 30,
(Dollars in millions) 2000 1999
Assets
Cash and equivalents $17.1 $23.4
Accounts receivable 134.6 139.0
Inventories 181.7 144.2
Prepaid expenses and other 12.4 57.2
Total Current Assets $345.8 $363.8
Recoverable from U.S. government and
third parties for environmental remediation 203.0 211.5
Deferred income taxes 76.5 148.7
Prepaid pension 280.8 112.8
Investments and other assets 51.9 58.2
Property, plant and equipment, less
accumulated depreciation 365.5 335.5
$1,323.5 $1,230.5
Liabilities and Shareholders' Equity
Notes payable $0.2 $9.3
Accounts payable-trade 47.3 44.3
Income taxes 8.2 44.4
Other current liabilities 271.7 273.4
Total Current Liabilities $327.4 $371.4
Long-term debt 190.2 148.7
Postretirement benefits other than pensions 230.0 251.0
Environmental reserves 327.6 346.2
Other liabilities 53.8 33.4
Total shareholders' equity 194.5 79.8
$1,323.5 $1,230.5