Tuesday August 3, 5:05 pm Eastern Time
Company Press Release
Kent Electronics Reports Substantial Sequential Increases in First Quarter
Sales and Earnings
- Net Sales Increase 16% Sequentially to $205.2 Million -
HOUSTON--(BUSINESS WIRE)--Aug. 3, 1999-- - Operating Income More Than Triples Compared to Prior Quarter -
Kent Electronics Corporation (NYSE:KNT - news) reported net sales and earnings for the first fiscal 2000 quarter ended July 3, 1999.
Net sales for the first quarter were $205.2 million, a 16% sequential improvement over the prior quarter and 31% increase over the first quarter of fiscal 1999. Sales
from Kent's specialty distribution businesses, which included the acquisitions of SabreData and Advacom, represented 73% of total net sales, while K*TEC, the
Company's contract manufacturing unit, accounted for 27%.
Gross profit was $32.0 million, an increase of 21% over the fourth quarter of fiscal 1999 and modestly above last year's first quarter. Gross margin was 15.6%
compared to 14.9% in the fourth quarter of fiscal 1999 and 19.8% in the first quarter last year.
SG&A expenses were $28.1 million for the first fiscal 2000 quarter, compared to $25.6 million in the fourth quarter of fiscal 1999 and $24.6 million in the first
quarter last year. As a percentage of sales, however, SG&A expenses declined to 13.7% from the 14.4% and the 15.7% reported in last year's fourth and first
quarters, respectively.
For the first quarter, operating income was $3.9 million, a material improvement over the $0.8 million reported in the fourth quarter last year. Operating income in the
first quarter last year was $6.5 million.
Morrie K. Abramson, Chairman and Chief Executive Officer, commented, ''First quarter fiscal 2000 performance illustrated the strengthening of our core businesses
resulting from both the beginning of improved market conditions as well as successful business initiatives undertaken by our management team. Higher plant utilization
and a more favorable product mix led to an improved gross margin at K*TEC. Better industry conditions resulted in stabilized pricing on the distribution side of our
business.''
''Importantly, we began to achieve significant operating leverage in the first quarter by integrating the facilities and systems of our two recent acquisitions,'' Mr.
Abramson noted.
Net earnings for the period were $1.9 million, or $0.07 per diluted share, up significantly from the $0.5 million, or $0.02 per diluted share, reported in the fourth
quarter of fiscal 1999. Net earnings in the first quarter last year were $4.1 million, or $0.15 per diluted share.
Larry D. Olson, President and Chief Operating Officer, commented, ''Beyond acquisitions, first quarter revenues demonstrated the successes K*TEC has achieved
in maintaining its relationships with key customers and adding new customers in fast growing industries, as well as in expanding its manufacturing services. During the
period, K*TEC began to benefit from the recovery of the semiconductor capital equipment market, which more than offset continued pricing pressures in the PC
industry. K*TEC's sales were up 34% year over year and modestly above the prior quarter. Our expanded manufacturing services accounted for 52% of
manufacturing revenue in the first fiscal 2000 quarter compared to 53% and 33%, respectively, in the fourth quarter and first quarter of fiscal 1999.''
The Company's distribution businesses experienced a solid quarter with Kent Components' sales improving approximately 22% sequentially as a result of the
addition of one month of sales from Kent's acquisition of Advacom and a strengthening market for passive components. Kent Datacomm posted an approximate
33% sequential sales increase over the prior quarter, benefiting from a full quarter of SabreData sales as well as a growing demand for networking products and
services.
Looking ahead, Mr. Abramson stated, ''We began fiscal 2000 with a much larger and more diversified customer base and breadth of services than we had at the
same time last year. Improved market conditions and the benefits of our investments in facilities and technology should support Kent's steady growth in the coming
periods.''
The forward-looking statements in this press release involve risks and uncertainties which could cause actual results, performance or trends, including the
above-mentioned anticipated improvement in performance, to differ materially from those expressed in the forward-looking statements. The Company believes that
all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as
expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and economic conditions, factors that could
cause actual results to differ materially from those discussed in the forward-looking statements in this press release, include, but are not limited to, the risks relating to
forward-looking statements discussed in the Company's Annual Report on Form 10-K for the fiscal year ended April 3, 1999, including, but not limited to, the risks
discussed under the captions ''Downward Pressure on Margins,'' ''Cycles in the Electronics Industry; General Economic Conditions,'' ''Dependence on K*TEC
Customers; Uncertainty of Increasing Contract Manufacturing Sales,'' ''Management of Growth,'' ''Competition,'' ''Risks Associated with Acquisitions'' and
''Dependence on Significant Suppliers.''
Kent Electronics is among the largest publicly traded specialty electronics distributors and network integrators. Kent's contract manufacturing subsidiary, K*TEC
Electronics, is among the leading contract manufacturers in the U.S.
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited - In thousands, except per share data)
First Quarter Ended
(Thirteen Weeks)
July 3, June 27,
1999 1998
Net sales $205,176 $157,057
Cost of sales 173,146 125,969
Gross profit 32,030 31,088
Selling, general and
administrative expenses 28,091 24,631
Operating profit 3,939 6,457
Other income (expense)
Interest expense (2,578) (2,574)
Other - net 1,782 2,875
Earnings before income taxes 3,143 6,758
Income taxes 1,234 2,650
Net earnings $1,909 $4,108
Earnings per common share:
Basic $.07 $.15
Diluted $.07 $.15
Weighted average shares:
Basic 27,974 27,213
Diluted 28,329 27,912
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
July 3, April 3,
1999 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (including
temporary investments of $108,139 at
July 3 and $206,919 at April 3) $105,504 $207,942
Accounts receivable, net 140,019 103,364
Inventories
Materials and purchased products 144,440 118,535
Work in process 3,852 6,349
148,292 124,884
Other 14,964 17,549
Total current assets 408,779 453,739
PROPERTY AND EQUIPMENT
Land 8,168 8,168
Buildings 43,910 43,817
Equipment, furniture and fixtures 126,576 124,194
Leasehold improvements 2,711 2,681
181,365 178,860
Less accumulated depreciation
and amortization (54,496) (50,496)
126,869 128,364
OTHER ASSETS 7,006 7,095
COST IN EXCESS OF NET ASSETS ACQUIRED,
Less accumulated amortization of $3,653
at July 3 and $3,320 at April 3 91,205 15,443
Total assets $633,859 $604,641
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
(In thousands, except share data)
July 3, April 3,
1999 1999
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ --- $---
Accounts payable 66,077 47,149
Accrued compensation 11,785 13,862
Other accrued liabilities 17,656 6,950
Income taxes --- ---
Total current liabilities 95,518 67,961
LONG-TERM DEBT, less current maturities 207,000 207,000
DEFERRED INCOME TAXES 7,998 8,511
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value per share;
authorized 2,000,000 shares; none issued --- ---
Common stock, no par value; authorized
60,000,000 shares; 28,033,159 shares
issued and 27,983,159 shares
outstanding at July 3 and
28,013,375 shares issued and
27,963,375 shares outstanding
at April 3 63,746 63,553
Additional paid-in capital 117,583 117,511
Retained earnings 142,991 141,082
------- -------
324,320 322,146
Less common stock in treasury - at cost,
50,000 shares (977) (977)
------- ------
323,343 321,169
Total liabilities and
stockholders' equity $633,859 $604,641
Contact:
Kent Electronics Corporation
Stephen J. Chapko
Executive Vice President & CFO
281-243-4000
or
Morgen-Walke Associates
Ed Bisno/Theresa Schillero
Media: Terry Rooney
212-850-5600 |
