November 4, 1999 - Continued Improvements in Operating Results
Stackpole Limited reported results for the third quarter of 1999 that evidenced a continuation in the Company's operational improvement.
Third quarter 1999 sales of $63,600,000 increased by 72% over the same period last year. Operating profit in the third quarter was $3,519,000 compared to a loss of $2,635,000 in the prior year, while net income was $1,313,000, compared to a loss of $2,192,000, and earnings per share were $0.14 versus a loss of $0.23 in the third quarter of 1998. It should be noted that third quarter 1998 sales and operating results were negatively impacted by the General Motors strike.
For the first nine months of 1999, sales have increased by 33% to $171,077,000. Net income of $1,507,000 and earnings per share of $0.16 compare to income of $3,160,000 and earnings per share of $0.33 for the first nine months of 1998.
In commenting on the operating results, Sam Parkhill, Stackpole's Chairman and Chief Executive Officer noted, "From a net loss of $801,000 in the first quarter of this year, the Company has combined higher revenue with gains in plant efficiency to produce quarter over quarter improvement in operating results. The growth in revenue in the third quarter resulted from the successful launch of the Stratford plant expansion, coupled with a ramp-up on transmission sprocket production at the Automotive Gear Division."
"At our Stratford facility, the launch of the plant expansion was accomplished without premium costs and with a resulting contribution to profitability within the first month of production."
"At the Automotive Gear Division, efforts in the third quarter were directed at achieving the capability to consistently produce the full ramp-up volumes on the GM 4T40 and 4T65 sprocket programs. This Division is now positioned to focus on improving operational efficiency in the months ahead."
Cash Flow
Third quarter 1999 cash flow from operations was $10,931,000, which was used to fund capital expenditures of $6,823,000 and to repay $3,554,000 of long-term debt. Debt to total capitalization was 39.5% at the end of the third quarter compared to 41.1% at the end of the second quarter.
Year 2000 Issues
The Company has conducted a program to review the Year 2000 readiness status of significant internal systems as well as critical suppliers. At the end of the third quarter 1999, the Company believes it has substantially completed its testing and remediation program relating to internal systems as well as its assessments on its critical suppliers. As a final element in the Year 2000 readiness program, the Company is preparing contingency plans for each facility to manage Year 2000 failures from critical systems or suppliers. At the end of the third quarter, such contingency plans were 90% complete.
There can be no assurances however, that despite the Company's efforts, it will not experience significant unanticipated negative consequences and/or material costs relating to the Year 2000 issue, caused by undetected errors or defects in the technology used in its internal systems or those of its suppliers, service providers and customers, in embedded software or related data bases or operating systems.
Stackpole Limited is one of the world's leading manufacturers of highly engineered, technologically differentiated, high volume powertrain systems and components, primarily for automotive engines and transmissions. Stackpole has more than 1,700 highly-skilled employees at five operating plants in Canada and the United Kingdom. Stackpole is a public company and its common shares are listed and traded on The Toronto Stock Exchange.
STACKPOLE LIMITED
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Dollars in thousands)
Oct 3, Sept 27,
1999 1998
ASSETS
CURRENT
Cash $1,084 $1,234
Accounts receivable 35,498 33,237
Inventories 15,990 16,051
Other current assets 1,483 1,761
54,055 52,283
PROPERTY, PLANT AND EQUIPMENT 164,664 138,608
NOTES RECEIVABLE 5,755 5,919
DEFERRED CHARGES 4,570 7,727
$229,044 $204,537
LIABILITIES
CURRENT
Accounts payable and
accrued liabilities $35,390 $23,922
Current portion of long-term debt 5,174 5,322
40,564 29,244
LONG-TERM DEBT 71,274 59,218
DEFERRED INCOME TAXES 7,657 7,479
119,495 95,941
SHAREHOLDERS' EQUITY
Share capital 32,136 31,329
Retained earnings 74,112 72,237
Foreign currency translation adjustments 3,301 5,030
109,549 108,596
$229,044 $204,537
STACKPOLE LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Dollars in thousands except per common share)
Three Months Ended Nine Months Ended
Oct 3, Sept 27, Oct 3, Sept 27,
1999 1998 1999 1998
Sales $63,600 $37,008 $171,077 $128,706
Manufacturing, selling,
general and
administrative expenses 58,122 38,387 160,043 117,110
Research and development
expenses, net 1,959 1,256 4,791 4,187
Operating income 3,519 (2,635) 6,243 7,409
Interest expense on
long-term debt 1,441 929 3,890 2,567
Income before income taxes 2,078 (3,564) 2,353 4,842
Income taxes 765 (1,372) 846 1,682
Net income $1,313 ($2,192) $1,507 $3,160
Earnings per share:
Basic $0.14 ($0.23) $0.16 $0.33
Fully diluted $0.14 ($0.23) $0.16 $0.33
Total shares outstanding 9,595,251 9,511,945 9,595,251 9,511,945
Average shares outstanding 9,590,800 9,511,945 9,581,423 9,484,832
STACKPOLE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands)
Nine Months Ended
Oct 3, Sept 27,
1999 1998
OPERATING ACTIVITIES
Net income $1,507 $3,160
Other items not affecting cash 15,685 11,247
Changes in non-cash operating working
capital items (5,621) (13,278)
11,571 1,129
FINANCING ACTIVITIES
Proceeds from long-term debt 18,080 21,203
Issuance of common shares 307 519
18,387 21,722
INVESTING ACTIVITIES
Additions to property, plant and
equipment, net of disposals (29,174) (22,700)
Other (545) (52)
(29,719) (22,752)
INCREASE (DECREASE) IN CASH 239 99
CASH POSITION, BEGINNING OF PERIOD 845 1,135
CASH POSITION, END OF PERIOD $1,084 $1,234
Supplementary cash flow information:
Interest paid $3,717 $2,251
Income tax paid $245 $2,053
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 Depreciation and amortization - Depreciation and amortization expense amounted to $15,906,000 in 1999 (1998 - $10,614,000).
2 Comparative figures - Certain comparative figures have been reclassified to conform with the current year's presentation.
TEL: (905) 829-2050 x225 Mr. Gary S. Love, Vice President, Finance and Chief Financial Officer
|
