U.S. Home & Garden Reports Results for the Third Quarter
SAN FRANCISCO, May 2, 2000 (BUSINESS WIRE) --
- Third quarter net sales of $36.5 million
- Third quarter fully diluted EPS of $0.21, $0.17 after egarden.com
subsidiary charge of $0.04 from start-up expenses
U.S. Home & Garden Inc. (Nasdaq: USHG), today reported operating results for the
third quarter of fiscal 2000 ended March 31, 2000.
The Company's third quarter net sales were $36.5 million compared to $34.8
million for the third quarter of fiscal 1999. The Company recorded net income of
$4,532,000 or $0.21 per share diluted, before a charge of $796,000, or $(0.04)
per diluted share for start-up expenses related to the Company's egarden.com
e-commerce business-to-business (B2B) subsidiary, for the third quarter of
fiscal 2000 compared to net income of $4,431,000 or $0.19 per share diluted, for
the comparable period in 1999.
Robert Kassel, Chairman and CEO of U.S. Home & Garden, commented, "During the
third quarter we decided to accelerate the scale of our investment in our
subsidiary, egarden.com, based on the interest from potential participants in
our e-commerce marketplace. Despite the increased start-up costs of egarden.com,
U.S. Home & Garden's operating earnings for the third quarter, before the impact
of those costs, met expectations and the outlook is solid. The increased
expenditures for egarden.com will be funded primarily by the capital we recently
obtained through our previously announced sale of equity in egarden.com."
"The demand for our industry leading products from our retailers remains robust,
and we are very pleased with the momentum that we have generated heading into
late spring, added Mr. Kassel. We continue to execute our streamlining
initiatives particularly focusing on cost controls, and better management of
production components and inventory levels. All of these operational issues can
now be effectively monitored and evaluated by our recently completed enterprise
resource planning system, which will provide us with the type of information we
need to better manage our business."
Commenting on these operational improvements, Donald Rutishauser, Chief
Financial Officer of U.S. Home & Garden, said, "Due to the Company's ongoing
inventory and cost reduction efforts, and financing initiative, the balance
sheet is materially stronger than a year ago. The current ratio has improved
from 2.1 on March 31,1999 to 2.3 currently. Inventories have been reduced to
$15.8 million from $21.3 million on March 31, 1999. The Company's working
capital line of credit balance stood at $11.0 million versus $15.5 million a
year ago. Finally, as previously announced, egarden.com raised $4.6 million
through the sale of equity in a private placement. Primarily as a result of this
transaction, cash and cash equivalents are $6.2 million versus $3.3 million on
March 31, 1999."
Further commenting on the Company's e-commerce B2B subsidiary, egarden.com, Mr.
Kassel stated, "The third quarter was a period of enormous progress in the
development of egarden.com, the first industry-wide B2B e-commerce marketplace
for the lawn and garden industry. We are rapidly preparing for the expected late
June launch of our Wholesale Store, which will be capable of delivering online
supplier information and offer e-commerce transactions to all members of our
industry, including, the estimated 25,000 small and medium size manufacturers,
65,000 independent retailers and specialty stores, and the 400,000 contractors,
landscapers, and municipalities."
"We recently announced two very important strategic events that we believe would
enable egarden.com to capture the thousands of transactions that these industry
participants either currently conduct with each other, or will now be able to
perform through our e-commerce marketplace, continued Mr. Kassel. The first
initiative involved an agreement with Ariba, Inc., the world's leading provider
of B2B e-commerce solutions, to provide the Ariba(R) B2B Commerce Platform. By
combining our industry expertise with Ariba's Platform, egarden.com will offer
participants of all sizes from every facet of our industry an e-commerce trading
exchange that truly replicates current practices performed by the buyer or
seller. The second strategic event for egarden.com involved our proposed
acquisition of findplants.com(R), an on-line plant catalog and locator service
for B2B growers and wholesalers. The acquisition of findplants.com, which offers
participants more than 10,000 different types of plants from nearly 140 growers,
when completed, will position egarden.com as one of the most comprehensive B2B
e-commerce web sites. We will be able to offer participants a broad range of
products, including fencing and edging, flower pots and planters, garden tools
and supplies, landscaping supplies and equipment, outdoor furniture and
accessories, and live-goods. With such a breadth of product offerings and
services, we are convinced that we can attract many of the large strategic
industry participants, and make egarden.com the premier e-commerce trading
exchange in our industry."
Gross margin for the quarter was 47.4% compared with 52.2% in the third quarter
last year. The lower margin reflects the Company's strategy to remain
competitive in the marketplace and maintain its preeminent market share in the
product categories it sells to major retailers.
During the third quarter, the Company introduced a new, improved, product to
take the place of an existing item, which is being discontinued. A nonrecurring
loss (unusual item) related to this discontinuation, along with an extraordinary
gain related to the previously announced completion of the repurchase of a
portion of the Company's cumulative trust preferred securities, were recorded in
the third quarter of fiscal year 2000.
For the nine months ended March 31, 2000, the Company reported net sales of
$63,624,000, compared with $61,522,000 million in the same period last year. The
Company recorded net income of $906,000 or $0.04 per share diluted, before a
charge of $(1,116,000) or $(0.05) per diluted share for start-up expenses
related to the Company's egarden.com subsidiary, compared to net income of
$2,540,000 or $0.11 per share diluted, for the comparable period in 1999.
About U.S. Home & Garden and egarden.com.
U.S. Home & Garden Inc. is a leading manufacturer and marketer of a broad range
of consumer lawn and garden products including weed preventative landscape
fabrics, weed trimmer replacement heads, fertilizer spikes, decorative landscape
edging, shade cloth and root feeders which are sold under various recognized
brand names including Weedblock(R) , Jobe's(R), Weed Wizard(TM), Emerald
Edge(R), Shade Fabric(TM) Ross(R)(pound) and Tensar(R). The Company markets its
products through most large national home improvement and mass merchant
retailers. The Company's Internet subsidiary, egarden.com (www.egarden.com), is
the first business-to-business e-commerce Web site focused on the lawn and
garden industry.
To learn more about U.S. Home & Garden Inc. please visit its web site at
www.ushg.com. For more information on egarden.com please visit its web site at
egarden.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
Certain statements contained in this press release that are not historical facts
are forward looking statements that involve a number of known and unknown risks,
uncertainties and other factors that could cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievement expressed or implied by such forward looking
statements. These risks and uncertainties include, but are not limited to, the
ability of the Company to successfully integrate any future businesses or
product lines acquired into existing operations, the Company's growth strategy,
customer concentration, outstanding indebtedness, dependence on weather
conditions, seasonality, expansion, and other activities of competitors, changes
in federal or state environmental laws and the administration of such laws,
protection of trademarks and other proprietary rights, the general condition of
the economy, uncertainty relating to the Company's e-commerce initiative, and
other risks detailed in the Company's Securities and Exchange Commission
filings. The words "anticipate," "expect," and "intend," and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
the statement was made.
U.S. HOME & GARDEN INC.
Consolidated Operating Results
(Unaudited)
Three Months Ended March 31, Nine months ended March 31,
1999 2000 1999 2000
---- ---- ---- ----
Net Sales $ 34,769,000 $36,495,000 $61,522,000 $63,624,000
-----------------------------------------------------------------------
Cost of Good Sold 16,611,000 19,212,000 29,628,000 33,814,000
Unusual Item - 928,000 - 928,000
Gross profit 18,158,000 16,355,000 31,894,000 28,882,000
-----------------------------------------------------------------------
Operating expenses
Selling & shipping 5,862,000 5,995,000 12,807,000 13,175,000
General and
administrative,
excluding
depreciation and
amortization 1,373,000 598,000 6,639,000 6,398,000
-----------------------------------------------------------------------
EBITDA 10,923,000 9,762,000 12,448,000 9,309,000
=======================================================================
Depreciation 411,000 425,000 1,002,000 1,211,000
Goodwill
amortization 698,000 878,000 1,919,000 2,336,000
Other amortization 120,000 115,000 303,000 324,000
-----------------------------------------------------------------------
Income/(Loss) from
operations 9,694,000 8,344,000 9,224,000 5,438,000
-----------------------------------------------------------------------
Interest expense,
net 2,063,000 1,818,000 4,914,000 5,506,000
-----------------------------------------------------------------------
Income / (Loss) before
income taxes, Minority
Interest &
Extraordinary Items 7,631,000 6,526,000 4,310,000 (68,000)
Income tax (3,200,000) (2,937,000) (1,770,000) 31,000
Minority Interest
in Earnings of
Affiliates - - - -
-----------------------------------------------------------------------
Net Income/(Loss)
before Extraordinary
Items $ 4,431,000 $3,589,000 $ 2,540,000 $ (37,000)
Extraordinary Items
Net of Tax of
$772,000 - 943,000 - 943,000
-----------------------------------------------------------------------
Net Income/(Loss) $ 4,431,000 $ 4,532,000 $ 2,540,000 $ 906,000
=======================================================================
Dilutive Income/(loss)
per share 0.19 0.21 0.11 0.04
=======================================================================
Cash earnings per share* 0.24 0.28 0.24 0.23
=======================================================================
Dilutive Common
Shares 23,509,000 21,627,000 23,826,000 20,441,000
* Cash earnings per share is defined by the Company as net income,
plus depreciation and amortization.
EGARDEN, INC.
Three Months Ended March 31, Nine months ended March 31,
1999 2000 1999 2000
---- ---- ---- ----
Net Sales $ - $ - $ - $ -
-----------------------------------------------------------------------
Cost of Good Sold - - - -
Unusual Item - - - -
Gross profit - - - -
-----------------------------------------------------------------------
Operating expenses
Selling & shipping - 1,307,000 - 1,502,000
General and
administrative,
excluding
depreciation and
amortization - 605,000 - 942,000
-----------------------------------------------------------------------
EBITDA - (1.912.000) - (2.444.000)
=======================================================================
Depreciation - 3,000 - 5,000
Goodwill amortization - 6,000 - 24,000
Other amortization - - -
-----------------------------------------------------------------------
Income/(Loss) from
operations - (1,921,000) - (2,473,000)
-----------------------------------------------------------------------
Interest expense,net - (37,000) - (37,000)
-----------------------------------------------------------------------
Income/(Loss) before
income taxes,
Minority Interest &
Extraordinary Items - (1,884,000) - (2,436,000)
Income tax - 829,000 - 1,061,000
Minority Interest in
Earnings of
Affiliates - 259,000 - 259,000
-----------------------------------------------------------------------
Net Income/(Loss)
before Extraordinary
Items $ - $ (796,000) $ - $ (1,116,000)
Extraordinary Items
Net of Tax of
$772,000 - - - -
-----------------------------------------------------------------------
Net Income/(Loss) $ - $ (796,000) $ - $ (1,116,000)
=======================================================================
Dilutive Income/(loss)
per share (0.04) (0.05)
=======================================================================
Cash earnings per share* (0.04) (0.05)
=======================================================================
Dilutive Common Shares
* Cash earnings per share is defined by the Company as net income,
plus depreciation and amortization.
U.S. HOME & GARDEN INC.
Consolidated Operating Results
------------------------------
(Unaudited)
U.S. HOME & GARDEN, INC. CONSOLIDATED
Three Months Ended March 31, Nine months ended March 31,
--------------------------- --------------------------
1999 2000 1999 2000
---- ---- ---- ----
Net Sales $ 34,769,000 $ 36,495,000 $ 61,522,000 $ 63,624,000
------------------------------------------------------------------------
Cost of Good Sold 16,611,000 19,212,000 29,628,000 33,814,000
Unusual Item - 928,000 - 928,000 - - - -
Gross profit 18,158,000 16,355,000 31,894,000 28,882,000
------------------------------------------------------------------------
Operating expenses
Selling & shipping 5,862,000 7,302,000 12,807,000 14,677,000
General and
administrative,
excluding
depreciation and
amortization 1,373,000 1,203,000 6,639,000 7,340,000
-----------------------------------------------------------------------
EBITDA 10,923,000 7,850,000 12,448,000 6,865,000
========================================================================
Depreciation 411,000 428,000 1,002,000 1,216,000
Goodwill
amortization 698,000 884,000 1,919,000 2,360,000
Other amortization 120,000 115,000 303,000 324,000
------------------------------------------------------------------------
Income / (Loss)
from operations 9,694,000 6,423,000 9,224,000 2,965,000
------------------------------------------------------------------------
Interest expense,
net 2,063,000 1,781,000 4,914,000 5,469,000
------------------------------------------------------------------------
Income / (Loss) before
income taxes,
Minority Interest &
Extraordinary Items 7,631,000 4,642,000 4,310,000 (2,504,000)
Income tax (3,200,000) (2,108,000) (1,770,000) 1,092,000
Minority Interest
in Earnings
of Affiliates - 259,000 - 259,000
------------------------------------------------------------------------
Net Income / (Loss)
before Extraordinary
Items $ 4,431,000 $ 2,793,000 $ 2,540,000 $ (1,153,000)
Extraordinary Items
Net of Tax of
$772,000 - 943,000 - 943,000
------------------------------------------------------------------------
Net Income /
(Loss) $ 4,431,000 $ 3,736,000 $ 2,540,000 $ (210,000)
========================================================================
Dilutive Income/
(loss) per share 0.19 0.17 0.11 (0.01)**
========================================================================
Cash earnings
per share * 0.24 0.24 0.24 0.18
========================================================================
Dilutive Common
Shares 23,509,000 21,627,000 23,826,000 20,441,000
Basic Common
Shares 19,033,000
* Cash earnings per share is defined by the Company as net income,
plus depreciation and amortization.
** Nine Month Earnings per Share is Calculated using the basic common
Shares
U.S. HOME & GARDEN INC.
Condensed Consolidated Balance Sheets
U.S. HOME & GARDEN, INC. CONSOL
June 30, 1999 March 31, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 2,936,000 $ 6,237,293
Restricted cash 1,000,000 1,881,707
Accounts receivable 20,242,000 32,873,000
Inventories 16,986,000 15,767,000
Other current assets 1,637,000 1,075,000
-----------------------------------------------------------------------
Total Current Assets 42,801,000 57,834,000
Property and equipment - net 11,634,000 12,213,000
Excess of cost over net assets
acquired 75,573,000 73,409,000
Other assets 7,456,000 7,651,000
-----------------------------------------------------------------------
TOTAL ASSETS $ 137,464,000 $ 151,107,000
=======================================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Working Capital Line of
credit $ - $ 11,000,000
Notes Payable 2,000,000
Accounts payable and accrued
expenses 9,927,000 12,316,000
-----------------------------------------------------------------------
Total Current Liabilities 9,927,000 25,316,000
Long Term Liabilities
Acquisition Line of credit
and other long-term liabilities 16,203,000 16,552,000
Deferred tax liability 1,600,000 2,000,000
Company obligated mandatorily
redeemable preferred securities
of subsidiary trust holding
solely junior subordinated
debentures 63,250,000 58,330,000
Minority Interest in Equity of
Affiliates - 4,306,000
Stockholders' Equity
Common stock 21,000 21,000
Additional paid-in capital 50,542,000 50,663,000
Retained earnings 4,703,000 4,494,000
Less: Treasury stock (8,782,000) (10,575,000)
-----------------------------------------------------------------------
Total Stockholders' Equity 46,484,000 44,603,000
-----------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 137,464,000 $ 151,107,000
======================================================================= - -
CONTACT: U.S. Home & Garden Inc.
Robert L. Kassel, President
415/616-8111
or
U.S. Home & Garden Inc.
Kevin McGrath
Investor Relations
212/245-4577
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: ADVERTISING/MARKETING
COMPUTERS/ELECTRONICS
E-COMMERCE
ENVIRONMENT
INTERNET
MANUFACTURING
EARNINGS
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