To all:
Here is the latest news from USAD:
NORTH BRUNSWICK, N.J., May 8 (Reuter) -
USA DETERGENTS, INC. AND SUBSIDIARIES
(in thousands, except per share information)
Three Months
Ended March 31,
1997 1996
Net sales $60,533 $34,067
Gross profit 10,632 11,159(1)
(Loss)/income from operations (6,431) 3,590
Net (loss)/income (4,195) 2,088
Net (loss)/income per share (0.30) 0.16
Weighted average shares outstanding 13,765 13,392
((New York newsdesk 212-859-1610))
REUTER
Rtr 01:46 05-08-97
NORTH BRUNSWICK, N.J., May 8 (Reuter) - USA Detergents Inc said on Thursday it was in violation of its financial covenants under its bank lending agreements, due to its first quarter results.
USA Detergents said it was negotiating to waive these violations and for necessary additional credit facilities.
In the first quarter, the company reported a loss of $0.30 per share compared to a profit of $0.16 per share.
The company said results were hurt by manufacturing and distribution inefficiencies associated with rising production capacity and sales.
Inefficiencies were caused by higher material costs, a high level of production line changeovers to meet customer demands and short production runs during the ramp up of new production capacity, the company said.
"There were significant additional costs for under-absorbed overhead and increased levels of warehousing and distribution associated with the assimilation of the new facilities," the company said. It said it also significantly boosted co-op advertising and other customer marketing funds.
USA Detergents said its primary focus was to return the company to profitability.
((New York newsdesk 212-859-1610))
REUTER
Rtr 02:12 05-08-97
It's worse than I had hoped for and while I haven't yet started using my stock certificates to start fires, it will be a while before this stock really comes back.
I listened in on the conference call this morning as well. Uri Evan did most of the talking. The gist of it was that in hindsight USAD management thought that their challenge was the marketing to create demand and the easy part was putting soap in boxes and shipping it to retail outlets, when in reality it was the other way around. Note that the net sales were huge. He also said that the company should have allocated $12 million for the capacity expansion from $100 - $125M to $400 - $500M in a single year rather than assuming that they could grow that fast without stumbling. Uri said that he has confidence in current management and that he feels they are 50% through their execution of management's plan to fix the problems. Management hopes that they will end the year showing a profit.
On other notes, they are in negotiations with their lenders about violations of the financial covenants. They are installing new information systems that will enable management to know what is going on at the various production/distribution facilities and enable them to get a clearer financial picture without waiting for end of the quarter inventories. This seems to have been the reason the problems came as such a sudden surprise. As Uri said, their success was their own worst enemy. The stock opened way lower and had come back quite a bit. I hope all the bad news is out and it will be uphill from here on out.
As for Premier's prior post, no, I am only another shareholder. You are right in that if you feel that management was or is lying you should not be long on the stock. If you really feel that they were lying perhaps you should join the plaintiffs in the current suit. I certainly could be wrong, but I feel that while management failed to anticipate and even recognize the problems that rapid growth caused, they have every incentive to perform and increase shareholder value and have shown that they are attempting to do so.
Good fortune to all,
Rob
P.S. I am sure that I would not be quite so patient if my average cost was closer to 40 than the 16 that it is. |
