Walter Industries Reports Improved Second Quarter,
First Half Results
Per Share Income Reaches $0.23 Before Extraordinary Charge; $0.18 After
Charge
TAMPA, Fla.--(BUSINESS WIRE)--Jan. 5, 1998-- Walter Industries, Inc. (NYSE: WLT - news)
today reported results for its fiscal 1998 second quarter and six months ended November 30, 1997,
including contributions to net sales and revenues and operating earnings from Applied Industrial
Materials Corporation (''AIMCOR''), which was acquired effective October 1, 1997.
Net sales and revenues for the quarter totaled $448.1 million compared with $397.9 million in the
fiscal 1997 second quarter.
Operating income for the fiscal 1998 quarter rose 24% to $20.6 million versus $16.6 million in the
1997 period. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) totaled
$98.6 million for the current quarter, compared with $90.4 million a year ago, a 9% increase.
Income, before an extraordinary charge, rose 68% to $12.6 million, or $0.23 per share in the fiscal
1998 quarter versus $7.5 million, or $0.13 per share in the prior year period. The Company
recorded a non-cash, after-tax charge of $2.7 million, or $0.05 per share, in the current quarter
from the write-off of unamortized debt expense related to the refinancing of bank credit facilities in
conjunction with the AIMCOR acquisition. After giving effect to this extraordinary charge, net
income was 33% higher, at $10.0 million, or $0.18 per share, compared with the prior year's $7.5
million, or $0.13 per share. Net income included goodwill expense totaling $9.8 million, or $0.17
per share (net of income tax benefit) in the current quarter versus $8.8 million, or $0.16 per share in
1997.
The company's positive second quarter comparisons reflected higher operating income from its
Homebuilding and Financing and Natural Resources segments and were further enhanced by the
integration of the AIMCOR operations into a new segment, the Energy Services Group.
Net sales and revenues for the fiscal six months ended November 30, 1997 were $847.4 million
compared with $767.6 million in the 1997 first half.
Operating income for the six month period rose 26% to $47.6 million versus $37.8 million a year
earlier. EBITDA amounted to $196.4 million, compared with $184.6 million, a 6% increase.
Income before the extraordinary second quarter charge was 50% higher, at $26.7 million, or $0.49
per share, versus prior year six month net income of $17.7 million, or $0.32 per share. After giving
effect to the extraordinary charge, net income for the six months was 35% higher, at $24.0 million,
or $0.44 per share. Net income included goodwill of $18.2 million, or $0.32 per share (net of
income tax benefit) versus $17.8 million, or $0.32 per share in the 1997 period.
Three of the company's business segments realized operating income gains for the six month period,
in addition to the Energy Services Group/AIMCOR contribution.
Kenneth E. Hyatt, Walter Industries' Chairman and Chief Executive Officer, said: ''We are pleased
to report another quarter of progress, underscored by aggressive and ongoing cost containment and
productivity enhancement efforts. We remain committed to increasing shareholder value by
improving the top and bottom line results of each of our operating companies. We were also pleased
to complete the purchase of AIMCOR and we look forward to further meaningful contributions
from our new Energy Services Group in the quarters ahead.''
Second Quarter Results From Operations
Homebuilding and Financing posted a 22% improvement in second quarter operating income and
3% higher revenues on the strength of increased time charge income from the group's $4.3 billion
mortgage portfolio. The company's Jim Walter Homes subsidiary completed 978 homes during the
current quarter compared with 1,004 homes in the same period last year, a shortfall attributable to
intense competition from local and regional homebuilders as housing activity nationally continues its
robust pace. Average selling prices were 3% higher, at $48,100 for the current quarter versus
$46,700 last year. Jim Walter Homes ended the quarter with 2,041 orders in backlog compared
with 2,052 orders a year earlier.
Water Transmission Products reported revenues of $115.7 million and operating income of $5.6
million for the second quarter, both below the prior year period. Pipe shipments for the current
quarter, at 151,000 tons, declined 3% and selling prices were 4% lower in response to competitive
conditions related to the continuing slow pace of funding for infrastructure repair and replacement
projects. The company's order backlog of 117,500 tons at November 30, 1997 was 4% higher
than a year ago on the strength of a previously announced, 35,000 ton pipe supply contract with the
Middle East nation of Qatar. The first of four shipments under the 15-month contract occurred in
September.
Second quarter operating income from the Natural Resources Group reached $7.6 million versus
$4.1 million in 1997, an 88% increase resulting from productivity gains and full production at Jim
Walter Resources' No. 5 mine, which was in development throughout fiscal 1997. The Mining
Division realized a 7% improvement in its cost per ton of coal produced during the second quarter.
Segment revenues decreased 3%, however, as coal shipments for the current quarter totaled 1.8
million tons at an average selling price of $43.50 per ton versus 1.8 million tons at $45.06 per ton in
the prior year second quarter.
The Industrial Products Group generated second quarter operating income of $4.9 million versus
$5.1 million in fiscal 1997. Segment revenues totaled $73.2 million, compared with $73.3 million in
the prior year quarter. The 4% decline in operating income resulted from unfavorable year-to-year
comparisons at two small subsidiaries, JW Window Components and Vestal Manufacturing, and at
JW Aluminum Company. JW Aluminum, the group's largest contributor to revenues and earnings,
experienced an earlier-than-expected seasonal decline in shipments of its higher margin specialty foil
products, as well as the short-term impact of higher raw material costs. Two other subsidiaries,
Sloss Industries and Southern Precision Corporation, posted improved year-to-year operating
income comparisons.
The Energy Services Group, comprised of the operations of recently acquired Applied Industrial
Materials Corporation (''AIMCOR''), generated operating income of $1.9 million and EBITDA of
$4.8 million. Net sales and revenues totaled $56.4 million.
Consolidated cash flow from operations, less amounts used for investing activities and excluding
acquisitions, totaled $40.3 million for the six months ended November 30, 1997, compared with
$73.5 million during the prior year period. The primary difference was a $21.4 million federal
income tax refund received in the prior year.
Gross capital expenditures were $24.4 million for the 1998 second quarter and $44.2 million for the
six months, compared with $31.0 million and $49.7 million, respectively, for the comparable prior
year periods. |
