Kent Electronics Reports Fourth Quarter and Fiscal 1998 Results
Announces Executive Promotions
HOUSTON--(BUSINESS WIRE)--May 5, 1998-- Kent Electronics Corporation (NYSE:KNT - news) reported net sales and earnings for the fourth quarter and fiscal year ended March 28, 1998. Fiscal 1998 marked 12 years of record comparative sales and earnings since Kent's initial public offering in June 1986, exclusive of non-recurring
merger and integration charges in 1997.
Fourth Quarter Results
Net sales for the fourth quarter were $162.4 million, a 15% increase over the $141.2 million reported in the fourth quarter last year. Net earnings for the quarter were $6.9 million, or $0.25 per diluted share, compared to $7.8 million, or $0.28 per diluted share, reported in last year's fourth quarter, exclusive of a one-time charge for merger and integration costs.
Commenting on the results, Morrie K. Abramson, Chairman and Chief Executive Officer of Kent, said, ''Net sales and earnings for the fourth quarter were squarely within the guidelines that we provided in our mid-February news release. As we noted at that time, the Company's contract manufacturing business was facing reductions in orders from certain of its semiconductor capital equipment customers who were being impacted by the Asian economic situation. At the same time, pricing pressures from customers in the computer industry were reducing both Kent's revenues and gross margin. As anticipated, these negative trends could not be offset by the addition of several new and substantial networking and telecommunications customers that signed contracts with Kent's contract manufacturing division during the fourth quarter.''
''Kent's distribution businesses, however, despite a well documented industry slowdown, continued to grow during the fourth quarter,'' Mr. Abramson continued, ''and, in fact, sales from these three business units grew 15% over the same period a year ago and represented 67% of net sales.'' This growth is being driven by the Company's ability to capitalize on the continuing trend toward increased use of distribution channels for passive electronic components, as well as by the increase in networking requirements and the continued demand for specialty wire and cable by electrical wholesalers.
Fiscal Year Results
Net sales for the fiscal year ended March 28, 1998 grew to $659.4 million, a 28% increase over the $516.8 million reported for fiscal 1997. Net earnings for fiscal 1998 were $35.4 million, or $1.26 per diluted share. This compares to net earnings, exclusive of the non-recurring charge related to the January 1997 acquisitions of Futronix and Wire and Cable Specialties, of $31.0 million for fiscal 1997, or $1.12 per diluted share.
Sales from Kent's distribution businesses increased 23% to $418.3 million and represented 63% of the Company's net sales. Contract manufacturing sales were up 36% for the year and represented 37% of net sales.
Executive Promotions
Mr. Abramson also announced the election of Larry Olson to the position of President and Chief Operating Officer of Kent Electronics. Mr. Olson, who is 41, joined Kent in 1992 with its acquisition of Shelley-Ragon, Inc. He will retain his current position of President of K*TEC.
Richard Hightower, 38, has been elected Executive Vice President of Kent Electronics and President of Kent Components, the Company's primary distribution business. Mr. Hightower has been with the Kent organization since 1993, and most recently has held the position of Vice President and General Manager of Kent Components.
Additionally, Frank Billone, 52, has been promoted to Executive Vice President and Chief Information Officer of the Company. He was previously Vice President and Chief Information Officer.
Commenting on Larry Olson's promotion, Mr. Abramson noted, ''Larry brings the unique combination of experience in both electronic component distribution and contract manufacturing to the newly created position of Chief Operating Officer. I am pleased to relinquish the title of President to a man who has been so instrumental in our
Company's growth.''
Mr. Abramson also stated, ''The promotions of Rich Hightower and Frank Billone are indicative of the broad pool of talent we have at the Company. Both Rich and Frank have distinguished themselves in their respective areas of expertise.''
Outlook
Looking ahead, Mr. Abramson noted, ''Our distribution businesses continue to grow, and we are using our supply chain management capabilities to build our components, datacomm and redistribution operations.''
''On the other hand,'' Mr. Abramson said, ''the pressure on our contract manufacturing business from customers in the computer industry has worsened since the end of the fourth quarter, and it is difficult to project the effect that this will have on the first quarter of fiscal 1999. We are addressing the current softness in the semiconductor capital equipment industry by introducing new services to existing customers.''
Mr. Abramson continued, ''The ramp-up of our contract manufacturing work for several new and substantial customers is in process, but revenues from these customers cannot yet offset the decline in business from certain computer and semiconductor capital equipment industry customers. Therefore, while we continue to believe that fiscal 1999 will be a year of progressive improvement in overall financial performance, we now believe that revenues for the first quarter ending June 27, 1998 will be in the range of $150.0 million to $160.0 million, and that earnings per share will be in the range of $0.15 to $0.20 per diluted share.''
The Company expects revenues from new services to both new and existing customers, which represented 40% of contract manufacturing revenues in the fourth quarter of fiscal 1998, to begin to benefit second quarter fiscal 1999 results and to make a more significant contribution to profitability in the second half of fiscal 1999.
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