APW beating earnings, KBH beating earnings was upgraded looks to be a turnaround in the sector.., CATP, ERICY, RPC* (*from yesterday's watch list upgraded today). All looking good before open. RMBS looking lovely... Internet sector: OZEMY, SEEK..
Applied Power Announces Record Sales And Earnings For Third Quarter<APW.N>
Applied Power Announces Record Sales And rust Alex. Brown said
Earnings For Third Quarter ng on shares of DeCrane Aircraft
MILWAUKEE--(BUSINESS WIRE)--June 23, 1998--Applied Power Inc.
(APW - NYSE) reported record sales and net earnings for the third
quarter ended May 31, 1998. Sales for the third quarter were $241.7
million, an increase of 39 percent over the comparable prior year
period. Net earnings for the quarter were $14.9 million, or $0.51 on
a diluted per share basis, an increase of 31 percent over the $11.1
million, or $0.39 per share, reported in third quarter fiscal 1997.
Third quarter operating profit grew 50 percent to $29.0 million over
the comparable prior year period.
For the first nine months of fiscal 1998, earnings were $1.33 on
a diluted per share basis, an increase of 27 percent over the $1.05
per share reported for the same period in fiscal 1997. Sales were
$667.5 million, an increase of 37.9 percent over the comparable prior
year period. Year-over-year operating profit increased substantially
to $75.4 million from $53.1 million, an increase of 42 percent.
The Company's focus on working capital improvements continued in
the third quarter as primary working capital as percent of sales
declined to 15.2 percent from 22.5 percent in the third quarter last
year and 21.7 percent at the end of fiscal 1997. These improvements
are due to the Company's World Class Performance program which is
being implemented in all of the operating units. This program
heavily uses Japanese manufacturing methods such as Kaizen to improve
work processes. The Company's long term goal is to reduce working
capital to approximately 10 percent of sales.
In the third quarter, Tools and Supplies sales grew 8 percent to
$80.3 million and operating profit increased 45 percent to $10.1
million from $6.9 million last year. Excluding Asia, Tools and
Supplies sales were up 18 percent over the comparable prior year
period. Operating profit for Engineered Solutions increased 113
percent to $12.5 million on an increase in sales of 59 percent to
$80.8 million. Sales in Technical Environments and Enclosures
("TEE") increased 64 percent to $80.5 million. Operating profit of
$8.1 million was flat with prior year's, the result of higher sales
and marketing expenses in Wright Line and less enclosure sales than
expected due to production reductions with semicondutor equipment
customers.
Richard G. Sim, CEO of Applied Power remarked that, "In addition
to being delighted by the performance of all three business segments,
the quarter had some events that significantly enhance the future
outlook for Applied Power. During the quarter we announced APW's
intention to acquire the ZERO Corporation, headquartered in Los
Angeles, and the VERO Group PLC, headquartered in the UK. The VERO
transaction was substantially completed in early June. The ZERO
transaction is subject to shareholder votes of both ZERO and APW and
is expected to be completed in late July. With these two
transactions, APW's sales for fiscal 1999 are projected to be
approximately $1.6 billion. Our current estimate is that both of
these transactions are accretive to EPS in fiscal 1999."
Sim continued, "Over the last three years, we have been pursuing
the electronic enclosure systems market as a strategic opportunity
for Applied Power going into the next century. Our fundamental
belief is that the information age is just getting started, and that
the electronic enclosure systems market will have above average
growth for many years to come. With VERO and the pending ZERO
acquisitions included, our sales in TEE next year will be
approximately $750 million. We will continue to make bolt-on
acquisitions within the TEE segment to expand our geographic and
product capabilities in electronic enclosure systems."
The above comments regarding fiscal 1999 represent forward
looking statements made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. Management cautions that
these projections are based on current estimates of future
performance and are highly dependent upon a variety of factors which
could cause actual results to differ from these estimates. These
factors include the economic environment in the industrial
production, trucking, recreational vehicle, construction, aerospace,
automotive, defense and electronic enclosure industries in North
America, Europe and Asia. Applied Power's results are also subject
to continued market acceptance of the Company's new product
introductions, the successful integration of recent acquisitions,
operating margin risk due to competitive pricing, foreign currency
fluctuations and interest rate risk.
Applied Power also announced today that Applied Power Limited, a
United Kingdom subsidiary, now owned or had accepted for payment,
over 90 percent of the issued share capital of VERO Group PLC
pursuant to its tender offer for such shares. Applied Power Limited
will now invoke Section 429 of the U.K. Companies Act of 1985 to
acquire the remaining outstanding shares of VERO stock, so that after
the required procedures are completed, Applied Power Limited will own
all of the issued share capital of VERO. In conjunction with the
closing of VERO, APW replaced its previous multicurrency credit
agreement with a new agreement providing for a $700 million 5 year
credit facility, which currently has approximately $450 million
borrowed against the facility.
Applied Power Inc., headquartered in Butler, Wisconsin, is a
global company comprised of three business segments. Technical
Environments and Enclosures provides technical furniture and
electrical and electronic enclosure systems. Engineered Solutions
supplies components and systems using actuation and vibration control
technologies to a diverse group of OEM customers. Tools and Supplies
provides industrial and electrical tools and accessories through
various distributor and retail channels worldwide.
Kaufman and Broad Reports 55.6% Increase in Second Quarter Earnings Per <KBH.N>
Kaufman and Broad Reports 55.6% Increase in Second Quarter Earnings Per Share
LOS ANGELES, June 23 /PRNewswire/ -- Kaufman and Broad Home Corporation
(NYSE: KBH) today reported for the second quarter ended May 31, 1998, diluted
earnings per share of $.42, an increase of 55.6% compared to diluted earnings
per share of $.27 in the 1997 second quarter. Net income for the second
quarter of 1998 totaled $17.2 million, up 60.9% compared to the prior year
quarter. The improved results were primarily driven by increases in unit
deliveries and construction gross margin, as well as significantly improved
mortgage banking pretax income. orted in third quarter fiscal 1997.
"We expected to record strongly improved deliveries in the second quarter
based on our excellent recent net orders and backlog trends; however, we also
recorded an eighty basis point year-over-year improvement in housing gross
margin for the second quarter which was particularly significant," said Bruce
Karatz, chairman and chief executive officer. "This is the first tangible
evidence that the expected KB2000-driven gross margin gains are being
realized. Assuming stable business conditions, we believe the prospects are
good for very favorable gross margin comparisons in the remaining quarters of
1998." The Company's focus on working capital improvements continued in
Construction revenues for the 1998 second quarter totaled $526.7 million,
up 29.4% versus the prior year quarter, driven by a 38.3% increase in unit
deliveries which was partially offset by a 5.2% decline in average sales price
and lower land and commercial revenues. Unit deliveries were up in all three
of the Company's geographic segments, led by increases of 60.0% in Other U.S.
and 118.2% in Foreign operations. Included in the 1,938 Other U.S. deliveries
during the quarter were a total of 427 incremental deliveries from the
Company's three recent acquisitions in Houston, Denver and Phoenix/Tucson.
The decline in average sales price was due to a higher proportion of lower
priced Other U.S. deliveries and a 25.4% decline in the average sales price in
the Company's Foreign operations as a result of the SMCI acquisition in France
in the third quarter of 1997. These declines were partially offset by a 4.0%
increase in the average sales price for California. ncreased 113
"As evidenced by deliveries and order rates thus far, we are very pleased
with our recent acquisitions," Karatz said. "Integration of the acquired
companies is proceeding smoothly and should be substantially complete by the
end of our third quarter. We are increasingly confident that revenues and
earnings per share contributions from these transactions will meet or exceed
our original expectations, assuming stable business conditions."
Net orders for the 1998 second quarter totaled 4,861 units, up 43.1%
compared to the 1997 second quarter. California net orders were down 5.8%, as
higher order rates per community were more than offset by a 17.1% decline in
the average number of active communities, particularly in Northern California.
Net orders from Other U.S. operations totaled 2,907 units, up 72.9% compared
to the second quarter of 1997, including a total of 539 net orders
attributable to the three newly acquired companies. Foreign net orders
increased 135.6% in the quarter, driven primarily by the SMCI acquisition and
improved market conditions in France. Backlog at the end of the 1998 second
quarter totaled 7,581 units, or $1.1 billion, up 71.6% and 67.8%,
respectively, compared to the prior year quarter. Included in 1998 backlog
were 940 units, or $120.0 million, associated with the newly acquired
companies. actions are accretive to EPS in fiscal 1999."
"Net orders have continued at very strong levels in all regions except
California, where we expect to substantially close the gap in quarterly
comparisons for community counts in the fourth quarter of 1998," Karatz said.
"In addition, in selected markets, particularly in California, we have been
aggressively increasing prices in certain hard-to-replace communities with
high sales rates, with the effect of slowing sales rates in those communities
to better match production. We are extremely pleased that our backlog ratio
at the end of the 1998 second quarter reached 179.8%, showing steady progress
toward our KB2000 goal of 200%." The backlog ratio is defined as the ratio of
beginning backlog to deliveries in the succeeding quarter.
Construction operating income for the 1998 second quarter totaled $27.9
million, or 5.3% of construction revenues, up 35.6% and .2 percentage points,
respectively, compared to the 1997 second quarter. The increase in
construction operating margin was driven by a .8 percentage point increase in
housing gross margin to 18.8%, partially offset by a lower margin on land
sales and an increase in the construction selling, general and administrative
expense ("SG&A") ratio. Included in 1998 second quarter gross profits were
land losses of $1.2 million, compared to an aggregate loss of $.1 million
related to land and commercial activities in the prior year quarter.
Excluding these losses, the 1998 second quarter construction operating income
margin would have improved .4 percentage points versus the prior year quarter.
The 1998 second quarter SG&A expense, measured as a percent of housing
revenues, was 13.3%, down .5 percentage points from the 1998 first quarter,
but up .4 percentage points from the 1997 second quarter. The quarterly year-
over-year increase in the SG&A ratio was primarily due to: higher sales
commissions; expenditures incurred in connection with extensive information
systems revisions in support of the KB2000 operational business model; and
expenses related to the acquisitions, including temporary duplicate overhead,
as well as sales incentives associated with the sell through of non-KB2000
product. Partially offsetting the foregoing were favorable variances related
to total Company advertising and sales incentives. Nonetheless, the Company
expects that the SG&A ratio for the entire 1998 fiscal year will be
approximately even with 1997, as quarterly year-over-year comparisons improve
in the remainder of 1998, assuming stable business conditions. ear
"In addition to quarterly year-over-year improvements in both gross and
operating margins which are anticipated in the remainder of 1998, we are
pleased to note the breadth and consistency of operating income contributions
across all major regions of the Company," Karatz said. echnical
Mortgage banking pretax income for the 1998 second quarter totaled $4.7
million, up 55.3% compared to the prior year quarter due to increased loan
closings and secondary marketing income. In addition, the loan mix was
favorable, with fixed rate loans representing 77% of closings in this year's
quarter, compared to 56% in the year ago quarter. sories through
For the first six months of 1998, the Company reported net income of $25.3
million, or $.62 diluted earnings per share, an increase of 63.2% versus the
$.38 diluted earnings per share in the first six months of 1997. For the
first six months of 1997, net income totaled $15.1 million. Construction
revenues for the first half of 1998 totaled $944.0 million, up 26.4% from
construction revenues of $746.7 million for the same period a year ago, as a
32.0% rise in deliveries to 6,038 units for the first six months of 1998 from
4,573 units for the first six months of 1997 was partially offset by lower
land sales and a 3.2% decline in average sales price. )
As of the end of the 1998 second quarter, construction debt totaled $688.3
million, up $189.8 million from the year earlier period due principally to
increased inventory levels resulting from the Company's overall growth in new
communities as well as the acquisitions closed in the 1998 second quarter.
Total consideration for the acquisitions, including debt assumed, was --
approximately $162 million. The Company's ratio of debt to total capital as
of the end of the 1998 second quarter was 62.7%, compared to 56.5% and 59.1%
at the end of the 1997 fiscal year and the end of the 1997 second quarter,
respectively. it 84,566 64,591 30.9%
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