Content area
Basic_____________________ $___ 0.55 $___ 0.29 $___ 0.93 $___ 0.33
Diluted_____________________$___ 0.52 $___ 0.29 $___ 0.89 $___ 0.33
___ deduction___________________________(8.5)___(9.7)___ (8.5)___(10.4)
Stock Symbol - TSX: SKD
TORONTO, July 24 /CNW/ - Stackpole Limited today reported its results of operations for the second quarter of fiscal year 2002.
Highlights
-
Stackpole's operating highlights for the second quarter 2002 include the following:
- Stackpole's oil pump systems business commenced production in
June 2002 of three new engine and transmission oil pump programs with
annual sales of approximately $52 million.
- Stackpole was honored by General Motors as a Supplier of the Year for
the second consecutive year.
- Stackpole received the prestigious MPIF powder metal innovation award
for the third consecutive year.
- Sales increased by 13.5% to $66.7 million from $58.8 million in the
second quarter 2001.
- Gross margin improved to 23.3% in the second quarter from 21.3% in the
prior year.
- Net income increased 80% to $5.0 million, or diluted earnings of $0.52
per share, in the second quarter 2002 versus $2.8 million or $0.29 per
share in the prior year.
- Cash flow provided by operating activities remained at a strong level
of $13.7 million in the second quarter 2002, an improvement from the
cash provided by operating activities of $13.0 million in the prior
year.
Results of Operations
---
Second quarter 2002 sales of $66.7 million increased by 13.5% compared with the second quarter of 2001. The increased sales reflected both an increase in North American automotive production of approximately 6% coupled with the impact of content growth from new programs that reached full production in late 2001. Gross margins improved to 23.3% in the second quarter 2002 from 21.3% in the prior year as a result of ongoing operational improvements and the impact of increased capacity utilization in each of the Company's facilities due to the year over year sales increase. Stackpole continued to benefit from lower market interest rates and a year over year reduction in long-term debt of approximately $21 million with interest expense of $0.5 million in the second quarter of 2002 decreased from $1.0 million in the prior year. Income tax expense in the second quarter 2002 as a percentage of income before income taxes at 33% was reduced from 36% in 2001 and was consistent with the expected statutory tax rate for manufacturing and processing income in the Company's principal jurisdiction Ontario, Canada.
At $5.0 million or diluted earnings per share of $0.52, net income in the second quarter of 2002 compared with net income of $2.8 million or diluted earnings per share of $0.29 in 2001. With the issuance in the first half of 85,667 common shares under the Company's option and share purchase plans, Stackpole has 9,197,105 shares outstanding at June 30, 2002.
Cash Flow
---------
In the second quarter 2002, cash flow from operations before changes in non-cash working capital was $12.6 million compared with $8.8 million in the prior year. During the second quarter 2002, non- cash working capital decreased by $1.2 million as a result of higher accounts payable that more than offset the aggregate $3.6 million increase in accounts receivable and inventory associated with the quarter over quarter increase in sales.
The second quarter 2002 cash provided by operating activities of $13.7 million coupled with proceeds from the issuance of common shares of $0.3 million were employed to reduce debt by $0.4 million and fund capital expenditures of $5.0 million with the excess of the cash flow increasing the cash and cash equivalents by $8.6 million to $15.0 million.
Outlook
-------
Robert Lander, President and Chief Executive Officer of Stackpole, commented on the second quarter 2002 results: "The highlight of the quarter was undoubtedly our repeat Supplier of the Year recognition from General Motors. We are naturally very proud of this accomplishment and once again I commend and thank our employees for their outstanding performance."
"With automotive production volumes at a strong and stable level in the second quarter, Stackpole was able to produce an excellent operating performance that was reflected in our strong margins and record earnings from operations. At this time, OEM production forecasts for the third quarter should translate into continued strong performance."
"Additionally in June 2002, Stackpole's oil pump systems business commenced the launch of two new engine oil pump programs for DaimlerChrysler and a transmission oil pump program for General Motors. The oil pump programs coupled with new powder metal transmission components will provide increased annual sales of approximately $60 million once in full production. Based on current customer production ramp up plans for the new programs and steady OEM production levels, Stackpole anticipates that third quarter sales will increase by approximately 18% over the third quarter of 2001."
"Looking ahead, new contract awards continue to validate our product strategy. During the second quarter, Stackpole's FormFlo facility was awarded several new synchronizer sleeve contracts that will commence production in 2003 while our planetary gear carrier development efforts translated into two new programs with start of production in January 2004. Sales from these programs will exceed $12 million per year when full production is achieved."
Certain information regarding Stackpole set forth in this document, including management's assessment of the Company's future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks; as a consequence, actual results may differ materially from those anticipated in the forward-looking statements.
Stackpole Limited is one of the world's leading manufacturers of highly engineered, technologically differentiated, automotive powertrain systems and components. Stackpole has more than 1,500 highly skilled employees at five operating plants in Canada and the United Kingdom. Stackpole is a public company and its common shares are listed and traded on The Toronto Stock Exchange under the symbol SKD.
A conference call to discuss the Company's quarterly results has been arranged for July 24th, 2002 at 11:00 a.m. To participate, please dial 1-888-793-1698. If you are unable to participate, a recording of the call will be made available until July 31st 2002 at 1-800-558-5253 (code 20742561). Also for your convenience, a webcast of the conference call will be available through CNW at: www.newswire.ca/webcast/pages/StackpoleLimited20020724.
Chief Financial Officer, (905) 829-2050 (Ext. 225), e-mail: glove(at)stackpole.on.ca/
(SKD.) ST: OntarioSU: ERN
STACKPOLE LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS
(Unaudited) (Dollars in thousands except per common share)
______________________________ Three Months Ended___ Six Months Ended
______________________________ June 30,___July 1,___June 30,___ July 1,
_________________________________2002______ 2001______ 2002______ 2001
----------
----------
Sales________________________ $ 66,727 $ 58,800 $ 126,120 $ 111,005
Manufacturing, selling,
general and
administrative expenses_________51,190___ 46,265___ 97,997___ 89,149
Depreciation and amortization___ 5,619______5,417___ 11,215___ 11,224
Research and development
expenses, net__________________ 1,977______1,805______3,769______3,546
----------
Income before interest and
income taxes_____________________7,941______5,313___ 13,139______7,086
Interest on long-term debt_________ 477______ 992______ 929______2,025
----------
Income before income taxes______ 7,464______4,321___ 12,210______5,061
Income taxes_____________________ 2,456______1,535______3,736______1,905
----------
Net Income__________________ $___5,008 $___2,786 $___8,474 $___3,156
Retained earnings, beginning
of period_____________________ 92,800___ 81,740___ 89,334___ 81,370
Retained earnings, end
of period__________________ $ 97,808 $ 84,526 $ 97,808 $ 84,526
----------
----------
Earnings per share:
Basic_____________________ $___ 0.55 $___ 0.29 $___ 0.93 $___ 0.33
Diluted_____________________$___ 0.52 $___ 0.29 $___ 0.89 $___ 0.33
----------
----------
STACKPOLE LIMITED
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Dollars in thousands)
________________________________________________ June 30,___ Dec. 31,
___________________________________________________ 2002_________2001
----------
----------
ASSETS
CURRENT
Cash and cash equivalents_____________________ $ 15,039___ $___7,144
Accounts receivable______________________________ 32,257______ 24,924
Inventories_______________________________________11,731______ 11,242
Other current assets______________________________ 1,781_________1,803
----------
___________________________________________________ 60,808______ 45,113
PROPERTY, PLANT AND EQUIPMENT_____________________ 146,191______ 145,856
OTHER ASSETS_______________________________________ 1,064_________ 958
----------
________________________________________________ $ 208,063___ $ 191,927
----------
----------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities______ $ 30,097___ $ 26,072
Current portion of long-term debt__________________1,316_________1,271
----------
___________________________________________________ 31,413______ 27,343
LONG-TERM DEBT____________________________________ 26,270______ 26,974
FUTURE INCOME TAX LIABILITIES_____________________ 18,681______ 15,460
----------
___________________________________________________ 76,364______ 69,777
----------
SHAREHOLDERS' EQUITY
Share capital____________________________________ 32,158______ 31,064
Retained earnings_________________________________97,808______ 89,334
Foreign currency translation adjustments_________ 1,733_________1,752
----------
___________________________________________________131,699______ 122,150
----------
________________________________________________ $ 208,063___ $ 191,927
----------
----------
STACKPOLE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands)
______________________________ Three Months Ended___ Six Months Ended
______________________________ June 30,___July 1,___June 30,___ July 1,
_________________________________2002______ 2001______ 2002______ 2001
----------
----------
OPERATING ACTIVITIES
Net income__________________ $ 5,008___$ 2,786___$ 8,474___$ 3,156
Non-cash items:
___ Depreciation and
___ amortization_______________ 5,619______5,417___ 11,215___ 11,224
___ Future income taxes_________ 1,931______ 717______3,219______ 901
___ Other___________________________ (1)______(120)______ (5)______ (99)
Changes in non-cash operating
___working capital items_________ 1,156______4,228___ (3,774)___ (5,110)
----------
Cash provided by operating
activities_____________________ 13,713___ 13,028___ 19,129___ 10,072
----------
FINANCING ACTIVITIES
Repayments of long-term debt___ (405)______(212)______(659)______(439)
Issuance of common shares_________252______ 622______1,094______ 622
----------
Cash provided by (used in)
financing activities____________ (153)______ 410______ 435______ 183
----------
INVESTING ACTIVITIES
Additions to property,
___plant and equipment_________ (4,893)___ (3,875)___(11,457)___ (8,987)
Proceeds from sale of plant
___and equipment_____________________ -_________ -_________ - ______ 217
Additions to deferred charges___ (89)______ (10)______(212)______ (38)
----------
Cash used in investing
activities_____________________ (4,982)___ (3,885)___(11,669)___ (8,808)
----------
Increase in cash and cash
equivalents_____________________ 8,578______9,553______7,895______1,447
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD_________ 6,461______3,839______7,144___ 11,945
----------
- END OF PERIOD____________ $ 15,039___$ 13,392___$ 15,039___$ 13,392
----------
----------
Supplementary Information:
Income taxes paid_______________ $233______ $586______ $466___ $1,026
Interest paid__________________ $409___ $1,022______ $924___ $2,064
STACKPOLE LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2002 AND JULY 1, 2001
1. BASIS OF PRESENTATION
___ The unaudited interim consolidated financial statements of Stackpole
___ Limited have been prepared following Canadian generally accepted
___ accounting principles except that certain disclosures required for
___ annual financial statements have not been included. These unaudited
___ interim consolidated financial statements and notes have been
___ prepared using accounting policies consistent with the policies used
___ in preparing the Company's annual consolidated financial statements
___ and should be read in conjunction with the annual financial
___ statements. In the opinion of management, the unaudited interim
___ consolidated financial statements reflect all adjustments, which
___ consist of normal and recurring items, necessary to present fairly
___ the financial position of the Company as at June 30, 2002 and the
___ results of its operations and cash flows for the three and six months
___ ended June 30, 2002 and July 1, 2001.
2. USE OF ESTIMATES
___ The preparation of the Company's unaudited interim consolidated
___ financial statements in conformity with Canadian generally accepted
___ accounting principles requires management to make estimates and
___ assumptions that affect certain reported amounts and disclosures.
___ Accordingly, actual results could differ from those estimates.
___ Furthermore, results of operations for the periods presented herein
___ are not necessarily indicative of results of operations for the
___ entire year ending December 31, 2002.
3. PROPERTY, PLANT AND EQUIPMENT
___ Property, plant and equipment consist of the following ($ 000's):
________________________________________________ June 30, 2002
____________________________________ -----
_____________________________________________ Accumulated___Net Book
_______________________________________ Cost___Depreciation___Value
_______________________________________ ----___--- --------
___ Land___________________________ $ 2,408___$______-___ $ 2,408
___ Buildings and improvements_________19,427______6,210______13,217
___ Machinery and equipment_________ 242,698___ 125,219___ 117,479
___ Construction in progress_________ 13,087_________ - ______13,087
____________________________________ -----
____________________________________ $277,620___$131,429___ $146,191
____________________________________ -----
____________________________________ -----
_____________________________________________December 31, 2001
____________________________________ -----
_____________________________________________ Accumulated___Net Book
_______________________________________ Cost___Depreciation___Value
_______________________________________ ----___--- --------
___ Land___________________________ $ 2,408___$______-___ $ 2,408
___ Buildings and improvements_________19,197______5,630______13,567
___ Machinery and equipment_________ 237,956___ 114,686___ 123,270
___ Construction in progress____________6,611_________ -______ 6,611
____________________________________ -----
____________________________________ $266,172___$120,316___ $145,856
____________________________________ -----
____________________________________ -----
4. SHARE CAPITAL
___ Authorized share capital consists of an unlimited number of common
___ shares and an unlimited number of First and Second Preference Shares,
___ issuable in series. To date, the Company has not issued any
___ preference shares.
___ A reconciliation of the issued common shares of the Company follows:
___________________________________________________ June 30, 2002
_____________________________________________----------
_____________________________________________ Number of___ Stated Value
________________________________________________ Shares______($000's)
_____________________________________________----------
___ Balance at beginning of year____________ 9,111,438______ $31,064
___ Shares issued for cash from 1993 Stock
___ Option Plan_________________________________ 40,053_________ 400
___ Shares issued under Employee Share
______Purchase Plan______________________________ 45,614_________ 694
_____________________________________________----------
___ Balance at July 1, 2002__________________ 9,197,105______ $32,158
_____________________________________________----------
_____________________________________________----------
5. EARNINGS PER SHARE
___ A reconciliation of the number of shares used in the earnings per
___ share calculation follows:
_________________________________Three Months Ended___ Six Months Ended
_________________________________---------___ -------
_________________________________June 30, July 1,___ June 30,___July 2,
___ Number of Shares Outstanding___2002___ 2001______ 2002______ 2001
______________________________ -----
___ Total shares outstanding,
___ at period end____________ 9,197,105 9,699,438 9,197,105 9,699,438
___ Average shares outstanding
___ during period____________ 9,182,664 9,648,162 9,152,245 9,637,906
___ Effect of dilutive options
___ outstanding_______________ 463,137_________ -___ 355,106_________ -
______________________________ -----
___ Average number of shares
___ per diluted earnings per
___ share calculation_________9,645,801 9,648,162 9,507,351 9,637,906
______________________________ -----
______________________________ -----
6. INCOME TAXES
___ The provision for income taxes consists of the following ($ 000's):
_____________________ Three Months Ended_________ Six Months Ended
_____________________ ---------_________ -------
_______________ June 30, 2002 July 1, 2001 June 30, 2002 July 1, 2001
____________ --------------
___ Current____________$___525______ $___818______ $___517______ $ 1,004
___ Future_______________1,931_________ 717_________ 3,219_________ 901
____________ --------------
_____________________ $ 2,456______ $ 1,535______ $ 3,736______ $ 1,905
____________ --------------
____________ --------------
___ The Company's effective income tax rates have been determined as
___ follows:
____________________________________ Three Months Ended Six Months Ended
____________________________________ --------- -------
____________________________________ June 30, July 1, June 30, July 1,
_______________________________________ 2002___ 2001______2002___ 2001
____________________________________ --------
___ Canadian statutory income tax rate___41.6%___43.1%___ 41.6%___ 43.1%
___ Manufacturing and processing
___ deduction___________________________(8.5)___(9.7)___ (8.5)___(10.4)
___ Recovery of prior years' losses_________-______ -___ (3.0)______ -
___ Foreign rate differential____________(0.2)______-___ (0.6)______ -
___ Large corporations tax_______________ 1.1___ 1.9______1.4______3.3
___ Other______________________________ (1.1)___ 0.2___ (0.3)___ 1.6
____________________________________ ---------
_______________________________________ 32.9%___35.5%___ 30.6%___ 37.6%
____________________________________ ---------
____________________________________ ---------
7. STOCK-BASED COMPENSATION PLANS
___ Employee Share Purchase Plan ("Share Plan")
___ On March 6, 2002 the Board of Directors of the Company granted
___ Purchase Rights under the Share Plan that resulted in the issuance of
___ 45,614 common shares at an issue price of $15.22 per share being the
___ fair market value at the date of the grant. After giving effect to
___ the March 6, 2002 grant and all preceding grants, the aggregate
___ number of common shares that may be issued pursuant to the Share Plan
___ shall not exceed 182,599 common shares.
___ Stock Option Plan
___ Under the 1993 Stock Option Plan (the "Option Plan"), the Company may
___ grant options to its directors, officers and certain key employees of
___ the Company and its affiliates for up to 1,943,869 common shares.
___ Under the Plan the exercise price of each option equals the market
___ price of the Company's common shares on the date of grant. Options
___ under the Plan expire no later than ten years from the date the
___ options are granted, and vest at 20% per annum, in arrears on a
___ cumulative basis, and based on criteria set by the Board of Directors
___ including the achievement of specified share price performance
___ targets.
___ Options are automatically cancelled, after a specified amount of
___ time, when the optionee leaves the employment of the Company or
___ ceases to qualify under the Plan. If the Company's parent, or its
___ controlling shareholders, ceases to own at least 35% of the Company,
___ all issued and outstanding options will become fully vested and
___ immediately exercisable.
___ A summary of the options outstanding under the Company's Plan is as
___ follows:
_____________________________________________Shares___Avg. Exercise Price
_____________________________________________------___----------
___ Balance at December 31, 2001_________ 1,208,041____________ 11.11
___ Granted_________________________________ 20,000____________ 20.00
___ Exercised_________________________________40,053_______________9.99
___ Terminated______________________________ 39,000____________ 11.34
__________________________________________----
___ Balance at June 30, 2002_______________1,148,988____________ 11.31
__________________________________________----
__________________________________________----
___ Options exercisable at June 30, 2002___ 532,788____________ 11.63
__________________________________________----
__________________________________________----
___ Effective January 1, 2002 the Company has adopted CICA 3870. Under
___ this standard, the Company has elected to continue to use the
___ intrinsic value method to account for employee stock options, and
___ will disclose the compensation expense for fixed stock options issued
___ subsequent to January 1, 2002. On a pro forma basis reflecting fair
___ value based accounting for stock options issued subsequent to January
___ 1, 2002, net income and diluted earnings per share for the three
___ months ended June 30, 2002 would have been $5.0 million and $0.52
___ respectively, unchanged from the reported amounts.
8. COMMITMENTS
___ At June 30, 2002, the Company has commitments for capital
___ expenditures under purchase orders and contracts amounting to
___ approximately $4.6 million.
9. SEGMENTED INFORMATION
___ The Company operates in one industry, the design, manufacture and
___ sale of automotive powertrain components and systems for the
___ automotive vehicle manufacturers or their Tier 1 powertrain system
___ suppliers. The Company has developed proprietary technologies in each
___ of its three operating segments, powder metal transmission
___ components, oil pump systems, and roll-formed steel components. Each
___ segment operates in a unique competitive environment with future
___ growth prospects determined by the Company's success in developing
___ and applying the particular technologies to meet the requirements of
___ the Company's global powertrain customers. The determination of
___ operating segments reflects management's approach to assessing the
___ performance and future growth prospects of its businesses and the
___ allocation of resources thereto.
___ Certain information with respect to operating segments follows:
Three Months ended___________________________ United
June 30, 2002__________________Canada_________Kingdom
_____________________-------
___________________________Powder
___________________________ Metal______Oil______Roll-
($ in thousands)___ Transmission___ Pump___ formed
_____________________ Components Systems Components Corporate___Total
_____________________-------
Sales_____________________ 43,616___17,842___ 6,751______ -___ 68,209
Intersegment sales____________ -______ -___(1,482)______ -___ (1,482)
External sales____________ 43,616___17,842___ 5,269______ -___ 66,727
Depreciation and
amortization_______________3,686___ 1,313______ 477______143______5,619
Income (loss) before
interest & taxes_________ 5,998___ 2,060______(110)______(7)___ 7,941
Interest expense_______________ -______ -_________- ______477______ 477
Property, plant and
equipment_______________ 90,551___43,983___ 10,461___ 1,196___ 146,191
Total assets____________ 113,855___58,262___ 16,019___19,927___ 208,063
Capital expenditures______ 2,543___ 2,246______ 93______ 11______4,893
_____________________-------
Three Months ended___________________________ United
July 1, 2001__________________ Canada______ Kingdom
_____________________-------
___________________________Powder
___________________________ Metal______Oil______Roll-
($ in thousands)___ Transmission___ Pump___ formed
_____________________ Components Systems Components Corporate___Total
_____________________-------
Sales_____________________ 40,680___14,420___ 5,626______ -___ 60,726
Intersegment sales____________ -______ -___ (1,926)______ -___ (1,926)
External sales____________ 40,680___14,420___ 3,700______ -___ 58,800
Depreciation and
amortization_______________3,492___ 1,187______ 508______230______5,417
Income (loss) before
interest & taxes_________ 4,881___ 1,316______(357)___ (527)___ 5,313
Interest expense_______________ -______ -_________- ______992______ 992
Property, plant and
equipment_______________ 94,868___38,773___ 10,713___ 4,236___ 148,590
Total assets____________ 118,060___48,950___ 20,890___19,784___ 207,684
Capital expenditures______ 1,402___ 2,061______ 288______124______3,875
_____________________-------
Six Months ended______________________________United
June 30, 2002_______________ Canada______ Kingdom
_____________________-------
___________________________Powder
___________________________ Metal______Oil______Roll-
($ in thousands)___ Transmission___ Pump___ formed
_____________________ Components Systems Components Corporate___Total
_____________________-------
Sales_____________________ 82,361___33,266___ 13,455______ -___ 129,082
Intersegment sales____________ -______ -___ (2,962)______ -___ (2,962)
External sales____________ 82,361___33,266___ 10,493______ -___ 126,120
Depreciation and
amortization_______________7,336___ 2,622___ 1,000______257___ 11,215
Income (loss) before
interest & taxes_________ 9,243___ 4,000______(604)___ 500___ 13,139
Interest expense_______________ -______ -_________- ______929______ 929
Property, plant and
equipment_______________ 90,551___43,983___ 10,461___ 1,196___ 146,191
Total assets____________ 113,855___58,262___ 16,019___19,927___ 208,063
Capital expenditures______ 3,770___ 6,912______ 764______ 11___ 11,457
_____________________-------
Six Months ended______________________________United
July 1, 2001__________________Canada______ Kingdom
_____________________-------
___________________________Powder
___________________________ Metal______Oil______Roll-
($ in thousands)___ Transmission___ Pump___ formed
_____________________ Components Systems Components Corporate___Total
_____________________-------
Sales_____________________ 77,202___25,682___ 11,083______ -___ 113,967
Intersegment sales____________ -______ -___ (2,962)______ -___ (2,962)
External sales____________ 77,202___25,682___ 8,121______ -___ 111,005
Depreciation and
amortization_______________7,367___ 2,331___ 1,051______475___ 11,224
Income (loss) before
interest & taxes_________ 6,134___ 2,024______(805)___ (267)___ 7,086
Interest expense_______________ -______ -_________-___ 2,025______2,025
Property, plant and
equipment_______________ 94,868___38,773___ 10,713___ 4,236___ 148,590
Total assets____________ 118,060___48,950___ 20,890___19,784___ 207,684
Capital expenditures______ 3,766___ 3,963______ 691______567______8,987
_____________________-------
10. COMPARATIVE FIGURES
___ Certain comparative figures have been reclassified to conform with
___ the current year's presentation.
(Copyright Canada Newswire)
