Core Materials Reports Lower Second Quarter Earnings and Sales
COLUMBUS, Ohio, Aug. 13 - Core Materials Corporation (Amex:CME) today announced results for the second quarter and six months ended June 30, 2001.
Net income for the second quarter of 2001 was $176,000, or $.02 per diluted share, compared with net income of $415,000, or $.04 per diluted share, in the second quarter of 2000. Net sales for the second quarter were $17,458,000, a 25% decline from $23,207,000 in the second quarter of 2000.
For the six months ended June 30, 2001, net income was $179,000, or $.02 per diluted share, compared with $1,237,000, or $.13 per diluted share, in the year-ago period. Net sales for the first six months of 2001 fell 26% to $36,558,000 from $49,120,000 last year.
Core Materials has approximately $18 million of operating tax loss carryforwards that are available to offset income taxes on future earnings. These tax loss carryforwards do not begin to expire until the year 2007. If the benefit of the Company's operating tax loss carryforwards were recorded as a reduction in income tax expense, which is reflective of the actual cash treatment, net income for the three months ended June 30, 2001, would have been increased by $75,000, or $.01 per diluted share, to a total of $251,000, or $.03 per diluted share. The comparable net income for the three months ended June 30, 2000, would have been increased by $178,000, or $.02 per diluted share, to a total of $593,000, or $.06 per diluted share.
"Business remained soft across our markets in the second quarter," said James L. Simonton, president and chief executive officer. "Sales were off 25% from the year-ago quarter and down 9% from the first quarter. Even with these adverse conditions we were able to show a profit for the quarter."
The primary reason for the decrease in sales from a year ago is the weaker economic climate, which has resulted in a significant decline in demand for new trucks that resulted in lower product orders from our truck customers. Additionally, as anticipated, sales of personal watercraft products also decreased for the quarter as a result of the same economic conditions and normal industry cycles. Sales to personal watercraft makers were down 30% compared with the year-ago quarter and 38% compared with the unusually strong first quarter of 2001. Lower sales to our truck and personal watercraft customers were slightly offset by a 4% increase in sales to other customers primarily as a result of previously announced new business.
Gross margin as a percentage of sales was approximately 13.8% for the latest quarter compared with 14.7% for the same period last year. The decrease was due primarily to production inefficiencies associated with reduced order flow and new product startup, mostly affecting the Columbus plant. However, improved productivity and a better product mix resulted in gross margin improvement in the Gaffney plant compared with last year.
"We remain on track for the third-quarter launch in Columbus of new products for International's new high-performance 4000 series truck," said Simonton. "We are also on track to begin production of SMC hood assemblies for Peterbilt's new 387 Class 8 model in the fourth quarter in Gaffney. As disclosed earlier, the Peterbilt business represents an estimated $3-$5 million in new annual revenue for Core Materials."
During the quarter the company announced that it had reached a new three- year, two-month labor agreement with the union representing production employees at its Columbus location. The new agreement, which extends until August 7, 2004, provides a competitive wage and benefit package along with provisions that allow for increased operational flexibility.
"Looking ahead, we are planning for continued softness through the remainder of the year," said Simonton. "The third quarter is typically our weakest due to normal seasonal production shutdowns in the truck and personal watercraft industry. We expect to show a loss for the third quarter and then return to profitability in the fourth quarter."
Core Materials Corporation is a compounder and compression molder of sheet molding composites (SMC). The company produces high quality fiberglass reinforced, molded products and SMC materials for varied markets, including transportation, marine, agricultural and commercial products. Core Materials, with its headquarters in Columbus, Ohio, operates plants in Columbus and Gaffney, South Carolina.
This press release contains certain "forward-looking statements" that involve certain risks and uncertainties. Core Materials' actual results may differ significantly from those discussed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to: business conditions in the plastics, transportation, recreation and consumer products industries, the general economy, competitive factors, the dependence on two major customers, the recent efforts of Core Materials to expand its customer base, new technologies, regulatory requirements, labor relations, the loss or inability to attract key personnel, the availability of capital, and management's decision to pursue new products or businesses which involve additional cost, risks or capital expenditures.
CORE MATERIALS CORPORATION
Condensed Income Statement
(in thousands, except per share data)
Three Months Ended Six Months Ended
06/30/01 06/30/00 06/30/01 06/30/00
(Unaudited) (Unaudited)
Net Sales $ 17,458 $ 23,207 $ 36,558 $ 49,120
Cost of Sales 15,049 19,800 31,731 41,245
Gross Margin 2,409 3,407 4,827 7,875
Selling, General
and Admin.
Expense 1,711 2,342 3,738 5,017
Income before
Interest and
Taxes 698 1,065 1,089 2,858
Interest Expense
- Net 398 354 783 744
Income before
Taxes 300 711 306 2,114
Net Income * $ 176 $ 415 $ 179 $ 1,237
Net Income
per Common
Share *
Basic and
Diluted $ 0.02 $ 0.04 $ 0.02 $ 0.13
Weighted Average
Shares
Outstanding:
Basic and
Diluted 9,779 9,779 9,779 9,779
*If the benefit of the Company's operating tax loss carryforwards were
recorded as a reduction in income tax expense, the Company's net income for
the six months ended 06/30/01 and 06/30/00 would have been $255,000 or
$.03 per diluted share, and $1,766,000, or $.18 per diluted share,
respectively.
Condensed Balance Sheet
(in thousands)
As of
06/30/01 As of
(Unaudited) 12/31/00
Assets
Cash and Investments $ 7,642 $ 2,712
Accounts Receivable 14,153 13,221
Inventories 3,962 3,644
Other Current Assets 1,946 3,656
Property, Plant & Equipment - net 25,876 26,053
Deferred Tax Asset - net 11,419 11,430
Other assets 1,782 2,069
Total Assets $ 66,780 $ 62,785
Liabilities and Stockholders' Equity
Current Portion of Long Term Debt $ 345 $ 330
Accounts Payable 8,237 5,266
Accrued Liabilities and Other 5,051 4,096
Long-term Debt 26,195 26,370
Interest Rate Swap 191 -
Deferred Long Term Gain 2,235 2,462
Post Retirement Benefits Liability 4,834 4,622
Stockholders' Equity 19,692 19,639
Total Liabilities and Stockholders' Equity $ 66,780 $ 62,785
SOURCE: Core Materials Corporation
CONTACT: James L. Simonton of Core Materials Corporation, +1-614-870-5014