 |
July 21, 1998
|
Sales for the three months to March 31, 1998 were $175.3 million, an increase of $20.5 million or 13.2% over the $154.8 million achieved in the comparable period of last year. Sales of the Packaging Segment were $93.4 million which reflects an improvement of 5.0% over last year's $89.0 million. This performance was below expectations, however, primarily due to lower than anticipated sales of plastic strapping. Metal Processing sales were up 15.6% in the quarter to $64.5 million aided by strong sales of roll formed products. Distribution sales for the quarter, at $17.4 million, were ahead 73.2% over last year primarily due to sales in the U.S. arising from the stainless steel master distributorship set up during the second half of 1997 and the acquisition of Energy Steel Products which was completed on February 10, 1998.
Earnings for the first quarter were $6.2 million or $0.36 per share, which reflects a decrease of 14.5% from the $7.2 million or $0.42 per share achieved in the comparable quarter of last year.
Operating profits for the quarter amounted to $12.4 million which is $0.4 million or 3.1% below last year. The Metal Processing Segment turned in a strong performance with profits of $11.3 million which represents an increase of 32.1% over last year's $8.5 million. All operations within this segment contributed to the improved performance. The Packaging Segment had profits of $2.5 million which were well-below last year. Lower sales of plastic strapping due to slower conversions from steel to plastic in the unitizing industry, higher plastic manufacturing costs in North America and reduced profitability at the European operations due to lower sales and the continuing strength of the British pound all contributed to this decline in profitability. The Distribution Segment operated essentially at a break-even during the quarter with an improved performance at the Canadian operations being offset by start-up and merger-related costs in the U.S.
Net interest expense in the quarter, at $3.1 million, is $0.9 million higher than last year. Three factors contributed to the higher interest expense; higher borrowing resulting from capital spending and the Energy Steel Products acquisition, an increased investment in working capital and a higher average interest rate incurred in the quarter compared to last year.
The second quarter will see an improvement in our results. The Metal Processing Segment will continue to be strong while Distribution and Packaging will both post better results. In the meanwhile, greater diligence in control of our working capital utilization will help us to regain our positive earnings momentum through the second quarter and the balance of the year.
CONSOLIDATED STATEMENTS OF
EARNINGS
Six Months ended June 30, 1998 and 1997 (unaudited)
(thousands of dollars
except per share amounts)
 | |||||
 |
2ND QUARTER |
SIX MONTHS | |||
| |||||
| 1998 | 1997 | |
1998 | 1997 | |
| |||||
NET SALES |
$ 187,639 | $ 166,851 | $ 362,893 | $ 321,653 | |
COSTS (INCOME) AND EXPENSES: |
|||||
| Cost
of sales, selling and administration |
167,015 | 144,659 | 323,775 | 281,330 | |
| Depreciation and amortization |
6,105 | 5,637 | 12,183 | 10,954 | |
| Interest on long-term debt |
2,954 | 2,755 | 5,808 | 4,917 | |
| Interest on short-term debt |
447 | 117 | 745 | 198 | |
| Interest income |
(15) | (2) | (26) | (52) | |
| |||||
| 176,506 | 153,166 | 342,485 | 297,347 | ||
| |||||
| EARNINGS BEFORE INCOME TAXES | 11,133 | 13,685 | 20,408 | 24,306 | |
| PROVISION FOR INCOME TAXES | 3,650 | 5,000 | 6,750 | 8,400 | |
| |||||
| NET EARNINGS | $ 7,483 | $ 8,685 | $ 13,658 | $ 15,906 | |
| |||||
| NET EARNINGS PER SHARE | $ 0.21 | $ 0.25 | $ 0.39 | $ 0.46 | |
| |||||
SEGMENTED INFORMATION
Six Months ended June 30, 1998 and 1997 (unaudited)
(thousands of
dollars)
| |||||
|
2ND
QUARTER |
SIX MONTHS | |||
| |||||
| NET SALES | 1998 | 1997 | |
1998 | 1997 |
| |||||
| Packaging |
$ 92,048 | $ 93,890 | $ 185,440 | $ 182,864 | |
| Metal Processing | 75,446 | 61,697 | 139,955 | 117,497 | |
| Distribution | 20,125 | 11,264 | 37,498 | 21,292 | |
| |||||
| Consolidated | $ 187,639 | $ 166,851 | $ 362,893 | $ 321,653 | |
| |||||
|
| |||||
|
2ND QUARTER |
SIX MONTHS | |||
| |||||
| EARNINGS (LOSS) BEFORE INTEREST | 1998 | 1997 | |
1998 | 1997 |
| |||||
| Packaging |
$ 1,410 | $ 6,651 | $ 3,875 | $ 11,641 | |
| Metal Processing | 14,237 | 10,746 | 25,493 | 19,267 | |
| Distribution | (414) | 307 | (410) | 715 | |
| Corporate | (714) | (1,149) | (2,023) | (2,254) | |
| |||||
| Consolidated | $ 14,519 | $ 16,555 | $ 26,935 | $ 29,369 | |
| |||||
|
CONSOLIDATED BALANCE
SHEETS
June 30, 1998 and 1997 (unaudited)
(thousands of dollars)
| ||
|
1998 |
1997 | |
| ||
| ASSETS |
||
| CURRENT ASSETS: |
||
| Cash and short-term deposits |
$ 5,190 |
$ 6,636 |
| Accounts receivable |
113,328 |
98,003 |
| Inventories |
162,802 |
121,573 |
| Prepaids and sundry |
6,194 |
4,177 |
| ||
|
287,514 |
230,389 | |
| FIXED ASSETS |
175,796 |
155,590 |
| DEFERRED PENSION COSTS |
2,990 |
2,910 |
| INTANGIBLE ASSETS |
60,848 |
60,752 |
| ||
|
$ 527,148 |
$ 449,641 | |
| ||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||
| CURRENT LIABILITIES: |
||
| Bank indebtedness |
$ 50,218 |
$ 17,592 |
| Accounts payable and accrued liabilities |
94,238 |
78,081 |
| Dividends payable |
1,394 |
1,318 |
| Income taxes payable |
1,792 |
3,259 |
| Current portion of long-term debt |
1,984 |
1,893 |
| ||
|
149,626 |
102,143 | |
| LONG-TERM DEBT |
168,768 |
160,428 |
| POST-RETIREMENT BENEFITS | ||
| OTHER THAN PENSIONS |
4,918 |
5,031 |
| DEFERRED INCOME TAXES |
6,164 |
6,462 |
| ||
|
329,476 |
274,064 | |
| SHAREHOLDERS' EQUITY: | ||
| Capital stock |
27,981 |
27,989 |
| Retained earnings |
159,660 |
137,031 |
| Cumulative translation adjustment |
10,031 |
10,557 |
| ||
|
197,672 |
175,577 | |
| ||
|
$ 527,148 |
$ 449,641 | |
| ||
CONSOLIDATED
STATEMENTS OF CHANGES IN FINANCIAL POSITION
Six Months ended June 30, 1998 and 1997 (unaudited)
(thousands of
dollars)
| ||
|
1998 |
1997 | |
| ||
| CASH PROVIDED BY (USED IN): | ||
| OPERATING ACTIVITIES: | ||
| Net earnings |
$ 13,658 |
$ 15,906 |
| Items not involving cash: |
||
| Depreciation
and amortization |
12,183 |
10,954 |
| Deferred
income taxes |
453 |
300 |
| Deferred
pension costs |
(138) |
102 |
| Post-retirement benefits other than pensions |
(84) |
(99) |
| ||
|
26,072 |
27,163 | |
| Change in non-cash operating working capital: |
||
| Accounts
receivable |
(13,834) |
(16,752) |
| Inventories |
(14,549) |
(15,110) |
| Prepaids and
sundry |
(3,841) |
968 |
| Accounts
payable and accrued liabilities |
16,399 |
7,781 |
| Income taxes
payable |
(915) |
(473) |
| ||
|
9,332 |
3,577 | |
| INVESTING ACTIVITIES: | ||
| Proceeds on sale of fixed assets |
357 |
148 |
| Purchase of fixed assets |
(23,260) |
(12,272) |
| Cumulative translation adjustment |
3,658 |
3,588 |
| Business acquisition |
(7,984) |
-- |
| ||
|
(27,229) |
(8,536) | |
| FINANCING ACTIVITIES: | ||
| Purchase of common shares |
(153) |
(23) |
| Increase (Decrease) in long-term debt, net |
5,828 |
(8,305) |
| ||
|
5,675 |
(8,328) | |
| DIVIDENDS PAID ON COMMON SHARES |
(2,767) |
(2,767) |
| ||
| DECREASE IN CASH DURING THE PERIOD |
(14,989) |
(16,054) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD |
(30,039) |
5,098 |
| ||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ (45,028) |
$ (10,956) |
| ||
Cash and cash equivalents is comprised of cash and short-term deposits less bank indebtedness.