 |
August 2, 2000
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Sales for the six months to June 30, 2000 were $416.2 million, an increase of $25.3 million or 6.5% over the $390.9 million achieved in the comparable period of last year, while second quarter sales at $210.4 million, were $11.9 million or 6% ahead of last year.
Sales of the Packaging segment in the second quarter were $107.8 million which reflects an improvement of 7.2% over last year's $100.5 million with all geographical areas contributing to the increase. Metal Processing sales at $77.5 million were up 1.7% in the quarter due primarily to increased sales of stainless steel pipe and tube and pressure vessels which more than offset reduced Technology sales at the Steel Pickling unit. Distribution sales for the quarter at $25.1 million, were ahead 15% over last year due to higher sales at the U.S. unit.
Earnings before goodwill amortization for the first half of 2000 were $17.6 million or $0.51 per share, which represents an increase of 4.9% over the $16.8 million or $0.49 per share earned last year. Net earnings for the six months to June 30, 2000 were $16.7 million or $0.49 per share compared to $15.9 million or $0.46 per share last year. For the second quarter, earnings before goodwill amortization were $9.3 million or $0.27 per share, which represents an increase of 2.2% over the $9.1 million or $0.27 earned last year. Net earnings for the second quarter were $8.8 million or $0.26 per share, an increase of 1.8% over the $8.6 million or $0.25 per share earned last year.
Operating profits for the second quarter amounted to $16.0 million which is $0.5 million or 3.2% below the comparable quarter of last year. The Packaging segment had profits of $4.8 million which is 17.2% below the $5.8 million earned last year. Although the Canadian unit enjoyed strong results, overall earnings were down because of the continuing under performance in the U.S. pertaining to plastic strapping and reduced earnings at the U.K. unit due to intense competition from mainland Europe and margin compression on exports due to the strength of the British pound.
The Metal Processing segment turned in profits of $11.1 million which is a decrease of 11% from last year's $12.5 million. The major reason for the shortfall is a decline in earnings from roll formed products due to reduced sales to the railroad industry. Profits from Pickling operations were down slightly due to lower Technology income compared to last year. Improved earnings however were noted from the sale of stainless steel tube and pipe. Distribution earnings for the quarter at $0.8 million are well ahead of last year when a loss was incurred. Earnings were however lower than those achieved in the first quarter reflecting increased competition in U.S. markets.
On June 22, 2000, the acquisition of the business and assets of WorldClass Processing Inc. was completed at a cost of $26.9 million. WorldClass, based in Ambridge, Pennsylvania is a toll processor of hot rolled carbon coils and stainless steel and will complement the activities of the company's Steel Pickling Group.
Under the Company's Normal Course Issuer Bid, 66,300 common shares of Samuel Manu-Tech Inc. were purchased during the second quarter bringing the cumulative total under the Issuer Bid to 279,000 shares.
Although we anticipate results for the third quarter to be comparable to those of the second quarter, we have recently become concerned with indications of softening in some of the markets served by the Company.
Mark C.
Samuel
President
August 2, 2000
|
CONSOLIDATED STATEMENTS OF EARNINGS |
Six Months ended June 30, 2000 and 1999 (unaudited)
(thousands of
dollars except per share amounts)
 | |||||
 |
2ND QUARTER |
SIX MONTHS | |||
| |||||
| 2000 | 1999 | |
2000 | 1999 | |
 | |||||
NET SALES |
$ 210,377 | $ 198,537 | $ 416,249 | $ 390,930 | |
COSTS (INCOME) AND EXPENSES: |
|||||
| Cost
of sales, selling and administration |
187,800 | 175,884 | 372,317 | 347,554 | |
| Depreciation and amortization |
6,620 | 6,175 | 12,916 | 12,119 | |
| Interest on long-term debt |
2,793 | 2,948 | 5,653 | 6,044 | |
| Interest on short-term debt |
370 | 333 | 657 | 590 | |
| Interest income |
(54) | (50) | (167) | (81) | |
| |||||
| 197,529 | 185,290 | 391,376 | 366,226 | ||
| |||||
| EARNINGS BEFORE INCOME TAXESAND GOODWILL AMORTIZATION |
12,848 | 13,247 | 24,873 | 24,704 | |
| PROVISION FOR INCOME TAXES | 3,550 | 4,150 | 7,250 | 7,900 | |
| |||||
| EARNINGS BEFORE GOODWILL AMORTIZATION |
9,298 | 9,097 | 17,623 | 16,804 | |
| GOODWILL AMORTIZATION, net of income taxes | 496 | 449 | 938 | 908 | |
| |||||
| NET EARNINGS |
$ 8,802 | $ 8,648 | $ 16,685 | $ 15,896 | |
| |||||
| EARNINGS PER SHARE BEFOREGOODWILL AMORTIZATION |
$ 0.27 | $ 0.27 | $ 0.51 | $ 0.49 | |
| |||||
| NET EARNINGS PER SHARE | $ 0.26 | $ 0.25 | $ 0.49 | $ 0.46 | |
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The Company has adopted the CICA's new disclosure recommendations with respect to goodwill amortization, which permits the entity to present goodwill amortization on a net-of-tax basis as a separate line item in the income statement. The comparative figures for 1999 have been restated to be consistent with the presentation adopted in September 1999.
|
SEGMENTED INFORMATION |
Six Months ended June 30, 2000 and 1999 (unaudited)
(thousands of
dollars)
| |||||
|
2ND
QUARTER |
SIX MONTHS | |||
| |||||
| NET SALES | 2000 | 1999 | |
2000 | 1999 |
| |||||
| Packaging |
$ 107,750 | $ 100,475 | $ 211,670 | $ 197,712 | |
| Metal Processing | 77,482 | 76,204 | 151,549 | 151,329 | |
| Distribution | 25,145 | 21,858 | 53,030 | 41,889 | |
| |||||
| Consolidated | $ 210,377 | $ 198,537 | $ 416,249 | $ 390,930 | |
| |||||
|
| |||||
|
2ND QUARTER |
SIX MONTHS | |||
| |||||
| EARNINGS BEFORE INTEREST ANDGOODWILL
AMORTIZATION |
2000 | 1999 | |
2000 | 1999 |
| |||||
| Packaging |
$ 4,839 | $ 5,843 | $ 9,375 | $ 10,112 | |
| Metal Processing | 11,082 | 12,459 | 21,259 | 24,954 | |
| Distribution | 823 | (687) | 2,309 | (1,602) | |
| Corporate | (787) | (1,137) | (1,927) | (2,207) | |
| |||||
| Consolidated | $ 15,957 | $ 16,478 | $ 31,016 | $ 31,257 | |
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|
|
CONSOLIDATED BALANCE SHEETS |
June 30, 2000 and 1999 (unaudited)
(thousands of dollars)
| ||
|
2000 |
1999 | |
| ||
| ASSETS |
||
| CURRENT ASSETS: |
||
| Cash and short-term deposits |
$ 7,537 |
$ 10,739 |
| Accounts receivable |
128,542 |
118,711 |
| Inventories |
158,718 |
143,860 |
| Prepaids and sundry |
3,956 |
2,708 |
| ||
|
298,753 |
276,018 | |
| FIXED ASSETS |
206,787 |
185,565 |
| DEFERRED PENSION COSTS |
4,130 |
3,946 |
| INTANGIBLE ASSETS |
52,117 |
56,122 |
| ||
|
$ 561,787 |
$ 521,651 | |
| ||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||
| CURRENT LIABILITIES: |
||
| Bank indebtedness |
$ 30,937 |
$ 26,110 |
| Accounts payable and accrued liabilities |
102,320 |
95,447 |
| Dividends payable |
1,730 |
1,395 |
| Income taxes payable |
4,389 |
1,062 |
| Current portion of long-term debt |
12,201 |
13,243 |
| ||
|
151,577 |
137,257 | |
| LONG-TERM DEBT |
161,423 |
160,041 |
| POST-RETIREMENT BENEFITS | ||
| OTHER THAN PENSIONS |
3,944 |
4,382 |
| FUTURE INCOME TAXES |
13,873 |
5,820 |
| ||
|
330,817 |
307,500 | |
| SHAREHOLDERS' EQUITY: | ||
| Capital stock |
27,732 |
27,958 |
| Retained earnings |
196,113 |
179,493 |
| Cumulative translation adjustment |
7,125 |
6,700 |
| ||
|
230,970 |
214,151 | |
| ||
|
|
|
| ||
| |
||
| Number of common shares outstanding | 34,265,540 | 34,544,540 |
| Number of options outstanding | 459,000 | 215,000 |
Effective January 1, 2000 the Company adopted the new recommendations of the CICA with respect to accounting for income taxes and accounting for employee future benefits. The cumulative effect of adopting the liability method of tax allocation, on a retroactive basis without restating the financial statements of prior periods, was a decrease to retained earnings of $10,004, an increase to the cumulative translation adjustment of $503 and an increase to future income taxes of $9,501. The effect of adopting the recommendation with respect to employee future benefits, on a prospective basis, was not material.
|
CONSOLIDATED CASH FLOW STATEMENTS |
Six Months ended June 30, 2000 and 1999 (unaudited)
(thousands of
dollars)
| ||
|
2000 |
1999 | |
| ||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net earnings |
$ 16,685 |
$ 15,896 |
| Items not involving cash: |
||
| Depreciation
and amortization |
12,916 |
12,119 |
| Goodwill
amortization |
1,188 | 1,208 |
| Future income
taxes |
92 |
363 |
| Increase in
deferred pension costs |
(7) |
(613) |
| Decrease in
post-retirement benefits other than pensions |
(194) |
(294) |
| ||
|
30,680 |
28,679 | |
| Change in non-cash operating working capital: |
||
| Increase in
accounts receivable |
(10,603) |
(12,396) |
| (Increase)
decrease in inventories |
(11,660) |
9,412 |
| Decrease in
prepaids and sundry |
429 |
737 |
| Increase in
accounts payable and accrued liabilities |
8,161 |
13,692 |
| Increase
(decrease) in income taxes payable |
540 |
(280) |
| ||
|
17,547 |
39,844 | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Proceeds on sale of fixed assets |
442 |
766 |
| Gain on disposal of fixed assets |
(78) | -- |
| Purchase of fixed assets and intangible assets |
(9,627) |
(11,754) |
| Business acquisition |
(26,886) |
(3,444) |
| ||
|
(36,149) |
(14,432) | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Purchase of common shares |
(1,245) |
-- |
| Increase in long term debt |
22,054 |
3,850 |
| Repayment of long term debt |
(13,954) |
(5,632) |
| Dividends paid on common shares |
(3,430) |
(2,764) |
| ||
|
3,425 |
(4,546) | |
| EFFECT OF EXCHANGE RATE CHANGES ON
CASHAND CASH
EQUIVALENTS |
1,302 |
396 |
| ||
| INCREASE (DECREASE) IN CASH DURING THE
PERIOD |
(13,875) |
21,262 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD |
(9,525) |
(36,633) |
| ||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ (23,400) |
$ (15,371) |
| ||
Cash and cash equivalents is comprised of cash and short-term deposits less bank indebtedness.