Action Performance Reports Second Quarter 2004 Earnings; Company Returns to Profitability and Forecasts Strong Recovery in Die-cast Business.Business Editors PHOENIX--(BUSINESS WIRE)--May 3, 2004 Action Performance Companies, Inc. (NYSE NYSE See: New York Stock Exchange : ATN ATN Acute tubular necrosis, see there ), the leader in the design, marketing, promotion, and distribution of licensed motorsports merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain , today reported financial results for the fiscal second quarter and first six months of 2004. The company reported revenues of $83.9 million for the quarter ended March 31, 2004, compared to $91.1 million during the same period last year. The company returned to profitability and reported net income for the fiscal second quarter of 2004 of $1.3 million, or $0.07 per share, after deducting special charges of $1.6 million. This compared to net income of $7.3 million, or $0.40 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. for the second quarter of fiscal 2003. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the quarter was $9.7 million compared to $18.8 million in the prior year. For the six-month period, the company reported revenues of $155.4 million compared with $176.9 million for the first six months of 2003. The company incurred a net loss of $417 thousand or $0.02 per share for the first six months of 2004 after deducting special charges aggregating $2.3 million in the six-month period. This compared to net income of $15.2 million or $0.83 per share in the previous year. EBITDA for the six months was $14.9 million compared with $38.4 million in the prior year. The company previously indicated that the first six months would be weak, but positively offset by revenues and income in the second half of the year. "I am pleased with our return to profitability and the improvement in our margins," Action Chief Executive Officer Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. Wagenhals said. "We expect this positive momentum will continue through our third and fourth quarters, which will include the full impact of our die-cast Adj. 1. die-cast - formed by forcing molten metal into a die; "a die-cast seal" formed - having or given a form or shape price increases and the revenue impact of a strong backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of die-cast programs. We're we're Contraction of we are. we're we are on the cusp of achieving our expectations and we expect we will only get stronger as we enter the height of the racing season." Mirroring the anticipated increase in revenues in the third and fourth quarters, backlog at March 31, 2004 increased 59.5% to $88.6 million from $55.6 million in the previous quarter. Backlog of die-cast products increased 63.8% to $71.0 million from $43.3 million in the previous quarter. Revenues for the quarter and the six months included $10.6 million and $23.8 million, respectively, from the company's Funline subsidiary, which was acquired in late September September: see month. 2003. Funline revenues continued to be strong reflecting continued strength in the "West Coast Chopper's" and "SS Tuner An electronic part of a radio or TV that locks on to a selected carrier frequency (station, channel) and filters out the audio and video signals for amplification and display. " products. Action's trackside track·side n. The area near a track, especially a racetrack. revenues met expectations in the second quarter of 2004, with revenues from four of the NASCAR NASCAR (National Association for Stock Car Auto Racing), organization that sanctions American stock-car races, est. 1948. It held its first race in Daytona Beach, Fla. season's first six races exceeding same-track sales during the same period last year. Quarter over quarter trackside comparables were affected by the timing of NASCAR'S Samsung/Radio Shack 500 race, which occurred during Action's fiscal third quarter in 2004, rather than during the second quarter as in the prior year. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3 million in trackside revenue from the Texas race held April 2, 2004, will be included in the June June: see month. quarter. Trackside revenues for the June quarter through the Auto (AUTOmatic) Refers to a wide variety of devices that perform unattended operations. Club 500 race on May 2, 2004 are up slightly over revenues from the same races during 2003. The previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). delays in die-cast program approvals caused wholesale distribution die-cast revenues to decline from the 2003 second quarter by $12.2 million. Winner's Circle win·ner's circle n. pl. winners' circles An enclosed area at a racetrack where the winning horse and jockey are brought for awards and publicity. Noun 1. die-cast revenues declined to $2.8 million to $3.2 million, reflecting the previously disclosed slow ramp-up of mass retail die-cast orders. Cost of sales for the quarter ended March 31, 2004 included a charge of approximately $1 million to increase royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. reserves applicable to the calendar year ended December December: see month. 31, 2003. Second quarter results also included a $256 thousand loss arising from foreign currency translation adjustments and $350 thousand of other special charges. The combined effects of these three charges totaled approximately $0.06 per share. The company's second quarter results reflected a sequential One after the other in some consecutive order such as by name or number. improvement over the first quarter ended December 31, 2003. Quarterly revenues improved 17.5% and gross margins excluding, special items in each period, improved to 30.4% from 24.9% in the December quarter, reflecting trackside revenues and the initial impact of the die-cast selling price increases instituted during the fiscal first quarter. Low die-cast revenue and fixed tooling amortization charges impacted gross margins by approximately 0.8% in the first half. Funline margins continue to be impacted by a current product mix that includes high unit value but lower percentage margin products. "During the quarter we had $6.7 million operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and $922 thousand free cash flow." Action Chief Financial Officer R. David Martin David Martin may refer to: Politicians
"EBITDA for the second quarter of $9.7 million was also a strong recovery increasing $4.4 million or 84.3% over EBITDA of $5.3 million in the previous quarter." Martin noted that, "Depreciation and amortization in the first six months increased $1.8 million over the prior year reflecting the Funline acquisition and the unusually high capital expenditures of fiscal 2003." Action supplements its consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting with the presentation of earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of our operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . EBITDA should be considered an addition to, not a substitute for, the Company's other measures of financial performance reported in the consolidated financial statements in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . A reconciliation of EBITDA to GAAP reporting is attached following the unaudited consolidated financial statements. The Company considers free cash flow to be an important indicator of the Company's liquidity and defines it as operational cash flow less capital expenditures. Capital expenditures, which are typically greatest in the first half of Action's fiscal year, totaled $13.4 million in the first six months of 2004 compared to $20.3 million in the same period last year. Capital expenditures remain on track to come within management's $20 million to $24 million full-year estimate. Of the $13.4 million for the six months, $4.1 million represents Funline capital expenditures, including the previously disclosed $1.6 million of tooling existing at the acquisition date that was acquired from one of Funline's contract manufacturers. Future capital expenditures will reflect the company's improved supply chain management processes and controls. Action's March 31, 2003 cash balance remained stable at $34.0 million and is expected to return to historical levels as the fiscal year progresses.
Action reported distribution channel revenues as follows,
in thousands:
Second Second
Quarter Quarter YTD YTD
2004 2003 2004 2003
------- ------- ------- --------
Domestic Die-cast:
Wholesale distribution and
promotion $12,120 $24,353 $24,005 $45,333
Wholesale to mass-merchant
retailers 13,771 5,942 31,607 19,147
Retail through collector's
catalogue club 4,145 4,361 8,049 10,584
Foreign Die-Cast - wholesale
distribution and promotion 9,000 8,149 18,437 17,301
-------- -------- -------- -------
Total die-cast 39,036 42,805 82,098 92,365
-------- -------- -------- -------
Domestic Apparel and Memorabilia:
Wholesale distribution and
promotion 21,430 21,833 34,683 38,452
Wholesale to mass-merchant
retailers 11,616 11,455 20,084 24,040
-------- ------- -------- --------
Total apparel and memorabilia 33,046 33,288 54,767 62,492
Retail at Trackside 10,826 13,991 16,922 20,427
Royalties and Other 1,011 972 1,571 1,571
-------- ------- -------- --------
Net Sales $83,919 $91,056 $155,358 $176,855
-------- ------- -------- --------
Net Sales from Business Acquired
in Fiscal 2003 $10,594 $-- $23,784 $--
======== ======= ======== ========
Action also reported inventories as follows,
in thousands:
March 31, December 31, March 31,
2004 2003 2003
---------- ------------- ----------
Die-Cast:
Motorsports Related:
United States $7,648 $7,045 $5,325
Germany 3,683 4,469 3,046
Funline 13,034 12,324 --
-------- ---------- --------
Total Die-Cast 24,365 23,838 8,371
-------- ---------- --------
Apparel and Other:
Motorsports Related 21,507 19,912 22,923
Other 10,529 8,715 4,943
-------- ---------- --------
Total Apparel and Other 32,036 28,627 27,866
-------- ---------- --------
Total Inventories $56,401 $52,465 $36,237
======== ========== ========
Fiscal 2004 Guidance Action left its fiscal 2004 revenue expectations unchanged at $400 million to $425 million although it is guiding toward the lower end of the range, while lowering its 12-month guidance for fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to a range of $1.35 to $1.60. This reduction reflects the special charges in the second quarter and lower than anticipated margins from the Funline and leather jacket (Zool.) A California carangoid fish (Oligoplites saurus). A trigger fish (Balistes Carolinensis). See also: Leather Leather business. Management will reassess reassess Verb to reconsider the value or importance of reassessment n Verb 1. reassess - revise or renew one's assessment reevaluate its 2004 forecasts next quarter, based on the expected success of die-cast program flow, the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of less-cautious ordering patterns for licensed NASCAR merchandise from distributors, and the continuation continuation - continuation passing style of a return to more normalized mass retail revenue levels. About Action Performance Action Performance Companies Inc. (NYSE: ATN) is the leader in the design, promotion, marketing and distribution of licensed motorsports merchandise. The Company's products include a broad range of motorsports-related die-cast replica Earlier document exchange software from Farallon Communications, Inc. that converted a Windows or Mac document into a proprietary viewing format. The viewer could be distributed separately or embedded within the document itself, turning it into a single-document viewer. collectibles, apparel, souvenirs and other memorabilia mem·o·ra·bil·i·a pl.n. 1. Objects valued for their connection with historical events, culture, or entertainment: posters, publicity photographs, and other movie memorabilia. 2. . Action Performance markets and distributes products through a variety of channels including the Action Racing Collectables network of wholesale distributors, the Racing Collectables Club of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , QVC QVC Quality Value Convenience QVC Question Valid Command , goracing.com, trackside at racing events, direct corporate promotions, mass retail, department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. dealers. Additional information about Action Performance can be found at www.action-performance.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding expectations for revenues, net income, operational plans, and guidance for future periods. The Company's actual results could differ materially from those set forth in these forward-looking statements. Factors that might cause such differences include, among others, the ability of the Company to successfully execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its business plan, competitive pressures, acceptance of the Company's products and services in the marketplace, the success of new marketing programs, the Company's ability to successfully execute its agreements with other parties, general economic conditions, and other risks discussed in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , dated September 30, 2003, on file with the U.S. Securities and Exchange Commission.
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Balance Sheets
March 31, 2004 and September 30, 2003
(in thousands)
March 31, September 30,
2004 2003
---------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $33,960 $49,462
Accounts receivable, net 52,753 69,890
Inventories 56,401 43,232
Prepaid royalties 7,942 6,540
Taxes receivable 2,462 -
Deferred income taxes 5,294 5,291
Prepaid expenses and other 3,676 3,161
--------- ---------
Total Long-Term Assets 162,488 177,576
--------- ---------
Long-Term Assets
Property and equipment, net 63,456 62,951
Goodwill 88,445 87,448
Licenses and other intangibles, net 41,075 44,426
Other 2,445 2,357
--------- ---------
Total Long-Term Assets 195,421 197,182
--------- ---------
$357,909 $374,758
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $29,525 $36,734
Accrued royalties 9,915 11,762
Accrued expenses 7,852 11,764
Taxes payable 762 3,156
Current portion of long-term debt 313 567
--------- ---------
Total Current Liabilities 48,367 63,983
--------- ---------
Long-Term Liabilities:
Long-term debt 34,531 34,425
Deferred income taxes and other 11,520 11,816
--------- ---------
Total Long-Term Liabilities 46,051 46,241
--------- ---------
Commitments and Contingencies
Minority Interests 2,529 2,941
Shareholders' Equity 260,962 261,593
--------- ---------
$357,909 $374,758
========= =========
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss)
Three and Six Months Ended March 31, 2004 and 2003
(in thousands, except per share data)
Three Months Ended Six Months Ended
2004 2003 2004 2003
-------- -------- --------- ---------
Net sales $83,919 $91,056 $155,358 $176,855
Cost of sales 59,434 59,005 113,685 114,282
-------- -------- --------- ---------
Gross profit 24,485 32,051 41,673 62,573
-------- -------- --------- ---------
Operating expenses:
Selling, general and
administrative 20,700 19,799 40,838 37,161
Amortization of licenses and
other intangibles 943 835 1,884 1,735
-------- -------- --------- ---------
Total operating expenses 21,643 20,634 42,722 38,896
-------- -------- --------- ---------
Income (loss) from operations 2,842 11,417 (1,049) 23,677
Interest expense (471) (610) (902) (1,189)
Foreign currency gains and losses (256) 926 573 2,287
Earnings from joint venture 198 - 762 -
Other income and expenses (242) (227) (54) (462)
-------- -------- --------- ---------
Income (loss) before income taxes 2,071 11,506 (670) 24,313
Income taxes 783 4,252 (253) 9,093
-------- -------- --------- ---------
Net income (loss) 1,288 7,254 (417) 15,220
Other comprehensive income
(loss) (591) 191 814 974
-------- -------- --------- ---------
Comprehensive income $697 $7,445 $397 $16,194
======== ======== ========= =========
Earnings (Loss) Per Common Share:
Basic $0.07 $0.41 $(0.02) $0.85
Diluted $0.07 $0.40 $(0.02) $0.83
Weighted Average Shares
Outstanding:
Basic 18,327 17,847 18,304 17,819
Diluted 18,602 18,998 18,304 19,009
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended March 31, 2004 and 2003
(in thousands)
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(417) $15,220
Adjustments to reconcile net income (loss) to cash
provided by operations-
Depreciation and amortization 14,713 12,942
Stock option tax benefits 86 446
Undistributed earnings from joint venture (762) -
Other 716 248
Changes in assets and liabilities, net of
businesses acquired and disposed-
Accounts receivable, net 17,351 10,561
Accounts payable and accrued expenses (6,276) (9,932)
Income taxes receivable and payable (4,934) 949
Inventories (12,144) (2,496)
Prepaid royalties and accrued royalties (3,320) (6,396)
Other (2,080) (5,046)
-------- --------
Net cash provided by operating
activities 2,933 16,496
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (13,443) (20,307)
Acquisition of businesses (2,439) (603)
Other 503 -
-------- --------
Net cash used in investing activities (15,379) (20,910)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt borrowings - German mortgage - 3,001
Long-term debt repayments (403) (422)
Common stock purchases for treasury - (2,024)
Dividends paid - common shareholders (1,829) (1,070)
Dividends paid - minority interest shareholders (1,149) (730)
Stock option and other exercise proceeds 145 394
-------- --------
Net cash used in financing activities (3,236) (851)
-------- --------
Effect of exchange rates on cash and cash
equivalents 180 477
-------- --------
Net change in cash and cash equivalents (15,502) (4,788)
Cash and cash equivalents, beginning of period 49,462 69,585
-------- --------
Cash and cash equivalents, end of period $33,960 $64,797
======== ========
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Reconciliation of EBITDA to GAAP Reporting
Three and Six Months Ended March 31, 2004 and 2003
(in thousands)
Three Months Ended Six Months Ended
2004 2003 2004 2003
-------- -------- -------- ---------
Income (Loss) Before Income
Taxes $2,071 $11,506 $(670) $24,313
Interest Expense 471 610 902 1,189
Depreciation and Amortization:
Depreciation - cost of sales 4,849 4,407 10,174 8,247
Depreciation - operating
expenses 1,355 1,451 2,655 2,960
Amortization of licenses and
other intangibles 943 835 1,884 1,735
-------- -------- ---------- ----------
Total depreciation and
amortization 7,147 6,693 14,713 12,942
-------- -------- ---------- ----------
Earnings Before Interest,
Taxes, Depreciation and
Amortization (EBITDA) $9,689 $18,809 $14,945 $38,444
======== ======== ========== ==========
The company supplements its consolidated financial statements under generally accepted accounting principles (GAAP) with a presentation of EBITDA, a non-GAAP financial measure. Action Performance considers EBITDA to be an important indicator of its operating margin. EBITDA should be considered an addition to, not a substitute for, the company's other measures of financial performance reported in the consolidated financial statements in accordance with GAAP.
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Calculation of Free Cash Flow
(in thousands)
Three Months Six Months
Ended Ended
12/31/2003 3/31/2004 3/31/2004
----------- ---------- ----------
Cash Flow From Operating Activities $(3,729) $6,662 $2,933
Capital Expenditures, Net (7,703) (5,740) (13,443)
--------- ------- ----------
Free Cash Flow $(11,432) $922 $(10,510)
========= ======= ==========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion