BHA Group Holdings, Inc. Announces First Quarter 2004 Operating Results.Business Editors KANSAS CITY Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Mo.--(BUSINESS WIRE)--Jan. 21, 2004 For the quarter ended December December: see month. 31, 2003 ("fiscal 2004"), BHA BHA butylated hydroxyanisole, an antioxidant used in foods, cosmetics, and pharmaceuticals that contain fats or oils. BHA n. A white, waxy phenolic antioxidant used to preserve fats and oils, especially in foods. Group Holdings, Inc.'s (Nasdaq:BHAG BHAG Big Hairy Audacious Goal BHAG Bad Honnef Aktiengesellschaft (Bad Honnef, Germany) ) consolidated net income was $3.1 million or $.47 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Consolidated net income was $2.9 million or $.45 per diluted share for the same period in the prior year. Consolidated revenues were $42.7 million for the quarter, a 15% decline as compared to the same period in the prior year. Commenting on the results, James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Lund, President and Chief Executive Officer, said: "The results for the first quarter are reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the strength the Company has in the diversity of its businesses. Year-over-year earnings have increased despite a decline in sales due to exceptional gross margin performance. Gross margins increased across all segments due to improved sales mix sales mix See product mix. , increased production volumes in the ePTFE membrane membrane, structure composed mostly of lipid and protein that forms the external boundary of cells and of major structures within cells. Membrane organization is based on a sheet two molecules thick—a double layer of lipids aligned with their long hydrocarbon business and lower manufacturing costs. In particular, the strong results in our ePTFE membrane business had a positive impact on consolidated earnings. We are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that U.S. manufacturing, as it impacts our fabric filter business, will show gradual improvement over the coming quarters. The results in the domestic ESP (1) (Enhanced Service Provider) An organization that adds value to basic telephone service by offering such features as call-forwarding, call-detailing and protocol conversion. area of our business were in line with internal expectations. We saw an increase in international orders during the last 90 days which has had a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact on the Company's overall 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. as we move into the second quarter." The following table provides a breakdown of consolidated revenues and pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. by segment (dollars in millions):
Quarter Ended
December 31,
2003 2002
---- ----
Revenues:
Domestic Air Pollution Control (APC) Segment
U.S. Fabric Filter 17.6 17.0
U.S. Electrostatic Precipitator (ESP) 9.3 20.5
U.S. Exports to Latin America and Asia 3.5 3.3
---- ----
Total Domestic APC Segment 30.4 40.8
Europe APC Segment 7.0 5.4
BHA Technologies Segment 5.3 3.9
---- ----
Total Revenues 42.7 50.1
==== ====
Pretax Earnings:
Domestic APC Segment 2.9 4.0
Europe APC Segment 0.3 (0.2)
BHA Technologies Segment 1.5 0.5
---- ----
Total Pretax Earnings 4.7 4.3
==== ====
Revenues Consolidated revenues for the quarter decreased $7.4 million or 15% as compared to the same period in the prior year. Revenues for the Domestic Air Pollution Control (APC (1) (American Power Conversion Corporation, West Kingston, RI, www.apcc.com) The leading manufacturer of UPS systems and surge suppressors, founded in 1981 by Rodger Dowdell, Neil Rasmussen and Emanual Landsman, three electronic power engineers who had worked at MIT. ) Segment decreased 25%. Going into the quarter, the Company had provided guidance that it expected a year-over-year decline in sales for this business segment due to the unusually strong revenues of the ESP portion of this segment in the prior year. The timing of execution of major project work tends to cause fluctuations in quarterly sales results. The $11.2 million decrease in sales for the ESP portion of the Domestic APC segment was offset in part by a modest increase in fabric filter replacement parts sales in the U.S. and export markets which corresponds to improving business conditions. On a U.S. dollar basis, sales for the Europe APC Segment increased 29% over the prior year. On a local currency basis, sales in Europe increased 9%. BHA Technologies' sales to third parties increased by 36% due in large part to continued success in selling membrane products for use in non-consumer apparel applications. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern Earnings Pretax earnings for the quarter increased $0.4 million or 9% as compared to the prior year. The Company's pretax earnings increased despite lower sales due to improved gross margins. Gross margin as a percentage of sales was 36.3% and 30.4% for the first quarter of fiscal 2004 and 2003, respectively. The improved gross margins were attributable to a combination of sales mix and cost reductions. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: as a percentage of sales were 11.2% and 8.8% for the first quarter of fiscal 2004 and 2003, respectively. Cash Flows During the first quarter of fiscal 2004, the Company's cash flows from operations resulted in a net use of cash of $4.1 million. The use of cash to fund operations, despite the increase in net earnings, is largely attributable to increases in inventories and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying related to the timing of project work and annual funding of incentive bonus plans and retirement contributions during the first quarter. Cash was also used during the quarter to invest $0.8 million in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → , to fund $3.1 million in dividends and to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. $0.4 million of the Company's common stock. Additionally, the Company spent $0.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a product line acquisition that will expand the Company's offering in the area of acoustic cleaning Acoustic cleaning is used wherever there is a build up of dry materials and particulates which need to be cleaned regularly to ensure maximum efficiency and minimize maintenance and down time. systems. Backlog BHA's backlog was $68.0 million at December 31, 2003. This compares with order backlogs of $60.4 million at September 30, 2003, and $47.5 million at December 31, 2002. Approximately $57.9 million (85%) of the backlog at December 31, 2003, is scheduled to ship within the next 12 months. At September 30, 2003, approximately $44.0 million (73%) of the backlog was scheduled for shipment during fiscal 2004. Substantially all of the December 31, 2002, backlog was scheduled to ship in the subsequent 12 months. Outlook One of the Company's primary business goals is to increase compounded earnings per share at a 12% to 15% rate over time. Between fiscal 2000 and 2003, the Company's consolidated earnings per diluted share increased at a 19% compounded rate. The overall financial condition of the Company has improved as bank borrowings, net of cash, were reduced by $30.0 million during the three-year period. The Company's earnings growth during that period was the result of an increase in ESP parts and service work for electric utility customers in the U.S. and the success of BHA Technologies. These areas of the Company's business provided strength to offset the overall weakness the Company experienced in its worldwide fabric filter replacement parts and service business. Although its financial results have varied by segment, the Company believes it has improved its market position and competitive advantage in each of its major business areas. The following are various factors for consideration as the Company moves into its second quarter: -- Publicly available information provides an indication that the U.S. economy is improving. Based on historical trending, the Company continues to believe that improvement in its market for the sale of fabric filter replacement parts and services will likely trail an improvement in overall manufacturing conditions by as much as six months. Although the Company saw some improvement in new orders during the first quarter, it expects that competition will remain intense for at least the next several quarters. The Company believes that it is well positioned with its products, people and approach to servicing this market. These factors, combined with a lower cost structure, are expected to benefit the Company as business conditions improve. -- The Company believes that over the past three years it has established itself as the premier supplier for ESP replacement parts, services and rebuilds in the U.S. The Company has also been successful in expanding this business in certain international markets. The Company's overall ESP replacement parts and service results achieved record levels during fiscal 2003. The Company's system for tracking project work to be executed over the next few years provides an indication that this market will continue to provide good opportunity for BHA. This same tracking information led the Company to predict the decline in ESP rebuild work executed by customers during the fall 2003 outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. season. The Company believes that work to be executed in the spring 2004 outage season will also be lower than the same period in the prior year. Preliminary information available to the Company provides an indication that business should again start to increase during the fall 2004 and spring 2005 outage seasons. This factor, combined with the Company's existing backlog of business scheduled for the next fiscal year, are early positive indicators of potential results for fiscal 2005. -- The Company is pleased with its sales and earnings growth in the BHA Technologies segment. The Company believes this segment is well positioned for additional growth during fiscal 2004. Incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. third party revenues within this segment are likely to be structured under multi-year supply arrangements with new customers. The extent to which this segment will increase its sales and earnings beyond fiscal 2004 will be dependent upon the timing of final product commercialization and order execution in its target markets. Due to the factors discussed above, visibility with respect to future results beyond 90 days remains a challenge. For more information, you should refer to the sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Outlook" and "Factors Affecting Earnings and Share Price" included in the Company's Annual Report on 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. filed with the Securities and Exchange Commission on November 11, 2003. The following is specific guidance being provided for the second quarter of fiscal 2004: -- For the second quarter of fiscal 2004, the Company anticipates that consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight will be higher than the same period in the prior year by as much as 10%. -- Gross margins and operating margins as a percentage of sales are expected to be lower in the second quarter than in the just completed period. The backlog includes a mix of larger orders of lower margin products and services. -- Earnings for the second quarter of fiscal 2004 are expected to be in the range of $.48 to $.58 per diluted share as compared to $.52 reported for the same period in the prior year. Other Actions The Company also reports that it has accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. 2.6 million shares of the 4.0 million shares of BHA common stock authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by its Board of Directors for repurchase. BHA Group Holdings, Inc. is a world leader in innovative filtration filtration: see sewerage; water supply. Filtration The separation of solid particles from a fluidsolids suspension of which they are a part by passage of most of the fluid through a septum or membrane that retains most of the solids technology. Its two principal operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. are BHA Group, Inc., the world's largest supplier of replacement parts and services for industrial air pollution control systems, and BHA Technologies, Inc., which manufactures and markets expanded polytetrafluoroethylene expanded polytetrafluoroethylene (ePTFE) (ekspan´did pol´ētet´r  -fl (ePTFE) membrane products for use in a variety
of industrial and consumer products.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. that reflect the Company's current views with respect to future events and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "should," "believe," "anticipate," "expect," and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the performance of newly established domestic and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , demand and price for the Company's products and services, and other factors. You should also consult the sections entitled "Factors Affecting Earnings and Stock Price" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial " included in the Company's report on Form 10-K which was filed with the Securities & Exchange Commission on November 11, 2003.
BHA GROUP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
& BALANCE SHEETS
(In millions except per share amounts)
Quarter Ended
December 31,
2003 2002
---- ----
Net sales $42.7 $50.1
---- ----
Gross margin 15.5 15.2
Operating expense 10.7 10.8
Interest expense, net .1 .1
---- ----
Earnings before income taxes 4.7 4.3
Income tax expense 1.6 1.4
---- ----
Net income $3.1 $2.9
==== ====
Diluted shares outstanding 6.6 6.4
==== ====
Diluted earnings per share $0.47 $0.45
==== ====
Depreciation and amortization $1.4 $1.5
==== ====
The earnings per share figures in this press release are computed on a "diluted" basis as defined under Statement of Financial Accounting Standards No. 128, "Earnings per Share."
December 31, September 30,
2003 2003
---- ----
Cash and equivalents $9.8 $18.8
Accounts receivable 30.9 28.8
Inventories 27.1 23.5
Other current assets 5.9 5.2
---- ----
Total current assets 73.7 76.3
PP&E and other assets 39.9 40.4
---- ----
Total assets $113.6 $116.7
===== =====
Current debt and lease payments $2.3 $2.5
Accounts payable and accruals 19.3 23.5
---- ----
Total current liabilities 21.6 26.0
Long-term debt and capital leases 13.3 12.2
Other liabilities 3.1 3.1
---- ----
Total liabilities 38.0 41.3
Equity 75.6 75.4
---- ----
Total liabilities and equity $113.6 $116.7
===== =====
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion