BHA Group Holdings, Inc. Announces Fourth Quarter 2000 and Full-Year 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)--Nov. 8, 2000 For the quarter ended September 30, 2000, 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 $1.5 million, or $.22 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, compared to a fourth quarter 1999 net loss of $.7 million, or $.10 per diluted share. For the year, BHA's consolidated net income was $6.0 million, or $.90 per diluted share, compared to $1.1 million, or $.15 per diluted share, in 1999. 1999 quarter and full-year results were negatively impacted by restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expenses and unusual charges discussed elsewhere in this news release. The following table summarizes BHA's 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 Year Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues
Domestic Air Pollution Control
(APC) Segment
U.S. Fabric Filter 20.6 20.0 88.0 79.0
U.S. Electrostatic
Precipitator (ESP) 4.5 11.3 27.2 37.6
U.S. Exports to Latin America
and Asia 4.9 4.3 19.2 17.2
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Total Domestic APC Segment 30.0 35.6 134.4 133.8
Europe APC Segment 5.1 4.9 20.1 20.1
BHA Technologies Segment 2.9 0.7 6.6 1.8
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Total Revenues 38.0 41.2 161.1 155.7
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Pretax Earnings
Domestic APC Segment 2.5 3.9 10.9 10.9
Europe APC Segment (0.1) (1.5) (0.8) (2.7)
BHA Technologies Segment 0.1 (3.4) (0.6) (6.5)
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Total Pretax Earnings 2.5 (1.0) 9.5 1.7
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Note on Restructuring Expense and Unusual Charges Included in Cost of Goods Sold During 1999 During fiscal 1999, the Company incurred unusual charges (included in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold ) and restructuring expenses totaling $2.7 million in the fourth quarter and $6.4 million for the year. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings for the fourth quarter and fiscal year 1999 with these charges added back were $1.7 million and $8.1 million, respectively. Consolidated revenues for the quarter declined $3.2 million or 8% as compared to the same period in the prior year. During the fourth quarter of fiscal 1999, a number of 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. rebuild orders relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc emergency customer outages were secured and executed. Year-over-year quarterly revenues showed a decline as similar orders were not received during the fourth quarter of this year. Consolidated revenues for the year increased $5.4 million or 3% over the prior year. The increase in revenues is attributable to an 11% increase in domestic fabric filter sales combined with higher U.S. export sales of 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. replacement parts and third-party sales of ePTFE membrane product sales to non-APC customers. These increases for the year were offset in part by a $10.4 million decline in domestic ESP replacement parts and service sales. ESP rebuild sales during fiscal 1999 were unusually high and are not typical of what BHA believes to be a sustainable level of sales. Pretax Earnings Pretax earnings for the fourth quarter and fiscal year increased $.8 million (47%) and $1.4 million (17%) over the same amounts in the prior fiscal year (with one-time charges added back). The improvement in pretax earnings for the year is largely attributable to an increase in gross margin as a percentage of sales. Gross margin as a percentage of sales for fiscal 2000 was 30.6%. This compares to 29.6% (with one- time charges added back) in the prior year. A more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mix of products sold emphasizing fine 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 and better overall manufacturing plant utilization were the primary drivers behind the improvement in gross margin as a percentage of sales. SG&A as a percentage of sales was 23.5% for the current year, as compared to 23.2% in the prior year. This increase is due primarily to higher retirement plan and incentive bonus expense during the current year. The funding of each of these programs is variable based upon corporate earnings. Current year SG&A also reflects higher expenses relating to BHA's IT initiatives and costs associated with foreign exchange losses. Interest expense for the year was flat as compared to the prior year as higher U.S. interest rates relating to BHA's variable rate borrowings were offset by a reduction in amounts outstanding. BHA's effective income tax rate for the year was 36.7% for the current year, as compared to 34.7% in the prior year. The higher income tax rate in the current year was the result of losses by certain foreign subsidiaries for which the Company did not recognize income tax benefits during the year. The improvement in pretax earnings for the 2000 quarter as compared to the prior year reflects significant improvements in the Europe APC and BHA Technologies segments. Such improvements were partially offset by a decline in profitability in the domestic APC segment which resulted from the $6.8 million decline in ESP rebuild volume as discussed above. Cash Flows For fiscal 2000, BHA produced 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 and free cash flow (defined as cash flows from operations less capital expenditures) of $17.1 million and $10.7 million, respectively. These results represent sharp increases over the prior year. Free cash flow was used to purchase $3.6 million of treasury stock and pay cash dividends totaling $.8 million. For the year, BHA repaid $3.4 million of bank debt, net, and increased its cash-on-hand position by $3 million. 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. BHA's backlog was $52.7 million at September 30, 2000. This compares with order backlogs of $47.9 million at June 30, 2000, and $47.2 million at September 30, 1999. Other Actions BHA announced that the Board of Directors has declared a cash dividend of $.03 per share payable on November 27, 2000, to shareholders of record at the close of business on November 20, 2000. BHA also announced that the Board has 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: an additional 500,000 shares in BHA's stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, increasing the total number of shares approved for 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. under that program to 3.0 million. BHA reports that through September 30, 2000, it had 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. 2.0 million shares of BHA common stock through share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . BHA Group Holdings, Inc. is a world leader in innovative filtration 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 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: "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 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. , which will be filed with the Securities & Exchange Commission on or about November 8, 2000.
BHA GROUP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
& BALANCE SHEETS
(In millions except per-share amounts)
Quarter Ended Year Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Net sales $ 38.0 $ 41.2 $ 161.1 $ 155.7
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Gross margin 12.5 11.3 49.4 41.9
Operating expense (a) 9.5 11.7 37.9 38.2
Interest expense, net .5 .6 2.0 2.0
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Earnings (loss) before income taxes 2.5 (1.0) 9.5 1.7
Income tax expense (benefit) 1.0 (.3) 3.5 .6
------ ------- ------- -------
Net income (loss) $ 1.5 $ (.7) $ 6.0 $ 1.1
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Diluted shares outstanding 6.7 7.0 6.7 7.1
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Diluted earnings (loss) per share $ 0.22 $(0.10) $ 0.90 $ 0.15
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Depreciation and amortization $ 1.3 $ 1.6 $ 5.6 $ 6.0
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(a) Operating expense in the fourth quarter of fiscal 1999
included $2.2 million of restructuring charges.
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."
September 30, September 30,
2000 1999
---- ----
Cash and equivalents $ 3.9 $ .9
Inventories 26.3 28.0
Accounts receivable 31.6 28.3
Other current assets 5.0 4.7
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Total current assets 66.8 61.9
PP&E and other assets 45.4 46.2
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Total assets $ 112.2 $ 108.1
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Current debt and lease payments $ 2.7 $ 2.9
Accounts payable and accruals 20.8 15.7
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Total current liabilities 23.5 18.6
Long-term debt and capital leases 24.8 27.9
Other liabilities 4.1 2.7
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Total liabilities 52.4 49.2
Equity 59.8 58.9
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Total liabilities and equity $ 112.2 $ 108.1
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