BHA Group Holdings, Inc. Announces Record Operating Results for Fiscal 2001.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. 6, 2001 For the year ended September 30, 2001, 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. (Nasdaq:BHAG BHAG Big Hairy Audacious Goal BHAG Bad Honnef Aktiengesellschaft (Bad Honnef, Germany) ) is pleased to report record sales and earnings 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. Fiscal 2001 consolidated net income was $7.2 million, or $1.11 per diluted share, compared to $6.0 million, or $0.90 per diluted share for the prior year. For the fourth quarter, BHA's consolidated net income was $1.5 million in both fiscal 2001 and 2000. 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 for the September 2001 quarter were $0.23 as compared to $0.22 in the prior year, as the Company's stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program has resulted in fewer outstanding shares. The Company achieved these record sales and earnings per diluted share despite a difficult business environment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. that led to a decline in its domestic fabric filter business. Strong business activity with electric utilities for BHA's electrostatic precipitator Noun 1. electrostatic precipitator - removes dust particles from gases by electrostatic precipitation Cottrell precipitator, precipitator electrical device - a device that produces or is powered by electricity (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. ) group helped offset cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. weaknesses experienced by many of the Company's customers in the traditional industrial markets. Improvement in the Company's Asian and Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. business, along with a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. for the Europe 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 and reduced losses by BHA Technologies, also contributed to the record results. James E. Lund, President and Chief Executive Officer, said: "This past year was a clear indication that our strategy of diverse but related business interests is the right direction for BHA. Our goal is to provide exceptional value to customers in each of our businesses, which requires us to have a broad mix of products, a high level of technical proficiency pro·fi·cien·cy n. pl. pro·fi·cien·cies The state or quality of being proficient; competence. Noun 1. proficiency - the quality of having great facility and competence and a commitment to providing solutions, not just parts. By having this customer-centered focus across each of its businesses and the best employees in the industry, BHA has created a solid foundation for continued success." The following table summarizes BHA's revenues and pre-tax income by segment (dollars in millions):
Quarter Ended Year Ended
September 30, September 30,
2001 2000 2001 2000
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Revenues
Domestic Air Pollution Control
(APC) Segment
U.S. Fabric Filter 20.7 21.3 85.6 90.2
U.S. Electrostatic Precipitator
(ESP) 4.1 4.7 36.0 28.0
U.S. Exports to Latin America
and Asia 5.6 5.0 20.8 19.7
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Total Domestic APC Segment 30.4 31.0 142.4 137.9
Europe APC Segment 5.0 5.1 21.7 20.1
BHA Technologies Segment 3.4 2.9 10.8 6.6
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Total Revenues 38.8 39.0 174.9 164.6
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Pre-Tax Earnings
Domestic APC Segment 2.0 2.5 10.4 10.9
Europe APC Segment (0.1) (0.1) 0.7 (0.8)
BHA Technologies Segment 0.3 0.1 (0.2) (0.6)
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Total Pre-Tax Earnings 2.2 2.5 10.9 9.5
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Consolidated revenues for fiscal 2001 were a record $174.9 million, representing a 6% increase over the prior year due to solid increases in the Company's ESP shipments and in the BHA Technologies' ePTFE membrane business. The Company's sales in Europe increased by 8% when expressed in U.S. dollars, but increased 20% in local currencies. Exports to Asia also contributed to the sales growth. These sales gains were partially offset by a 5% decline in domestic fabric filter replacement parts and service sales which was the result of the continued weakness in the manufacturing sector of the U.S. economy. Consolidated revenues for the fourth quarter were essentially unchanged as compared to the prior year. Modestly lower sales of air pollution control products were largely offset by an increase in sales by BHA Technologies, including an increase in shipments of ePTFE membrane for use in both consumer and non-consumer apparel applications. Pre-Tax Earnings Pre-tax earnings for fiscal 2001 increased 15% as compared to the prior year. For the fourth quarter of fiscal 2001, pre-tax earnings declined due to higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , including 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. provisions for bad debts and recognition of training costs and consulting fees relative to the Company's enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. (ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ) software initiative. Consolidated gross margins for fiscal 2001 were 30.1% of sales, as compared to 30.0% in the prior year. Selling, general and administrative expenses as a percentage of sales were 23.0% in each year. Interest expense, net of interest income, declined by $0.3 million due to lower interest rates as well as lower average borrowings. Improved business results in Europe, an increase in ESP rebuild project work, and improving operating results of BHA Technologies were the primary drivers behind the increase in pre-tax earnings for the year. BHA's effective income tax rate was 33.7% in fiscal 2001, compared to 36.7% in the prior year. The fiscal 2000 tax rate was higher due to losses during that period relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc certain foreign subsidiaries for which BHA did not recognize any tax benefits. Cash Flows For fiscal 2001 and 2000, the Company generated $16.5 million and $15.2 million, respectively, in cash from operations. In fiscal 2001, these funds were used 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. $6.6 million of the Company's common stock, pay cash dividends of $0.7 million, fund capital expenditures of $4.4 million and repay $0.6 million of debt. Cash and cash equivalents increased from $3.9 million at the start of the current fiscal year to $9.5 million at September 30, 2001. Backlog BHA's backlog was $46.4 million at September 30, 2001. This compares with order backlogs of $52.7 million at September 30, 2000, and $45.2 million at June 30, 2001. Outlook The Company is required to adopt Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 142, "Accounting for Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " during fiscal 2003. The Company is electing to adopt SFAS No. 142 early and will implement the standard during fiscal 2002. It is expected that adopting this standard will result in a pre-tax charge during fiscal 2002 of $1.2 million ($0.12 per share) relative to the write-off of goodwill in its Europe segment that is deemed impaired under the provisions of SFAS No. 142. This charge, which represents the cumulative effect of a change in accounting principle, will be recognized during the first quarter of fiscal 2002. The financial impact of this first-quarter charge will be offset in part during fiscal 2002 by the elimination of approximately $0.6 million ($0.06 per share) in amortization expense relating to other intangibles that are not deemed to be impaired. Economic conditions around the world are challenging as businesses are faced with the uncertainties and threats associated with war, terrorist activities and the current recession. The Company is not immune from these significant external factors and a substantial downturn in business resulting from any of the above noted factors would negatively impact financial results. The Company's record fiscal 2001 earnings per diluted share represented a 23% increase over the previous year. Although the Company has confidence in its business strategies and believes that its longer-term earnings growth will compound at a 12% to 15% annual rate, it remains cautious about near-term operating results. The Company does not believe it is appropriate to provide specific guidance with respect to a range of sales or profits for fiscal 2002. Management anticipates that sales and meaningful profit growth during the upcoming fiscal year will be difficult and plans to continue to proactively manage the cost side of its business. Although visibility with respect to future results is a challenge, the Company expects to operate profitably, maximize cash flows and execute strategies to strengthen its competitive position across key business lines. Management believes that BHA is well positioned to weather a global recession and emerge from it stronger than its competitors due to its diverse product offerings, global presence and strong financial position. For the first quarter of fiscal 2002, 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 likely be lower than for the first quarter of the prior year by as much as 5%. Earnings per diluted share for the first quarter are expected to be in the range of $0.24 to $0.29 before the impact of the $1.2 million pre-tax charge related to the adoption of SFAS No. 142. 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 6, 2001. Other Actions BHA announced that the Board of Directors has declared a cash dividend of $.03 per share payable on November 26, 2001, to shareholders of record at the close of business on November 16, 2001. The Company also reports that its Board of Directors has increased the number of 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: for repurchase to 3.5 million shares from 3.0 million shares. The Company 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. 2.5 million shares under it's repurchase program. 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 will be filed with the Securities & Exchange Commission on November 6, 2001.
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,
2001 2000 2001 2000
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Net sales $ 38.8 $ 39.0 $174.9 $164.6
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Gross margin 12.7 12.5 52.7 49.4
Operating expense 10.2 9.5 40.2 37.9
Interest expense, net .3 .5 1.6 2.0
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Earnings before income taxes 2.2 2.5 10.9 9.5
Income tax expense .7 1.0 3.7 3.5
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Net income $ 1.5 $ 1.5 $ 7.2 $ 6.0
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Diluted shares outstanding 6.4 6.6 6.5 6.7
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Diluted earnings per share $ 0.23 $ 0.22 $ 1.11 $ 0.90
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Depreciation and amortization $ 1.3 $ 1.3 $ 5.8 $ 5.6
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EBITDA $ 3.8 $ 4.3 $ 18.5 $ 17.1
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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,
2001 2000
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Cash and equivalents $ 9.5 $ 3.9
Inventories 22.8 26.3
Accounts receivable 29.8 31.6
Other current assets 5.3 5.0
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Total current assets 67.4 66.8
PP&E and other assets 43.8 45.4
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Total assets $111.2 $112.2
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Current debt and lease payments $ 2.5 $ 2.7
Accounts payable and accruals 19.6 20.8
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Total current liabilities 22.1 23.5
Long-term debt and capital leases 24.4 24.8
Other liabilities 3.6 4.1
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Total liabilities 50.0 52.4
Equity 61.1 59.8
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Total liabilities and equity $111.2 $112.2
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