Brush Engineered Materials Inc. Reports First Quarter Sales up 4% and Net Income up 14% Compared to Prior Year.CLEVELAND Cleveland, former county, England Cleveland, former county, NE England, created under the Local Government Act of 1972 (effective 1974). It was composed of the county boroughs of Hartlepool and Teeside and parts of the former counties of Durham and -- Brush Engineered Materials Brush Engineered Materials Inc. is a multinational company specializing in high performance engineered materials emphasizing the qualities of strength, reliability, miniaturization and weight savings, thermal dissipation, electrical conductivity and reflectivity. Inc. (NYSE NYSE See: New York Stock Exchange :BW) today reported first quarter net income of $4.3 million, up 14% compared to the first quarter 2004 net income of $3.8 million. Earnings per share 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. was $0.22, unchanged from the first quarter of 2004. Sales were $130.4 million, up 4% compared to the first quarter 2004 sales of $125.9 million. Metal prices and currency accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. half of the sales increase. First quarter 2005 was the ninth consecutive quarter where sales were higher than the comparable quarter of the prior year. The improvement in net income from the higher sales volume was partially offset by lower margins from an unfavorable product mix, higher copper prices and lower production levels compared to the prior year. In addition, the Company recorded a charge in the first quarter of 2005 of approximately $0.6 million, or $0.03 per share, for the unamortized financing costs associated with the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of $18.6 million of term loans. The increase in sales for the first quarter of 2005 was due to strength in the magnetic media, semiconductor and industrial component markets as well as sales of materials for the optical mirrors for NASA's James Webb Space Telescope This article or section documents a scheduled or expected spaceflight. Details may change as the launch date approaches or more information becomes available. . In addition, new product sales in the first quarter exceeded expectations. Sales were negatively impacted during the latter part of the quarter from weakness in the Company's largest markets, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and computer and automotive electronics. Business Segment Reporting Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. Metal Systems Group: The Metal Systems Group consists of Alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. Products, Technical Materials, Inc. (TMI TMI Too Much Information TMI Three Mile Island TMI TRMM Microwave Imager TMI Transactions on Medical Imaging TMI Texas Military Institute TMI Teen Missions International TMI Tauber Manufacturing Institute ), Beryllium beryllium (bərĭl`ēəm) [from beryl ], metallic chemical element; symbol Be; at. no. 4; at. wt. 9.01218; m.p. about 1,278°C;; b.p. 2,970°C; (estimated); sp. gr. 1.85 at 20°C;; valence +2. Products and Brush brush a bushy tail in dogs. brush Cytology A disposible with synthetic 'whiskers', used to scrape cells from mucosal surfaces. See Endocervical brush. Resources Inc. The Metals Systems group now includes Brush Resources Inc., our Utah mine and mill, which previously was classified in Other. This reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. better reflects how the operations are now managed. Brush Resources produces beryllium hydroxide Beryllium hydroxide is one of the few amphoteric metal hydroxides, capable of being an acid or a base under different conditions. For example, it dissolves in sodium hydroxide solution to give a colourless solution of sodium beryllate: 2NaOH(aq) + Be(OH)2 , a raw material input for our beryllium businesses and for sale to external customers. Prior year results have been adjusted to reflect the change. Brush Resources Inc. did not have any third party sales in the first quarters of 2005 and 2004. The Metal Systems Group's first quarter sales of $79.5 million were 5% higher than first quarter 2004 sales of $76.0 million. The first quarter operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $2.6 million was flat with the first quarter of 2004. Alloy Products' first quarter sales of $52.6 million were slightly above first quarter 2004 sales of $52.5 million. Alloy experienced strong growth during the quarter in its bulk form products which were up approximately 20%, driven by strength in the oil and gas, aerospace and heavy equipment markets. Much of this growth is from new products. This strength was offset by weakness, especially in the latter part of the quarter, from the telecommunications and computer and automotive electronics markets. Alloy Products' results were negatively impacted by higher copper prices and a weaker product mix as compared to the first quarter of 2004. TMI's first quarter sales of $12.7 million were down 7% from first quarter 2004 sales of $13.7 million. The sales decrease is primarily due to the fall off in the telecommunications and computer and automotive electronics markets. Beryllium Products' first quarter sales of $14.2 million increased 46% over first quarter 2004 sales of $9.7 million. The increase includes sales of material for the optical mirrors for NASA's James Webb Space Telescope, continued strength in defense and strong commercial sales from the Electrofusion Products business. It is anticipated that Beryllium Products' sales will slow in the second half of 2005. Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. Group: The Microelectronics Group includes Williams Advanced Materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, Inc. (WAM WAM - Intermediate language for compiled Prolog, used by the Warren Abstract Machine. "An Abstract Prolog Instruction Set", D.H.D. Warren, TR 309, SRI 1983. ) and Electronic Products. The Microelectronics Group's first quarter 2005 sales of $50.9 million were 2% above the first quarter 2004 sales of $49.9 million. Operating profit of $3.7 million was down 33% from first quarter 2004 operating profit of $5.5 million. WAM's first quarter sales of $44.2 million were 5% higher than first quarter 2004 sales of $42.1 million. The increase in sales was driven by strong demand from the magnetic media and semiconductor markets. This strength was partially offset by weakness in the wireless photonic Dealing with light (photons). See photon and photonics. handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. market. The outlook for magnetic media, performance film and semiconductor product applications remains strong for the second quarter. Electronic Products' first quarter 2005 sales of $6.7 million were down 14% from first quarter 2004 sales of $7.8 million. Sales were negatively affected by weakness in the wireless telecommunications market. Operating profit in the segment, compared to prior year, was negatively affected by market shifts and related changes in mix which led to lower margins. In addition, operating profit was negatively affected by differences in inventory valuation adjustments between the two periods and increases in costs allocated by the corporate office. Outlook The Company began to experience weakness in its two largest markets, telecommunications and computer and automotive electronics, in the latter part of the first quarter. The market weakness has continued into the second quarter. The softness however is being offset in part by continued strength from the magnetic media, semiconductor and industrial component markets. New product growth is also helping to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the
weaker telecommunications and computer and automotive electronics market
conditions. New product opportunities remain encouraging. Although lead
times are short and forecasting in this market environment continues to
be difficult, we currently expect the sales growth for the year to be in
the 4 to 8% range. Second quarter 2005 sales are currently expected to
be similar to the first quarter 2005 with an upside UpsideThe potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside or downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. potential of 5%. While earnings for the year are still expected to be up significantly compared to prior year, we currently expect that it will be below the $1.30 earnings per share low end of the previously announced range. Chairman's Comments Commenting on the results, Gordon Gordon, river in W Tasmania, Australia, 125 mi (200 km) long. Flowing from mountains to the W coast, its main tributaries are the Franklin and Denison from the N, and Serpentine and Olga to the S. D. Harnett, President, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "While I am pleased with the continued growth in revenue and net income for the first quarter of 2005, results were below my expectations. Although conditions in some of our key markets appear to have weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak en·er n. , we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about conditions in our other markets and our ability to grow our new products which are targeted at broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad and diversifying our base. We remain committed to strong organic growth and continuing to improve our operations, reducing costs and growing shareholder value." 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. Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. The Company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: --The global economy; --The condition of the markets the Company serves, whether defined geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge or by segment, with the major market segments being telecommunications and computer, automotive electronic, magnetic and optical data storage, aerospace and defense, industrial components, and appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. ; --Changes in product mix and the financial condition of customers; --The Company's success in implementing its strategic plans and the timely and successful completion of any capital projects; --The availability of adequate lines of credit and the associated interest rates; --Other financial factors, including cost and availability of materials, tax rates, exchange rates, pension costs, energy costs, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. compliance costs, and the cost and availability of insurance; --The uncertainties related to the impact of war and terrorist activities; --Changes in government regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and the enactment of new legislation that impacts the Company's obligations; and --The conclusion of pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. matters 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 the Company's expectation that there will be no material adverse effects. Brush Engineered Materials Inc. is headquartered in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . The Company, through its wholly-owned subsidiaries, supplies worldwide markets with beryllium products, alloy products, electronic products, precious metal products, and engineered material systems.
Brush Engineered Materials Inc.
Digest of Earnings
April 1, 2005
2005 2004
------------- -------------
First Quarter
Net Sales $130,372,000 $125,862,000
Net Income $4,286,000 $3,754,000
Share Earnings - Basic $0.22 $0.23
Average Shares - Basic 19,197,476 16,618,565
Share Earnings - Diluted $0.22 $0.22
Average Shares - Diluted 19,411,560 16,980,786
Consolidated Balance Sheets
(Unaudited)
Apr. 1, Dec. 31,
(Dollars in thousands) 2005 2004
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 9,677 $ 49,643
Accounts receivable 65,863 59,229
Inventories 99,650 95,271
Prepaid expenses 7,617 8,348
Deferred income taxes 24 275
----------- -----------
Total current assets 182,831 212,766
Other assets 14,172 14,876
Long-term deferred income taxes 925 928
Property, plant and equipment 542,768 540,937
Less allowances for depreciation,
depletion and impairment 368,088 363,318
----------- -----------
174,680 177,619
Goodwill 7,992 7,992
----------- -----------
$ 380,600 $ 414,181
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt $ 10,948 $ 11,692
Current portion of long-term debt 636 19,209
Accounts payable 16,345 13,234
Other liabilities and accrued items 32,105 50,452
Unearned revenue 2,537 7,789
Income taxes 1,415 1,591
----------- -----------
Total current liabilities 63,986 103,967
Other long-term liabilities 9,789 10,798
Retirement and post-employment benefits 50,370 49,729
Long-term debt 41,515 41,549
Shareholders' equity 214,940 208,138
----------- -----------
$ 380,600 $ 414,181
=========== ===========
See notes to consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
First Quarter Ended
(Dollars in thousands except share and per April 1, April 2,
share amounts) 2005 2004
----------------------------------------------------------------------
Net sales $ 130,372 $ 125,862
Cost of sales 101,795 96,285
----------- -----------
Gross margin 28,577 29,577
Selling, general and administrative
expense 18,701 19,048
Research and development expense 1,241 1,268
Other-net 2,211 3,190
----------- -----------
Operating profit 6,424 6,071
Interest expense 1,622 2,218
----------- -----------
Income before income taxes 4,802 3,853
Income taxes 516 99
----------- -----------
Net income $ 4,286 $ 3,754
=========== ===========
Per share of common stock: basic $ 0.22 $ 0.23
Weighted average number
of common shares outstanding 19,197,476 16,618,565
Per share of common stock: diluted $ 0.22 $ 0.22
Weighted average number
of common shares outstanding 19,411,560 16,980,786
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
April 1, April 2,
(Dollars in thousands) 2005 2004
----------------------------------------------------------------------
Net income $ 4,286 $ 3,754
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation, depletion and amortization 5,343 5,396
Amortization of deferred financing costs in
interest expense 304 362
Derivative financial instrument
ineffectiveness (510) 482
Decrease (increase) in accounts receivable (7,059) (12,121)
Decrease (increase) in inventory (5,024) (7,684)
Decrease (increase) in prepaid and other
current assets 941 (290)
Increase (decrease) in accounts payable and
accrued expenses (11,413) 2,437
Increase (decrease) in unearned revenue (5,252) -
Increase (decrease) in interest and taxes
payable (1,600) (1,147)
Increase (decrease) in other long-term
liabilities 949 (1,128)
Other - net 826 800
---------- ----------
Net cash used in operating activities (18,209) (9,139)
Cash flows from investing activities:
Payments for purchase of property, plant and
equipment (2,179) (1,356)
Payments for mine development - (90)
Purchase of equipment previously held under
operating lease (448) -
Proceeds from sale of property, plant and
equipment 25 15
Other investments - net (16) 39
---------- ----------
Net cash used in investing activities (2,618) (1,392)
Cash flows from financing activities:
Proceeds from issuance/(repayment) of short-
term debt (717) 8,983
Proceeds from issuance of long-term debt - 24
Repayment of long-term debt (18,607) (60)
Issuance of common stock under stock option
plans 249 1,883
---------- ----------
Net cash provided from (used in)
financing activities (19,075) 10,830
Effects of exchange rate changes (64) (23)
---------- ----------
Net change in cash and cash
equivalents (39,966) 276
Cash and cash equivalents at
beginning of period 49,643 5,062
---------- ----------
Cash and cash equivalents at
end of period $ 9,677 $ 5,338
========== ==========
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
Note A - Accounting Policies
In management's opinion, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position as of April 1, 2005 and December 31, 2004 and the
results of operations for the three month periods ended April 1, 2005
and April 2, 2004. All of the adjustments were of a normal and
recurring nature. Certain items in the prior year have been
reclassified to conform to the 2005 consolidated financial statement
presentation.
Note B - Inventories
Apr. 1, Dec. 31,
(Dollars in thousands) 2005 2004
---------------------------------------------------------
Principally average cost:
Raw materials and supplies $25,825 $22,705
Work in process 75,805 77,438
Finished goods 30,135 27,538
----------- ------------
Gross inventories 131,765 127,681
Excess of average cost over LIFO
Inventory value 32,115 32,410
----------- ------------
Net inventories $99,650 $95,271
=========== ============
Notes to Consolidated Financial Statements
(Unaudited)
Note C - Comprehensive Income
The reconciliation between net income and comprehensive income for the
three month periods ended April 1, 2005 and April 2, 2004 is as
follows:
First Quarter Ended
Apr. 1, Apr. 2,
(Dollars in thousands) 2005 2004
----------------------------------------------------------
Net income $4,286 $3,754
Cumulative translation
adjustment (874) 225
Change in the fair value of
derivative financial
instruments 3,261 928
------------ ------------
Comprehensive income $6,673 $4,907
============ ============
Note D - Segment Reporting
Effective January 1, 2005, the operating results of Brush Resources
Inc. are included as part of the Metal Systems Group. Previously, the
operating results of Brush Resources were included as part of All
Other in the segment disclosures. Brush Resources sells beryllium
hydroxide, produced through its Utah operations, to outside customers
and to businesses within the Metal Systems Group. This change is more
reflective of how the Company's businesses are evaluated. The 2004
amounts presented below have been reclassified to reflect this change.
Metal Micro- Total All
(Dollars in Systems Electronics Segments Other Total
thousands)
----------------------------------------------------------------------
First Quarter 2005
---------------------
Revenues from
external customers $79,481 $50,891 $130,372 $- $130,372
Intersegment
revenues 591 230 821 - 821
Operating profit 2,618 3,696 6,314 110 6,424
First Quarter 2004
---------------------
Revenues from
external customers $75,958 $49,904 $125,862 $- $125,862
Intersegment
revenues 1,214 296 1,510 - 1,510
Operating profit
(loss) 2,598 5,489 8,087 (2,016) 6,071
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