Brush Engineered Materials Inc. Reports Sales up 10% for Fourth Quarter and up 24% for 2004; Fourth Quarter Earnings meet Expectations.CLEVELAND -- 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 earnings for the fourth quarter 2004 of $1.8 million or $0.09 per share on sales of $116.0 million. Net income for the quarter improved by $9.0 million over the 2003 fourth quarter net loss of $7.2 million. The fourth quarter 2003 net loss included a charge of $6.0 million for deferred costs from an interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and other deferred financing costs associated with the restructure of debt and lease obligations. The significant improvement in earnings is due to increased sales volume and improved gross margins. However, the improvement was negatively impacted in the amount of $1.4 million by higher copper prices in the fourth quarter. Fourth quarter 2004 sales were 10% higher than fourth quarter 2003 sales of $105.6 million. The sales increase for the quarter was driven by strength from the data storage, wireless, oil and gas and heavy equipment markets. New product initiatives are contributing to the growth in the oil and gas and heavy equipment markets. This is the eighth consecutive quarter where sales were higher than the corresponding previous year's performance. Sales for 2004 were $496.3 million, up $95.3 million or 24% compared to 2003 sales of $401.0 million. The strong sales growth for the year was driven by a strong recovery in the computer and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market, an improved domestic economy, strength in Europe and Asia and new product initiatives. Copper and precious metal prices and foreign currency exchange rates served to increase sales by 5%. Net income for 2004 was $15.5 million or $0.86 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. , up $28.7 million compared to the 2003 net loss of $13.2 million or $0.80 per share diluted. Higher copper prices negatively impacted earnings for the year by approximately $7.4 million. Balance Sheet The Company finished the year with a much-improved balance sheet and significant financial flexibility. During 2004 the Company successfully completed an equity offering of 2,250,000 newly issued shares sold by the Company and 115,000 shares of common stock sold by selling shareholders to exercise warrants, raising $38.7 million net of fees. The majority of the proceeds from the offering were used to repay outstanding borrowings under the Company's revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. and $5.0 million was used to repay a portion of the Company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". . Total debt at December 31, 2004 was $72.4 million, a reduction of $26.7 million as compared to the balance at December 31, 2003. Cash on the balance sheet at December 31, 2004 was $49.6 million. During the fourth quarter, the Company amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its $105.0 million credit facility to reduce pricing, provide more flexibility and extend the term for an additional year. On January 21, 2005 the Company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $17.9 million of term loans that existed under this credit facility and
has therefore classified such amount as short-term debt Short-term debtDebt obligations, recorded as current liabilities, requiring payment within the year. on the December 31, 2004 Balance Sheet. The interest savings expected in 2005 from the reduction in debt is approximately $2.5 million compared to 2004. Subsequent to the January 21st 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. , the Company's debt-to-debt plus equity ratio was approximately 20%. SEGMENT REPORTING segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four 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 ) and 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. The Metal Systems Group's fourth quarter sales of $70.9 million were 12% higher than the fourth quarter of 2003 sales of $63.5 million. The fourth quarter operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $1.4 million versus an operating loss of $2.4 million for the fourth quarter of 2003. The Metal Systems' 2004 sales of $296.0 million were up 24% over 2003 sales of $239.4 million. 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. for 2004 was $2.7 million, an improvement of $19.3 million, versus an operating loss of $16.6 million for 2003. Alloy Products' fourth quarter sales of $46.7 million were 9% higher than 2003 fourth quarter sales of $42.9 million. Alloy Products' 2004 sales of $202.9 million were $40.6 million or 25% higher than 2003 sales of $162.3 million. Alloy Products experienced significant improvement in sales growth, operating performance and new product initiatives throughout the year. The strong sales growth was driven largely by a more robust telecommunications and computer market as well as continued success in the introduction of new products for the oil and gas, industrial components and electronics markets. This growth was strong in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. . Sales in Japan were softer during the year. Over 16% of the sales growth was from new products. Alloy Products also continued to make significant progress in operating performance during 2004 through its implementation of lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. . The progress included higher manufacturing yields, lower operating costs operating costs npl → gastos mpl operacionales , less unplanned maintenance downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. and higher on-time shipments to customers, all of which helped improve margins. During the second half of the year, particularly in the fourth quarter, Alloy experienced a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in order entry from the telecommunications and computer markets, in part, due to customer inventory adjustments. Order entry has improved in the beginning of the first quarter of 2005. TMI's fourth quarter sales of $11.2 million were 10% higher than fourth quarter 2003 sales of $10.2 million. Sales for 2004 of $53.6 million were 28% higher than 2003 sales of $41.9 million. TMI saw double-digit growth in the first three quarters of 2004 fueled by demand from the telecommunications and computer, automotive electronics and semiconductor markets. Plating and CERDIP (CERamic Dual In-line Package) A type of ceramic DIP chip. It uses a ceramic lid that is bonded to the chip with a glass seal. See DIP, CDIP, CERQUAD and chip package. aluminum clad CLAD canine leukocyte adhesion disease. alloy product applications were particularly strong. TMI's automotive electronics and telecommunications and computer markets weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak en·er n. during the fourth
quarter. This weakness has continued into the first quarter of 2005 and
is in part due to customer inventory adjustments.Beryllium Products' fourth quarter sales of $13.0 million were up 27% over 2003 fourth quarter sales of $10.2 million. Sales for 2004 of $39.5 million were 12% higher than 2003 sales of $35.2 million. The sales growth during the year was fueled by strong demand for defense and medical applications. The fourth quarter 2004 sales were benefited by the program for supplying material 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. . Beryllium production for this program will continue through 2005 and will add approximately $12.0 million in sales. More recently, budget cuts announced by the Department of Defense could have a negative impact on defense sales 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 sales for the fourth quarter 2004 of $45.1 million were 7% higher than fourth quarter 2003 sales of $42.0 million. Sales for 2004 of $195.6 million were 24% higher than 2003 sales of $157.3 million. Operating profit for the fourth quarter was $4.3 million up 54% versus $2.8 million for the fourth quarter of 2003. Operating profit for 2004 was $18.5 million or 47% higher than the 2003 operating profit of $12.6 million. WAM's fourth quarter sales of $38.6 million were 8% higher than 2003 fourth quarter sales of $35.7 million. WAM's 2004 sales of $165.7 million were 30% higher than 2003 sales of $127.8 million. Excluding the effect of precious metal prices, the sales increase is 23% for the year. The strongest growth throughout the year was from wireless and data storage product applications. WAM has continued to grow its international business, especially in Southeast Asia. During 2004, WAM purchased the remaining interest in their Taiwan joint venture and is well positioned to service the continued growth in Asia. Electronic Products' sales in the fourth quarter of $6.5 million were up slightly from 2003 sales of $6.3 million. Electronic Products' sales for 2004 of $29.9 million were about flat with 2003 sales of $29.5 million. Outlook We remain confident that we'll continue to see considerable progress in 2005. Overall, our global markets continue to present double-digit sales growth opportunities. While we don't expect that 2005 will yield the 24% growth that we saw in 2004, we do expect sales growth to be within the estimated 8% to 12% range we've communicated in the past. Given the mix shifts and softness we saw during the fourth quarter of 2004, we anticipate a slower start in 2005 and thus, at this time, expect the full-year growth to be closer to the lower end of that range. Our current estimate for the year is for sales to be in the $535.0 million to $555.0 million range and for earnings to be in the $1.30 to $1.60 per share range. For the first quarter, we expect sales to be in the range of $125.0 to $135.0 million. Assuming that level of sales, first quarter 2005 earnings are expected to be in the range of $0.25 to $0.30 per share. Chairman's Comments Commenting on the results, Gordon Harnett, Chairman, President 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, "I am proud of the significant progress our Company made in 2004 in revenue growth, profitability, operational improvements, new product development and introductions and geographic penetration. Our renewed strong balance sheet and cash position affords us the opportunity to continue to grow our business as strategic opportunities arise. We remain committed to improving shareholder value even further in 2005." 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 content set forth in this document that are not statements of historical or current facts are forward-looking statements. The Company's actual future performance, including performance in the near term, 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 condition of the markets which the Company serves, whether defined geographically or by market, with the major markets being telecommunications and computer, optical media, automotive electronics, semiconductor, industrial components, aerospace and defense and appliance. --Actual sales, operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. and margins for the year 2005. --Changes in product mix. --The financial condition of particular customers. --The Company's success in implementing its strategic plans and the timely and successful completion of any capital expansion projects. --Other factors, including, interest rates, exchange rates, tax rates, pension costs, energy costs, raw material costs and the cost and availability of insurance. --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 any new legislation that impacts the Company's obligations. --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. --Additional risk factors that may affect the Company's results are identified under the caption "Risk Factors" in the Company's Prospectus filed with the Securities and Exchange Commission on July 1, 2004. 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
December 31, 2004
2004 2003
------------- -------------
Fourth Quarter
Net Sales $116,009,000 $105,567,000
Net Income (Loss) $1,761,000 ($7,187,000)
Share Earnings - Basic $0.09 ($0.43)
Average Shares - Basic 19,167,750 16,563,652
Share Earnings - Diluted $0.09 ($0.43)
Average Shares - Diluted 19,406,405 16,563,652
Year-to-date
Net Sales $496,276,000 $401,046,000
Net Income (Loss) $15,516,000 ($13,226,000)
Share Earnings - Basic $0.87 ($0.80)
Average Shares - Basic 17,865,053 16,562,864
Share Earnings - Diluted $0.86 ($0.80)
Average Shares - Diluted 18,106,443 16,562,864
Consolidated Statements of Income
(Unaudited)
(Dollars in
thousands except Fourth Quarter Ended Year Ended
share and per Dec. 31, Dec. 31, Dec. 31, Dec. 31,
share amounts) 2004 2003 2004 2003
-------------------------------------------- -------------------------
Net sales $ 116,009 $ 105,567 $ 496,276 $ 401,046
Cost of sales 90,537 82,876 385,202 328,008
----------- ----------- ----------- -----------
Gross margin 25,472 22,691 111,074 73,038
Selling,
general and
administrative
expenses 20,286 20,626 77,267 68,834
Research
and development
expenses 995 1,196 4,491 4,230
Other-net (2) 6,566 4,282 8,918
----------- ----------- ----------- -----------
Operating
profit (loss) 4,193 (5,697) 25,034 (8,944)
Interest expense 1,815 1,576 8,377 3,751
----------- ----------- ----------- -----------
Income (loss)
before income
taxes 2,378 (7,273) 16,657 (12,695)
Minority interest - (21) - (45)
Income taxes 617 (65) 1,141 576
----------- ----------- ----------- -----------
Net income (loss) $ 1,761 $ (7,187) $ 15,516 $ (13,226)
=========== =========== =========== ===========
Per share of
common stock:
basic $ 0.09 $ (0.43) $ 0.87 $ (0.80)
Weighted average
number of
common shares
outstanding 19,167,750 16,563,652 17,865,053 16,562,864
Per share of
common stock:
diluted $ 0.09 $ (0.43) $ 0.86 $ (0.80)
Weighted average
number of
common shares
outstanding 19,406,405 16,563,652 18,106,443 16,562,864
Consolidated Balance Sheets
(Unaudited)
Dec. 31, Dec. 31,
(Dollars in thousands) 2004 2003
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 49,643 $ 5,062
Accounts receivable 59,229 55,102
Inventories 95,271 87,396
Prepaid expenses 8,348 5,454
Deferred income taxes 275 291
-------- --------
Total current assets 212,766 153,305
Other assets 14,876 18,902
Long-term deferred income taxes 928 704
Property, plant and equipment 540,937 535,421
Less allowances for depreciation,
depletion and impairment 363,318 344,575
-------- --------
177,619 190,846
Goodwill 7,992 7,859
-------- --------
$414,181 $371,616
======== ========
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt $ 30,901 $ 13,387
Accounts payable 13,234 16,038
Other liabilities and accrued items 45,452 37,366
Unearned revenue 7,789 -
Income taxes 1,591 1,373
-------- --------
Total current liabilities 98,967 68,164
Other long-term liabilities 10,798 14,739
Retirement and post-employment benefits 54,729 49,358
Long-term debt 41,549 85,756
Minority interest in subsidiary - 26
Shareholders' equity 208,138 153,573
-------- --------
$414,181 $371,616
======== ========
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