Butler Manufacturing Company Reports Second Quarter 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)--July 29, 2003 Butler Butler, city (1990 pop. 15,714), seat of Butler co., W Pa.; inc. as a borough 1817, as a city 1917. It is located in an area with coal, natural gas, oil, and limestone resources. Glass and plastic products, machinery, and abrasives are made. Manufacturing Company (NYSE NYSE See: New York Stock Exchange :BBR BBR Bureau of Business Research BBR Broadbandreports.com (website) BBR Bending Beam Rheometer BBR Burnt Beyond Repair BBR Black Body Radiation (quantum physics) BBR Baby Back Ribs BBR Back Bone Ring ), reported sales for the second quarter ended June June: see month. 30, 2003 were $174 million compared with $213 million in the same period last year. The after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charges related to the previously announced sale of the Lester Les´ter n. 1. (Meteor.) A dry sirocco in the Madeira Islands. wood building business of $4.2 million, or $0.66 per share, resulted in the company recording a $9.1 million, or $1.43 per share, loss for the quarter, compared with net earnings of $0.3 million, or $.05 per share last year. The second quarter loss, net of the Lester after-tax charges, was $4.9 million. Commenting on the results, John Holland, chairman and chief executive officer, said, "This was one of our more disappointing quarterly financial results in many years, highlighting how difficult the current conditions have been. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. F. W. Dodge, domestic nonresidential Adj. 1. nonresidential - not residential; "the commercial or nonresidential areas of a town"; "community colleges are typically nonresidential" residential - used or designed for residence or limited to residences; "a residential hotel"; "a residential quarter"; "a construction contract awards were down 8% through June, continuing the steep decline that began in 2001. The pricing environment remained fiercely fierce adj. fierc·er, fierc·est 1. Having a savage and violent nature; ferocious. See Synonyms at cruel. 2. Extremely severe or violent; terrible: competitive, and this, along with the lower volume due to low demand, resulted in reduced standard margins and higher unabsorbed fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). . "Each of our business units reported lower demand during the quarter. While there were shipping delays caused by wet weather, especially along the east coast of the United States The "Eastern Seaboard," or "Atlantic Seaboard" are terms referring to the easternmost coastal states in the United States. They touch the Atlantic Ocean and stretch up to Canada. , the fundamental cause of the reduced revenue was the scarcity Scarcity The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. of construction projects generally. Hardest hit was our metal buildings business, followed by the decline at Bucon, our general contracting subsidiary. We continued to implement cost cutting measures during the quarter and increase niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the revenues in previously underserved markets. We will continue both of these efforts throughout 2003 - and beyond. "The North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Building Systems segment sales were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $82 million during the second quarter compared with $98 million a year ago. The majority of the decline in sales occurred in the metal building business reflecting the weak markets, particularly manufacturing end-uses which represent a significant percentage of Butler revenues. Our programs to increase sales in the commercial and community markets continued to make progress in the second quarter. The commercial and community markets have not been as hard hit as the manufacturing sector. The lower volume and gross margins, together with the $7 million in charges related to the announced sale of our Lester operation, resulted in a segment pretax loss pretax loss A loss reported before tax benefits are considered. of $13.4 million compared with a pretax loss of $1.6 million last year. Excluding the effect of the $7 million in charges related to the Lester sale, the loss was $6.4 million. We are on schedule to complete the construction of our previously announced Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum pre-engineered metal building plant later this year. This lower cost facility will enhance our competitive position in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and domestically as well. During the second quarter we implemented a major 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. system in our metal buildings business. This system replaces an aging legacy computer system. We are incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. extra costs as we move up the learning curve on this system and anticipate those costs will decline gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. over the remainder of the year. "The International Building Systems segment sales for the second quarter, all from China in the current year, were approximately $25 million, compared with $32 million a year ago. Excluding the $6 million of sales recorded for the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business in 2002, sales for this segment were down 4% compared with a year ago. The lower volume in China was related to the overall economic 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. primarily caused by the SARS virus. Order rates have picked up of late and we expect year-over-year sales growth during the remainder of this year. Despite the lower volume, margins and expenses were well managed 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. was $1.9 million compared with $2.0 million last year. Excluding the European results, 2002 second quarter pretax income was $1.6 million. Our new plant in the north of China that opened earlier this year is progressing on schedule providing important capacity to support this growing business. "Sales in the Vistawall Architectural Products segment were $54 million compared with $56 million last year. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings were $2.8 million compared with $3.0 million a year ago. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. were only slightly lower in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite recent weaker demand in the commercial construction markets. We are well positioned with low cost capacity to grow our share of the architectural products market with Vistawall. "Our project related businesses, Butler Construction and Butler Real Estate, accounted for approximately half of the decline in Butler sales when compared to the second quarter of 2002. Butler Construction's sales were $15 million compared with $27 million last year, reflecting not only lower demand generally but the dearth of larger building projects specifically. The lower volume led to a pretax loss of $0.6 million compared with pretax earnings of $0.3 million in 2002. The Real Estate segment had no sales in the second quarter compared with sales of $6 million a year ago. Pretax earnings were $0.3 million compared with $.9 million last year with the drop in earnings both revenue and rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time related. "The poor financial results for the first half of the year and weak outlook were factors that led to the mid-June n. 1. the middle part of June. Noun 1. mid-June - the middle part of June period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" announcement to reduce the cash dividend to $0.04 per share. At the end of the second quarter we were in compliance with all provisions of our bank and note agreements. However, given the continued weakness in the marketplace, our ability to comply in the future with the existing financial covenants of our credit agreements is uncertain. Therefore, we are working to restructure our debt agreements to provide more financial and operating flexibility and also to protect against any potential default scenarios during this prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the nonresidential construction market. "While economic signals point toward a gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. improvement in the economy, there are no signs of increased investment in nonresidential construction beyond the seasonal summer-fall pick-up pick-up Noun 1. a small truck with an open body used for light deliveries 2. Informal a casual acquaintance made for a sexual purpose 3. Informal a. . 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. at June 30, 2003 was $295 million compared with $310 million a year ago, excluding backlogs of the Lester and European businesses. Backlog of the products businesses were 6% lower while those of the construction business were 3% lower. We remain focused on reducing costs and expenses in line with current demand, while targeting growth opportunities in commercial and community markets positioning the company for improved operating results when economic conditions improve," Mr. Holland concluded. Butler Manufacturing Company is the world's leading producer of pre-engineered building systems, a leading supplier of architectural aluminum systems and components, and provides construction and real estate services for the nonresidential construction market. An analyst conference call to review the second-quarter results will be held today at 3:30 PM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A live audio webcast of the call will be available to the public on a listen-only basis. To listen to the webcast go to www.butlermfg.com and click on the webcast icon. Statements in this press release concerning the company's business outlook or future economic performance; anticipated profitability, revenues, expenses or other financial items, together with other statements that are not historical facts, are "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. " as that term is defined under the Federal Securities Laws. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated in such statements. Such risks and uncertainties include, but are not limited to, industry cyclicality, fluctuations in customer demand and order pattern, the seasonal nature of the business, changes in pricing or other actions by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , and general economic conditions, as well as other risks detailed in the company's 2002 Annual Report to Shareholders on page 16.
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
----------------------------------------------------------------------
(Dollars in thousands except
per share amounts)
Net sales $ 174,035 $ 213,421 $ 343,802 $ 396,273
Cost of sales 153,051 184,210 301,398 344,943
--------- --------- ---------- ----------
Gross profit 20,984 29,211 42,404 51,330
Selling, general and
administrative expenses 26,408 27,909 52,950 55,746
Asset impairment charge 6,234 - 6,234 -
--------- --------- ---------- ----------
Operating income (loss) (11,658) 1,302 (16,780) (4,416)
Other income (expense), net (400) 686 (1,396) 616
--------- --------- ---------- ----------
Earnings (loss) before
interest and taxes (12,058) 1,988 (18,176) (3,800)
Interest expense 2,404 1,975 4,550 3,933
--------- --------- ---------- ----------
Pretax earnings (loss) (14,462) 13 (22,726) (7,733)
Income tax benefit 5,371 281 9,720 2,659
--------- --------- ---------- ----------
Net earnings (loss) $ (9,091) $ 294 $ (13,006) $ (5,074)
========== ========= =========== ==========
Basic earnings (loss)
per common share $ (1.43) $ 0.05 $ (2.05) $ (0.81)
========== ========= =========== ==========
Diluted earnings (loss)
per common share $ (1.43) $ 0.05 $ (2.05) $ (0.81)
========== ========= =========== ==========
Basic weighted average
number of shares 6,344,612 6,315,046 6,339,951 6,302,643
Diluted weighted average
number of shares 6,344,612 6,324,684 6,339,951 6,302,643
A $7.0 million pre-tax charge recorded in the second quarter related
to the sale of Lester included a $6.2 million impairment charge and a
charge for $.8 million other selling and legal costs recorded in other
expense. Net losses for the current quarter, excluding the after-tax
Lester charge of $4.2 million ($.66 per share), were $4.9 million
($.77 per share). For the six months, net losses excluding the
after-tax Lester charge were $8.8 million ($1.39 per share).
SELECTED SEGMENT INFORMATION
----------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
Net Sales 2003 2002 2003 2002
----------------------------------------------------------------------
(Dollars in thousands)
North American
Building Systems $ 82,363 $ 97,725 $162,844 $176,212
International Building
Systems 25,351 31,980 47,511 53,572
Architectural Products 54,350 56,102 107,216 107,683
Construction Services 14,519 27,387 33,320 65,137
Real Estate - 6,075 - 6,075
Other (2,548) (5,848) (7,089) (12,406)
--------- --------- --------- ---------
$174,035 $213,421 $343,802 $396,273
========= ========= ========= =========
----------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
Pretax Earnings (Loss) 2003 2002 2003 2002
----------------------------------------------------------------------
(Dollars in thousands)
North American
Building Systems $(13,369) $(1,589) $(19,804) $ (5,841)
International Building
Systems 1,888 1,957 3,999 1,928
Architectural Products 2,849 3,022 4,914 3,931
Construction Services (645) 311 (364) 1,088
Real Estate 306 927 (311) 1,482
Other (5,491) (4,615) (11,160) (10,321)
--------- --------- --------- ---------
$(14,462) $ 13 $(22,726) $ (7,733)
========= ========= ========= =========
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
At June 30, 2003 2002
----------------------------------------------------------------------
(Dollars in thousands)
ASSETS:
Cash and equivalents $ 56,750 $ 44,431
Receivables, net 101,916 115,555
Inventories 62,609 60,014
Real estate developments 5,789 18,459
Assets held for sale under contract 7,592 -
Net current deferred tax assets 16,805 16,635
Other current assets 5,667 8,468
-------- --------
Total current assets 257,128 263,562
Investments and other assets 74,751 52,777
Assets held for sale 3,684 3,684
Plant and equipment, net 113,926 138,335
-------- --------
$449,489 $458,358
======== ========
LIABILITIES &
SHAREHOLDERS' EQUITY:
Short-term debt $ 12,346 $ 7,980
Accounts payable 58,467 76,179
Accrued liabilities 89,742 91,386
Taxes on income 11,339 3,960
Dividends payable 254 1,136
---------- ----------
Total current liabilities 172,148 180,641
Net noncurrent deferred tax liabilities - 3,683
Other non-current liabilities 49,706 18,041
Long-term debt 93,194 97,916
Shareholders' equity 134,441 158,077
---------- ----------
$ 449,489 $ 458,358
========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------
Six Months Ended June 30, 2003 2002
----------------------------------------------------------------------
(Dollars in thousands)
CASH FROM
OPERATING ACTIVITIES:
Net loss $(13,006) $ (5,074)
Asset impairment charge 6,234 -
Depreciation and amortization 10,268 9,000
Change in assets and liabilities (15,168) (2,700)
Other, net 83 55
--------- ----------
Total (11,589) 1,281
--------- ----------
CASH FROM
INVESTING ACTIVITIES:
Capital expenditures - PP&E (6,010) (3,068)
Capital expenditures - software (2,118) (4,770)
--------- ----------
Total (8,128) (7,838)
--------- ----------
CASH FROM
FINANCING ACTIVITIES:
Dividends (2,274) (2,264)
Net change in long-term debt 751 (328)
Net change in short-term debt 2,446 263
Purchase and sale of treasury stock, net 404 673
--------- ----------
Total 1,327 (1,656)
--------- ----------
EFFECT OF EXCHANGE RATE CHANGES (638) 75
--------- ----------
DECREASE IN CASH AND EQUIVALENTS $(19,028) $ (8,138)
========== ==========
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