C2, Inc. Reports Financial Results for the Fourth Quarter and Fiscal Year 2001.Business Editors MILWAUKEE--(BUSINESS WIRE)--Feb. 12, 2002 C2, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CTOO) announced today its financial results for the fourth quarter and fiscal year ended December 31, 2001. Net earnings for the fourth quarter were $220,000, or $0.04 per fully 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 $386,000, or $0.08 per fully diluted share, reported for the same period last year. Consolidated revenues for the quarter increased 16 percent to $55,726,000 driven by strong growth in integrated logistic lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation service revenues from its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Total Logistic Control (TLC TLC total lung capacity; thin-layer chromatography. TLC abbr. 1. thin-layer chromatography 2. ), which grew 35 percent period-to-period. Net earnings for the fourth quarter were lower than the prior year's period due primarily to lower sales of refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. display casements at Zero Zone as the lower level of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. in retail grocery infrastructure continued through this period. For the year, C2 reported net earnings of $812,000, or $0.16 per fully diluted share, compared to $1,995,000, or $0.38 per fully diluted share reported for fiscal 2000. Revenues for fiscal 2001 increased 16 percent to $212,445,000 resulting from strong growth in integrated logistic services at TLC. Commenting on the reports, William T. Donovan, C2 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. , said: "C2's business reflected improved operating results in the fourth quarter compared to the third quarter due primarily to the contribution from new programs in dedicated facility management and reduced overhead at TLC and improved margin and overhead savings generated at Zero Zone. Our operating profitability bottomed during the third quarter and although sales levels at Zero Zone continued to be weak through the fourth quarter, cost reduction programs positively impacted both companies during this period. We are experiencing continued growth in most of the components of our logistic business at TLC and new order levels and 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. are strengthening at Zero Zone. Our outlook for 2002 is for a substantial improvement in operating profitability at both companies driven by increased volume in warehousing operations, new dedicated facility and logistic management projects at TLC and increased sales at Zero Zone which are now being augmented by the recent acquisition of Zero Zone Refrigeration refrigeration, process for drawing heat from substances to lower their temperature, often for purposes of preservation. Refrigeration in its modern, portable form also depends on insulating materials that are thin yet effective. ." Fourth Quarter Financial Results: Revenues for the fourth quarter ended December 31, 2001 increased 16 percent, to $55,726,000 due to growth in integrated logistic services at TLC. Logistic Service revenues increased 35 percent to a record $40,542,000 due to growth in Transportation Operations, Logistic Management Services and Dedicated Facility Solutions. Product Sales declined 16 percent quarter-to-quarter to $15,184,000 reflecting continued low level of capital spending in the retail grocery, convenience and drug store chains which has been depressed throughout 2001. Consolidated operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before before capital charges (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 ) for the quarter totaled $3,386,000, a decline of 20 percent compared to $4,213,000 reported for last year's fourth quarter. The decline in EBITDA was due primarily to reduced sales of refrigerated display cases and lower volume in warehousing operations this quarter compared to the same period last year. Interest expense declined 28 percent quarter-to-quarter reflecting both lower rates and reduced levels of borrowings at both TLC and Zero Zone. Net earnings for the quarter totaled $220,000, or $0.04 per fully diluted share, compared to $387,000, or $0.08 per fully diluted share, reported for last year's fourth quarter. Lower volume in product sales and warehousing operations were the primary reasons for the difference in earnings this quarter. Fiscal 2001 Financial Results: Revenues for the twelve months ended December 31, 2001 increased 16 percent to $212,445,000, compared to $183,450,000 reported for fiscal 2000 driven by growth in integrated logistic services at TLC which increased revenues 30 percent in fiscal 2001. Product sales for the year totaled $64,782,000, a decline of 8 percent from the prior year, reflecting the generally low level of capital investment in retail grocery infrastructure that has impacted the entire industry throughout 2001. Revenue growth at TLC in 2001 was primarily attributable to the following: -- Transportation operations increased revenues 19 percent due to both a larger fleet (293 units at year end vs. 245 units at year end 2000) and higher revenues per unit in 2001 compared to the prior year. -- Logistic Management Services grew revenues 196 percent in 2001 to $44,347,000 due to growth in existing client relationships and new programs such as the highly successful product introduction of Smirnoff Ice. -- Dedicated Facility Solutions, TLC's newest line of business which provides facility management services, generated incremental revenues of $5,289,000 in 2001. -- Revenues attributable to warehousing operations declined 10 percent in 2001, reflecting the expiration of two large warehousing service contracts and delays in replacing this volume. Consolidated operating earnings before capital charges (EBITDA) for the year totaled $15,648,000, a decline of 18 percent from the prior year's level of $19,048,000. The decline in EBITDA in 2001 was primarily due to lower volume in product sales at Zero Zone and to a lesser extent lower volume in warehousing operations and increased overhead expenses incurred at TLC to support future growth. Net earnings for the year totaled $812,000, or $0.16 per fully diluted share compared to $1,995,000, or $0.38 per fully diluted share reported for fiscal 2000. C2, Inc. is a Milwaukee-based public company with two operating businesses, Total Logistic Control and Zero Zone. Total Logistic Control TLC, based in Zeeland, Michigan Zeeland is a city in Ottawa County in the U.S. state of Michigan. The population was 5,805 at the 2000 census. The city is located at the western edge of Zeeland Charter Township which is politically independent. Its name is derived from the Dutch province of Zeeland. , is a national provider of integrated logistic services which include refrigerated and dry warehousing, transportation operations, supply chain management, dedicated third-party facility and operations management Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. , food distribution, and fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. services for e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. applications. Operations are conducted through a network of 28 logistic centers with 36.3 million cubic feet of refrigerated capacity and over 2 million square feet of dry warehouse space making it the tenth largest provider of refrigerated warehousing services 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. . TLC operates a fleet of 293 refrigerated transportation units. TLC recently was cited by Inbound in·bound 1 adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound Logistics as a Top 10 Provider of Third Party Logistics Excellence for the fourth year in a row. TLC is a 100 percent owned subsidiary of C2, Inc. Zero Zone Zero Zone, headquartered in North Prairie, Wisconsin North Prairie is a village in Waukesha County, Wisconsin. It is located in the Town of Genesee, near the town's southwestern corner. As of the 2000 census, the village had a total population of 1,571. Government North Prairie is a village, with a village board. is a manufacturer of refrigerated and freezer freezer the compartment in which meat and offal are stored at freezing temperatures of 10 to 16°F (-12 to -9°C) although there is a trend to lower temperatures of 0 to -22°F (-18 to -30°C). display cases used in grocery, convenience and drug store chains for retail merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. or food, beverage and floral flo·ral adj. Of, relating to, or suggestive of a flower: a fabric with a floral pattern. flo products. Zero Zone recently announced the acquisition of Zero Zone Refrigeration which manufactures refrigeration houses and racks to power and control the refrigeration systems, electrical panels, air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. and stand-by power for super markets, convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. and industrial applications. Zero Zone is a 70.6 percent owned subsidiary of C2, Inc. The statements contained in this release 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. . Actual results may differ materially from management's expectations. The forward-looking statements involve risks and uncertainties, including but not limited to: -- Demand for warehousing, transportation logistic services and refrigerated display cases may be adversely affected by increases in interest rates, adverse economic conditions, increased energy costs, loss of a material customer, weather or other factors. -- Growth in volume of services or products may be adversely affected by reduced ability to identify and hire qualified employees. -- The company's profitability may be adversely affected by increases in interest rates because a significant portion of the Company's capital structure is debt, a portion which bears interest at variable interest rates. -- Consolidations within the food industry or food retailers could impact the Company's customers. -- Company's market share may be adversely affected as a result of new or increased competitive conditions in warehousing, transportation or display case manufacturing. Additional information about risks and uncertainties discussed above as well as additional material risks in the Company's business may be found 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. for the year 2000 and other filings the Company made from time to time with the Securities and Exchange Commission. This and other C2, Inc. news releases and additional corporate data can be accessed on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.c2-inc.com.
C2, INC.
Consolidated Statement of Earnings
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
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2001 2000 2001 2000
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Revenues:
Logistics
Services $ 40,542 $ 29,948 $ 147,663 $ 113,376
Product Sales 15,184 18,006 64,782 70,074
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55,726 47,954 212,445 183,450
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Costs and Expenses:
Logistics Expense 36,248 25,308 129,749 94,870
Cost of Product
Sales 12,407 14,177 51,623 53,909
Depreciation and
Amortization 1,752 1,603 8,153 7,895
Selling, General
& Administrative 3,685 4,257 15,425 15,623
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54,092 45,345 204,950 172,297
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Earnings from
Operations 1,634 2,609 7,495 11,153
Other Income (Expense):
Interest
Expense, net (1,119) (1,558) (5,051) (5,899)
Other Income
(Expense) (18) 17 (45) 58
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(1,137) (1,541) (5,096) (5,841)
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Earnings before Income
Taxes & Minority
Interest 497 1,068 2,399 5,312
Income Tax Provision 157 490 1,027 2,270
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Net Earnings before
Minority Interest 340 578 1,372 3,042
Minority Interest 120 191 560 1,047
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Net Earnings $ 220 $ 387 $ 812 $ 1,995
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Basic Net Earnings
Per Share $ 0.04 $ 0.08 $ 0.16 $ 0.39
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Diluted Earnings
Per Share $ 0.04 $ 0.08 $ 0.16 $ 0.38
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Average Number
of Shares
Outstanding 5,081,864 5,081,864 5,081,864 5,106,043
Diluted Number
of Shares
Outstanding 5,211,404 5,267,525 5,219,433 5,266,789
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