C2, Inc. Reports Financial Results for the Third Quarter and First Nine Months of Fiscal 2001.Business Editors MILWAUKEE--(BUSINESS WIRE)--Oct. 22, 2001 Growth in 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 Business Continues 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 third quarter and first nine months of fiscal 2001. Net earnings for the three months ended September 30, 2001 were $3,000, or $0.00 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 $426,000, or $0.08 per fully diluted share, reported for last year's third quarter. Revenues for the quarter increased 17.3 percent to $52,862,000, driven by 37.3 percent growth in integrated logistic service revenues from its wholly-owned subsidiary Total Logistic Control ("TLC TLC total lung capacity; thin-layer chromatography. TLC abbr. 1. thin-layer chromatography 2. "). Net earnings in the quarter were impacted primarily by 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 due principally to the slowing U.S. economy and reduced investment in retail infrastructure. For the first nine months of fiscal 2001, C2 reported net earnings of $592,000, or $0.11 per fully diluted share, compared to $1,608,000, or $0.31 per fully diluted share, reported for the same period last year. "This was a difficult but transitioning quarter as our results have been impacted by deferred and reduced 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 the retail grocery industry and the planned exit of a large distribution account in our refrigerated warehousing operations", said William T. Donovan, 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. . "We are experiencing strong growth at TLC in Logistic Management Services and Dedicated Facility Solutions, both of which reflect success in our continuing strategy to emphasize development in non-asset based logistic services which require minimal capital investment while providing high operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. on existing technology and people resources. While these new services have excellent growth prospects, they tend to carry lower margins than traditional refrigerated warehousing operations." Donovan added, "As the projects that TLC is developing become operationalized over the next two quarters, we anticipate meaningful improvement in the operating profitability of this segment. Similarly, Zero Zone continues to maintain exclusive or first-tier supplier relationships with most of its principal customers and as their expansion and refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur programs proceed, its volume and margins will step up as well." Third Quarter Financial Results: Revenues for the third quarter ended September 30, 2001 increased 17.3 percent to $52,862,000 due to growth in integrated logistic services at TLC. Logistic service revenues increased 37.3 percent to a record $38,379,000 due to growth in Transportation Operations, Logistic Management Services and Dedicated Facility Solutions. Product sales declined 15.3% quarter-to-quarter reflecting deferred or reduced spending on the build out or refurbishment of retail grocery, convenience and drug store chains due to slowing economic conditions in the U.S. 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 $3,492,000, reflecting a decline of 26 percent, compared to $4,717,000 reported for last year's third quarter. The decline in EBITDA was due primarily to reduced sales of refrigerated display cases. Interest expense declined 18.8 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 $3,000, or $0.00 per fully diluted share, compared to $426,000, or $0.08 per fully diluted share, reported for last year's third quarter. Lower volume in product sales was the main factor impacting earnings this quarter. First Nine Months of Fiscal 2001: Revenues for the nine months ended September 30, 2001 increased 15.6 percent to $156,719,000 compared to $135,537,000 reported for the same period last year driven by growth in integrated logistic services at TLC. EBITDA for the nine-month period were $12,261,000 reflecting a 17.3 percent decline compared to $14,824,000 reported for the same period last year. Net earnings for the nine months totaled $592,000, or $0.11 per fully diluted share, versus $1,608,000, or $0.31 per fully diluted share reported for the comparable period a year ago. 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 unique national provider of integrated logistic services. These services include refrigerated and dry warehousing, logistic management services, transportation, dedicated 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. , 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. application, food distribution and packaging services. Operations are conducted through a network of 13 logistic centers with 36.3 million cubic feet of refrigerated capacity and more than 1 million square feet of dry warehouse space. TLC operates a fleet of 267 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 A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part, or sometimes all of their supply chain management function. Excellence for the third year in a row. TLC is a wholly-owned subsidiary of C2, Inc. Zero Zone Zero Zone is a Wisconsin-based 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. of 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 is a 70.6% 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 substantial 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 Nine Months Ended
September 30, September 30,
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2001 2000 2001 2000
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Revenues:
Logistic Services $ 38,379 $ 27,961 $ 107,120 $ 83,398
Product Sales 14,483 17,091 49,599 52,139
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52,862 45,052 156,719 135,537
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Costs and Expenses:
Logistic Expense 33,869 23,279 93,501 69,188
Cost of Product Sales 11,762 13,063 39,217 39,753
Depreciation and
Amortization 2,116 2,174 6,401 6,280
Selling, General &
Administrative Expenses 3,739 3,993 11,740 11,772
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51,486 42,509 150,859 126,993
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Earnings from Operations 1,376 2,543 5,860 8,544
Other Income (Expense):
Interest Expense, net (1,196) (1,473) (3,931) (4,341)
Other Income (Expense) (8) 41 (27) 41
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(1,204) (1,432) (3,958) (4,300)
Earnings before Income
Taxes, and Minority
Interest 172 1,111 1,902 4,244
Income Tax Provision 105 524 869 1,779
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Net Earnings before
Minority Interest 67 587 1,033 2,465
Minority Interest 64 161 441 857
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Net Earnings $ 3 $ 426 $ 592 $ 1,608
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Basic Net Earnings Per
Share $ 0.00 $ 0.08 $ 0.12 $ 0.31
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Diluted Net Earnings Per
Share $ 0.00 $ 0.08 $ 0.11 $ 0.31
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Average Number of Shares
Outstanding 5,081,864 5,081,864 5,081,864 5,114,161
Diluted Number of Shares
Outstanding 5,213,665 5,278,150 5,224,070 5,265,530
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