Cameron Ashley Reports Record Fiscal 1999 Second Quarter Results.DALLAS--(BUSINESS WIRE)--May 19, 1999-- Cameron Ashley Building Products, Inc. (NYSE NYSE See: New York Stock Exchange :CAB) today reported record results for the second quarter ended April 30, 1999. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter of fiscal 1999 increased 36.5% to $268.7 million from $196.9 million in the prior year period. Same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. growth of 7.7% overall, and 8.7% in the Cameron division, combined with acquired operations, drove the total sales increase. Same-store sales in the Ashley division grew 4.0% during the quarter, which was consistent with planned levels. Net income for the second quarter of 1999 was $3.5 million, or $0.40 per share on a 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. basis, compared to $2.7 million, or $0.29 per diluted share in the second quarter of fiscal 1998. Second quarter results for the 1999 fiscal year included $724,000 in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. associated with the systems development and business process re-engineering See reengineering. (business) Business Process Re-engineering - (BPR) Any radical change in the way in which an organisation performs its business activities. BPR involves a fundamental re-think of the business processes followed by a redesign of business activities to project in the Cameron division versus $923,000 for the same period last year. For the six months ending April 30, 1999 net sales increased 35.2% to $492.1 million from $364.0 million in 1998. Net income for the six-month fiscal 1999 period was $3.4 million, or $0.39 per diluted share, compared to $3.4 million, or $0.35 per diluted share in the year-ago period. The six-month fiscal 1999 period included $1,063,000, or $0.07 per diluted share after-tax, in expenses associated with systems development costs, compared to $923,000, or $0.06 per diluted share after-tax, in costs for the same period in 1998. Commenting on the second quarter, Ronald R. Ross, Chairman and Chief Executive Officer, said: "We are very pleased with our financial performance this quarter. The Company had another strong quarter with revenue growth of 36.5% and net income growth of 26.5% when compared to last year. We had expected our operating expenses as a percent of sales to be higher in 1999 due to the impact of adverse seasonality of the $200 million in northern U.S. and Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. acquired late last year. Having this percentage remain flat compared with last year points to the success we believe we have achieved in a number of our initiatives to improve operating performance. We are positioned extremely well going into our selling season where much higher seasonal sales will firmly demonstrate this improved operating performance." As previously reported, the systems project had been estimated to cost $16 million and to be completed by the end of the 1999 calendar year. However, due to a variety of factors, the cost of the project has increased. These factors include the addition of 26 new branches; multiple and more complex business models in the U.S. when compared to Canada; volume and complexity of data conversion efforts in the U.S.; and extended training and implementation periods. The project is complete in Canada. However, the U.S. rollout has been delayed until mid-June as a result of these issues. The project is now expected to cost in the range of $20-$23 million and be completed no later than April 2000. Pre-tax project expenses are expected to be $3.0 - $3.5 million in fiscal 1999, compared with a previous estimate of $1.5-$1.8 million. Of the total costs to be expensed in 1999, 45% to 50% are expected to be incurred in the Company's fiscal fourth quarter. "We believe the new system's improved functionality and productivity are essential to our long-term growth strategy," Mr. Ross said. "Clearly, we are disappointed to have to report an increase in our estimated development costs. However, we expect that the strength of our business will allow us to substantially cover these expenses over the course of the full year, and remain comfortable with current consensus earnings estimates of $1.92 per share for fiscal 1999." Mr. Ross concluded, "We are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our growth prospects and expect to build upon this year's positive momentum. Our goal is to deliver solid earnings growth by focusing on improving operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , continuing our emphasis on increasing same-store sales, and expanding through strategic acquisitions that complement our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. branch network, although our acquisition activity will be minimal until our systems conversion project is complete. We are already accelerating our internal growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. through our targeted sales and marketing programs and increasing our operating efficiencies in Canada by leveraging our new information system. We expect to capture similar economies in the U.S. once the system is fully rolled-out." Cameron Ashley Building Products, Inc. is a distributor of a broad line of building products that are used principally in home improvement, remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling and repair work and in new residential construction. The Company distributes its products to independent building material dealers, professional builders Professional Builder (ISSN-1072-0561) is a trade publication and web site owned by Reed Business Information serving the information needs of the housing and light construction marketplace. , large contractors and mass merchandisers through a network of 161 branches located throughout 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. and Canada. Product lines include roofing, millwork, pool and patio patio In Spanish and Latin American architecture, a courtyard open to the sky within a building. A Spanish development of the Roman atrium, it is comparable to the Italian cortile but provides more seclusion, possibly due to Moorish custom. The patio of the contemporary U.S. enclosure enclosure (inclosure) n. land bounded by a fence, wall, hedge, ditch or other physical evidence of boundary. Unfortunately, too often these creations are not included among the actual legally-described boundaries and cause legal problems. ENCLOSURE. materials, insulation, siding, steel products, industrial metals and a variety of other building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . . -0- Certain statements in this release 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. " that are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward- looking statements may be indicated by phrases such as "believes", "anticipates", "expects", "intends", "foresees", "projects", "predicts", "forecasts" or similar words and are subject to known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. Among the key factors that could cause results to differ materially are: (i) business and economic conditions 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. , (ii) business and economic conditions in the regional markets in which the Company operates, (iii) adverse homebuilding conditions including those related to weather and interest rates, (iv) the ability to make acquisitions at reasonable prices and achieve operating efficiencies upon integration, (v) reliable and cost-effective supply of products from manufacturers, and (vi) technology risks in implementing new and/or converting existing information systems. These risks are more fully described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligations to update the information contained herein, which speaks only as of this date. Note: More information on Cameron Ashley Building Products can be found on the Wide World Web at http://www.cabp.com. -0-
CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Unaudited. Dollars in thousands, except per share amounts.)
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Six Months
Ended Ended
4/30/99 4/30/98 4/30/99 4/30/98
NET SALES $268,717 $196,896 $492,133 $363,986
COST OF SALES 214,734 157,349 393,412 290,521
ROSS PROFIT 53,983 39,547 98,721 73,465
OPERATING EXPENSES 44,662 32,217 86,486 63,541
RE-ENGINEERING SYSTEM
& CONVERSION COSTS 724 923 1,063 923
INCOME FROM OPERATIONS 8,597 6,407 11,172 9,001
INTEREST EXPENSE 2,810 1,765 5,394 3,421
INCOME BEFORE INCOME TAXES 5,787 4,642 5,778 5,580
PROVISION FOR INCOME TAXES 2,310 1,894 2,344 2,192
NET INCOME $ 3,477 $ 2,748 $ 3,434 $ 3,388
NET INCOME PER SHARE:
BASIC $ 0.40 $ 0.29 $ 0.40 $ 0.36
DILUTED $ 0.40 $ 0.29 $ 0.39 $ 0.35
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 8,654 9,350 8,650 9,336
DILUTED 8,801 9,637 8,802 9,608
BALANCE SHEET DATA
APRIL 30, OCTOBER 31,
1999 1998
(Unaudited) (Unaudited)
CURRENT ASSETS $ 297,752 $ 257,610
TOTAL ASSETS 419,504 361,733
CURRENT LIABILITIES 126,832 107,348
LONG-TERM DEBT 168,480 135,051
TOTAL LIABILITIES 299,921 246,768
SHAREHOLDERS' EQUITY 119,583 114,965
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