IFCO Systems Third Quarter 2001 Results.Business Editors AMSTERDAM, Netherlands--(BUSINESS WIRE)--Nov. 21, 2001 IFCO IFCO Interreligious Foundation for Community Organization IFCO International Foster Care Organisation (Den Haag, Netherlands) IFCO International Fan Club Organization (Nashville, Tennessee) Systems N.V. (Nasdaq:IFCO)(Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. :IFE Ife (ē`fā), city (1991 est. pop. 262,000), SW Nigeria. Located in a farm region, the city is an important center for marketing and shipping cacao. According to tradition, Ife is the oldest Yoruba town (founded c.1300). ) -- Agreement to sell industrial container services business -- RTC business in line with expectations -- US pallet service business suffers from deteriorated economy -- Management expectations for full year 2001 lowered IFCO Systems N.V. ("IFCO Systems," "IFCO" or the "Company"), a global leader in round-trip logistic systems and services, announced its third quarter 2001 results, an agreement to sell its industrial container services business and lowered expectations for full year 2001. The Company announced that on Nov. 20, 2001, it entered into a definitive agreement with Industrial Container Services, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control to sell the assets of its industrial container services business (drums). Pursuant to the agreement, the Company expects to receive gross proceeds of US$60.0m, including US$56.5m in cash and promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. from the buyer totaling US$3.5m. In addition, the buyer will assume current working capital liabilities of the business. Pending an agreement with U.S. and Florida government authorities to protect the buyer from environmental liabilities relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a single parcel of Florida real property that is subject to a Superfund 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. consent decree A settlement of a lawsuit or criminal case in which a person or company agrees to take specific actions without admitting fault or guilt for the situation that led to the lawsuit. A consent decree is a settlement that is contained in a court order. , $2.0 million of the cash purchase price and $1.5 million of the promissory notes will be placed in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. on terms set forth in the agreement. The Company will use net cash proceeds to pay down its senior debt. The closing is subject to customary closing conditions and the buyer obtaining satisfactory financing as contemplated in the agreement. The closing is currently scheduled to occur before the end of December. As a result of the agreement to sell the industrial container services business, this business is treated as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for purposes of the Company's third quarter 2001 results of operations. The Company's former pallet manufacturing business, which was sold in October 2001, continues to be reflected as discontinued operations. In compliance with US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , the numbers discussed below (including the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma 2000 numbers) therefore, relate only to the Company's continuing businesses, except as noted. Sales from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in third quarter 2001 totalled US$94.3 compared to revenues of US$89.8m in the same period in the prior year, which is 5.0% higher. Sales for the first nine months of 2001 were US$292.1m, compared to revenues of US$281.4m for the same period in the previous year, a 3.8% increase. 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 from continuing operations resulted in US$9.6m in third quarter 2001 compared to an EBITDA of US$6.6m in the prior year period, which is an increase of 45.8%. EBITDA for the first nine months of 2001 of US$34.9m was also marginally up compared to pro forma EBITDA of US$34.2m in the prior year period. Notwithstanding the increase in revenues and EBITDA in comparison to pro forma numbers from the 2000 periods, revenues and EBITDA for each of third quarter 2001 and the first nine months of 2001 were below the Company's expectations. The initiatives started in fourth quarter 2000 to cut SG&A/Overhead expenses resulted in a strong downward trend of 16.3% in Q1, 13.8% in Q2 and 13.0% in Q3 as a proportion of sales. The Company expects a significant improvement of overhead expenses for 2001 compared to pro forma overhead expenses for 2000. RTC See real time clock. achieved revenues of US$40.5m in the third quarter 2001 resulting in revenues of US$121.0m for the year to date, which is 2.5% and 5.7%, respectively, higher than for the same period last year. RTC trips increased by 4.3% (YTD See Year-to-date. YTD See year to date (YTD). 7.5%) to 63.1 million trips in Q3. Pool-size of 71.0 million crates at the end of Q3 is almost unchanged since year end 2000, due to the company's decision not to grow the current pool in order to improve utilization. As a result of this the Q3 01 turn rate increased to 3.6 times compared to 3.3 in Q2 01. 2001 EBITDA before overhead for the RTC business totalled US$9.2m, compared to US$8.4m in the prior year, which is 9.5% higher. Positive EBITDA margin development continued in Q3 2001 with 22.7% compared to 21.3% in the same period 2000. The YTD 2001 EBITDA margin of 21.9% was further improved by 1.3% points compared to 20.6% EBITDA margin for full year 2000. Pallet Services revenues in the third quarter were US$48.9m (YTD US$157.2m) compared to pro forma revenues of US$45.8m (US$154.7) in the prior year, which is up by 6.8% (1.6%), The EBITDA for Q3 of 2.8m, compared with Q3 2000 EBITDA of US$5.1m, reflects the severe downturn of the US economy. Pallet Pooling Services (Canadian pallet rental pool) revenues in the third quarter grew 8.9% to US$4.9m (YTD by 13.7% to US$13.9m) compared to the prior year period. EBITDA for the pallet pooling business was stable at US$0.4m in Q3 2001 compared to the previous year. In Q3 2001, IFCO Systems reported an 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. of US$12.2m. However, due to the disposal of the drum division, which will result in a book loss of US$59.7, an additional book loss of US$6.7m from other discontinued operations (pallet manufacturing), a currency book loss of US$20.2m (although a net gain of US$29.1m in the first six months of 2001) have resulted in a net loss of US$98.8m in Q3 2001, which is a net loss of US$84.3m for the first nine months of 2001. As in the previous quarter, the third quarter currency loss reflects the change in the value of the euro-denominated debt when translated into US$. Debt as of Sept. 30, 2001 totalled US$380.8m against US$364.0m at the end of the first half 2001, which primarily reflects exchange rate movements relating to the senior subordinated notes. This has since been reduced to US$332.0m, following the sale of the Pallet manufacturing business in October. Liquidity, defined as cash plus availability under the senior credit facility minus borrowings, was US$21.6m. IFCO Systems was in compliance with its bank covenants as of Sept. 30, 2001, or compliance was waived by its senior lenders. In October 2001, the Company entered into an amendment of its senior credit facility, in which its senior lenders consented to the sale of the pallet manufacturing business and the possible sale of the industrial container services business and determined the allocation of the net cash proceeds from the sales to pay down the senior credit facility's term loan and revolver. In recognition of the revised size of the Company's businesses as a result of the sales, the lenders modified various of the financial and restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. under the facility. The amendment also gave the Company additional borrowing capacity under its revolver and waived certain noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance with covenants if it existed. Effective Oct. 1, 2001, the Company's factoring agent terminated the Company's factoring agreements for its operating subsidiaries in France, Italy and Spain and notified the Company that its factoring agreement in Germany would be terminated as of Jan. 31, 2002. The Company has subsequently entered into a new factoring agreement with a local factoring agent in France. The Company is also in negotiations with local factoring agents in each of Italy, Spain and Germany for new factoring agreements in each of those countries. Working capital of continuing businesses was reduced by US$5.7 in the first nine months of 2001. The cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses generated by continuing businesses amounted to US$17.9m. Following the events of September 11, which accelerated the continuing downturn in the US economy, the Company has downgraded its expectations for full year 2001. As a result of these trends, the Company nevertheless expects revenues and EBITDA from continuing operations to at least exceed prior year levels. In view of the reduced size of the US operations following the sale of the pallet manufacturing business and the disposal of drums, Jim Griffin has resigned from his positions on the management board and as President, 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. , effective Dec. 31, 2001 in order to pursue other business interests, although he will continue to work with the company for a transition period. Separately, the Company also announced that in October 2001 Randall Onstead, a B director of the company since March 2000, resigned from the Board of Directors to devote his time and energies to other interests. The third quarter report 2001 will be filed on or before Nov. 30, 2001, with the Frankfurt Stock Exchange and will be available on our homepage www.ifcosystems.de or www.ifcosystems.com. The statements in this press release regarding management's expectations, estimates and projections constitute "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. " within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to risks and uncertainties that could cause IFCO Systems' results to differ materially from those expectations. Such risks and uncertainties include, but are not limited to: (1) the results of internal and independent reviews of projected financial results and condition; (2) the Company's ability to integrate effectively its operations and achieve its operational and growth objectives; (3) the Company's significant indebtedness; (4) the cost and availability of financing for operations, capital expenditures and contemplated growth; (5) the competitive nature of the container businesses, including RTCs, pallets, and industrial containers; (6) customer demand and business and economic cycles; (7) the ability to comply with covenants contained in credit agreements to which IFCO Systems is a party; (8) seasonality; (9) weather conditions; (10) the ability to consummate the proposed sale of the industrial container services business and the terms thereof; (11) changes in national or international politics and economics; (12) currency exchange rate fluctuations; and (13) change in capital and financial markets, including the performance of companies listed on the Frankfurt Stock Exchange or the Nasdaq National Market. This announcement should be read in conjunction with the filings made by the Company with the Securities and Exchange Commission and the Frankfurt Stock Exchange. These filings disclose risk factors and other information that could cause actual results to materially differ from management's expectations. Please find details of the conference call below: Wednesday, 21 November 2001-11-21 Time: 2 p.m. (GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 ), 3 p.m. (CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr ), 9 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) Dial-in number: +49 (0)61 03 485 3000 |
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