Maxco Reports Third-Quarter Results.LANSING Lansing. 1 Village (1990 pop. 28,086), Cook co., NE Ill., a suburb of Chicago, near the Ind. line; inc. 1893. Among the city's industries are meatpacking, food processing, and the manufacture of metal products. 2 City (1990 pop. , Mich.--(BUSINESS WIRE)--Feb. 16, 1999--Maxco Inc. (Nasdaq:MAXC) today announced results for the third quarter ended Dec. 31, 1998, highlighted by sales growth at its constructon supplies unit, heat treating operations, and continued investments. Maxco, a Lansing-based holding company, reported net income of $129,000, or 1 cent per 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, on 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 of $29.7 million for the third quarter of fiscal 1999, compared with net income of $347,000, or 7 cents per diluted share, on net sales of $24.1 million in the fiscal 1998 third quarter. Net income declined versus the year-ago period, due mostly to lower sales at Maxco's packaging products unit, higher operating costs operating costs npl → gastos mpl operacionales to support growth at Maxco's construction supplies and heat treating operations, higher net interest costs, and an increased loss at the company's equity holdings. Maxco said the 23.3 percent sales increase versus the prior year third quarter was due primarily to added activity at its Lansing-based Ersco Corp. unit, which distributes construction supplies. Sales growth at Maxco's Atmosphere Annealing annealing (ənēl`ĭng), process in which glass, metals, and other materials are treated to render them less brittle and more workable. subsidiary also contributed to the top-line improvement in the quarter, as the Lansing-based heat treating company's performance began to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective following the end of a strike at one of its automotive customers. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. at Atmosphere Annealing also improved in the quarter, reflecting higher sales and increased productivity. The increases helped offset lower sales and 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. at Maxco's packaging unit, Pak-Sak Industries. "We are pleased with our progress," said Max A. Coon coon: see raccoon. , president and chief executive officer of Maxco. "Atmosphere Annealing is positioned to continue on a track of improved sales growth and profitability as a result of improvements made to make this unit more operationally efficient, and continued strength in the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. . Likewise, continued strength in the Midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and construction market and increased federal spending on highway repairs bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for Ersco, which is playing a leadership role in the consolidation of the construction supplies industry." Sales at Ersco increased 43 percent in the fiscal 1999 third quarter to $16.7 million, reflecting the impact of new acquisitions as well as the strong construction market. Ersco's same location sales grew approximately 18 percent over the prior year third quarter, with newly acquired companies adding approximately $3.5 million in revenues in the most recent fiscal quarter. Ersco acquired a Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. branch and also established a new distribution facility in Louisville Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky. during the quarter to serve the construction market in
southern Ohio and northern Kentucky Kentucky, state, United StatesKentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. . Operating costs associated with new facilities, and additional costs to facilitate the planned growth of this unit, resulted in a decline in operating profitability at Ersco in the fiscal 1999 third quarter. Maxco reported it added to its investment portfolio of real estate related companies. During the most recent quarter, the company acquired a 50 percent interest in LandEquities, a Lansing-based developer and manager of commercial property. Maxco also acquired a 50 percent interest in Lansing-based Nilson Builders, a residential and commercial builder. "We continue to believe that real estate and related assets represent extremely attractive values in the current economic climate," Coon said. "The real estate holdings of our joint venture include approximately 90,000 square feet of developed office and retail space." A diversified diversified (di·verˑ·s holding company, Maxco's businesses include Ersco, a construction supplies unit; Atmosphere Annealing Inc., a production metal heat treating service company; and Pak-Sak Industries Inc., which makes polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n packaging. Maxco also holds investments in real estate development companies L/M L/M low and moderate (income levels) Associates LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , LandEquities Corp., and Nilson Builders; Blasen Brogan Asset Management Co.; Mid-State Industrial Services Inc.; and several technology-related businesses: Medar Inc. (Nasdaq:MDXR), PROVANT Inc. (Nasdaq:POVT POVT Provisioning On-Site Verification Testing ), AXSON, S.A., and Foresight (graphics, tool) Foresight - A software product from Nu Thena providing graphical modelling tools for high level system design and simulation. Solutions. Except for the historical information contained herein, the matters discussed in this press 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. 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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements represent the company's best estimates as of the date of this press release. The company assumes no obligation to update such estimates except as required by the rules and regulations of the Securities and Exchange Commission. -0-
CONSOLIDATED STATEMENTS OF OPERATIONS
Maxco Inc. and Subsidiaries
Three Months Ended Dec. 31,
1998 1997
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(In thousands, except per share data)
Net sales $29,697 $24,091
Costs and expenses:
Cost of sales and operating expenses 22,763 18,405
Selling, general and administrative 5,234 4,254
Depreciation and amortization 860 615
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28,857 23,274
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Operating Earnings 840 817
Other income (expense)
Investment and other income 196 267
Interest expense (698) (548)
------------ -----------
Income Before Federal Income Taxes
and Equity in Earnings of
Affiliates 338 536
Federal income tax expense 129 179
------------ -----------
Income Before Equity in Earnings
of Affiliates 209 357
Equity in earnings (loss) of affiliates,
net of deferred tax (80) (10)
------------ -----------
Net Income 129 347
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Net Income Per Common Share -
Assuming Dilution: $ .01 $ .07
------------ -----------
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Weighted average number of shares
of common and common stock equivalents
outstanding 3,262 3,418
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CONSOLIDATED STATEMENTS OF OPERATIONS
Maxco Inc. and Subsidiaries
Nine Months Ended Dec. 31,
1998 1997
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(In thousands, except per share data)
Net sales $100,946 $81,272
Costs and expenses:
Cost of sales and operating expenses 79,117 61,675
Selling, general and administrative 15,337 12,519
Depreciation and amortization 2,285 1,807
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96,739 76,001
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Operating Earnings 4,207 5,271
Other income (expense)
Investment and other income 668 727
Interest expense (1,929) (1,529)
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Income Before Federal Income Taxes
and Equity in Earnings of
Affiliates 2,946 4,469
Federal income tax expense 1,042 1,558
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Income Before Equity in Earnings
of Affiliates 1,904 2,911
Equity in earnings (loss) of affiliates,
net of deferred tax (38) 193
------------ -----------
Net Income 1,866 3,104
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------------ -----------
Net Income Per Common Share -
Assuming Dilution: $ .47 $ .81
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Weighted average number of shares
of common and common stock equivalents
outstanding 3,310 3,486
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