Second Quarter Loss Reduced During Special Metals' Ongoing Strike Recovery.NEW HARTFORD New Hartford is the name of several towns in the United States:
Conditions Influencing Profitability for Remainder of '99 Cited and Salaried Workforce Reduction Announced Special Metals Corporation Special Metals Corporation, headquartered in New Hartford, New York, U.S.A., with operations in Huntington, West Virginia, and Hereford, England, is a supplier of refractory alloys. Trademarks include Inconel, Incoloy, Monel, Nimonic, and Udimet. (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 : SMCX SMCX Selected Mouse Cdna on X (human homolog of) ) reported a loss for the second quarter of 1999, as anticipated, while beginning its recovery from an 11-week strike. At the same time, management said as a result of industry and market conditions, the Company is taking cost-cutting measures including a targeted downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of its salaried workforce by a minimum of 10 percent in 1999. Second quarter 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 were $158.8 million in 1999, increasing $114.9 million or 262.2 percent over the $43.9 million recorded for the same period in 1998. Second quarter revenues were also nearly 5 percent greater than in the first three months of 1999. The Company posted a second quarter 1999 net loss of $337,000, compared to net income of $4.6 million in the second quarter of 1998. Net loss per share was $.13 on weighted average shares outstanding of 15.5 million, compared with second quarter 1998 net income per share of $.30. The significant increase in second quarter 1999 revenues over the same period the year prior is attributed to the October 1998 acquisition of Inco Alloys International (IAI IAI Infection And Immunity (journal) IAI International Alliance for Interoperability IAI Institut für Angewandte Informatik IAI Inter-American Institute for Global Change Research IAI International Association for Identification ). The acquisition was followed by a strike at the Company's largest facility that ended on March 1. "We have undertaken a massive effort to win back customers and market share lost during the strike," President and Chief Executive Officer Dr. Donald R. Muzyka said. "It has begun to pay off, as Special Metals narrowed losses from over $6 million in the first quarter to less than a half million dollars in the second. However, we remain cautious about the balance of 1999, with results susceptible to factors including pricing pressures, increasing raw material costs, weakness in certain markets and production and delivery issues, including the possibility of problems in the final stages of computer software implementation as we install our new business enterprise system." Net sales for the first six months of 1999 were $310.6 million, an increase of $217.6 million or 233.8 percent over the $93.0 million recorded in the first six months of 1998. For the first six months of 1999 the net loss of $7.0 million compared to net income of $10.9 million for the same period in 1998. Net loss per share was $.66 for the first six months of 1999, compared with net income per share of $.71 for the first six months of 1998. "Although Special Metals increased all nickel-alloy product prices 5 percent on Aug. 2, 1999 primarily to recover higher nickel nickel, metallic chemical element; symbol Ni; at. no. 28; at. wt. 58.69; m.p. about 1,453°C;; b.p. about 2,732°C;; sp. gr. 8.902 at 25°C;; valence 0, +1, +2, +3, or +4. and cobalt Cobalt, town, Canada Cobalt (kō`bôlt), town (1991 pop. 1,470), E Ont., Canada, NE of Sudbury, near Lake Timiskaming. Once a center for cobalt and silver mining, the area is now economically depressed. costs, we believe there is excess industry capacity relative to near-term demand for nickel-based alloys," Muzyka said. "Coupled with continuing softness in some customer markets, revenues and margins will likely continue to feel an impact into year 2000." Special Metals also expects several issues to impact financial results through the remainder of the year. Scheduled facility shutdowns in the third quarter for maintenance and capital upgrades will limit production. Reduced summer European demand and a continued slowness in aerospace orders will also limit shipments in the quarter. In response to these factors the Company is taking new cost-cutting actions. "Special Metals is targeting a salaried work force reduction of a minimum of 10 percent by the end of 1999, to a significant extent through an early retirement program at Huntington and job redundancies at Hereford, England." Muzyka said. "We are targeting $5 million in annual cost savings from the workforce reductions, and we anticipate a net restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of up to $2.5 million in the third quarter of 1999. Special Metals continues to pursue other, previously announced, cost-cutting synergies including leveraging purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. for raw materials, supplies and services. The Company is also continuing to focus on improvement and integration initiatives that enhance the balance sheet and cash flows, and improve productivity and quality. Special Metals, which in April announced re-negotiated terms of its $375 million credit facility, remained in compliance with its loan covenants A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or forbids the borrower from undertaking certain actions, or possibly restricts certain activities to circumstances when other conditions are met. for the second quarter. As stated in Special Metals' first quarter press release, management reiterates that in 1999 the Company will continue to be challenged to meet the earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. these covenants with its credit banks. Management also gave a mid-year assessment on its view of major customer markets. Aerospace remains an important market that is running well ahead of the doldrums doldrums (dŏl`drəmz) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds. of '92 and '93, but well below the peak found in '97. Special Metals expects aerospace to remain at its current level into year 2000. "Power generation" Muzyka noted, "continues to be an exceptional market that many experts believe still has growth potential." The market for land-based, natural-gas-fired power generating turbines grew to $8.5 billion in 1998, up 21 percent from 1997 according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the International Gas Turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. Institute as reported by Mechanical Engineering Power magazine in July. The oil and gas market is beginning to see modest recovery as demand for alloys used in exploration improves with higher prices for crude. The automotive market is very promising, particularly in nickel-alloy rod for exhaust valves, wire for sparkplug spark·plug tr.v. spark·plugged, spark·plug·ging, spark·plugs Informal To inspire or energize (an endeavor, for example). wire and sheet for flexible exhaust couplings. The chemical processing and pollution control markets remain weak. Special Metals is the world's largest and most-diversified producer of high-performance nickel-based alloys. Its specialty metals are used in some of the world's most technically demanding industries and applications, including: aerospace, power generation, chemical processing, oil exploration and medical/dental devices. Through its New Hartford, N.Y. headquarters, 11 U.S. and European production facilities and a global distribution network, Special Metals supplies over 5,000 customers and every major world market for high-performance nickel-based alloys. The statements in this release relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc matters 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. that involve risks and uncertainties, including, but not limited to, the cyclicality of its markets including the aerospace industry, raw material pricing, future global economic conditions, global productive capacity, competitive products, the ability to integrate Inco Alloys International into Special Metals Corporation to achieve synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. savings, and other risks and uncertainties detailed in the Company's Securities and Exchange Commission filings.
Special Metals Corporation
Condensed Consolidated Statements of
Operations and Retained Earnings
(Unaudited - In thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
1998 1999 1998 1999
--------- --------- --------- ---------
Net sales $ 43,852 $ 158,842 $ 93,043 $ 310,550
Cost of goods sold 35,038 139,391 72,551 282,328
-------------------- --------------------
8,814 19,451 20,492 28,222
Selling, general and
administrative expenses 1,949 14,846 3,769 30,003
-------------------- --------------------
Operating income (loss) 6,865 4,605 16,723 (1,781)
Interest expense 31 5,694 64 11,363
Interest income (154) (295) (331) (865)
Other income (33) (876) (45) (1,281)
-------------------- --------------------
Income (loss) before
income taxes 7,021 82 17,035 (10,998)
Income tax expense (benefit) 2,410 419 6,089 (3,968)
-------------------- --------------------
Net income (loss) 4,611 (337) 10,946 (7,030)
Accumulated preferred
stock dividends - 1,606 - 3,212
-------------------- --------------------
Net income (loss)
attributable to
common shareholders 4,611 (1,943) 10,946 (10,242)
Retained earnings
Beginning of period 34,969 29,104 28,634 37,403
-------------------- --------------------
End of period $ 39,580 $ 27,161 $ 39,580 $ 27,161
==================== ====================
Net income per share $ 0.30 $ (0.13) $ 0.71 (0.66)
(Basic and Diluted)
Weighted average
shares outstanding 15,479 15,479 15,478 15,479
(Basic and Diluted)
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