Wickes Inc. Reports Third Quarter 2002 Results.Business Editors VERNON HILLS Vernon Hill II (born circa 1946) is the founder and former chairman, president, and chief executive officer of Commerce Bancorp and Commerce Bank of Cherry Hill Township, New Jersey. , Ill.--(BUSINESS WIRE)--Oct. 29, 2002 Third Quarter 2002 Net Income Increases 63.0%, Debt Decreases by $49.7 Million or 21.3% Wickes Wickes is a UK DIY retailer, focused on building materials and supplies for the public and trade. It is owned by Travis Perkins Background Until February 2005, the company operated as a sister brand to Focus DIY, offering a distinct alternative with no home furnishing 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 :WIKS WIKS is an Urban Contemporary formatted broadcast radio station licensed to New Bern, North Carolina. WIKS carries the Tom Joyner Morning Show. External Links
These categories of materials and products are used by and construction project managers to specify the materials and methods used for . and manufacturer of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: building components, today reported third quarter 2002 net income of $1.1 million or $0.13 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 net income of $0.7 million or $0.08 per fully diluted share reported for the third quarter of 2001. Sales for the third quarter of 2002 were $237.3 million compared to $295.3 million reported in the third quarter of 2001. The company also reported sales for the first thirty-nine weeks ended September September: see month. 28, 2002 of $657.7 million compared to $754.2 million reported during the same period of 2001. Sales declined as a result of store count reductions and commodity lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to price deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. . Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of were down 12.5 percent during the quarter, partially as a result of commodity price deflation that the company estimates accounted for at least $6.5 million of sales reductions compared to last year's third quarter. Wickes president, chairman and chief executive officer, J. Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. Wilson Wilson, city (1990 pop. 36,930), seat of Wilson co., E N.C., in a rich agricultural region; inc. 1849. It is a commercial and industrial center with a large tobacco market. Manufactures include textile goods (especially clothing), metal products, and processed foods. , stated, "We continue to see the expected positive financial impacts of the organizational and structural changes made over the past year offset by continued lumber price deflation. Our continued focus on streamlining and improving operations is enabling the company to better maximize profitability, productivity and return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). ." Gross margin for the thirteen weeks ended September 28, 2002 improved to 21.8 percent from 20.7 percent for the same period in 2001. Selling, general and administrative expense (SG&A) for the third quarter decreased $9.1 million to $44.2 million, or 18.6 percent of sales, compared to the $53.3 million, or 18.1 percent of sales, reported for the third quarter 2001. "The significant progress that we have made so far this year is probably best illustrated by the substantial lowering of the company's debt," Wilson continued. "Total debt is $49.7 million below last year's level at the end of September, and with SG&A decreased by $24.1 million year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. combined with improving gross margins, we expect increased financial strength in the quarters to come." The company reported an improvement in Adjusted 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 (income (loss) before interest, taxes, deprecation dep·re·cate tr.v. de·pre·cat·ed, de·pre·cat·ing, de·pre·cates 1. To express disapproval of; deplore. 2. To belittle; depreciate. , amortization, severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other closed store items) as a percent of sales for the third quarter of 2002, increasing to 3.5 percent of sales, or $8.2 million, compared to 3.0 percent of sales, or $8.9 million, for the same period a year ago. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. A. Hopwood, Wickes chief financial officer commented, "Many of the measures taken to improve operations, profitability and debt levels are becoming evident in our financial results. Besides the improvements in Adjusted EBITDA and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. as a percent of sales, the company produced a healthier cash interest coverage of 2.32 times during the third quarter compared to 1.78 times for the same period in 2001, and our balance sheet has improved as well. Inventory productivity has increased dramatically and combined with the sale or closure of certain operations, debt levels at the end of the quarter are significantly below last year. While we've we've Contraction of we have. we've have made exceptional progress to date, management continues to focus on ways to improve our performance further." At the beginning of fiscal 2002, the company ceased amortizing goodwill, in compliance with the provisions of Statement of Financial Accounting Standards No. 142, ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142") "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." This new standard requires changes in the treatment of goodwill and other intangible assets on a forward going basis. Amortization expense for the thirteen weeks and thirty-nine weeks ended September 29, 2001 was $223,000 and $683,000 respectively. About the Company Wickes Inc. is a leading distributor of building materials and manufacturer of value-added building components in 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. , serving primarily building and remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling professionals. The company distributes materials nationally and internationally, operating building centers in the Midwest, Northeast and South. The company's building component manufacturing facilities, which produce value-added products such as roof trusses, floor systems, framed wall panels, pre-hung door units and window assemblies. Wickes Inc.'s web site, http://www.wickes.com, offers a full range of valuable services about the building materials and construction industry. The company is traded on the Nasdaq small cap market under the stock symbol "WIKS". 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. Statement This release contains 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. as defined in 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 are information of a non-historical nature and are subject to risks and uncertainties that are beyond the company's ability to control. The company cautions shareholders and prospective investors that the following factors may cause actual results to differ materially from those indicated by the forward-looking statements: costs of materials sold; changes in selling prices; competition within the building materials supply industry; the effects of economic conditions; as well as other factors set forth in the company's 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. and other documents, which are on file with the Securities and Exchange Commission.
Tables to Follow
WICKES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
UNAUDITED
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
09/28/02 09/29/01 09/28/02 09/29/01
---------- ---------- ---------- ----------
Net sales $ 237,284 $ 295,307 $ 657,718 $ 754,226
Cost of sales 185,609 234,055 517,012 592,406
---------- ---------- ---------- ----------
Gross profit 51,675 61,252 140,706 161,820
Selling, general and
administrative expense 44,215 53,331 124,116 148,200
Depreciation, goodwill and
trademark amortization 1,293 1,570 4,036 4,675
Provision for doubtful
accounts 483 159 1,101 802
Store closing costs 623 0 2,370 0
Other operating income (772) (710) (3,267) (1,823)
---------- ---------- ---------- ----------
Income from operations 5,833 6,902 12,350 9,966
Interest expense 3,941 5,417 12,432 16,811
---------- ---------- ---------- ----------
Income (loss) before
income taxes 1,892 1,485 (82) (6,845)
Income tax expense
(benefit) 769 796 279 (2,032)
---------- ---------- ---------- ----------
Net income (loss) $ 1,123 $ 689 $ (361) $ (4,813)
========== ========== ========== ==========
Income (loss) per common
share- basic $ 0.14 $ 0.08 $ (0.04) $ (0.58)
========== ========== ========== ==========
Income (loss) per common
share- diluted $ 0.13 $ 0.08 $ (0.04) $ (0.58)
========== ========== ========== ==========
Weighted average common
shares outstanding
- basic 8,293,168 8,278,347 8,288,921 8,275,737
========== ========== ========== ==========
Weighted average common
shares outstanding
- diluted 8,520,384 8,448,300 8,288,921 8,275,737
========== ========== ========== ==========
WICKES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
UNAUDITED
Quarter Ended
---------------------
9/28/02 9/29/01
---------- ----------
Assets
------
Cash $ 151 $ 203
Accounts receivable, net of doubtful accounts 86,799 107,633
Notes receivable from affiliate 436 356
Inventory 89,746 127,493
Deferred tax asset 7,667 9,254
Prepaid expenses 7,001 5,269
---------- ----------
Total current assets 191,800 250,208
Notes receivable from affiliate - 67
Property, plant & equipment, net 52,450 57,337
Trademark, net of amortization 5,856 5,912
Deferred tax asset 16,559 12,990
Rental equipment 1,633 2,480
Other assets, net of amortization 16,429 20,251
---------- ----------
Total assets $ 284,727 $ 349,245
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Current maturities of long-term debt $ 10,800 $ 8,922
Accounts payable 52,703 61,449
Accrued liabilities 18,450 21,311
---------- ----------
Total current liabilities 81,953 91,682
Long-term debt, less current maturities 173,100 224,721
Other long term liabilities 3,142 3,904
Stockholders' equity 26,532 28,938
---------- ----------
Total liabilities & stockholders' equity $ 284,727 $ 349,245
========== ==========
WICKES INC. AND SUBSIDIARIES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION
(in thousands)
UNAUDITED
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
09/28/02 09/29/01 09/28/02 09/29/01
---------- ---------- ---------- ----------
Income from operations $ 5,833 $ 6,902 $ 12,350 $ 9,966
Plus depreciation,
goodwill and trademark
amortization 1,293 1,570 4,036 4,675
Plus depreciation in
cost of goods sold 334 445 1,162 1,452
Store closing costs and
other related charges 778 0 3,732 0
---------- ---------- ---------- ----------
Adjusted EBITDA (a)(b) $ 8,238 $ 8,917 $ 21,280 $ 16,093
========== ========== ========== ==========
Interest expense 3,941 5,417 12,432 16,811
Minus non-cash
transaction costs 386 401 1,146 1,078
---------- ---------- ---------- ----------
Cash interest expense 3,555 5,016 11,286 15,733
========== ========== ========== ==========
Interest Coverage (b) 2.32 1.78 1.89 1.02
(a) Adusted EBITDA represents income (loss) before income taxes,
interest expense, depreciation,amortization, severance and other
closed store items. In addition to the $623 thousand for the third
quarter of 2002 and $2.37 million year-to-date in store closing
cost, gross margins were reduced by $312 thousand for the third
quarter of 2002 and $1.35 million year-to-date and provision for
doubtful accounts were reduced by $157 thousand for the third
quarter of 2002 and increased $12 thousand year-to-date related to
these store closings.
(b) Adjusted EBITDA and Cash Interest Coverage are not presented
herein as an alternative measure of operating results but rather
to provide additional information related to debt service
capability, and does not represent cash flow from operations, as
defined by GAAP and may not be comparable to similarly titled
measures reported by other companies.
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