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 DALLAS, Oct. 14 /PRNewswire/ -- Elcor Corporation (NYSE: ELK) said today that improved first quarter sales and operating earnings resulted from continuing strength in its core Roofing Products segment, which overcame lower than anticipated performance from its Industrial Products segment. Lower earnings per share for the first quarter reflect higher taxes and a 21 percent increase in average shares outstanding due to the company's 1.15 million share secondary offering in June 1993 and the dilutive effect of stock options.
 According to Roy E. Campbell, chairman and chief executive officer, "Strong demand and higher prices for our Elk Prestique(R) premium laminated fiberglass asphalt roofing shingles contributed to a 19 percent increase in operating profit in our core business segment. On the other hand, our Industrial Products segment, which achieved solid improvement for the first three quarters of 1993, has encountered softer market conditions. As a result, Industrial Products' operating loss in the first quarter of this year was about $.10 per share higher than the same quarter last year. In addition, the higher federal tax rate and increased state income taxes in this year's first quarter, as compared to the year ago quarter, reduced earnings by about $.02 per share. Our Industrial Products segment has yet to reach the profitability goals and objectives which Elcor believes are achievable. We are addressing this issue head-on and taking action to adjust to market conditions. As a result, the company has cut its staffing in this area by 62 employees, or about 20 percent, which should reduce operating costs by about $500,000 per quarter, and is prepared to take further actions as necessary."
 Operating Results
 For the first quarter ending Sept. 30, 1993, income before extraordinary item and cumulative change in accounting for income taxes of $4,072,000 was up 5.7 percent from $3,850,000 in the year ago quarter. Earnings of $.46 per share were lower than $.52 per share in the year ago period, primarily a result of a 21 percent increase in average common and common equivalent shares outstanding.
 In this year's first quarter, net income of $4,740,000, or $.53 per share,

included the cumulative effect of a change in accounting for income taxes, in accordance with Statement of Accounting Standards No. 109, of $668,000, or $.07 per share, as compared to net income of $5,717,000, or $.77 per share, which included a $1,867,000, or $.25 per share tax carryforward extraordinary item in the year ago quarter. Average common and common equivalent shares outstanding in the first quarter this year were 8,932,000 shares, up 21 percent from 7,395,000 shares last year. Sales of $45,397,000 were up 4.2 percent from the year ago period.
 Financial Position
 Richard J. Rosebery, vice president, treasurer and chief financial officer, said, "With almost $25 million in cash, $75 million in equity and no debt, the company is in a strong position to pursue its growth opportunities, including the construction of a new $30 million premium laminated fiberglass asphalt roofing manufacturing facility now underway in Shafter, Calif. In addition, the company has replaced its former credit facilities with a new $30 million unsecured three-year revolving credit facility to provide additional financial resources," he said.
 At Sept. 30, 1993, cash and cash equivalents of $24,447,000 were up $5,930,000 from June 30, 1993, and $21,480,000 from the year ago period. The company had no short or long term debt at Sept. 30, 1993, as compared to $23,680,000 of debt a year ago. Shareholders' equity of $74,517,000 was up $4,770,000 in the first quarter and was about three times our equity of $26,399,000 in the year ago quarter.
 Roofing Products
 Elk Corporation's sales were up 11 percent and operating income was up 19 percent primarily as a result of increased volume and higher prices, partially offset by higher asphalt and glass fiber raw material costs. Strong demand for our Elk Prestique premium laminated fiberglass asphalt shingles kept Elk sold out during the first quarter, and a small price increase has been implemented in the western states at the start of the second quarter.
 At the present time, Elk expects a normal seasonal pattern for this winter, which should enable Elk to build inventory to service higher demand during the spring, summer and fall of 1994. In fiscal 1993, Elk was sold out in each of the quarters.
 The new asphalt roofing plant in California will expand Elk's Prestique premium laminated fiberglass asphalt shingle manufacturing capacity by about 65 percent when the plant is operating near full capacity. Construction of the new plant was underway in mid September 1993, and everything is on schedule for initial production late in the second quarter next fiscal year.
 Industrial Products
 During the first quarter, Industrial Products sales were down 22 percent from the year-ago period as a result of slower markets in each business area. Record floods in the Midwest this summer reduced demand for Chromium Corporation's hard chrome-plated diesel engine cylinder liners used by marine transportation on the Mississippi River and certain railroad maintenance facilities which were impacted by the floods. In addition, inventory adjustments and changing requirements of some Conductive Coatings Division customers reduced demand in this area of Chromium's business. The current surplus of waste materials available for recycling has also resulted in slower demand for Mosley solid waste balers, waste paper and cardboard balers, nonferrous metal balers and beverage can densifiers. Patent licensing income was also lower in this year's first quarter. In addition to the staffing cutbacks at Chromium and Mosley, we are currently studying other actions that may need to be taken to restore profitability or reduce the impact of the lower sales levels currently being experienced.
 According to Campbell, "At the present time, we believe the slow demand for our Industrial Products, along with the anticipated seasonal slow-down in demand for our premium roofing products and continuing higher raw material costs, could result in lower sales and operating results during the winter months of our second and third quarters and sharply higher sales and operating results in our fourth quarter when we should have adequate inventory to support the seasonal pickup in roofing demand.
 "Our strong financial position and available resources place us in an excellent position to continue making strategic investments to enhance shareholder values in the years ahead," he concluded.
 Elcor manufactures roofing products and industrial products. Each of Elcor's principal operating subsidiaries is the leader or one of the leaders within its particular market. Its common stock is listed on the New York Stock Exchange under the symbol ELK.
 Elcor's roofing products facilities are located in Tuscaloosa, Ala.; Dallas and Ennis, Texas; and its newest facility will be located in Shafter, Calif. Its industrial products facilities are located in Cleveland, Ohio; Dallas, Lufkin, Midland and Waco, Texas.
 Condensed Results of Operations
 (In thousands, except for per share data)
 First Quarter Trailing
 Period ended Three Months Twelve Months
 Sept. 30 1993 1992 1993 1992
 Sales $ 45,397 $ 43,562 $174,809 $153,294
 Income Before Extraordinary
 Items and Change in Acctg $ 4,072 $ 3,850 $ 14,982 $ 5,899
 Extraordinary Items (A) 0 1,867 1,150 4,658
 Cumulative Effect of
 Change In Accounting
 for Income Taxes (B) 668 0 668 0
 Net Income $ 4,740 $ 5,717 $ 16,800 $ 10,557
 Income Per Common Share:
 Before Extraordinary Items
 and Change in Accounting $ .46 $ .52 $ 1.86 $ .80
 Extraordinary Items (A) .00 .25 .14 .63
 Cumulative Effect of
 Change in Accounting
 for Income Taxes (B) .07 .00 .08 .00
 Net Income Per Share $ .53 $ .77 $ 2.08 $ 1.43
 Average Common and Common
 Equivalent Shares Outstndg 8,932 7,395 8,067 7,365
 (A) Includes $1,278, or $.17 per share, in the 12 months ended Sept. 30, 1992, from extinguishment of debt, and the balance is tax benefit from tax-loss carryforwards.
 (B) Represents cumulative effect of applying Statement of Accounting Standards No. 109, Accounting for Income Taxes.
 Condensed Balance Sheet
 (In thousands)
 Sept. 30,
 Assets 1993 1992
 Cash and Cash Equivalents $24,447 $ 2,967
 Receivables, Net 27,125 25,798
 Inventories 12,740 11,265
 Deferred Taxes 1,781 ---
 Prepaid Expenses and Other 954 1,817
 Current Assets 67,047 41,847
 Property, Plant and Equipment, Net 21,683 20,228
 Net Assets of Discontinued Operations 6,897 6,905
 Other Assets 2,265 1,862
 Total Assets $97,892 $70,842
 Sept. 30,
 Liabilities And Shareholders' Equity 1993 1992
 Accounts Payable & Accrued Liabilities $23,375 $20,763
 Current Maturities on Long-Term Debt --- 3,000
 Total Current Liabilities 23,375 23,763
 Long-Term Debt, Net --- 20,680
 Shareholders' Equity 74,517 26,399
 Total Liabilities and Shareholders' Equity $97,892 $70,842
 -0- 10/14/93
 /CONTACT: Richard J. Rosebery, vice president, treasurer and chief financial officer of Elcor Corporation, 214-851-0500/

CO: Elcor Corporation ST: Texas IN: CST SU: ERN

MP -- NY046 -- 2229 10/14/93 12:20 EDT
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Publication:PR Newswire
Date:Oct 14, 1993

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