Fourth Quarter Conference Call -- Fiscal 2000
11 / 09 / 2000Highlights
Recent Conference Calls
Fourth Quarter Conference Call -- Fiscal 2000
Good morning. Thanks for joining us. Our plan for the morning is to discuss our business in total and then go through the major product segments. In each section, I’ll discuss the most recent quarter, do a wrap-up on fiscal 2000, and then update our expectations for fiscal 2001. I’m going to report a lot of numbers, so we are going to post the text of my remarks - including all the numbers - on our web site for your convenience.
So, let me begin with the fourth quarter of fiscal 2000. Sales for the quarter of $165.9 million were up 4.2% from last year’s $159.2 million. Sales were about $1.5 million higher than we expected, mostly as a result of strong Aircraft aftermarket revenues. As you know revenues in the aftermarket tend to fluctuate quarter to quarter. Over the course of this year, they have ranged from $28 to $34 million.
As a result of the slightly higher sales, our earnings of $6.5 million, or 73 cents per share, were also slightly higher than we anticipated. We were helped in the quarter by a $350k pre-tax gain on the sale of our 26% ownership in a Russian controls manufacturer, which we’ve included in other income.
Absolute earnings of $6.5 million were almost identical with the fourth quarter of last year but, as you know, over the year, we bought in some shares and so we have fewer shares outstanding. Therefore, $6.5 million this year results in 73 cents per share, whereas last year’s earnings of $6.488 million resulted in 72 cents per share.
Compared to last year’s fourth quarter, our R&D this year was lower by $2.2 million. You will remember that last year at this time we were spending heavily on the Joint Strike Fighter Concept Demonstrator Aircraft. This reduction in R&D offset a slight increase in selling and administrative expenses. As a result, our operating profit in the quarter was up by almost $1 million and that increase offset our increased interest expense.
For the fiscal year, sales increased to $644 million, up 2.2% from last year. The small sales increase, coupled with improvement in operating margins from 11.6% to 12.4%, resulted in operating profit of $79.8 million, up $6.4 million from last year. This increase more than covered our increased interest of $5.1 million and resulted in pre-tax earnings of $38.6 million, up 5% from the previous year. After-tax earnings of $25.4 million were up 4% from the previous year but, because we bought in some shares over the course of the year, our earnings per share of $2.85 were up 6% over last year’s $2.70 per share. Our average shares outstanding for fiscal 2000 were 8,908,624 shares.
EBITDA was $102 million for the year, slightly ahead of our forecast. Depreciation and amortization amounted to $30.4 million with capital expenditures at $24 million. Year-end total debt came down by $4.6 million during the fourth quarter to $366 million even after carrying cash balances that were $4 million higher than our figures at the end of June.
With respect to the year that we’ve just begun, we are anticipating that organic growth will take us from $644 million to about $663 million. We’ve also announced two acquisitions that have closed and one that we expect to close early next year. We bought a servovalve product line from the Schenck Pegasus Corporation. It will provide about $2 million in revenue. At the end of October, we closed the acquisition of Vickers Electric Systems, a company in Casella, Italy, that designs and manufactures high-performance electric motors. We expect Casella to produce about $17 million in revenue. So, adding those two components would get us to $682 million. Earlier this week, we announced our agreement to buy the Radial Piston Pump product line from Robert Bosch Automation Technology Group. That acquisition depends on approval by the European Commission of the Bosch / Rexroth merger so it probably won’t close until early in 2001. But, if it closes, it could add another $10 million or so. So, as it looks now, we are estimating revenues somewhere between $682 and $692 million, an increase of 6% or 7% over this year’s $644 million. In terms of EBITDA, we expect to meet or exceed a target of $110 million. Our net earnings estimate is $27.5 million, or $3.10 per share, up about 9% from this year’s result. We expect steady growth in earnings per share throughout ’01 with estimates of 74 cents in Q1, 76 cents in Q2, 79 cents in Q3 and 81 cents in Q4. We believe the acquisitions will provide a small positive contribution but, at this stage of the game, it’s not large enough to discuss and serves more to solidify our $3.10 per share prediction than to increase it. We don’t expect any of these acquisitions to be dilutive but we think their impact, in terms of accretion, will be more noticeable in the second year than the first.
We don’t intend today to discuss our fiscal year 2002 in any detail. We probably won’t be ready to do that until next summer when we report out our third quarter. However, we do believe that these acquisitions will make a target of 15% growth in earnings per share realistic.
At this point, you may be wondering how we’re funding these acquisitions. So, let me run through them. Schenck closed in September so it’s reflected in the figures I gave you a moment ago. To fund Casella, we will borrow $9 million in Italy. The cash portion of the Bosch Pump Company will be paid out of existing cash deposits we have in Germany. Our latest cash flow model updated for the effects of these acquisitions lead us to expect total debt at this time next year to be in the range of $355 to $360 million.
Good morning. Thanks for joining us. Our plan for the morning is to discuss our business in total and then go through the major product segments. In each section, I’ll discuss the most recent quarter, do a wrap-up on fiscal 2000, and then update our expectations for fiscal 2001. I’m going to report a lot of numbers, so we are going to post the text of my remarks - including all the numbers - on our web site for your convenience.
So, let me begin with the fourth quarter of fiscal 2000. Sales for the quarter of $165.9 million were up 4.2% from last year’s $159.2 million. Sales were about $1.5 million higher than we expected, mostly as a result of strong Aircraft aftermarket revenues. As you know revenues in the aftermarket tend to fluctuate quarter to quarter. Over the course of this year, they have ranged from $28 to $34 million.
As a result of the slightly higher sales, our earnings of $6.5 million, or 73 cents per share, were also slightly higher than we anticipated. We were helped in the quarter by a $350k pre-tax gain on the sale of our 26% ownership in a Russian controls manufacturer, which we’ve included in other income.
Absolute earnings of $6.5 million were almost identical with the fourth quarter of last year but, as you know, over the year, we bought in some shares and so we have fewer shares outstanding. Therefore, $6.5 million this year results in 73 cents per share, whereas last year’s earnings of $6.488 million resulted in 72 cents per share.
Compared to last year’s fourth quarter, our R&D this year was lower by $2.2 million. You will remember that last year at this time we were spending heavily on the Joint Strike Fighter Concept Demonstrator Aircraft. This reduction in R&D offset a slight increase in selling and administrative expenses. As a result, our operating profit in the quarter was up by almost $1 million and that increase offset our increased interest expense.
For the fiscal year, sales increased to $644 million, up 2.2% from last year. The small sales increase, coupled with improvement in operating margins from 11.6% to 12.4%, resulted in operating profit of $79.8 million, up $6.4 million from last year. This increase more than covered our increased interest of $5.1 million and resulted in pre-tax earnings of $38.6 million, up 5% from the previous year. After-tax earnings of $25.4 million were up 4% from the previous year but, because we bought in some shares over the course of the year, our earnings per share of $2.85 were up 6% over last year’s $2.70 per share. Our average shares outstanding for fiscal 2000 were 8,908,624 shares.
EBITDA was $102 million for the year, slightly ahead of our forecast. Depreciation and amortization amounted to $30.4 million with capital expenditures at $24 million. Year-end total debt came down by $4.6 million during the fourth quarter to $366 million even after carrying cash balances that were $4 million higher than our figures at the end of June.
With respect to the year that we’ve just begun, we are anticipating that organic growth will take us from $644 million to about $663 million. We’ve also announced two acquisitions that have closed and one that we expect to close early next year. We bought a servovalve product line from the Schenck Pegasus Corporation. It will provide about $2 million in revenue. At the end of October, we closed the acquisition of Vickers Electric Systems, a company in Casella, Italy, that designs and manufactures high-performance electric motors. We expect Casella to produce about $17 million in revenue. So, adding those two components would get us to $682 million. Earlier this week, we announced our agreement to buy the Radial Piston Pump product line from Robert Bosch Automation Technology Group. That acquisition depends on approval by the European Commission of the Bosch / Rexroth merger so it probably won’t close until early in 2001. But, if it closes, it could add another $10 million or so. So, as it looks now, we are estimating revenues somewhere between $682 and $692 million, an increase of 6% or 7% over this year’s $644 million. In terms of EBITDA, we expect to meet or exceed a target of $110 million. Our net earnings estimate is $27.5 million, or $3.10 per share, up about 9% from this year’s result. We expect steady growth in earnings per share throughout ’01 with estimates of 74 cents in Q1, 76 cents in Q2, 79 cents in Q3 and 81 cents in Q4. We believe the acquisitions will provide a small positive contribution but, at this stage of the game, it’s not large enough to discuss and serves more to solidify our $3.10 per share prediction than to increase it. We don’t expect any of these acquisitions to be dilutive but we think their impact, in terms of accretion, will be more noticeable in the second year than the first.
We don’t intend today to discuss our fiscal year 2002 in any detail. We probably won’t be ready to do that until next summer when we report out our third quarter. However, we do believe that these acquisitions will make a target of 15% growth in earnings per share realistic.
At this point, you may be wondering how we’re funding these acquisitions. So, let me run through them. Schenck closed in September so it’s reflected in the figures I gave you a moment ago. To fund Casella, we will borrow $9 million in Italy. The cash portion of the Bosch Pump Company will be paid out of existing cash deposits we have in Germany. Our latest cash flow model updated for the effects of these acquisitions lead us to expect total debt at this time next year to be in the range of $355 to $360 million.
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