Lamson & Sessions Reports Strong First Quarter 2004 Results
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Net Sales Rise 6.1 Percent to $84.3 Million - Diluted Earnings Per
Share Improve to 12 Cents for the First Quarter Versus 2 Cents in
First Quarter of 2003 - Sales Improve in Electrical, Telecom and
Home Products Markets
CLEVELAND, Apr 30, 2004 /PRNewswire-FirstCall via COMTEX/ -- Lamson & Sessions
(NYSE: LMS) today announced first quarter net income of $1.7 million,
or 12 cents per diluted share, compared with $226,000, or 2 cents
per diluted share, in the first quarter of 2003. Net sales in the
first quarter of 2004 rose to $84.3 million, or a 6.1 percent increase
over the $79.4 million reported in the first quarter of 2003. Due
to differences in the Company's fiscal calendar, the first quarter
of 2004 had only 13 weeks, whereas the first quarter of 2003 represented
a 14-week period.
Net income from continuing operations (after tax) was $1.3 million,
or 9 cents per diluted share. Included in this result is a gain
of $924,000 on the sale of the Company's manufacturing plant in
Pasadena, Texas. In addition, the Company's 2004 first quarter
net income includes income from discontinued operations of $401,000
(net of tax), or 3 cents per diluted share, representing the recovery
of a note receivable, which was fully reserved in 2003 and relates
to a discontinued operation.
"We are encouraged by the significant increase in sales order
activity in March, which exceeded the average of the previous two
months by 34 percent," said John B. Schulze, Chairman, President
and Chief Executive Officer. "This improved market strength sets
us on a good course for the rest of the year."
While the Company's gross margin improved by 4 percent, to 17.3
percent of net sales, further improvements in product mix and passing
through raw material cost increases to customers must occur in
order to return all of the Company's business segments to profitability.
The cost of the Company's primary raw material, polyvinyl chloride
(PVC) resin, rose 8 percent in the first quarter and is expected
to continue to increase steadily throughout the second quarter.
Business Segments
Carlon experienced more than 12 percent growth in net sales as
demand improved for electrical and telecom products. Increased
business activity has resulted in stronger unit demand, greater
overhead absorption in the operating facilities and improved operating
income. Raw material cost increases continue to strain margin levels,
and the realization of announced selling price increases will become
better known as the second quarter progresses.
Lamson Home Products' net sales rose more than 13 percent as this
segment continues to benefit from market share gains announced
in the second half of 2003. Operating income is down 9 percent
from the prior-year first quarter due to higher raw material costs
and transition costs associated with the market share gains.
The PVC Pipe segment experienced a decrease of nearly 7 percent
in net sales due to weak market conditions in January and February.
Volume and pricing improved consistently late in the quarter, but
raw material cost increases for PVC resin outpaced the improvement
in selling prices. The Company anticipates some improvement in
pricing if demand continues to strengthen in the second quarter.
Working capital efficiency showed a positive trend in the first
quarter of 2004 as inventory turns and accounts receivable days
sales outstanding (DSOs) improved. The inventory turn ratio rose
to 6.8 turns in the first quarter of 2004, and compared favorably
with 6.3 turns and 4.6 turns in the first quarters of 2003 and
2002, respectively. If present business volume levels continue
throughout the year, the Company anticipates that inventory turns
will continue to improve in the subsequent quarters of 2004.
Accounts receivable DSOs were 45.1 days in the first quarter of
2004, continuing the improvement the Company has achieved in this
area during the past two years. The DSOs in the first quarters
of 2003 and 2002 were 46.6 days and 49.7 days, respectively.
The Company's debt level and ratios were relatively unchanged
in the first quarter, compared with the fourth quarter of 2003.
Typically, the first quarter is a period of increasing working
capital investment at the start of the spring construction season.
Outlook
Earlier this month, the Company raised its range of projected
earnings for the year to 39 to 43 cents per diluted share for 2004,
compared with net earnings of 27 cents per diluted share from continuing
operations for 2003. This revised earnings range could improve
if present sales order trends continue and improved pricing levels
are realized. While overall business activity clearly has been
on the rise over the past six weeks, the Company has experienced
little improvement from the commercial and industrial construction
markets. Office vacancy rates remain very high. The Company's expectation
is that it will be mid-to-late 2004 before improvement begins in
these key markets.
Conference Call:
A live Internet broadcast of the Company's conference call regarding
its first quarter financial performance can be accessed via the
Investor Relations page on the Company's Web site ( www.lamson-sessions.com
) at 2:00 p.m. Eastern Time on Friday, April 30, 2004.
Lamson & Sessions is a leading producer of thermoplastic enclosures,
fittings, wiring outlet boxes and conduit for the electrical, telecommunications,
consumer, power and wastewater markets. For additional information,
please visit our Web site at: www.lamson-sessions.com .
This press release contains forward-looking statements that involve
risks and uncertainties within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially
from those expected as a result of a variety of factors, such as:
(i) the volatility of resin pricing, (ii) the ability of the Company
to pass through raw material cost increases to its customers, (iii)
maintaining a stable level of housing starts, telecommunications
infrastructure spending, consumer confidence and general construction
trends, (iv) the continued availability and reasonable terms of
bank financing and (v) any adverse change in the recovery trend
of the country's general economic condition affecting the markets
for the Company's products. Because forward-looking statements
are based on a number of beliefs, estimates and assumptions by
management that could ultimately prove to be inaccurate, there
is no assurance that any forward-looking statement will prove to
be accurate.
THE LAMSON & SESSIONS CO.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
First Quarter Ended
2004 2003
NET SALES $84,286 100.0% $79,445 100.0%
COST OF PRODUCTS SOLD 69,711 82.7% 66,174 83.3%
GROSS PROFIT 14,575 17.3% 13,271 16.7%
OPERATING EXPENSES 11,379 13.5% 10,677 13.4%
OTHER (INCOME) (924) -1.1% - 0.0%
OPERATING INCOME 4,120 4.9% 2,594 3.3%
INTEREST 1,955 2.3% 2,213 2.8%
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 2,165 2.6% 381 0.5%
INCOME TAX PROVISION 866 1.1% 155 0.2%
INCOME FROM CONTINUING OPERATIONS 1,299 1.5% 226 0.3%
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAX OF $256 401 0.5% - 0.0%
NET INCOME $1,700 2.0% $226 0.3%
BASIC EARNINGS PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.09 $0.02
EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX 0.03 -
NET EARNINGS $0.12 $0.02
AVERAGE SHARES OUTSTANDING 13,787 13,783
DILUTED EARNINGS PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.09 $0.02
EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX 0.03 -
NET EARNINGS $0.12 $0.02
DILUTED AVERAGE SHARES OUTSTANDING 13,958 13,789
THE LAMSON & SESSIONS CO.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
Quarter Quarter
Ended Year Ended Ended
April 3, January 3, April 5,
2004 2004 2003
ACCOUNTS RECEIVABLE, NET $50,612 $38,196 $42,458
INVENTORIES, NET 36,397 30,143 37,227
OTHER CURRENT ASSETS 14,347 13,038 14,700
PROPERTY, PLANT AND EQUIPMENT, NET 48,508 51,326 50,408
GOODWILL 21,519 21,519 21,558
PENSION ASSETS 30,140 30,016 30,665
OTHER ASSETS 22,420 24,075 23,946
TOTAL ASSETS $223,943 $208,313 $220,962
ACCOUNTS PAYABLE $31,258 $16,928 $28,142
OTHER CURRENT LIABILITIES 39,093 40,098 35,570
LONG-TERM DEBT 84,104 82,990 91,766
OTHER LONG-TERM LIABILITIES 29,181 29,782 28,927
SHAREHOLDERS' EQUITY 40,307 38,515 36,557
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $223,943 $208,313 $220,962
THE LAMSON & SESSIONS CO.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(In thousands)
First Quarter Ended
2004 2003
OPERATING ACTIVITIES
NET INCOME $1,700 $226
ADJUSTMENTS TO RECONCILE NET INCOME
TO CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION 2,328 2,289
AMORTIZATION 400 400
GAIN ON SALE OF FIXED ASSETS (924) -
DEFERRED INCOME TAXES 957 109
NET CHANGE IN WORKING CAPITAL
ACCOUNTS:
ACCOUNTS RECEIVABLE (12,416) (5,772)
INVENTORIES (6,254) (4,997)
PREPAID EXPENSES AND OTHER (1,553) 250
ACCOUNTS PAYABLE 14,330 6,933
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES (660) (7,050)
OTHER LONG-TERM ITEMS (303) 510
CASH USED IN OPERATING ACTIVITIES (2,395) (7,102)
INVESTING ACTIVITIES
NET ADDITIONS TO PROPERTY, PLANT,
AND EQUIPMENT (635) (948)
REFUND OF DEPOSITS ON EQUIPMENT
OPERATING LEASES 580 -
PROCEEDS FROM SALE OF FIXED ASSETS 1,536 -
ACQUISITIONS AND RELATED ITEMS (62) (250)
CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 1,419 (1,198)
FINANCING ACTIVITIES
NET BORROWINGS UNDER SECURED CREDIT
AGREEMENT 1,064 7,600
PAYMENT ON OTHER LONG-TERM
BORROWINGS (186) (198)
CASH PROVIDED BY FINANCING ACTIVITIES 878 7,402
DECREASE IN CASH AND CASH EQUIVALENTS (98) (898)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 468 1,496
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $370 $598
THE LAMSON & SESSIONS CO.
BUSINESS SEGMENTS
(In thousands)
First Quarter Ended
2004 2003
NET SALES
CARLON $38,163 $33,979
LAMSON HOME PRODUCTS 21,045 18,564
PVC PIPE 25,078 26,902
$84,286 $79,445
OPERATING INCOME (LOSS)
CARLON $3,639 $2,006
LAMSON HOME PRODUCTS 2,384 2,623
PVC PIPE (1,187) (701)
CORPORATE OFFICE (1,640) (1,334)
OTHER INCOME 924 -
$4,120 $2,594
DEPRECIATION AND AMORTIZATION
CARLON $1,397 $1,727
LAMSON HOME PRODUCTS 470 433
PVC PIPE 861 529
$2,728 $2,689
TOTAL ASSETS BY BUSINESS SEGMENT AT APRIL 3, 2004 AND JANUARY 3, 2004
April 3, 2004 January 3, 2004
IDENTIFIABLE ASSETS
CARLON $79,833 $79,900
LAMSON HOME PRODUCTS 32,954 30,065
PVC PIPE 46,862 34,232
CORPORATE OFFICE (INCLUDES CASH,
DEFERRED TAX, AND PENSION ASSETS) 64,294 64,116
$223,943 $208,313
SOURCE Lamson & Sessions Co.
James J. Abel, Executive Vice President and Chief Financial
Officer of Lamson & Sessions Co., +1-216-766-6557
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