Lamson & Sessions Reports Record Net Sales for Fourth Quarter and Full-Year 2004
- Net Sales Increase 20.3 Percent in Fourth Quarter and 13.7
Percent for the Full Year
- Diluted Earnings Per Share Rose to 46 Cents for the Full Year,
in Line With Expectations
- Telecom Infrastructure Market Sales Increased 25 Percent
- Outlook for 2005: Net Sales to Increase 8-11 Percent and Diluted
Earnings Per Share Growth of 52-74 Percent
CLEVELAND, Feb. 17 /PRNewswire-FirstCall/ -- Lamson & Sessions
(NYSE: LMS) today reported record net sales of $97.1 million for
the fourth quarter of 2004, an increase of 20.3 percent over the
$80.7 million reported in the fourth quarter of 2003. For the full
year, net sales rose to $387.1 million, an increase of 13.7 percent
compared with the $340.5 million reported in 2003.
Net income for the fourth quarter of 2004 was $1.3 million, or
9 cents per diluted share, which includes the final expenses associated
with a plant closure of $444,000 ($280,000 net of tax, or 2 cents
per diluted share). In the fourth quarter of 2003, the Company
reported a net loss of $2.4 million, or 18 cents per diluted share,
which included a loss from discontinued operations of $2.7 million
net of tax, or 20 cents per diluted share.
Net income for the year increased to $6.5 million, or 46 cents
per diluted share, which includes a litigation settlement charge
of $1.7 million ($1.1 million net of tax, or 8 cents per diluted
share) and total net costs associated with a plant closure of $213,000
($134,000 net of tax, or 1 cent per diluted share). The $924,000,
or 7 cents per diluted share, net gain on the sale of this facility,
which occurred in the first quarter of this year, was more than
offset by subsequent closure and relocation costs. In 2003, the
Company reported net income of $1.0 million, or 7 cents per diluted
share, which included a loss from discontinued operations of $2.7
million net of tax, or 20 cents per diluted share.
"We are very pleased that the operating improvements and cost-saving
measures we have implemented in the past few years have helped
us take greater advantage of the recovery in some of our key markets,
such as commercial and industrial construction and telecom infrastructure
construction," said John B. Schulze, Chairman, President and Chief
Executive Officer. "This momentum is expected to carry over into
2005 and support our sales growth estimates of 8 to 11 percent
for the year."
The Company experienced some strengthening of its gross margin
in both the fourth quarter and full year 2004, despite incurring
significantly higher raw material costs, particularly for polyvinyl
chloride (PVC) and high density polyethylene (HDPE) resins. These
raw material costs continue to be under pressure due to higher
energy costs, and this trend is expected to continue in 2005.
Operating expenses rose by 19.7 percent in the fourth quarter
and 11.5 percent for the full year 2004, reflecting higher variable
sales costs and incentive compensation expense, as well as increased
legal and professional fees associated with Sarbanes-Oxley compliance
efforts.
Business Segments
The Carlon business segment net sales grew approximately 19 percent
in both the fourth quarter and full year 2004 over the same periods
in 2003. The primary factor in this growth resulted from a more
than 25 percent increase in telecom market demand, compared with
2003 levels. This demand increase was driven by expansion in fiber-to-the-premise
projects. Operating income in this segment doubled to $4.0 million
in the fourth quarter of 2004 compared with $2.0 million in the
fourth quarter of 2003. For the year, operating income increased
42 percent to $16.8 million in 2004 from $11.8 million in 2003,
as a result of improved volume and higher sales prices.
The Lamson Home Products business segment experienced nearly
flat net sales of $23.5 million in the fourth quarter of 2004 when
compared with the $23.7 million reported in the fourth quarter
of 2003. For the full year 2004, net sales rose 6.1 percent to
$86.5 million compared with $81.5 million in 2003. Lamson Home
Products saw its operating income fall by 41 percent in the fourth
quarter, and 36 percent for the year, as raw material costs rose
steadily throughout the year but selling prices remained flat.
The PVC Pipe business segment experienced consistently improving
demand activity throughout the year as net sales increased by 47.3
percent in the fourth quarter and 11.4 percent for the full year
of 2004, when compared with similar periods in 2003. Market activity
strengthened shipment volume significantly throughout the fourth
quarter, and sales prices improved as well. As a result, this business
segment was able to substantially reduce its operating loss to
$737,000 in the fourth quarter of 2004 compared with a $2.3 million
loss in the fourth quarter of 2003. For the full year, the operating
loss was reduced to $1.5 million from the $5.1 million reported
in 2003.
Working Capital and Debt
Along with the strong net sales growth, the Company was able
to improve its inventory turns to 7.5 times in 2004 compared with
7.4 times in 2003. In addition, the accounts receivable days outstanding
improved to 51 days in 2004 compared with 52.5 days in 2003. This
continuously improving working capital management contributed to
a $7 million reduction in debt and further lowered the Company's
debt leverage despite the need to support the net sales growth.
Business Outlook
For 2005, the Company anticipates further strengthening of its
key construction markets which should allow for net sales growth
to a range of $420-$430 million, or 8-11 percent for the year.
This improved market activity is expected to assist the Company
in its efforts to recover some of its raw material costs, and higher
capacity utilization in the Company's plants should reduce manufacturing
overhead variances. As a result, net income should strengthen progressively
throughout the year and result in diluted earnings per share of
70-80 cents for the year, an increase of 52-74 percent over 2004.
As announced on October 5, 2004, the Company is reviewing various
strategic alternatives to enhance shareholder value, which may
include the sale of part or all of the Company. This evaluation
process is continuing.
Conference Call
A live Internet broadcast of the Company's conference call regarding
its fourth-quarter and full-year financial performance can be accessed
via the investor relations page on the Company's Web site ( http://www.lamson-sessions.com
) at 2:00 p.m. Eastern Time on Thursday, February 17, 2005.
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: http://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 impact, outcome and effects of the Company's exploration
of strategic alternatives, (ii) the volatility of resin pricing,
(iii) the ability of the Company to pass through raw material cost
increases to its customers, (iv) maintaining a stable level of
housing starts, telecommunications infrastructure spending, consumer
confidence and general construction trends, (v) the continued availability
and reasonable terms of bank financing, and (vi) 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)
Fourth Quarter Ended
2004 2003
NET SALES $97,077 100.0% $80,729 100.0%
COST OF PRODUCTS SOLD 82,088 84.6% 69,142 85.6%
GROSS PROFIT 14,989 15.4% 11,587 14.4%
SELLING AND MARKETING EXPENSES 6,426 6.6% 5,228 6.5%
GENERAL AND ADMINISTRATIVE EXPENSES 3,969 4.1% 3,409 4.2%
RESEARCH AND DEVELOPMENT 506 0.5% 469 0.6%
OPERATING EXPENSES 10,901 11.2% 9,106 11.3%
LITIGATION SETTLEMENT - 0.0% - 0.0%
OTHER EXPENSE, NET 444 0.4% - 0.0%
OPERATING INCOME 3,644 3.8% 2,481 3.1%
INTEREST 2,028 2.1% 2,095 2.6%
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 1,616 1.7% 386 0.5%
INCOME TAX PROVISION 345 0.4% 93 0.1%
INCOME FROM CONTINUING OPERATIONS 1,271 1.3% 293 0.4%
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAX OF
$1,750 AND ($256) - 0.0% (2,738) -3.4%
NET INCOME (LOSS) $1,271 1.3% $(2,445) -3.0%
BASIC EARNINGS (LOSS) PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.09 $0.02
(LOSS) EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX - (0.20)
NET EARNINGS (LOSS) $0.09 $(0.18)
AVERAGE SHARES OUTSTANDING 13,878 13,786
DILUTED EARNINGS (LOSS) PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.09 $0.02
(LOSS) EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX - (0.20)
NET EARNINGS (LOSS) $0.09 $(0.18)
DILUTED AVERAGE SHARES OUTSTANDING 14,417 13,786
NOTE: Certain amounts in the prior periods have been reclassified to
conform with current period presentations.
THE LAMSON & SESSIONS CO.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Twelve Months Ended
2004 2003
NET SALES $387,139 100.0% $340,487 100.0%
COST OF PRODUCTS SOLD 323,455 83.6% 286,300 84.1%
GROSS PROFIT 63,684 16.4% 54,187 15.9%
SELLING AND MARKETING EXPENSES 26,527 6.8% 23,787 6.9%
GENERAL AND ADMINISTRATIVE EXPENSES 15,349 4.0% 13,831 4.1%
RESEARCH AND DEVELOPMENT 2,198 0.6% 1,911 0.6%
OPERATING EXPENSES 44,074 11.4% 39,529 11.6%
LITIGATION SETTLEMENT 1,728 0.4% - 0.0%
OTHER EXPENSE. NET 213 0.1% - 0.0%
OPERATING INCOME 17,669 4.5% 14,658 4.3%
INTEREST 7,925 2.0% 8,527 2.5%
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 9,744 2.5% 6,131 1.8%
INCOME TAX PROVISION 3,596 0.9% 2,391 0.7%
INCOME FROM CONTINUING OPERATIONS 6,148 1.6% 3,740 1.1%
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAX OF
$1,750 AND ($256) 401 0.1% (2,738) -0.8%
NET INCOME (LOSS) $6,549 1.7% $1,002 0.3%
BASIC EARNINGS (LOSS) PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.45 $0.27
(LOSS) EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX 0.03 (0.20)
NET EARNINGS (LOSS) $0.47 $0.07
AVERAGE SHARES OUTSTANDING 13,815 13,785
DILUTED EARNINGS (LOSS) PER SHARE:
EARNINGS FROM CONTINUING OPERATIONS $0.43 $0.27
(LOSS) EARNINGS FROM DISCONTINUED
OPERATIONS, NET OF TAX 0.03 (0.20)
NET EARNINGS (LOSS) $0.46 $0.07
DILUTED AVERAGE SHARES OUTSTANDING 14,164 13,894
NOTE: Certain amounts in the prior periods have been reclassified to
conform with current period presentations.
THE LAMSON & SESSIONS CO.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
Year Ended Year Ended
January 1, 2005 January 3, 2004
ACCOUNTS RECEIVABLE, NET $48,391 $38,196
INVENTORIES, NET 36,860 30,143
OTHER CURRENT ASSETS 15,494 13,038
PROPERTY, PLANT AND EQUIPMENT, NET 47,961 51,326
GOODWILL 21,480 21,519
PENSION ASSETS 30,513 30,016
OTHER ASSETS 17,803 24,075
TOTAL ASSETS $218,502 $208,313
ACCOUNTS PAYABLE $24,213 $16,928
SECURED CREDIT AGREEMENT - CURRENT 75,000 11,000
OTHER CURRENT LIABILITIES 31,899 29,098
LONG-TERM DEBT 11,876 82,990
OTHER LONG-TERM LIABILITIES 30,138 29,782
SHAREHOLDERS' EQUITY 45,376 38,515
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $218,502 $208,313
THE LAMSON & SESSIONS CO.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(In thousands)
Twelve Months Ended
2004 2003
OPERATING ACTIVITIES
NET INCOME $6,549 $1,002
ADJUSTMENTS TO RECONCILE NET INCOME
TO CASH PROVIDED BY OPERATING ACTIVITIES:
LOSS FROM DISCONTINUED OPERATIONS - 2,738
DEPRECIATION 9,140 9,195
AMORTIZATION 1,599 1,599
GAIN ON SALE OF FIXED ASSETS (933) -
DEFERRED INCOME TAXES 3,913 2,280
NET CHANGE IN WORKING CAPITAL ACCOUNTS:
ACCOUNTS RECEIVABLE (10,195) (1,510)
INVENTORIES (6,717) 2,087
PREPAID EXPENSES AND OTHER 313 (689)
ACCOUNTS PAYABLE 7,285 (4,281)
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 926 (2,041)
PENSION PLAN CONTRIBUTIONS (1,866) (1,126)
OTHER LONG-TERM ITEMS 1,821 457
CASH PROVIDED BY OPERATING ACTIVITIES 11,835 9,711
INVESTING ACTIVITIES
NET ADDITIONS TO PROPERTY, PLANT,
AND EQUIPMENT (6,370) (8,562)
PROCEEDS FROM SALE OF FIXED ASSETS 1,595 -
ACQUISITIONS AND RELATED ITEMS (250) (813)
CASH USED IN INVESTING ACTIVITIES (5,025) (9,375)
FINANCING ACTIVITIES
NET PAYMENTS UNDER SECURED CREDIT
AGREEMENT (6,400) (600)
PAYMENTS ON OTHER LONG-TERM
BORROWINGS (599) (772)
PURCHASE AND RETIREMENT OF TREASURY
STOCK (205) -
EXERCISE OF STOCK OPTIONS 609 8
CASH USED IN FINANCING ACTIVITIES (6,595) (1,364)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 215 (1,028)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 468 1,496
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $683 $468
THE LAMSON & SESSIONS CO.
BUSINESS SEGMENTS
(In thousands)
Fourth Quarter Twelve Months
Ended Ended
2004 2003 2004 2003
NET SALES
CARLON $44,313 $37,211 $183,800 $154,090
LAMSON HOME PRODUCTS 23,548 23,690 86,510 81,514
PVC PIPE 29,216 19,828 116,829 104,883
$97,077 $80,729 $387,139 $340,487
OPERATING INCOME (LOSS)
CARLON $4,024 $1,955 $16,836 $11,840
LAMSON HOME PRODUCTS 2,493 4,222 8,776 13,766
PVC PIPE (737) (2,295) (1,502) (5,119)
CORPORATE OFFICE (1,692) (1,401) (6,228) (5,829)
OTHER EXPENSE (444) - (213) -
$3,644 $2,481 $17,669 $14,658
DEPRECIATION AND AMORTIZATION
CARLON $1,264 $1,665 $5,342 $6,801
LAMSON HOME PRODUCTS 488 436 1,881 1,722
PVC PIPE 887 604 3,516 2,271
$2,639 $2,705 $10,739 $10,794
TOTAL ASSETS BY BUSINESS SEGMENT AT JANUARY 1, 2005 AND JANUARY 3, 2004
January 1, 2005 January 3, 2004
IDENTIFIABLE ASSETS
CARLON $77,473 $79,900
LAMSON HOME PRODUCTS 34,190 30,065
PVC PIPE 44,650 34,232
CORPORATE OFFICE (INCLUDES CASH,
DEFERRED TAX, AND PENSION ASSETS) 62,189 64,116
$218,502 $208,313
SOURCE Lamson & Sessions Co.
/CONTACT: James J. Abel, Executive Vice President and Chief Financial
Officer of Lamson & Sessions, +1-216-766-6557/
(Web site: http://www.lamson-sessions.com /
(LMS)
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