EXHIBIT 99.1
Global Power Equipment Group Inc.
Reports Fourth Quarter EPS of $0.27,
FY2002 EPS of $1.14
Strong Cash Flow Results in Net Debt to Capital Ratio of Below One Percent at Year End
TULSA, Oklahoma, February 24, 2003 – Global Power Equipment Group Inc. (NYSE: GEG), a leading design, engineering and fabrication firm providing a broad array of equipment and services to diversified global companies engaged in the power and process industries, today reported financial results for the fourth quarter ended December 28, 2002.
Global Power Equipment Group reported earnings of $12.1 million, or $0.27 per diluted share, on revenues of $107.7 million for the fourth quarter of fiscal 2002. This compares to net earnings of $17.9 million, or $0.39 per diluted share, on revenues of $215.1 million for the fourth quarter of fiscal 2001.
For the twelve months ended December 28, 2002, the Company reported net earnings of $51.9 million, or $1.14 per diluted share, on revenues of $586.8 million. This compares to pro forma net earnings for the same period last year of $49.3 million, or $1.05 per diluted share, on revenues of $723.5 million. Pro forma earnings for 2001 were adjusted downward from a reported $117.7 million to exclude certain one-time benefits and charges pertaining to the change in the company’s tax status, recapitalization of debt, one-time charges related to the Company’s May, 2001 initial public offering and other non-recurring items.
The Company’s gross profit for the fourth quarter totaled $30.4 million representing a 28.2 percent gross margin compared to the prior year gross margin of 19.8 percent. For the full fiscal year 2002, the Company’s gross margin was 22.4 percent compared to 18.2 percent for fiscal year 2001.
The Company generated EBITDA (earnings before interest, taxes, depreciation and amortization) of $21.5 million for the fourth quarter, down approximately 32 percent from the $31.8 million recorded during the same period in 2001. EBITDA for the twelve months of 2002 totaled $92.9 million compared to adjusted EBITDA of $94.4 million for the twelve months of 2001. Adjusted EBITDA in 2001 included an add-back of $18.1 million relating to a one-time charge for the pre-payment of debt.
The Company had cash and cash equivalents of $59.0 million on hand at the end of December 2002 compared to total indebtedness of $60.1 million. At these levels, the Company’s net debt to net capitalization ratio at the end of 2002 was less than one percent as compared to 57 percent at the end of 2001.
“We greatly exceeded our earnings expectations and posted very strong operating cash flows for the fourth quarter,” stated Larry Edwards, Global Power Equipment Group’s president and chief executive officer. “The financial results we posted for 2002 are a direct result of our business model and the hard work of our management team and employees. While our margins benefited from the year-end completion of jobs that were bid during more robust market conditions, our record gross
Global Power Equipment Group Inc.
Fourth Quarter 2002 Earnings — Page 2
margin for the fourth quarter is attributable to our ability to shift our manufacturing locations for many of those jobs to lower cost countries and capture the savings.”
Mr. Edwards further added, “Although at the present time market conditions inside the United States are extremely soft and reflect the adjustments of recently added capacity and financial constraints throughout the power generation industry, we continue to see some modest demand in other markets around the globe. However, international demand is not yet strong enough to offset the decline we have witnessed domestically. Nonetheless, our financial position is stronger than ever and we are confident in our ability to participate in the international power generation opportunities across a number of markets and improve our market share.”
At the end of the fourth quarter, the Company’s firm backlog totaled $275 million compared to $342 million at the end of September 2002 and $557 million at the end of 2001. Approximately 34 percent of the Company’s bookings during 2002 originated from projects outside the United States compared to approximately 12 percent during 2001.
Earnings Estimate
Based upon information management currently has evaluated, in conjunction with this release, management estimates 2003 earnings of between $0.30 to $0.40 per diluted share on sales of between $275 and $325 million, and establishes an estimate of first quarter 2003 earnings of approximately $0.07 per share on estimated revenues of $65 million.
About Global Power
Oklahoma based Global Power Equipment Group Inc. (NYSE: GEG) is a global designer, engineer and fabricator of equipment for gas turbine power plants. The company markets its products under the Deltak, Braden, and Consolidated Fabricators brands and also offers value-added services including engineering, retrofit and upgrade, and maintenance and repair. Global Power Equipment Group’s equipment is installed in power plants in more than 30 countries on six continents, giving it what it believes to be one of the largest installed bases of equipment for gas turbine power plants. Global Power Equipment Group maintains a web site atwww.globalpower.com.
Statements contained in this release regarding the Company’s or management’s intentions, beliefs, expectations, or predictions for the future, including, but not limited to, those regarding anticipated operating results, are forward looking statements within the meaning of U.S. federal securities laws and are subject to a number of risks, assumptions and uncertainties that could cause the Company’s actual results to differ materially from those projected. Information concerning some of the factors that could cause actual results to differ materially from those in, or implied by, the forward looking statements are set forth under “Risk Factors” in the Company’s Form 10-K for the period ending December 29, 2001, and other reports on file with the U.S. Securities and Exchange Commission.
Company Contact:
Bob Zwerneman
Director of Investor Relations
(918) 274-2398
Global Power Equipment Group Inc., 6120 S. Yale, Suite 1480, Tulsa, OK 74136 U.S.A.
Phone: 1-918 488-0828 FAX: 1-918 488-8389
Global Power Equipment Group Inc.
Fourth Quarter 2002 Earnings — Page 3
GLOBAL POWER EQUIPMENT GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 28, 2002 | December 29, 2001 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 59,042 |
| $ | 2,435 |
| ||
Accounts receivable, net of allowance of $1,775 and $2,385 |
| 82,844 |
|
| 123,182 |
| ||
Inventories |
| 4,403 |
|
| 5,973 |
| ||
Costs and estimated earnings in excess of billings |
| 62,289 |
|
| 131,355 |
| ||
Deferred tax assets |
| 22,385 |
|
| 19,068 |
| ||
Other current assets |
| 2,082 |
|
| 1,920 |
| ||
Total current assets |
| 233,045 |
|
| 283,933 |
| ||
Property, plant and equipment, net |
| 25,469 |
|
| 27,810 |
| ||
Deferred tax assets |
| 64,803 |
|
| 71,454 |
| ||
Goodwill, net |
| 45,000 |
|
| 45,000 |
| ||
Other assets |
| 1,387 |
|
| 2,434 |
| ||
Total assets | $ | 369,704 |
| $ | 430,631 |
| ||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 5,423 |
| $ | 15,505 |
| ||
Accounts payable |
| 29,773 |
|
| 56,005 |
| ||
Accrued compensation and employee benefits |
| 9,301 |
|
| 11,838 |
| ||
Accrued warranty |
| 19,460 |
|
| 16,489 |
| ||
Billings in excess of costs and estimated earnings |
| 107,242 |
|
| 145,522 |
| ||
Other current liabilities |
| 13,888 |
|
| 17,968 |
| ||
Total current liabilities |
| 185,087 |
|
| 263,327 |
| ||
Long-term debt, net of current maturities |
| 54,650 |
|
| 90,124 |
| ||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Common stock |
| 440 |
|
| 440 |
| ||
Paid-in capital deficit |
| (28,321 | ) |
| (28,329 | ) | ||
Accumulated comprehensive income (loss) |
| 822 |
|
| (80 | ) | ||
Retained earnings |
| 157,026 |
|
| 105,149 |
| ||
Total stockholders’ equity |
| 129,967 |
|
| 77,180 |
| ||
Total liabilities and equity | $ | 369,704 |
| $ | 430,631 |
| ||
Global Power Equipment Group Inc., 6120 S. Yale, Suite 1480, Tulsa, OK 74136 U.S.A.
Phone: 1-918 488-0828 FAX: 1-918 488-8389
Global Power Equipment Group Inc.
Fourth Quarter 2002 Earnings — Page 4
GLOBAL POWER EQUIPMENT GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | ||||||||||||
December 28, 2002 | December 29, 2001 | December 28, 2002 | December 29, 2001 | ||||||||||
Revenues | $ | 107,689 | $ | 215,142 | $ | 586,805 | $ | 723,504 |
| ||||
Cost of sales |
| 77,339 |
| 172,544 |
| 455,339 |
| 591,958 |
| ||||
Gross profit |
| 30,350 |
| 42,598 |
| 131,466 |
| 131,546 |
| ||||
Selling and administrative expenses |
| 9,798 |
| 11,594 |
| 42,212 |
| 40,333 |
| ||||
Amortization expense |
| — |
| 434 |
| — |
| 1,716 |
| ||||
Operating income |
| 20,552 |
| 30,570 |
| 89,254 |
| 89,497 |
| ||||
Interest expense, net |
| 673 |
| 1,182 |
| 4,210 |
| 15,896 |
| ||||
Income before income taxes and extraordinary loss |
| 19,879 |
| 29,388 |
| 85,044 |
| 73,601 |
| ||||
Income tax provision |
| 7,753 |
| 11,461 |
| 33,167 |
| 22,905 |
| ||||
Income tax benefit from tax status change |
| — |
| — |
| — |
| (88,000 | ) | ||||
Income before extraordinary loss |
| 12,126 |
| 17,927 |
| 51,877 |
| 138,696 |
| ||||
Extraordinary loss on debt extinguishment, net of tax |
| — |
| — |
| — |
| 18,060 |
| ||||
Net income |
| 12,126 |
| 17,927 |
| 51,877 |
| 120,636 |
| ||||
Preferred dividend |
| — |
| — |
| — |
| (2,947 | ) | ||||
Net income available to common stockholders | $ | 12,126 | $ | 17,927 | $ | 51,877 | $ | 117,689 |
| ||||
Basic income per common share | |||||||||||||
Weighted average shares outstanding |
| 43,976 |
| 43,953 |
| 43,959 |
| 39,275 |
| ||||
Income before extraordinary loss | $ | 0.28 | $ | 0.41 | $ | 1.18 | $ | 3.46 |
| ||||
Extraordinary loss |
| — |
| — |
| — |
| (0.46 | ) | ||||
Net income available to common stockholders | $ | 0.28 | $ | 0.41 | $ | 1.18 | $ | 3.00 |
| ||||
Diluted income per common share | |||||||||||||
Diluted shares outstanding |
| 45,576 |
| 45,670 |
| 45,636 |
| 41,011 |
| ||||
Income before extraordinary loss | $ | 0.27 | $ | 0.39 | $ | 1.14 | $ | 3.31 |
| ||||
Extraordinary loss |
| — |
| — |
| — |
| (0.44 | ) | ||||
Net income available to common stockholders | $ | 0.27 | $ | 0.39 | $ | 1.14 | $ | 2.87 |
| ||||
Global Power Equipment Group Inc.
Fourth Quarter 2002 Earnings — Page 5
GLOBAL POWER EQUIPMENT GROUP INC.
EARNINGS AND EBITDA INFORMATION
2002 ACTUAL AND 2001 PRO FORMA
(in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | ||||||||||||
December 28, 2002 | December 29, 2001 | December 28, 2002 | December 29, 2001 | ||||||||||
Net income available to common stockholders | $ | 12,126 | $ | 17,927 | $ | 51,877 | $ | 117,689 |
| ||||
Add (Less): | |||||||||||||
Preferred dividend |
| — |
| — |
| — |
| 2,947 |
| ||||
Extraordinary loss on debt extinguishment, net of tax |
| — |
| — |
| — |
| 18,060 |
| ||||
Income tax benefit from tax status change |
| — |
| — |
| — |
| (88,000 | ) | ||||
Reduced tax provision due to non-taxable status prior to IPO |
| — |
| — |
| — |
| (8,607 | ) | ||||
Pro forma effect of debt restructuring |
| — |
| — |
| — |
| 6,394 |
| ||||
IPO related compensation charge and other |
| — |
| — |
| — |
| 804 |
| ||||
Pro forma net income available to common stockholders | $ | 12,126 | $ | 17,927 | $ | 51,877 | $ | 49,287 |
| ||||
Pro forma basic income per common share | |||||||||||||
Weighted average shares outstanding |
| 43,976 |
| 43,953 |
| 43,959 |
| 39,275 |
| ||||
Net income available to common stockholders | $ | 0.28 | $ | 0.41 | $ | 1.18 | $ | 1.25 |
| ||||
Pro forma diluted income per common share | |||||||||||||
Diluted shares outstanding |
| 45,576 |
| 45,670 |
| 45,636 |
| 46,874 |
| ||||
Net income available to common stockholders | $ | 0.27 | $ | 0.39 | $ | 1.14 | $ | 1.05 |
| ||||
EBITDA | $ | 21,500 | $ | 31,828 | $ | 92,936 | $ | 76,301 |
| ||||
Add: | |||||||||||||
Extraordinary loss on debt extinguishment, net of tax |
| — |
| — |
| — |
| 18,060 |
| ||||
Adjusted EBITDA | $ | 21,500 | $ | 31,828 | $ | 92,936 | $ | 94,361 |
| ||||