Exhibit 99.1
ERICO International Corporation
Announces Fourth Quarter and Full-Year 2004 Results
SOLON, OH(March 9, 2005) ERICO International Corporation (bond ticker CADDY) today reported results for its fourth quarter and year ended December 31, 2004.
Net sales in the fourth quarter of 2004 were $84.7 million, an increase of $6.9 million, or 8.9%, compared with fourth quarter 2003 sales of $77.8 million. The increase in net sales was due to a combination of increased sales volume, increased selling prices and the favorable effect of foreign currency exchange rates.
Gross profit in the fourth quarter of 2004 was $28.4 million, up $3.0 million, or 11.8%, from the fourth quarter 2003 gross profit of $25.4 million.
Operating expenses in the fourth quarter of 2004 were $23.1 million, up $2.6 million, or 12.9%, from fourth quarter 2003 operating expenses of $20.5 million. As a percentage of net sales, operating expenses increased to 27.3% in the fourth quarter of 2004 from 26.3% for the fourth quarter of 2003.
The Company’s net cash provided by operating activities in the fourth quarter of 2004 was $12.7 million, compared with $12.5 million in the fourth quarter of 2003. The Company generated EBITDA of $10.1 million in the fourth quarter of 2004, compared with EBITDA of $8.5 million in the fourth quarter of 2003, an increase of $1.6 million, or 18.9%. See below for the Company’s definition of EBITDA and a reconciliation of EBITDA to net cash provided by operating activities computed in accordance with accounting principles generally accepted in the United States (“GAAP”).
FULL-YEAR RESULTS
Net sales for the year ended December 31, 2004 were $352.6 million, up $42.7 million, or 13.8%, from sales of $309.9 million for the year ended December 31, 2003, setting a new annual sales record. Foreign currency exchange rates contributed $10.7 million toward the 2004 sales increase. The remaining $32.0 million increase in net sales for the year ended December 31, 2004 compared with the year ended December 31, 2003 was due to a combination of increased sales volume and increased selling prices.
Gross profit for the year ended December 31, 2004 was $124.7 million, up $14.2 million, or 12.8%, from gross profit of $110.5 million for the year ended December 31, 2003.
Operating expenses for the year ended December 31, 2004 were $87.8 million, up $6.5 million, or 8.0%, from operating expenses of $81.3 million for the year ended December 31, 2003. As a percentage of net sales, operating expenses declined to 24.9% for the year ended December 31, 2004 from 26.2% for the year ended December 31, 2003.
The Company’s net cash provided by operating activities was $22.7 million for the year ended December 31, 2004 compared with $18.0 million for the year ended December 31, 2003. The Company generated EBITDA of $51.1 million for the year ended December 31, 2004, up $5.8
million, or 12.8%, from EBITDA of $45.3 million for the year ended December 31, 2003, setting a new annual EBITDA record.
CONFERENCE CALL
The Company will hold a conference call at 10:00 a.m. (Eastern) on March 9, 2005 to provide an overview of the Company’s operating results for the fourth quarter and year ended December 31, 2004. Those interested in hearing the conference call may listen via telephone by dialing 1-866-482-6973 (the ID for the call is 653009).
ERICO is a leading designer, manufacturer and marketer of precision-engineered specialty metal products serving global niche product markets in a diverse range of electrical, commercial and industrial construction, utility and rail applications. The Company is headquartered in Solon, Ohio, USA, with a network of sales locations serving more than 25 countries and with manufacturing and distribution facilities worldwide. For more information, visitwww.erico.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Statements in this press release that are not historical facts, including statements accompanied by words such as “intend,” “may” and “will,” or the negative of such terms or comparable terminology, are forward-looking statements. Forward-looking statements appearing herein may include statements concerning plans and goals, and are based on current expectations. Actual results may differ materially from those projected in the forward-looking statements as a result of, among other things, changes in global, political, business and regulatory factors, including acts of war or terrorism; changes in raw material prices; the application of environmental laws to the Company’s business; adverse events in the Company’s international markets; and the development of design innovations by competitors of the Company. The Company is also subject to risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission (“SEC”). In particular, see “Risk Factors” in the Company’s filings with the SEC, including the Annual Report on Form 10-K filed with the SEC on March 9, 2005 and available atwww.sec.gov. The Company does not undertake any ongoing obligation, other than that applied by law, to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.
ERICO International Corporation and Subsidiaries
Condensed Consolidated Income Statements
(Dollars in Thousands)
Three Months Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||||
(Unaudited) | |||||||||||||||||
Net sales | $ | 84,658 | $ | 77,758 | $ | 352,618 | $ | 309,871 | |||||||||
Cost of sales | 56,262 | 52,354 | 227,870 | 199,324 | |||||||||||||
Gross profit | 28,396 | 25,404 | 124,748 | 110,547 | |||||||||||||
Operating expenses | 23,103 | 20,466 | 87,770 | 81,296 | |||||||||||||
Operating income | 5,293 | 4,938 | 36,978 | 29,251 | |||||||||||||
Interest expense, net | 3,809 | 3,184 | 15,083 | 12,739 | |||||||||||||
Foreign exchange gain, net | (1,712 | ) | (308 | ) | (1,893 | ) | (3,943 | ) | |||||||||
Other expense | — | — | 1,736 | — | |||||||||||||
Income before income taxes | 3,196 | 2,062 | 22,052 | 20,455 | |||||||||||||
Provision for income taxes | 1,258 | 728 | 8,684 | 7,257 | |||||||||||||
Net income | $ | 1,938 | $ | 1,334 | $ | 13,368 | $ | 13,198 | |||||||||
ERICO International Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, Except Per Share Amounts)
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,321 | $ | 2,421 | ||||
Trade accounts receivable, net | 50,485 | 54,252 | ||||||
Inventories, net | 59,600 | 45,513 | ||||||
Prepaid expenses and other current assets | 8,909 | 7,745 | ||||||
Total current assets | 121,315 | 109,931 | ||||||
Property, plant and equipment, net | 52,522 | 60,630 | ||||||
Goodwill | 101,303 | 105,194 | ||||||
Trademarks and other intangible assets, net | 36,905 | 36,572 | ||||||
Other assets | 10,676 | 11,440 | ||||||
Total assets | $ | 322,721 | $ | 323,767 | ||||
Liabilities and stockholder’s net investment | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 26,422 | $ | 29,607 | ||||
Accrued compensation | 13,446 | 9,216 | ||||||
Dividend payable | 15,000 | — | ||||||
Accrued expenses and other current liabilities | 21,874 | 25,956 | ||||||
Total current liabilities | 76,742 | 64,779 | ||||||
Long-term debt | 152,175 | 140,920 | ||||||
Deferred income taxes | 28,894 | 28,939 | ||||||
Other long-term liabilities | 16,785 | 16,699 | ||||||
Stockholder’s net investment: | ||||||||
Common stock, par value $1.00 per share, 1,500,000 shares authorized, 1 share issued and outstanding | — | — | ||||||
Parent company investment | 46,699 | 72,668 | ||||||
Accumulated other comprehensive income (loss) | 1,426 | (238 | ) | |||||
Total stockholder’s net investment | 48,125 | 72,430 | ||||||
Total liabilities and stockholder’s net investment | $ | 322,721 | $ | 323,767 | ||||
ERICO International Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
Years Ended December 31, | ||||||||
2004 | 2003 | |||||||
Operating activities | ||||||||
Net income | $ | 13,368 | $ | 13,198 | ||||
Depreciation and amortization | 12,184 | 12,083 | ||||||
Other operating activities | (2,887 | ) | (7,240 | ) | ||||
Net cash provided by operating activities | 22,665 | 18,041 | ||||||
Investing activities | ||||||||
Acquisition payments, net of cash acquired | — | (3,329 | ) | |||||
Capital expenditures | (3,571 | ) | (5,252 | ) | ||||
Other investing activities | (93 | ) | (447 | ) | ||||
Net cash used in investing activities | (3,664 | ) | (9,028 | ) | ||||
Financing activities | ||||||||
Net transfers from parent company | 663 | 378 | ||||||
Dividends paid | (25,000 | ) | — | |||||
Net payments on revolving line of credit | (38,000 | ) | (4,206 | ) | ||||
Proceeds from issuance of subordinated debt | 121,500 | — | ||||||
Principal payments on long-term debt | (72,950 | ) | (6,000 | ) | ||||
Financing fees paid | (5,583 | ) | — | |||||
Net cash used in financing activities | (19,370 | ) | (9,828 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 269 | (138 | ) | |||||
Decrease in cash and cash equivalents | (100 | ) | (953 | ) | ||||
Cash and cash equivalents at beginning of period | 2,421 | 3,374 | ||||||
Cash and cash equivalents at end of period | $ | 2,321 | $ | 2,421 | ||||
The Company defines EBITDA, a non-GAAP financial measure, as net income plus income taxes, interest expense, net, depreciation, amortization and certain other non-cash, non-recurring items. The Company has chosen to present EBITDA because the Company believes it is a widely accepted financial indicator of a company’s ability to service and incur indebtedness and because EBITDA is used in the Company’s financial debt covenants. Additionally, management uses EBITDA, among other financial measures, for planning and forecasting purposes. However, EBITDA should not be considered as an alternative to net cash provided by operating activities as a measure of liquidity in accordance with GAAP. Since EBITDA is not calculated identically by all companies, the Company’s method of computation may not be comparable to those disclosed by other companies. Following is a reconciliation of EBITDA to net cash provided by operating activities, which the Company believes is the most directly comparable GAAP measure of a company’s ability to service and incur indebtedness:
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Net cash provided by operating activities | $ | 12,744 | $ | 12,548 | $ | 22,665 | $ | 18,041 | ||||||||
Interest expense, net | 3,809 | 3,184 | 15,083 | 12,739 | ||||||||||||
Provision for income taxes | 1,258 | 728 | 8,684 | 7,257 | ||||||||||||
Foreign exchange gain, net | 1,712 | 308 | 1,893 | 3,943 | ||||||||||||
Deferred taxes | (5,062 | ) | (3,290 | ) | (4,372 | ) | (2,230 | ) | ||||||||
Amortization of financing fees and discount on senior subordinated notes included in interest expense, net | (224 | ) | (200 | ) | (910 | ) | (697 | ) | ||||||||
Net changes in operating assets and liabilities | (4,097 | ) | (4,749 | ) | 8,012 | 6,224 | ||||||||||
EBITDA | $ | 10,140 | $ | 8,529 | $ | 51,055 | $ | 45,277 | ||||||||
Contact: | Polly Bloom | |
Investor Relations | ||
(440) 542-1304 |