Exhibit 99.1
| |
NEWS RELEASE | |
March 23, 2005
Torrance, California
Summa Reports 2nd Quarter Earnings
Summa Industries (Nasdaq NM:SUMX) reports net income of $276,000, or $.07 per share, on sales of $29,197,000 for the three months ended February 28, 2005, versus net income of $453,000, or $.06 per share, on sales of $26,545,000 for the three months ended February 29, 2004.
| | Three months ended | |
| | Feb 28, 2005 | | Feb 29, 2004 | |
Sales | | $ | 29,197,000 | | $ | 26,545,000 | |
Net income | | $ | 276,000 | | $ | 453,000 | |
Diluted earnings per share | | $ | .07 | | $ | .06 | |
Earnings have been substantially impacted by costs directly related to two major relocation initiatives; the consolidation of three plants to a new facility in Reading, PA, which was substantially completed during the second quarter, and an ongoing relocation from Bensenville, IL to Pharr, TX. The Pharr relocation is expected to be completed in the fourth quarter of fiscal 2005. The relocation costs are expected to continue through the third quarter and decline sharply thereafter. For comparison, it is noted that earnings in the second quarter of fiscal 2004 were adversely impacted by a non-recurring charge to interest expense of $266,000 for term loan breakup fees and the write-off of unamortized bank fees in connection with a change in banks. The effects of the relocation expenses and financing expenses and the pro forma earnings, calculated as though the relocation expenses and financing expenses had not been incurred, are as follows:
| | Three months ended | | Six months ended | |
| | Feb 28, 2005 | | Feb 29, 2004 | | Feb 28, 2005 | | Feb 29, 2004 | |
Operating income | | $ | 891,000 | | $ | 1,251,000 | | $ | 2,218,000 | | $ | 2,802,000 | |
Relocation expense | | $ | 497,000 | | $ | 77,000 | | $ | 896,000 | | $ | 129,000 | |
Pro forma operating income | | $ | 1,388,000 | | $ | 1,328,000 | | $ | 3,114,000 | | $ | 2,931,000 | |
| | | | | | | | | |
Net income | | $ | 276,000 | | $ | 453,000 | | $ | 886,000 | | $ | 1,283,000 | |
Tax-effected financing expenses | | — | | $ | 170,000 | | — | | $ | 170,000 | |
Tax-effected relocation expense | | $ | 318,000 | | $ | 49,000 | | $ | 573,000 | | $ | 83,000 | |
Pro forma net income | | $ | 594,000 | | $ | 672,000 | | $ | 1,459,000 | | $ | 1,536,000 | |
| | | | | | | | | |
Diluted EPS | | $ | 0.07 | | $ | 0.06 | | $ | 0.22 | | $ | 0.21 | |
Pro forma diluted EPS | | $ | 0.15 | | $ | 0.11 | | $ | 0.36 | | $ | 0.27 | |
Note that “pro forma” has no defined meaning under Generally Accepted Accounting Principles. The information presented above is for the purpose of drawing attention to two critical components of current performance. By providing this information, the Company does not assume the responsibility to provide such supplemental information in future releases of earnings. There are other components of current performance which are not highlighted in the above presentation. Investors are urged to read the Management’s Discussion and Analysis section of the Company’s Quarterly Report on Form 10-Q for the period ended February 28, 2005, which is expected to be filed by April 15, 2005.
A conference call to discuss the results will be held at 9:00 a.m., Pacific Time, Wednesday, March 23, 2005. The call-in number is (800) 776-0816 and the international call-in number is (913) 981-5505. The conference call will also be simulcast and archived by www.vcall.com.
Statements in this news release which relate to future plans, financial results, projections, events or performance, including without limitation expectations and beliefs regarding future events, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and fall under the safe harbor. These forward-looking statements include, but are not limited to, statements regarding the Company’s expectations regarding the timing of completion of the ongoing Pharr relocation, and expectations that aggregate relocation costs will diminish steadily throughout the remainder of the fiscal year. Actual results may differ materially from those anticipated because of a number of factors, including, but not limited to, delays and/or cost overruns in the ongoing Pharr relocation, implementation of additional relocation projects not currently in process, and other risks and uncertainties described in detail under “Risk Factors” in Summa’s Annual Report on Form 10-K for the fiscal year ended August 31, 2004.
Summa Industries manufactures proprietary engineered plastic products for a broad spectrum of industrial and commercial markets. The Company has manufacturing facilities across North America. Products, many of which are unique or patented, are shipped to customers worldwide.
For further information, contact Jim Swartwout, (310) 792-7024; Fax (310) 792-7079; www.summaindustries.com; or ir@summaindustries.com.
Summa Industries
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| | February 29, 2004 | | August 31, 2004 | | February 28, 2005 | |
ASSETS | | | | | | | |
| | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 147,000 | | $ | 1,248,000 | | $ | 930,000 | |
Accounts receivable | | 17,669,000 | | 18,227,000 | | 19,251,000 | |
Inventories | | 13,828,000 | | 14,749,000 | | 15,213,000 | |
Prepaid expenses and other | | 3,108,000 | | 3,782,000 | | 4,188,000 | |
| | | | | | | |
Total current assets | | 34,752,000 | | 38,006,000 | | 39,582,000 | |
Property, plant and equipment, net | | 27,967,000 | | 31,053,000 | | 32,845,000 | |
Goodwill and other assets, net | | 11,896,000 | | 11,058,000 | | 10,969,000 | |
| | | | | | | |
Total assets | | $ | 74,615,000 | | $ | 80,117,000 | | $ | 83,396,000 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | 5,871,000 | | $ | 9,088,000 | | $ | 8,793,000 | |
Accrued liabilities | | 4,211,000 | | 7,429,000 | | 5,450,000 | |
Current maturities of long-term debt | | 2,110,000 | | 2,195,000 | | 4,955,000 | |
| | | | | | | |
Total current liabilities | | 12,192,000 | | 18,712,000 | | 19,198,000 | |
Long-term debt, net of current maturities | | 21,818,000 | | 28,663,000 | | 30,603,000 | |
Other long-term liabilities | | 2,585,000 | | 2,508,000 | | 2,492,000 | |
Manditorily redeemable convertible preferred stock | | 6,472,000 | | — | | — | |
Minority interest in subsidiary | | 205,000 | | 205,000 | | 172,000 | |
Total stockholders’ equity | | 31,343,000 | | 30,029,000 | | 30,931,000 | |
| | | | | | | |
Total | | $ | 74,615,000 | | $ | 80,117,000 | | $ | 83,396,000 | |
Summa Industries
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
| | Three months ended | | Six months ended | |
| | February 29
2004 | | February 28
2005 | | February 29
2004 | | February 28
2005 | |
Net sales | | $ | 26,545,000 | | $ | 29,197,000 | | $ | 52,471,000 | | $ | 57,435,000 | |
Cost of sales | | 20,256,000 | | 23,410,000 | | 39,811,000 | | 45,203,000 | |
| | | | | | | | | |
Gross profit | | 6,289,000 | | 5,787,000 | | 12,660,000 | | 12,232,000 | |
Selling, general, administrative and other expenses | | 5,038,000 | | 4,896,000 | | 9,858,000 | | 10,014,000 | |
| | | | | | | | | |
Operating income | | 1,251,000 | | 891,000 | | 2,802,000 | | 2,218,000 | |
Interest expense | | 584,000 | | 471,000 | | 889,000 | | 838,000 | |
| | | | | | | | | |
Income before income taxes | | 667,000 | | 420,000 | | 1,913,000 | | 1,380,000 | |
Provision for income taxes | | 214,000 | | 144,000 | | 630,000 | | 494,000 | |
| | | | | | | | | |
Net income | | $ | 453,000 | | $ | 276,000 | | $ | 1,283,000 | | $ | 886,000 | |
| | | | | | | | | |
Preferred stock accretion | | $ | 185,000 | | — | | $ | 369,000 | | — | |
| | | | | | | | | |
Net income available to common stockholders | | $ | 268,000 | | $ | 276,000 | | $ | 914,000 | | $ | 886,000 | |
| | | | | | | | | |
Earnings per common share | | | | | | | | | |
Basic | | $ | .06 | | $ | .07 | | $ | .21 | | $ | .22 | |
Diluted | | $ | .06 | | $ | .07 | | $ | .21 | | $ | .22 | |
| | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | |
Basic | | 4,370,000 | | 4,002,000 | | 4,328,000 | | 3,993,000 | |
Diluted | | 4,456,000 | | 4,079,000 | | 4,403,000 | | 4,071,000 | |
