Exhibit 99.1
![]() | Material Sciences Corporation | |||||
2200 East Pratt Blvd. | ||||||
Elk Grove Village, IL 60007 | ||||||
847-439-2210 |
COMPANY CONTACT: | MEDIA CONTACT: | |||||||
James M. Froisland | Katie Wood Znameroski | |||||||
Senior Vice President, Chief Financial Officer, | Edelman | |||||||
Chief Information Officer and Corporate Secretary | 312-240-2827 | |||||||
847-718-8020 |
FOR IMMEDIATE RELEASE
THURSDAY, October 9, 2008
Material Sciences Announces Second Quarter Fiscal 2009 Results
• | Second Quarter 2009 Net Sales Increased 1.1 Percent |
• | Gross Margin as Percent of Sales Improves 10.3 Percent |
• | Net Cash Provided by Operations of $1.1 million |
• | Successfully implemented global price increase to counter rising material costs |
• | Management announces Third and Fourth Quarter Restructuring Plan |
ELK GROVE VILLAGE, IL, October 9, 2008 – Material Sciences Corporation (NYSE: MSC), a leading provider of material-based solutions for acoustical and coated applications, today reported results for the second quarter of fiscal 2009, ended August 31, 2008.
Net sales for the second quarter of fiscal 2009 were $56.8 million, a 1.1 percent increase compared with $56.2 million in the second quarter of fiscal 2008. The company recorded a net loss of $1.3 million, or $0.09 per diluted common share, compared with a net loss of $1.7 million, or $0.12 per diluted common share, in the prior year’s quarter.
“Further deterioration in the automotive and building industries continued to negatively impact our business in the second quarter,” said Clifford D. Nastas, chief executive officer for Material Sciences. “We anticipate that the weakness in these sectors will continue through fiscal 2010, if not longer.”
“In the second quarter we achieved new milestones in our effort to transform MSC into a more efficient and diversified global provider of acoustical and coated metal solutions. We began shipments into our first Quiet Steel® application with Subaru and won several new engine applications and brake programs around the globe. Amid difficult economic conditions, we’re aggressively pursuing ways to improve our profitability. This quarter we implemented a price increase across our products to counter the impact of rising manufacturing costs. Also, this week we announced a corporate restructuring plan that is expected to reduce our cost of sales and general and administrative expenses by a total of approximately $4.0 million in the third and fourth quarter of fiscal 2009. Also, we have achieved operational improvement through our six sigma program leading to gains in productivity, and reduced claims exposure,” Nastas said.
Results of Operations – Second Quarter Sales, Gross Profit and Income
Sales of acoustical materials, which are primarily to automotive manufacturers, decreased 1.5 percent to $25.7 million in the second quarter of fiscal 2009 from $26.0 million in the second quarter of fiscal 2008. Increased sales of body panel and brakes were offset by lower sales of engine.
Sales of coated materials, which are mainly to appliance, building product and automotive customers, increased 3.3 percent to $31.1 million in the second quarter from $30.1 million in the second quarter of fiscal 2008. Sales declines in appliances/HVAC, fuel tank and building products were offset by higher sales of gasket and furniture and fixtures.
Gross profit was $6.1 million in the second quarter compared with $5.4 million in the prior period. Gross margin increased to 10.7 percent in the second quarter from 9.7 percent in the second quarter of fiscal 2008. The $0.7 million increase in gross profit in the second quarter of fiscal 2009 was primarily due to favorable operating efficiencies relating to labor & overhead, claims, and other quality improvements, that were partially offset by unfavorable product sales price/mix.
Selling, general and administrative expenses were $9.4 million in the second quarter compared with $8.6 million in the second quarter of fiscal 2008. The increase is mainly due to higher compensation costs of $0.9 million, which were partially offset by lower bad debt expense of $0.4 million.
Material Sciences recorded a loss from operations for the second quarter of $3.3 million compared with a loss of $3.2 million in the second quarter of fiscal 2008. It recorded other income of $1.1 million versus $0.4 million in the comparable period, mainly due to a gain on the sale of Manulife Financial Corporation shares in the second quarter of fiscal 2009.
Net cash provided by operations was $5.6 million for the first six months of fiscal 2009, compared with $2.8 million in the same period last year. Capital expenditures were $2.8 million for the first half of fiscal 2008 versus $3.3 million in the comparable period.
Conference Call
Material Sciences will host a conference call to review its second quarter fiscal 2009 results on Thursday, October 9, 2008, at 9:00 a.m. CT. Clifford D. Nastas, chief executive officer, and James M. Froisland, senior vice president, chief financial officer, chief information officer and corporate secretary, will discuss the company’s recent financial performance and respond to questions from the financial community.
The company invites interested investors to listen to the presentation, which will be carried live on the Internet at the company’s Web site:http://www.matsci.com. A replay of the call will be available on the site for the following 30 days. Those who wish to listen should go to the Web site several minutes before the discussion begins. After clicking on the presentation icon, investors should follow the instructions to ensure their systems are set up to hear the event, or download the correct applications at no charge.
About Material Sciences
Material Sciences Corporation is a leading provider of material-based solutions for acoustical and coated applications. MSC uses its expertise in materials, which it leverages through relationships and a network of partners, to solve customer-specific problems. The Company’s stock is traded on the New York Stock Exchange under the symbol MSC.
This news release contains forward-looking statements that are based on current expectations, forecasts and assumptions. MSC cautions the reader that the following factors could cause its actual outcomes and results to differ materially from those stated or implied in the forward-looking statements: impact of changes in the overall economy; changes in the business environment, including the transportation, building and construction, electronics and durable goods industries; competitive factors, including domestic and foreign competition for both acoustical and coated applications as well as changes in industry capacity; changes in laws, regulations, policies or other activities of governments, agencies or similar organizations (including the ruling under Section 201 of the Trade Act of 1974); the stability of governments and business conditions inside and outside of the U.S., which may affect a successful penetration of the Company’s products; acceptance of brake damping materials, engine components and body panel laminate parts by customers in North America, Asia and Europe; the continued successful operation of the Application Research Center in Michigan and the Application Development Center in Europe; increases in the prices of raw and other material inputs used by the Company, as well as availability; the loss, or changes in the operations, financial condition, including potential bankruptcy thereof, or results of operations, of one or more of the Company’s significant customers; our ability to retain key personnel; overcapacity in the coil coating industry; shifts in the supply model for our products; the impact of future warranty expenses; environmental risks, costs, recoveries and penalties associated with the Company’s past and present manufacturing operations; and other factors, risks and uncertainties identified in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended February 29, 2008, filed with the Securities and Exchange Commission on May 29, 2008, our Form 10-Q for the quarter ended May 31, 2008, filed with the Securities and Exchange Commission on July 10, 2008, and from time to time in other reports filed with the Securities and Exchange Commission.
Additional information about Material Sciences is available atwww.matsci.com.
Condensed Consolidated Statements of Operations (Unaudited)
Material Sciences Corporation and Subsidiaries
Three Months Ended August 31, | Six Months Ended August 31, | |||||||||||||||
(In thousands, except per share data) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Net Sales | $ | 56,793 | $ | 56,166 | $ | 113,958 | $ | 116,831 | ||||||||
Cost of Sales | 50,735 | 50,740 | 101,099 | 102,684 | ||||||||||||
Gross Profit | 6,058 | 5,426 | 12,859 | 14,147 | ||||||||||||
Selling, General and Administrative Expenses | 9,362 | 8,628 | 19,716 | 18,916 | ||||||||||||
Loss from Operations | (3,304 | ) | (3,202 | ) | (6,857 | ) | (4,769 | ) | ||||||||
Other Income, Net : | ||||||||||||||||
Interest Income, Net | (60 | ) | (108 | ) | (134 | ) | (190 | ) | ||||||||
Equity in Results of Joint Venture | (139 | ) | (69 | ) | (220 | ) | (125 | ) | ||||||||
Other, Net | (910 | ) | (216 | ) | (1,400 | ) | (733 | ) | ||||||||
Total Other Income, Net | (1,109 | ) | (393 | ) | (1,754 | ) | (1,048 | ) | ||||||||
Loss from Operations Before | ||||||||||||||||
Benefit for Income Taxes | (2,195 | ) | (2,809 | ) | (5,103 | ) | (3,721 | ) | ||||||||
Benefit for Income Taxes | (936 | ) | (1,131 | ) | (2,272 | ) | (1,498 | ) | ||||||||
Net Loss | $ | (1,259 | ) | $ | (1,678 | ) | $ | (2,831 | ) | $ | (2,223 | ) | ||||
Basic Net Loss Per Share | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.21 | ) | $ | (0.15 | ) | ||||
Diluted Net Loss Per Share | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.21 | ) | $ | (0.15 | ) | ||||
Weighted Average Number of Common Shares Outstanding Used for Basic Net Loss Per Share | 13,678 | 14,466 | 13,776 | 14,497 | ||||||||||||
Dilutive Shares | — | — | — | — | ||||||||||||
Weighted Average Number of Common Shares Outstanding Plus Dilutive Shares | 13,678 | 14,466 | 13,776 | 14,497 | ||||||||||||
Outstanding Common Stock Options Having No Dilutive Effect | 582 | 169 | 582 | 169 | ||||||||||||
Condensed Consolidated Balance Sheets (Unaudited)
Material Sciences Corporation and Subsidiaries
(In thousands) | August 31, 2008 | February 29, 2008 | ||||||
Assets: | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 12,536 | $ | 7,913 | ||||
Short Term Investments | — | 6,933 | ||||||
Receivables, Less Reserves of $2,574 and $3,708, Respectively | 28,208 | 28,547 | ||||||
Income Taxes Receivable | 1,952 | 3,316 | ||||||
Prepaid Expenses | 1,759 | 744 | ||||||
Inventories | 35,889 | 31,811 | ||||||
Deferred Income Taxes | 3,010 | 3,754 | ||||||
Assets Held for Sale | 3,882 | 3,882 | ||||||
Other Assets | 149 | 180 | ||||||
Total Current Assets | 87,385 | 87,080 | ||||||
Property, Plant and Equipment | 215,916 | 213,842 | ||||||
Accumulated Depreciation, Amortization and Accretion | (151,834 | ) | (146,541 | ) | ||||
Net Property, Plant and Equipment | 64,082 | 67,301 | ||||||
Other Assets: | ||||||||
Investment in Joint Venture | 3,684 | 3,094 | ||||||
Deferred Income Taxes | 10,291 | 6,608 | ||||||
Other | 2,860 | 232 | ||||||
Total Other Assets | 16,835 | 9,934 | ||||||
Total Assets | $ | 168,302 | $ | 164,315 | ||||
Liabilities: | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 32,919 | $ | 22,513 | ||||
Accrued Payroll Related Expenses | 4,649 | 4,691 | ||||||
Accrued Expenses | 7,501 | 7,403 | ||||||
Total Current Liabilities | 45,069 | 34,607 | ||||||
Long-Term Liabilities: | ||||||||
Pension and Postretirement Liabilities | 8,813 | 9,628 | ||||||
Other | 5,655 | 4,948 | ||||||
Total Long-Term Liabilities | 14,468 | 14,576 | ||||||
Commitments and Contingencies | ||||||||
Shareowners’ Equity: | ||||||||
Preferred Stock | — | — | ||||||
Common Stock | 381 | 381 | ||||||
Additional Paid-In Capital | 79,720 | 79,491 | ||||||
Treasury Stock at Cost | (56,088 | ) | (52,978 | ) | ||||
Retained Earnings | 85,441 | 88,272 | ||||||
Accumulated Other Comprehensive Income | (689 | ) | (34 | ) | ||||
Total Shareowners’ Equity | 108,765 | 115,132 | ||||||
Total Liabilities and Shareowners’ Equity | $ | 168,302 | $ | 164,315 | ||||
Condensed Consolidated Statements of Cash Flows (Unaudited)
Material Sciences Corporation and Subsidiaries
Six Months Ended August 31, | ||||||||
(In thousands) | 2008 | 2007 | ||||||
Cash Flows From: | ||||||||
Operating Activities: | ||||||||
Net Income (Loss) | $ | (2,831 | ) | $ | (2,223 | ) | ||
Adjustments to Reconcile Net Income (Loss) to Net Cash | ||||||||
Provided by Operating Activities: | ||||||||
Gain on Sale of Marketable Securities | (841 | ) | 0 | |||||
Depreciation, Amortization and Accretion | 5,434 | 5,952 | ||||||
Provision for Deferred Income Taxes | (2,674 | ) | (280 | ) | ||||
Compensatory Effect of Stock Plans | 219 | 56 | ||||||
Foreign Currency Transaction Gain | (354 | ) | (587 | ) | ||||
Other, Net | (220 | ) | (94 | ) | ||||
Changes in Assets and Liabilities: | ||||||||
Receivables | 248 | 15,338 | ||||||
Income Taxes Receivable | 1,657 | (925 | ) | |||||
Prepaid Expenses | (1,021 | ) | (372 | ) | ||||
Inventories | (4,113 | ) | (598 | ) | ||||
Accounts Payable | 10,979 | (12,381 | ) | |||||
Accrued Expenses | (899 | ) | (160 | ) | ||||
Other, Net | (14 | ) | (906 | ) | ||||
Net Cash Provided by Continuing Operations | 5,570 | 2,820 | ||||||
Net Cash Provided by Discontinued Operations | — | 12 | ||||||
Net Cash Provided by Operating Activities | 5,570 | 2,832 | ||||||
Investing Activities: | ||||||||
Capital Expenditures | (2,823 | ) | (3,345 | ) | ||||
Proceeds from Sale of Marketable Securities | 4,027 | — | ||||||
Proceeds from Exclusivity Agreement | 1,000 | — | ||||||
Net Cash Provided by (Used in) Investing Activities | 2,204 | (3,345 | ) | |||||
Financing Activities: | ||||||||
Purchases of Treasury Stock | (3,110 | ) | (2,353 | ) | ||||
Issuance of Common Stock | 11 | 140 | ||||||
Net Cash Used in Financing Activities | (3,099 | ) | (2,213 | ) | ||||
Effect of Exchange Rate Changes on Cash | (52 | ) | 14 | |||||
Net Increase (Decrease) in Cash | 4,623 | (2,712 | ) | |||||
Cash and Cash Equivalents at Beginning of Period | 7,913 | 11,667 | ||||||
Cash and Cash Equivalents at End of Period | $ | 12,536 | $ | 8,955 | ||||
Non-Cash Transactions: | ||||||||
Capital Expenditures in Accounts Payable at End of Period | $ | 356 | $ | 399 | ||||
Supplemental Cash Flow Disclosures: | ||||||||
Interest Paid | $ | 49 | $ | 88 | ||||
Income Taxes Paid (Credited) | 29 | (159 | ) |