Exhibit 99.1
| | The Genlyte Group Incorporated
10350 Ormsby Park Place, Suite 601
Louisville, KY 40223 |
News Release | | For Immediate Release |
Contact: William G. Ferko, CFO
(502) 420-9502
GENLYTE ANNOUNCES RECORD THIRD QUARTER SALES OF $303 MILLION AND EARNINGS OF $1.10 PER SHARE
Louisville, KY, October 22, 2004. The Genlyte Group Incorporated (NASDAQ: GLYT) today announced its third quarter earnings per share of $1.10 compared to 2003 earnings per share of $1.16. Net income was $15.3 million, down 2.8% from the third quarter of 2003.
Third quarter 2004 sales of $303.1 million were 11.1% higher than the $272.8 million reported last year. The increase in net sales was due primarily to higher shipments and better pricing for certain products, and also reflects the benefit of $1.3 million from recent acquisitions. The backlog decreased $13.8 million or 13.7% to $87.3 million at October 2, 2004 from July 3, 2004, reflecting the shipment of orders placed in advance of the May price increase as well as the normal seasonal pattern for the non-residential construction market.
The Genlyte Group Incorporated completed on July 31, 2004 the acquisition of the 32% minority interest in Genlyte Thomas Group LLC (GTG) owned by Thomas Industries Inc. (NYSE: TII) for a cash price of approximately $402 million. The transaction was structured as an asset purchase of various interests owned by Thomas Industries and certain of its subsidiary entities. As previously announced, the transaction was funded through a combination of cash balances and new debt facilities.
Third quarter 2004 results include a $5.3 million one-time amortization expense related to the step-up of inventory and backlog for purchase accounting adjustments related to the acquisition of the 32% minority interest in GTG. In addition, the company recognized $.5 million of increased depreciation and amortization expense related to the step-up of property, plant and equipment and intangible assets attributed to the acquisition. Net interest expense increased during the quarter by $1.8 million due to increased debt for the acquisition.
During the third quarter, the company recognized a $1.6 million foreign currency exchange loss related to the translation of US dollar denominated investments and receivables held by the Canadian divisions. This caused an unfavorable impact on net income of approximately $1.0 million or $.07 per share. The prior year third quarter results included the benefit of a patent litigation settlement, which increased 2003
operating income by $7.1 million and net income by $2.9 million or $.21 per share after minority interest and taxes.
The year-to-date earnings per share of $2.72 and net income of $37.7 million, were up 7.5% and 9.6%, respectively, from 2003. Sales during the nine-month period increased 15.3% to $881.9 million from $764.8 million. The New Oxford Aluminum and USS Manufacturing acquisitions during 2004 and the Shakespeare Composite Structures acquisition during the second quarter of 2003 contributed $17.7 million of the $117.1 million sales increase.
Chairman, President and CEO Larry Powers said, “We are pleased to report record sales. We are concerned that although we increased prices during May, our costs for steel, freight, energy, ballasts and employee benefits have substantially offset any price increases, and the cost increases are escalating. Accordingly, we have announced another price increase of between 5% and 10% effective in November 2004.
“We are beginning to see a recovery in some of the markets we service, however lighting is one of the last building materials to be installed in any construction project. The overall commercial construction outlook reflects a soft rebound during the next year or two. Office, retail and high-end hospitality markets continue to be relatively soft. Residential construction markets remain surprisingly strong. We have seen some recent strength in sales for healthcare construction business. The retail and school construction, which is normally strong during the third quarter, was about the same as last year.
“As always, we continue to take actions to minimize these economic issues. These actions include our ongoing industry leadership in product development, price increases, a refocusing of our sales force toward the more active markets including healthcare and other institutional facilities, and continued cost containment actions.”
Vice President and Chief Financial Officer Bill Ferko stated, “During the quarter we generated $39.3 million of cash from operations, less $6.3 million for plant and equipment investments, compared to the third quarter of last year when we generated $48.5 million of cash from operations, including the net legal settlement of $7.1 million, less $3.6 million for plant and equipment investments. Accounts receivable and inventories increased by $40.9 million from year-end and $28.1 million from last September. The $40.6 million of year-to-date cash flow from operations has funded $18.6 million for capital expenditures. In addition, we funded approximately $402.2 million for the Thomas Industries 32% minority interest acquisition and $2.3 million for other acquisitions. In an effort to help our investors understand the impact of the acquisition of the Thomas 32% minority interest, we included a table of adjusted and pro forma operating results with the supporting schedules to our earnings release for the current quarter, prior year quarter, and the pro forma ongoing business.
“We closed the third quarter of 2004 with a cash balance of $60.1 million and debt of $290.7 million, or a net-debt position of $230.6 million compared to a net-cash and short-term investments balance of $105.6 million last September.”
To supplement the consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the company has presented a table of pro forma operating results which includes non-GAAP financial information. This non-GAAP financial information is provided to enhance the user’s overall understanding of the company’s current financial performance and prospects for the future. Specifically, management believes the non-GAAP financial information provides useful information to investors by excluding or adjusting certain items of operating results that were unusual and not indicative of the company’s core operating results. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP. The non-GAAP financial information included in this news release has been reconciled to the nearest GAAP measure.
Live audio of Genlyte’s conference call with securities analysts, scheduled for 11 a.m. EDT on October 22, can be accessed from the investor relations section of Genlyte’s website (http://www.genlyte.com) or from http://www.visualwebcaster.com/event.asp?id=25279. An audio replay of the call will be available for 90 days.
The Genlyte Group Incorporated (Nasdaq: GLYT) holds a 100% interest in Genlyte Thomas Group LLC, which is a leading manufacturer of lighting fixtures, controls, and related products for the commercial, industrial and residential markets. Genlyte Thomas sells lighting and lighting accessory products under the major brand names of Capri, Chloride Systems, Crescent, Day-Brite, Gardco, Hadco, Ledalite, Lightolier, Lightolier Controls, Lumec, Shakespeare Composite Structures, Stonco, Thomas, Vari-Lite, Wide-Lite, and Canlyte.
The statements in this report with respect to future results, future expectations, and plans for future activities and synergies may be regarded as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially from those currently expected. Such future results are subject to various risks, such as the ability of the Company to meet new business sales goals and realize desired price increases, fluctuations in commodity and transportation prices, slowing of the overall economy, changes in foreign currency translation rates, increased interest costs arising from a change in the Company’s leverage or change in rates, failure of the Company’s plans to produce anticipated cost savings, the outcome of pending litigation, and the timing and magnitude of capital expenditures, as well as other risks discussed in the company’s filing with the Securities Exchange Commission. The Company makes no commitment to disclose any revision to forward-looking statements, or any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.
For additional information about Genlyte please refer to the Company’s web site at: http://www.genlyte.com.
THE GENLYTE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
| | For the three months ended |
| | | | | | | |
| | October 2, 2004 | | September 27, 2003 | | % Change | |
| | | | | | | |
Net Sales | | $ | 303,085 | | $ | 272,769 | | 11.1 | % |
| | | | | | | |
Operating Profit* | | 29,302 | | 36,456 | | -19.6 | % |
| | | | | | | |
Net Income | | 15,323 | | 15,770 | | -2.8 | % |
| | | | | | | |
E.P.S. | | $ | 1.10 | | $ | 1.16 | | -5.2 | % |
| | | | | | | |
Average Shares | | | | | | | |
Outstanding | | 13,934 | | 13,645 | | 2.1 | % |
* Operating Profit is before deducting minority interest of $2,853 for the three months ended October 2, 2004 and $10,730 for the three months ended September 27, 2003.
THE GENLYTE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
| | For the nine months ended |
| | |
| | October 2, 2004 | | September 27, 2003 | | % Change | |
| | | | | | | |
Net Sales | | $ | 881,884 | | $ | 764,795 | | 15.3 | % |
| | | | | | | |
Operating Profit* | | 81,294 | | 80,290 | | 1.3 | % |
| | | | | | | |
Net Income | | 37,713 | | 34,412 | | 9.6 | % |
| | | | | | | |
E.P.S. | | $ | 2.72 | | $ | 2.53 | | 7.5 | % |
| | | | | | | |
Average Shares | | | | | | | |
Outstanding | | 13,865 | | 13,576 | | 2.1 | % |
* Operating Profit is before deducting minority interest of $18,314 for the nine months ended October 2, 2004 and $23,941 for the nine months ended September 27, 2003.
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
PRO FORMA OPERATING RESULTS
FOR THE THREE MONTHS ENDED OCTOBER 2, 2004 AND SEPTEMBER 27, 2003
(Amounts in thousands, except E.P.S. data)
(Unaudited)
| | (1)
Third Quarter
2004
Adjusted | | (2)
Third Quarter
2003 Adjusted
Legal Only | | (3)
Third Quarter
2004 Pro Forma
Ongoing | |
Reported Operating Profit | | $ | 29,302 | | $ | 36,456 | | $ | 29,302 | |
Gain on Settlement of Patent Litigation | | | | (8,000 | ) | | |
Legal Settlement Expenses | | | | 900 | | | |
32% Minority Interest Purchase Accounting: | | | | | | | |
One-time Inventory and Backlog Step-up Amortization | | 5,314 | | | | 5,314 | |
Step-up PP&E Deprec. and Intangibles Amortization - 2 mos. | | 522 | | | | 522 | |
Step-up PP&E Deprec. and Intangibles Amortization - Ongoing | | | | | | (978 | ) |
Adjusted Comparable Operating Profit | | 35,138 | | 29,356 | | 34,160 | |
Minority Interest: | | | | | | | |
One Month 2004 Actual | | (2,853 | ) | | | | |
2003 Adjusted for 32% of Legal Settlement | | | | (8,458 | ) | | |
Interest Income (Expense) | | (1,682 | ) | 128 | | (2,523 | ) |
Adjusted Pre-tax Income | | 30,603 | | 21,026 | | 31,637 | |
Pro Forma Income Tax Provision 2004 at 38.1% and 2003 at 39% | | 11,660 | | 8,200 | | 12,053 | |
Pro Forma Adjusted Net Income | | $ | 18,943 | | $ | 12,826 | | $ | 19,584 | |
Pro Forma Adjusted E.P.S. | | $ | 1.36 | | $ | 0.95 | | $ | 1.41 | |
Columns (1) and (2) in the table above present the operating profit for the third quarter of 2004 on a more comparable basis with the operating profit for the third quarter of 2003. Column (1) adjusts 2004 to eliminate the two months of additional depreciation and amortization expenses associated with the 32% minority interest step-up of inventory, backlog, property, plant, and equipment, and intangible assets. Column (2) adjusts 2003 to eliminate the net gain on the settlement of patent litigation, including the impact such net gain had on minority interest.Minority interest and interest expense in 2004, and interest income in 2003, are presented at actual in the table above as stated in the accompanying statement of income.The income tax provisions in columns (1) and (2) are adjusted at the effective tax rate for each year based on the adjusted pre-tax income. Columns (1) and (2) are not intended to present net income and earnings per share on a more comparable basis, just operating profit.
Column (3) in the table above presents net income and earnings per share on a pro forma on-going basis as if Genlyte had acquired the 32% minority interest in Thomas Industries as of the beginning of the third quarter of 2004. Therefore, it presents actual third quarter operating profit, but shows a full three months of additional depreciation and amortization expenses associated with the step-up of inventory, backlog, property, plant, and equipment, and intangible assets.It also presents a full three months of expected interest expense associated with the additional debt obtained to finance the acquisition and completely eliminates the minority interest to Thomas Industries.
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 2, 2004 AND SEPTEMBER 27, 2003
(Amounts in thousands, except earnings per share data)
(Unaudited and Preliminary)
| | Three Months Ended | | Nine Months Ended | |
| | October 2,
2004 | | September 27,
2003 | | October 2,
2004 | | September 27,
2003 | |
Net sales | | $ | 303,085 | | $ | 272,769 | | $ | 881,884 | | $ | 764,795 | |
Cost of sales | | 196,144 | | 176,146 | | 572,278 | | 497,613 | |
Gross profit | | 106,941 | | 96,623 | | 309,606 | | 267,182 | |
Selling and administrative expenses | | 74,167 | | 67,772 | | 224,375 | | 194,040 | |
Gain on settlement of patent litigation | | — | | (8,000 | ) | — | | (8,000 | ) |
Amortization of intangible assets | | 3,472 | | 395 | | 3,937 | | 852 | |
Operating profit | | 29,302 | | 36,456 | | 81,294 | | 80,290 | |
Interest expense (income), net | | 1,682 | | (128 | ) | 1,509 | | (65 | ) |
Minority interest, net of income taxes | | 2,853 | | 10,730 | | 18,314 | | 23,941 | |
Income before income taxes | | 24,767 | | 25,854 | | 61,471 | | 56,414 | |
Income tax provision | | 9,444 | | 10,084 | | 23,758 | | 22,002 | |
Net income | | $ | 15,323 | | $ | 15,770 | | $ | 37,713 | | $ | 34,412 | |
| | | | | | | | | |
Earnings per share: | | | | | | | | | |
Basic | | $ | 1.12 | | $ | 1.17 | | $ | 2.77 | | $ | 2.55 | |
Diluted | | $ | 1.10 | | $ | 1.16 | | $ | 2.72 | | $ | 2.53 | |
| | | | | | | | | |
Weighted average number of shares outstanding: | | | | | | | | | |
Basic | | 13,682 | | 13,492 | | 13,612 | | 13,472 | |
Diluted | | 13,934 | | 13,645 | | 13,865 | | 13,576 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 2, 2004 AND DECEMBER 31, 2003
(Amounts in thousands)
(Preliminary)
| | October 2,
2004 | | December 31,
2003 | |
| | (Unaudited) | | | |
Assets: | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 60,122 | | $ | 82,136 | |
Short-term investments | | — | | 70,479 | |
Accounts receivable, less allowances for doubtful accounts of $13,537 and $13,456, as of October 2, 2004 and December 31, 2003 | | 197,505 | | 160,111 | |
Inventories | | 152,482 | | 143,898 | |
Deferred income taxes and other current assets | | 30,726 | | 28,602 | |
Total current assets | | 440,835 | | 485,226 | |
Property, plant and equipment, at cost | | 425,835 | | 387,507 | |
Less: accumulated depreciation and amortization | | 277,369 | | 275,883 | |
Net property, plant and equipment | | 148,466 | | 111,624 | |
Goodwill | | 231,803 | | 150,532 | |
Other intangible assets, net of accumulated amortization | | 129,779 | | 21,315 | |
Other assets | | 5,116 | | 5,028 | |
Total Assets | | $ | 955,999 | | $ | 773,725 | |
| | | | | |
Liabilities & Stockholders’ Equity: | | | | | |
Current Liabilities: | | | | | |
Short-term debt | | $ | 96,412 | | $ | — | |
Current maturities of long-term debt | | 20,238 | | 284 | |
Accounts payable | | 97,918 | | 98,114 | |
Accrued expenses | | 87,301 | | 75,431 | |
Total current liabilities | | 301,869 | | 173,829 | |
Long-term debt | | 174,051 | | 11,190 | |
Deferred income taxes | | 37,401 | | 35,577 | |
Minority interest | | 829 | | 159,632 | |
Accrued pension and other long-term liabilities | | 36,299 | | 36,129 | |
Total liabilities | | 550,449 | | 416,357 | |
Commitments and contingencies | | | | | |
Stockholders’ Equity: | | | | | |
Common stock | | 137 | | 136 | |
Additional paid-in capital | | 19,276 | | 12,988 | |
Retained earnings | | 352,133 | | 314,420 | |
Accumulated other comprehensive income | | 34,004 | | 29,824 | |
Total stockholders’ equity | | 405,550 | | 357,368 | |
Total Liabilities & Stockholders’ Equity | | $ | 955,999 | | $ | 773,725 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 2, 2004 AND SEPTEMBER 27, 2003
(Amounts in thousands)
(Unaudited and Preliminary)
| | 2004 | | 2003 | |
Cash Flows From Operating Activities: | | | | | |
Net income | | $ | 37,713 | | $ | 34,412 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 22,209 | | 19,129 | |
Net (gain) loss from disposals of property, plant and equipment | | (1,879 | ) | 172 | |
Minority interest | | 13,204 | | 22,893 | |
Changes in assets and liabilities, net of effect of acquisitions: | | | | | |
(Increase) decrease in: | | | | | |
Accounts receivable | | (36,004 | ) | (18,346 | ) |
Inventories | | (4,900 | ) | 1,665 | |
Deferred income taxes and other current assets | | (1,984 | ) | (1,536 | ) |
Intangible and other assets | | 56 | | 930 | |
Increase (decrease) in: | | | | | |
Accounts payable | | (935 | ) | 4,363 | |
Accrued expenses | | 11,429 | | 1,489 | |
Accrued pension and other long-term liabilities | | (145 | ) | (756 | ) |
All other, net | | 1,874 | | 279 | |
Net cash provided by operating activities | | 40,637 | | 64,694 | |
Cash Flows From Investing Activities: | | | | | |
Acquisitions of businesses, net of cash received | | (404,476 | ) | (20,132 | ) |
Purchases of property, plant and equipment | | (18,623 | ) | (13,026 | ) |
Proceeds from sales of property, plant and equipment | | 4,580 | | 28 | |
Purchases of short-term investments | | (43,145 | ) | (72,263 | ) |
Proceeds from sales of short-term investments | | 113,047 | | 71,860 | |
Net cash used in investing activities | | (348,617 | ) | (33,533 | ) |
Cash Flows From Financing Activities: | | | | | |
Increase in short-term debt, net | | 96,412 | | — | |
Proceeds from long-term debt | | 200,000 | | — | |
Repayments of long-term debt | | (17,736 | ) | (22,497 | ) |
Exercise of stock options | | 4,565 | | 1,389 | |
Net cash provided by (used in) financing activities | | 283,241 | | (21,108 | ) |
Effect of exchange rate changes on cash and cash equivalents | | 2,725 | | (1,348 | ) |
Net (decrease) increase in cash and cash equivalents | | (22,014 | ) | 8,705 | |
Cash and cash equivalents at beginning of period | | 82,136 | | 67,019 | |
Cash and cash equivalents at end of period | | $ | 60,122 | | $ | 75,724 | |
| | | | | |
Supplemental Disclosure of Cash Flow Information: | | | | | |
Cash paid during the period for: | | | | | |
Interest paid, net | | $ | 295 | | $ | 122 | |
Income taxes, net of refunds of $19 in 2004 and $26 in 2003 | | $ | 21,846 | | $ | 20,101 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
SELECTED SEGMENT DATA
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 2, 2004 AND SEPTEMBER 27, 2003
(Amounts in thousands)
(Unaudited and Preliminary)
| | Three Months Ended | | Nine Months Ended | |
| | October 2,
2004 | | September 27,
2003 | | October 2,
2004 | | September 27,
2003 | |
Net sales: | | | | | | | | | |
Commercial segment | | $ | 227,881 | | $ | 209,991 | | $ | 659,320 | | $ | 572,195 | |
Residential segment | | 35,661 | | 31,879 | | 107,417 | | 96,843 | |
Industrial & other segment | | 39,543 | | 30,899 | | 115,147 | | 95,757 | |
Total net sales | | $ | 303,085 | | $ | 272,769 | | $ | 881,884 | | $ | 764,795 | |
| | | | | | | | | |
Operating profit: | | | | | | | | | |
Commercial segment | | $ | 22,147 | | $ | 27,769 | | $ | 59,593 | | $ | 57,735 | |
Residential segment | | 4,204 | | 5,484 | | 12,133 | | 13,388 | |
Industrial & other segment | | 2,951 | | 3,203 | | 9,568 | | 9,167 | |
Total operating profit | | $ | 29,302 | | $ | 36,456 | | $ | 81,294 | | $ | 80,290 | |
