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 SALES AND EARNINGS IN 2004
Louisville, KY February 1, 2005—The Genlyte Group Incorporated (NASDAQ: GLYT) today announced that it expects fourth quarter 2004 net sales to grow to $297.2 million, a 10.4% increase from the fourth quarter of 2003, generating earnings per share of $1.46, a 67.8% increase over 2003 and the highest fourth quarter earnings per share in Genlyte’s history. For the full year 2004, the Company expects to report record net sales of $1.179 billion and record earnings per share of $4.20. This compares to $1.034 billion and $3.41 per share reported for 2003 and increases of 14.0% and 23.2%, respectively.
Chairman, President and Chief Executive Officer Larry Powers said, “We are pleased to report that sales and earnings per share increased in the fourth quarter. Sales and earnings for 2004 both are anticipated to show more than 10% growth, due in part to a combination of price increases, new products, and continued strength in our residential and commercial markets. We are very pleased that our operating profit grew at a faster pace than sales primarily due to the previously announced price increases and our continued focus on cost controls.
“For the full year 2004, sales are expected to show an increase of 14.0% to $1.179 billion and an earnings per share increase of 23.2% to $4.20. We anticipate our 12th consecutive record annual earnings per share increase. Gross profit margin is expected to show an improvement to 35.5% from 35.1% in 2003 resulting from realized price increases, cost reductions, and efficiency improvements. In addition to the improvements in gross margin, the Company expects to realize a slight decrease in selling and administrative expenses from 25.3% in 2003 to 25.2% of sales for 2004. We incurred increased selling and freight expenses associated with increased sales. In addition, we incurred $9.7 million for patent litigation expenses, and an incremental $1.0 million for increased audit fees related to Sarbanes Oxley internal controls testing.”
During the fourth quarter, the Company recognized a $1.2 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 $0.8 million or $0.05 per share. The full year foreign currency exchange loss was $2.3 million and the unfavorable impact on net income was approximately $1.4 million or $0.10 per share. This was partially offset by translating the sales and earnings of our Canadian divisions at the stronger Canadian Dollar rate, which contributed $0.3 million to net income and $.02 per share for the fourth quarter and $0.9 million to net income and $.06 per share for the full year.
Fourth quarter and full-year results improved significantly due to the Genlyte Group Incorporated completing the acquisition of the 32% minority interest in Genlyte Thomas Group LLC (GTG) owned by Thomas Industries Inc. (NYSE: TII) for a cash price plus transaction costs of approximately $402.1 million on July 31, 2004. 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.
Full year 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. This expense was fully recognized in the third quarter. In addition, during the period from August through December 2004, the Company recognized $1.5 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 by $4.3 million due to increased debt for the acquisition.
Chairman, President and Chief Executive Officer Larry Powers said, “We are pleased with the results of our new product development efforts last year. Our Lightolier division launched its largest new product release in the company’s history as a part of commemorating Litghtolier’s 100th anniversary. In addition, our Gardco, Ledalite, Vari-Lite, and Stonco divisions had some exciting new award-winning product launches.
“Looking forward, we expect our primary commercial construction markets will continue to improve in 2005, although we do not anticipate seeing a significant benefit in the commercial markets until the second half of 2005. The Residential market, which has been relatively strong during the past few years, is expected to soften during 2005. In addition, we expect 2005 to be another very challenging year primarily due to materials and commodity cost increases and the potential impact of increasing interest rates on our end markets. The success of the 6% to 10% price increase that we announced in November of 2004 is a critical factor for our success for 2005. The real question will be how much of that pricing sticks and how quickly. It appears that the market recognizes the need for higher pricing and will implement it. We will focus our efforts to maintain performance by continuing to control costs, introduce new products, and grow sales.”
Vice President and Chief Financial Officer Bill Ferko said, “In addition to our earnings performance, we are pleased with the cash flow results that we achieved in 2004. During the fourth quarter we generated an estimated $66.1 million cash from operations less $8.0 million for plant and equipment investments, compared with the fourth quarter of 2003 when we generated $36.5 million of cash from operations less $4.5 million for plant and equipment investments. The full year cash from operations, a record $106.7 million, funded $26.6 million for capital expenditures. In addition, we funded approximately $402.1 million for the Thomas Industries 32% minority interest acquisition and $2.5 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 operating results with the supporting schedules to our earnings release for the current year, prior year, and the pro forma ongoing business.
“Working capital excluding cash, short-term investments, and short-term and current debt is expected to be $156.2 million, or 13.1% of fourth quarter annualized sales compared to $159.1 million or 14.8% in 2003. Accounts receivable and inventories increased from prior year-end by $23.0 million and $6.2 million, respectively, primarily due to higher sales volumes.
“We expect to close 2004 with total debt of $243.7 million compared to $11.5 million in 2003. Our net cash and short-term investments less debt changed to a negative (net debt position) $168.9 million at the end of the fourth quarter compared to a net debt position of $230.6 at the end of the third quarter, and a net cash positive position of $141.1 million at the end of 2003.”
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 adjusted 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.
It should be noted that in the past, the Company’s auditors dated their year-end audit opinion as of the date of the year-end earnings release. Pursuant to the new Sarbanes-Oxley requirements, the Company’s certifying public accountants’ audit opinion with respect to the year-end financial statements will not be dated until the Company completes the final 10-K report and evaluation of internal controls over financial reporting, which is anticipated to be filed with the SEC on March 16, 2005. Accordingly, the financial results reported in this earnings release are preliminary and are subject to adjustment. The Company expects to report full audited financial results by March 16, 2005.
Live audio of Genlyte’s conference call with securities analysts, scheduled for 11 a.m. EDT on February 1, can be accessed from the investor relations section of Genlyte’s website (http://www.genlyte.com) or from www.vcall.com. 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. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. 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, the timing and magnitude of capital expenditures, and uncertainty whether the Company will be able to assert that the internal controls over financial reporting as of December 31, 2004 are effective under Section 404 of the Sarbanes-Oxley Act of 2002, 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
Consolidated Condensed Statements of Income
(Amounts in thousands, except earnings per share data)
(Unaudited and Preliminary)
| | For the three months ended | | | |
| | December 31, 2004 | | December 31, 2003 | | % Change | |
| | | | | | | |
Net Sales | | $ | 297,185 | | $ | 269,104 | | 10.4 | % |
| | | | | | | |
Operating Profit* | | 35,524 | | 27,962 | | 27.0 | % |
| | | | | | | |
Net Income | | 20,540 | | 11,937 | | 72.1 | % |
| | | | | | | |
Earnings Per Share | | 1.46 | | .87 | | 67.8 | % |
| | | | | | | |
Average Shares Outstanding | | 14,021 | | 13,744 | | 2.0 | % |
| | | | | | | | | |
*Operating Profit is before deducting minority interest of $40 and $8,653 for the three months ended December 31, 2004 and December 31, 2003, respectively.
| | For the years ended | | | |
| | December 31, 2004 | | December 31, 2003 | | % Change | |
| | | | | | | |
Net Sales | | $ | 1,179,069 | | $ | 1,033,899 | | 14.0 | % |
| | | | | | | |
Operating Profit* | | 116,818 | | 108,252 | | 7.9 | % |
| | | | | | | |
Net Income | | 58,253 | | 46,349 | | 25.7 | % |
| | | | | | | |
Earnings Per Share | | 4.20 | | 3.41 | | 23.2 | % |
| | | | | | | |
Average Shares Outstanding | | 13,885 | | 13,597 | | 2.1 | % |
| | | | | | | | | |
*Operating Profit is before deducting minority interest of $18,354 and $32,594 for the years ended December 31, 2004 and December 31, 2003, respectively.
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
ADJUSTED NON-GAAP OPERATING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(Amounts in thousands, except E.P.S. data)
(Unaudited and Preliminary)
| | (1)
2004
Adjusted | | (2)
2003 Adjusted
Legal Only | | (3)
2004
Ongoing | |
Reported operating profit | | $ | 116,818 | | $ | 108,252 | | $ | 116,818 | |
Gain on settlement of patent litigation | | | | (8,000 | ) | | |
Legal settlement expenses | | | | 1,600 | | | |
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 - five mos. | | 1,543 | | | | 1,543 | |
Step-up PP&E deprec. and intangibles amortization - ongoing | | | | | | (4,148 | ) |
Adjusted comparable operating profit | | 123,675 | | 101,852 | | 119,527 | |
Interest income (expense) | | 485 | | 324 | | (10,135 | ) |
Minority Interest: | | | | | | | |
2004 twelve month full amount | | (37,248 | ) | | | | |
2003 adjusted for 32% of net legal settlement | | | | (30,546 | ) | | |
Adjusted income before taxes | | 86,912 | | 71,630 | | 109,392 | |
Income tax provision: | | | | | | | |
2004 at 38.4%, 2003 at 39%, and ongoing at 38.1% | | 33,374 | | 27,936 | | 41,678 | |
Adjusted net income | | $ | 53,538 | | $ | 43,694 | | $ | 67,714 | |
Columns (1) and (2) in the table above present the operating results for 2004 on a more comparable basis with the operating results for 2003. Column (1) adjusts 2004 to eliminate the five 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 (1) also adjusts 2004 interest income and expense to eliminate the effect of reduced cash and short-term investments and increased debt used to pay for the acquisition. Column (1) retains the estimated minority interest to Thomas. 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. The income tax provisions in columns (1) and (2) are adjusted at the effective tax rate of 38.4% and 39.0%, respectively, for each year based on the adjusted income before income taxes.
Column (3) in the table above presents operating results on an ongoing basis as if Genlyte had acquired the 32% minority interest from Thomas as of the beginning of 2004. Therefore, it presents actual annual operating profit, but shows a full year 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 year of expected interest expense associated with the additional debt obtained to finance the acquisition and completely eliminates the minority interest to Thomas.
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except earnings per share data)
(Unaudited and Preliminary)
| | Three Months Ended
December 31, | | Twelve Months Ended
December 31, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Net sales | | $ | 297,185 | | $ | 269,104 | | $ | 1,179,069 | | $ | 1,033,899 | |
Cost of sales | | 188,660 | | 173,709 | | 760,938 | | 671,322 | |
Gross profit | | 108,525 | | 95,395 | | 418,131 | | 362,577 | |
Selling and administrative expenses | | 72,658 | | 67,206 | | 297,033 | | 261,246 | |
Amortization of intangible assets | | 343 | | 227 | | 4,280 | | 1,079 | |
Gain on settlement of patent litigation | | — | | — | | — | | (8,000 | ) |
Operating profit | | 35,524 | | 27,962 | | 116,818 | | 108,252 | |
Interest expense (income), net | | 2,428 | | (259 | ) | 3,937 | | (324 | ) |
Minority interest, net of income taxes | | 40 | | 8,653 | | 18,354 | | 32,594 | |
Income before income taxes | | 33,056 | | 19,568 | | 94,527 | | 75,982 | |
Income tax provision | | 12,516 | | 7,631 | | 36,274 | | 29,633 | |
Net income | | $ | 20,540 | | $ | 11,937 | | $ | 58,253 | | $ | 46,349 | |
| | | | | | | | | |
Earnings per share: | | | | | | | | | |
Basic | | $ | 1.49 | | $ | 0.88 | | $ | 4.27 | | $ | 3.44 | |
Diluted | | $ | 1.46 | | $ | 0.87 | | $ | 4.20 | | $ | 3.41 | |
| | | | | | | | | |
Weighted average number of shares outstanding: | | | | | | | | | |
Basic | | 13,756 | | 13,541 | | 13,630 | | 13,480 | |
Diluted | | 14,021 | | 13,744 | | 13,885 | | 13,597 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited and Preliminary)
| | As of December 31, | |
| | 2004 | | 2003 | |
Assets: | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 56,233 | | $ | 82,136 | |
Short-term investments | | 18,619 | | 70,479 | |
Accounts receivable, less allowances for doubtful accounts of $10,724 and $13,456, as of December 31, 2004 and 2003 | | 183,119 | | 160,111 | |
Inventories | | 150,077 | | 143,898 | |
Deferred income taxes and other current assets | | 31,381 | | 28,602 | |
Total current assets | | 439,429 | | 485,226 | |
Property, plant and equipment, at cost | | 434,790 | | 387,507 | |
Less: accumulated depreciation and amortization | | 281,316 | | 275,883 | |
Net property, plant and equipment | | 153,474 | | 111,624 | |
Goodwill | | 253,684 | | 150,532 | |
Other intangible assets, net of accumulated amortization | | 115,267 | | 21,315 | |
Other assets | | 3,816 | | 5,028 | |
Total Assets | | $ | 965,670 | | $ | 773,725 | |
| | | | | |
Liabilities & Stockholders’ Equity: | | | | | |
Current Liabilities: | | | | | |
Short-term debt | | $ | 92,489 | | $ | — | |
Current maturities of long-term debt | | 20,202 | | 284 | |
Accounts payable | | 114,887 | | 98,114 | |
Accrued expenses | | 93,496 | | 75,431 | |
Total current liabilities | | 321,074 | | 173,829 | |
Long-term debt | | 131,029 | | 11,190 | |
Deferred income taxes | | 40,156 | | 35,577 | |
Minority interest | | 910 | | 159,632 | |
Accrued pension | | 21,336 | | 27,567 | |
Other long-term liabilities | | 8,177 | | 8,562 | |
Total liabilities | | 522,682 | | 416,357 | |
Commitments and contingencies | | | | | |
Stockholders’ Equity: | | | | | |
Common stock ($.01 par value, 30,000,000 shares authorized; 14,673,131 and 14,481,426 shares issued as of December 31, 2004 and 2003; 13,765,122 and 13,573,395 shares outstanding as of December 31, 2004 and 2003) | | 138 | | 136 | |
Additional paid-in capital | | 20,343 | | 12,988 | |
Retained earnings | | 372,673 | | 314,420 | |
Accumulated other comprehensive income | | 49,834 | | 29,824 | |
Total stockholders’ equity | | 442,988 | | 357,368 | |
Total Liabilities & Stockholders’ Equity | | $ | 965,670 | | $ | 773,725 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited and Preliminary)
| | Twelve months ended December 31, | |
| | 2004 | | 2003 | |
Cash Flows From Operating Activities: | | | | | |
Net income | | $ | 58,253 | | $ | 46,349 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 28,069 | | 24,207 | |
Net (gain) loss from disposals of property, plant and equipment | | (1,790 | ) | 1,131 | |
Provision for deferred income taxes | | 652 | | 1,573 | |
Minority interest | | 13,238 | | 25,666 | |
Changes in assets and liabilities, net of effect of acquisitions: | | | | | |
(Increase) decrease in: | | | | | |
Accounts receivable | | (20,740 | ) | (3,261 | ) |
Inventories | | (1,579 | ) | (663 | ) |
Deferred income taxes and other current assets | | (3,388 | ) | (41 | ) |
Intangible and other assets | | 4,592 | | (2,778 | ) |
Increase (decrease) in: | | | | | |
Accounts payable | | 15,106 | | 6,244 | |
Accrued expenses | | 16,962 | | (352 | ) |
Deferred income taxes, long-term | | 1,306 | | 235 | |
Accrued pension and other long-term liabilities | | (6,564 | ) | 1,927 | |
All other, net | | 2,579 | | 920 | |
Net cash provided by operating activities | | 106,696 | | 101,157 | |
Cash Flows From Investing Activities: | | | | | |
Acquisitions of businesses, net of cash received | | (404,594 | ) | (20,350 | ) |
Purchases of property, plant and equipment | | (26,620 | ) | (17,559 | ) |
Proceeds from sales of property, plant and equipment | | 4,607 | | 31 | |
Purchases of short-term investments | | (60,467 | ) | (126,998 | ) |
Proceeds from sales of short-term investments | | 113,725 | | 103,775 | |
Net cash used in investing activities | | (373,349 | ) | (61,101 | ) |
Cash Flows From Financing Activities: | | | | | |
Increase in short-term debt, net | | 92,489 | | — | |
Proceeds from long-term debt | | 200,000 | | — | |
Repayments of long-term debt | | (60,603 | ) | (27,410 | ) |
Exercise of stock options | | 5,196 | | 2,713 | |
Net cash provided by (used in) financing activities | | 237,082 | | (24,697 | ) |
Effect of exchange rate changes on cash and cash equivalents | | 3,668 | | (242 | ) |
Net (decrease) increase in cash and cash equivalents | | (25,903 | ) | 15,117 | |
Cash and cash equivalents at beginning of year | | 82,136 | | 67,019 | |
Cash and cash equivalents at end of year | | $ | 56,233 | | $ | 82,136 | |
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
SELECTED SEGMENT DATA
(Amounts in thousands)
(Unaudited and Preliminary)
| | Three Months Ended
December 31, | | Twelve Months Ended
December 31, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Net sales: | | | | | | | | | |
Commercial segment | | $ | 223,080 | | $ | 200,693 | | $ | 885,200 | | $ | 772,888 | |
Residential segment | | 37,534 | | 32,645 | | 148,471 | | 129,488 | |
Industrial & other segment | | 36,571 | | 35,766 | | 145,398 | | 131,523 | |
Total net sales | | $ | 297,185 | | $ | 269,104 | | $ | 1,179,069 | | $ | 1,033,899 | |
| | | | | | | | | |
Operating profit: | | | | | | | | | |
Commercial segment | | $ | 24,897 | | $ | 19,868 | | $ | 84,488 | | $ | 77,603 | |
Residential segment | | 6,458 | | 4,549 | | 19,199 | | 17,937 | |
Industrial & other segment | | 4,169 | | 3,545 | | 13,131 | | 12,712 | |
Total operating profit | | $ | 35,524 | | $ | 27,962 | | $ | 116,818 | | $ | 108,252 | |
