PORTLAND, OR -- 05/07/2008 -- Williams Controls, Inc. (the "Company") (NASDAQ: WMCO) today announced financial results for its 2008 second quarter ended March 31, 2008.
Sales for the quarter were $16,484,000, down 10.0% from sales of $18,309,000 reported in the second quarter of fiscal 2007. Sales for the six months ended March 31, 2008, decreased $5,295,000, or 14.4%, to $31,456,000 from $36,751,000 for the comparable period last year. The Company reported net income in the second quarter of fiscal 2008 of $2,480,000, or $0.32 per diluted share, compared to net income of $2,054,000, or $0.27 per diluted share, for the second quarter of fiscal 2007. Net income for the six months ended March 31, 2008 was $3,636,000, or $0.47 per diluted share, compared to net income of $4,597,000, or $0.60 per diluted share, for the six months ended March 31, 2007. Included in the second quarter and six months fiscal 2008 results was an after tax gain of approximately $680,000, or $.09 per fully diluted share, related to settlement of environmental claims.
Although our NAFTA heavy truck sales were down 43% when compared to the second quarter of fiscal 2007, our overall NAFTA sales were only down 23% and sales volumes in this market improved slightly from first quarter 2008 levels. Sales to the Company's European and Asian customers increased 16% and 84%, respectively, over last year due to a continuing strong demand for the Company's products.
For the first half of the year, NAFTA heavy truck sales volumes were down 51% when compared to the same period in fiscal 2007; however, overall NAFTA sales were only down 26%. Sales to our European and Asian customers helped offset a portion of the NAFTA decline, increasing approximately 15% and 36%, respectively. For the first six months of fiscal 2008, sales outside of the NAFTA market were $1.9 million higher than in the first six months of 2007 and represented over 35% of world-wide sales.
For the quarter, operating income increased 17.4%, to $3,622,000 from $3,086,000 in the second quarter of fiscal 2007. For the first six months, 2008 operating income was $5,420,000, a 17.6% decline from the first six months of fiscal 2007 operating income of $6,578,000. For both the quarter and the six months, the earnings decline is primarily the result of the decline in the NAFTA truck sales volume. However, a gain realized from the settlement of environmental claims of $1,010,000 with prior operators of the Company's Portland, Oregon site improved second quarter earnings. For the quarter, the gross margin percentage improved even though sales were down 10%. Included in the second quarter and six months ended March 31, 2007, the Company recognized $251,000 and $840,000 in other income, respectively, related to the reversal of old accounts payable from which it had been judicially released. No amounts were reversed during fiscal 2008.
"We continue to execute our diversification strategy in spite of the weak NAFTA truck market, increasing international sales $1.4 million quarter-over-quarter, with customers outside of NAFTA, which now account for 36% of our total sales," said Patrick W. Cavanagh, Williams Controls' President and Chief Executive Officer. He continued, "An example of the success of this strategy is the award of a significant new vehicle platform by a major Asian truck manufacturer." In addition, "We are confident that this trend will continue as the China, India and other global markets continue their conversion to emission compliant engines."
The Company will hold an investor conference call at 4:15 p.m. Eastern Time on Wednesday, May 7, 2008, to provide an overview of the second quarter fiscal 2008 financial performance and business highlights. You are invited to listen to the conference call by dialing 1-888-665-2348 (domestic) or 1-706-643-4013 (international). Participants should call prior to the start time to allow for registration. The conference access code is 44443140. An audio replay will be available by telephone through May 31, 2008. The telephone number to access the replay is 1-800-642-1687 (domestic) and 1-706-645-9291 (International). The access code will be 44443140.
ABOUT WILLIAMS CONTROLS
Williams Controls is a leading global designer and manufacturer of Electronic Throttle Control Systems ("ETCs") for the heavy truck, bus and off-road markets. Williams Controls is headquartered in Portland, Oregon and employs more than 200 people worldwide at locations in North America, Europe, and Asia. For more information, visit Williams Controls' website at www.wmco.com.
The statements included in this news release concerning predictions of economic performance and management's plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1934, as amended. These forward-looking statements are based on management's assumptions and projections, and are sometimes identifiable by use of the words, "expect to," "plan," "will," "believe" and words of similar predictive nature. Because management's assumptions and projections are based on anticipation of future events, you should not place undue emphasis on forward-looking statements. You should anticipate that our actual performance may vary from these projections, and variations may be material and adverse. You should not rely on forward-looking statements in evaluating an investment or prospective investment in our stock, and when reading these statements you should consider the uncertainties and risks that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, factors detailed in the Securities and Exchange Commission filings of the Company, economic downturns affecting the operations of the Company or any of its business operations, competition, and the ability of the Company to successfully identify and implement any strategic alternatives. The forward-looking statements contained in this press release speak only as of the date hereof and the Company disclaims any intent or obligation to update these forward-looking statements.
Williams Controls, Inc. Unaudited Condensed Consolidated Statements of Operations (Dollars in thousands, except share and per share amounts) Three Three Six Six months months months months ended ended ended ended 3/31/08 3/31/07 3/31/08 3/31/07 (unaudited)(unaudited)(unaudited)(unaudited) --------- --------- --------- --------- Net sales $ 16,484 $ 18,309 $ 31,456 $ 36,751 Cost of sales 10,858 12,174 20,943 24,325 Gross profit 5,626 6,135 10,513 12,426 Research and development expense 992 838 2,001 1,668 Selling expense 659 572 1,337 1,092 Administration expense 1,363 1,382 2,765 2,655 Gain from settlement of environmental claims (1,010) - (1,010) - Realignment of operations - 257 - 433 Operating income 3,622 3,086 5,420 6,578 Interest income (11) (25) (32) (61) Interest expense 42 209 131 467 Other income, net (73) (259) (108) (863) Income before income taxes 3,664 3,161 5,429 7,035 Income tax expense 1,184 1,107 1,793 2,438 Net income $ 2,480 $ 2,054 $ 3,636 $ 4,597 Earnings per share information: Basic - Net income per common share $ 0.33 $ 0.28 $ 0.48 $ 0.62 Weighted average shares used in per share calculation - basic 7,518,217 7,460,709 7,513,488 7,450,112 Diluted - Net income per common share $ 0.32 $ 0.27 $ 0.47 $ 0.60 Weighted average shares used in per share calculation -diluted 7,743,835 7,735,525 7,749,198 7,718,489 Williams Controls, Inc. Unaudited Condensed Consolidated Balance Sheets (Dollars in thousands) March 31, September 30, 2008 2007 (unaudited) (unaudited) ----------- ----------- Assets Current Assets: Cash and cash equivalents $ 3,250 $ 1,621 Short-term investments 381 - Trade accounts receivable, net 10,629 8,054 Other accounts receivable 645 1,656 Inventories 8,069 9,152 Deferred income taxes 544 486 Prepaid expenses and other current assets 628 297 Total current assets 24,146 21,266 Property, plant and equipment, net 8,852 8,953 Deferred income taxes 1,514 1,461 Other assets, net 560 623 Total assets $ 35,072 $ 32,303 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 3,787 $ 3,811 Accrued expenses 4,975 4,983 Current portion of employee benefit obligations 288 288 Current portion of long-term debt - 1,000 Total current liabilities 9,050 10,082 Employee benefit obligations 4,438 4,803 Other long-term liabilities 259 249 Stockholders' Equity: Preferred stock (Series C) - - Common stock 75 75 Additional paid-in capital 35,364 34,899 Accumulated deficit (8,923) (12,477) Treasury Stock (377) (377) Accumulated other comprehensive loss (4,814) (4,951) Total stockholders' equity 21,325 17,169 Total liabilities and stockholders' equity $ 35,072 $ 32,303
Contact: Mike Rusk Financial Controller Telephone: (503) 684-8600