Company Contacts:
Bradley B. Buechler Randy C. Martin
Chairman, President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
(314) 721-4242 (314) 721-4242
For Immediate Release
Thursday, May 30, 2002
SPARTECH CORPORATION REPORTS
SECOND QUARTER FISCAL 2002 SALES AND EARNINGS
Second Quarter Highlights:
Net sales declined by 4%* to $233.2 million
Operating earnings were $21.3 million
Net earnings totaled $9.1 million, down 10%
Diluted Earnings per share was $.33
Cash flow from operations increased 59% to $28.8 million
*After adjusting for the July 2001 divestiture of Spartech's custom molded
products business (sales of $8.6 million in the
second quarter of 2001).
Financial Summary (Unaudited)
(Dollars in thousands, except per share data)
Quarter Ended
%
05/04/02 05/05/01 Change
OPERATING RESULTS $233,204 $252,099 ( 7%)
Net Sales
Operating Earnings $ 21,345 25,592 (17%)
Net Earnings $ 9,074 $10,123 (10%)
Earnings Per Share: $ 0.34 $ 0.38 (11%)
Basic
Diluted $ 0.33 $ 0.37 (11%)
PERFORMANCE RATIOS
Gross Margin 15.5% 16.9%
Operating Return on Net Sales 9.2% 10.2%
Debt to Total Capitalization 41.4% 47.9%
Return on Average Equity 16.1% 18.9%
"Spartech's second quarter produced substantially better results than those of
the first three months of our fiscal 2002. Net earnings for the second
quarter, though down compared to last year's similar three month period, did
increase by more than 85% from this year's first quarter, and also exceeded
analyst consensus estimates."
- Bradley B. Buechler, Chairman, President & Chief Executive Officer
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SPARTECH CORPORATION
SECOND QUARTER 2002 EARNINGS
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SPARTECH CORPORATION ANNOUNCES
SECOND QUARTER FISCAL 2002 RESULTS
ST. LOUIS, May 30, 2002 - Spartech Corporation (NYSE:SEH) announced today
sales and earnings for its second quarter ended May 4, 2002.
Spartech's Chairman, President and CEO, Bradley B. Buechler, reported that
sales for the second quarter of fiscal 2002 were $233.2 million, down 7% from
the $252.1 million reported in 2001. The Company's fiscal 2002 second quarter
operating earnings were $21.3 million or 17% lower than the $25.6 million
reported for the same quarter last year. Second quarter 2002 net earnings were
$9.1 million, or $0.33 per diluted share, compared to the $10.1 million, or
$0.37 per diluted share, reported in 2001.
Commenting on the results, Mr. Buechler stated, "Our second quarter
produced substantially better results than the first three months of our fiscal
2002, and recent economic news points toward a more sustainable rebound
developing later this year. Volume shipped in pounds during our second quarter
totaled just over 316 million, which exceeded our volume for the prior year's
similar period. This represents the first such quarterly volume increase in more
than a year. Second quarter fiscal 2002 net earnings, though down by
approximately 10% compared to the second quarter of last year, also responded
favorably by increasing more than 85% from this year's first quarter as capacity
utilization rates rose significantly."
SEGMENT RESULTS
Custom Sheet & Rollstock - Spartech's Custom Sheet & Rollstock group saw
steady improvement in weekly volume each month during the quarter and
finished the period with a reasonably strong backlog moving into our fiscal
third quarter. Despite the volume increases, second quarter sales in
dollars for the group declined by 5%, as compared to last year's similar
period, primarily due to changes in product mix and lower average resin
costs. On a positive note, the group's second quarter operating margin
(10.2%) moved closer to more normal levels, as volume returned and certain
cost reduction initiatives took hold.
(In Millions)
Second Quarter
2002 2001
Net Sales $158.2 $166.7
Operating $ 16.1 $ 18.6
Earnings
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SPARTECH CORPORATION
SECOND QUARTER 2002 EARNINGS
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Color & Specialty Compounds - Our Color & Specialty Compounds group
continued to receive solid orders from most markets served, with the
exception of consumer electronics, and recorded an approximate 5% increase
in volume shipped versus last year's second quarter. The group's operating
margin moved up solidly in the second quarter to 11.4%, from 10.3% in the
first quarter, but still has some room for improvement as it heads towards
more historical margins of 12-13% for this group.
(In Millions)
Second Quarter
2002 2001
Net Sales $ 57.4 $ 59.4
Operating $ 6.5 $ 6.6
Earnings
Molded & Profile Products - The Company's Molded & Profile Products segment
also saw a modest rebound in both sales and operating earnings in the
second quarter. Excluding the results of the molded products businesses
sold in July of 2001, sales were basically level with last year's similar
quarter, but up more than 25% from the first quarter of this year.
Operating margin for the group (9.2%) improved from recent quarters but
still trails the 12-14% margins this segment realized in the past.
(In Millions)
Second Quarter
2002 2001
Net Sales $ 17.6 $ 26.0
Operating $ 1.6 $ 2.9
Earnings
Finally, Mr. Buechler stated, "As we move into the second half of fiscal
2002, we are beginning to see some additional signs of economic recovery. Our
customer inventories appear to have been streamlined over the last six months
and we have noted some improvement in the recent level of orders. While
customers continue to be cautious and reluctant in some cases to rebuild
inventories despite the recent increases in resin prices, they are ordering on a
more regular basis that allows us to produce at more efficient rates.
Accordingly, while competitive pressures continue to provide a challenging
environment, we are reasonably confident that our Focused Growth and Continuous
Improvement Strategies will enable us to generate improved results for the
second half of our fiscal year."
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SPARTECH CORPORATION
SECOND QUARTER 2002 EARNINGS
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Spartech Corporation is a leading producer of engineered thermoplastic
materials, polymeric compounds, and molded & profile products which has 44
facilities located throughout North America and Europe, with annual production
capacity and sales of more than 1.2 billion pounds and $875 million,
respectively.
Safe Harbor For Forward-Looking Statements
Statements contained herein which are not historical facts are forward-
looking statements within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934 which are intended to be covered by the safe
harbors created thereby. For a summary of important facts which could cause the
Company's actual results to differ materially from those included in, or
inferred by, the forward-looking statements, refer to the Company's Form 10-K
for the fiscal year ended November 3, 2001, which is on file with the Securities
and Exchange Commission.
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SPARTECH CORPORATION
SECOND QUARTER 2002 EARNINGS
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SPARTECH CORPORATION
(In Thousands, Except Per Share Amounts)
Operating Results
Three Months Ended (Unaudited) Six Months Ended (Unaudited)
5/4/2002 5/5/2001 Percent 5/4/2002 5/5/2001 Percen
Change t
Change
Net Sales $ 233,204 $ 252,099 ( 7%) $423,872 $492,734 (14%)
Operating $ 21,345 $ 25,592 (17%) $ 35,932 $ 49,093 (27%)
Earnings
Interest Expense
& Distributions
On Preferred $ 6,852 $ (26%) $ 13,783 $ 18,968 (27%)
Securities 9,265
Income Tax $ 5,419 $ (13%) $ $ (28%)
Provision 6,204 8,213 11,447
Net Earnings $ 9,074 $ 10,123 (10%) $ 13.936 $ (25%)
18,678
Earnings Per
Common
Share - Diluted $ .33 $ .37 (11%) $ .51 $ .69 (26%)
Weighted Average
Common
Shares 29,059 31,592 28,139 30,116
Outstanding -
Diluted
Notes:
(1) The Company's fiscal year ends on the Saturday closest to October 31. The
First Quarter of Fiscal 2001 included 14 weeks compared to 13 weeks
in the First
Quarter of 2002. This results in approximately 4% additional
sales activity in
the first six months of 2001 compared to our 2002 six months data.
(2) The fiscal 2001 results include the operations of the custom molded
products business that was divested in July of last year. The business
generated sales of $8.6 million and $17.1 million, and operating earnings
of $.6 million and $.9 million in the prior year second quarter and first
six months, respectively.
(3) Freight costs for 2001 have been reclassified to comply with EITF 00-10
"Accounting for Shipping and Handling Fees and Costs."
The reclassification
resulted in an increase to net sales and corresponding
increase to cost of goods
sold of $6.3 million and $12.3 million for the second
quarter and six months, respectively.
(4) The Company adopted Financial Accounting Standards Board Statement No. 142
"Goodwill and Other Intangible Assets" effective
at the beginning of fiscal year
2002. Statement No. 142 requires that goodwill
no longer be amortized against
earnings, but instead tested for impairment at least annually.
Upon adoption,
the Company did not have an impairment charge and
eliminated the amortization of
goodwill, which totaled $2.0 million in the prior year
second quarter and $4.1
million for the prior year six months, both of which ended May 5, 2001.
Adjusted for the elimination of goodwill, diluted
earnings per share for the
quarter and six months ended May 5, 2001 would have been $.42 and $.80,
respectively.
SPARTECH CORPORATION
SECOND QUARTER 2002 EARNINGS
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SPARTECH CORPORATION
(In Thousands, Unaudited)
5/4/02 11/3/01 Percent
Change
Select Balance Sheet Data
Receivables, net $128,212 $119,074 8%
Inventories $ 93,377 $ 93,091 -%
Property, Plant and $268,754 $274,155 ( 2%)
Equipment, net
Accounts Payable & Accrued $115,186 $100,699 14%
Liabilities
Total Debt $268,013 $288,714 ( 7%)
Shareholders' Equity $229,758 $216,546 6%
Three Months Ended Six Months Ended
5/4/2002 5/5/2001 5/4/2002 5/5/2001
Select Cash Flow
Information
Cash Flow From $ 28,815 $ 18,082 $ 36,996 $ 32,036
Operations
Capital Expenditures $ 4,805 $ 3,157 $ 8,576 $ 8,568
Depreciation & $ 6,791 $ 9,016 $ 13,541 $ 18,081
Amortization
Debt Repayments,
Excludes Acquisition $ 22,730 $ 15,239 $ 25,391 $ 15,702
Payments
Dividends on Common $ 2,554 $ 2,535 $ 5,096 $ 5,065
Stock
Treasury Stock Acquired,
Net of Option (Proceeds) $ (1,361) $ (297) $ (2,283) $ 4,169