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 29, 2003
SPARTECH CORPORATION REPORTS
SECOND QUARTER FISCAL 2003 SALES AND EARNINGS
Second Quarter Highlights:
* Net Sales increased by 7% to $250.5 million
* Operating Earnings rose by 5% to $22.5 million
* Financing Costs declined by 9% to $6.3 million
* Net Earnings increased by 16% to $10.5 million
* Earnings Per Diluted Share was $.36 vs. $.33 per share last year
Financial Summary (Unaudited)
(Dollars in thousands, except per share data)
Quarter Ended %
05/03/03 05/04/02 Change
OPERATING RESULTS
Net Sales $250,488 $233,204 7%
Operating Earnings $ 22,456 $ 21,345 5%
Net Earnings $ 10,541 $ 9,074 16%
Earnings Per Share:
Basic $ 0.36 $ 0.34 6%
Diluted $ 0.36 $ 0.33 9%
PERFORMANCE RATIOS
Gross Margin 14.4% 15.5%
Operating Return on Net Sales 9.0% 9.2%
Debt to Total Capitalization 37.6% 41.4%
Return on Average Equity 14.1% 16.1%
"The crisis in the Middle East, along with near record high crude oil and
natural gas prices, produced unprecedented and rapid increases in the
cost of the Company's raw materials during the second quarter. This,
coupled with the sluggish economy, resulted in some very intense pressure
on our margins during this period. However, despite these negative
events, we were able to generate increases in both Sales (7%) and Net
Earnings (16%) during the quarter, as our cost control efforts and new
Product Transformation volume remained strong."
-Bradley B. Buechler, Chairman, President & Chief Executive Officer-
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SPARTECH CORPORATION
SECOND QUARTER 2003 EARNINGS
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SPARTECH CORPORATION ANNOUNCES
SECOND QUARTER FISCAL 2003 RESULTS
ST. LOUIS, May 29, 2003 - Spartech Corporation (NYSE:SEH) announced
today sales and earnings increases for its second quarter ended May 3,
2003.
Spartech's Chairman, President and CEO, Bradley B. Buechler, reported
that sales for the second quarter of fiscal 2003 were $250.5 million, an
increase of 7% from the $233.2 million reported in 2002. The Company's
fiscal 2003 second quarter operating earnings were $22.5 million or 5%
greater than the $21.3 million reported for the same quarter last year.
Second quarter 2003 net earnings were $10.5 million, or $0.36 per diluted
share, compared to the $9.1 million, or $0.33 per diluted share, reported
in 2002.
Commenting on the results, Mr. Buechler stated, "Our second quarter
generated some reasonably strong results considering the events which
occurred during this three month period. The crisis in the Middle East,
along with near record high crude oil and natural gas prices, produced
unprecedented and rapid increases in the cost of the Company's raw
materials during the quarter. This, coupled with the sluggish economy,
resulted in some very intense pressure on our margins during this period.
However, despite these negative events, we were able to generate increases
in both Sales (7%) and Net Earnings (16%) during the quarter, as our cost
control efforts and new Product Transformation volume remained strong."
SEGMENT RESULTS
Custom Sheet & Rollstock - Spartech's Custom Sheet & Rollstock group,
which represents approximately two-thirds of the Company's
consolidated results, saw modest growth of 2% in sales volume (pounds)
during the second quarter of fiscal 2003. However, our second quarter
sales in dollars for the segment increased by more than 3%, primarily
due to changes in product mix, higher average resin costs and our late-
March acquisition of Polymer Extruded Products. In addition, the
group's 11% second quarter operating margin moved closer to our 12-13%
target for this segment, as (1) operating results improved
significantly at our Spartech Polycast unit; (2) certain cost
reduction initiatives implemented last year began to show some
positive returns; and (3) new Product Transformation volume continued
strong.
(In Millions)
Second Quarter First Six Months
2003 2002 2003 2002
Net Sales $163.3 $158.2 $303.0 $286.2
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Operating $ 18.0 $ 16.1 $ 30.6 $ 27.3
Earnings ====== ====== ====== ======
112:
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SPARTECH CORPORATION
SECOND QUARTER 2003 EARNINGS
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Color & Specialty Compounds - Sales volume (in pounds) for the
Company's Color & Specialty Compounds group rose by 5% in the second
quarter, with this increase primarily coming from last year's late-May
acquisition of GWB Plastics. However, the group's operating margin
suffered its largest decline in the past five years.to 7.6%...as the
unit saw its cost of raw materials increase, on average, by more than
40% during the period. While progress was made late in the quarter in
raising our sales prices to offset the higher raw material costs, we
were not able to cover the full impact of the raw material inflation
during the period. The group initiated over $2 million in cost
reductions midway through the quarter and this coupled with the
announced sales price increases should help this segment return to its
historical margin levels (11-13%) in the second half of fiscal 2003.
(In Millions)
Second Quarter First Six Months
2003 2002 2003 2002
Net Sales $ 68.0 $ 57.4 $127.9 $106.3
======= ======= ====== ======
Operating $ 5.2 $ 6.5 $ 10.5 $ 11.6
Earnings ======= ======= ====== ======
Molded & Profile Products - The Company's Molded & Profile Products
segment (approximately 8% of consolidated results) generated modest
increases in sales and operating earnings during the quarter, as
compared to last year's similar period. Margins in the group remained
fairly constant between years, as softness in the profiles unit was
offset by improved operating results within our acrylic rods business.
(In Millions)
Second Quarter First Six Months
2003 2002 2003 2002
Net Sales $ 19.2 $ 17.6 $ 33.3 $ 31.3
======= ======= ======= ======
Operating $ 1.9 $ 1.6 $ 2.5 $ 2.4
Earnings ======= ======= ======= ======
Finally, Mr. Buechler stated, "As we move into the second half of our
fiscal year, the economy yet to show any substantive signs of a sustainable
turnaround developing for the last six months of the year. Therefore, we
continue to closely monitor our costs, while we also attempt to grow our
volume both internally, and through strategic expansions, in these
challenging times. However, despite the competitive pricing pressures
which traditionally accompany this type of an economic environment, we are
reasonably confident that our Focused Growth and Continuous Improvement
Strategies will enable us to generate stronger results for the second six
months of our fiscal year, compared to those produced during the first half
of fiscal 2003."
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SPARTECH CORPORATION
SECOND QUARTER 2003 EARNINGS
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Spartech Corporation is a leading producer of engineered thermoplastic
materials, polymeric compounds, and molded & profile products, which has 46
facilities located throughout North America and Europe, with annual
production capacity and sales of more than 1.2 billion pounds and $950
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 2, 2002, which is on file with
the Securities and Exchange Commission.
-TABLE TO FOLLOW-
SPARTECH CORPORATION
SECOND QUARTER 2003 EARNINGS
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SPARTECH CORPORATION
(In Thousands, Except Per Share Amounts)
Operating Results
Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
May 3, May 4, Percent May 3, May 4, Percent
2003 2002 Change 2003 2002 Change
Net Sales $250,488 $233,204 7% $464,188 $423,872 10%
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Operating Earnings $ 22,456 $ 21,345 5% $ 38,199 $ 35,932 6%
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Interest Expense
& Distributions
On Preferred Securities $ 6,265 $ 6,852 ( 9%) $ 12,371 $ 13,783 (10%)
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Income Tax Provision $ 5,650 $ 5,419 4% $ 9,129 $ 8,213 11%
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Net Earnings $ 10,541 $ 9,074 16% $ 16,699 $ 13,936 20%
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Earnings Per Common
Share - Diluted $ .36 $ .33 8% $ .57 $ .51 10%
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Weighted Average
Common Shares
Outstanding - Diluted 31,102 29,059 7% 29,484 28,139 5%
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SPARTECH CORPORATION
SECOND QUARTER 2003 EARNINGS
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SPARTECH CORPORATION
(In Thousands, Unaudited)
As Of
May 3, Nov. 2, Percent
2003 2002 Change
Select Balance Sheet Data
Receivables, net $148,336 $124,966 19%
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Inventories $106,565 $ 95,190 12%
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Property, Plant and $283,782 $280,474 1%
Equipment, net
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Accounts Payable & Accrued $125,010 $117,841 6%
Liabilities
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Total Debt $274,125 $238,332 15%
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Shareholders' Equity $304,988 $290,698 5%
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Three Months Ended Six Months Ended
May 3, May 4, May 3, May 4,
2003 2002 2003 2002
Select Cash Flow Information
Cash Flow From Operations $ 7,211 $28,815 $ 6,106 $ 36,996
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Capital Expenditures $ 7,424 $ 4,805 $ 12,013 $ 8,576
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Depreciation & Amortization $ 7,692 $ 6,791 $ 15,406 $ 13,541
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Debt Repayments,
(Borrowings) Excludes $(3,560) $22,730 $(12,219) $ 25,391
Acquisition Payments
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Dividends on Common Stock $ 2,924 $ 2,554 $ 5,849 $ 5,096
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Treasury Stock Acquired,
Net of Option (Proceeds) $ 261 $(1,361) $ 1,446 $ (2,283)
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