[Spartech Logo] SPARTECH Corporation
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, DECEMBER 11, 2003
SPARTECH CORPORATION REPORTS FOURTH QUARTER & FISCAL YEAR 2003
RESULTS AND ANNOUNCES INCREASE IN QUARTERLY DIVIDEND
ST. LOUIS, December 11, 2003 -- SPARTECH Corporation (NYSE:SEH) announced
today improved sales and net earnings for its fourth quarter which ended on
November 1, 2003 and a 10% increase in its quarterly dividend to $.11 per common
share.
Sales for the fourth quarter of fiscal 2003 were $253.1 million, up 7% from
last year's $237.2 million, primarily due to strong volume with our customers
serving the Transportation, Roofing, and Pool & Spa markets, along with the
benefit of acquisitions made during the year. Operating earnings for the
quarter of $20.8 million also saw a modest 3% increase compared to last year as
we began to reap some benefits from our August conversion cost reduction efforts
and the economy started to show some signs of recovery. Net Earnings per
diluted share was $.31 for the fourth quarter of fiscal 2003, slightly above
last year's $.30, and the analyst consensus estimate of $.29 for the quarter.
SPARTECH's fiscal year 2003 sales totaled $956.2 million, a 6% increase
from last year's $898.3 million. Acquisitions accounted for approximately 3% of
the increase while internal volume, in pounds, grew by 1% and price/mix
accounted for the 2% balance of the increase over fiscal 2002. Strong growth
markets for the Company in fiscal 2003 included Lawn & Garden, Transportation,
and Pool & Spa. However, Operating Earnings dropped by 3% as Middle East oil
concerns, and the related near record high resin costs during the middle of the
year, resulted in weak product demand and intense margin pressures in certain of
the industries we serve. Several changes recently made in our cost structure,
targeted to reduce manufacturing costs by $12 million, should assist us in
returning to our more traditional, pre-recessionary margins (10-12%) in the
future.
Commenting on the 2003 results & current events, SPARTECH's Chairman,
President and CEO, Bradley B. Buechler, stated, "Despite being disappointed with
our relatively flat earnings performance this year, these are exciting times at
SPARTECH as we transform into a more global company and simultaneously implement
our new Accountable and Lean initiatives. While fiscal 2003 represented the
third consecutive year that all or a majority of our year was impacted by a
depressed manufacturing economy, we continued to focus on those areas that we
could control--product marketing, cost structure, product innovation, and
strategic expansions. Our record 9 new Alloy Plastics introductions and 72 new
Product Transformation successes during 2003 should bode well for us as we
tackle our reasonably aggressive sales & earnings targets for fiscal 2004. In
addition, our cash flow from operations was strong
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SPARTECH CORPORATION
FOURTH QUARTER AND FISCAL YEAR 2003 RESULTS
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once again in fiscal 2003 ($66.7 million) which allowed us to acquire businesses
for $27.6 million, make approximately $22 million in capital expenditures, pay
out $11.7 million in dividends, and still reduce our debt load by nearly $10.0
million. As we carefully plan to become a more global player in the plastics
market, while at the same time implementing lean manufacturing throughout the
Company, rest assured your management team is determined to take SPARTECH to the
next level and generate even more value for our shareholders. In that regard,
and as a show of confidence for the future, our Board of Directors raised the
Common Stock Dividend by 10% at today's meeting by declaring our fourth quarter
2003 cash dividend at $.11 per share, payable on January 16, 2004, to
stockholders of record on January 2, 2004."
A further discussion of the Company's fourth quarter results by business
segment follows:
Custom Sheet & Rollstock - Sales in our Custom Sheet & Rollstock group (66%
of consolidated sales) increased by a solid 6% in the fourth quarter of
fiscal 2003, with strong volume coming from our customers in the
Automotive, Building & Construction, and Pool & Spa markets. The Sign
market also began to pickup for us as the year progressed, with the BP-
Amoco re-signage program continuing to ramp up. The group's Operating
Margin saw a modest--less than .3%--drop in the fourth quarter of fiscal
2003, as compared to last year's similar period, but still remained in
double-digits at 10.0% for the year. Shortfalls in the group's
polyethylene product line margins were basically offset by a sizable
turnaround in our cell cast acrylic business/margins compared to the prior
year. Overall Operating Margins during the last two months of the quarter
have improved and it is anticipated that this trend, which benefited from
our August cost reductions, will continue as we move forward into fiscal
2004.
(In Millions)
Fourth Quarter Full Year__
2003 2002 2003 2002
Net Sales $ 166.6 $ 156.6 $ 628.6 $ 600.5
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Operating Earnings $ 16.5 $ 15.9 $ 63.1 $ 62.3
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Color & Specialty Compounds - Our Color & Specialty Compounds group (27% of
consolidated revenues) saw sales grow by 7% during the fourth quarter of
fiscal 2003. New business with certain Automotive and Film Packaging
industry customers overcame the weak orders from the group's Appliance and
Electronics industry. However, the segment's Operating Earnings declined
by nearly 20% in the fourth quarter, as capacity utilization rates dropped
below 80% for the group. Recent order intake has increased for the group
and they should return to better utilization rates and improved margins as
fiscal 2004 progresses.
(In Millions)
Fourth Quarter Full Year__
2003 2002 2003 2002
Net Sales $ 70.8 $ 66.3 $ 263.0 $ 235.7
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Operating Earnings $ 5.8 $ 7.2 $ 21.0 $ 25.7
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SPARTECH CORPORATION
FOURTH QUARTER AND FISCAL YEAR 2003 RESULTS
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Molded & Profile Products - The Molded & Profile Products group, which
represents approximately 7% of the Company's annual sales, recorded a
strong 10% increase in fourth quarter sales, and more importantly, achieved
a substantial turnaround in Operating Earnings. A sizable increase in
sales to several Medical and Lawn & Garden market customers more than
offset volume shortfalls from last year's exceptional sales to the Plastic
Fencing market. Though we are encouraged by the group's sales and earnings
improvements this year, we continue to stress the need for this segment to
find more new volume or further rationalize its capacity.
(In Millions)
Fourth Quarter Full Year__
2003 2002 2003 2002
Net Sales $ 15.7 $ 14.3 $ 64.6 $ 62.1
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Operating Earnings $ 1.6 $ ( .2) $ 5.4 $ 3.5
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Finally, Mr. Buechler stated, "As we enter fiscal 2004, we are beginning to
see some signs of economic improvement on the horizon. However, until we are
certain that a sustainable economic recovery is underway; we will follow the
same straightforward formula that led us to our past successes. We will focus
on producing internal sales and earnings growth through our Alloy Plastics,
Product Transformations, and Accountable & Lean Initiatives to generate cash
flow and further reduce our debt; while, at the same time, pursuing those
acquisitions, which complement existing product lines and technologies,
particularly those that will help to expand our business internationally.
Fiscal 2004 operational and financial goals for the Company include (1) a 5%
growth in sales volume; (2) a lowering of our conversion cost by 1-2% of sales;
(3) a $50 million paydown of our debt excluding any new acquisition financings;
(4) growth through strategic expansions with a target of 2-3 acquisitions
completed within the year; and (5) a minimum 15% increase in our operating
earnings. Our current earnings per share guidance for fiscal 2004, assuming a
reasonably stable resin price environment, is in the $1.40-1.45 range, with
distribution between quarters similar to our average of the past two years."
Spartech Corporation is a leading producer of engineered thermoplastic
materials, polymeric compounds, and molded & profile products, which has 47
facilities located throughout the United States, Canada, Mexico, and Europe,
with annual production and sales of more than 1.2 billion pounds and $950
million, respectively.
SPARTECH will hold a conference call with investors and financial analysts
at 2:00 p.m. EST this afternoon, Thursday, December 11, to further discuss the
Company's fourth quarter and fiscal 2003 results. Investors can listen to the
call live via a Web cast by logging onto http://www.spartech.com, or via phone
by dialing 1-888-520-5981 and entering the confirmation code 77875 followed by
the "#" key.
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.
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SPARTECH CORPORATION
FOURTH QUARTER AND FISCAL YEAR 2003 RESULTS
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SPARTECH CORPORATION
(In Thousands, Except Per Share Amounts, Unaudited)
Three Months Ended Fiscal Year Ended
Nov. 1, Nov. 2, Percent Nov. 1, Nov. 2, Percent
2003_ 2002_ Change 2003_ 2002_ Change
Operating Results
Net Sales $253,102 $237,194 7% $956,160 $898,308 6%
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Operating Earnings $ 20,778 $ 20,202 3% $ 78,286 $ 80,879 (3%)
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Interest Expense &
Distributions $ 6,107 $ 6,377 ( 4%) $ 24,965 $ 26,816 (7%)
On Preferred
Securities
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Income Tax Provision $ 5,414 $ 4,977 9% $ 19,219 $ 19,793 (3%)
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Net Earnings $ 9,257 $ 8,848 5% $ 34,103 $ 34,270 -%
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Earnings Per Common
Share- $ 0.32 $ 0.30 7% $ 1.17 $ 1.23 (5%)
Basic $ 0.31 $ 0.30 3% $ 1.15 $ 1.21 (5%)
Diluted ======== ======== ======== ======== ======== =======
Weighted Average
Common Shares 29,679 29,561 -% 29,567 28,379 4%
Outstanding-Diluted
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FOURTH QUARTER AND FISCAL YEAR 2003 RESULTS
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SPARTECH CORPORATION
(In Thousands, Unaudited)
As of the Fiscal Year Ended
Nov. 1, Nov. 2, Percent
2003 2002 Change
Receivables, net $ 149,546 $ 124,966 20%
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Inventories $ 99,671 $ 95,190 5%
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Property, Plant and Equipment, net $ 283,924 $ 280,474 1%
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Accounts Payable & Accrued Liabilities $ 132,764 $ 117,841 13%
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Total Debt $ 229,180 $ 238,332 ( 4%)
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Shareholders' Equity $ 322,358 $ 290,698 11%
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Three Months Ended Fiscal Year Ended
Nov. 1, Nov. 2 Nov. 1, Nov. 2
2003 2002 2003 2002
Select Cash Flow Information
Cash Flow From $25,094 $23,640 $66,680 $87,070
Operations
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Capital Expenditures $ 4,267 $ 10,981 $22,009 $28,217
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Depreciation & $ 8,190 $ 7,405 $31,566 $28,120
Amortization
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Debt Repayments,
Excluding Acquisition $ 18,975 $ 12,220 $37,066 $55,072
and Divestitures
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Dividends on Common $ 2,933 $ 2,775 $11,709 $10,661
Stock
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Treasury Stock
Acquired,
Net of Option
Proceeds $ (481) $ 1,692 $ 131 $ 1,173
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