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
Tuesday, March 8, 2005
SPARTECH CORPORATION ANNOUNCES
FIRST QUARTER FISCAL 2005 SALES AND EARNINGS
IN LINE WITH THE COMPANY'S FEBRUARY 9, 2005 GUIDANCE
_______________________
First Quarter Highlights:
Net sales increased by 26% to $304.5 million
Operating earnings declined by 45% to $10.3 million
Interest expense increased by a modest 2% to $6.5 million
Net earnings decreased by 63% to $2.8 million
Earnings per diluted share was $.09 vs. $.26 per share last year
Financial Summary (Unaudited)
(Dollars in thousands, except per share data)
Quarter Ended %
01/29/05 01/31/04 Change
OPERATING RESULTS
Net Sales $304,512 $241,463 26%
Operating Earnings $ 10,283 $ 18,799 (45%)
Net Earnings $ 2,818 $ 7,706 (63%)
Earnings Per Share: $ 0.09 $ 0.26 (65%)
Basic
Diluted $ 0.09 $ 0.26 (65%)
PERFORMANCE RATIOS
Operating Earnings Per Pound Sold 3.0 cents 6.2 cents
Operating Return on Net Sales 3.4% 7.8%
Total Debt to Total Debt and Equity 52.6% 54.7%
Return on Average Equity 2.7% 9.5%
"Spartech's first quarter proved to be a very difficult one. Based on these
unacceptable results, we implemented several operational changes, involving the
closing of certain plants and the planned disposal of two non-core operations."
- Bradley B. Buechler, Chairman, President and Chief Executive Officer -
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SPARTECH CORPORATION
FIRST QUARTER 2005 EARNINGS
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SPARTECH CORPORATION ANNOUNCES
FIRST QUARTER FISCAL 2005 SALES AND EARNINGS
ST. LOUIS, March 8, 2005 - Spartech Corporation (NYSE:SEH) announced
today sales and earnings for its first quarter ended January 29, 2005.
Spartech's Chairman, President and CEO, Bradley B. Buechler, reported
that sales for the first three months of fiscal 2005 were $304.5 million, a
26% increase (representing 3% internal growth, 10% from acquisitions, and 13%
from price/mix) compared to the Company's first quarter sales last year of
$241.5 million. However, the Company's fiscal 2005 first quarter operating
earnings were $10.3 million or 45% lower than the $18.8 million reported for
the same quarter la
st year. These sales and operating results produced first quarter net
earnings of $2.8 million or $.09 per diluted share (in line with our early
February 2005 guidance for the quarter), compared to $7.7 million, or $.26
per diluted share generated in last year's first quarter.
Commenting on the results, Mr. Buechler stated, "Spartech's first
quarter proved to be a very difficult one. Record high resin prices,
combined with increases in several conversion cost components, including
labor, freight, and utilities, resulted in severe downward pressure on our
margins. Based on these unacceptable results, we implemented several
operational changes, involving the closing of certain plants and the
planned disposal of two non-core operations. We estimate that the
implementation of these actions will cost $5-6 million over the second and
third quarters of fiscal 2005, but going forward, will eliminate an
estimated $9 million of annual pre-tax expenses. The estimated costs will
include asset write-downs, severance, moving, and lease buy-out expenses
..with two-thirds of these expected to be non-cash expenditures."
SEGMENT RESULTS
Custom Sheet & Rollstock - Net sales in our Custom Sheet & Rollstock
segment were $189.6 million in the first quarter of fiscal 2005, an
increase of 22% from the $155.4 million produced in the same three month
period of 2004. This sales increase was attributable to our late fiscal
2004 acquisition of VPI (7%) and the impact of price/mix changes (16%)
being partially affected by a 1% decline in internal volume (pounds
sold). This slight decrease in internal volume was primarily the result
of slowdowns in the group's Building & Construction and Pool & Spa
markets. The segment's operating earnings declined by 47% due to sharp
raw material price increases and greater than normal freight, utility
and start-up costs of our recently expanded Donchery, France facility.
(In Millions)
First Quarter
2005 2004
Net Sales $189.6 $155.4
Operating $ 7.7 $ 14.5
Earnings
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Color & Specialty Compounds - The Company's Color & Specialty Compounds
group saw its sales increase sharply to $97.1 million or 36% greater
than last year's $71.3 million. Approximately 20% of this increase was
the result of the Company's VPI acquisition, with 9% driven by price/mix
changes, and the remaining 7% from strong internal growth, principally
in the Lawn & Garden and Transportation markets. However, operating
earnings declined by about 8% due once again to persistently high resin
prices, coupled with excess conversion costs resulting from high energy-
related expenses and lingering start-up costs in the group's expanded
facility in France.
(In Millions)
First Quarter
2005 2004
Net Sales $ 97.1 $ 71.3
Operating $ 5.7 $ 6.2
Earnings
Molded & Profile Products - Our Molded & Profile Products segment
produced a 20% increase in first quarter 2005 sales - from $14.8 million
last year to $17.8 million this year. New customers, added by the wheels
unit, along with strong sales into the marine market produced the bulk
of this increase. However, operating earnings for the group declined by
nearly 50% in the first quarter, related to product mix changes and
start-up costs associated with the ramp-up of new production capacity at
our Tupelo, Mississippi, facility.
(In Millions)
First Quarter
2005 2004
Net Sales $ 17.8 $ 14.8
Operating $ 0.6 $ 1.2
Earnings
Finally, Mr. Buechler stated, "As we move forward into our second
quarter, we are seeing some mixed economic signals from the various markets
we serve - packaging remains strong, while building & construction and
transportation are showing some weakness. Therefore, we will expeditiously
move forward with the plant restructuring program we announced on February
9, and will diligently monitor all costs throughout our operations as we
move toward a more globally competitive company in the years ahead. In
addition, we remain committed to expanding our raw material sourcing
horizons to give us some relief on the persistently high prices for our raw
materials in an effort to better serve our growing customer base.
Considering all of the above, and assuming no significant deterioration in
the overall economic environment, we believe our best guidance for full
fiscal year 2005 diluted earnings per share is $1.30 to $1.40."
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Spartech Corporation is a leading producer of engineered thermoplastic
materials, polymeric compounds, and molded & profile products, which
following its recently announced plant restructurings will have 47
facilities located throughout the United States, Canada, Mexico, and
Europe, with annual production and sales in its recently completed fiscal
year of nearly 1.4 billion pounds and $1.1 billion, 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 October 30, 2004, which is on
file with the Securities and Exchange Commission.
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SPARTECH CORPORATION
FIRST QUARTER 2005 EARNINGS
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SPARTECH CORPORATION
(In Thousands, Except Per Share Amounts)
Three Months Ended
(Unaudited)
Jan. 29, Jan. 31, Percent
2005 2004 Change
Operating Results
Net Sales $304,512 $241,463 26%
Operating Earnings $ 10,283 $ 18,799 (45%)
Interest $ 6,474 $ 6,330 2%
Income Tax Provision $ 991 $ 4,763 (79%)
Net Earnings $ 2,818 $ 7,706 (63%)
Earnings Per Common Share- $ .09 $ .26 (65%)
Diluted
Weighted Average Common
Shares Outstanding-Diluted 32,693 29,785 10%
* Our effective tax rate decreased from 38.2% in the first quarter of 2004
to 26.0% in the first quarter of 2005. This decrease reflects a reduction
in deferred tax liabilities associated with implementation of state tax
planning strategies that will reduce our long-term effective tax rate,
relative to low earnings before income taxes. We estimate that our
effective tax rate will approximate 37% for the remainder of fiscal 2005
resulting in an approximate 36% effective tax rate for the fiscal year.
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SPARTECH CORPORATION
(In Thousands, Unaudited)
As Of
Jan. 29, Oct. 30 Percent
2005 2004 Change
Select Balance Sheet Data
Receivables, net $189,792 $188,427 1%
Inventories $159,689 $142,035 12%
Property, Plant and $335,257 $330,745 1%
Equipment, net
Accounts Payable & Accrued $158,473 $160,609 ( 1%)
Liabilities
Total Debt $465,550 $474,091 ( 2%)
Shareholders' Equity $418,753 $417,732 -%
Three Months Ended
Jan. 29 Jan. 31
2005 2004
Select Cash Flow Information
Cash Flow From Operations $ (12,084) $ (3,268)
Capital Expenditures $ 13,474 $ 5,231
Depreciation & Amortization $ 10,296 $ 8,335
Borrowings of Long-Term
Debt, $ 8,543 $ (10,244)
Excluding Acquisitions
Dividends on Common Stock $ 3,865 $ 3,229
Treasury Stock Acquired,
Net of Option (Proceeds) $ (780) $ (1,746)