EXHIBIT 99.1
FOR: Home Products International, Inc.
APPROVED BY: James R. Tennant, Chairman & CEO
Home Products International, Inc.
FOR IMMEDIATE RELEASE (773) 890-1010
---------------------
CONTACT: Investor Relations:
James Winslow, Executive VP & CFO
Home Products International, Inc.
(773) 890-1010
HOME PRODUCTS INTERNATIONAL ANNOUNCES THIRD QUARTER
AND NINE MONTH RESULTS
Net income ahead of pro forma 2001 on increased sales
Chicago, IL, October 31, 2002 - Home Products International, Inc.
(NASDAQ SmallCap: HOMZ), a leader in the housewares industry, today
announced financial results for the third quarter and first nine months
of its 2002 fiscal year.
The Company reported net earnings of $6.1 million ($0.74 per diluted
share) for the third quarter ended September 28, 2002 as compared to net
earnings a year ago of $19.4 million ($2.49 per diluted share). The
2001 result included a $14.5 million gain from the July 2001 sale of the
Company's servingware product line ("PI"). On a pro forma basis that
excludes the gain on sale of PI (and operating earnings from PI prior to
the July 2001 sale) and adjusts for the required change in accounting for
goodwill, the 2001 third quarter net income would have been $5.3 million
or $0.68 per diluted share. On a pro forma basis that excluded $0.7 million
of other income related to the final determination of the PI selling price,
the 2002 third quarter net income would have been $5.4 million or $0.65 per
diluted share. The improved pro forma third quarter 2002 earnings were
primarily the result of higher sales, reduced operating expenses, and
reduced interest expense. Net sales in the third quarter were $67.8
million, a 2.6% increase over net sales in the third quarter of 2001 and
a 3.5% increase over pro forma net sales (giving effect to the disposition
of PI) in the third quarter of 2001.
For the nine months ended September 28, 2002, the Company reported
net earnings of $11.3 million ($1.37 per diluted share) as compared to net
earnings in the comparable prior year period of $16.1 million ($2.10 per
diluted share). The 2001 result included the $14.5 million gain on the sale
of PI, operating earnings from PI prior to the July 2001 sale, as well as
first quarter 2001 restructuring and other charges. On a pro forma basis
that excludes the 2001 gain on sale and earnings of PI, the restructuring
and other charges and adjusts for the required change in accounting for
goodwill, the 2001 nine month net income would have been $5.2 million or
$0.68 per diluted share. The significantly improved earnings in 2002 were
primarily the result of higher sales, improved margins, lower interest
expense and $0.7 million of other income ($0.08 per diluted share) related
to final determination of the PI selling price. Net sales in the nine
months ended September 28, 2002 increased to $178.4 million from pro forma
net sales of $176.9 million in the comparable prior year period (giving
effect to the disposition of PI).
The Company reported positive cash flow during the third quarter of
$6.2 million. The Company also noted that total debt, net of cash, declined
to $124 million from $139 million a year ago. The significant reduction in
debt was due entirely to positive cash flow from operations. The Company
continues to be in compliance with all of its loan covenants, and net
availability at September 28, 2002 was approximately $47 million.
Commenting on results, James R. Tennant, chairman and chief executive
officer, stated, "We are very pleased with our operating results. The third
quarter is historically a strong quarter for us due to the back-to-school
season. Although many of our customers have reported disappointing sales
trends for the back-to-school season, it seems evident that the falloff is
in other categories. Our product lines have always been largely recession-
proof and once again the results bear this out. Therefore, we believe that
as the economy strengthens, HPI is very well positioned to maintain our
positive trends."
Our third quarter conference call will take place Friday, November 1, 2002,
starting at 10:00 a.m. Eastern Time (9:00 a.m. CT, 8:00 a.m. MT, and 7:00
a.m. PT). Dial 800/289-0730 approximately ten minutes prior to conference
time.
A replay of our third quarter conference call will be available from 1:00
p.m. Eastern Time November 1, 2002 through midnight Eastern Time November 7,
2002. Dial 888/203-1112, then enter confirmation code 783330.
Home Products International, Inc. is an international consumer products
company specializing in the manufacture and marketing of quality diversified
housewares products. The Company sells its products to all the largest
national retailers.
Some of the statements made in this press release are forward-looking and
concern the Company's future growth, product development, markets and
competitive position. While management will make its best efforts to be
accurate in making these forward-looking statements, any such statements
are subject to risks and uncertainties that could cause the Company's actual
results to vary materially. These include market risks such as increased
competition for both the Company and its end users and changes in retail
distribution channels; dependence on a few large customers; economic risks;
financial risks such as fluctuations in the price of raw materials, future
liquidity and access to debt and equity markets. Should one or more of
these risks or uncertainties materialize, actual results may vary materially
from those anticipated, expected or projected. The Company undertakes no
obligation to update any such factors or to announce the results of any
revision to any of the forward-looking statements contained herein to
reflect future events or developments.
Home Products International, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited)
September 28, December 29,
2002 2001
-------- --------
Cash $ 5,264 $ 1,091
Accounts receivable, net 40,876 36,577
Inventories 32,762 17,043
Prepaid expenses and other current assets 1,753 2,275
-------- --------
Current assets 80,655 56,986
-------- --------
Fixed assets, net 38,608 42,631
Goodwill, net 74,759 74,759
Other intangibles, net 1,236 1,616
Other non-current assets 11,764 11,351
-------- --------
Total assets $ 207,022 $ 187,343
======== ========
Accounts payable $ 24,859 $ 16,834
Accrued liabilities 34,785 33,916
Current maturities of long term debt 158 158
-------- --------
Current liabilities 59,802 50,908
-------- --------
Long term debt 129,593 130,447
Other non-current liabilities 3,265 3,168
-------- --------
Long term debt and other non-current liabilities 132,858 133,615
-------- --------
Stockholders' equity 14,362 2,820
-------- --------
Total liabilities and stockholders' equity $ 207,022 $ 187,343
======== ========
Home Products International, Inc.
Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
(Unaudited)
Thirteen-weeks Thirteen-weeks Thirty-nine weeks Thirty-nine weeks
Ended Ended Ended Ended
September 28, September 29, September 28, September 29,
2002 2001 2002 2001
----------------- ----------------- ----------------- -----------------
Net sales $ 67,799 100.0% $ 66,064 100.0% $178,429 100.0% $196,048 100.0%
Cost of goods sold 51,271 75.6% 48,002 72.7% 133,597 74.9% 147,874 75.4%
Special (income)
charges, net (73) (0.1%) - - (73) (0.0%) 110 0.1%
----------------- ----------------- ----------------- -----------------
Gross profit 16,601 24.5% 18,062 27.3% 44,905 25.1% 48,064 24.5%
----------------- ----------------- ----------------- -----------------
Operating expenses 7,460 11.0% 8,486 12.8% 22,965 12.9% 26,605 13.6%
Amortization of
intangibles 127 0.2% 665 1.0% 380 0.2% 2,524 1.3%
Restructuring and
other charges - - - - - - 2,483 1.3%
----------------- ----------------- ----------------- -----------------
Operating profit 9,014 13.3% 8,911 13.5% 21,560 12.0% 16,452 8.3%
Interest (expense) (3,432) (5.1%) (3,828) (5.8%) (10,370) (5.8%) (14,698) (7.5%)
Other income 644 0.9% 14,458 21.9% 501 0.3% 14,562 7.4%
----------------- ----------------- ----------------- -----------------
Earnings before
income taxes 6,226 9.1% 19,541 29.6% 11,691 6.5% 16,316 8.2%
----------------- ----------------- ----------------- -----------------
Income tax (expense) (133) (0.2%) (93) (0.1%) (433) (0.2%) (191) (0.1%)
----------------- ----------------- ----------------- -----------------
Net earnings $ 6,093 8.9% $ 19,448 29.5% $ 11,258 6.3% $ 16,125 8.1%
================= ================= ================= =================
Net earnings per share:
Basic $0.78 $2.57 $1.45 $2.14
Diluted $0.74 $2.49 $1.37 $2.10
Number of weighted
average common
shares outstanding:
Basic 7,795,873 7,555,978 7,785,076 7,524,858
Diluted 8,258,516 7,824,364 8,216,783 7,664,741
Adjusted EBITDA(1) $ 11,360 16.8% $ 11,551 17.5% $ 29,132 16.3% $ 29,737 15.2%
(1) Adjusted EBITDA represents, for any period, net income before interest expense, income taxes,
depreciation and amortization and non-recurring items. Adjusted EBITDA is presented to provide
additional information about the Company's ability to meet future debt service, capital
expenditures and working capital requirements and is one of the measures which determines
the Company's ability to borrow money. Adjusted EBITDA should not be considered in isolation
or as a substitute for operating income, cash flows from operating activities and other income
or cash flow statement data prepared in accordance with generally accepted accounting principles
or as a measure of the Company's profitability or liquidity. Adjusted EBITDA as calculated
herein may not be comparable to similarly titled measures reported by other companies.
Home Products International, Inc.
Pro Forma Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
(Unaudited)
The following table sets forth for the periods indicated the 2002 and 2001 pro forma results of
operations as well as the percentage, which the pro forma items in the Statements of Operations
bear to net sales. The pro forma results of operations are presented as if the PI divestiture
and the change in accounting for goodwill had occurred at the beginning of fiscal 2001. Also
excluded are one-time special and restructuring (income)/charges of ($73) and $2,593, which
were incurred during the third quarter of 2002 and the first quarter of 2001, respectively.
This pro forma financial information is not necessarily indicative of the results the Company
would have realized had such events occurred at the beginning of fiscal 2001 or of the Company's
future results of operations.
Pro Forma Pro Forma Pro Forma Pro Forma
--------- --------- --------- ---------
Thirteen-weeks Thirteen-weeks Thirty-nine weeks Thirty-nine weeks
Ended Ended Ended Ended
September 28, September 29, September 28, September 29,
2002 2001 2002 2001
----------------- ----------------- ----------------- -----------------
Net sales $ 67,799 100.0% $ 65,499 100.0% $178,429 100.0% $176,880 100.0%
Cost of goods sold 51,271 75.6% 47,638 72.7% 133,597 74.9% 135,899 76.8%
----------------- ----------------- ----------------- -----------------
Gross profit 16,528 24.4% 17,861 27.3% 44,832 25.1% 40,981 23.2%
----------------- ----------------- ----------------- -----------------
Operating expenses 7,460 11.0% 8,419 12.9% 22,965 12.9% 23,570 13.3%
Amortization of
intangibles 127 0.2% 145 0.2% 380 0.2% 464 0.3%
----------------- ----------------- ----------------- -----------------
Operating profit 8,941 13.2% 9,297 14.2% 21,487 12.0% 16,947 9.6%
Interest (expense) (3,432) (5.1%) (3,828) (5.8%) (10,370) (5.8%) (11,622) (6.6%)
Other income (expense) (19) (0.0%) (31) (0.0%) (162) (0.1%) 73 0.0%
----------------- ----------------- ----------------- -----------------
Earnings before
income taxes 5,490 8.1% 5,438 8.4% 10,955 6.1% 5,398 3.0%
----------------- ----------------- ----------------- -----------------
Income tax (expense) (133) (0.2%) (93) (0.1%) (433) (0.2%) (191) (0.1%)
----------------- ----------------- ----------------- -----------------
Net earnings $ 5,357 7.9% $ 5,345 8.3% $ 10,522 5.9% $ 5,207 2.9%
================= ================= ================= =================
Net earnings per share:
Basic $0.69 $0.71 $1.35 $0.69
Diluted $0.65 $0.68 $1.28 $0.68
Number of weighted
average common
Shares outstanding:
Basic 7,795,873 7,555,978 7,785,076 7,524,858
Diluted 8,258,516 7,824,364 8,216,783 7,664,741
Adjusted EBITDA(1) $ 11,360 16.8% $ 11,382 17.4% $ 29,132 16.3% $ 24,735 14.0%
(1) Adjusted EBITDA represents, for any period, net income before interest expense, income taxes,
depreciation and amortization and non-recurring items. See note to the preceding table.