EXHIBIT 99.1
FOR: Home Products International, Inc.
APPROVED BY: James R. Tennant, Chairman & CEO
Home Products International, Inc.
(773) 890-1010
FOR IMMEDIATE RELEASE CONTACT: Investor Relations:
--------------------- James Winslow, Executive VP & CFO
Home Products International, Inc.
(773) 890-1010
HOME PRODUCTS INTERNATIONAL REPORTS FOURTH QUARTER
AND FULL YEAR RESULTS
Fourth Quarter Earnings Per Share of $0.37 vs. $0.11 a year ago;
sales up 32%
Chicago, IL, February 24, 2003 - Home Products International, Inc.
(Nasdaq SmallCap: HOMZ) (the "Company"), a leader in the housewares
industry, today announced financial results for its fourth quarter and
year ended December 28, 2002.
Net sales in the 2002 fourth quarter were $70.8 million versus $53.7
million in the prior year, an increase of 32%. The Company reported fourth
quarter net earnings of $3.0 million and diluted earnings per share of
$0.37 as compared to net earnings of $0.9 million ($0.11 per diluted share)
in 2001. The fourth quarter 2002 results include $1.3 million of income
for the favorable resolution of matters relating to the Company's prior
year restructuring actions. The fourth quarter 2001 results include an
extraordinary charge ($0.6 million) related to the early retirement of
debt, $0.5 million of goodwill amortization that is no longer required under
generally accepted accounting principles, and $3.5 million of income from
changes in estimate relating to the Company's restructuring initiatives.
On a comparable basis that eliminates extraordinary charges, income from
restructuring, income from special charges and the effect of the change in
accounting for goodwill, the Company achieved diluted earnings per share
in the fourth quarter of 2002 of $0.21 as compared to a loss per share of
$(0.20) in 2001's fourth quarter. The improvement between years was a
result of the higher sales as well as a $3.1 million reduction in bad debt
expense. In 2001, the Company recorded a significant write-down of its
receivable from Kmart.
For the fiscal year ended December 28, 2002, net sales of $249.2
million were flat to 2001's net sales of $249.7 million. The prior year,
however, included $19.2 million of sales from the servingware product
line that was sold in July 2001. These sales did not repeat in 2002. An
additional $7.9 million of sales was lost due to the bankruptcy of several
customers, primarily Ames. Offsetting these sales declines were significant
sales gains at the Company's largest customers. On a comparable basis that
adjusts for the disposition of the servingware product line, 2002's sales of
$249.2 million were up $18.6 million to a year ago, or 8.1%.
The Company reported full year net earnings of $14.3 million and
diluted earnings per share of $1.73 as compared to last year's net earnings
of $17.0 million, $2.19 per diluted share. Both years contain items that
make it difficult to compare operating results between years. The most
significant non-recurring item in 2001 is the $14.5 million gain, $1.87
per share, on the sale of the Company's servingware product line. The
2001 results also include an extraordinary charge ($0.6 million) related
to the early retirement of debt, $2.6 million of goodwill amortization that
is no longer required under generally accepted accounting principles, $0.9
million of income from the favorable resolution of matters related to the
Company's restructuring initiatives, and $1.1 million of earnings related
to the servingware product line. The 2002 results include $1.4 million of
income from the favorable resolution of matters relating to the Company's
prior years' restructuring actions and an additional gain of $0.7 million
related to the servingware divestiture. On a comparable basis that
eliminates earnings relating to the servingware divestiture, the
extraordinary charges, income from restructuring, income from special
charges, and the effect of the change in accounting for goodwill, the
Company achieved diluted earnings per share in 2002 of $1.48 as compared
to $0.48 in 2001. The improvement between years was a result of higher
sales, consistent gross profit margins, and a reduction in bad debt expense.
The Company noted that total debt, net of cash, declined to $126
million from $130 million a year ago. There were no borrowings outstanding
at year-end under the Company's revolving line of credit and total borrowing
availability at December 28, 2002 was $43.6 million. The Company continues
to be in compliance with all of its loan covenants.
Commenting on the results, James R. Tennant, chairman and chief
executive officer, stated, "We are very pleased with our sales and operating
results. The fourth quarter sales continued to grow upon the enhanced
performance that we reported in the second and third quarters. We are
very pleased that we have been able to grow sales in a tough economic
and competitive environment."
Mr. Tennant concluded, "As we look at 2003, there are clearly
opportunities and challenges ahead. We have proven in the past our
ability to effectively compete while maintaining a low cost environment
and providing a positive return to shareholders. We are confident that
HPI's financial and operational strength coupled with our strong customer
relationships have positioned the Company well."
The Company's fourth quarter conference call will take place Tuesday,
February 25, 2003, 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 1-888/569-5033 approximately 10 minutes
prior to conference time.
A replay of the Company's fourth quarter conference call will be available
from 1:00 p.m. Eastern Time February 25, 2003 through midnight Eastern Time
March 3, 2003. Dial 1-888/203-1112, then enter confirmation code 774107.
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 makes 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)
December 28, December 29,
2002 2001
-------- --------
Cash $ 3,974 $ 1,091
Accounts receivable, net 48,937 36,577
Inventories 25,357 17,043
Prepaid expenses and other current assets 1,879 2,275
-------- --------
Current assets 80,147 56,986
-------- --------
Fixed assets, net 37,189 42,631
Goodwill, net 73,752 74,759
Other intangibles, net 1,111 1,616
Other non-current assets 11,319 11,351
-------- --------
Total assets $ 203,518 $ 187,343
======== ========
Accounts payable $ 22,986 $ 16,834
Accrued liabilities 28,993 33,916
Current maturities of long term debt 158 158
-------- --------
Current liabilities 52,137 50,908
-------- --------
Long term debt 129,621 130,447
Other non-current liabilities 4,293 3,168
-------- --------
Long term debt and other non-current liabilities 133,914 133,615
-------- --------
Stockholders' equity 17,467 2,820
-------- --------
Total liabilities and stockholders' equity $ 203,518 $ 187,343
======== ========
Home Products International, Inc.
Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
Thirteen weeks Thirteen weeks Fifty-two weeks Fifty-two weeks
ended ended ended ended
December 28, December 29, December 28, December 29,
2002 2001 2002 2001
----------------- ----------------- ----------------- -----------------
Net sales $ 70,763 100.0% $ 53,673 100.0% $249,192 100.0% $249,721 100.0%
Cost of goods sold 57,108 80.7% 40,425 75.3% 190,705 76.5% 188,299 75.4%
Special (income)
charges, net (33) (0.0%) (524) (1.0%) (106) (0.0%) (414) (0.2%)
----------------- ----------------- ----------------- -----------------
Gross profit 13,688 19.3% 13,772 25.7% 58,593 23.5% 61,836 24.8%
----------------- ----------------- ----------------- -----------------
Operating expenses 7,762 11.0% 10,305 19.2% 30,727 12.3% 36,910 14.8%
Amortization of
intangibles 127 0.2% 666 1.2% 507 0.2% 3,190 1.3%
Restructuring and other
(income) charges (1,303) (1.8%) (2,963) (5.5%) (1,303) (0.5%) (480) (0.2%)
Asset impairment
charges 567 0.8% - - 567 0.2% - -
----------------- ----------------- ----------------- -----------------
Operating profit 6,535 9.1% 5,764 10.8% 28,095 11.3% 22,216 8.9%
Interest (expense) (3,453) (4.9%) (3,586) (6.7%) (13,823) (5.5%) (18,284) (7.3%)
Other income 58 0.1% 59 0.1% 559 0.2% 14,621 5.9%
----------------- ----------------- ----------------- -----------------
Earnings before
income taxes 3,140 4.3% 2,237 4.2% 14,831 6.0% 18,553 7.5%
----------------- ----------------- ----------------- -----------------
Income tax (expense) (94) (0.1%) (784) (1.5%) (527) (0.2%) (975) (0.4%)
----------------- ----------------- ----------------- -----------------
Net earnings before
extraordinary charges 3,046 4.2% 1,453 2.7% 14,304 5.8% 17,578 7.1%
Extraordinary charge for
early retirement of debt - - 598 1.1% - - 598 0.2%
----------------- ----------------- ----------------- -----------------
Net earnings $ 3,046 4.2% $ 855 1.6% $ 14,304 5.8% $ 16,980 6.9%
================= ================= ================= =================
Net earnings per share:
Basic $0.39 $0.11 $1.83 $2.24
Diluted $0.37 $0.11 $1.73 $2.19
Number of weighted
average common
shares outstanding:
Basic 7,817,218 7,591,900 7,804,309 7,563,740
Diluted 8,294,652 7,936,337 8,286,790 7,754,762
Home Products International, Inc.
Pro Forma Consolidated Statements of Operations
($ 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. Exclusions to 2002 include
special and restructuring (income) charges of $(1,336) and $(1,409), which were
recorded during the fourth quarter and full year, respectively. Exclusions to 2001
include special (income) charges, restructuring (income) charges and an
extraordinary charge for the early retirement of debt of $(2,889) and $(296), which
were recorded during the fourth quarter and full year, 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
--------- --------- --------- ---------
13 weeks ended 13 weeks ended 52 weeks ended 52 weeks ended
December 28, December 29, December 28, December 29,
2002 2001 2002 2001
----------------- ----------------- ----------------- -----------------
Net sales $ 70,763 100.0% $ 53,673 100.0% $249,192 100.0% $230,553 100.0%
Cost of goods sold 57,108 80.7% 40,425 75.3% 190,705 76.5% 176,324 76.5%
----------------- ----------------- ----------------- -----------------
Gross profit 13,655 19.3% 13,248 24.7% 58,487 23.5% 54,229 23.5%
----------------- ----------------- ----------------- -----------------
Operating expenses 7,762 11.0% 10,305 19.2% 30,727 12.3% 33,875 14.7%
Amortization of
intangibles 127 0.2% 130 0.2% 507 0.2% 594 0.3%
Asset impairment charges 567 0.8% - - 567 0.2% - -
----------------- ----------------- ----------------- -----------------
Operating profit 5,199 7.3% 2,813 5.3% 26,686 10.8% 19,760 8.5%
Interest (expense) (3,453) (4.9%) (3,586) (6.7%) (13,823) (5.5%) (15,203) (6.6%)
Other income (expense) 58 0.1% 59 0.1% (104) (0.0%) 132 0.1%
----------------- ----------------- ----------------- -----------------
Earnings (loss) before
income taxes 1,804 2.5% (714) (1.3%) 12,759 5.3% 4,689 2.0%
----------------- ----------------- ----------------- -----------------
Income tax (expense) (94) (0.1%) (784) (1.5%) (527) (0.2%) (975) (0.4%)
----------------- ----------------- ----------------- -----------------
Net earnings (loss) $ 1,710 2.4% $ (1,498) 2.8% $ 12,232 5.1% $ 3,714 1.6%
================= ================= ================= =================
Net earnings (loss) per
share:
Basic $0.22 $(0.20) $1.57 $0.49
Diluted $0.21 $(0.20) $1.48 $0.48
Number of weighted avg
common shares o/s:
Basic 7,817,218 7,591,900 7,804,309 7,563,740
Diluted 8,294,652 7,936,337 8,286,790 7,754,762
Adjusted EBITDA(1) $ 7,766 11.0% $ 5,058 9.4% $ 36,898 14.8% $ 29,793 12.9%
(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.
Adjusted Earnings Per Share
The Company has incurred various items of income and expense that are considered
internally separate from day-to-day operations. These include extraordinary
charges, restructuring costs, income related to changes in estimates of
restructuring costs and earnings related to our former servingware product line.
In addition, the Company ceased to amortize goodwill as of the beginning of fiscal
2002 in accordance with new accounting standards. This required change in
accounting had a significantly favorable impact on reported results in 2002 as
compared to prior years. To provide a better picture of comparable earnings
results, the table below reconciles reported earnings per share to what is a more
useful measurement of our operating performance.
Thirteen- Thirteen- Fifty-two Fifty-two
weeks weeks weeks weeks
ended ended ended ended
December 28, December 29, December 28, December 29,
2002 2001 2002 2001
---- ---- ---- ----
Diluted earnings per share
as reported $0.37 $0.11 $1.73 $2.19
Extraordinary charge for
early retirement of debt --- 0.08 --- 0.08
Reversal of special charge
accruals --- (0.07) (0.01) (0.05)
Income from resolution of
restructuring items (0.16) (0.39) (0.16) (0.06)
Earnings from servingware
product line --- --- --- (0.14)
Gain from sale of
servingware product line --- --- (0.08) (1.87)
Goodwill amortization --- 0.07 --- 0.33
---- ---- ---- ----
Diluted earnings (loss) per
share as adjusted $0.21 $(0.20) $1.48 $0.48
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