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
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CONTACT: Investor Relations:
James Winslow, Executive VP & CFO
Home Products International, Inc.
(773) 890-1010
HOME PRODUCTS INTERNATIONAL ANNOUNCES
SECOND QUARTER RESULTS
Sales drop and raw material cost increases lead to loss in quarter;
Company also announces plant closure.
Chicago, IL, July 29, 2003 - Home Products International, Inc. (Nasdaq
SmallCap: HOMZ), (the "Company"), a leader in the housewares industry, today
announced financial results for the second quarter of its 2003 fiscal year.
The Company reported a net loss of $3.3 million, $(0.42) per diluted
share, for the second quarter ended June 28, 2003 as compared to net
earnings a year ago of $3.7 million, $0.45 per diluted share. Earnings
were negatively impacted by increased raw material costs and a decline
in sales.
Net sales in the quarter declined to $54.0 million from $59.6 million
a year ago. The net sales decrease of 9% was due to selling price decreases
and a decline in store count at Kmart, one of the Company's key customers.
The Company reported negative cash flow (which the Company defines as the
net change in cash and debt) during the second quarter of $9.8 million
due to semi-annual high yield bond interest payments of $6 million.
Receivable levels increased during the quarter due to seasonally higher
net sales. The Company continues to be in compliance with all of its loan
covenants, and net availability at June 28, 2003 under the Company's $50
million senior loan agreement was $43 million. At June 28, 2003, there were
no borrowings outstanding under the senior loan agreement.
For the six months ended June 28, 2003, the Company reported a net loss
of $6.5 million ($0.82 per diluted share) as compared to earnings a year ago
of $5.2 million ($0.63 per diluted share). Similar to the second quarter,
results were impacted by increased raw material costs and a decline in net
sales. Net sales during the six-month period were $103.2 million, down 7%
from 2002 six-month sales of $110.6 million. A weak retail environment
in the first quarter together with a decline in store count at Kmart
contributed to the sales decline. Cash flow for the first six months
of fiscal 2003 was a positive $0.4 million.
The Company also announced that it plans to close its Eagan, Minnesota
manufacturing and warehouse facility when its lease ends in January 2004.
The Minnesota facility employs 130 people and manufactures various kitchen
and general storage items. Production will be moved to existing Company
facilities augmented by some outsourcing. Total costs to close the plant,
including severance, increased depreciation charges and the relocation of
some equipment will be about $4.5 million and will be recorded over the next
6-9 months. The Company expects to realize annual cash savings as a result
of the plant closing, and currently estimates that the cash savings in the
first year will be approximately $2 million (excluding plant closing costs).
Commenting on the results, James R. Tennant, chairman and chief
executive officer, stated, "The rising cost of plastic resin, our primary
raw material, had a significant impact on the second quarter and our first
half results. Resin costs have been moving up all year and have negatively
impacted earnings. Our sales, while disappointing, reflect conditions in
our industry. Because Kmart is one of our largest customers, their store
closings during both 2002 and 2003 had an impact on comparable sales."
With regard to the Company's decision to close the Eagan facility, Mr.
Tennant stated, "The current business conditions we face require that
the Company respond with meaningful expense reductions."
The Company's second quarter conference call will take place Tuesday, July
29, 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 1-800-210-9006 approximately 10 minutes prior to
conference time.
A replay of the Company's second quarter conference call will be available
from 1:00 p.m. Eastern Time July 29, 2003 through midnight Eastern Time
August 4, 2003. Dial 1-888-203-1112, then enter confirmation code 475339.
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 through national and
regional discounters including Kmart, Wal-Mart and Target, hardware/home
centers, food/drug stores, juvenile stores and specialty stores.
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including statements
regarding expected plant closing costs and estimated annual cash savings
from such plant closing as well as other statements that may concern the
Company's future growth, operating results, product development, markets
and competitive position. While management makes its best efforts to be
accurate in making these forward-looking statements, such statements are
based on management's current expectations and are subject to risks,
uncertainties and assumptions, including those identified below as well
as other risks not yet known to the Company or not currently considered
material by the Company. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may differ materially from those expected. These risks include
unanticipated plant closing costs; unanticipated difficulties and costs
associated with the relocation of equipment and the manufacture or sourcing
of products; 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. For a more detailed description of these and other risk
factors, please refer to the Company's 10-K, 10-Q and other SEC filings.
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)
June 28, December 28,
2003 2002
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Cash $ 3,495 $ 3,974
Accounts receivable, net 36,083 48,937
Inventories 27,887 25,357
Deferred income taxes 2,559 2,559
Prepaid expenses and other current assets 1,519 1,879
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Current assets 71,543 82,706
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Fixed assets, net 36,521 37,189
Goodwill, net 73,752 73,752
Other intangibles, net 859 1,111
Deferred income taxes 5,207 5,207
Other non-current assets 3,264 3,553
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Total assets $ 191,146 $ 203,518
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Accounts payable $ 24,188 $ 22,986
Accrued liabilities 21,711 28,993
Current maturities of long term debt 158 158
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Current liabilities 46,057 52,137
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Long term debt 129,576 129,621
Other non-current liabilities 4,380 4,293
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Long term debt and other non-current liabilities 133,956 133,914
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Stockholders' equity 11,133 17,467
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Total liabilities and stockholders' equity $ 191,146 $ 203,518
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Home Products International, Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
Thirteen weeks Thirteen weeks Twenty-six weeks Twenty-six weeks
ended ended ended ended
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2003
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Net sales $ 54,049 100.0% $ 59,623 100.0% $103,178 100.0% $110,630 100.0%
Cost of goods sold 46,425 85.9% 44,092 74.0% 86,884 84.2% 82,326 74.4%
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Gross profit 7,624 14.1% 15,531 26.0% 16,294 15.8% 28,304 25.6%
Selling, general and
administrative expenses 7,382 13.7% 7,879 13.2% 15,614 15.1% 15,505 14.0%
Amortization of intangibles 126 0.2% 123 0.2% 252 0.2% 253 0.2%
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Operating profit 116 0.2% 7,529 12.6% 428 0.5% 12,546 11.4%
Interest (expense) (3,451) (6.4%) (3,454) (5.8%) (6,928) (6.7%) (6,938) (6.3%)
Other income 26 0.0% (164) (0.3%) 69 0.1% (143) (0.1%)
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Earnings (loss) before
income taxes (3,309) (6.2%) 3,911 6.5% (6,431) (6.1%) 5,465 5.0%
Income tax expense (20) (0.0%) (176) (0.3%) (44) (0.0%) (300) (0.3%)
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Net earnings (loss) $ (3,329) (6.2%) $ 3,735 6.2% $ (6,475) (6.1%) $ 5,165 4.7%
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Net earnings (loss) per share:
Basic $(0.42) $0.48 $(0.82) $0.67
Diluted $(0.42) $0.45 $(0.82) $0.63
Number of weighted average
common shares outstanding:
Basic 7,936,215 7,750,251 7,935,349 7,744,052
Diluted 7,936,215 8,212,095 7,935,349 8,161,168