C2, INC.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Telephone (414) 291-9000
Facsimile (414) 291-9061
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: WILLIAM T. DONOVAN
JULY 22, 2003 PRESIDENT AND CEO
(414) 291-9000
C2, INC. ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
Milwaukee, WI -- C2, Inc. (Nasdaq:CTOO) announced today its financial
results for the second quarter and first six months of fiscal 2003 ended June
30, 2003. Consolidated revenues for the second quarter totaled $67,300,000, a
decline of 8.2% when compared to revenues of $73,324,000 reported for last
year's second quarter. Revenues from logistic services for the second quarter
were $51,311,000, approximately $2,000,000 below last year's comparable period
due primarily to reduced throughput in certain fixed fee contracts, which does
not alter the Company's fee structure. Revenues from product sales totaled
$15,989,000, a decline of 20.2% over those reported for last year's second
quarter. Net earnings for the second quarter totaled $515,000, or $0.09 per
diluted share, a decline of 40.2%, compared to $861,000, or $0.16 per diluted
share reported for the same period last year.
Commenting on the results, William T. Donovan, C2 President and CEO, said, "C2's
financial performance in this quarter and the first half of 2003 reflects
continued growth in earnings contribution from logistic services as the
development of Total Logistic Control's (TLC) business and earnings power
progress. Our product sales segment, which includes Food Distribution Services
at TLC and refrigerated display cases at Zero Zone, continues to make steady
progress in improving operating results from its low point in the fourth quarter
of 2002. This segment has been impacted by deferred spending in retail
infrastructure over the past year, however, we are achieving a significant
increase in order levels and the outlook for this segment in the second half of
fiscal 2003 is to generate meaningful improvement in earnings contribution and
strong quarterly comparable performance."
Commenting further, "Our outlook for C2's financial performance in 2003 and
beyond is for continued strong growth in both revenues and, more importantly,
earnings from both TLC and Zero Zone. Our consolidated results for the first
half of 2003 have been impacted by lower volume in product sales and product
service related expenses. New dedicated facility projects, increased
transportation operations, increased capacity utilization in warehouse
operations and higher order rates at Zero Zone are expected to drive
significantly improved performance during the second half of 2003 and beyond."
C2, INC. - NEWS RELEASE
JULY 22, 2003
PAGE 2 of 4
Consolidated revenues for the six months ended June 30, 2003 totaled
$131,485,000, reflecting a decline of 4.7% from last year's comparable period
revenues of $137,964,000. Revenues attributable to logistic services were
slightly ahead of last year's level despite the lower volume in certain fixed
fee contracts. Revenues from product sales declined 16.8% to $32,653,000,
reflecting the substantial deferral of spending by retailers as previously
noted.
Net earnings for the six months ended June 30, 2003 totaled $1,081,000, or $0.20
per diluted share, a decline of 33%, compared to $1,614,000, or $0.31 per
diluted share reported for the same period last year. Growth in logistic
services from TLC in both revenues and earnings were offset by lower volume and
a small loss from product sales.
C2, INC. IS A MILWAUKEE-BASED PUBLIC COMPANY WITH TWO OPERATING BUSINESSES,
TOTAL LOGISTIC CONTROL AND ZERO ZONE.
TOTAL LOGISTIC CONTROL
TLC, based in Zeeland, Michigan, is a national provider of integrated
logistic services which include refrigerated and dry warehousing, transportation
operations, supply chain management, dedicated third-party facility and
operations management, food distribution, bottling and packaging and fulfillment
services. Operations are conducted through a national network of 40 logistic
centers with 36.3 million cubic feet of refrigerated capacity and over 3 million
square feet of dry warehouse space making it the eleventh largest provider of
refrigerated warehousing services in the United States. TLC operates a fleet of
over 400 tractors with over 700 refrigerated and dry trailers with 5 maintenance
facilities. TLC recently was cited by Inbound Logistics as a Top 10 Provider of
Third Party Logistics Excellence for the sixth year in a row. TLC is a
wholly-owned subsidiary of C2, Inc. More information about TLC is available at
www.totallogistic.com.
ZERO ZONE
Zero Zone, headquartered in North Prairie, Wisconsin is a manufacturer
of refrigerated and freezer display cases used in grocery, convenience and drug
store chains for retail merchandising of food, beverage and floral products. In
2002, Zero Zone acquired Zero Zone Refrigeration which manufactures
refrigeration houses and racks to power and control the refrigeration systems,
electrical panels, air conditioning and stand-by power for supermarkets,
convenience stores and industrial applications. Zero Zone is a wholly-owned
subsidiary of C2, Inc. More information about Zero Zone is available at
www.zero-zone.com.
C2, INC. - NEWS RELEASE
JULY 22, 2003
PAGE 3 of 4
The statements contained in this release that are not historical facts are
forward-looking statements. Actual results may differ materially from
management's expectations. The forward-looking statements involve risks and
uncertainties, including but not limited to:
- Demand for and profitability of warehousing, transportation, logistic
services, refrigerated display cases and refrigeration control systems
may be adversely affected by increases in interest rates, adverse
economic conditions, increased energy costs, loss of a material
customer or vendor, weather or other factors.
- Growth in volume of services or products may be adversely affected by
reduced ability to identify and hire qualified employees.
The Company's profitability may be adversely affected by increases in
interest rates because a significant portion of the Company's capital
structure is debt, a portion, which bears interest at variable interest
rates.
- The Company's profitability may be adversely affected by performance,
which does not meet standards established in contractual agreements
relating to transportation operations, logistics management, dedicated
facility operations and product warranty.
- Consolidation within the food industry or grocery, drug or convenience
retailers could negatively impact the Company's customers.
- The Company's market share may be adversely affected as a result of new
or increased competitive conditions in warehousing, transportation or
display case and refrigeration control systems manufacturing.
- Additional information about risks and uncertainties discussed above as
well as additional material risks in the Company's business may be
found in the Company's Annual Report on Form 10-K for the year 2002 and
other filings the Company made from time to time with the Securities
and Exchange Commission.
This and other C2, Inc. news releases and additional corporate data
can be found on C2's website at www.c2-inc.com.
C2, INC. -- NEWS RELEASE
JULY 22, 2003
PAGE 4 OF 4
C2, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(In Thousands, Except Per Share Data)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------------
2003 2002 2003 2002
----------------------------- ------------------------------
Revenues:
Logistic Services $ 51,311 $ 53,291 $ 98,832 $ 98,732
Product Sales 15,989 20,033 32,653 39,232
---------- ------------ ------------ -----------
67,300 73,324 131,485 137,964
---------- ------------ ------------ -----------
Costs and Expenses:
Logistic Expenses 46,004 47,601 88,209 87,987
Cost of Product Sales 13,283 15,730 27,187 31,312
Depreciation and Amortization 1,923 2,030 3,837 4,110
Selling, General & Administrative Expense 4,430 5,002 8,816 9,096
---------- ------------ ------------ -----------
65,640 70,363 128,049 132,505
---------- ------------ ------------ -----------
Earnings from Operations 1,660 2,961 3,436 5,459
Other Income (Expense):
Interest Expense, net (758) (1,105) (1,515) (2,172)
Other Income (Expense) - (163) - (139)
---------- ------------ ------------ -----------
(758) (1,268) (1,515) (2,311)
Earnings before Income Taxes and
Minority Interest 902 1,693 1,921 3,148
Income Tax Provision 387 672 840 1,250
---------- ------------ ------------ -----------
Net Earnings before Minority Interest 515 1,021 1,081 1,898
Minority Interest - 160 - 284
---------- ------------ ------------ -----------
Net Earnings $ 515 $ 861 $ 1,081 $ 1,614
========== ============ ============ ===========
Basic Net Earnings Per Share $ 0.10 $ 0.17 $ 0.21 $ 0.32
========== ============ ============ ===========
Diluted Net Earnings Per Share $ 0.09 $ 0.16 $ 0.20 $ 0.31
========== ============ ============ ============
Average Number of Shares Outstanding 5,273,853 5,081,864 5,272,858 5,081,864
Diluted Number of Shares Outstanding 5,506,202 5,277,286 5,525,789 5,261,774
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