C2, INC.
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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
OCTOBER 21, 2003 PRESIDENT AND CEO
(414) 291-9000
C2, INC. ANNOUNCES RECORD EARNINGS
FOR THE THIRD QUARTER OF FISCAL 2003
Milwaukee, WI -- C2, Inc. (Nasdaq:CTOO) announced today net earnings
for the third quarter ended September 30, 2003 totaled $1,568,000 or $0.30 per
share ($0.28 per diluted share), which represents a 50.3% increase compared to
$1,043,000, or $0.21 per share ($0.20 per diluted share) reported for the same
period last year. Consolidated revenues for the three months ended September 30,
2003 totaled $71,095,000, an increase of 7.0%, over those reported for the
comparable period last year. Both of C2's operating businesses, Total Logistic
Control and Zero Zone, contributed to the increase in revenues and earnings for
the quarter.
Net earnings for the nine months ended September 30, 2003 totaled
$2,648,000 or $0.50 per share ($0.48 per diluted share), essentially level with
net earnings of $2,657,000, or $0.52 per share ($0.51 per diluted share),
reported for the same period last year. Growth in logistic services from TLC in
both revenues and earnings contribution were offset by lower volume and earnings
from product sales for the period. Consolidated revenues for the nine months
ended September 30, 2003 totaled $202,580,000, down 0.9% compared to revenue of
$204,435,000 reported for the same period a year ago. Revenues attributable to
logistic services year-to-date increased 2.3% over the prior year's comparable
period, while revenues from product sales declined 9.4%, reflecting the deferral
in spending by retailers experienced in the first half of 2003.
Commenting on the results, William T. Donovan, C2 President and CEO, said, "C2's
financial performance for the third quarter reflects a record level of quarterly
net earnings and a significant improvement by both TLC and Zero Zone in
delivering earnings growth compared to last year's period, as well as
sequentially. Our logistic services segment is benefiting from additional term
contracts for dedicated facility management projects as well as improved
utilization in warehousing and transportation operations. Total Logistic Control
is recognized as an industry leader in integrated logistic services and
dedicated facility operations. This
C2, INC.- NEWS RELEASE
OCTOBER 21, 2003
PAGE 2 OF 4
company is developing a strong earnings profile and 2003 is expected to be the
third year in a row of double digit earnings growth. Product sales at Zero Zone
have made steady progress in growing revenues and earnings from its low point in
the fourth quarter of fiscal 2002. We are seeing increased commitments by Zero
Zone's customers in capital spending in retail infrastructure which is
contributing to our higher volume as is Zero Zone's refrigeration systems and
controls business which has grown significantly since its acquisition in
February 2002. Zero Zone is also benefiting from meaningful cost reduction
initiatives and production efficiencies. Our outlook for C2's financial
performance for the balance of 2003 and beyond is for continued strong growth in
revenues and earnings on a comparable basis."
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 41 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 425 tractors with over 700 refrigerated and dry trailers with 3 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
OCTOBER 21, 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
OCTOBER 21, 2003
PAGE 4 OF 4
C2, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(In Thousands, Except Per Share Data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2003 2002 2003 2002
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Revenues:
Logistic Services $ 53,394 $ 50,127 $ 152,226 $ 148,859
Product Sales 17,701 16,344 50,354 55,576
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71,095 66,471 202,580 204,435
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Costs and Expenses:
Logistic Expenses 46,649 43,824 134,868 131,850
Cost of Product Sales 14,120 13,137 41,307 44,448
Depreciation and Amortization 1,952 1,966 5,780 6,077
Selling, General & Administrative Expense 4,931 4,935 13,746 13,757
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67,652 63,862 195,701 196,132
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Earnings from Operations 3,443 2,609 6,879 8,303
Other Income (Expense):
Interest Expense, net (707) (840) (2,222) (3,012)
Other Income (Expense) - 121 - (18)
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(707) (719) (2,222) (3,030)
Earnings before Income Taxes and
Minority Interest 2,736 1,890 4,657 5,273
Income Tax Provision 1,168 816 2,009 2,301
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Net Earnings before Minority Interest 1,568 1,074 2,648 2,972
Minority Interest - 31 - 315
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Net Earnings $ 1,568 $ 1,043 $ 2,648 $ 2,657
========== ========== ========== ==========
Basic Net Earnings Per Share $ 0.30 $ 0.21 $ 0.50 $ 0.52
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Diluted Net Earnings Per Share $ 0.28 $ 0.20 $ 0.48 $ 0.51
========== ========== ========== ==========
Average Number of Shares Outstanding 5,275,864 5,081,864 5,273,875 5,081,864
Diluted Number of Shares Outstanding 5,509,397 5,253,109 5,523,021 5,258,795