EXHIBIT 99.1
[TRANSPRO LOGO]
THE HEAT TRANSFER PROFESSIONALS
FOR: TRANSPRO, INC.
Contact:
Richard A. Wisot
Chief Financial Officer
(203) 401-6452
FOR IMMEDIATE RELEASE
Financial Dynamics
Investors: Christine Mohrmann,
Eric Boyriven, Lindsay Hatton
(212) 850-5600
TRANSPRO, INC. REPORTS THIRD QUARTER 2003 RESULTS
- NET INCOME INCREASES 15.4% -
- INVENTORIES DECREASE 6.1% ON A SEQUENTIAL BASIS -
NEW HAVEN, CONNECTICUT, October 27, 2003 - Transpro, Inc. (AMEX: TPR) today
announced results for the third quarter and nine months ended September 30,
2003.
Charles E. Johnson, President and CEO, stated, "Our results for the third
quarter of 2003 reflected an improvement in net income over the third quarter of
last year of approximately 15% despite the soft and challenging conditions we
continued to face in our markets. The benefits of our restructuring program have
allowed us to reduce manufacturing and operating expenses while still
maintaining the commitment to quality and service our customers have come to
expect from a leader in the marketplace."
Net sales for the third quarter of 2003 totaled $65.6 million, versus net sales
of $65.9 million in the third quarter of 2002.
Within the Company's Automotive and Light Truck Group, net sales were $48.9
million, compared to net sales of $46.9 million in the same period a year ago.
These revenue levels reflect the contributions of new sales programs introduced
since last year and the acquisition of Fedco Automotive Components Company,
which has entered the seasonally stronger period of its heater sales cycle.
Together, they contributed revenues of approximately $5.3 million in the third
quarter of 2003. It had also been anticipated that revenues would improve as a
result of more normal market conditions as the Company entered its peak selling
season. However, during the third quarter, customer demand declined due to
continued customer realignment of inventory levels and a shorter and weaker peak
selling season
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TRANSPRO, INC. REPORTS THIRD QUARTER 2003 RESULTS PAGE 2
reflecting milder than usual weather, and the Company also continued to
experience competitive pricing pressure.
In the Heavy Duty Group, net sales for the third quarter of 2003 were $16.7
million compared to $19.0 million in the same period last year. The group's
revenues reflect expected declines resulting from Original Equipment
Manufacturer ("OEM") sales programs phased out at the end of 2002, as well as
milder than usual weather patterns and a weak general industrial market, which
continued to adversely impact Heavy Duty Aftermarket Unit sales into the third
quarter of 2003. The Company continues to expect new customer programs,
including the recently announced Monaco Coach and Cummins Power Generation
programs, to begin replacing these OEM revenues in the fourth quarter of 2003.
In addition, as previously announced, sales in 2002 benefited from higher
volumes reflecting customer purchases in anticipation of heavy truck engine
changes caused by new emission regulations.
In the third quarter of 2003, Transpro reported consolidated gross margin of
$13.2 million, or 20.1% of net sales, versus a consolidated gross margin of
$14.4 million, or 21.8% of net sales, in the year ago period. Consolidated gross
margins in the year ago period include approximately $0.5 million in
restructuring charges associated with the closure of its Maquoketa, Iowa plant.
Gross margins for the third quarter of 2003 continue to reflect the impact of
lower sales volumes and pricing pressure as a result of the current soft market
environment, which masked the benefits of the Company's cost reduction programs.
As expected, start-up delays at Transpro's new aluminum tube mill operation were
successfully addressed early in the third quarter, and will lead to lower tube
and radiator core manufacturing costs in future periods as outside purchased
tube is consumed. Consolidated gross margin for the third quarter of 2003
increased sequentially over a consolidated gross margin of $9.0 million, or
15.4% of net sales, in the second quarter of 2003.
For the third quarter of 2003, selling, general and administrative expenses
totaled $9.1 million, or 13.8% of net sales, versus $10.6 million, or 16.1% of
net sales, in the same period last year. This decrease in operating expenses
reflects the Company's efforts to reduce costs and increase operational
efficiency along with accrual adjustments resulting from the current soft
operating environment. The Company reported operating income of $3.8 million, or
5.9% of sales, versus operating income of $3.2 million, or 4.9% of sales, in the
third quarter of last year, despite the lower sales volume.
The Company recorded $0.3 million in restructuring and special charges during
the third quarter of 2003. These charges primarily reflect severance costs due
to headcount reductions taken during the third quarter, as previously announced,
and costs related to the integration of Fedco copper/brass heater core
production into the Company's Mexico facility. In the third quarter of 2002, the
Company recorded restructuring charges of $1.0 million of which $0.5 million was
recorded in cost of sales.
During the third quarter of 2003, the Company recorded a tax benefit of $0.6
million, which represents additional refundable income taxes as a result of
filing the Company's 2002 Federal Income Tax return. The income tax provision
also includes an adjustment to the effective tax rate reflecting the expected
tax rate at year end.
For the third quarter of 2003, Transpro reported consolidated net income of $2.0
million, or $0.27 per diluted share, an increase of 15.4% over consolidated net
income of $1.7 million, or $0.24 per diluted share, in the same period a year
ago.
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TRANSPRO, INC. REPORTS THIRD QUARTER 2003 RESULTS PAGE 3
Inventory levels at the end of the 2003 third quarter were $72.0 million,
compared to $76.6 million at the end of the second quarter of 2003 and $67.7
million at the end of last year's third quarter. The 6.1% reduction in
inventories versus the 2003 second quarter reflects successful execution on the
Company's plan to reduce inventory levels despite soft market conditions. The
Company expects inventory levels in the fourth quarter of 2003 to be below those
seen at the end of the 2003 third quarter. However, as a result of the soft
conditions seen across many of the Company's markets, inventory levels are
expected to exceed those seen at the end of the fourth quarter of 2002 by $3.0
to $5.0 million.
Accounts receivable for the 2003 third quarter were $49.9 million, down $7.6
million versus the year-ago period. The reduction in accounts receivable
reflects the Company's ongoing efforts to accelerate the collection of certain
receivables utilizing a cost effective, customer-sponsored program administered
by a financial institution.
Accounts payable for the third quarter of 2003 totaled $30.3 million, compared
with $28.5 million a year ago. The increase is primarily due to the Company's
efforts to balance payables with the ongoing shift in customer receivables mix
toward longer payment cycles, as well as higher inventory levels versus the year
ago period.
For the third quarter of 2003, the Company generated operating cash flow of $2.5
million. This represents a significant improvement over an operating cash
outflow of $2.9 million in the third quarter of 2002, and reflects actions the
Company has taken to enhance its working capital management.
Mr. Johnson stated, "Several ongoing external factors combined to create a
challenging operating environment for the Company. The selling season for our
air conditioning and radiator products, which normally begins in April, began
this year in late June, and ended early in September with the onset, once again,
of unusually mild weather. Combined with the effects of a marketplace that
continues to be soft as many customers continue to have high inventories of some
products, the result has been reduced demand, a shift in our sales mix and
ongoing pressure on selling prices. Against this backdrop, Transpro continued to
focus on its cost reduction and cash generation initiatives, which resulted in
improved operating spending ratios and positive cash flow, as we were able to
enhance operational efficiency, lower unit production costs and better utilize
working capital. The Company benefited from the Fedco acquisition, which
contributed both revenues and profits to our quarterly results."
Net sales for the first nine months of 2003 were $176.6 million, versus $179.4
million in the 2002 nine-month period. Net sales for the Automotive and Light
Truck Group were $131.2 million, compared with net sales of $127.2 million in
the same period last year. Net sales in the Heavy Duty Group for the 2003
nine-month period were $45.4 million, compared with net sales of $52.2 million
last year. The factors impacting the Company's revenues for the 2003 nine-month
period were similar to those seen in the 2003 third quarter.
For the 2003 nine-month period, the Company reported a consolidated gross margin
of $29.4 million, or 16.6% of net sales, versus $37.6 million, or 21.0% of net
sales in the first nine months of 2002. Selling, general and administrative
expenses totaled $29.4 million, or 16.7% of net sales, in the first
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TRANSPRO, INC. REPORTS THIRD QUARTER 2003 RESULTS PAGE 4
nine months of 2003, an improvement over expenses of $30.2 million, or 16.8% of
net sales, a year ago.
Included in the Company's net results for both the 2003 and 2002 nine-month
periods are restructuring and special charges of $1.3 million and $1.2 million
(including $0.5 million classified in cost of sales), respectively. The
Company's results for the 2003 nine-month period include a tax benefit of $1.3
million, which represents additional refundable income taxes as a result of
filing the Company's 2002 Federal Income Tax return. In addition, the Company's
results for the 2002 nine-month period included a tax benefit of $3.8 million
resulting from the tax legislation enacted during March 2002 that included a
provision allowing pre-tax losses incurred in 2001 and 2002 to be carried-back
for a period of five years instead of two years, and a charge of $4.7 million,
related to the cumulative effect of the write-off of goodwill as a result of the
adoption of FASB Statement No. 142.
For the first nine months of 2003, the Company reported a consolidated net loss
of $3.0 million, or $0.43 per diluted share, compared to consolidated net income
of $2.3 million, or $0.32 per diluted share, in the same period a year ago.
In the 2003 nine-month period, Transpro generated operating cash flow of $4.4
million versus an operating cash outflow of $8.1 million in the year ago period.
Mr. Johnson added, "Looking ahead, we continue to face a difficult operating
environment, and while there are several positive factors that will affect the
fourth quarter, including ongoing efficiency improvements, the contributions of
the Fedco acquisition and the ramp-up of previously announced new customer
awards within our Heavy Duty Group, we cannot discount the difficult conditions
we currently face. Our previous guidance assumed a return to more normalized
conditions in our markets as we enter the 2003 fourth quarter, typically the
weakest seasonal period for our business. However, this has not been the case.
We continue to face the issues of lower than normal demand and competitive
pricing pressures, and while we feel we've taken a number of actions to help
address these issues, we do not feel that we will be able to offset the full
effect of the dynamics we currently see in the marketplace. Therefore, assuming
no further deterioration in market conditions, we currently expect that on a
pre-tax basis, the 2003 fourth quarter results will approximate the pre-tax loss
reported in the same period of 2002. At the same time, we anticipate strong
cashflow in the fourth quarter of 2003 as a result of our ongoing efforts to
lower borrowings and improve utilization of working capital."
Mr. Johnson concluded, "We remain focused on positioning Transpro for a
successful 2004. To this end, we will continue to align our cost structure to
compete effectively in the current marketplace and provide the best service and
products possible to our customer. This will include a further review of our
current distribution and plant network to ensure that our infrastructure
properly supports the marketplace. We believe that our progress in reposturing
the Company during 2003 will provide a strong platform for future performance as
our markets return to more normal levels."
TRANSPRO, INC. is a manufacturer and supplier of heating and cooling systems and
components for a variety of Aftermarket and OEM automotive, truck and industrial
applications.
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TRANSPRO, INC. REPORTS THIRD QUARTER 2003 RESULTS PAGE 5
TRANSPRO, INC.'S STRATEGIC CORPORATE VALUES ARE:
o Being An Exemplary Corporate Citizen
o Employing Exceptional People
o Dedication To World-Class Quality Standards
o Market Leadership Through Superior Customer Service
o Commitment to Exceptional Financial Performance
FORWARD-LOOKING STATEMENTS
Statements included in this news release, which are not historical in nature,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The Company's Annual
Report on Form 10-K contains certain detailed factors that could cause the
Company's actual results to materially differ from forward-looking statements
made by the Company. In particular, statements relating to the future financial
performance of the Company are subject to business conditions and growth in the
general economy and automotive and truck business, the impact of competitive
products and pricing, changes in customer product mix, failure to obtain new
customers or retain old customers or changes in the financial stability of
customers, changes in the cost of raw materials, components or finished products
and changes in interest rates. The forward-looking statements contained in this
press release are made as of the date hereof, and we do not undertake any
obligation to update any forward-looking statements, whether as a result of
future events, new information or otherwise.
- TABLES FOLLOW -
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- -------------------------
2003 2002 2003 2002
---------- ---------- --------- ---------
Net sales $ 65,629 $ 65,922 $176,631 $179,356
Cost of sales 52,415 51,562 147,228 141,720
---------- --------- --------- ---------
Gross margin 13,214 14,360 29,403 37,636
Selling, general and administrative expenses 9,071 10,630 29,413 30,211
Restructuring and other special charges 302 492 1,260 675
---------- --------- --------- ---------
Operating income (loss) 3,841 3,238 (1,270) 6,750
Interest expense 942 1,025 2,854 2,712
---------- --------- --------- ---------
Income (loss) before taxes and cumulative effect of
accounting change 2,899 2,213 (4,124) 4,038
Income tax provision (benefit) 938 513 (1,143) (2,963)
---------- --------- --------- ---------
Income (loss) before cumulative effect of accounting
change 1,961 1,700 (2,981) 7,001
Cumulative effect of accounting change -- -- -- (4,671)
---------- --------- --------- ----------
Net income (loss) $ 1,961 $ 1,700 $ (2,981) $ 2,330
========== ========= ========= ==========
Shares outstanding:
Basic 7,106 6,982 7,106 6,982
Diluted 7,185 7,229 7,106 7,220
Income (loss) per share before cumulative effect of accounting
change:
Basic $ 0.27 $ 0.24 $ (0.43) $ 0.99
Diluted $ 0.27 $ 0.24 $ (0.43) $ 0.97
Net income (loss) per share:
Basic $ 0.27 $ 0.24 $ (0.43) $ 0.32
Diluted $ 0.27 $ 0.24 $ (0.43) $ 0.32
Table 1 of 3
TRANSPRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
SEPTEMBER 30, 2003 DECEMBER 31, 2002
------------------ -----------------
Accounts receivable, net $ 49,934 $ 54,724
Inventories, net 71,954 64,627
Other current assets 5,494 6,458
Net property, plant and equipment 23,690 26,552
Other assets 8,695 8,605
---------- ----------
Total assets $159,767 $160,966
========== ==========
Accounts payable $ 30,253 $ 22,577
Accrued liabilities 16,278 18,096
Total debt 53,618 59,596
Other long-term liabilities 14,409 12,459
Stockholders' equity 45,209 48,238
---------- ----------
Total liabilities and stockholders' equity $159,767 $160,966
========== ==========
Table 2 of 3
TRANSPRO, INC.
SUPPLEMENTARY INFORMATION
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------- ------------------------
2003 2002 2003 2002
---------- --------- --------- ---------
SEGMENT DATA
Net sales:
Automotive and light truck ............ $ 48,906 $ 46,924 $ 131,224 $ 127,193
Heavy duty ............................ 16,723 18,998 45,407 52,163
--------- --------- --------- ---------
Total .............................. $ 65,629 $ 65,922 $ 176,631 $ 179,356
========= ========= ========= =========
Operating income (loss):
Automotive and light truck ............ $ 4,435 $ 5,860 $ 4,228 $ 12,352
Restructuring and other special charges (302) (118) (688) (100)
--------- --------- --------- ---------
Automotive and light truck total ... 4,133 5,742 3,540 12,252
--------- --------- --------- ---------
Heavy duty ............................ 625 (122) (733) (9)
Restructuring and other special charges -- (856) (572) (1,057)
--------- --------- --------- ---------
Heavy duty total ................... 625 (978) (1,305) (1,066)
--------- --------- --------- ---------
Corporate expenses .................... (917) (1,526) (3,505) (4,436)
--------- --------- --------- ---------
Total .............................. $ 3,841 $ 3,238 $ (1,270) $ 6,750
========= ========= ========= =========
CAPITAL EXPENDITURES .................. $ 1,686 $ 1,115 $ 3,234 $ 4,500
========= ========= ========= =========
Table 3 of 3
END