Exhibit 99.2
Contact:
Ed Dickinson
Chief Financial Officer, 636/916-2150
FOR IMMEDIATE RELEASE
LMI AEROSPACE DISCUSSION OF 2003 RESULTS AND GUIDANCE FOR 2004
ST. LOUIS - April 16, 2004 - LMI Aerospace, Inc. (NASDAQ: LMIA), a
leading provider of assemblies, kits and detail sheet metal and machined
components to the aerospace, defense and technology industries, filed with the
Securities and Exchange Commission its Annual Report Form 10-K for the year
ended December 31, 2003, on April 14, 2004. This release supplements the
Company's earnings release of yesterday and discusses in more detail the results
for the fourth quarter and full year 2003, and provides guidance for the year
2004.
Sales for the sheet metal segment in the fourth quarter of 2003 were
$14.3 million, a decrease of 20 percent from the $17.8 million reported in the
fourth quarter of 2002. The decrease is due to lower sales of business jet
components, with sales in the fourth quarter of 2003 to Gulfstream, Cessna and
Bombardier of $2.0 million, compared to $6.8 million in 2002. Military sales of
$4.4 million in the fourth quarter of 2003 were higher than the $3.3 million in
the 2002 quarter. As previously reported, weakness in business jet sales in
2003, evidenced by production stoppages at several of our customers followed by
our customers' aggressive inventory reduction strategies, significantly reduced
business jet sales in the fourth quarter and year 2003. For the full year 2003,
regional and business jet sales declined to $18.5 million from $20.0 million in
2002, despite the addition of sales in this sector from acquisitions made in
2002.
For the machining and technology segment, sales in the fourth quarter
of 2003 were $4.2 million, up from $4.0 million in the fourth quarter of 2002.
Beginning in September 2003, LMI began to receive significant reorders of laser
equipment components resulting in fourth quarter 2003 sales of $2.3 million
compared to $2.4 million in 2002. For the year 2003, laser equipment sales
declined to $8.3 million, from $11.4 million in 2002 year.
"Our sales forecast for 2004 presently includes an expected increase of
$3.0 million in our machining and technology segment and flat sales in our sheet
metal segment, with sales in the second half of 2004 higher than in the first
six months," said Ronald S. Saks, President and Chief Executive Officer of LMI.
"In the first quarter of 2004, we have begun to receive purchase orders for up
to 3,000 new components for aircraft produced for the regional and business jet
and commercial aerospace markets, a large portion of which is being transferred
from another industry supplier. Our employee work force, which declined from 884
at January 1, 2003 to 676 at March 31, 2004, is being reviewed for potential
increases, and our supply chain is currently being expanded to include several
suppliers in low labor cost countries. We anticipate that production of this
work will commence in April 2004 and continue throughout the year. When we are
able to reasonably estimate the size and impact of these orders, we will modify
our budgets and guidance if necessary," said Saks.
LMI reported a net loss in the fourth quarter of 2003 of ($1.6) million
of ($0.20) per diluted share, compared to a net loss of ($7.7) million or
($0.94) per diluted share in 2002. The fourth quarter of 2003 results included a
charge for obsolete or slow moving inventory, primarily in the sheet metal
segment, to recognize the impact of reduced production rates of aircraft
produced by our customers. This expense of $1.9 million before income tax was in
addition to the obsolescence expense previously reflected in our quarterly 2003
releases of earnings.
LMI reported a net loss for the full year of 2003 of ($4.0) million, or
($0.49) per diluted share compared to a net loss of ($8.3) million or ($1.03)
million per diluted share for 2002. In addition to charges for obsolete or
slow-moving inventory, the results for 2003 were negatively impacted by $500,000
of restructuring costs, $300,000 of moving expenses, and an increase in
professional fees of $400,000. These costs were partially offset by a $300,000
gain on sales of securities. LMI's results in 2002 included $7.7 million of
goodwill impairment charges and additional start-up costs associated with new
military programs.
Gross profit for the fourth quarter of 2003 was $1.0 million or 5.3
percent of sales, an increase from $700,000 or 3.3 percent of sales in the
fourth quarter 2002. The gross margin for the 2003 quarter was lowered
significantly by the charge for obsolete and/or slow moving inventory.
Other expenses in the fourth quarter 2003 included a $300,000 gain on
the sale of securities, compared to a $400,000 charge in the 2002 quarter for a
decline in market value of these securities.
As a result of the losses incurred during 2003, the Company borrowed an
additional $3.3 million on its revolving line of credit. However, the Company's
term note obligations were reduced by $4.7 million. In addition, the losses
created violations of certain covenants with its primary lending institution in
the fourth quarter of 2003. The Company obtained a waiver of these violations
and negotiated an amended credit agreement which better reflects the current
outlook for the Company.
Backlog at December 31, 2003, was approximately $53.9 million, down
from $72.1 million at the end of the fourth quarter 2002. As of March 31, 2004,
the Company has firm orders for delivery in 2004 of $65.0 million.
LMI previously advised that on February 6, 2004, Versaform, a
wholly-owned subsidiary of the Company acquired on May 16, 2002, was served an
administrative subpoena by the federal government. The Company has been
cooperating fully with the Defense Department (DOD) in connection with its
investigation of issues occurring between January 1, 1999, and February 6, 2004.
In addition the Company has successfully concluded a portion of a dispute with a
customer regarding extra costs incurred in connection with military programs for
which the Company began producing components in 2002. The outcome of the request
for additional relief sought by the Company on a C130 program is uncertain, so
no benefit has been reflected in the financial statements for either 2003 or
2002.
During the second quarter of 2004 the Company will complete the
restructuring at its Wichita, Kansas facility and the consolidation of its
Versaform operations from three separate facilities in Oceanside, California to
one modern facility in Vista, California. The Company's quarterly budgets for
2004 anticipate restructuring and moving expenses of approximately $400,000 in
the first quarter and $500,000 in the second quarter of 2004. In addition, it is
anticipated that sales, excluding the new programs referred to previously, will
increase in each quarter of 2004. The Company has emphasized cost management in
this environment by reducing employment levels by over 200, working less
overtime, and reducing certain operating, general and administrative expenses.
Gross margins by month are expected to improve from 13 percent to 15 percent in
early 2004 to 18 percent to 22 percent by the end of 2004, and should average
between 18 percent and 20 percent for the full year. Selling, general and
administrative expense is expected to decline by $500,000 before restructuring
costs and the possible impact of increased professional fees related to the DOD
case and the Company's claim against a military customer.
"We remain optimistic that LMI will continue to be recognized by our
customers for the high quality of its products and services and its ability to
provide a wide range of complex products and logistics and distribution
services. Our strategy is to be a manufacturer of metal components as well as an
expert at managing our supply chain inside and outside the United States.
Investment continues in building our supply chain management expertise, our
information systems and our distribution and kitting services," said Saks.
LMI Aerospace, Inc. is a leading supplier of quality components to the
aerospace and technology industries. The Company operates thirteen facilities
that fabricate, machine, finish and integrate formed, close tolerance aluminum
and specialty alloy components for commercial, corporate, regional and military
aircraft, laser equipment used in the semiconductor and medical industries, and
for commercial sheet metal industries.
This press release includes forward-looking statements related to LMI
Aerospace's outlook for 2004 and future periods, which are based on current
management expectations. Such forward-looking statements are subject to various
risks and uncertainties, many of which are beyond the control of LMI Aerospace,
Inc. Actual results could differ materially from the forward-looking statements
as a result, among other things, of the factors detailed from time to time in
LMI Aerospace's filings with the Securities and Exchange Commission. Please
refer to the Risk Factors contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 2003, for more details.
LMI Aerospace Reports Results for
Fourth Quarter And Full-Year 2003
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)
For the Three Months Ended For the Twelve Months Ended
December 31 December 31
2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 18,582 $ 21,828 $ 75,855 $ 81,349
Cost of sales 17,603 21,099 67,485 69,185
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Gross profit 979 729 8,370 12,164
Selling, general & administrative expenses 3,485 3,689 13,423 12,931
Goodwill impairment charges - 5,104 - 5,104
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Loss from operations (2,506) (8,064) (5,053) (5,871)
Interest expense, net (411) (477) (1, 645) (1,495)
Other (expense) net 271 (325) 306 (525)
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Income (loss) before income taxes (2,646) (8,866) (6,392) (7,891)
Provision for (benefit of) income taxes (1,006) (1,160) (2,411) (691)
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Income (loss) before cumulative change in
accounting principle (1,640) (7,706) (3,981) (7,200)
Cumulative effect of change in accounting
principle, net of income tax benefit of $663
for 2002 - - - (1,104)
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Net loss $ (1,640) $ (7,706) $ (3,981) $ (8,304)
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Amounts per common share:
Loss before cumulative effect of
change in accounting principle $ (0.20) $ (0.94) $ (0.49) $ (0.89)
Cumulative effect of change in accounting
principle - - - (0.14)
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Net loss per common share $ (0.20) $ (0.94) $ (0.49) $ (1.03)
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Net loss per common share - assuming
dilution $ (0.20) $ (0.94) $ (0.49) $ (1.03)
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Weighted average common shares outstanding 8,181,786 8,181,786 8,181,786 8,077,293
=================================================================
Weighted average dilutive stock options
outstanding - - - -
LMI Aerospace, Inc.
Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
December 31
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2002 2003
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Assets
Current assets:
Cash and cash equivalents $ 1,182 $ 441
Trade accounts receivable, net of allowance
of $334 in 2002 and $245 in 2003 11,392 9,158
Inventories 25,181 24,159
Prepaid expenses 978 787
Deferred income taxes 1,389 2,206
Income taxes receivable 1,501 1,933
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Total current assets 41,623 38,684
Property, plant, and equipment, net 25,986 22,248
Goodwill 5,653 5,653
Customer intangible assets, net 4,267 3,792
Other assets 336 142
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Total assets $77,865 $70,519
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,107 $ 4,570
Accrued expenses 2,846 2,126
Current installments of long-term debt and capital lease
obligations 4,616 6,069
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Total current liabilities 13,569 12,765
Long-term debt and capital lease obligations, less current
installments 24,621 21,756
Deferred income taxes 1,939 2,206
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Total long-term liabilities 26,560 23,962
Stockholders' equity:
Common stock of $.02 par value; authorized 28,000,000
shares; 8,736,427 shares issued in 2002 and 2003 175 175
Preferred stock; authorized 2,000,000 shares; none issued - -
Additional paid-in capital 26,171 26,171
Treasury stock, at cost, 554,641 shares in 2002 and 2003 (2,632) (2,632)
Accumulated other comprehensive (loss) income (17)
20
Retained earnings 14,039 10,058
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Total stockholders' equity 37,736
33,792
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Total liabilities and stockholders equity $77,865 $70,519
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