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PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
CompX International Inc. David A. Bowers
5430 LBJ Freeway, Suite 1700 President & CEO
Dallas, Texas 75240 Tel. 864-286-1122
COMPX REPORTS HIGHER SALES AND PROFITS
FOR THIRD QUARTER 2004
Dallas, TEXAS ... October 26, 2004 ... CompX International Inc. (NYSE: CIX)
announced today sales of $56.0 million for the third quarter of 2004 and net
income of $3.9 million, or $0.26 per diluted share. This represents an increase
in sales of 7% from $52.5 million in the year ago quarter. For the comparable
2003 quarter, the Company reported a net loss of $400,000, or $0.03 per diluted
share, which included a pre-tax restructuring charge of $3.5 million ($2.0
million, or $0.13 per diluted share, net of income tax benefit) relating to a
formal headcount reduction plan at the company's Maastricht, the Netherlands
manufacturing facility.
Net sales for the nine-month period ended September 30, 2004 were $165.8 million
compared to $153.3 million for same period of the previous year. Net income for
the nine-month period in 2004 was $8.7 million, or $0.58 per diluted share,
compared to $500,000, or $0.03 per diluted share in 2003.
"Third quarter sales continued the improvements experienced in the second
quarter of this year," commented David A. Bowers, President and CEO. "In
addition to the increase in demand, ongoing benefits from cost reduction
activities implemented over the last two years continued to positively impact
our results."
Security Products Segment
CompX Security Products experienced a 2% increase in net sales in the third
quarter of 2004 to $19.1 million compared to the same quarter last year of $18.8
million. Net sales for this segment increased 3% on a year-to-date basis to
$57.6 million from $56.0 million in 2003 primarily, as a result of a general
market improvement and new customer additions. Third quarter operating income
decreased from $2.9 million in 2003 to $2.5 million in 2004. The decrease in
operating income was primarily attributable to higher raw material and medical
costs and a change in product mix due to a relatively higher volume of lower
margin products. For the year-to-date period, operating income improved slightly
to $7.7 million in 2004 compared to $7.6 million in 2003. The year-to-date
operating income improvements were primarily due to the increase in sales
volumes and improved manufacturing efficiencies as a result of earlier cost
reduction efforts, offset by the higher raw material and medical costs and the
change in product mix.
Waterloo Segment
Net sales for the Waterloo segment increased 7% to $27.1 million in the third
quarter of 2004 from $25.3 million in the third quarter of 2003 and increased 9%
for the nine-month period from $72.0 million in 2003 to $78.3 million in 2004.
The increase is primarily related to higher precision slide product volumes with
certain customers and increases in certain precision slide product surcharges
and prices primarily to recover the dramatic rise in raw material prices for
steel during the year. In addition, the strengthening of the Canadian dollar in
2004 in relation to the US dollar increased sales by approximately $1.8 million
in the first nine months of 2004 as compared to the same period in 2003 (the
third quarter effect increased sales by approximately $350,000). Operating
income for this segment was $2.5 million in the third quarter of 2004 compared
to $300,000 in the comparable prior year quarter, and was $200,000 in the first
nine months of 2003 compared to $5.2 million in the first nine months of 2004.
The increases in operating income are primarily attributable to improved margins
resulting from a lower fixed cost structure in 2004, non-recurring expenses of
approximately $900,000 in the first nine months of 2003 ($100,000 in the third
quarter) associated with the consolidation of the Company's two Canadian
facilities, and to some extent, overall product mix and pricing changes.
Relative changes in currency exchange rates negatively impacted year-to-date
operating income comparisons by approximately $1.1 million but did not have a
significant impact on the third quarter results.
Thomas Regout Segment
Net sales for the Thomas Regout segment increased 11% to $9.9 million in the
third quarter of 2004 from $8.9 million in the third quarter of 2003. For the
2004 nine-month period, net sales increased 16% to $30.5 million as compared to
$26.3 million for 2003. The improvement in net sales is due to an increase in
orders from European customers and the strengthening of the euro in 2004 in
relation to the US dollar, which increased sales by approximately $2.7 million
in the first nine months of 2004 as compared to the same period in 2003 (the
third quarter effect increased sales by approximately $700,000). The third
quarter of 2004 operating income for this segment was $1.0 million compared to
an operating loss of $3.5 million in 2003. The 2004 year-to-date operating
income was $1.5 million, compared to a loss of $5.4 million for 2003. The
operating losses in the 2003 periods included the previously mentioned
restructuring charge of $3.5 million. The improvement in operating income is
primarily the result of the successful restructuring actions taken in 2003
combined with the increase in sales. The impact of relative changes in currency
exchange rates on operating income comparisons was not significant for this
segment.
Mr. Bowers concluded, "We are continuing to focus on developing new products and
customers, as well as on managing our cost structure to improve profitability
and competitiveness, especially in an environment of increasing pressure from
offshore competitors and from escalating raw material costs. Over the coming
months, we do expect certain customers to move at least a portion of their
volume to Asian sources. However, we are aggressively pursuing new market
opportunities with a focused product development program that is expected to
reduce the impact of the loss of some sales volume to Asian competition."
Liquidity and Cash Flow
Cash provided by operating activities improved to $20.8 million for the 2004
nine-month period compared to $14.1 million in the prior year. The improvement
in cash provided by operating activities was primarily due to the improved
operating results. During the first nine months of 2004, the Company utilized a
portion of its available cash balances to reduce debt by approximately $26.0
million.
CompX is a leading manufacturer of precision ball bearing slides, security
products and ergonomic computer support systems.
Statements in this release relating to matters that are not historical facts are
forward-looking statements based upon management's belief and assumptions using
currently available information. Although CompX believes the expectations
reflected in such forward-looking statements are reasonable, it cannot give any
assurances that these expectations will prove to be correct. Such statements, by
their nature, involve substantial risks and uncertainties that could
significantly impact expected results, and actual future results could differ
materially from those described in such forward-looking statements. While it is
not possible to identify all factors, CompX continues to face many risks and
uncertainties. Among the factors that could cause actual future results to
differ materially include, but are not limited to, general economic and
political conditions, demand for office furniture, service industry employment
levels, competitive products and prices, fluctuations in currency exchange
rates, the introduction of trade barriers, potential difficulties in integrating
completed acquisitions and other risks and uncertainties detailed in CompX's
Securities and Exchange Commission filings. Should one or more of these risks
materialize (or the consequences of such a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ materially
from those forecasted or expected. CompX disclaims any intention or obligation
to publicly update or revise such statements whether as a result of new
information, future events or otherwise.
* * * * *
COMPX INTERNATIONAL INC.
SUMMARY OF CONSOLIDATED OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2003 2004 2003 2004
------------------------ ------------------------
Net sales $ 52.5 $ 56.0 $ 153.3 $ 165.8
Cost of goods sold 42.8 43.5 126.9 130.0
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Gross profit 9.7 12.5 26.4 35.8
Selling, general and administrative 6.5 6.5 20.5 21.5
Restructuring charge 3.5 - 3.5 -
------------------------ -----------------------
Operating income (loss) (0.3) 6.0 2.4 14.3
Interest expense (0.3) (0.1) (1.0) (0.4)
Other income (expense) (0.1) (0.2) (0.5) 0.3
------------------------- -----------------------
Income (loss) before income taxes (0.7) 5.7 0.9 14.2
Income tax expense (benefit) (0.3) 1.8 0.4 5.5
------------------------ -----------------------
Net income (loss) $ (0.4) $ 3.9 $ 0.5 $ 8.7
======================== =======================
Net income (loss) per diluted
common share $(0.03) $ 0.26 $ 0.03 $ 0.58
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Weighted average diluted common
shares outstanding 15.1 15.2 15.1 15.2
======================== =======================
COMPX INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
December 31, September 30,
2003 2004
----------------- --------------
Assets (Unaudited)
Current assets:
Cash and equivalents $ 21.7 $ 16.1
Accounts receivable, net 25.7 28.2
Inventories 26.3 26.6
Prepaid expenses and other 6.5 3.3
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Total current assets 80.2 74.2
Intangibles 45.3 44.8
Net property and equipment 83.2 73.4
Other assets 0.8 0.9
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Total assets $ 209.5 $ 193.3
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 24.0 $ 23.7
Accrued income taxes and other 0.5 2.9
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Total current liabilities 24.5 26.6
Long-term debt 26.0 0.1
Other non-current liabilities 4.6 3.4
Stockholders' equity 154.4 163.2
----------- -----------
Total liabilities and stockholders' equity $ 209.5 $ 193.3
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