Exhibit 99.1
ElkCorp Reports Third Quarter Fiscal 2006 Results;
Exceeds Revised Guidance Late Surge in Shingle Shipments Improves
Third Quarter Results
DALLAS--(BUSINESS WIRE)--April 25, 2006--ElkCorp (NYSE:ELK)
announced today financial results for its third fiscal quarter, ended
March 31, 2006. Earnings from continuing operations for the third
quarter were $10.1 million, or $0.49 per diluted share, exceeding the
company's revised guidance of $0.40 to $0.43 per diluted share. The
company anticipates earnings per diluted share for the fourth quarter
to be in the range of $0.64 to $0.68 and has revised its estimates for
fiscal 2006 to be in the range of $2.18 to $2.22.
Third Quarter Overview
ElkCorp Consolidated
-- For the quarter, ElkCorp recorded revenue of $243.2
million, compared to the $ 201.9 million reported for the
third quarter of fiscal 2005. The increase over the third
quarter of fiscal 2005 was due to volume and pricing in
Elk's roofing business including new sales from the
recently acquired RGM Products Inc. and incremental sales
from Elk Composite Building Products and Specialty Fabric
Technologies.
-- Income from continuing operations for the third fiscal
quarter was $10.1 million, or $0.49 per diluted share,
compared to $14.1 million, or $0.69 per diluted share
reported for the third quarter of fiscal 2005. The decline
in net income was primarily attributable to higher raw
material and transportation costs, partially offset by
price and volume gains.
-- Third quarter results include $2.0 million, or $0.06 per
diluted share, of stock-based compensation expense
compared to $0.8 million, or $0.02 per diluted share, in
the prior year quarter.
Premium Roofing Products
-- Revenue for Premium Roofing Products was $ 220.1 million,
a 19% increase over the $185.5 million reported in the
third quarter of fiscal 2005. This increase was due to
increased shingle volumes and improved pricing in the
third quarter of fiscal 2006 as well as sales from RGM,
which was acquired in August 2005.
-- Operating income was $25 million, compared to $32.7
million for the third quarter of fiscal 2005.
-- Operating margin for the quarter was 11.4% compared to
17.6 % for the same quarter last year. The margin decline
in the quarter was due to higher raw materials, primarily
asphalt, and freight costs and significantly lower
shipment volume into the Florida storm areas, which is a
relatively higher margin market.
Composite Building Products
-- Sales for the third quarter were $7.5 million, compared to
$4.7 million reported in the same quarter of fiscal year
2005.
-- The operating loss for the third quarter was $2.1 million
compared to a loss of $2.4 million in the third quarter of
fiscal 2005. Improvements in volume and contribution
margin were partially offset by increased expansion costs
of the new plant which had not fully ramped-up until the
fourth quarter of fiscal year 2005.
Specialty Fabric Technologies
-- Sales for the quarter were $13.6 million, a 45% increase
over the $9.4 million in the same quarter last year. The
significant growth is due to volume and pricing for
roofing related fabric sales. Additionally, sales of the
non-roofing fabrics increased approximately 58% over the
third quarter of fiscal 2005.
-- Operating income was $1.4 million in the third quarter
compared to $177,000 for the prior-year period.
-- Operating margin improved to 10% compared to the 1.9%
recorded in the third quarter of fiscal 2005. The improved
margins in this product platform are attributable to
higher volumes and an increased mix of higher- margin
products, such as carpet tile, facer and air filtration.
Financial Condition
At March 31, 2006, the contractual principal amount of ElkCorp's
long-term debt, including $6.0 million of debt related to
acquisitions, was $201.0 million. Net debt (contractual principal debt
minus cash and short-term investments) was $156.5 million, and the net
debt to capital ratio was 33.7%. Liquidity consisted of $44.5 million
of cash, cash equivalents and short-term investments and $121.1
million of borrowing availability under a $125 million committed
revolving credit facility expiring November 30, 2008. Long-term debt
of $201.2 million included $0.2 million representing the net fair
market value for two interest rate swap agreements.
Business Outlook
"We are pleased that the actual results for the quarter exceeded
our revised expectations. The increase was primarily due to better
than anticipated shingle shipments in the last week of the quarter and
improved pricing in March," said Thomas Karol, chairman and chief
executive officer of ElkCorp. "During the quarter we were able to
attain substantial productivity improvements to achieve record shingle
volumes, which assisted us in recording more positive results. Shingle
volumes increased despite slower than anticipated shipments into the
Florida market due to longer lead times for insurance claim
settlements following Hurricane Wilma. This change in regional mix,
combined with higher raw material, transportation and energy costs has
also created near-term pressure on our margins. In the fourth quarter
we anticipate improved results in composites, expense reductions,
improved pricing and better efficiencies at our plants will assist us
in easing this pressure.
Mr. Karol continued, "Sales in our composite lumber platform were
approximately 60% higher than the third quarter of last year but lower
than expected, which was largely due to slower than anticipated
inventory build at the dealer level. We believe that dealers are
somewhat reluctant to place large initial seasonal orders due to
slower growth in the 2005 decking season which caused a general
industry overstocking last season. Based on industry data, we
anticipate the decking market to return to a more normalized growth
rate later in the season. We believe that we have the cost structure,
yields, products and market acceptance to reach profitability in this
business. With the addition of our recently introduced CrossTimbers
Signature Rail System we have a full line of exceptional railing
products that accentuates our decking materials, which we believe will
assist us in increasing our position in the decking market."
"Our Specialty Fabric Technologies business again reported strong
results with sales growth of 45% over the prior year. The increased
sales in both roofing and non-roofing fabrics are attributable to
improved pricing and increased volume from new and existing
customers."
"During the quarter we were able to increase productivity in our
shingle plants to achieve record volumes. Although we have not reached
profitability in the composites platform, we are confident in our
products and our potential to become a leader in the composite lumber
market. Our specialty fabrics business continues to post impressive
results. We continue to expand our product offerings with new and
innovative products, such as our CrossTimbers(TM) Signature Rail
System, which has a similar look and assembly to the Railways railing
product utilizing the patent pending UniBall(TM) Technology and is
available in colors complementary to our CrossTimbers decking. We
believe innovation is a key component of maintaining growth in
maturing markets."
Earnings Outlook
Due to the recent ramp-up and continued volatility in oil and
natural gas prices, the company now expects earnings for the fourth
quarter of fiscal 2006 to be in the range of $0.64 to $0.68 per
diluted share, and in the range of $2.18 to $2.22 per diluted share
for fiscal 2006.
Conference Call
The ElkCorp management team will host a conference call on April
26, 2006, at 11:00 a.m. EDT to further discuss its earnings and
operations for the third quarter as well as expectations for its
fourth quarter and fiscal year end.
Investors and other interested parties may listen to the live
webcast by visiting the investor relations section of the ElkCorp
Web site at www.elkcorp.com. A replay of the conference call will be
available for 24 hours beginning at 1:00 p.m. ET. and may be accessed
by dialing 1-800-642-1687 and entering passcode 8232597. The webcast
replay also will be available on the investor relations section of
Company's Web site.
Safe Harbor Provisions
In accordance with the safe harbor provisions of the securities
law regarding forward-looking statements, in addition to the
historical information contained herein, the above discussion contains
forward-looking statements that involve risks and uncertainties. The
statements that are not historical facts are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements usually are accompanied by words
such as "optimistic," "vision," "outlook," "believe," "estimate,"
"potential," "forecast," "goal," "project," "expect," "anticipate,"
"plan," "predict," "could," "should," "may," "likely," or similar
words that convey the uncertainty of future events or outcomes and
include the earnings outlook for the fourth quarter and fiscal year
2006. These statements are based on judgments the company believes are
reasonable; however, ElkCorp's actual results could differ materially
from those discussed here. Factors that could cause or contribute to
such differences could include, but are not limited to, changes in
demand, prices, raw material costs, transportation costs, changes in
economic conditions of the various markets the company serves, failure
to achieve expected efficiencies in new operations, changes in the
amount and severity of inclement weather, acts of God, war or
terrorism, as well as the other risks detailed herein, and in the
company's reports filed with the Securities and Exchange Commission,
including but not limited to, its Form 10-K for the fiscal year ended
June 30, 2005. ElkCorp undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
ElkCorp, through its subsidiaries, manufactures Elk brand premium
roofing and building products (90% of consolidated revenue) and
provides technologically advanced products and services to other
industries. Its common stock is listed on the New York Stock Exchange
(NYSE:ELK). See www.elkcorp.com for more information.
Condensed Results of Operations
($ in thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Sales $243,194 $201,871 $688,000 $558,982
--------- --------- --------- ---------
Costs and Expenses:
Cost of sales 200,917 157,939 563,858 444,258
Selling, general &
administrative 23,476 19,004 65,103 50,065
--------- --------- --------- ---------
Operating Income from
Continuing Operations 18,801 24,928 59,039 64,659
Interest expense, net 2,700 2,614 8,525 7,090
--------- --------- --------- ---------
Income from Continuing
Operations
Before Income Taxes 16,101 22,314 50,514 57,569
Provision for income taxes 5,955 8,191 18,760 21,588
--------- --------- --------- ---------
Income from Continuing
Operations 10,146 14,123 31,754 35,981
Income (Loss) from
Discontinued Operations, Net
0 1,174 (66) 451
--------- --------- --------- ---------
Net Income $10,146 $15,297 $31,688 $36,432
========= ========= ========= =========
Income (Loss) Per Common
Share-Basic
Continuing Operations $0.50 $0.71 $1.57 $1.83
Discontinued Operations 0.00 0.06 (0.01) 0.02
--------- --------- --------- ---------
$0.50 $0.77 $1.56 $1.85
========= ========= ========= =========
Income (Loss) Per Common
Share-Diluted
Continuing Operations $0.49 $0.69 $1.54 $1.78
Discontinued Operations 0.00 0.06 (0.00) 0.02
--------- --------- --------- ---------
$0.49 $0.75 $1.54 $1.80
========= ========= ========= =========
Average Common Shares
Outstanding
Basic 20,308 19,784 20,254 19,718
========= ========= ========= =========
Diluted 20,697 20,482 20,627 20,184
========= ========= ========= =========
Condensed Results of Operations
($ in thousands)
Twelve Months Ended
March 31,
2006 2005
--------- ---------
Sales $890,737 $714,826
--------- ---------
Costs and Expenses:
Cost of sales 733,525 570,021
Selling, general & administrative 84,984 66,624
--------- ---------
Operating Income from Continuing Operations 72,228 78,181
Interest expense, net 11,800 8,502
--------- ---------
Income from Continuing Operations
Before Income Taxes 60,428 69,679
Provision for income taxes 21,959 25,907
--------- ---------
Income from Continuing Operations 38,469 43,772
Income (Loss) from Discontinued Operations, Net
3,654 814
--------- ---------
Net Income $42,123 $44,586
========= =========
Income (Loss) Per Common Share-Basic
Continuing Operations $1.91 $2.22
Discontinued Operations 0.18 0.04
--------- ---------
$2.09 $2.26
========= =========
Income (Loss) Per Common Share-Diluted
Continuing Operations $1.87 $2.17
Discontinued Operations 0.18 0.04
--------- ---------
$2.05 $2.21
========= =========
Average Common Shares Outstanding
Basic 20,191 19,706
========= =========
Diluted 20,586 20,128
========= =========
Financial Information by Company Segments
($ in thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Sales
Premium Roofing Products $220,114 $185,549 $620,473 $512,965
Composite Building
Products 7,545 4,726 21,303 10,968
Specialty Fabric
Technologies 13,616 9,443 39,696 28,237
Surface Finishes 1,919 2,153 6,528 6,812
--------- --------- --------- ---------
$243,194 $201,871 $688,000 $558,982
========= ========= ========= =========
Operating Profit (Loss)
Premium Roofing Products $24,990 $32,671 $78,709 $82,484
Composite Building
Products (2,059) (2,441) (7,577) (6,341)
Specialty Fabric
Technologies 1,383 177 4,266 1,523
Surface Finishes 212 (371) 656 (228)
Corporate & Other (5,725) (5,108) (17,015) (12,779)
--------- --------- --------- ---------
$18,801 $24,928 $59,039 $64,659
========= ========= ========= =========
Financial Information by Company Segments
($ in thousands)
Twelve Months Ended
March 31,
2006 2005
---------- ----------
Sales
Premium Roofing Products $801,142 $653,086
Composite Building Products 29,760 15,252
Specialty Fabric Technologies 50,910 37,277
Surface Finishes 8,925 9,211
---------- ----------
$890,737 $714,826
========== ==========
Operating Profit (Loss)
Premium Roofing Products $100,457 $98,661
Composite Building Products (13,058) (6,135)
Specialty Fabric Technologies 4,826 1,617
Surface Finishes 1,028 62
Corporate & Other (21,025) (16,024)
---------- ----------
$72,228 $78,181
========== ==========
Condensed Balance Sheet
($ in thousands)
March 31,
Assets 2006 2005
- ------------------------------------------------ ---------- ----------
Cash and cash equivalents $5,901 $11,657
Short-term investments 38,600 27,500
Receivables, net 170,045 158,711
Inventories 96,121 70,655
Deferred income taxes 7,971 3,721
Prepaid expenses and other 10,725 10,045
Discontinued operations 2,426 404
---------- ----------
Total Current Assets 331,789 282,693
Property, plant and equipment, net 294,388 285,883
Other assets 28,409 12,046
Discontinued operations - noncurrent 2,188 3,647
---------- ----------
Total Assets $656,774 $584,269
========== ==========
March 31,
Liabilities and Shareholders' Equity 2006 2005
- ------------------------------------------------ ---------- ----------
Accounts payable and accrued liabilities $93,399 $81,010
Discontinued operations 865 159
Current maturities on long-term debt 977 385
---------- ----------
Total Current Liabilities 95,241 81,554
Long-term debt, net 201,218 198,000
Deferred income taxes 53,004 49,908
Shareholders' equity 307,311 254,807
---------- ----------
Total Liabilities and Shareholders' Equity $656,774 $584,269
========== ==========
Condensed Statement of Cash Flows
($ in thousands)
Nine Months Ended
March 31,
2006 2005
---------- ---------
Cash Flows From Operating Activities:
Net income $31,688 $36,432
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 19,653 17,424
Deferred income taxes (672) 7,934
Stock-based compensation 6,057 2,272
Changes in assets and liabilities:
Trade receivables (15,409) (43,892)
Inventories (17,745) (8,526)
Prepaid expenses and other (2,173) (1,420)
Accounts payable and accrued liabilities (7,831) 18,577
Changes in assets and liabilities of
discontinued operations 225 337
---------- ---------
Net cash from operating activities 13,793 29,138
---------- ---------
Investing Activities
Additions to property, plant and equipment (14,997) (32,141)
Short-term investments, net 30,560 (27,500)
Proceeds from sale of assets of discontinued
operations 0 3,093
Acquisition of business (24,285) (471)
Other, net (2,380) (1,496)
---------- ---------
Net cash from investing activities (11,102) (58,515)
---------- ---------
Financing Activities
Proceeds from sale of Senior Notes 0 50,000
Long-term payments on Revolving Credit
Facility, net 0 (10,300)
Payments on other borrowings (4,807) 0
Dividends on common stock (3,065) (3,007)
Purchases of common stock (5,681) (763)
Exercises of stock options 6,782 4,831
Excess tax benefit of stock option exercises 720 0
---------- ---------
Net cash from financing activities (6,051) 40,761
---------- ---------
Net Increase in Cash and Cash Equivalents (3,360) 11,384
Cash and Cash Equivalents at Beginning of Year 9,261 273
---------- ---------
Cash and Cash Equivalents at End of Period $5,901 $11,657
========== =========
CONTACT: ElkCorp
Stephanie Elwood, 972-851-0472