EXHIBIT 99
PRESS RELEASE
ELAMEX REPORTS SECOND QUARTER 2003
FINANCIAL RESULTS
EL PASO, TEXAS - AUGUST 15, 2003 - ELAMEX S.A. DE C.V. (NASDAQ: ELAM), a
diversified manufacturing services company with food services, plastics and
metals operations and real estate holdings in Mexico and the United States,
today announced financial results for the second quarter ended July 4, 2003.
THIRTEEN WEEKS ENDED JULY 4, 2003
Second quarter 2003 net sales increased 51% to $41.4 million compared with $27.3
million for the second quarter of 2002. The Food Products segment (Franklin
Connections acquisition effective June 28, 2002) represented $18.7 million or
45% of second quarter net sales, contributing substantially to the Company's
strong quarterly sales growth. Shelter Services sales increased 4%
year-over-year and represented $8.5 million of total second quarter net sales.
There was $3.8 million in inter-segment sales between Shelter Services and Food
Products that was eliminated in consolidated net sales. Metal Stamping segment
(Precision Tool, Die and Machine Company) sales decreased 6% year-over-year and
represented $18.0 million in revenue for the second quarter. The Metal Stamping
segment continued to experience weakness in end market demand in the appliance
and automotive industries related to general economic conditions.
"Franklin Connections continued to perform well during the second quarter
generating strong packaged candy sales to prominent retailers as well as bulk
candy sales to rebaggers," said Elamex President and Chief Executive Officer
Richard P. Spencer. "We initiated one new contract manufacturing project which
we anticipate will grow into $5 million in annual business. Franklin
Connections' sequential performance reflects repeat order momentum and new
customer orders with a sales increase of $2 million or 12% compared with the
first quarter of 2003.
"Concurrent with the close of the second quarter, we completed the partial
divestiture of our Shelter Services business which netted cash proceeds of
approximately $2.4 million, after severance and other exit costs and reflecting
the conversion of net working capital to cash. A gain of $1.7 million on this
transaction was recognized during the second quarter. Elamex continues to own
and operate seven facilities in Mexico totaling 400,000 square feet of
manufacturing space. We recently leased our sixth facility, and our six leases
now represent approximately $1.6 million in potential annual rental income. We
are actively seeking to lease or sell our remaining facility located in
Chihuahua City.
"While we continued to experience softer sales of our metal stamping services,
we are addressing healthy demand for value-added integrated services and
commenced volume shipments of cosmetically painted metal parts from our new
powder paint facility that opened during the second quarter," said Spencer.
Gross profit increased to $5.4 million or 13% of sales for the second quarter of
2003 compared with $1.9 million or 7% of sales for the second quarter of 2002.
The large increase was primarily related to the contribution of $4.3 million, or
81% of total gross profit, from the Food Services segment partially offset by
unleased facilities in the Shelter Services segment during the second quarter
and increased costs related to Metal Stamping operations.
Total operating expenses for the second quarter of 2003 were $6.2 million
compared with $1.7 million for the second quarter of 2002. The increase was
primarily related to Food Services expenses of $4.2 million for the quarter
ended July 4, 2003.
The Company reported net income of $220,000 or $0.03 per basic and diluted share
for the second quarter of 2003 compared with a net loss of $827,000 or $0.12 per
basic and diluted share for the second quarter of 2002.
TWENTY-SIX WEEKS ENDED JULY 4, 2003
For the 26 weeks ended July 4, 2003, the Company reported a net sales increase
of 50% to $80.8 million compared with $53.7 million for the comparable period in
2002. Gross profit increased to $10.0 million, or 12% of sales, for the first
half of 2003 compared with $4.1 million, or 8% of sales, for the first half of
2002.
Operating expenses increased to $15.7 million for the 26 weeks ended July 4,
2003 from $3.6 million for the 26 weeks ended June 28, 2002. First half 2003
operating expenses include a first quarter impairment of $3.6 million in
goodwill associated with the Precision Tool & Die acquisition in 1999.
Net loss for the first half of 2003 was $5.2 million, or $0.69 per basic and
diluted share, compared with a net loss of $1.9 million, or $0.28 per basic and
diluted share, for the first half of 2002.
FINANCIAL CONDITION
Net cash provided by operating activities was $761,000 for the twenty-six weeks
ended July 4, 2003. At July 4, 2003, the Company had cash and cash equivalents
of $4.2 million and total assets of $129.8 million. Long-term debt and capital
leases, excluding current portion, totaled $25.1 million at July 4, 2003, and
stockholders' equity totaled $60.4 million.
OUTLOOK
"Our outlook for the third quarter calls for both sequential and year-over-year
revenue growth in our Food Products segment," said Spencer. "With our continuing
success in the development of our candy business, we are seeking to expand our
operations to accommodate our projected growth for Franklin Connections. Using
proceeds from the partial divestiture of our Shelter Services business, we are
seeking synergistic acquisition opportunities in Food Products and
reviewing opportunities for capital investments in both our Food Products and
Metal Stamping segments."
TELECONFERENCE
Management of Elamex will host a conference call today at 10:00 a.m.
Mountain/12:00 p.m. Eastern to discuss second quarter 2003 operating
performance. To participate in the conference call, please dial 800-346-7359,
conference entry code 36897, at least ten minutes prior to the initiation of the
teleconference. For international calls, please dial 973-528-0008. Remarks by
management made during the teleconference will be posted on the Elamex web site
at WWW.ELAMEX.COM
A replay will be available through August 22, 2003 at 12:00 p.m. Mountain, by
dialing 800-332-6854 for domestic callers or 973-528-0005 for international
callers, conference entry code 36897.
ABOUT ELAMEX
Elamex is a Mexican company with manufacturing operations and real estate
holdings in Mexico and the United States. The Company is involved in the
production of metal and plastic parts for the appliance and automotive
industries, and food items related to its candy manufacturing and nut packaging
operations. Elamex's competitive advantage results from its demonstrated
capability to leverage low cost, highly productive labor, strategic North
American locations, recognized quality and proven ability to combine high
technology with labor-intensive manufacturing processes in world-class
facilities.
This press release includes forward-looking statements that involve risks and
uncertainties, including, but not limited to, risks associated with the
Company's future growth and development. Information contained herein should be
read in conjunction with the Company's Form 10-Q filing with the Securities and
Exchange Commission for the period ended July 4, 2003.
- TABLES TO FOLLOW -
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
JULY 4, 2003 DECEMBER 31, 2002
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ASSETS
Current assets $ 44,695 $ 45,906
Property, plant and equipment, net 70,067 69,979
Other assets, net 15,037 18,616
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$ 129,799 $ 134,501
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 44,328 $ 32,407
Long-term debt and liabilities 25,051 36,429
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Total liabilities 69,379 68,836
Stockholders' equity 60,420 65,665
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$ 129,799 $ 134,501
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ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE DATA)
(UNAUDITED)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JULY 4, 2003 JUNE 28, 2002 JULY 4, 2003 JUNE 28, 2002
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Net sales $ 41,400 $ 27,330 $ 80,828 $ 53,716
Cost of sales 36,034 25,426 70,788 49,614
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Gross profit 5,366 1,904 10,040 4,102
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Operating expenses:
General and administrative 2,202 1,537 4,147 3,107
Selling 1,715 188 3,459 454
Distribution 2,331 4,549
Goodwill impairment 3,580
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Total operating expenses 6,248 1,725 15,735 3,561
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Operating (loss) income (882) 179 (5,695) 541
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Other income (expense):
Interest income - 257 14 441
Interest expense (866) (216) (1,724) (397)
Equity in loss of unconsolidated joint venture (350) (76) (522) (453)
Gain on sale of certain Shelter operations 1,680 1,680
Other, net 836 (201) 826 (285)
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Total other income (expense) 1,300 (236) 274 (694)
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Income (loss) before income taxes and
cumulative effect of change in accounting
principle 418 (57) (5,421) (153)
Income tax provision (benefit) 198 770 (205) 918
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Income (loss) before cumulative effect
of change in accounting principle 220 (827) (5,216) (1,071)
Cumulative effect of change in accounting
principle, net of tax - - 853
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Net income (loss) $ 220 $ (827) $ (5,216) $ (1,924)
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Net income (loss) per share, basic before
cumulative effect of change in accounting
principle $ 0.03 $ (0.12) $ (0.69) $ (0.16)
Net income (loss) per share, basic $ 0.03 $ (0.12) $ (0.69) $ (0.28)
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Shares used to compute net loss per share,
basic 7,504,904 6,866,100 7,507,881 6,866,100
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Net income (loss) per share, diluted before
cumulative effect of change in accounting
principle $ 0.03 $ (0.12) $ (0.69) $ (0.16)
Net income (loss) per share, diluted $ 0.03 $ (0.12) $ (0.69) $ (0.28)
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Shares used to compute net loss per share,
diluted 7,526,051 6,866,100 7,507,881 6,866,100
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