| CLEVELAND,
Apr 24, 2002 /PRNewswire-FirstCall via COMTEX/ --
Lower
Net Sales Reflect Recessionary Conditions Cost Reduction Efforts
Minimize Impact of Lower Sales Net Sales and Earnings Increase
for Lamson Home Products
Lamson
& Sessions (NYSE: LMS) today reported net sales of $68.1
million in the first quarter of 2002, a 23.2 percent decline
from $88.6 million in the first quarter of 2001. While sales
order patterns began to show improvement at the start of the
construction season in March, the first quarter of 2002 overall
reflects a continuation of the recessionary conditions that
the Company experienced in its key markets in the second half
of 2001.
The
Company incurred a net loss of $756,000, or 5 cents per diluted
share, in the first quarter of 2002. Two factors reduced the
amount of net loss resulting from the decline in net sales.
First, in conjunction with the implementation of FAS 142,
as discussed below, the Company no longer amortizes goodwill.
This accounting change had a favorable effect of $873,000,
or 6 cents per diluted share, in the first quarter. Second,
the Company significantly reduced its operating expense base
in 2001, and this is the first quarter where this improvement
is clearly evident in comparison with the prior-year period.
In
the first quarter of 2001, the Company reported net income
of $696,000, or 5 cents per diluted share, which reflected
the benefit of a litigation settlement having an after-tax
effect of $976,000, or 7 cents per diluted share.
"Weak
demand and highly competitive pricing continued in our key
markets in the first quarter," said John B. Schulze, Chairman,
President and Chief Executive Officer. "However, the continuing
strength of the residential housing and home improvement markets
continues to support our core product lines quite well."
Schulze
continued: "As expected, the telecommunications infrastructure
market has not shown any recovery yet and a continued downward
trend in industrial and commercial construction market activity
remained evident in the first quarter of 2002. Our cost reduction
efforts not only have decreased the impact of these soft market
conditions on our results, but also have helped position us
to take advantage of opportunities as our markets begin to
recover. We continue to focus on maximizing cash flow and
paying down debt to further improve our financial position."
Among
the Company's business segments, Lamson Home Products' net
sales increased slightly more than 25 percent from the first
quarter of last year, due to strength in the home improvement
market. Operating income for Lamson Home Products increased
to slightly under $2.0 million in the first quarter of 2002,
compared with $379,000 in the year-earlier period. While the
Company expects the current level of sales order and shipment
strength to continue, the operating income level is expected
to trend lower as raw material cost increases take effect
in the second and third quarters.
Net
sales for the Carlon business segment decreased 26 percent,
while operating income declined to $3.2 million, from $5.1
million in the first quarter of 2001, primarily because of
the continued weakness in the telecommunications infrastructure
market. Net sales to the telecommunications infrastructure
market declined 40 percent compared with the prior year quarter,
and management continues to be cautious in regard to this
area of the business.
Net
sales for the PVC Pipe segment continued to decline and the
operating loss increased compared with the first quarter of
2001, due to weak demand and pricing levels throughout the
domestic market. A highly competitive pricing environment
reflects very weak demand for products in this segment. A
strengthening export market for polyvinyl chloride (PVC) resin
and the start of seasonal growth in the second quarter will
provide support to the announced price increases of PVC resin
manufacturers. As these factors take effect, improvements
should occur in the selling prices and unit volumes of the
Company's PVC Pipe products.
"For
the remainder of the year, market conditions continue to be
too uncertain for us to provide any kind of meaningful earnings
guidance," James J. Abel, Executive Vice President and Chief
Financial Officer, said. "Recovery in the telecommunications
infrastructure market is still expected to take place no earlier
than the fourth quarter of 2002, or possibly early in 2003."
Abel
continued: "Working capital has been reduced by $29.2 million,
compared with the first quarter of 2001, and it reflects the
lower business level and our attention to cash management.
Our secured credit agreement has been amended to adjust financial
covenants consistent with management's expectations for the
remainder of 2002."
Accounting
Change: The first quarter of 2002 results reflect the elimination
of goodwill amortization, in conjunction with implementing
Statement of Financial Accounting Standard 142 "Goodwill and
Other Intangible Assets" (FAS 142). While the valuation analysis
required by this new standard to determine any goodwill impairment
is still in progress, the elimination of goodwill amortization
had a favorable after-tax impact of $873,000, or 6 cents per
diluted share, for the first quarter.
Conference
Call: A live Internet broadcast of the Company's conference
call regarding its first quarter 2002 financial performance
can be accessed via the investor relations page on the Company's
Web site ( www.lamson-sessions.com ) at 2:00 p.m. Eastern
Time on Wednesday, April 24, 2002.
Lamson
& Sessions is a leading producer of thermoplastic enclosures,
fittings, wiring outlet boxes and conduit for the electrical,
telecommunications, consumer, power and wastewater markets.
For additional information, please visit our Web site at:
www.lamson-sessions.com .
This
press release contains forward-looking statements that involve
risks and uncertainties within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results may
differ materially from those expected as a result of a variety
of factors, such as: (i) the volatility of resin pricing,
(ii) the ability of the Company to pass through raw material
cost increases to its customers, (iii) maintaining a stable
level of housing starts, telecommunications infrastructure
spending, consumer confidence and general construction trends,
and (iv) any adverse change in the recovery trend of the country's
general economic condition affecting the markets for the Company's
products.
THE LAMSON & SESSIONS CO.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
First Quarter Ended
2002 2001
NET SALES $68,083 100.0% $88,641 100.0%
COST OF PRODUCTS SOLD 56,604 83.1% 72,305 81.6%
GROSS PROFIT 11,479 16.9% 16,336 18.4%
OPERATING EXPENSES 10,424 15.4% 14,086 15.9%
NET GAIN - 0.0% (1,600) -1.8%
OPERATING INCOME 1,055 1.5% 3,850 4.3%
INTEREST 2,411 3.5% 2,650 2.9%
(LOSS) INCOME BEFORE INCOME TAXES (1,356) -2.0% 1,200 1.4%
INCOME TAX (BENEFIT) PROVISION (600) -0.9% 504 0.6%
NET (LOSS) INCOME $(756) -1.1% $696 0.8%
BASIC (LOSS) EARNINGS PER SHARE $(0.05) $0.05
AVERAGE SHARES OUTSTANDING 13,778 13,716
DILUTED (LOSS) EARNINGS PER SHARE $(0.05) $0.05
DILUTED AVERAGE SHARES OUTSTANDING 13,778 14,088
Supplemental data:
Net (loss) income and diluted
(loss) earnings per share excluding
2001 goodwill amortization and net
gain - See Note A
NET (LOSS) INCOME $(756) -1.1% $593 0.7%
DILUTED (LOSS) EARNINGS PER SHARE $(0.05) $0.04
DILUTED AVERAGE SHARES OUTSTANDING 13,778 14,088
NOTE A:
In the first quarter of 2001, the Company recorded pre-tax goodwill
amortization of $1.1 million ($0.9 million after tax, or 6 cents per
diluted share). The Company also recorded a net gain of $1.6 million in
the first quarter of 2001 ($1.0 million after tax, or 7 cents per diluted
share) relating to litigation settlement. On a pro forma basis, excluding
the goodwill amortization and the net gain, net income for the first
quarter of 2001 would have been $0.6 million, or 4 cents per diluted
share.
THE LAMSON & SESSIONS CO.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
Quarter Quarter
Ended Year Ended Ended
March 30, December 29, March 31,
2002 2001 2001
ACCOUNTS RECEIVABLE, NET $37,071 $39,204 $55,357
INVENTORIES, NET 40,050 42,083 63,476
OTHER CURRENT ASSETS 11,935 12,798 20,259
PROPERTY, PLANT AND EQUIPMENT, NET 55,783 57,871 67,447
GOODWILL 81,666 81,666 85,016
PENSION ASSETS 24,026 24,071 22,173
OTHER ASSETS 18,128 16,128 9,952
TOTAL ASSETS $268,659 $273,821 $323,680
ACCOUNTS PAYABLE $19,110 $21,975 $37,649
OTHER CURRENT LIABILITIES 37,564 40,915 39,894
LONG-TERM DEBT 106,100 104,266 131,653
OTHER LONG-TERM LIABILITIES 25,116 25,441 27,937
SHAREHOLDERS' EQUITY 80,769 81,224 86,547
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $268,659 $273,821 $323,680
THE LAMSON & SESSIONS CO.
SELECTED FINANCIAL DATA
(In thousands except percentages)
First Quarter Ended
2002 2001
CASH (USED) PROVIDED BY OPERATING
ACTIVITIES $(476) $3,516
CAPITAL EXPENDITURES 552 2,329
EBITDA 4,095 8,271
EBITDA MARGIN 6.0% 9.3%
LONG-TERM DEBT AS A % OF EQUITY 131.4% 152.1%
ANNUALIZED RETURN ON AVERAGE EQUITY -3.7% 3.2%
THE LAMSON & SESSIONS CO.
BUSINESS SEGMENTS
(In thousands)
First Quarter Ended
2002 2001
NET SALES
CARLON $34,991 $47,381
LAMSON HOME PRODUCTS 16,292 12,976
PVC PIPE 16,800 28,284
$68,083 $88,641
OPERATING INCOME (LOSS)
CARLON $3,157 $5,054
LAMSON HOME PRODUCTS 1,993 379
PVC PIPE (2,764) (737)
CORPORATE OFFICE (1,331) (846)
$1,055 $3,850
DEPRECIATION AND AMORTIZATION
CARLON $1,946 $3,032
LAMSON HOME PRODUCTS 524 588
PVC PIPE 570 801
$3,040 $4,421
The first quarter 2002 operating income in the Carlon business segment
excludes the amortization of goodwill whereas the first quarter 2001
operating income includes the amortization of goodwill.
The first quarter 2001 operating loss in the PVC Pipe segment includes a
net gain of $1.6 million from a litigation settlement.
TOTAL ASSETS BY BUSINESS SEGMENT AT MARCH 30, 2002 AND DECEMBER 29, 2001
March 30, 2002 December 29, 2001
IDENTIFIABLE ASSETS
CARLON $152,170 $153,194
LAMSON HOME PRODUCTS 28,637 28,157
PVC PIPE 39,574 45,684
CORPORATE OFFICE (INCLUDES CASH, DEFERRED
TAX, AND PENSION ASSETS) 48,278 46,786
$268,659 $273,821
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SOURCE
The Lamson & Sessions Co.
CONTACT: James J. Abel, Executive Vice President and Chief Financial
Officer of Lamson & Sessions, +1-216-766-6557
http://www.prnewswire.com
Copyright (C) 2002 PR Newswire. All rights reserved.
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