First Quarter 2024 Highlights
- Total net sales of
$78.1 million decreased 21.5% compared to the prior year first quarter. Sequentially, first quarter net sales improved by 5.9%, up from$73.8 million in the 2023 fourth quarter. - Gross margin of
$13.3 million , or 17.0% of net sales, decreased from 17.8% of net sales compared to the prior year first quarter. Sequentially, gross margin improved 220 basis points from 14.8% in the 2023 fourth quarter. - Selling, general, and administrative expenses of
$8.6 million , or 11.0% of net sales, compared to$9.7 million , or 9.7% for the prior year first quarter. - Operating income of
$4.7 million , or 6.1% of net sales, compared to operating income of$8.1 million , or 8.1% of net sales for the prior year first quarter. - Net income of
$3.8 million , or$0.43 per diluted share, compared to net income of$5.9 million , or$0.66 per diluted share for the prior year first quarter. - Adjusted EBITDA1 of
$8.7 million , or 11.2% of net sales, compared to$12.2 million , or 12.3% for the prior year first quarter. Sequentially, Adjusted EBITDA as a percent of net sales improved to 11.2% compared to 8.9% in the 2023 fourth quarter.
1Adjusted EBITDA is a non-GAAP financial measure as defined and reconciled below.
Three months ended | ||||||||||||||||
2024 | 2023 | % Change | 2023 | % Change | ||||||||||||
Net sales | $ | 78,145 | $ | 99,507 | (21.5)% | $ | 73,778 | 5.9 | % | |||||||
Gross margin | 13,305 | 17,743 | (25.0)% | 10,937 | 21.7 | % | ||||||||||
Operating income | 4,732 | 8,075 | (41.4)% | 2,517 | 88.0 | % | ||||||||||
Net income | 3,759 | 5,852 | (35.8)% | 2,182 | 72.3 | % | ||||||||||
Adjusted EBITDA1 | 8,743 | 12,196 | (28.3)% | 6,532 | 33.8 | % | ||||||||||
Gross margin as a percent of sales | 17.0 | % | 17.8 | % | 14.8 | % | ||||||||||
Operating income as a percent of sales | 6.1 | % | 8.1 | % | 3.4 | % | ||||||||||
Net income as a percent of sales | 4.8 | % | 5.9 | % | 3.0 | % | ||||||||||
Adjusted EBITDA as a percent of sales1 | 11.2 | % | 12.3 | % | 8.9 | % | ||||||||||
Net income per common share | ||||||||||||||||
Basic | $ | 0.43 | $ | 0.69 | (37.7)% | $ | 0.25 | 72.0 | % | |||||||
Diluted | $ | 0.43 | $ | 0.66 | (34.8)% | $ | 0.25 | 72.0 | % |
“We are well positioned to now focus on growing the business. We are, and will continue to, invest in our sales development structure and technical capabilities. Our technical, engineered solutions allow us to work on new environmentally friendly and sustainable products, which positions
“Despite product mix shifts and operational de-leverage in the first quarter, I want to highlight that we held our gross margins to 17.0%, which improved over the fourth quarter of 2023. As we anticipated future sales demand decreases at the end of 2023, the Company expeditiously executed our cost reduction plans in order to maintain gross margin within our targeted range.
"The Company is well positioned operationally to continue to adjust for changing demand levels. Our financial position is strong, and at
1Free Cash Flow is a non-GAAP financial measure as defined and reconciled below.
2024 Capital Expenditures
The Company’s capital expenditures for first quarter 2024 were
Financial Position at
The Company’s total liquidity at the end of the first fiscal quarter 2024 was
1 Adjusted EBITDA and return on capital employed are non-GAAP financial measures as defined and reconciled below.
Conference Call
The Company will conduct a conference call today at
About
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws that are subject to risks and uncertainties. These statements often include words such as “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release may contain forward-looking statements about the Company’s expectations for future periods with respect to its plans to improve financial results, the future of the Company’s end markets. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: dependence on certain major customers, and potential loss of any major customer due to completion of existing production programs or otherwise; general macroeconomic, social, regulatory and political conditions, including uncertainties surrounding volatility in financial markets; changes in the plastics, transportation, marine and commercial product industries (including changes in demand for production), efforts of the Company to expand its customer base and develop new products to diversify markets, materials and processes and increase operational enhancements; the Company’s initiatives to quote and execute manufacturing processes for new business, acquire raw materials, address inflationary pressures, regulatory matters and labor relations; the Company’s financial position or other financial information; and other risks and uncertainties described in the Company’s Annual Report on Form 10-K for the year ended
Company Contact:
Executive Vice President & Chief Financial Officer
614-870-5604
Investor Relations Contact:
Three
214-616-2207
- Financial Statements Follow –
Consolidated Statements of Operations (unaudited, in thousands, except share and per share data) | |||||||
Three months ended | |||||||
2024 | 2023 | ||||||
Net sales: | |||||||
Products | $ | 75,831 | $ | 98,337 | |||
Tooling | 2,314 | 1,170 | |||||
Total net sales | 78,145 | 99,507 | |||||
Total cost of sales | 64,840 | 81,764 | |||||
Gross margin | 13,305 | 17,743 | |||||
Selling, general and administrative expense | 8,573 | 9,668 | |||||
Operating income | 4,732 | 8,075 | |||||
Other income and expense | |||||||
Net interest expense | 82 | 356 | |||||
Net periodic post-retirement benefit | (138 | ) | (52 | ) | |||
Total other (income) and expense | (56 | ) | 304 | ||||
Income before income taxes | 4,788 | 7,771 | |||||
Income tax expense | 1,029 | 1,919 | |||||
Net income | $ | 3,759 | $ | 5,852 | |||
Net income per common share: | |||||||
Basic | $ | 0.43 | $ | 0.69 | |||
Diluted | $ | 0.43 | $ | 0.66 |
Product Sales by Market (unaudited, in thousands) | |||||
Three months ended | |||||
2024 | 2023 | ||||
Medium and heavy-duty truck | $ | 41,509 | $ | 49,516 | |
Power sports | 18,859 | 22,036 | |||
Building products | 6,545 | 11,787 | |||
Industrial and utilities | 3,346 | 6,430 | |||
All other | 5,572 | 8,568 | |||
Net product revenue | $ | 75,831 | $ | 98,337 |
Consolidated Balance Sheets (in thousands) | |||||||
As of | |||||||
As of | |||||||
2024 | |||||||
(unaudited) | 2023 | ||||||
Assets: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 26,618 | $ | 24,104 | |||
Accounts receivable, net | 40,082 | 41,711 | |||||
Inventories, net | 23,861 | 22,063 | |||||
Prepaid expenses and other current assets | 12,676 | 15,001 | |||||
Total current assets | 103,237 | 102,879 | |||||
Right of use asset | 3,302 | 3,802 | |||||
Property, plant and equipment, net | 80,398 | 81,185 | |||||
17,376 | 17,376 | ||||||
Intangibles, net | 5,617 | 6,017 | |||||
Other non-current assets | 2,337 | 2,118 | |||||
Total Assets | $ | 212,267 | $ | 213,377 | |||
Liabilities and Stockholders' Equity: | |||||||
Liabilities: | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 1,624 | $ | 1,468 | |||
Accounts payable | 24,260 | 23,958 | |||||
Contract liabilities | 4,222 | 5,204 | |||||
Compensation and related benefits | 6,711 | 10,498 | |||||
Accrued other liabilities | 5,406 | 5,058 | |||||
Total current liabilities | 42,223 | 46,186 | |||||
Other non-current liabilities | 3,316 | 3,759 | |||||
Long-term debt | 21,061 | 21,519 | |||||
Post retirement benefits liability | 2,852 | 2,960 | |||||
Total Liabilities | 69,452 | 74,424 | |||||
Stockholders' Equity: | |||||||
Common stock | 87 | 86 | |||||
Paid in capital | 44,004 | 43,265 | |||||
Accumulated other comprehensive income, net of income taxes | 5,007 | 5,301 | |||||
(32,111 | ) | (31,768 | ) | ||||
Retained earnings | 125,828 | 122,069 | |||||
Total Stockholders' Equity | 142,815 | 138,953 | |||||
Total Liabilities and Stockholders' Equity | $ | 212,267 | $ | 213,377 |
Consolidated Statements of Cash Flows (unaudited, in thousands) | |||||||
Three months ended | |||||||
2024 | 2023 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 3,759 | $ | 5,852 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 3,292 | 3,410 | |||||
Loss on disposal of property, plant and equipment | — | 80 | |||||
Share-based compensation | 739 | 731 | |||||
Losses (gain) on foreign currency | (214 | ) | 81 | ||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 1,629 | (8,240 | ) | ||||
Inventories | (1,798 | ) | (1,139 | ) | |||
Prepaid and other assets | 1,908 | (450 | ) | ||||
Accounts payable | 280 | 4,209 | |||||
Accrued and other liabilities | (4,254 | ) | 324 | ||||
Post retirement benefits liability | (269 | ) | (211 | ) | |||
Net cash provided by operating activities | 5,072 | 4,647 | |||||
Cash flows from investing activities: | |||||||
Purchase of property, plant and equipment | (1,893 | ) | (2,127 | ) | |||
Net cash used in investing activities | (1,893 | ) | (2,127 | ) | |||
Cash flows from financing activities: | |||||||
Gross borrowings on revolving loans | — | (35,369 | ) | ||||
Gross repayment on revolving loans | — | 33,505 | |||||
Payments for taxes related to net share settlement of equity awards | (343 | ) | (23 | ) | |||
Payment on principal on term loans | (322 | ) | (324 | ) | |||
Net cash used in financing activities | (665 | ) | (2,211 | ) | |||
Net change in cash and cash equivalents | 2,514 | 309 | |||||
Cash and cash equivalents at beginning of year | 24,104 | 4,183 | |||||
Cash and cash equivalents at end of period | $ | 26,618 | $ | 4,492 | |||
Cash paid for: | |||||||
Interest | $ | 291 | $ | 345 | |||
Income taxes | $ | 326 | $ | 1,931 | |||
Non cash investing activities: | |||||||
Fixed asset purchases in accounts payable | $ | 489 | $ | 262 |
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation and amortization of long-lived assets, (iv) share based compensation expense, (v) plant closure costs, and (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations. Debt-to-trailing twelve months adjusted EBITDA represents total outstanding debt divided by trailing twelve months Adjusted EBITDA. Free Cash Flow represents net cash (used in) provided by operating activities less purchase of property, plant and equipment. Trailing twelve months return on capital employed represents the trailing twelve months earnings before (i) interest expense, net and (ii) provision (benefit) for income taxes divided by (i) stockholders' equity and (ii) current and long-term debt.
We present Adjusted EBITDA, Adjusted EBITDA as a percent of net sales, debt-to-trailing twelve months adjusted EBITDA, Free Cash Flow and trailing twelve months Return on Capital Employed because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to performance measure derived in accordance with GAAP as an indicator of our operating performance. Our calculation of these measures may not be comparable to similarly named measures reported by other companies. The following tables present reconciliations of net income to Adjusted EBITDA, and Cash Flow from Operating Activities to Free Cash Flow, the most directly comparable GAAP measures, and Debt to trailing twelve months adjusted EBITDA and trailing twelve months Return on Capital Employed, for the periods presented:
Net Income to Adjusted EBITDA Reconciliation (unaudited, in thousands) | |||||||||||
Three months ended | |||||||||||
2024 | 2023 | 2023 | |||||||||
Net income | $ | 3,759 | $ | 5,852 | $ | 2,182 | |||||
Provision for income taxes | 1,029 | 1,919 | 223 | ||||||||
Total other expenses(1) | (56 | ) | 304 | 112 | |||||||
Depreciation and amortization | 3,272 | 3,390 | 3,315 | ||||||||
Share-based compensation | 739 | 731 | 700 | ||||||||
Adjusted EBITDA | $ | 8,743 | $ | 12,196 | $ | 6,532 | |||||
Adjusted EBITDA as a percent of net sales | 11.2 | % | 12.3 | % | 8.9 | % | |||||
(1)Includes net interest expense and non-cash periodic post-retirement benefit cost. |
Computation of Debt to Trailing Twelve Months Adjusted EBITDA (unaudited, in thousands) | |||||||||||||||
Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Trailing Twelve Months | |||||||||||
Net income | $ | 7,936 | $ | 4,354 | $ | 2,182 | $ | 3,759 | $ | 18,231 | |||||
Provision for income taxes | 1,893 | 1,386 | 223 | 1,029 | 4,531 | ||||||||||
Total other expenses(1) | 241 | 135 | 112 | (56 | ) | 432 | |||||||||
Depreciation and amortization | 2,918 | 3,208 | 3,315 | 3,272 | 12,713 | ||||||||||
Share-based compensation | 756 | 736 | 700 | 739 | 2,931 | ||||||||||
Adjusted EBITDA | $ | 13,744 | $ | 9,819 | $ | 6,532 | $ | 8,743 | $ | 38,838 | |||||
Total Outstanding Term Debt as of | $ | 22,685 | |||||||||||||
Debt to Trailing Twelve Months Adjusted EBITDA | 0.58 | ||||||||||||||
(1)Includes net interest expense and non-cash periodic post-retirement benefit cost. |
Computation of Trailing Twelve Months Return on Capital Employed (unaudited, in thousands) | |||||||||||||||
Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Trailing Twelve Months | |||||||||||
Operating Income | $ | 10,070 | $ | 5,875 | $ | 2,517 | $ | 4,732 | $ | 23,194 | |||||
Equity | $ | 142,815 | |||||||||||||
Structured Debt | 22,685 | ||||||||||||||
Total Capital Employed | $ | 165,500 | |||||||||||||
Return on Capital Employed | 14.0 | % |
Free Cash Flow Three Months Ended (unaudited, in thousands) | |||||||
2024 | 2023 | ||||||
Cash flow provided by operations | $ | 5,072 | $ | 4,647 | |||
Purchase of property, plant and equipment | (1,893 | ) | (2,127 | ) | |||
Free cash flow | $ | 3,179 | $ | 2,520 |
Source:
2024 GlobeNewswire, Inc., source