EX-99.1 2 l20208aexv99w1.htm EX-99.1 PRESS RELEASE EX-99.1
 

Exhibit 99.1
(ERICO LOGO)
ERICO International Corporation
30575 Bainbridge Road, Suite 300
Solon, Ohio 44139
USA 		  phone: (440) 349-2630
fax: (440) 349-2996
www.erico.com
ERICO International Corporation
Announces Record First Quarter 2006 Results
SOLON, OH - May 9, 2006 - ERICO International Corporation (bond ticker CADDY) today reported results for its first quarter ended March 31, 2006.
Net sales in the first quarter of 2006 were $105.5 million, an increase of $15.6 million, or 17.3%, compared with first quarter 2005 net sales of $89.9 million. The increase in net sales was due primarily to increased selling prices and higher sales volume. This performance is a new record for quarterly net sales.
Gross profit in the first quarter of 2006 was $39.3 million, up $8.4 million, or 27.0%, from the first quarter 2005 gross profit of $30.9 million. The increase in gross profit was due primarily to increased selling prices and higher sales volume resulting in manufacturing efficiencies.
Operating expenses in the first quarter of 2006 were $24.0 million, up $2.4 million, or 10.9%, from first quarter 2005 operating expenses of $21.6 million. As a percentage of net sales, operating expenses decreased to 22.7% in the first quarter of 2006 from 24.0% for the first quarter of 2005. The decrease in operating expenses as a percent of net sales in the first quarter of 2006 was due to the higher sales level along with management’s continued focus on controlling expenses.
The Company’s net cash used in operating activities in the first quarter of 2006 was $5.4 million, compared with $7.9 million used in the first quarter of 2005. The Company generated EBITDA of $18.8 million in the first quarter of 2006, compared with EBITDA of $12.9 million in the first quarter of 2005, an increase of $5.9 million, or 45.6%. These results represent a new quarterly record for EBITDA generation by the Company. See below for the Company’s definition of EBITDA and a reconciliation of EBITDA to net cash provided by operating activities computed in accordance with accounting principles generally accepted in the United States (“GAAP”).
ERICO is a leading designer, manufacturer and marketer of precision-engineered specialty metal products serving global niche product markets in a diverse range of electrical, construction, utility and rail applications. The Company is headquartered in Solon, Ohio, USA, with a network of sales locations serving more than 25 countries and with manufacturing and distribution facilities worldwide. ERICO’s well-known brand names include: CADDY® fixings, fasteners and supports; CADWELD® welded electrical connections; CRITEC® surge protection devices; ERICO® rail bonds and specialty products; ERIFLEX® low-voltage components; ERITECH® electrical products; and LENTON® concrete reinforcement. Visit ERICO online at www.erico.com.
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®

 

 

(ERICO LOGO)
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical facts are forward-looking statements, as that term is defined by the federal securities laws, and can be identified by the use of terminology such as “believe,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “continue,” “positioned,” “strategy” and similar expressions. These statements are only the Company’s predictions and not guarantees of future performance. The Company’s actual results may differ materially from those contained in the forward-looking statements in this release as a result of risks, uncertainties and contingencies that include, without limitation, general economic conditions in the markets in which the Company operates, industry related and other factors such as the availability of sufficient amounts of raw materials, particularly steel and copper, and the Company’s ability to acquire these raw materials on an economic basis; risks associated with foreign operations, including fluctuations in exchange rates of foreign currencies; competitive pressures on pricing; operational issues at the Company’s facilities; availability of financing to fund operations at anticipated rates and terms; prolonged work stoppages; governmental or regulatory policies; product warranty, product liability and product recall costs; rapid increases in health care costs; the Company’s acquisition activities; the Company’s substantial debt and leverage and ability to service its debt; the restrictive covenants contained in the agreements governing the Company’s indebtedness; the Company’s ability to realize revenue growth; the Company’s ability to implement initiatives designed to increase operating efficiencies and improve results; the loss of major customers; acts of war or terrorism; and other risks and uncertainties set forth under “Risk Factors” in the Company’s SEC filings, including its Annual Report on Form 10-K filed with the SEC on March 10, 2006 and available at www.sec.gov. The Company undertakes no obligation, except as required by law, to update these statements.
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®

 

 

(ERICO LOGO)
ERICO International Corporation and Subsidiaries
Condensed Consolidated Income Statements
(Dollars in Thousands)
                 
    Three Months Ended  
    March 31,  
    2006     2005  
    (Unaudited)  
Net sales
   $ 105,471     $ 89,950  
Cost of sales
     66,159       59,001  
 
            
Gross profit
     39,312       30,949  
 
Operating expenses
     23,972       21,619  
 
            
 
Operating income
     15,340       9,330  
Interest expense, net
     3,379       3,880  
Foreign exchange (gain) loss, net
     (138 )     191  
Other income
     (594 )     —  
 
            
Income before income taxes
     12,693       5,259  
Provision for income taxes
     4,855       2,049  
 
            
Net income
   $ 7,838     $ 3,210  
 
            
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®

 

 

(ERICO LOGO)
ERICO International Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, Except Per Share Amounts)
                 
    March 31,   December 31,
    2006   2005
    (Unaudited)        
Assets
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 4,626     $ 19,561  
Trade accounts receivable, net
     66,234       54,802  
Inventories, net
     51,780       46,710  
Other current assets
     7,324       6,758  
     
Total current assets
     129,964       127,831  
 
                
Property, plant and equipment, net
     40,924       42,799  
Goodwill
     95,518       95,524  
Other intangible assets, net
     36,675       36,802  
Other assets
     8,095       8,315  
     
Total assets
   $ 311,176     $ 311,271  
     
 
                
Liabilities and stockholder’s net investment
                
Current liabilities:
                
Trade accounts payable
   $ 36,985     $ 29,157  
Accrued compensation
     9,892       15,699  
Dividend payable
     —       11,000  
Other current liabilities
     19,699       20,344  
     
Total current liabilities
     66,576       76,200  
 
                
Long-term debt
     142,414       141,675  
Deferred income taxes
     26,362       26,561  
Other long-term liabilities
     13,816       13,852  
 
                
Stockholder’s net investment:
                
Common stock, par value $1.00 per share, 1,500,000 shares authorized, 1 share issued and outstanding
     —       —  
Parent company investment
     64,690       56,202  
Accumulated other comprehensive loss
     (2,682 )     (3,219 )
     
Total stockholder’s net investment
     62,008       52,983  
     
Total liabilities and stockholder’s net investment
   $ 311,176     $ 311,271  
     
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®

 

 

(ERICO LOGO)
ERICO International Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                 
    Three Months Ended  
    March 31,  
    2006     2005  
Operating activities
                
Net income
   $ 7,838     $ 3,210  
Depreciation and amortization
     2,743       3,784  
Other operating activities
     (16,007 )     (14,895 )
 
            
Net cash used in operating activities
     (5,426 )     (7,901 )
 
                
Investing activities
                
Capital expenditures
     (720 )     (699 )
Proceeds from sale of building
     787       —  
Other investing activities
     (61 )     (398 )
 
            
Net cash provided by (used in) investing activities
     6       (1,097 )
 
                
Financing activities
                
Dividends paid
     (11,000 )     (15,000 )
Net transfers from Parent Company
     650       —  
Net borrowings on revolving line of credit
     739       24,964  
 
            
Net cash (used in) provided by financing activities
     (9,611 )     9,964  
 
                
Effect of exchange rate changes on cash and cash equivalents
     96       5  
 
            
(Decrease) increase in cash and cash equivalents
     (14,935 )     971  
Cash and cash equivalents at beginning of period
     19,561       2,321  
 
            
Cash and cash equivalents at end of period
   $ 4,626     $ 3,292  
 
            
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®

 

 

(ERICO LOGO)
The Company defines EBITDA, a non-GAAP financial measure, as net income plus income taxes, interest expense, net, depreciation, amortization and certain other non-cash, non-recurring items. The Company has chosen to present EBITDA because the Company believes it is a widely accepted financial indicator of a company’s ability to service and incur indebtedness and because EBITDA is used in the Company’s financial debt covenants. Additionally, management uses EBITDA, among other financial measures, for planning and forecasting purposes. However, EBITDA should not be considered as an alternative to net cash provided by operating activities as a measure of liquidity in accordance with GAAP. Since EBITDA is not calculated identically by all companies, the Company’s method of computation may not be comparable to those disclosed by other companies. Following is a reconciliation of EBITDA to net cash provided by operating activities, which the Company believes is the most directly comparable GAAP measure of a company’s ability to service and incur indebtedness:
                 
    Three Months Ended  
    March 31,  
    2006     2005  
Net cash used in operating activities
   $ (5,426 )   $ (7,901 )
Interest expense, net
     3,379       3,880  
Provision for income taxes
     4,855       2,049  
Foreign exchange gain (loss), net
     138       (191 )
Deferred taxes
     192       219  
Amortization of financing fees and discount on senior subordinated notes included in interest expense, net
     (223 )     (223 )
Net changes in operating assets and liabilities
     15,900       15,090  
 
            
 
                
EBITDA
   $ 18,815     $ 12,923  
 
            
     
Contact:
  Polly Bloom
 
  Investor Relations
 
  (440) 542-1304
CADDY®      •      ERICO®      •      ERIFLEX®      •      ERITECH®      •      LENTON®