Continental Materials Corporation Reports Audited 2009 Results
CHICAGO, IL -- (Marketwire - April 23, 2010) - Continental Materials Corporation (NYSE Amex: CUO) today reported a net loss from continuing operations of $802,000,
fifty cents per diluted share for the 2009 fiscal year on sales of
$113,461,000. For the 2008 fiscal year the company reported a net income
from continuing operations of $1,757,000, $1.09 per diluted share on sales
of $145,714,000 (the 2008 amounts have been reclassified from those
originally reported for the discontinued operation).
The decrease in sales for 2009 was primarily due to the depressed level of
construction along the Front Range of southern Colorado and a slowdown in
hotel construction. The weak construction market in southern Colorado led
to a $24,409,000 (38%) decline in sales in the Concrete, Aggregates and
Construction Supplies segment. Also contributing to the lower sales in this
segment was the shutdown of operations at the Pikeview Quarry in Colorado
Springs due to a landslide in December 2008 which made for unsafe
condition. A substantial reduction in hotel construction, a primary market
for fan coils, led to a $9,382,000 (22%) decrease in sales in the Heating
and Cooling segment. Door sales were also dampened by the low level of
construction both within the State of Colorado and to a lesser extent on a
nation-wide basis. In spite of the weak economy, sales in the Evaporative
Cooling segment during 2009 increased by $2,296,000 (10%) as the result of
a primary competitor exiting the domestic market in late 2008.
The loss from continuing operations before income taxes was $1,564,000 in
2009 despite the inclusion of a gain of $2,026,000 received from the
conclusion of the company's negotiations with the city of Colorado Springs
on the fair value of a portion of the company's sand property in Colorado
Springs (a gain of $1,947,000 was recorded in 2008 related to the sale of
this property as well as a gain of $344,000 from the sale of a small
aggregate operation that the company determined was not a strategic part of
its business). The loss was primarily attributable to the reduced sales and
the fixed nature of many of the company's production expenses, especially
in the Concrete, Aggregates and Construction Supplies segment. Selling and
administrative expenses at the operating companies were $587,000 less in
2009 compared to 2008. The decrease was due to cost reduction actions taken
throughout the year in response to the lower sales volume in all but the
Evaporative Cooling segment. As a percentage of consolidated sales, selling
and administrative expenses rose to 16% in 2009 compared to 13% in the
prior year. The higher percentage reflects the fixed nature of many of
these expenses. The administrative expenses at the corporate offices
increased by $532,000 largely due to $420,000 of charges to the unfunded
supplemental profit-sharing obligation to certain officers as a result of a
large increase in the deemed earnings on the balances corresponding to the
overall strong performance of the stock market during 2009. In 2008, the
company recorded a credit of $245,000 for the deemed loss on the
supplemental profit sharing account balances.
The results of discontinued operations reflect the operations of Rocky
Mountain Ready Mix (RMRM), a former subsidiary that was sold on July 17,
2009. The 2009 loss includes a loss from operations before income tax
benefits of $1,778,000 and a loss before the income tax benefit on the sale
of the stock of the subsidiary of approximately $221,000. The income tax
benefits associated with the discontinued operation in 2009 were
approximately $1,138,000. In 2008 the net loss from the operations of RMRM
was $1,797,000, net of the income tax benefit of $989,000.
The company's income tax benefit rate for continuing operations reflects
the effects of state net operating loss carry forwards, the payment of
alternative minimum tax and a decrease in the reserve for uncertain tax
positions.
FORWARD-LOOKING STATEMENTS -- Statements in this document that do not
relate strictly to historical or current facts are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of 1934. When used in this press release, words such as "anticipates,"
"believes," "contemplates," "estimates," "expects," "plans," "projects,"
and similar expressions are intended to identify forward-looking
statements. Actual results could differ materially from those projected in
the forward-looking statements as a result of factors including, but not
limited to, weather, interest rates, availability and cost of raw
materials, national and local economic conditions and competitive forces.
Changes in accounting pronouncements could also alter projected results.
Additional information concerning factors that could cause actual results
to differ materially from those suggested in the forward-looking statements
is contained in the company's Form 10-K, 10-Q and 8-K reports filed with
the Securities and Exchange Commission. Forward-looking statements speak
only as of the date they were made, and the Company undertakes no
obligation to publicly update them.
CONTINENTAL MATERIALS CORPORATION
SUMMARY OF SALES AND EARNINGS
Three Months Ended Year Ended
January 2, January 3, January 2, January 3,
2010 2009 2010 2009
------------ ------------ ------------ ------------
Sales $ 28,035,000 $ 37,685,000 $113,461,000 $145,714,000
Operating (loss)
income (2,045,000) 2,807,000 (612,000) 3,606,000
Interest (expense),
net (223,000) (318,000) (956,000) (1,161,000)
Other (expense)
income (53,000) (9,000) 4,000 50,000
------------ ------------ ------------ ------------
(Loss) income from
continuing
operations before
income taxes (2,321,000) 2,480,000 (1,564,000) 2,495,000
Benefit (provision)
for income taxes 1,120,000 (746,000) 762,000 (738,000)
------------ ------------ ------------ ------------
Net (loss) income
from continuing
operations (1,201,000) 1,734,000 (802,000) 1,757,000
Income (loss) from
discontinued
operation net of
income taxes 91,000 (726,000) (640,000) (1,797,000)
------------ ------------ ------------ ------------
Net (loss) income $ (1,110,000) $ 1,008,000 $ (1,442,000) $ (40,000)
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Basic and diluted
(loss) earnings
per share:
Continuing
operations $ (.75) $ 1.08 $ (.50) $ 1.09
Discontinued
operation .06 (.45) (.40) (1.12)
------------ ------------ ------------ ------------
$ (.69) $ .63 $ (.90) $ (.03)
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Weighted average
shares outstanding 1,598,000 1,598,000 1,598,000 1,599,000
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