UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): August 13, 2019
Continental Materials Corporation
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-03834 | 36-2274391 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 440 S. LaSalle Drive, Suite 3100, Chicago, IL 60605 |
| (Address of Principal Executive Offices) (Zip Code) |
(312)541-7200
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | CUO | NYSE: American |
Item 2.02. Results of Operations and Financial Condition.
On August 13, 2019, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Continental Materials Corporation | ||
| Date: August 13, 2019 | By: | /s/ Paul Ainsworth |
| Paul Ainsworth | ||
| Chief Financial Officer | ||
EXHIBIT 99.1
Continental Materials Corporation Reports Unaudited Second Quarter Results – Four Companies Acquired
CHICAGO, Aug. 13, 2019 (GLOBE NEWSWIRE) -- Continental Materials Corporation (NYSE American; CUO) today reported a net loss of $4,836,000, or $2.82 per share for the second quarter ended June 29, 2019 compared to net income of $2,113,000 or $1.24 per share for the second quarter ended June 30, 2018.
Following a strategic review, the Company sold substantially all assets of its ready-mix concrete and Daniels sand operations in the first quarter of 2019 and acquired four new operating businesses in the second quarter of 2019. These significant changes increase the HVAC and Door segments and reduce the dependence on Construction Materials. All acquisitions were completed in the latter half of the second quarter, therefore contribution to second quarter results was limited.
Consolidated sales in the second quarter of 2019 were $25,257,000 or $300,000 (1.2%) lower than the second quarter of 2018. The decrease is primarily due to lower sales in the Construction Materials segment, down 29.0%, as one of the main operating quarries was mined out and moved to complete reclamation. The HVAC segment reported sales down 1.9% over the second quarter of the prior year. The Door segment reported a sales increase of 11.6% in the second quarter of 2019 compared to the second quarter of the previous year.
Consolidated sales in the first six months of 2019 were $47,786,000, a decrease of $1,181,000 or 2.4% compared to the first six months of 2018. The Door segment reported a sales increase of 6.1%, however, the HVAC and Construction Materials segments reported sales decreases of 3.2% and 17.7%, respectively.
The consolidated operating loss for the second quarter of 2019 was $5,419,000 compared to operating income of $1,014,000 in the second quarter of the prior year. The decreased performance is primarily attributable to increases in the HVAC segment and Corporate office selling and administrative expenses, as investments were made to stimulate future growth of the Company.
The consolidated operating loss for the first six months of 2019, before the gain from a legal settlement discussed above, was $7,824,000. The consolidated operating profit for the first half of 2018, before the write off of deferred development, was $330,000. All segments contributed to the decrease in performance.
Interest expense in the second quarter of 2019 was $102,000 compared to $167,000 in the second quarter of 2018. Interest expense includes interest on outstanding funded debt, finance charges on outstanding letters of credit, the fee on the unused revolving credit line and other recurring fees charged by the lending bank. The decrease from the prior year quarter is attributable to lower average borrowings.
Interest expense for the first six months of 2019 was $174,000 compared to $275,000 in the first six months of 2018 due to lower average borrowings combined with the fixed nature of certain bank fees and charges. Average outstanding funded debt in the first six months of 2019 was $513,000 compared to $5,779,000 in the first six months of 2018.
The Company’s effective income tax rate reflects federal and state statutory income tax rates adjusted for non-deductible expenses, tax credits and other tax items. The estimated effective income tax rate as of June 29, 2019 was 27.5% compared to a benefit of 25.0% as of June 30, 2018.
For further information, see the Company’s Form 10-Q report for the quarterly period ended June 29, 2019.
CAUTIONARY STATEMENT-- Statements in this document that are not historical facts are forward-looking statements. It is important to note that the company’s actual results could differ materially from those projected in such forward-looking statements. 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 Annual Report on Form 10-K for the year ended December 29, 2018 filed with the Securities and Exchange Commission, as the same may be amended from time to time. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of the company may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the company’s ability to control or predict. Shareholders are cautioned not to put undue reliance on forward-looking statements. In addition, the company does not have any intention or obligation to update forward-looking statements after the date hereof, even if new information, future events, or other circumstances have made them incorrect or misleading. For those statements, the company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
| CONTINENTAL MATERIALS CORPORATION SUMMARY OF SALES AND EARNINGS (Unaudited) | |||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||
| June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | ||||||||||
| Sales | $ | 25,257,000 | $ | 25,557,000 | $ | 47,786,000 | $ | 48,967,000 | |||||
| Operating income (loss) | (5,419,000 | ) | 1,014,000 | 6,957,000 | (6,510,000 | ) | |||||||
| Interest expense | (102,000 | ) | (167,000 | ) | (174,000 | ) | (275,000 | ) | |||||
| Other income, net | 206,000 | 43,000 | 368,000 | 86,000 | |||||||||
| Income (loss) from continuing operations before income taxes | (5,315,000 | ) | 890,000 | 7,151,000 | (6,699,000 | ) | |||||||
| Provision (benefit) for income taxes | (1,397,000 | ) | 223,000 | 1,969,000 | (1,675,000 | ) | |||||||
| Income (loss) from continuing operations | (3,918,000 | ) | 667,000 | 5,182,000 | (5,024,000 | ) | |||||||
| Income (loss) from discontinued operations net of tax | (918,000 | ) | 1,446,000 | 3,304,000 | 944,000 | ||||||||
| Net income (loss) | $ | (4,836,000 | ) | $ | 2,113,000 | $ | 8,486,000 | $ | (4,080,000 | ) | |||
| Basic and diluted income (loss) per share: | |||||||||||||
| Income (loss) from continuing operations | $ | (2.28 | ) | $ | 0.39 | $ | 3.03 | $ | (2.96 | ) | |||
| Income (loss) from discontinued operations | (0.54 | ) | 0.85 | 1.93 | 0.56 | ||||||||
| Basic and diluted income (loss) per share | $ | (2.82 | ) | $ | 1.24 | $ | 4.96 | $ | (2.40 | ) | |||
| Average shares outstanding | 1,715,000 | 1,698,000 | 1,712,000 | 1,697,000 | |||||||||
CONTACT:
Paul Ainsworth
(312) 541-7222