EX-99.1 2 a2042684zex-99_1.txt EXHIBIT 99.1 EXHIBIT INDEX Company Press Release March 22, 2001, titled Stewart & Stevenson Services Reports Fiscal Fourth Quarter and Year End Results. Client: Stewart & Stevenson Services, Inc. Contact: John Doster, CFO Stewart & Stevenson Services, Inc. 713-868-7602 FOR IMMEDIATE RELEASE Ken Dennard / kdennard@easterly.com Lisa Elliott / lisae@easterly.com Easterly Investor Relations 713-529-6600 STEWART & STEVENSON SERVICES REPORTS FISCAL FOURTH QUARTER AND YEAR END RESULTS FOURTH QUARTER REVENUES UP 17 PERCENT OPERATING PROFIT INCREASES 58 PERCENT NET EARNINGS FROM CONTINUING OPERATIONS INCREASES 122 PERCENT HOUSTON - MARCH 22, 2001 - Stewart & Stevenson Services, Inc. (NASDAQ:SSSS), a leading manufacturer, service provider, and distributor of industrial and energy related equipment, announced results for the fiscal fourth quarter and year ended January 31, 2001. Sales for the fiscal fourth quarter grew 17 percent to $338.9 million compared to sales of $ 289.5 million in the same period a year ago. Operating profit for the Company's segments was $21.6 million for the quarter, up 58 percent over last year's fourth quarter of $13.7 million. Net earnings from continuing operations in the fourth quarter of fiscal 2000 were $10.9 million, or $0.38 per diluted share, up 122 percent over $4.9 million, or $0.17 per share, reported in last year's fourth quarter. Net earnings from discontinued operations for the fourth quarter were $0.6 million or $0.02 per share compared to $6.9 million or $0.25 per share last year. Sales for fiscal 2000 totaled $1,153.2 million compared to $918.7 million in fiscal 1999. Net earnings from continuing operations for the year grew 99 percent to $34.8 million, or $1.23 per diluted share, compared with $17.5 million, or $0.62 per share, in the prior year. Including discontinued operations, total year net earnings for fiscal 2000 and 1999 were $35.4 million, or $1.25 per diluted share, and $24.3 million, or $0.87 per share, respectively. Reported sales for the fourth quarter comply with a new accounting pronouncement whereby all shipping and handling fees which are billed to the customer must be recorded as sales. Prior period sales and cost of sales have been restated to conform with this new requirement. Michael L. Grimes, President and Chief Executive Officer, stated, "We are again very pleased with the growth in earnings during the fourth quarter, the eighth consecutive quarter of improved earnings. Three of our segments have solid upward momentum and an accelerated turnaround plan is being implemented in the Airline Products segment. We continue to focus on five key initiatives to (1) strengthen business leadership, (2) improve cash flow management, (3) enhance supply chain productivity, (4) revitalize business growth, and (5) implement a new enterprise-wide information system. The performance improvement we anticipate from these initiatives, and based on our current backlog position, we are looking forward in FY 2001 to almost $100 million in top line sales growth at the Tactical Vehicle Systems segment, continued double digit sales growth at the Petroleum Equipment segment, the ability to stop operating losses at the Airline Products segment, and double digit sales growth in our Power Products segment due to power generation equipment sales growth. These factors combine to give us a very positive view of our ability to continue earnings growth for FY 2001." SEGMENT DATA The Power Products segment, which is responsible for marketing and aftermarket support of a wide range of industrial equipment, recorded fourth quarter sales of $165.2 million, a 17 percent increase over the sales of $140.9 million in the same period of fiscal 1999. The operating profit totaled $4.3 million versus a $0.4 million loss in the comparable period of last year. Sales for the total year were $612.5 million, 13 percent higher than last year's sales of $540.7 million. Operating profit for fiscal 2000 was $13.1 million compared with $15.2 million last year. As mentioned earlier this year, operations in fiscal 2000 were adversely impacted by special charges of $8.9 million, principally in connection with an uncollectible account and note receivable, and inventory reserves. Order backlog for this segment increased $18.6 million during the fourth quarter, largely on the strength of power generation orders. The Tactical Vehicle Systems segment, which manufactures tactical vehicles for the U.S. Army and others, recorded sales of $100.8 million in the fourth quarter compared to $87.3 million a year ago. Operating profit for the quarter totaled $15.5 million, compared with $17.0 million in the fourth quarter of fiscal 1999. Sales for fiscal 2000 were $304.1 million versus $150.9 million a year ago. Total year operating profit for fiscal 2000 was $54.5 million, which compared favorably with $30.2 million a year ago. Operating margins were in line with expectations. The Petroleum Equipment segment manufactures equipment for oil and gas exploration, production, and well stimulation industries. Sales in this segment totaled $39.6 million for the fourth quarter compared to $17.9 million last year. The operating profit for the fourth quarter totaled $2.5 million compared to an operating loss of $0.1 million in the previous year. Fiscal year sales of $100.3 million and $84.3 million were recorded for fiscal 2000 and 1999, respectively. The segment reported a $3.7 million operating profit in 2000 and a $2.1 million operating profit in 1999. The order backlog at year-end fiscal year 2000 totaled $55.3 million, well above the $17.2 million at 1999 fiscal year-end but $10.3 million lower than the end of the third quarter due to strong fourth quarter shipments. The Airline Products segment which manufactures airline ground support products and mobile railcar movers, recorded sales of $26.8 million in the fourth quarter of fiscal 2000, compared with $30.0 million in the same quarter last year. Operating losses for the fourth quarter of 2000 and 1999 were $1.8 million and $3.2 million, respectively. Sales for fiscal 2000 were $110.3 million versus $104.9 million the previous year. Operating losses were reported for both years: $6.6 million in 2000 and $3.7 million in 1999. The disappointing performance in Airline Products resulted principally from production and inventory process issues, and to a lesser extent, softness in demand from airline customers. A performance improvement team is working on a recovery plan which, coupled with our supply chain initiative, should restore margins to targeted levels by the end of fiscal 2001. Other business activities not identified in a specific segment include predominantly gas compression equipment sales or leases. Sales totaled $6.4 million for the fourth quarter, compared to $13.5 million for the comparable period last year. Fourth quarter operating profit totaled $ 1.1 million and was largely comprised of non-recurring billing adjustments, whereas a $0.4 million profit was recorded in last year's fourth quarter. Total year sales were $26.1 million versus $37.9 million last year. Operating profit for the year totaled $3.6 million and included a $5.6 million gain on sale of the gas compression leasing business. An operating loss of $0.7 million was reported last year. Net cash provided by operating activities totaled $13.2 million for the fourth quarter and $97.3 million for the total year. The balance in cash and equivalents was $110.0 million at year-end, an increase of $98.2 million for the year. Total debt decreased $12.9 million during the year. CONFERENCE CALL Stewart & Stevenson has scheduled a conference call for Thursday, March 22, 2001 at 11:00 a.m. Eastern Time to review fourth quarter results. To listen to the call, dial (719) 457-2641 at least ten minutes before the conference call begins and ask for the Stewart & Stevenson Services conference call. A replay of the call will be available approximately two hours after the call ends and will be accessible until March 29, 2001. To access the replay, dial (719) 457-0820 and enter the pass code 437954. Investors, analysts, and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting the Company's web site at www.ssss.com. To listen to the live call on the web, please visit the Stewart & Stevenson web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live web cast, an archive will be available shortly after the call ends. Stewart & Stevenson Services, Inc., founded in 1902, is a billion-dollar company that manufactures, distributes, and provides service for a wide range of industrial products and diesel-powered equipment to key industries worldwide, including petroleum, power generation, defense, airline, marine, and transportation. CAUTIONARY STATEMENTS This press release contains forward-looking statements that are based on management's current expectations, estimates, and projections. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Many factors, including those discussed more fully elsewhere in this release and in the Company's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, risks associated with newly acquired businesses; increasing price and product/service competition by foreign and domestic competitors; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost effective basis; the mix of products/services; the achievement of lower costs and expenses; reliance on large customers; technological, implementation and cost/financial risks in use of large, multi-year contracts; the cyclical nature of the markets served; the outcome of pending and future litigation and governmental proceedings; the continued availability of financing, financial instruments and financial resources in the amount, at the times and on the terms required to support the Company's business; the assessment of unanticipated taxes by foreign or domestic governmental authorities; and the risk of cancellation or adjustment of specific orders and termination of significant government programs. In addition, such forward-looking statements could be affected by general industry and market conditions and growth rates, general domestic and international conditions including interest rates, inflation and currency exchange rates and other future factors. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. - TABLES TO FOLLOW - STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (In thousands, except per share data)
TWELVE MONTHS ENDED THREE MONTHS ENDED JANUARY 31 JANUARY 31 ------------------------------------- ---------------------------------- 2001 2000 2001 2000 ----------------- ---------------- ---------------- -------------- Sales $1,153,209 $918,664 $338,876 $289,510 Cost of sales 972,163 783,826 288,521 251,434 ----------------- ---------------- ---------------- -------------- Gross profit 181,046 134,838 50,355 38,076 Selling and administrative expenses 123,842 109,038 32,481 32,607 Interest expense 9,069 9,991 2,330 1,179 Interest and investment income (7,902) (1,083) (1,672) (229) Other (income) expense, net 894 (6,313) (157) (3,389) ----------------- ---------------- ---------------- -------------- 125,903 111,633 32,982 30,168 ----------------- ---------------- ---------------- -------------- Earnings before income taxes 55,143 23,205 17,373 7,908 Income tax expense 20,354 8,642 6,451 2,969 ----------------- ---------------- ---------------- -------------- Earnings of consolidated companies 34,789 14,563 10,922 4,939 Gain on sale of investment, net of tax - 2,746 - - Equity in net earnings of unconsolidated affiliates - 142 - - ----------------- ---------------- ---------------- -------------- Net earnings from continuing operations 34,789 17,451 10,922 4,939 Gain on disposal of discontinued operations, net 565 6,879 565 6,879 of tax of $331 and $4,112 ----------------- ---------------- ---------------- -------------- Net earnings $ 35,354 $24,330 $11,487 $11,818 ================= ================ ================ ============== Weighted average shares outstanding: Basic 28,026 27,989 28,056 27,992 Diluted 28,373 28,042 28,656 28,059 Earnings per share: Basic Continuing operations $ 1.24 $ 0.62 $ 0.39 $ 0.17 Gain on disposal of discontinued operations 0.02 0.25 0.02 0.25 ----------------- ---------------- ---------------- -------------- NET EARNINGS PER SHARE $ 1.26 $ 0.87 $ 0.41 $ 0.42 ================= ================ ================ ============== Diluted Continuing operations $ 1.23 $ 0.62 $ 0.38 $ 0.17 Gain on disposal of discontinued operations 0.02 0.25 0.02 0.25 ----------------- ---------------- ---------------- -------------- NET EARNINGS PER SHARE $ 1.25 $ 0.87 $ 0.40 $ 0.42 ================= ================ ================ ============== Cash dividends per share $ 0.340 $ 0.340 $ 0.085 $ 0.085
STEWART & STEVENSON SERVICES, INC. SEGMENT INFORMATION (In thousands)
TWELVE MONTHS ENDED THREE MONTHS ENDED JANUARY 31 JANUARY 31 ---------------------------------------- ----------------------------------------- 2001 2000 2001 2000 ------------------- ------------------- ------------------- ------------------- SALES Power Products $ 612,463 $540,740 $165,180 $140,866 Tactical Vehicle Systems 304,143 150,884 100,797 87,296 Petroleum Equipment 100,251 84,265 39,645 17,938 Airline Products 110,250 104,915 26,841 29,956 Other Business Activities 26,102 37,860 6,413 13,454 ------------------- ------------------- ------------------- ------------------- Total $1,153,209 $918,664 $338,876 $289,510 =================== =================== =================== =================== OPERATING PROFIT (LOSS) Power Products $ 13,057 $15,244 $ 4,310 $ (416) Tactical Vehicle Systems 54,509 30,217 15,529 16,969 Petroleum Equipment 3,681 2,099 2,457 (123) Airline Products (6,552) (3,697) (1,750) (3,150) Other Business Activities 3,595 (652) 1,076 424 ------------------- ------------------- ------------------- ------------------- Total 68,290 43,211 21,622 13,704 NON-OPERATING INCOME/(EXPENSE) Corporate expense, net (11,980) (10,044) (3,591) (4,617) Interest income 7,902 29 1,672 - Interest expense (9,069) (9,991) (2,330) (1,179) ------------------- ------------------- ------------------- ------------------- EARNINGS BEFORE INCOME TAXES $ 55,143 $23,205 $17,373 $ 7,908 =================== =================== =================== =================== OPERATING PROFIT (LOSS) PERCENTAGE Power Products 2.1% 2.8% 2.6% -0.3% Tactical Vehicle Systems 17.9 20.0 15.4 19.4 Petroleum Equipment 3.7 2.5 6.2 (0.7) Airline Products (5.9) (3.5) (6.5) (10.5) Other Business Activities 13.8 (1.7) 16.8 3.2 Total 5.9 4.7 6.4 4.7
STEWART & STEVENSON SERVICES, INC. SELECTED OTHER INFORMATION ORDER BACKLOG
January 31, April 29, July 29, October 28, January 31, 2000 2000 2000 2000 2001 ---------------------------------------------------------------------------------------------- (Millions) Tactical Vehicle Systems $ 914.5 $839.5 $795.7 $ 742.8 $ 658.2 Power Products 77.6 89.9 116.7 119.2 137.8 Petroleum Equipment 17.2 26.5 55.6 65.6 55.3 Airline Products 23.5 18.6 17.2 19.5 16.2 Other Business Activities 24.0 14.7 10.1 16.5 11.3 ---------------------------------------------------------------------------------------------- $1,056.8 $989.2 $995.3 $ 963.6 $ 878.8 ==============================================================================================
UNIT SHIPMENTS
Fiscal Year 2000 Fiscal Year 2001 ---------------------------------------------------------------------------------------------------------------------- 1Q 2Q 3Q 4Q Total 1Q* Total* ---------------------------------------------------------------------------------------------------------------------- MTV 311 186 339 503 1,339 472 1,690 LMTV 91 74 - 30 195 75 503 Trailers - - - - - 161 690 ---------------------------------------------------------------------------------------------------------------------- 402 260 339 533 1,534 708 2,883 ====================================================================================================================== Estimated Sales (millions) $ 304 $ 100 $ 400 =============================================
*Based on current US Army forecast and other data. See "Cautionary Statements" above for important information regarding forward-looking statements. STEWART & STEVENSON SERVICES, INC. SCHEDULE OF CHANGES IN REPORTED SALES FOR PASS-THROUGH COSTS (In thousands)
FISCAL 2000 ----------------------------------------------------------------------------------------------------------------- Excluding Pass-Through Costs --------------------------------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Year ----------------- ------------------ ---------------- ------------- -------------- Power Products $ 127,091 $ 154,140 $ 162,520 $ 164,108 $ 607,859 Tactical Vehicle Systems 78,673 55,652 69,021 100,797 304,143 Petroleum Equipment 14,927 18,131 25,517 38,301 96,876 Airline Products 28,271 28,252 26,785 26,810 110,118 Other Business Activities 10,245 8,890 384 6,411 25,930 ----------------- ------------------ ---------------- ------------- -------------- Total $ 259,207 $ 265,065 $ 284,227 $ 336,427 $1,144,926 ================= ================== ================ ============= ============== INCLUDING PASS-THROUGH COSTS --------------------------------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Year ----------------- ------------------ ---------------- ------------- -------------- Power Products $ 128,316 $ 155,299 $ 163,668 $ 165,180 $ 612,463 Tactical Vehicle Systems 78,673 55,652 69,021 100,797 304,143 Petroleum Equipment 15,448 18,813 26,345 39,645 100,251 Airline Products 28,310 28,275 26,824 26,841 110,250 Other Business Activities 10,366 8,939 384 6,413 26,102 ----------------- ------------------ -------------- ------------- -------------- Total $ 261,113 $ 266,978 $ 286,242 $ 338,876 $1,153,209 ================= ================== ============== ============= ============== FISCAL 1999 ----------------------------------------------------------------------------------------------------------------- Excluding Pass-Through Costs --------------------------------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Year ----------------- ------------------ ---------------- ------------- -------------- Power Products $ 121,288 $ 144,909 $ 130,381 $ 139,658 $ 536,236 Tactical Vehicle Systems 6,215 5,818 51,555 87,296 150,884 Petroleum Equipment 28,464 23,648 12,787 17,186 82,085 Airline Products 22,252 23,585 29,026 29,922 104,785 Other Business Activities 10,692 2,680 10,967 13,373 37,712 ----------------- ------------------ --------------- ------------ ------------- Total $ 188,911 $ 200,640 $ 234,716 $ 287,435 $ 911,702 ================= ================== =============== ============ ============= INCLUDING PASS-THROUGH COSTS --------------------------------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Year ----------------- ------------------ ---------------- ------------- -------------- Power Products $ 122,287 $ 145,985 $ 131,602 $ 140,866 $ 540,740 Tactical Vehicle Systems 6,215 5,818 51,555 87,296 150,884 Petroleum Equipment 28,898 24,095 13,334 17,938 84,265 Airline Products 22,286 23,614 29,059 29,956 104,915 Other Business Activities 10,699 2,701 11,006 13,454 37,860 ----------------- ------------------ --------------- ------------ ------------- Total $ 190,385 $ 202,213 $ 236,556 $ 289,510 $ 918,664 ================= ================== =============== ============ =============
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
TWELVE MONTHS ENDED THREE MONTHS ENDED JANUARY 31 JANUARY 31 ---------------------- --------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Operating Activities Net earnings from continuing operations $ 34,789 $ 17,451 $ 10,922 $ 4,939 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Accrued postretirement benefits & pension 3,249 2,857 (450) 13 Depreciation and amortization 22,604 22,298 6,469 6,403 Deferred income taxes, net (8,485) (2,310) (7,505) (2,085) Gain on sale of business assets (5,649) (5,804) - (1,850) Change in operating assets and liabilities net of the effect of acquisition, divestiture and discontinued operations: Accounts and notes receivable, net 71,885 (76,192) (14,399) (46,291) Recoverable costs and accrued profits not yet billed (14,264) 90,946 (1,508) 257 Inventories (9,070) 24,839 8,779 1,617 Accounts payable (23,726) 4,360 5,113 14,730 Accrued payrolls and incentive 2,693 3,717 8,185 8,782 Current income taxes, net 25,187 20,442 18,774 4,444 Other current liabilities (421) (16,933) (20,723) (5,660) Other--principally long-term assets and liabilities 83 5,890 1,098 13,924 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS 98,875 91,561 14,755 (777) NET CASH USED IN DISCONTINUED OPERATIONS (1,589) (3,287) (1,589) (3,287) --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 97,286 88,274 13,166 (4,064) --------- --------- --------- --------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (35,385) (38,573) (9,130) (13,883) Proceeds from sale of business assets 55,221 8,303 2,599 7,628 Acquisition of businesses - (5,832) - (5,832) Disposal of property, plant and equipment, net 2,925 14,082 713 122 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 22,761 (22,020) (5,818) (11,965) --------- --------- --------- --------- FINANCING ACTIVITIES Additions to long-term borrowings 29,238 16,234 8,821 - Payments on long-term borrowings (29,469) (82,016) (8,947) (120) Net short-term borrowings (payments) (12,658) 7,801 (486) 10,308 Dividends paid (9,521) (9,517) (2,383) (2,379) Exercise of stock options 603 - 545 - --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (21,807) (67,498) (2,450) 7,809 --------- --------- --------- --------- Increase (decrease) in cash and cash equivalents 98,240 (1,244) 4,898 (8,220) Cash and cash equivalents, beginning of period 11,715 12,959 105,057 19,935 --------- --------- --------- --------- Cash and cash equivalents, end of period $109,955 $ 11,715 $109,955 $ 11,715 ========= ========= ========= =========
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION (In thousands, except share data)
JANUARY 31, 2001 JANUARY 31, 2000 ---------------- ---------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 109,955 $ 11,715 Accounts and notes receivable, net 172,441 242,625 Recoverable costs and accrued profits not yet billed 22,415 8,151 Income tax receivable 8,518 26,255 Deferred tax asset 6,562 9,076 Inventories: Power Products 159,524 150,844 Petroleum Equipment 37,461 30,151 Airline Products 29,007 26,029 Tactical Vehicle Systems 3,861 3,662 Other Business Activities 1,863 33,762 Excess of current cost over LIFO values (51,309) (49,839) ---------- ---------- 180,407 194,609 ---------- ---------- TOTAL CURRENT ASSETS 500,298 492,431 PROPERTY, PLANT AND EQUIPMENT 281,789 290,355 Allowances for depreciation and amortization (167,024) (160,821) ---------- ---------- 114,765 129,534 DEFERRED INCOME TAX ASSET 1,131 166 INVESTMENTS AND OTHER ASSETS 22,668 23,881 ---------- ---------- $ 638,862 $ 646,012 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 12,611 $ 25,269 Accounts payable 66,437 90,163 Accrued payrolls and incentives 21,395 18,701 Current income taxes 1,962 3,257 Current portion of long-term debt 20,437 8,955 Other current liabilities 65,361 66,235 ---------- ---------- TOTAL CURRENT LIABILITIES 188,203 212,580 ---------- ---------- COMMITMENTS AND CONTINGENCIES LONG-TERM DEBT 66,568 78,281 DEFERRED INCOME TAXES - 958 ACCRUED POSTRETIREMENT BENEFITS & PENSION 18,879 15,630 DEFERRED COMPENSATION 2,145 2,436 OTHER LONG-TERM LIABILITIES 1,554 1,048 ---------- ---------- TOTAL LIABILITIES 277,349 310,933 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock, without par value, 100,000,000 shares authorized; 28,067,566 and 27,992,203 shares issued at January 31, 2001 and January 31, 2000, respectively 48,325 47,722 Retained earnings 313,188 287,357 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 361,513 335,079 ---------- ---------- $ 638,862 $ 646,012 ========== ==========