EX-99.1 3 a2074995zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 NEWS FROM: STEWART & STEVENSON CORPORATE HEADQUARTERS [STEWART & STEVENSON LOGO] P.O. BOX 1637 HOUSTON, TX 77251-1637 Client: Stewart & Stevenson Services, Inc. Contact: John Doster, CFO Stewart & Stevenson Services, Inc. 713-868-7602 Ken Dennard / kdennard@easterly.com Lisa Elliott / lisae@easterly.com Easterly Investor Relations 713-529-6600 STEWART & STEVENSON SERVICES REPORTS FISCAL YEAR END AND FOURTH QUARTER RESULTS HOUSTON - MARCH 27, 2002 - Stewart & Stevenson Services, Inc. (NASDAQ:SSSS), a leading manufacturer, service provider, and distributor of industrial and energy related equipment, announced results for the year and fiscal fourth quarter ended January 31, 2002. Sales for fiscal 2001 totaled $1,329.5 million compared to $1,111.1 million in fiscal 2000. Net earnings from continuing operations for the year grew 29 percent to $45.3 million, or $1.57 per diluted share, compared with $35.2 million, or $1.24 per diluted share, in the prior year. Including discontinued operations, net earnings for fiscal 2001 and 2000 were $42.2 million, or $1.46 per diluted share, and $35.4 million, or $1.25 per diluted share, respectively. Sales for the fiscal fourth quarter totaled $306.8 million compared to sales of $325.3 million recorded in the same period a year ago. Net earnings from continuing operations in the fourth quarter of fiscal 2001 were $0.1 million, or $0.00 per diluted share, versus $10.5 million, or $0.37 per diluted share, reported in last year's fourth quarter. Including discontinued operations, net loss for the fourth quarter was $2.8 million, or $0.10 loss per share, compared to net earnings of $11.5 million, or $0.40 per diluted share, in last year's fourth quarter. Michael L. Grimes, President and Chief Executive Officer, stated, "We are pleased with our overall performance in 2001 which included a strong first half and a difficult second half. We believe the numerous actions we have taken to strengthen our management team, reduce costs, and improve our business processes should benefit us going forward and better position us to respond to uncertain market conditions." SEGMENT DATA Effective with the fourth quarter, the Power Products segment is being modified to exclude activities pertaining to power generation, which will be reported in a new segment called Distributed Energy Solutions. Sales in the modified Power Products segment totaled $147.1 million in the fourth quarter versus sales of $153.6 million in the same period of fiscal 2000. The decrease in revenue resulted primarily from lower equipment sales while parts and service sales remained stable. The fourth quarter operating profit totaled $1.7 million versus a $6.7 million profit in the comparable period of last year. The decrease in operating profit was attributable to higher expenses and lower volume. Sales for the total year were $587.0 million, 4 percent higher than last year's sales of $566.1 million. Operating profit for fiscal 2001 was $10.3 million compared with a $16.4 million profit last year. Actions being taken to improve profitability in this segment include redesign of business processes to improve accountability and reduce costs, and the introduction of new business and financial leaders. The Distributed Energy Solutions segment has been established for activities associated with the reciprocating power generation equipment business. Fourth quarter sales totaled $7.0 million versus sales of $11.6 million in the same period of fiscal 2000. The decrease in revenue resulted primarily from a general softening of the market. The fourth quarter operating loss totaled $12.3 million compared to a $2.5 million loss in the comparable period of last year. The increased loss included $6.7 million in higher costs on various power generation turnkey projects that were in excess of previous estimates, and inventory valuation issues of $2.8 million. Sales for the total year were $115.7 million versus last year's sales of $46.4 million. Operating loss for fiscal 2001 was $12.4 million compared with a $3.8 million loss last year. Actions being taken to improve profitability in this segment include realignment of the power generation business in order to have more focus on market opportunities, redesign of business processes to improve project management, and the introduction of new business and financial leaders. The Tactical Vehicle Systems segment, which manufactures tactical vehicles for the U.S. Army and others, recorded sales of $111.3 million in the fourth quarter compared to $100.8 million a year ago. Operating profit for the quarter totaled $16.0 million, compared with $15.4 million in the fourth quarter of fiscal 2000. Sales for fiscal 2001 were $432.3 million versus $304.1 million a year ago. Total year operating profit for fiscal 2001 was $103.5 million and included $39.0 million in settlement of claims, net of related expenses, with the U.S. Army. Last year's operating profit totaled $54.3 million. Operating margins for the current quarter were in line with expectations. As previously reported during the fourth quarter, the U.S. Army exercised an option to award a fifth program year to the current contract, which added $374 million to the backlog. Deliveries under this award will begin in October 2002 and be completed by September 2003. As announced earlier this year, the Company intends to sell a portion of the product lines in the Petroleum Equipment segment. As a result, this segment now primarily includes equipment manufactured for the well servicing industry. Sales in this segment from continuing operations totaled $20.3 million for the fourth quarter compared to $26.1 million last year. The operating loss for the fourth quarter totaled $0.5 million compared to an operating profit of $1.7 million in the previous year. Fiscal year sales of $90.5 million and $58.1 million were recorded for fiscal 2001 and 2000, respectively. The segment reported a $1.6 million operating profit in 2001 and a $4.1 million operating profit in 2000. A new business leadership team was installed during the fourth quarter and efforts are underway to improve basic business processes, reduce costs and rebuild margins. The Airline Products segment which manufactures airline ground support products, mobile railcar movers, and snow blowers recorded sales of $16.0 million in the fourth quarter of fiscal 2001, compared with $26.8 million in the same quarter last year. Operating losses for the fourth quarter of 2001 and 2000 were $3.6 million and $1.8 million, respectively. Sales for fiscal 2001 were $80.6 million versus $110.3 million the previous year. Operating losses were reported for both years: $18.4 million in 2001 and $6.6 million in 2000. The disappointing performance in Airline Products was attributable to a depressed airline market following the September 11 terrorist attacks, coupled with previously reported special costs ($7.0 million) associated with business restructuring, inventory realization, and higher product warranty costs. Actions taken during the last half of fiscal 2001 to reduce costs and lower the business breakeven point, plus the addition of a new business leadership team, should position this business for improved performance in the coming year. Other business activities not identified in a specific segment include predominantly gas compression equipment and wheel chair lifts. Sales totaled $5.1 million for the fourth quarter, compared to $6.4 million for the comparable period last year. Fourth quarter operating profit totaled $0.5 million, whereas a $1.1 million profit was recorded in last year's fourth quarter. Total year sales were $23.3 million versus $26.1 million last year. Operating profit for the year totaled $1.2 million, compared to a $3.6 million profit last year, which included a $5.6 million gain on sale of the gas compression leasing business. On February 19, 2002, the Company announced its intention to sell the Petroleum Equipment segment's blowout preventer, valve and drilling riser business, and as a result these activities are being reclassified for accounting reporting purposes as discontinued operations. Sales for these operations during the fourth quarter amounted to $6.8 million, compared with $13.5 million in last year's fourth quarter. An operating loss of $2.9 million was recorded during the fourth quarter, versus a $1.0 million profit recorded in last year's comparable quarter. Total year sales for fiscal year 2001 and 2000 were $45.6 million and $42.2 million, respectively. A loss of $3.1 million was reported in 2001 compared with a $0.2 million profit last year. NET CASH Net cash provided by operating activities totaled $21.8 million for the fourth quarter and $ 50.3 million for the total year. At year-end, the balance in cash and equivalents was $81.4 million whereas total debt amounted to $60.0 million. CONFERENCE CALL Stewart & Stevenson has scheduled a conference call for March 27, 2002 at 11:00 a.m. Eastern Time to review fourth quarter and year-end results. To listen to the call, dial 303-262-2175 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 Wednesday, April 3, 2002. To access the replay, dial 303-590-3010 and enter the pass code 456990. 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 audio 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, 2002 JANUARY 31, 2001 JANUARY 31, 2002 JANUARY 31, 2001 ---------------- ---------------- ---------------- ---------------- Sales $ 1,329,510 $ 1,111,050 $ 306,755 $ 325,337 Cost of sales 1,150,792 939,592 267,938 278,228 Gross profit 178,718 171,458 38,817 47,109 Recovery of costs incurred, net (39,000) -- -- -- Selling and administrative expenses 148,757 120,482 42,270 30,390 Interest expense 5,400 8,108 696 2,000 Interest and investment income (3,415) (7,993) (598) (1,681) Other (income) expense, net (3,472) (4,755) (2,741) (157) ----------- ----------- ----------- ----------- 108,270 115,842 39,627 30,552 ----------- ----------- ----------- ----------- Earnings (loss) before income taxes 70,448 55,616 (810) 16,557 Income tax expense 25,104 20,459 (907) 6,082 ----------- ----------- ----------- ----------- Net earnings from continuing operations 45,344 35,157 97 10,475 Earnings (loss) from discontinued operations, net of tax of $(1,538), $226, $(1,401), and $700 (3,121) 197 (2,903) 1,011 ----------- ----------- ----------- ----------- Net earnings (loss) $ 42,223 $ 35,354 $ (2,806) $ 11,486 =========== =========== =========== =========== Weighted average shares outstanding: Basic 28,325 28,026 28,444 28,056 Diluted 28,865 28,373 28,747 28,657 Earnings per share: Basic Continuing operations $ 1.60 $ 1.25 $ 0.00 $ 0.37 Discontinued operations (0.11) 0.01 (0.10) 0.04 ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) PER SHARE $ 1.49 $ 1.26 $ (0.10) $ 0.41 =========== =========== =========== =========== Diluted Continuing operations $ 1.57 $ 1.24 $ 0.00 $ 0.37 Discontinued operations (0.11) 0.01 (0.10) 0.04 ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) PER SHARE $ 1.46 $ 1.25 $ (0.10) $ 0.40 =========== =========== =========== =========== 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, 2002 JANUARY 31, 2001 JANUARY 31, 2002 JANUARY 31, 2001 ---------------- ---------------- ---------------- ---------------- SALES Power Products $ 587,034 $ 566,078 $ 147,135 $ 153,606 Distributed Energy Solutions 115,728 46,385 6,976 11,574 Tactical Vehicle Systems 432,288 304,143 111,252 100,797 Petroleum Equipment 90,547 58,092 20,319 26,106 Airline Products 80,649 110,250 15,998 26,841 Other Business Activities 23,264 26,102 5,075 6,413 ----------- ----------- ----------- ----------- Total $ 1,329,510 $ 1,111,050 $ 306,755 $ 325,337 =========== =========== =========== =========== OPERATING PROFIT (LOSS) Power Products $ 10,278 $ 16,395 $ 1,681 $ 6,668 Distributed Energy Solutions (12,449) (3,839) (12,255) (2,529) Tactical Vehicle Systems 103,493 54,258 16,011 15,443 Petroleum Equipment 1,648 4,062 (475) 1,685 Airline Products (18,395) (6,643) (3,611) (1,781) Other Business Activities 1,173 3,569 506 1,068 ----------- ----------- ----------- ----------- Total 85,748 67,802 1,857 20,554 NON-OPERATING INCOME/(EXPENSE) Corporate expense, net (13,322) (11,980) (2,562) (3,591) Interest income 3,420 7,902 590 1,672 Interest expense (5,398) (8,108) (695) (2,078) ----------- ----------- ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES $ 70,448 $ 55,616 $ (810) $ 16,557 =========== =========== =========== =========== OPERATING PROFIT (LOSS) PERCENTAGE Power Products 1.8% 2.9% 1.1% 4.3% Distributed Energy Solutions (10.8) (8.3) U (21.9) Tactical Vehicle Systems 23.9 17.8 14.4 15.3 Petroleum Equipment 1.8 7.0 (2.3) 6.5 Airline Products (22.8) (6.0) (22.6) (6.6) Other Business Activities 5.0 13.7 10.0 16.7 Total 6.4 6.1 0.6 6.3
STEWART & STEVENSON SERVICES, INC. SELECTED OTHER INFORMATION
ORDER BACKLOG ----------------------------------------------------------------------------------------------------- January 31, April 29, July 29, October 28, January 31, April 28, July 28, October 27, January 31, ($ Millions) 2000 2000 2000 2000 2001 2001 2001 2001 2002 ----------------------------------------------------------------------------------------------------- Tactical Vehicle Systems $ 914.5 $ 839.5 $ 795.7 $ 742.8 $ 658.2 $ 596.3 $ 493.1 $ 404.7 $ 686.0 Power Products 77.6 89.9 116.7 119.2 137.8 177.2 146.1 133.6 91.7 Distributed Energy Solutions Petroleum Equipment 17.2 26.5 55.6 65.6 55.3 47.4 63.0 44.3 31.8 Airline Products 23.5 18.6 17.2 19.5 16.2 17.2 17.1 8.4 6.9 Other Business Activities 24.0 14.7 10.1 16.5 11.3 7.1 10.6 5.3 4.3 ----------------------------------------------------------------------------------------------------- $ 1,056.8 $ 989.2 $ 995.3 $ 963.6 $ 878.8 $ 845.2 $ 729.9 $ 596.3 $ 820.7 ===================================================================================================== Fiscal 2002* Fiscal Fiscal -------------------------------------------------- Fiscal -------------------------------------------------------------------------------------- UNIT SHIPMENTS 2000 2001 1Q 2Q 3Q 4Q TOTAL 2003* TRUCKS 1,534 2,229 597 568 566 620 2,351 1,617 TRAILERS -- 692 135 127 133 123 518 362 -------------------------------------------------------------------------------------- 1,534 2,921 732 695 699 743 2,869 1,979 ====================================================================================== ESTIMATED SALES (MILLIONS) $ 304 $ 432 $ 112 $ 106 $ 112 $ 109 $ 439 $ 265 ======================================================================================
*Based on current US Army forecast and other data through September, 2003. See cautionary statements above for important information regarding forward-looking statements. STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
TWELVE MONTHS ENDED THREE MONTHS ENDED ---------------------------- -------------------------- JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, 2002 2001 2002 2001 ------------- ------------ ------------ ------------ Operating Activities Net earnings from continuing operations $ 45,344 $ 35,157 $ 97 $ 10,475 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 22,275 20,790 6,465 6,028 Gain on sale of business assets -- (5,649) -- -- Change in operating assets and liabilities net of the effect of acquisition, divestiture and discontinued operations: Accounts and notes receivable, net (11,876) 79,274 41,026 (4,487) Recoverable costs and accrued profits not yet billed 11,829 (14,264) -- (12,227) Inventories, net (25,761) (3,201) 3,454 19,433 Other current and noncurrent assets (10,651) 19,513 (10,054) 15,410 Accounts payable 10,916 (25,380) 5,924 3,274 Accrued payrolls and incentive (622) 2,610 1,788 7,953 Billings in excess of costs 9,236 30,638 (14,691) 194 Other current liabilities (10,492) (32,233) (16,461) (28,389) Accrued postretirement benefits & pension 1,472 3,249 2,570 5,330 Other long-term liabilities (2,188) (2,959) (3,820) (3,955) --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS 39,482 107,545 16,298 19,039 NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS 10,831 (10,520) 5,522 (3,002) --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 50,313 97,025 21,820 16,037 --------- --------- --------- --------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (53,207) (35,021) (17,252) (9,055) Proceeds from sale of business assets 2,323 55,221 -- -- Disposal of property, plant and equipment, net 3,707 2,668 863 669 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (47,177) 22,868 (16,389) (8,386) --------- --------- --------- --------- FINANCING ACTIVITIES Additions to long-term borrowings -- 29,238 -- (126) Payments on long-term borrowings (21,005) (29,233) (588) 48 Change in short-term notes payable (9,497) (12,517) (5,036) (486) Dividends paid (9,611) (9,521) (2,418) (2,383) Exercise of stock options 8,241 603 1,489 545 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (31,872) (21,430) (6,553) (2,402) --------- --------- --------- --------- Increase (Decrease) in cash and cash equivalents (28,736) 98,463 (1,122) 5,249 Cash and cash equivalents, beginning of period 110,174 11,711 82,560 104,925 --------- --------- --------- --------- Cash and cash equivalents, end of period $ 81,438 $ 110,174 $ 81,438 $ 110,174 ========= ========= ========= =========
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION (In thousands)
JANUARY 31, 2002 JANUARY 31, 2001 ------------------ ------------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 81,438 $ 110,174 Accounts and notes receivable, net 166,123 156,787 Recoverable costs and accrued profits not yet billed -- 11,829 Inventories 231,243 210,712 Excess of current cost over LIFO values (43,075) (48,305) Income tax receivable 26,026 15,267 Other current assets 3,753 1,348 Total assets of discontinued operations 43,862 57,877 --------- --------- TOTAL CURRENT ASSETS 509,370 515,689 --------- --------- PROPERTY, PLANT AND EQUIPMENT, NET 119,657 103,220 DEFERRED INCOME TAX ASSET 48 840 INVESTMENTS AND OTHER ASSETS 16,236 19,113 --------- --------- $ 645,311 $ 638,862 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 3,114 $ 12,611 Accounts payable 71,270 60,354 Accrued payrolls and incentives 19,402 20,024 Income taxes payable 1,394 1,962 Current portion of long-term debt 250 20,437 Billings in excess of costs 39,874 30,638 Other current liabilities 21,577 33,870 Total liabilities of discontinued operations 8,484 8,548 --------- --------- TOTAL CURRENT LIABILITIES 165,365 188,444 COMMITMENTS AND CONTINGENCIES LONG-TERM DEBT 56,600 66,327 ACCRUED POSTRETIREMENT BENEFITS & PENSION 32,281 18,879 DEFERRED INCOME TAXES 249 -- OTHER LONG-TERM LIABILITIES 3,565 4,628 --------- --------- TOTAL LIABILITIES 258,060 278,278 --------- --------- SHAREHOLDERS' EQUITY Common Stock, without par value, 100,000,000 shares authorized; 28,444,281 and 28,067,566 shares issued at January 31, 2002 and January 31, 2001, respectively 54,176 48,325 Accumulated other comprehensive loss (12,726) (929) Retained earnings 345,801 313,188 --------- --------- TOTAL SHAREHOLDERS' EQUITY 387,251 360,584 --------- --------- $ 645,311 $ 638,862 ========= =========