EX-99.1 3 a2081717zex-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 B. Simmons, CFO Stewart & Stevenson Services, Inc. 713-868-7865 Ken Dennard / kdennard@easterly.com Lisa Elliott / lisae@easterly.com Easterly Investor Relations 713-529-6600 STEWART & STEVENSON SERVICES REPORTS FISCAL FIRST QUARTER RESULTS NET EARNINGS FROM CONTINUING OPERATIONS WERE $0.17 PER DILUTED SHARE HOUSTON - JUNE 4, 2002 - Stewart & Stevenson Services, Inc. (NASDAQ:SSSS), a leading manufacturer, service provider, and distributor of industrial and energy related equipment; oilfield and airline ground support equipment; and medium tactical vehicles for the U.S. Army, announced results for the fiscal first quarter ending May 4, 2002. Sales for the first quarter of 2002 were $299.7 million compared to sales of $327.8 million in the same period a year ago. Net earnings from continuing operations in the first quarter of 2002 were $4.9 million or $0.17 per diluted share, compared to net earnings from continuing operations of $8.0 million, or $0.28 per diluted share, in last year's first quarter excluding a one time benefit related to the settlement of a claim with the U.S. government. The settlement last year resulted in a gain of $20.8 million with an after tax impact of $13.1 million in net income or $0.45 per diluted share. Net loss from discontinued operations in the first quarter of 2002 was $1.1 million or $0.04 per diluted share and in the same period of the prior year the net loss from discontinued operations was $716,000 or $0.02 per diluted share. The Company adopted the Financial Accounting Standards Board's SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets" effective February 1, 2002. As a result, the Company recognized an impairment of goodwill of $3.7 million or $0.13 per diluted share, net of tax, primarily related to the Airline Products segment, that was recorded as a cumulative effect of a change in accounting during the first quarter. Total net earnings in first quarter 2002 after discontinued operations and cumulative change in accounting were $117,000 or $0.00 per diluted share compared with $20.3 million or $0.71 per diluted share for the comparable period of 2001. Michael L. Grimes, President and Chief Executive Officer, stated, "The results from continuing operations were in line with expectations even at the lower than anticipated sales levels achieved. We believe our efforts and focus on business process improvements, cost control and cost reduction are placing us in position to improve the profitability of the Company." SEGMENT DATA The Power Products segment, which is responsible for marketing and aftermarket support of a wide range of industrial equipment, recorded first quarter 2002 sales of $150.0 million, a 10 percent increase over sales of $136.6 million in the same period of 2001. The sales growth was driven by higher service and parts sales related to aftermarket activities. Operating profit totaled $3.7 million versus a $1.6 million profit in the comparable period of last year. The Distributed Energy Solutions Segment was established in the last quarter of 2001 for activities associated with the reciprocating power generation equipment business, and was formerly part of the Power Products segment. Sales in this segment were $11.8 million in the first quarter of 2002 versus $31.0 million in the same period of 2001. Prior year sales included certain large turnkey power generation contracts that were completed during 2001. This segment posted an operating loss of $2.2 million for the quarter versus a breakeven result in the same quarter of the previous year. The order backlog at the end of the first quarter 2002 increased to $52.3 million, compared with $40.3 million at the end of 2001. The Tactical Vehicle Systems segment, which manufactures tactical vehicles for the U.S. Army and others, recorded sales of $115.5 million in the first quarter of 2002 compared to $108.5 million a year ago. The increase in sales was due to an increased volume of truck sales for the period and higher service sales. Operating profit for the quarter totaled $14.9 million, compared with $17.5 million in the first quarter of 2001, excluding last year's one time benefit of a $20.8 million settlement of a claim with the U.S. government. After taking this prior year item into account, operating margins for the current quarter were lower than the prior year due to lower equipment margins and increased costs associated with the Company's efforts to win a third multi-year contract for the FMTV. The Petroleum Equipment segment manufactures equipment for the well servicing industry. Sales in this segment totaled $6.5 million for the first quarter of 2002 compared to $21.0 million in the same period of 2001. The decrease in sales for this segment was primarily attributable to the generally lower business levels in the oil and gas markets and the completion of several large equipment orders for well stimulation equipment in the prior year. This segment posted an operating loss for the first quarter of $507,000 versus an operating profit of $1.5 million in the previous year. The order backlog at the end of the first quarter 2002 totaled $20.2 million, compared with $17.8 million at the end of 2001. The Airline Products segment, which manufactures airline ground support products, mobile railcar movers, and snow blowers recorded sales of $14.3 million in the first quarter of 2002, compared with $24.1 million in the same quarter last year. The airline industry has been adversely impacted by the events of September 11 and this segment is currently operating at below breakeven levels. The operating loss for the first quarter totaled $3.1 million as compared to an operating loss of $4.4 million in the previous first quarter. Other business activities not identified in a specific segment include primarily gas compression equipment sales and wheel chair lifts. First quarter 2002 sales were $1.6 million, compared to $6.5 million for the comparable period last year. First quarter 2002 operating loss was $432,000 compared to a $223,000 profit in last year's first quarter. OTHER Loss from discontinued operations in first quarter of 2002 was $1.1 million, net of tax or $0.04 per diluted share. Included in this loss was a $666,000 operating loss from the Petroleum Equipment segment's blowout preventer, valve and drilling riser business that was reclassified for accounting purposes as a discontinued operation during the fourth quarter of 2001. Also included in the loss for the first quarter was a $431,000 provision for a financial guarantee related to the discontinued gas turbine business. The balance in cash and equivalents was $67.3 million at quarter end, a decrease of $14.1 million for the quarter. Operating activities consumed $2.5 million in cash, investing activities consumed $9.5 million, and $2.2 million was used in financing activities. Total debt was unchanged for the quarter as no maturities became due during the quarter. CONFERENCE CALL Stewart & Stevenson Services, Inc. has scheduled a conference call, which will be broadcast live over the Internet, on Tuesday, June 4 at 11:00 a.m. eastern time to review the first quarter results. To listen to the call, dial 303-262-2190 at least ten minutes before the conference begins and ask for the Stewart & Stevenson Services conference call. To listen to the call free over the Internet, sign on to the Stewart & Stevenson web site at WWW.SSSS.COM at least fifteen minutes early to register, download, and install any necessary audio software. A telephonic replay of the conference call will be available through Tuesday, June 11, 2002, and may be accessed by dialing 303-590-3000 and using pass code 471068. An audio archive will also be available on the Stewart & Stevenson website at WWW.SSSS.COM shortly after the call and will be accessible for approximately 90 days. For more information, please contact Karen Roan at Easterly Investor Relations at 713-529-6600 or email KAREN@EASTERLY.COM. Stewart & Stevenson Services, Inc., founded in 1902, is a billion-dollar company that manufactures, distributes, and provides services for a wide range of industrial products and diesel-powered equipment to key industries worldwide, including petroleum, power generation, defense, airline, marine, and transportation. For more information, please contact Karen Roan at Easterly Investor Relations at 713-529-6600 or email KAREN@EASTERLY.COM. 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. Specific important factors that could cause actual results, performance, or achievements to differ materially from such forward-looking statements include risk of competition, risks relating to technology, risks of general economic conditions, risks relating to personnel, risks of dependence on government, inherent risks of government contracts, risks of claims and litigation, risks as to global trade matters, risks as to cost controls, risks as to acquisitions, risks as to currency fluctuations, risks as to environmental and safety matters, and risks as to distributorships, all as more specifically outlined in the Company's latest annual report on Form 10-K. 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)
THREE MONTHS ENDED ---------------------------------------- MAY 04, 2002 APRIL 28, 2001 -------------- ---------------- Sales $ 299,670 $ 327,817 Cost of sales 255,918 281,124 --------- --------- Gross profit 43,752 46,693 Recovery of costs incurred, net -- (20,800) Selling and administrative expenses 35,424 33,378 Interest expense 1,132 1,860 Interest and investment income (338) (1,214) Other income, net (21) (24) --------- --------- 36,197 13,200 Earnings before income taxes 7,555 33,493 Income tax expense 2,659 12,444 --------- --------- NET EARNINGS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING 4,896 21,049 Loss from discontinued operations, net of tax of $(599) and $(398) (1,097) (716) Cumulative effect of change in accounting, net of tax of $(1,798) (3,682) -- --------- --------- NET EARNINGS $ 117 $ 20,333 ========= ========= Weighted average shares outstanding: Basic 28,454 28,085 Diluted 28,767 28,704 Earnings per share: Basic Continuing operations before cumulative effect $ 0.17 $ 0.75 Discontinued operations (0.04) (0.03) Cumulative effect of change in accounting (0.13) -- --------- --------- NET EARNINGS PER SHARE $ 0.00 $ 0.72 ========= ========= Diluted Continuing operations before cumulative effect $ 0.17 $ 0.73 Discontinued operations (0.04) (0.02) Cumulative effect of change in accounting (0.13) -- --------- --------- NET EARNINGS PER SHARE $ 0.00 $ 0.71 ========= ========= Cash dividends per share $ 0.085 $ 0.085
STEWART & STEVENSON SERVICES, INC. SEGMENT INFORMATION (In thousands)
THREE MONTHS ENDED ----------------------------------- MAY 04, 2002 APRIL 28, 2001 -------------- --------------- SALES Power Products $ 149,961 $ 136,623 Distributed Energy Solutions 11,783 31,049 Tactical Vehicle Systems 115,461 108,494 Petroleum Equipment 6,518 21,034 Airline Products 14,301 24,109 Other Business Activities 1,646 6,508 --------- --------- Total $ 299,670 $ 327,817 ========= ========= OPERATING PROFIT (LOSS) Power Products $ 3,655 $ 1,632 Distributed Energy Solutions (2,201) 52 Tactical Vehicle Systems 14,916 38,259 Petroleum Equipment (507) 1,547 Airline Products (3,124) (4,368) Other Business Activities (432) 223 --------- --------- Total 12,307 37,345 NON-OPERATING INCOME/(EXPENSE) Corporate expense, net (3,958) (3,206) Interest income 338 1,214 Interest expense (1,132) (1,860) --------- --------- EARNINGS BEFORE INCOME TAXES $ 7,555 $ 33,493 ========= ========= OPERATING PROFIT (LOSS) PERCENTAGE Power Products 2.4% 1.2% Distributed Energy Solutions (18.7) 0.2 Tactical Vehicle Systems 12.9 35.3 Petroleum Equipment (7.8) 7.4 Airline Products (21.8) (18.1) Other Business Activities (26.2) 3.4 Total 4.1 11.4
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, May 4, ($ Millions) 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002 -------------------------------------------------------------------------------------------------------------- Tactical Vehicle Systems $ 914.5 $ 839.5 $ 795.7 $ 742.8 $ 658.2 $ 596.3 $ 493.1 $ 404.7 $ 686.0 $ 582.7 Power Products 77.6 89.9 80.8 73.0 59.4 60.1 79.9 79.9 51.4 49.1 Distributed Energy Solutions -- -- 35.9 46.2 78.4 117.1 66.2 53.7 40.3 52.3 Petroleum Equipment -Continuing 13.6 22.5 36.0 44.8 37.5 34.7 46.0 27.4 17.8 20.2 -Discontinued 3.6 4.0 19.6 20.8 17.8 12.7 17.0 16.9 14.0 11.2 -------------------------------------------------------------------------------------------------------------- 17.2 26.5 55.6 65.6 55.3 47.4 63.0 44.3 31.8 31.4 Airline Products 23.5 18.6 17.2 19.5 16.2 17.2 17.1 8.4 6.9 7.6 Other Business Activities 24.0 14.7 10.1 16.5 11.3 7.1 10.6 5.3 4.3 6.8 -------------------------------------------------------------------------------------------------------------- $ 1,056.8 $ 989.2 $ 995.3 $ 963.6 $ 878.8 $ 845.2 $ 729.9 $ 596.3 $ 820.7 $ 729.9 ==============================================================================================================
TACTICAL VEHICLE SYSTEMS UNIT SHIPMENTS ------------------------------------------------------------------------------------- Fiscal 2002 Fiscal Fiscal -------------------------------------------------- Fiscal 2000 2001 1Q 2Q* 3Q* 4Q* Total* 2003* ------------------------------------------------------------------------------------- Trucks 1,534 2,229 612 553 566 620 2,351 1,585 Trailers -- 692 135 127 133 123 518 362 ------------------------------------------------------------------------------------- 1,534 2,921 747 680 699 743 2,869 1,947 ===================================================================================== 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 FINANCIAL POSITION (In thousands except share data)
MAY 04, 2002 JANUARY 31, 2002 ---------------- ------------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 67,318 $ 81,438 Accounts and notes receivable, net 168,471 166,123 Recoverable costs and accrued profits not yet billed 981 -- Inventories 237,149 230,300 Excess of current cost over LIFO values (43,828) (42,132) Other current assets 20,330 33,503 Total assets of discontinued operations 43,584 40,693 --------- --------- TOTAL CURRENT ASSETS 494,005 509,925 --------- --------- PROPERTY, PLANT AND EQUIPMENT, NET 124,256 119,657 DEFERRED INCOME TAX ASSET 4,740 3,237 INVESTMENTS AND OTHER ASSETS 12,359 16,236 --------- --------- TOTAL ASSETS $ 635,360 $ 649,055 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 3,066 $ 3,114 Accounts payable 45,645 71,270 Accrued payrolls and incentives 18,593 19,402 Current portion of long-term debt 250 250 Billings in excess of incurred costs 44,778 39,874 Other current liabilities 30,395 22,971 Total liabilities of discontinued operations 9,855 8,078 --------- --------- TOTAL CURRENT LIABILITIES 152,582 164,959 COMMITMENTS AND CONTINGENCIES LONG-TERM DEBT 56,600 56,600 ACCRUED POSTRETIREMENT BENEFITS & PENSION 33,185 32,281 OTHER LONG-TERM LIABILITIES 4,133 3,984 --------- --------- TOTAL LIABILITIES 246,500 257,824 --------- --------- SHAREHOLDERS' EQUITY Common Stock, without par value, 100,000,000 shares authorized; 28,471,281 and 28,444,281 shares issued at January 31, 2002 and January 31, 2001, respectively 54,500 54,176 Accumulated other comprehensive loss (9,090) (8,746) Retained earnings 343,450 345,801 --------- --------- TOTAL SHAREHOLDERS' EQUITY 388,860 391,231 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 635,360 $ 649,055 ========= =========
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
THREE MONTHS ENDED ------------------------------------ MAY 04, 2002 APRIL 28, 2001 -------------- ---------------- Operating Activities Net earnings from continuing operations $ 1,214 $ 21,049 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 4,852 5,005 Change in operating assets and liabilities net of the effect of acquisition, divestiture and discontinued operations: Accounts and notes receivable, net (2,348) (48,988) Recoverable costs and accrued profits not yet billed (981) 954 Inventories, net (5,153) (3,311) Other current and noncurrent assets 15,546 (301) Accounts payable (25,625) (7,607) Accrued payrolls and incentives (809) 795 Billings in excess of incurred costs 4,904 9,245 Other current liabilities 7,424 14,901 Accrued postretirement benefits & pension 905 1,096 Other long-term liabilities (196) (113) --------- --------- NET CASH USED IN CONTINUING OPERATIONS (267) (7,275) NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS (2,211) 3,089 --------- --------- NET CASH USED IN OPERATING ACTIVITIES (2,478) (4,186) --------- --------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (9,995) (10,845) Proceeds from sale of business assets -- 2,323 Disposal of property, plant and equipment, net 545 847 --------- --------- NET CASH USED IN INVESTING ACTIVITIES (9,450) (7,675) --------- --------- FINANCING ACTIVITIES Payments on long-term borrowings -- (51) Change in short-term notes payable (48) (888) Dividends paid (2,468) (2,385) Exercise of stock options 324 470 --------- --------- NET CASH USED IN FINANCING ACTIVITIES (2,192) (2,854) --------- --------- Decrease in cash and cash equivalents (14,120) (14,715) Cash and cash equivalents, beginning of period 81,438 110,174 --------- --------- Cash and cash equivalents, end of period $ 67,318 $ 95,459 ========= =========