Mark IV Reports First Quarter Results
AMHERST, N.Y., June 17, 1998 -- Mark IV Industries, Inc. (NYSE: IV) today reported results for its first quarter ended May 31, 1998. Income before an extraordinary charge for early debt extinguishment decreased 11 percent in the first quarter of fiscal 1999, to $26.9 million from $30.1 million last year, while related basic earnings per share were down four percent, to 44 cents from 46 cents last year.
Sales for the quarter increased eight percent, to $604.5 million from $560.1 million last year. Excluding the effects of acquisitions in the latter part of fiscal 1998, sales for the quarter reflect an increase of approximately $18 million, or three percent over the comparable prior year period. Operating income (income before interest expense and taxes) for the quarter was down 10 percent, to $57.5 million from $63.6 million in the first quarter of fiscal 1998.
Basic weighted average shares outstanding decreased six percent in the quarter, to 61.5 million from 65.5 million. Diluted weighted average shares outstanding increased seven percent in the quarter, to 70.3 million from 66.0 million last year, resulting from the issuance of $275 million of convertible subordinated notes in October 1997. In both cases, shares outstanding are net of the company's share repurchase activities during the periods. On a diluted basis, earnings per share before the extraordinary early debt extinguishment charge decreased eleven percent, to 41 cents in the first quarter of fiscal 1999, from 46 cents last year.
Commenting on the company's results, Sal H. Alfiero, chairman and chief executive officer of Mark IV, said, "Although Mark IV's operating results were down in the first quarter of fiscal 1999, they were in line with our expectations as outlined in our April 20, 1998, press release. We anticipated unfavorable quarter-over-quarter comparisons in the first and second quarters of fiscal 1999. The effects of duplicative and other costs realized and expected in these periods, due to the additional time required to complete the restructuring, are and will be offsetting earnings from revenue gains achieved in the periods.
"Automotive OEM revenue gains in North America and Europe, combined with gains in Mark IV's Industrial business segment which were led by the Transportation products group, more than offset the slightly reduced sales performance of the company's Automotive Aftermarket business. Cash flow from operations in the first quarter is on track with expectations for the year, including capital expenditures and working capital objectives set for the quarter. Based on the strength of the company's cash flow, during the quarter, Mark IV's Board of Directors authorized the repurchase of up to ten million additional shares of its common stock.
"Since April 1997 to date, the company has repurchased an aggregate of 8.3 million shares, which covers the number of shares required to be issued upon conversion of the company's $275 million 4-3/4% subordinated notes. In the current fiscal year, we have repurchased slightly in excess of 4.8 million shares of Mark IV stock at a cost of $102 million, which completes the previous authorization of 7.3 million shares and includes 1.0 million shares purchased pursuant to the new authorization."
Mr. Alfiero also said that the company is on track with the guidance given in its April 20, 1998 press release calling for diluted earnings per share in the range of $1.68 to $1.75 for fiscal 1999. However, the recent strike at General Motors could negatively impact Mark IV's earnings per share by one to two cents per diluted share per month, upon hitting full stride. In addition, the strong dollar continues to adversely affect Mark IV's earnings performance, and the likelihood is that this will continue, at least through the second quarter, given the ongoing Asian crises and continuing flight to quality of the American dollar.
Mr. Alfiero added, "We will substantially be completing our restructuring activities during the current quarter, and will focus on repositioning the company's aftermarket business activities for which we will take a charge later in the fiscal year of $25-$40 million, net of taxes, or 37-58 cents per diluted share, as previously announced."
Net income in the first quarter of fiscal 1999 decreased to $24.3 million, or 40 cents per basic share, from $30.1 million, or 46 cents per share last year. On a diluted basis, net income in the first quarter of fiscal 1998 was 37 cents per share compared to 46 cents per share last year, in both cases reflecting the extraordinary charge for early debt extinguishment of $2.6 million after taxes, or four cents per share in this year's first period.
This press release contains forward-looking statements that involve risk and uncertainties as detailed from time to time in the company's SEC reports, including its report on Form 10-K for its fiscal year ended February 28, 1998. These risks and uncertainties could affect the company's actual results and cause them to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the company.
Mark IV Industries, Inc. is a $2.2 billion global manufacturing company headquartered in the Buffalo suburb of Amherst, New York, employing 17,000 people worldwide. The company's core technologies include power transmission, fluid transfer and filtration systems and components for global industrial and automotive markets.MARK IV INDUSTRIES, INC. (Amounts in thousands, except per share data) Three Months Ended May 31,
1998 1997 Sales $ 604,500 $ 560,100 Operating income (a) $ 57,500 $ 63,600 Interest expense $ 15,600 $ 14,300 Operating income, net of interest expense $ 41,900 $ 49,300 Income before extraordinary loss (b) $ 26,900 $ 30,100 Extraordinary loss (c) $ (2,600) $ - Net income $ 24,300 $ 30,100 Earnings per share: Basic: Income before extraordinary loss $ .44 $ .46 Extraordinary loss (.04) - Net income $ .40 $ .46 Diluted: Income before extraordinary loss $ .41 $ .46 Extraordinary loss (.04) - Net income $ .37 $ .46 Weighted average number of shares outstanding: Basic 61,500 65,500 Diluted 70,300 66,000 ---------------- (a) Represents income before interest expense and taxes. (b) Presented net of related tax effects. (c) Represents extraordinary loss from early debt extinguishment, presented net of related tax effects.