Uniroyal Global Engineered Products, Inc. Reports Net Sales of $26,077,549 and Net Income Available to Common Shareholders of $214,466 or $0.01 per Diluted Share for the Quarter Ended July 2, 2017
SARASOTA, FL – (BUSINESS WIRE) – August 7, 2017 – Uniroyal Global Engineered Products, Inc. (OTCQB:UNIR or the “Company”) today reported its financial results for the second fiscal quarter ended July 2, 2017.
“The second quarter proved to be difficult, with rapidly increasing volumes in our European plant being offset by declining volumes in our North America plant, as the US auto market has softened” stated Howard R. Curd, Chairman and Chief Executive Officer. “While we are certainly not pleased with our results this quarter, we are taking dramatic action to improve productivity and cut costs at all global operations. This will lead to better operating performance as we progress through the second half of this year,”
Net Sales
Three Months Ended July 2, 2017
Net Sales for the second fiscal quarter ended July 2, 2017 were $26,077,549 versus $27,333,869 for the previous year, a decline of 4.6%. Excluding changes in currency, Net Sales would have declined only 1.4% for the quarter. Global automotive sales which accounted for over 67% of overall sales for the quarter, declined 5.4% versus the previous year. The decline was primarily attributable to lower US domestic automotive volume, where industry production levels have slowed versus the second quarter of the previous year. European automotive business continued to record strong improvement versus the previous year.
Net Sales for the Industrial Sector (33% of total Net Sales) declined 2.9% for the second fiscal quarter versus the previous year. This decline was less than the decline of the first quarter as sales to major off-highway equipment manufacturers showed improvement versus recent quarterly trends. The decline was partially offset by increases in the decorative and contract furnishings markets.
Six Months Ended July 2, 2017
Net Sales for the six months ended July 2, 2017 were $51,835,978 versus $52,301,464 for the previous year, a decline of 0.9%. Excluding changes in currency, Net Sales would have increased 3.0% for the period. Global automotive sales for the six months ended July 2, 2017 increased 2% versus the previous year. European automotive business for the six months ended July 2, 2017 showed record improvement versus the previous year. This improvement was partially offset by the decline attributable to the lower US domestic automotive volume.
Net Sales for the Industrial Sector decreased 6.4% for the six months end July 2, 2017 versus the previous year. The decline in this sector slowed as sales during the current quarter to major off-highway equipment manufacturers showed improvements. The decline was partially offset by increases in the decorative and contract furnishings markets.
Operating Income
Three Months Ended July 2, 2017
Operating Income for the second fiscal quarter was $1,644,302 versus $2,614,414 for the second quarter of the previous year, a decline of 37.1%. The principal reason for the decline was a contraction in Gross Profit Margins to 20.5% from 24.4% in the second quarter of the previous year. Negatively affecting margins in the second quarter of this fiscal year by approximately 2% were global raw material price increases, principally due to inflation in the U.K. caused by a weaker British Pound Sterling. In addition, general operating inefficiencies, due to the decline in production levels as a result of lower US automotive sales combined with start-up issues at the European operation caused by the ramp up for new automotive platforms contributed to the decline in Gross Profit Margins.
Total Operating Expenses for the second fiscal quarter declined by $352,459 or 8.7% as the Company continues to focus on cost reduction programs to reduce General and Administrative overhead. Also contributing to the reduction was the currency effect of $158,000.
Six Months Ended July 2, 2017
Operating Income for the six months was $3,380,182 versus $4,487,868 for the six months of the previous year, a decline of 24.7%. The principal reason for the decline was a contraction in Gross Profit Margins to 20.7% from 23.7% in the six months of the previous year. As highlighted above, margins for the six months were negatively affected by approximately 1.5% from global raw material price increases principally due to inflation in the U.K. caused by a weaker British Pound Sterling. In addition, general operating inefficiencies, due to the decline in production levels as a result of lower US automotive sales combined with start-up issues at the European operation caused by the ramp up for new automotive platforms, contributed to the decline in Gross Profit Margins.
Total Operating Expenses for the six months ended July 2, 2017 declined by $565,198 or 7.2%, due to the focus on cost reduction programs to reduce General and Administrative overhead and the currency effect of $346,000.
Net Income Available to Common Shareholders
Three Months Ended July 2, 2017
Net Income Available to Common Shareholders declined in the second fiscal quarter to $214,466 from $1,181,726 in the second quarter of the previous year, as a result of the lower Gross Profit Margins. The tax provision was $191,343 for the three months ended July 2, 2017 compared to $198,134 for the prior year. The overall effective tax rate was higher for the current year due to UK taxes. Earnings per common share were $0.01 for the three months ended July 2, 2017 compared to $0.06 for the prior year.
Six Months Ended July 2, 2017
Net Income Available to Common Shareholders for the six months ended July 2, 2017 declined to $685,242 from $1,615,829 in the first six months of the previous year, principally due to the lower Gross Profit Margins. The tax provision was $425,929 for the six months ended July 2, 2017 compared to $327,900 for the period in the prior year. The overall effective tax rate was higher for the current year due to UK taxes. Earnings per common share were $0.04 for the six months ended July 2, 2017 compared to $0.09 for the prior year.
For further details, see the Consolidated Statements of Operations in the Company’s Form 10-Q filed on August 7, 2017. The Company will have comments on the quarter in an earnings conference call on August 8, 2017 at 9:00 am (EDT).
Persons wishing to access the conference call may do so by dialing 888-428-9498 (U.S.) and 719-325-2351 (International), and using the ID # 9457766. Howard F. Curd, President, will discuss our earnings on the call and will be available for questions. The call will also be available by logging on to www.uniroyalglobal.com and accessing the webcast link (http://public.viavid.com/index.php?id=125791) in the investor relations section. A replay of the conference call will be available beginning Tuesday August 8, 2017 through November 8, 2017 by calling 844-512-2921 (US) or 412-317-6671 (International) and Pin # 9457766.
About Uniroyal Global Engineered Products, Inc.:
Uniroyal Global Engineered Products, Inc. (UNIR) is a leading manufacturer of vinyl coated fabrics that are durable, stain resistant, cost-effective alternatives to leather, cloth and other synthetic fabric coverings. Uniroyal Global Engineered Products, Inc.’s revenue in 2016 was derived 65% from the automotive industry and approximately 35% from the recreational, industrial, indoor and outdoor furnishings, hospitality and health care markets. Our primary brand names include Naugahyde®, BeautyGard®, Flameblocker™, Spirit Millennium®, Ambla®, Amblon®, Velbex®, Cirroflex®, Plastolene® and Vynide®.
Forward-Looking Statements:
Except for statements of historical fact, certain information contained in this press release constitutes forward-looking statements, including, without limitation, statements containing the words “believe,” “expect,” “anticipate,” “intend,” “should,” “planned,” “estimated” and “potential” and words of similar import, as well as all references to the future. These forward-looking statements are based on Uniroyal Global Engineered Products, Inc.’s current expectations. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company´s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company´s forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company´s business include, but are not limited to, the following: uncertainties relating to economic conditions, uncertainties relating to customer plans and commitments, the pricing and availability of equipment, materials and inventories, currency fluctuations, technological developments, performance issues with suppliers, economic growth, delays in testing of new products, the Company’s ability to successfully integrate acquired operations, the Company’s dependence on key personnel, the Company’s ability to protect its intellectual property rights, the effectiveness of cost-reduction plans, rapid technology changes and the highly competitive environment in which the Company operates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Uniroyal Global Engineered Products, Inc. Corporate Contact:
Elizabeth Henson; telephone: 941-870-3950; email: LHenson@uniroyalglobal.com
Uniroyal Global Engineered Products, Inc. Public Relations:
Vic Allgeier; TTC Group, Inc.; telephone: 646-290-6400; email: vic@ttcominc.com