Uniroyal Global Engineered Products, Inc. Reports Financial Results for the Second Quarter Ended June 30, 2019
SARASOTA, Fla.—August 5, 2019—Uniroyal Global Engineered Products, Inc. (OTCQB: UNIR) today reported its second quarter financial results for the three months ended June 30, 2019.
- Net Sales declined 7.4 % to $24.1 million versus $26.0 million in the prior year
- Net Income declined to $363,047 versus $924,493 in the prior year
- Loss per Common Share of $0.02 versus a prior year profit of $0.01
Our second quarter faced several major headwinds particularly at the UK operations where a weak European economy, particularly in the automotive segment, and currency fluctuations negatively impacted our overall results. Despite disappointing European results which negatively impacted our overall performance this quarter, we are encouraged by the results of our US operations particularly in our Automotive segment where we were awarded new platforms.
Our focus continues to be on retrofitting our UK operations, cutting costs and redirecting our manufacturing capabilities to improve our product mix with an emphasis on higher margin product lines. At our US operations we also continue to target higher margin product lines particularly in the Automotive segment focusing on the heavy truck and SUV vehicle segments. Overall, this will lead to better Gross Profit margins which have been negatively impacted by product mix and the timing of raw material costs which we expect to be largely offset over time.
An area of particular success has been our targeted goal of reducing Operating Expenses as we reduced expenses $208,664 or 6.3% for the second quarter as compared to the prior year.
Net Sales for the three months ended June 30, 2019 declined 7.4% to $24,095,783 versus $26,023,233 in the prior year. Approximately 51.5% of the total Net Sales for the quarter were from our European operations and significant fluctuations in currency conversions negatively impacted overall Net Sales in the current quarter versus the prior year. Excluding the effect of currency fluctuations related to exchange rates, overall Net Sales would have declined 4.6% for the quarter as compared to the prior year.
Automotive net sales which comprised 65.7% of overall Net Sales, declined 11.3% for the second quarter as compared to last year. The UK operations which continued to be challenged by a weak European economy, declined 16.9% for the quarter offsetting a solid performance for the US operations which increased 3.6% for the second quarter. Industrial net sales which comprised 34.3% of overall Net Sales, increased 1.2% for the second quarter. Our US operations account for approximately 81.0% of total Industrial net sales. Increased sales of seating applications for off the road equipment manufacturers offset a decline in sales to contract upholsterers.
Operating Income for the second quarter was $1,131,774 or 4.7% of Net Sales as compared to $1,474,897 or 5.7% of Net Sales for the prior year, a decline of $343,123 or 23.3%. A decline in Gross Profit of $551,787 was offset by reduced Operating Expenses of $208,664.
The decline in Gross Profit was due to temporary operational inefficiencies at our UK operations as we convert the manufacturing capabilities to target higher margin product lines and the timing of raw material price increases as compared to price increases which generally lag the increase in costs.
The decline in Operating Expenses was due to a reduction in General and Administrative expenses.
Net Income (Loss) Allocable to Common Shareholders
Net Loss Allocable to Common Shareholders for the second quarter was $416,899 or $(0.02) per share compared to Net Income Allocable to Common Shareholders of $148,389 or $0.01 per share. In addition to the decline of operating income, the decline of Net Income Allocable to Common Shareholders was impacted by the increase in Other Expense of $205,730. Other Expense is principally the currency gains and losses recognized on foreign currency transactions and the change in the fair value of financial assets and liabilities that are denominated in Euros.
Weighted average shares outstanding for June 30, 2019 were 18,684,755 as compared to 18,690,030 for July 1, 2018.
For further details, see the Company’s Form 10-Q filed on August 5, 2019.
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 2018 was derived 66.2% from the automotive industry and approximately 33.8% from the recreational, industrial, indoor and outdoor furnishings, hospitality and healthcare markets. Our primary brand names include Naugahyde®, BeautyGard®, Flame Blocker™, Spirit Millennium®, Ambla®, Amblon®, Velbex®, Cirroflex®, Plastolene® and Vynide®.
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. Public Relations:
TTC Group, Inc.
Vic Allgeier, 646-290-6400