Uniroyal Global Engineered Products, Inc. Reports Financial Results for the Third Quarter Ended September 29, 2019
Sarasota, Fla. – November 4, 2019—Uniroyal Global Engineered Products, Inc. (OTCQB:UNIR) today reported its third quarter financial results for the three months ended September 29, 2019.
Financial Summary For the Quarter
- Net Sales declined 9.4% to $22.0 million versus $24.3 million in the prior year.
- Net Income declined to $277,374 versus $759,569 in the prior year.
- Loss per Common Share of $0.03 versus breakeven in the prior year.
The third quarter of this year was negatively impacted by two significant factors. The first was the continuing sluggishness of sales at our European operation particularly as it relates to our automotive business. The second is the negative impact on margins due to the manufacturing restructuring in Europe. Also, the negative currency effect weighed on our financials this quarter.
Automotive sales comprised 88.3% of our total European operations this quarter which declined 11.4% from the same quarter of the previous year. While we don’t believe we lost any share of market with our customers, the sluggishness of the European economy continues to be a headwind for us.
To improve on Gross Profit Margins, we undertook a major restructuring of manufacturing equipment in Europe, targeted to drive higher margin product offerings. We shut down equipment generating low margin product offerings and transitioned alternate higher margin product offerings, where possible, to that customer base. During this transition, we lost some sales and incurred startup costs in the short term but we believe the positive long-term effects on margins will be very beneficial.
Virtually all the transition expenses and related capital expenditures were incurred in the previous year and the first nine months of this year.
As we move into the fourth quarter of this year, we are confident that the operational improvements we have put in place at our manufacturing facilities will ultimately lead to margin improvement. This, coupled with the significant reduction in Operating Expenses we have realized this year versus last, will lead to improved profitability in areas within our control.
Net Sales for the three months ended September 29, 2019 were $22,033,539 versus $24,322,532 for the third quarter of the previous year, a decline of $2,288,993 or 9.4%. The two major businesses of the Company, Automotive and Industrial, were down 10.0% and 8.3% respectively versus the same period of the previous year. Excluding the negative currency effect of approximately $540,000, total Net Sales would have declined by approximately $1.7 million or 7.2%.
Automotive sales which represent 64.1% of the total Net Sales of the Company or $14,133,223, declined $1,571,760 or 10.0% with most of the decline ($1,251,952 or 79.7%) coming from our European operations which are navigating through a sluggish economy.
Industrial sales which represent 35.9% of the total Net Sales of the Company or $7,900,316, declined 8.3% or $717,233. Approximately 83.8% of total Industrial sales come from our US operations. A decline in sales to contract customers primarily due to a major non-recurring customer in the prior year offset an increase in sales to major equipment manufacturers for seating applications.
Operating Income for the third quarter was $749,012 or 3.4% of Net Sales compared to $1,138,760 or 4.7% of Net Sales for the same quarter of the previous year, a decline of $398,748 or 34.2%. The primary reason for the decline in Operating Income was the overall lower Net Sales combined with the manufacturing restructuring at our UK operations which resulted in certain non-recurring costs and the delay in passing on raw material costs incurred to automotive customers due to the sluggish economy in Europe. The net effect was a decline in Gross Profit Margins to 16.2% for the third quarter ended September 29, 2019 from 17.3% recorded in the third quarter of last year.
Following a strategic effort to reduce overall Operating Expenses, for the third quarter, expenses were reduced $258,088 or 8.4% to $2,812,888 primarily due to a reduction in employment costs and professional fees as compared to the same period of last year.
Net Loss Allocable to Common Shareholders
Net Loss Allocable to Common Shareholders for the third quarter was $499,998 or a loss of $0.03 per common share as compared to a loss of $10,118 or a breakeven for the same period of the prior year. Impacting on the comparability of the two third quarter periods was a Tax Provision of $12,022 this year versus a Tax Benefit of $132,670 for the prior year period. Weighted average shares outstanding as of September 29, 2019 were 18,680,030 as compared to 18,690,030 as of September 30, 2018.
For further details, see the Company’s Form 10-Q filed as of November 4, 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