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EXHIBIT 99.1
Press Release dated January 17, 2001
of Elcor Corporation.
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[ELCOR CORPORATION LETTERHEAD]
PRESS RELEASE TRADED: NYSE
FOR IMMEDIATE RELEASE SYMBOL: ELK
FOR FURTHER INFORMATION:
Richard J. Rosebery Harold R. Beattie, Jr.
Vice Chairman, Chief Financial Vice President - Finance
and Administrative Officer and Treasurer
(972) 851-0510 (972) 851-0523
ELCOR REPORTS LOWER FISCAL 2001 SECOND QUARTER RESULTS
IN LINE WITH EARLIER GUIDANCE
DALLAS, TEXAS, January 17, 2001 . . . . Elcor Corporation today reported lower
results for its fiscal 2001 second quarter ending December 31, 2000. Results
were in line with guidance provided in the company's January 11, 2001, press
release.
For its second quarter ending December 31, 2000, net income was $1,005,000, or
$0.05 per diluted share, compared to $7,471,000, or $0.37 per diluted share, in
the year-ago quarter. Sales were $68,620,000, versus $81,736,000, in the same
quarter last year.
For its first half ending December 31, 2000, net income was $5,949,000, or $.30
per diluted share, on sales of $154,821,000, compared to net income of
$17,480,000, or $.87 per diluted share, on sales of $177,525,000 in the same
period last year.
Harold K. Work, Elcor's Chairman, President and Chief Executive Officer, said,
"Second quarter results were affected by lower residential asphalt roofing
products sales. Several factors contributed to the decline. Unusually harsh
winter weather conditions further impacted an already slow roofing market due to
the economic slowdown. In addition to the slow roofing market, this business
continued to be impacted by the high costs of asphalt and diesel fuel, as well
as very competitive product pricing."
ROOFING PRODUCTS: LOWER RESULTS IN A SLOW MARKET
Elk's roofing products sales were $56,623,000 in this year's second quarter,
compared to $68,830,000 in the record year-ago quarter. Its operating profits
were $3,363,000, compared to $11,318,000 in the record quarter last year. Elk
experienced a significant decline in both laminated asphalt shingle shipments
and external shipments of nonwoven fiberglass mat to other roofing manufacturers
during the quarter, as
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PRESS RELEASE
Elcor Corporation
January 17, 2001
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compared to the record year-ago quarter. As indicated, unusually severe winter
weather conditions further contributed to already slow demand in the roofing
industry. Product pricing during the quarter was about flat with prior year.
While asphalt costs have remained relatively stable during the first half of
fiscal 2001, asphalt costs in this year's second quarter were 32% higher than in
the year-ago quarter.
NEW MYERSTOWN SHINGLE PLANT ACHIEVES SMOOTH START-UP
Elk's new Myerstown, Pennsylvania premium laminated asphalt shingle plant is
undergoing a very smooth start-up and has begun producing limited quantities of
quality products during this year's December quarter. The Myerstown plant will
increase Elk's laminated shingle capacity by about 38% and will significantly
reduce Elk's transportation costs to serve Northeast and Middle Atlantic
markets. According to Work, "We are receiving enthusiastic comments from roofing
contractors about the improved appearance and winter handling performance of the
new plant's Prestique laminated shingles. The Myerstown plant places Elk in a
strong position to provide excellent service to an expanded distribution network
in the Northeast and Middle Atlantic states in the years ahead," he added.
ELECTRONICS MANUFACTURING SERVICES: CYBERSHIELD'S SALES AND EARNINGS ARE
EXPECTED TO ACCELERATE SIGNIFICANTLY DURING THE SECOND HALF OF FISCAL 2001
Cybershield had lower sales of $8,347,000, compared to $9,865,000, and operating
profits of $919,000, compared to $2,252,000, in the record year-ago second
quarter. Last year's second quarter operating results had benefited from higher
production levels of components for more mature digital cell phone models.
However, this year's second quarter results reflect lower production volumes of
these mature phone components and higher costs associated with ramping up
production of components for several new phone models.
Richard J. Rosebery, Elcor's Vice Chairman, said, "The scheduled ramp-up of new
cellular handset components and other new products should provide significant
sales and profit momentum to the third and fourth quarters of fiscal 2001. Many
of these new products will have greater value added content provided by
Cybershield, which should also contribute to higher sales and earnings during
the second half of fiscal 2001. Although we see many uncertainties in the
market, if our telecom customers maintain current production schedules, full
year fiscal 2001 sales and operating earnings could exceed record fiscal 2000
results by about one third," he concluded.
INDUSTRIAL PRODUCTS: SIGNIFICANT TURNAROUND IN OPERATIONS ACHIEVED
The Industrial Products segment had higher sales of $3,621,000, compared to
$2,996,000, and an operating profit of $297,000, compared to an operating loss
of
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PRESS RELEASE
Elcor Corporation
January 17, 2001
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$845,000, in the year-ago quarter. Significantly improved results were due
primarily to Chromium Corporation's turnaround after consolidating all
manufacturing operations into its Cleveland, Ohio facility. Manufacturing
productivity at the Cleveland facility improved throughout the quarter, and the
outlook appears good for continued improvement as fiscal 2001 progresses.
Ortloff Engineers' operating results were also better than in the year-ago
quarter, and its outlook for additional awards of significant licenses of
Elcor's leading edge patented cryogenic gas processing technology appears good.
FINANCIAL POSITION:
For the six months ending December 31, 2000, cash flows from operations of $15.1
million, $1.2 million in cash and $16.7 million in increased long-term debt,
funded $25.9 million of net investments in property, plant and equipment and
$7.1 million in dividends and share repurchases. Approximately $19.1 million of
the net investments in property, plant and equipment were related to Elk's new
Myerstown roofing plant.
Elcor ended the second quarter with $58 million of inventory, compared to $35
million at the end of the year-ago quarter when roofing product inventory levels
were significantly below desired levels. Compared to the year-ago quarter,
asphalt shingle inventories increased on both a unit and cost per unit basis, as
well as a result of building a base level inventory at the new Myerstown roofing
plant. Nonwoven fiberglass mat inventories also increased. While management
continues to closely monitor inventory levels in relation to current and
projected sales levels, it does not consider the current level of inventory to
be excessive.
At December 31, 2000, the company had $108.0 million of long-term debt, $160.7
million of shareholders' equity and $268.7 million of total capital. Long-term
debt, as a percent of total capital, increased to 40% from 24% last year.
OUTLOOK:
Mr. Work said, "It has been our experience that periods of below average shingle
demand have often been followed by periods of significantly higher growth, since
a number of existing roofs will require replacement each year, and each deferred
replacement builds a backlog of future demand. Extended periods of abnormally
dry weather can mask deteriorating roof conditions, and weakened economic
conditions can provide economic incentive to temporarily defer replacement, both
resulting in an increasing replacement backlog. Therefore, we are cautiously
optimistic that recent heavy rains following a prolonged drought in the Western
states, and the recent shift in Federal Reserve policy towards reduced interest
rates, may provide the stimulus
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PRESS RELEASE
Elcor Corporation
January 17, 2001
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necessary to increase shingle demand in coming months. On average, reroofing and
remodeling account for about 80% of the asphalt shingle market.
"We have received numerous reports that the unusually harsh winter weather in
the Midwestern and Northern regions of the country has caused severe roof
damage. It is possible that the same weather conditions which adversely affected
roofing sales during the current quarter may provide an impetus for increased
demand in the months ahead.
"Elk is currently very well positioned to take advantage of any improvement in
demand that may occur in the laminated asphalt shingle market. For the first
time in several years, Elk has in place the manufacturing capacity, and
inventory levels, to fully participate in a market recovery.
"We also see some encouraging developments on the pricing front. During the
December quarter, one roofing manufacturer announced a permanent closing of
several inefficient roofing plants, and other manufacturers have temporarily
curtailed production at selected roofing plants. These actions should help to
reduce the excess inventories which have restricted the industry's ability to
recover sharply higher raw material and transportation costs through increased
pricing.
"While there are reasons for guarded optimism about the future, we are also
keenly aware of the realities of the recently completed quarter, and the
uncertainties inherent in predicting the timing and magnitude of a turnaround in
the roofing market. We therefore believe it is prudent to reduce our earnings
guidance for the full fiscal year 2001 to the range of $0.65 to $0.75 per
share," he concluded.
CORPORATE QUARTERLY EARNINGS CONFERENCE CALL
Elcor's quarterly earnings conference call for the quarter ended December 31,
2000, will be held tomorrow, Thursday, January 18, 2001, at 11:00 a.m. Eastern
time (10:00 a.m. Central time). The conference call will be broadcast live over
the Internet. Interested parties can access the conference call through the
Elcor Website at www.elcor.com (Investor Relations / Calls & Presentations) or
by visiting www.prnewswire.com.
SAFE HARBOR PROVISIONS
In accordance with the safe harbor provisions of the securities law regarding
forward-looking statements, in addition to the historical information contained
herein, the above discussion contains forward-looking statements that involve
risks and uncertainties. The statements that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements usually are accompanied by words
such as "outlook," "believe,"
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PRESS RELEASE
Elcor Corporation
January 17, 2001
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"estimate," "potential," "project," "expect," "anticipate," "plan," "predict,"
"could," "should," "may," or similar words that convey the uncertainty of future
events or outcomes. These statements are based on judgments the company believes
are reasonable; however, Elcor's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such differences
could include, but are not limited to, changes in demand, prices, raw material
costs, transportation costs, changes in economic conditions of the various
markets the company serves, changes in the amount and severity of inclement
weather, as well as the other risks detailed herein and in the company's reports
filed with the Securities and Exchange Commission, including but not limited to
its Form 10-K for the fiscal year ending June 30, 2000, and subsequent Forms 8-K
and 10-Q.
- - - - - - - -
Elcor, through its subsidiaries, manufactures roofing products and industrial
products, and provides electronics manufacturing services. Each of Elcor's
principal operating subsidiaries is the leader or one of the leaders within its
particular market. Its common stock is listed on the New York Stock Exchange
(ticker symbol: ELK).
Elcor's roofing products facilities are located in Tuscaloosa, Alabama; Shafter,
California; Myerstown, Pennsylvania; Dallas and Ennis, Texas. Its electronics
manufacturing services facilities are located in Canton, Georgia; Dallas and
Lufkin, Texas; and its industrial products facilities are located in Cleveland,
Ohio and Midland, Texas.
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PRESS RELEASE
Elcor Corporation Quarterly Results
January 17, 2001
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CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Trailing
Three Months Ended Six Months Ended Twelve Months Ended
December 31, December 31, December 31,
2000 1999 2000 1999 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SALES $ 68,620 $ 81,736 $ 154,821 $ 177,525 $ 327,571 $ 338,332
---------- ---------- ---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales 53,825 60,674 120,244 130,416 252,345 250,712
Selling, general & administrative 12,548 9,838 23,987 19,350 44,336 38,965
Interest expense and other, net 623 104 1,128 521 1,769 1,492
Gain from involuntary conversion 0 (889) 0 (889) (403) (889)
---------- ---------- ---------- ---------- ---------- ----------
Total Costs and Expenses 66,996 69,727 145,359 149,398 298,047 290,280
---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,624 12,009 9,462 28,127 29,524 48,052
Provision for income taxes 619 4,538 3,513 10,647 11,123 17,493
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME $ 1,005 $ 7,471 $ 5,949 $ 17,480 $ 18,401 $ 30,559
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-BASIC $ 0.05 $ 0.38 $ 0.31 $ 0.89 $ 0.94 $ 1.57
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-DILUTED $ 0.05 $ 0.37 $ 0.30 $ 0.87 $ 0.93 $ 1.53
========== ========== ========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING
Basic 19,317 19,564 19,420 19,546 19,514 19,525
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Diluted 19,438 20,071 19,597 20,027 19,871 20,010
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</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
January 17, 2001
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FINANCIAL INFORMATION BY COMPANY SEGMENTS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Trailing
Three Months Ended Six Months Ended Twelve Months Ended
December 31, December 31, December 31,
2000 1999 2000 1999 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SALES
Roofing Products $ 56,623 $ 68,830 $ 131,841 $ 151,769 $ 285,468 $ 291,407
Electronics Manufacturing Services 8,347 9,865 16,736 19,009 30,753 32,964
Industrial Products 3,621 2,996 6,185 6,658 11,221 13,782
Corporate & Eliminations 29 45 59 89 129 179
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$ 68,620 $ 81,736 $ 154,821 $ 177,525 $ 327,571 $ 338,332
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OPERATING PROFIT (LOSS)
Roofing Products $ 3,363 $ 11,318 $ 14,362 $ 27,595 $ 39,791 $ 50,511
Electronics Manufacturing Services 919 2,252 1,616 3,612 2,908 5,115
Industrial Products 297 (845) (948) (676) (4,925) (1,244)
Corporate & Eliminations (2,332) (1,501) (4,440) (2,772) (6,884) (5,727)
---------- ---------- ---------- ---------- ---------- ----------
$ 2,247 $ 11,224 $ 10,590 $ 27,759 $ 30,890 $ 48,655
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</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
January 17, 2001
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CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
December 31,
ASSETS 2000 1999
------ ---------- ----------
<S> <C> <C>
Cash and cash equivalents $ 3,461 $ 3,270
Receivables, net 48,429 51,259
Inventories 58,204 35,027
Deferred income taxes 2,937 2,413
Prepaid expenses and other 4,127 4,918
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Total Current Assets 117,158 96,887
Property, plant and equipment, net 214,466 161,811
Other assets 2,797 3,234
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Total Assets $ 334,421 $ 261,932
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</TABLE>
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 1999
------------------------------------ ---------- ----------
<S> <C> <C>
Accounts payable and accrued liabilities $ 43,228 $ 40,871
Current maturities on long-term debt 0 0
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Total Current Liabilities 43,228 40,871
Long-term debt, net 108,000 49,300
Deferred income taxes 22,474 18,749
Shareholders' equity 160,719 153,012
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Total Liabilities and Shareholders' Equity $ 334,421 $ 261,932
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</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
January 17, 2001
Page 9
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
December 30,
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 5,949 $ 17,480
Adjustments to net income
Depreciation and amortization 6,699 5,254
Deferred income taxes 1,276 401
Gain from involuntary conversion 0 (889)
Changes in assets and liabilities:
Trade receivables 23,283 21,607
Inventories (17,239) (9,257)
Prepaid expenses and other 185 2,672
Accounts payable and accrued liabilities (5,059) 6,987
---------- ----------
Net cash from operations 15,094 44,255
---------- ----------
INVESTING ACTIVITIES
Additions to property, plant & equipment (26,048) (31,330)
Insurance proceeds from involuntary conversion 0 1,651
Other 147 (72)
---------- ----------
Net cash from investing activities (25,901) (29,751)
---------- ----------
FINANCING ACTIVITIES
Long-term borrowings, net 16,700 (13,700)
Dividends on common stock (1,936) (1,956)
Treasury stock transactions and other, net (5,198) 236
---------- ----------
Net cash from financing activities 9,566 (15,420)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,241) (916)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,702 4,186
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,461 $ 3,270
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</TABLE>
