CONTACT:
Richard B. Witaszak
Sr. V.P.- Finance and CFO
(816) 347-6974
[email protected]
PAYLESS CASHWAYS, INC.
800 N.W. Chipman Road o Suite 5900
Lee's Summit, Missouri 64063
www.payless.cashways.com
OTC Bulletin BOard: PCSH
PAYLESS CASHWAYS, INC. REPORTS 89% IMPROVEMENT
IN FISCAL YEAR 2000 PRO FORMA OPERATING RESULTS
LEE'S SUMMIT, Mo.-- January 10, 2001 -- Payless Cashways, Inc. (OTC Bulletin
Board: PCSH), a full line building materials and finishing products company
focusing on the professional builder, remodel and repair contractor,
institutional buyer, and project oriented consumer, today reported operating
results for the fourth quarter and fiscal year ended November 25, 2000.
<TABLE>
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<CAPTION>
Summary of Financial Highlights
(Pro Forma excluding Special Charges)
(amounts in thousands except percentages and per share amounts)
------------------------------------------- ------------------------------------------
Fourth Quarter Ended Fiscal Year Ended
------------------------------------------- ------------------------------------------
---------------- --------------- ---------- ---------------- -------------- ----------
Nov. 25, 2000 Nov. 27, 1999 Change Nov. 25, 2000 Nov. 27, 1999 Change
---------------- --------------- ---------- ---------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 332,125 $ 434,604 - 24 % $ 1,492,783 $ 1,811,365 - 18 %
Gross Margin $ 91,788 $ 116,005 - 21 % $ 406,056 $ 481,247 - 16 %
SG&A $ 72,541 $ 97,130 - 25 % $ 340,474 $ 420,382 - 19 %
EBITDA $ 19,573 $ 19,270 + 2 % $ 67,646 $ 62,847 + 8 %
Income/(Loss) Before Taxes $ 1,960 $ 240 + 717 % $ (3,973) $ (9,943) + 60 %
Net Income/(Loss) $ 1,003 $ 141 + 611 % $ (652) $ (5,837) + 89 %
Net Income / (Loss) Per Common
Share $ .05 $ .01 + 611 % $ (.03) $ (.29) + 89 %
Wtd. Avg. Shares Outstanding 20,000 20,000 -- 20,000 20,000 --
---------------------------------- ---------------- --------------- ---------- ---------------- -------------- ----------
</TABLE>
KEY DEVELOPMENTS - FOURTH QUARTER & FISCAL 2000
o 10th consecutive quarter of EBITDA improvement.
o Quarterly EBITDA ratio of 5.9% highest achieved in last 16 quarters.
o Full Year EBITDA ratio improvement of 100 basis points.
o Second consecutive year of gross margin rate improvement.
o Lowest annual SG&A rate since 1994.
o Pro forma net loss of $0.7 million best performance since 1994.
"Fiscal 2000 was a year of continued improvement for our Company. We made
tremendous progress in the complex process of reengineering our business model
and our profit model. At the same time, in a very difficult operating environ-
ment where we experienced a dramatic fall in commodity prices, rising interest
costs, and the negative sales impact of transitioning from a mass advertising
format to a targeted marketing approach, our bottom line results continued to
improve over the prior year.
President & CEO Millard Barron
Fourth Quarter 2000 Results
The Company reported fourth quarter pro forma net income of $1.0 million
compared to $0.1 million in the fourth quarter of the previous year, excluding
2000 and 1999 non-routine and special charges discussed below. Net loss after
non-routine and special charges was $18.9 million for the fourth quarter of 2000
compared to a loss of $2.7 million in 1999. Pro forma earnings per share for the
fourth quarter of 2000 was $.05 compared to $.01 in the fourth quarter of 1999.
Loss per common share after non-routine and special charges in the fourth
quarter of 2000 was $0.94 compared to a loss per common share of $0.14 in the
same quarter of 1999.
Pro forma earnings before interest, taxes, depreciation, and amortization
(EBITDA), were $19.6 million or 5.9% of sales for the 2000 fourth quarter,
compared to $19.3 million or 4.4% of sales for the same period last year. Fourth
quarter 2000 Pro-forma EBITDA benefited from a $1.1 million reversal of items
expensed in earlier quarters and reflected as special charges in the fourth
quarter and a $0.2 million LIFO credit. Comparatively, fourth quarter 1999
Pro-forma EBITDA benefited from a $1.6 million LIFO credit.
Net sales for the fourth quarter of 2000 were $332.1 million, a 24.5% same-store
decrease and a 23.6% decrease in total, versus fourth quarter of 1999 sales of
$434.6 million. On a same-store sales basis, sales to the professional customer
decreased 19.0%, and sales to the DIY customer decreased 31.4% for the quarter.
Same store sales were negatively impacted by significant deflation in lumber and
wallboard prices, reductions in advertising activity and an increase in new
competition.
The Company is in the process of closing 22 existing retail locations.
Accordingly, in the fourth quarter, the Company recorded a special charge of
$20.4 million for severance, fixed asset impairment and disposal costs and lease
commitments, and a non-routine $11.8 million gross margin charge for inventory
liquidation at these stores. Last year, the Company also recorded a special
charge in the fourth quarter of $1.1 million and a non-routine $0.5 million
gross margin charge related to inventory liquidation at a store it closed.
Fiscal 2000 Operating Results
For fiscal 2000, the Company reported a pro forma net loss of $0.7 million, or
$0.03 per share, compared to a pro forma net loss of $5.8 million, or $0.29 per
share, for fiscal 1999, excluding non-routine and special charges and credits
affecting both periods. Net loss for fiscal 2000 after non-routine and special
charges was $20.6 million, or $1.03 per share, versus a net loss of $8.1
million, or $0.41 per share, for fiscal 1999. The net loss for 2000 includes
fourth quarter special and non-routine charges associated with the closing of 22
retail locations as detailed above. The net loss for fiscal 1999 includes
non-routine and special charges for store closing and administrative staff
elimination costs recorded in the second and fourth quarters, accelerated
depreciation charges recorded in the third and fourth quarters, a pension
benefit curtailment gain recorded in the second quarter, and an extraordinary
charge related to the early extinguishment of debt recorded in the fourth
quarter.
Net sales in fiscal year 2000 were $1.5 billion, a decrease of 15.1% on a
same-store sales basis and 17.6% in total, compared with last year's sales of
$1.8 billion. On a same-store sales basis, sales to the professional customer
declined 9.9% and sales to the DIY customer decreased 21.2%, largely due to
significant deflation in commodity prices, reductions in advertising activity
and new competition.
Pro forma EBITDA for fiscal year 2000 was $67.6 million, compared to $62.8
million during fiscal year 1999. EBITDA for fiscal 2000 benefited from a $0.2
million LIFO credit compared to a $0.9 million LIFO credit in fiscal 1999.
Payless Cashways Management Comments
Payless Cashways President & CEO Millard Barron commented, "Fiscal 2000 was a
year of continued improvement for our Company. We made tremendous progress in
the complex process of reengineering our business model and our profit model. At
the same time, in a very difficult operating environment where we experienced a
dramatic fall in commodity prices, rising interest costs, and the negative sales
impact of transitioning from a mass advertising format to a targeted marketing
approach, our bottom line results continued to improve over the prior year. 2000
was our second consecutive year with an increase in gross margin after eight
years of decline, and our SG&A expense rate was the best performance since
1994."
Mr. Barron continued, "We continue to strengthen our team and our culture, while
we improve overall efficiencies and make the hard decisions necessary to
eliminate under-producing assets. We have enhanced existing businesses as well
as developed new ones, invested in technology for improvements today and in the
future, and reorganized key resources around our mission statement and target
customers. Our pro-forma bottom line performance is the best since 1994, a
result of the continuing support of our customers, associates, vendors, lenders
and shareholders. I look forward to 2001 with confidence and optimism."
About the Company
Payless Cashways, Inc. is a full-line building materials and finishing products
company focusing on the professional builder, remodel and repair contractor,
institutional buyer, and project-oriented consumer. The Company operates 128
retail stores and 5 Builders Resource facilities in 17 states located in the
Midwestern, Southwestern, Pacific Coast and Rocky Mountain areas. The Company
also operates 12 distribution and manufacturing facilities in 7 states. The
stores operate under the names Payless Cashways, Furrow, Lumberjack, Hugh M.
Woods, Knox Lumber and Contractor Supply.
Forward-Looking Statements
This paragraph is included in this release to comply with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. There are
certain important factors that could cause results to differ materially from
those anticipated by the forward-looking statements made above. Investors are
cautioned that all forward-looking statements involve risk and uncertainty.
Among the factors that could cause results to differ materially are the
following: competitor activities; stability of customer demand; weather;
stability of the work force; supplier and lender support; consumer spending;
interest rates; new and existing housing activity; commodity prices-specifically
lumber and wallboard; customer and product mix; growth of certain market
segments; an excess of retail space devoted to the sale of building materials
and the success of the Company's strategy. Additional information concerning
these and other factors is contained in the Company's SEC filings, which are
available by contacting the Company or on the Company's web site,
payless.cashways.com.
PAYLESS CASHWAYS, INC.
Fourth Quarter Ended and Year Ended November 25, 2000
Pro Forma Operating Data (Unaudited) (a) (b)
(In thousands, except percentages and per share amounts)
<TABLE>
Thirteen Weeks Ended
<CAPTION>
November 25, 2000 November 27, 1999
------------------------- ----------------------
Amount Percent Amount Percent
----------- -------- -------- -------
<S> <C> <C> <C> <C>
Net sales $ 332,125 100.0 % $ 434,604 100.0 %
Cost of merchandise sold 240,337 72.4 318,599 73.3
----------- ------ ----------- ------
Gross margin 91,788 27.6 116,005 26.7
Selling, general and administrative 72,541 21.8 97,130 22.4
Provision for depreciation and amortization 7,389 2.2 9,424 2.2
Other income (326) (.1) (395) (.1)
------------ ----- ----------- ------
Operating Income 12,184 3.7 9,846 2.2
Interest expense 10,224 3.1 9,606 2.2
----------- ------ ----------- ------
Income before income taxes 1,960 0.6 240 --
Federal and state income taxes 957 0.3 99 --
----------- ------ ----------- -------
NET INCOME $ 1,003 0.3 % $ 141 -- %
=========== ====== ============ =======
Net income per common share-basic $ 0.05 $ 0.01
=========== ===========
Weighted average common shares outstanding 20,000 20,000
=========== ===========
Fifty-Two Weeks Ended
-------------------------------------------------------
November 25, 2000 November 27, 1999
------------------------- ------------------------
Amount Percent Amount Percent
----------- -------- ---------- -------
<S> <C> <C> <C> <C>
Net sales $ 1,492,783 100.0 % $1,811,365 100.0 %
Cost of merchandise sold 1,086,727 72.8 1,330,118 73.4
----------- -------- ----------- ------
Gross margin 406,056 27.2 481,247 26.6
Selling, general and administrative 340,474 22.8 420,382 23.2
Provision for depreciation and amortization 30,067 2.0 37,027 2.0
Other income (2,064) (.1) (1,982) (.1)
----------- ------ ----------- ------
Operating Income 37,579 2.5 25,820 1.5
Interest expense 41,552 2.8 35,763 2.0
----------- ------ ----------- ------
Loss before income taxes (3,973) (.3) (9,943) (.5)
Federal and state income taxes (3,321) (.2) (4,106) (.2)
---------- ------ ----------- ------
NET LOSS $ (652) (.1) % $ (5,837) (.3) %
========== ====== =========== ======
Net loss per common share-basic $ (0.03) $ (0.29)
========== ===========
Weighted average common shares outstanding 20,000 20,000
========== ===========
</TABLE>
[FN]
(a) The pro forma operating data for fiscal 2000 excludes a fourth quarter
special charge for store closings and associated costs of $20.4 million. It also
excludes a non-routine fourth quarter margin charge for inventory liquidation at
these closing stores of $11.8 million.
(b) The pro forma operating data for fiscal 1999 excludes $2.0 million and $1.1
million for fourth and third quarter depreciation charges, respectively, related
to the accelerated depreciation of certain leasehold improvements and assets
related to closed stores. Additionally, it excludes a fourth and second quarter
special charge for store closings and costs associated with the elimination of
administrative staff of $1.1 million and $5.2 million, respectively. It also
excludes a fourth and second quarter margin charge for inventory liquidation at
these closing stores of $.5 million and $3.4 million, respectively. A second
quarter special credit of $10.6 million, which represents a pension benefit
curtailment gain recorded as a result of freezing benefits under the Company's
pension plan, is excluded from the 1999 pro forma operating data. A fourth
quarter $.7 million extraordinary item representing losses on early
extinguishment of debt is also excluded from the 1999 pro forma operating data.
</FN>
PAYLESS CASHWAYS, INC.
Fourth Quarter and Year Ended November 25, 2000
Operating Data (Unaudited)
(In thousands, except percentages and per share amounts)
<TABLE>
Thirteen Weeks Ended
<CAPTION>
-------------------------------------------------------
November 25, 2000 November 27, 1999
------------------------- -------------------------
Amount Percent Amount Percent
----------- -------- ----------- -------
<S> <C> <C> <C> <C>
Net sales $ 332,125 100.0 % $ 434,604 100.0 %
Cost of merchandise sold 252,137 75.9 319,099 73.4
----------- -------- ----------- ------
Gross margin 79,988 24.1 115,505 26.6
Selling, general and administrative 72,541 21.8 97,130 22.4
Provision for depreciation and amortization 7,389 2.2 11,445 2.6
Special charges 20,400 6.2 1,085 .2
Other income (326) (.1) (395) (.1)
------------ ------ ----------- ------
Operating Income (20,016) (6.0) 6,240 1.5
Interest expense 10,224 3.1 9,606 2.2
----------- ------ ----------- ------
Loss before income taxes (30,240) (9.1) (3,366) (.7)
Federal and state income taxes (11,344) (3.4) (1,390) (.3)
---------- ------ ----------- ------
Loss before extraordinary items (18,896) (5.7) (1,976) (.4)
Extraordinary items -- -- 729 .2
----------- ------ ----------- ------
NET LOSS $ (18,896) (5.7) % $ (2,705) (.6) %
========== ====== ========= ======
Net income per common share-basic $ (0.94) $ (0.14)
=========== ===========
Weighted average common shares outstanding 20,000 20,000
========== ===========
Fifty-Two Weeks Ended
-------------------------------------------------------
November 25, 2000 November 27, 1999
------------------------ -------------------------
Amount Percent Amount Percent
----------- -------- ----------- -------
<S> <C> <C> <C> <C>
Net sales $ 1,492,783 100.0 % $ 1,811,365 100.0 %
Cost of merchandise sold 1,098,527 73.6 1,333,968 73.6
----------- -------- ----------- ------
Gross margin 394,256 26.4 477,397 26.4
Selling, general and administrative 340,474 22.8 420,382 23.2
Provision for depreciation and amortization 30,067 2.0 40,167 2.2
Special charges (credits), net 20,400 1.3 (4,315) (.2)
Other income (2,064) (.1) (1,982) (.1)
----------- ------ ----------- ------
Operating Income 5,379 .4 23,145 1.3
Interest expense 41,552 2.8 35,763 2.0
----------- -------- ----------- ------
Loss before income taxes (36,173) (2.4) (12,618) (.7)
Federal and state income taxes (15,622) (1.0) (5,211) (.3)
---------- -------- ----------- -------
Loss before extraordinary items (20,551) (1.4) (7,407) (.4)
Extraordinary items -- -- 729 --
---------- -------- ----------- ------
NET LOSS $ (20,551) (1.4) % $ (8,136) (.4)%
==========- ======== =========== ======
Net loss per common share-basic $ (1.03) $ (.41)
========== ===========
Weighted average common shares outstanding 20,000 20,000
========== ===========
</TABLE>
PAYLESS CASHWAYS, INC.
Condensed Balance Sheets (Unaudited) (a)
(In thousands)
<TABLE>
<CAPTION>
November 25, November 27,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,485 $ 1,111
Merchandise inventories 311,489 349,332
Prepaid expenses and other current assets 19,246 22,013
Income taxes receivable -- 679
------------- -------------
TOTAL CURRENT ASSETS 332,220 373,135
OTHER ASSETS
Real estate held for sale 3,785 8,851
Deferred financing costs 3,051 3,944
Other 3,090 1,549
LAND, BUILDINGS, EQUIPMENT & SOFTWARE, NET 335,512 340,912
------------- -------------
$ 677,658 $ 728,391
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 10,181 $ 3,265
Trade accounts payable 38,633 51,480
Other current liabilities 76,537 73,880
Income taxes payable 927 1,851
Deferred income taxes 5,510 2,157
------------- -------------
TOTAL CURRENT LIABILITIES 131,788 132,633
LONG-TERM DEBT, less portion classified
as current liability 363,432 374,154
NON-CURRENT LIABILITIES 49,692 68,307
SHAREHOLDERS' EQUITY
Common stock 200 200
Additional paid-in capital 183,600 183,600
Accumulated deficit (51,054) (30,503)
------------- ------------
TOTAL SHAREHOLDERS' EQUITY (b) 132,746 153,297
------------- -------------
$ 677,658 $ 728,391
============= =============
</TABLE>
[FN]
(a) Certain reclassifications have been made to the 1999 financial statements to
conform to the 2000 presentation.
(b) The covenant included in the 1999 Credit agreement with Congress Financial
regarding minimum "adjusted net worth" excludes the effects of certain non-
cash charges and credits. The cumulative amount of such non-cash charges
at November 25, 2000 was $11.6 million.
</FN>
