United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 33-75154
J.B. POINDEXTER & CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0312814
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1100 Louisiana
Suite 5400
Houston, Texas
77002
(Address of principal executive offices)
(Zip code)
(713) 655-9800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
There were 3,059 shares of Common Stock, $.01 par value, of the registrant
outstanding as of May 1, 1997.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
(Unaudited)
<S> <C> <C>
Current assets
Restricted cash .............................................. $ 4,240 $ 2,607
Accounts receivable, net of allowance for doubtful accounts of
$1,746 and $1,863, respectively ........................ 38,106 31,258
Inventories, net ............................................. 57,485 48,612
Deferred income taxes ........................................ 2,588 2,588
Prepaid expenses and other ................................... 2,143 2,139
----- -----
Total current assets ................................... 104,562 87,204
Property, plant and equipment, net ................................ 50,496 51,097
Goodwill, net ..................................................... 21,474 21,773
Other assets ...................................................... 13,076 13,407
------ ------
Total assets ........................................... $ 189,608 $ 173,481
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term debt .............................................. $ 1,740 $ 917
Current portion of long-term debt ............................ 1,564 1,885
Borrowings under revolving credit facility ................... 30,173 28,238
Accounts payable ............................................. 26,741 14,624
Accrued interest payable ..................................... 4,733 1,682
Accrued income taxes ......................................... 149 372
Other accrued liabilities .................................... 17,750 17,120
------ ------
Total current liabilities .............................. 82,850 64,838
------ ------
Noncurrent liabilities
Long-term debt, less current portion ......................... 102,488 102,767
Employee benefit obligations and other ....................... 2,872 2,846
----- -----
Total noncurrent liabilities ........................... 105,360 105,613
------- -------
Commitments and contingencies
Stockholder's equity
Common stock and paid-in capital ............................. 16,486 16,486
Cumulative translation adjustment ............................ 16 39
Accumulated deficit .......................................... (15,104) (13,495)
------- -------
Total stockholder's equity ............................. 1,398 3,030
----- -----
Total liabilities and stockholder's equity ............. $ 189,608 $ 173,481
========= =========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
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<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited-in thousands except share and per share amounts)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Net sales ......................................................... $ 101,998 $ 98,903
Cost of sales ..................................................... 80,845 79,343
------ ------
Gross profit ...................................................... 21,153 19,560
Selling, general and administrative expense ....................... 20,888 20,715
Other (income) expense, net ....................................... (2,718) 31
------ --
Operating income (loss) ........................................... 2,983 (1,186)
Interest expense .................................................. 4,242 3,915
------ ------
Loss before income taxes .......................................... (1,259) (5,101)
Income tax expense (benefit) ...................................... 350 (1,985)
------ ------
Net loss .......................................................... $ (1,609) $ (3,116)
========= =========
Loss per share .................................................... $ (526) $ (1,018)
========= =========
Weighted average shares outstanding ............................... 3,059 3,059
========= =========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
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<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited-In thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Net loss .......................................................... $ (1,609) $ (3,116)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Depreciation and amortization ................................ 3,148 3,027
Gain on sale of equipment .................................... (2,626) (7)
Deferred federal income tax provision ........................ 1 (863)
Other ........................................................ 320 (163)
Increase (decrease) in operating cash flows resulting from:
Accounts receivable .......................................... (6,838) (4,625)
Inventories .................................................. (8,875) (3,702)
Prepaid expenses and other ................................... 30 (171)
Accounts payable ............................................. 12,102 12,629
Accrued income taxes ......................................... (222) (1,483)
Accrued expenses and other ................................... 2,988 3,780
------ ------
Net cash provided by (used in) operating activities ........ (1,581) 5,306
------ ------
Cash flows provided by (used in) investing activities:
Proceeds from disposition of property plant and equipment .... 2,818 66
Acquisition of property, plant and equipment ................. (1,995) (1,617)
Other ........................................................ (45) 14
------ ------
Net cash provided by (used in) investing activities ....... 778 (1,537)
------ ------
Cash flows provided by (used in) financing activities:
Net proceeds (payments) of revolving lines of credit and
short-term debt ........................................... 3,009 (705)
Net proceeds (payments) of long-term debt and capital leases . (573) (568)
------ ------
Net cash provided by (used in) financing activities ....... 2,436 (1,273)
------ ------
Increase (decrease) in restricted cash and cash equivalents ....... 1,633 2,496
Restricted cash and cash equivalents, beginning of period ......... 2,607 1,714
------ ------
Restricted cash and cash equivalents, end of period ............... $ 4,240 $ 4,210
========= =========
Supplemental information:
Cash paid for income taxes, net of refunds ................... $ 118 $ 156
========= =========
Cash paid for interest cost .................................. $ 1,208 $ 592
========= =========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
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<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Business. J.B. Poindexter & Co., Inc. (JBPCO) and its
subsidiaries (the Subsidiaries, and, together with JBPCO, the Company), operate
manufacturing and wholesale distribution businesses. Subsidiaries consist of
Morgan Trailer Mfg. Co., (Morgan), Truck Accessories Group, Inc., (TAG), Lowy
Group, Inc. (Lowy), EFP Corporation (EFP), and Magnetic Instruments Corp.
(Magnetic Instruments).
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto for the year ended December 31, 1996 filed with the
Securities and Exchange Commission on Form 10-K.
(2) Earnings Per Share. In February 1997, the Financial Accounting Standards
Board issued Statement No.128, Earnings per Share, which is required to be
adopted on December 31, 1997. Since the Company has no common stock equivalents
outstanding, this statement will not impact the earnings per share calculation.
(3) Inventories. Consolidated net inventories consist of the following (in
thousands):
March 31, December 31,
1997 1996
FIFO Basis Inventory:
Raw Materials ................................. $19,228 $13,231
Work in Process ............................... 14,272 12,052
Finished Goods ................................ 12,269 12,436
------ ------
45,769 37,719
------ ------
LIFO Basis Inventory:
Raw Materials ................................. 2,265 2,041
Work in Process ............................... 1,641 1,595
Finished Goods ................................ 7,810 7,257
----- -----
11,716 10,893
------ ------
Total Inventory ....................................... $57,485 $48,612
======= =======
If the first-in, first-out method had been used for all inventory,
inventories would have approximated the reported value at March 31, 1997 and at
December 31, 1996.
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<PAGE>
(4) Income Taxes. The income tax provision for the three months ended March 31,
1997 relates to state income taxes. The company's tax provision for the three
months ended March 31, 1997 differs from the federal statutory rate principally
due to an increase in the deferred tax valuation allowance relating to net
operating losses that may not be realizable.
(5) Contingencies.
Claims and Lawsuits. The Company is involved in certain claims and
lawsuits arising in the normal course of business. In the opinion of management,
the ultimate resolution of these matters will not have a material adverse effect
on the financial position or results of operations of the Company.
Concentration of Credit Risk. Morgan has two customers (truck rental and
leasing companies) accounting for approximately 53% and 38% of Morgan's net
sales during the three months ended March 31, 1997 and 1996, respectively, and
20% and 13% of consolidated net sales, respectively.
Environmental Matters. Morgan has been named as a potentially
responsible party ("PRP") with respect to its generation of hazardous materials
alleged to have been handled or disposed of at two Federal Superfund sites in
Pennsylvania. Typically, the generator portion of the costs are allocated among
identified generators, with each generator bearing costs proportionate to the
volume and nature of the wastes it disposed of at the site. Although a precise
estimate of liability cannot currently be made with respect to these sites,
based upon information known to Morgan, the Company currently believes that it's
proportionate share, if any, of the ultimate costs related to any necessary
investigation and remedial work at those sites will not have a material adverse
effect on the Company.
National Steel Service Center (NSSC), a company into which Morgan was
merged during 1993, has been listed as a potentially responsible party at one
other Federal Superfund site. Although the extent of NSSC's liability, if any,
is not known at this time, management currently believes that NSSC's allocated
share of the ultimate costs related to any necessary investigation and remedial
work at this site will not have a material adverse effect on the Company.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company operates in industries that are dependent on various factors
reflecting general economic conditions, including corporate profitability,
consumer spending patterns, sales of truck chassis and new pickup trucks, new
and remodeling construction activity and levels of oil and gas exploration
activity.
Results of Operations
First Quarter 1997 Compared to First Quarter 1996
Consolidated Operating Results
Net sales increased 3% to $102.0 million for the three months ended
March 31, 1997, compared to $98.9 million during the same period in 1996. Sales
increases at Morgan (16%), Magnetic Instruments (18%), EFP (10%) and Lowy Group
(3%) were offset by a 12% decline in sales at TAG.
-6-
<PAGE>
Cost of sales increased 2% to $80.9 million for the three months ended
March 31, 1997, compared to $79.3 million during the same period in 1996. Gross
profit increased 8% to $21.2 million (21% of net sales) for the three months
ended March 31,1997 compared to $19.6 million (20% of net sales) during the same
period in 1996.
Selling, general and administrative expense for the three months ended
March 31, 1997 increased less than 1% to $20.9 million (21% of net sales)
compared to $20.7 million (21% of net sales) during the same period in 1996.
The Company sold a Lowy warehouse facility near Minneapolis, Minnesota
during the three months ended march 31, 1997 and realized a $2.6 million gain on
the transaction which is included in Other Income and Expense.
Operating income increased $4.2 million to $3.0 million for the three
months ended March 31, 1997 compared to a loss of $1.2 million during 1996. The
improvement is due to a $1.8 million increase in operating income at Morgan
partially offset by a $0.8 million increase in operating losses at TAG and to
the gain on the sale of the Lowy facility.
Interest expense increased slightly to $4.2 million during the three
months ended March 31, 1997 compared to the same period in 1996.
The income tax expense of $0.4 million for the first three months of 1997
represents state income taxes payable. The Company recorded a net tax benefit
during the same period in 1996 of $2.0 million. The income tax provision for the
three months ended March 31, 1997 relates to state income taxes. The Company's
tax provision for the three months ended March 31, 1997 differs from the federal
statutory rate principally due to an increase in the deferred tax valuation
allowance relating to net operating losses that may not be realized.
Morgan
Net sales increased 16% to $37.4 million for the first three months of
1997 compared to sales of $32.3 million for the first three months of 1996.
Shipments increased 29% during the 1997 period compared to 1996 primarily due to
increased shipments of consumer rental units. Backlog increased to $51.1 million
at March 31, 1997 compared to $50.2 million at December 31, 1996.
Cost of sales increased 10% to $32.4 million for the first quarter of
1997 compared to $29.3 million for the same period in 1996. Gross profit
increased 67% to $5.0 million (13% of net sales) during 1997 compared to $3.0
million (9% of net sales) during 1996. The improvement in gross profit margins
was primarily due to favorable raw material pricing and improved absorption of
fixed overhead costs on increased sales.
Selling, general and administrative expense increased 4% to $3.5 million
(9% of net sales) for the first three months of 1997 compared to $3.3 million
(10% of net sales) for the same period of 1996. The decrease to 9% of net sales
in 1997 from 10% in 1996 was primarily due to reduction in personnel related
costs and a higher volume of sales in 1997.
-7-
<PAGE>
Morgan's operating income increased $1.8 million to $1.5 million during
the first three months of 1997 compared to a loss of $0.3 million for the first
three months of 1996. Improved absorption of overhead costs on increased sales
improved operating performance.
Truck Accessories Group (TAG)
Net sales decreased $4.3 million or 12% to $33.0 million for the first
three months of 1997 compared to $37.3 million for the first three months of
1996. TAG Distribution net third party sales decreased 25% to $12.2 million
during the 1997 period compared to $16.2 million during the same period in 1996.
At its Leer Retail unit, sales decreased 14% or $1.3 million during the 1997
period compared to 1996 while same store sales decreased approximately 10%,
primarily due to lower cap sales. Leer Retail operated four fewer stores during
1997 compared to 1996 which reduced sales during the 1997 period by $0.4 million
compared to 1996. Wholesale sales decreased 41% or $2.6 million due to softness
in certain regional markets in which the Company operates, a change of supplier
of a certain product line and the loss of customers resulting from a
reorganization of service areas. The effect on operating performance from the
loss of sales due to the reorganization of service areas should be mitigated by
reduced delivery costs. TAG Manufacturing net third party sales decreased 2% to
$20.8 million during the 1997 period compared to $21.2 million during the same
period in 1996. Reductions in sales were experienced at all TAG Manufacturing
units except Raider Industries where net sales were up 45% over the first
quarter of 1996.
Gross profit decreased $1.2 million or 13% to $8.1 million (25% of net
sales) for the first three months of 1997 compared to $9.3 million (25% of net
sales) for the 1996 period, primarily due to a 25% or $1.3 million decrease at
TAG Distribution on lower sales.
Selling, general and administrative expense decreased 3% to $11.0
million (33% of net sales) for the first three months of 1997 compared to $11.4
million (30% of net sales) for the first three months of 1996. The increase in
expenses as a percent of net sales was primarily due to fixed costs at TAG
Distribution.
TAG's operating loss increased $0.7 million to an operating loss of $2.8
million for the first quarter of 1997 compared to an operating loss of $2.1
million for the first quarter of 1996. Operating losses at TAG Manufacturing
improved $0.1 million on flat revenues compared to the first quarter of 1996.
TAG Distribution operating losses increased $0.8 million to a loss of $1.4
million on a 30% decline in sales. The Company continues to implement
improvement measures at the TAG companies. Steps taken by management to address
the manufacturing problems include, among others, redesigning certain products
and implementing additional quality control procedures. The Company has
appointed a Senior Vice President-Operations responsible, initially, solely for
TAG and a Vice President-Operations of Leer Manufacturing. See Management
Changes below.
Lowy
Net sales increased 3% to $16.5 million for the first three months of
1997 compared to $16.0 million for the first three months of 1996. Sales at Blue
Ridge increased $0.8 million or 12% which was partially offset by a decrease in
wholesale floor covering sales of $0.3 million or 3%.
Cost of sales increased 1% to $12.1 million for the first quarter of
1997 compared to $12.0 million for the same period in 1996. Gross profit
increased 10% to $4.5 million (27% of net sales) for the first three months of
1997 compared to $4.1 million (25% of net sales) for the first three months of
1996.
-8-
<PAGE>
Primarily due to reduced sample costs Selling, General and
Administrative expense decreased 2% to $3.9 million (24% of net sales) for the
first three months of 1997 compared to $4.0 million (25% of net sales) for the
first three months of 1996.
Lowy Distribution sold its warehouse facility, near Minneapolis,
Minnesota, effective March 31,1997, realizing a gain of $2.6 million. Lowy
Distribution intends to move its Minnesota operations to a new facility during
1997.
Lowy Group's operating income increased $3.1 million to $3.2 million for
the first three months of 1997 compared to $0.1 million for the first three
months of 1996, primarily as result of the gain on the sale of the warehouse
facility and improved performance at its Blue Ridge division.
EFP
Net sales increased 10% to $7.7 million for the first three months of
1997 compared to $7.0 million for the first three months of 1996, primarily due
to sales from the company's door core business started during 1996 as well as
increased Styrocast sales.
Cost of sales increased 12% to $6.3 million during the 1997 period
compared to $5.6 million during 1996. Gross profit increased to $1.5 million
(19% of net sales) for the first three months of 1997 compared to $1.4 million
(20% of net sales) for the first quarter of 1996. The decrease in gross profit
as a percentage of sales was due to increased manufacturing overhead.
Selling, general and administrative expense increased 18% to $1.0
million (13% of net sales) for the first three months of 1997 compared to $0.8
million (12% of net sales) during the comparable period of 1996. Selling expense
increased $0.1 million as a result of increased personnel and advertising costs
associated with higher sales.
EFP's operating income decreased to $0.5 million for the first three
months of 1997 compared to $0.6 million for the first three months of 1996,
primarily due to increased selling expenses.
Magnetic Instruments
Net sales increased 18% to $7.4 million for the first three months of
1997 compared to $6.3 million for the first three months of 1996, as a result of
strong demand for the oil field service related products produced by the
majority of Magnetic's customers
Cost of sales increased 19% to $5.2 million during the 1997 period
compared to $4.4 million during 1996. Gross profit margins decreased to 29% in
the 1997 period from 30% in 1996.
Selling, general and administrative expense increased to $0.8 million
(11% of net sales) for the first three months of 1997 compared to $0.7 million
(11% of net sales) during the comparable period of 1996.
Operating income increased 20% to $1.3 million during 1997 compared to
$1.1 million during 1996 due primarily to greater absorption of overhead on
higher sales.
-9-
<PAGE>
Liquidity and Capital Resources
Operating activities during the quarter ended March 31, 1997 used cash
of $1.6 million compared to generating cash of $5.3 million during the same
period in 1996, primarily due to changes in working capital. During the 1997
period working capital increased, using cash of $0.8 million compared to
decreasing and generating cash of $6.4 million during 1996. During the three
months ended March 31, 1997 accounts receivable and inventories increased $15.7
million, partially offset by a $12.1 million increase in accounts payable. The
net increase of $3.6 million or 3% of the total of accounts receivable,
inventories and accounts payable is consistent with the 3% increase in sales
during the quarter.
The ability to borrow under the Revolving Credit Agreement depends on
the amount of eligible collateral. The amount of eligible collateral depends on
certain advance rates applied to the value of accounts receivables and
inventory. At March 31, 1997 the Company had total borrowing capacity of $50.0
million, of which $6.8 million was used to secure letters of credit and finance
trade transactions. Additionally, $29.6 million had been borrowed to fund
operations resulting in unused available borrowing capacity of $13.6 million. At
May 1, 1997 the Company had available borrowing capacity of $13.3 million under
the terms of the Revolving Credit Agreement.
The Company realized proceeds of $2.8 million, from the sale of a
warehouse facility by Lowy, which will be used to fund operations. Capital
expenditures of $2.0 million increased 23% during the three months ended March
31,1997 compared to 1996.
The Company believes that it has adequate resources to meet its working
capital and capital expenditure requirements consistent with past trends and
practices. Management believes that its cash balances and the borrowing
availability under the Revolving Loan Agreement will satisfy the Company's cash
requirements for the foreseeable future given its anticipated additional capital
expenditure, working capital requirements and its known obligations. The Company
is in compliance with the terms the Revolving Loan Agreement.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Management Changes
Effective May 5, 1997, the Company appointed Charles E. Craig
Senior Vice President -Operations of the Company. Mr. Craig will, initially, be
responsible for the operations of the Truck Accessories Group, he was previously
employed by Tiara Motorcoach in Elkhart, Indiana and will remain Chairman of
that company.
Effective April 28, 1997 the Company appointed Howard Carpenter
Vice President Operations of the Leer Manufacturing operations of TAG. Mr.
Carpenter was previously president of the Bathing Systems Division of Universal
Rundle Corp., which manufactured fiberglass based home consumer products.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits. The following exhibits are filed herewith:
None
b. Reports on Form 8-K. The Company filed the following reports on
Form 8-K during the quarter for which this Form 10-Q is filed:
None
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.B. POINDEXTER & CO., INC.
(Registrant)
Date: May 9, 1997 By: S. Magee
---------------------------------
S. Magee, Chief Financial Officer
and Treasurer
By: R.S. Whatley
---------------------------------
R. S. Whatley, Chief Accounting
Officer
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1997 1ST
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,240
<SECURITIES> 0
<RECEIVABLES> 39,852
<ALLOWANCES> 1,746
<INVENTORY> 57,485
<CURRENT-ASSETS> 104,562
<PP&E> 50,496
<DEPRECIATION> 0
<TOTAL-ASSETS> 189,608
<CURRENT-LIABILITIES> 82,850
<BONDS> 105,360
0
0
<COMMON> 16,486
<OTHER-SE> (15,088)
<TOTAL-LIABILITY-AND-EQUITY> 189,608
<SALES> 101,998
<TOTAL-REVENUES> 101,998
<CGS> 80,845
<TOTAL-COSTS> 80,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,242
<INCOME-PRETAX> (1,259)
<INCOME-TAX> 350
<INCOME-CONTINUING> (1,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,609)
<EPS-PRIMARY> (0.526)
<EPS-DILUTED> (0.526)
<FN>
OTHER EXPENSES ARE INCLUDED IN SELLING, GENERAL AND ADMINISTRATIVE ON
THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
