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 June 30, 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 August 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>
June 30, December 31,
ASSETS 1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Restricted cash .............................................. $ 2,737 $ 2,607
Accounts receivable, net of allowance for doubtful accounts of
$1,835 and $1,863, respectively ........................ 40,615 31,258
Inventories, net ............................................. 56,243 48,612
Deferred income taxes ........................................ 2,596 2,588
Prepaid expenses and other ................................... 2,016 2,139
--------- ---------
Total current assets ................................... 104,207 87,204
Property, plant and equipment, net ................................ 50,191 51,097
Goodwill, net ..................................................... 21,189 21,773
Other assets ...................................................... 12,249 13,407
--------- ---------
Total assets ........................................... $ 187,836 $ 173,481
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term debt .............................................. $ 1,019 $ 917
Current portion of long-term debt ............................ 1,383 1,885
Borrowings under revolving credit facility ................... 31,020 28,238
Accounts payable ............................................. 22,813 14,624
Accrued interest payable ..................................... 1,882 1,682
Accrued income taxes ......................................... 501 372
Other accrued liabilities ...................................... 19,457 17,120
--------- ---------
Total current liabilities .............................. 78,075 64,838
--------- ---------
Noncurrent liabilities
Long-term debt, less current portion ......................... 102,233 102,767
Employee benefit obligations and other ....................... 3,155 2,846
--------- ---------
Total noncurrent liabilities ........................... 105,388 105,613
--------- ---------
Commitments and contingencies
Stockholder's equity
Common stock and paid-in capital ............................. 16,486 16,486
Cumulative translation adjustment ............................ (40) 39
Accumulated deficit .......................................... (12,073) (13,495)
--------- ---------
Total stockholder's equity ............................. 4,373 3,030
--------- ---------
Total liabilities and stockholder's equity ............. $ 187,836 $ 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 For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ................................... $ 128,330 $ 122,132 $ 230,328 $ 221,034
Cost of sales ............................... 98,560 94,333 179,405 173,676
--------- --------- --------- ---------
Gross Profit ................................ 29,770 27,799 50,923 47,358
Selling, general and administrative expense . 21,774 21,601 42,662 42,316
Other income ................................ (459) (135) (3,177) (105)
--------- --------- --------- ---------
Operating income ............................ 8,455 6,333 11,438 5,147
Interest expense ............................ 4,253 4,140 8,495 8,055
--------- --------- --------- ---------
Income (Loss) before income taxes
and extraordinary loss ................... 4,202 2,193 2,943 (2,908)
Income tax provision (benefit) .............. 1,171 1,079 1,521 (906)
--------- --------- --------- ---------
Income (Loss) before extraordinary loss ..... 3,031 1,114 1,422 (2,002)
Extraordinary loss on refinancing of revolver
debt, net of income tax benefit of $135 .. -- 260 -- 260
--------- --------- --------- ---------
Net income (loss) ........................... $ 3,031 $ 854 $ 1,422 $ (2,262)
========= ========= ========= =========
Income (loss) per share:
Income (loss) before extraordinary loss .. $ 991 $ 364 $ 465 $ (654)
Extraordinary loss ....................... -- 85 -- 85
--------- --------- --------- ---------
Net income (loss) ........................ $ 991 $ 279 $ 465 $ (739)
========= ========= ========= =========
Weighted average shares outstanding ......... 3,059 3,059 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 Six Months
Ended June 30,
1997 1996
------ ------
<S> <C> <C>
Net income (loss) .................................................. $ 1,422 $ (2,262)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization ................................. 6,148 6,007
(Gain) loss on sale of equipment .............................. (2,945) 91
Extraordinary loss on extinguishment of debt .................. -- 260
Deferred federal income tax provision ......................... 869 (863)
Other ......................................................... 282 (131)
Increase (decrease) in operating cash flows resulting from:
Accounts receivable ........................................... (9,349) (4,991)
Inventories ................................................... (7,633) (4,017)
Prepaid expenses and other .................................... (138) (443)
Accounts payable .............................................. 8,185 11,221
Accrued income taxes .......................................... 129 (874)
Accrued expenses and other .................................... 1,682 1,932
---------- ----------
Net cash provided by (used in) operating activities ......... (1,348) 5,930
---------- ----------
Cash flows used in investing activities:
Proceeds from disposition of property plant and equipment ..... 3,554 351
Acquisition of property, plant and equipment .................. (4,091) (3,404)
Other ......................................................... (17) --
---------- ----------
Net cash used in investing activities ...................... (554) (3,053)
---------- ----------
Cash flows provided by (used in) financing activities:
Net proceeds (payments) of revolving lines of credit and
short-term debt ............................................ 3,135 (1,379)
Payments of long-term debt and capital leases ................. (978) (1,081)
Refinancing costs ............................................. (125) (150)
---------- ----------
Net cash provided by (used in) financing activities ........ 2,032 (2,610)
---------- ----------
Increase in restricted cash and cash equivalents ................... 130 267
Restricted cash and cash equivalents, beginning of period .......... 2,607 1,714
---------- ----------
Restricted cash and cash equivalents, end of period ................ $ 2,737 $ 1,981
========== ==========
Supplemental information:
Cash paid for income taxes, net of refunds .................... $ 118 $ 507
========== ==========
Cash paid for interest cost ................................... $ 7,995 $ 7,463
========== ==========
<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):
June 30, December 31,
1997 1996
--------- ----------
FIFO Basis Inventory:
Raw Materials ...................... $17,512 $13,231
Work in Process .................... 14,550 12,052
Finished Goods ..................... 13,084 12,436
------- -------
45,146 37,719
------- -------
LIFO Basis Inventory:
Raw Materials ...................... 2,685 2,041
Work in Process .................... 1,667 1,595
Finished Goods ..................... 6,745 7,257
------- -------
11,097 10,893
------- -------
Total Inventory ............................ $56,243 $48,612
======= =======
If the first-in, first-out method had been used for all inventories,
inventories would have approximated the reported value at June 30, 1997 and at
December 31, 1996.
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<PAGE>
(4) Income Taxes. The provision for income taxes differs from amounts computed
based on the federal statutory rates primarily as the result of state income
taxes in jurisdictions where no benefits will be received for losses at certain
divisions and as the result of non-deductible goodwill amortization.
(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 had two customers (three during
1996) accounting for approximately 57% and 33% of Morgan's net sales during the
six months ended June 30, 1997 and 1996, respectively, and 23% and 12% 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.
- 6 -
<PAGE>
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
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales increased 4% to $230.3 million for the six months ended June
30, 1997 compared to $221.0 million during 1996. The increase was due primarily
to Morgan whose sales increased 21% or $16.1 million which was partially offset
by sales at TAG which decreased 13% or $11.0 million. The Company also recorded
sales increases at Magnetic Instruments of 20% or $2.6 million and at EFP of 9%
or $1.3 million.
Cost of sales increased 3% to $179.4 million for the six months ended
June 30, 1997 compared to $173.7 million during 1996. Gross profit increased 7%
to $50.9 million (22% of net sales) for the first six months of 1997 compared to
$47.4 million (21% of net sales) for 1996. The increase in gross profit as a
percentage of net sales was due primarily to improved gross margin performance
at Morgan and EFP.
Selling, general and administrative expense increased 0.8% to $42.7
million (19% of net sales) for the six months ended June 30, 1997 compared to
$42.3 million (19% of net sales) during 1996.
Operating income more than doubled to $11.4 million (5% of net sales)
for the six months ended June 30, 1997 compared to operating income of $5.2
million (2% of net sales) in 1996. Operating income for the six months ended
June 30, 1997 includes a $3.0 million gain on the sale of certain real property
by the Lowy Group.
Interest expense increased 5% to $8.5 million during the six months
ended June 30, 1997 compared to $8.1 million during 1996. Average short-term
borrowings increased $2.3 million or 8% during the 1997 period compared to the
same period in 1996.
The provision for income tax of $1.5 million for the first six months of
1997 or an effective rate of 52% exceeds amounts computed based on the federal
statutory rates primarily as the result of state income taxes in jurisdictions
where no benefits will be received for losses at TAG and as the result of
non-deductible goodwill amortization.
Second Quarter 1997 Compared to Second Quarter 1996
Net sales for the quarter ended June 30, 1997 increased 5% to $128.3
million compared to $122.1 million for the same period in 1996. The increase was
due primarily to an $11.0 million improvement in sales at Morgan partially
offset by a 15% or $6.7 million decrease in sales at TAG.
Cost of sales increased 5% to $98.6 million during the quarter ended
June 30, 1997 compared to $94.3 million for the same period in 1996. Gross
profits increased $1.9 million to $29.8 million during
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<PAGE>
the quarter ended June 30, 1997 compared to $27.9 million during the prior year.
Gross profits as a percentage of net sales were 23% during the current quarter
equal to the same quarter in 1996.
Selling, general and administrative expense increased $0.2 million or 1%
to $21.8 million during the quarter compared to $21.6 million for the same
period in the prior year. Selling, general and administrative expense as a
percent of sales remained at approximately 17% of sales.
Operating income increased 34% to $8.5 million (7% of net sales) for the
second quarter of 1997 compared to $6.3 million (5% of net sales) in 1996. The
increase was due primarily to a $2.7 million or 71% increase in operating income
at Morgan partially offset by a $1.5 million deterioration in operating income
at TAG.
Morgan
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales increased 21% to $93.4 million for the first six months of
1997 compared to sales of $77.3 million for the first six months of 1996 as
demand for Morgan's commercial van bodies increased. Shipments increased 32%
during the 1997 period compared to 1996 including an 83% increase in consumer
rental product shipments. Backlog at June 30, 1997 was $39.2 million compared to
$39.4 million at December 31, 1996.
Cost of sales increased 17% to $78.3 million for the first six months of
1997 compared to $67.1 million for the same period in 1996. Gross profit
increased 48% to $15.1 million (16% of net sales) during 1997 compared to $10.2
million (13% of net sales) during 1996, due primarily to increased sales and
improved absorption of overhead costs.
Selling, general and administrative expense increased 5% to $7.1 million
(8% of net sales) for the first six months of 1997 compared to $6.7 million (9%
of net sales) for the same period of 1996.
Morgan's operating income increased $4.5 million to $8.0 million during
the first six months of 1997 compared to $3.5 million for the first six months
of 1996 due to the increase in gross margins and the improved absorption of
overhead costs.
Second Quarter 1997 Compared to Second Quarter 1996
Net sales increased 25% to $56.0 million for the second quarter of 1997
compared to $44.9 million for the second quarter of 1996, as demand for
commercial van bodies increased. The number of units shipped increased 33%
during the 1997 period compared to 1996 primarily due to an increase in
shipments of consumer rental units. Consumer rental sales increased $4.9 million
or 51% and retail sales increased $4.9 million or 15%.
Cost of sales increased 22% to $45.8 million for the second quarter of
1997 compared to $37.7 million for the same period in 1996. Gross profit
increased 40% to $10.1 million (18% of net sales) during 1997 compared to $7.2
million (16% of net sales) during 1996. The improvement in gross profit as a
percent of sales was primarily due to improved absorption of manufacturing
overhead costs.
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<PAGE>
Selling, general and administrative expense increased 6% to $3.6 million
(6% of net sales) for the second quarter of 1997 compared to $3.4 million (8% of
net sales) for the same period of 1996. Morgan's selling, general and
administrative expense as a percent of sales decreased as certain costs did not
increase in proportion to sales increases.
Morgan's operating income increased 71% to $6.5 million during the
second quarter of 1997 compared to $3.8 million for the second quarter of 1996.
The increase in operating income was due primarily to higher sales and greater
overhead absorption during the 1997 period.
Truck Accessories Group (TAG)
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales decreased $11.0 million or 13% to $71.4 million for the first
six months of 1997 compared to $82.4 million for the same period in 1996. TAG
Manufacturing net third party sales decreased 3% to $44.9 million for the six
months ended June 30, 1997 compared to $46.2 million for the first six months in
1996. Net third party sales by Leer Manufacturing declined $2.5 million or 10%
which was partially offset by a $2.1 million or 41% increase at Raider. Sales at
Century were consistent with the prior period.
Net third party sales at TAG Distribution decreased 27% to $26.5 million
for the six months ended June 30, 1997 from $36.2 million for the first six
months in 1996. At Leer Retail, sales decreased 29% to $17.9 million and same
store sales decreased approximately 14%, primarily due to lower cap sales. Leer
Retail operated six fewer stores during the 1997 period compared to the first
six months of 1996, which reduced sales approximately $1.3 million during 1997,
compared to 1996. Wholesale sales decreased 21% or $3.5 million primarily due to
softness in certain regional markets and the loss of customers resulting from a
reorganization of service areas late in 1996.
Gross profit during the first six months of 1997 decreased $3.0 million
or 14% to $18.4 million compared to $21.4 million during the 1996 period. Gross
profit as a percentage of sales was 26% of net sales during the 1997 and 1996
periods. The decrease in gross profit was due primarily to a 21% or $2.4 million
decrease in gross profit at TAG Distribution on a 27% decrease in sales.
Selling, general and administrative expense decreased 3% to $22.6
million (or 33% of net sales) for the first six months of 1997 compared to $23.3
million (or 29% of net sales) for the first six months of 1996, due mostly to
decreased selling and delivery expenses at TAG Distribution.
TAG's operating loss increased $2.2 million to $4.1 million for the
first six months of 1997 compared to an operating loss of $1.9 million for the
first six months of 1996, primarily due to lower absorption of overhead on lower
sales.
Second Quarter 1997 Compared to Second Quarter 1996
Net sales decreased 15% to $38.4 million for the second quarter of 1997
compared to $45.1 million for the second quarter of 1996. Net third party sales
by the TAG Manufacturing Division decreased 4% to $24.1 million compared to
$25.0 million during 1996. TAG Distribution Division sales
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<PAGE>
decreased 29% to $14.3 million during 1997 compared to $20.1 million during
1996. At Leer Retail, sales decreased 23%, same store sales decreased
approximately 17%, primarily due to lower cap sales. Leer Retail operated six
fewer stores during the 1997 period compared to the first six months of 1996,
which reduced sales approximately 6%. Wholesale sales decreased 38% primarily
due to softness in certain regional markets and the loss of customers resulting
from a reorganization of service areas late in 1996.
Primarily due to lower sales at TAG Distribution, TAG gross profit
decreased 15% to $10.3 million (27% of net sales) for the second quarter of 1997
compared to $12.1 million (27% of net sales) for the 1996 period.
Selling, general and administrative expense decreased 3% to $11.6
million (or 30% of net sales) for the second quarter of 1997 compared to $11.9
million (or 26% of net sales) for the second quarter of 1996.
TAG's operating loss increased $1.5 million to $1.3 million for the
quarter ended June 30, 1997 compared to an operating profit of $0.2 million
during the quarter ended June 30, 1996, principally because of lower sales and a
resultant decrease in the absorption of overhead.
Lowy
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales increased 1% to $34.8 million for the first six months of 1997
compared to $34.4 million for the first six months of 1996.
Cost of sales increased 2% to $25.0 million for the first six months of
1997 compared to $24.8 million for the same period in 1996. Gross profit
increased 2% to $9.8 million (28% of net sales) for the first six months of 1997
compared to $9.6 million (28% of net sales) for the 1996 period.
Selling, general and administrative expense decreased 2% to $7.9 million
(22% of net sales) for the first six months of 1997 compared to $8.0 million
(23% of net sales) for the first six months of 1996. The decrease was due
primarily to reduced sample expense and reduced costs associated with a
reduction in sales personnel.
Lowy Distribution sold two locations during the period realizing a gain
of $3.0 million, which was included in Other Income and Expense, for the six
months ended June 30, 1997. A warehouse facility near Minneapolis, Minnesota was
sold effective March 31, 1997 and the operations moved to new location during
the quarter ended June 30, 1997. Effective June 30, 1997 Lowy distribution sold
and leased back a warehouse facility in Ankeny, Iowa.
Lowy Group's operating income increased $3.4 million to $4.9 million for
the first six months of 1997 compared to $1.6 million for the first six months
of 1996, $3.0 million of the improvement was due to the gain realized on the
sale of certain properties.
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<PAGE>
Second Quarter 1997 Compared to Second Quarter 1996
Net sales decreased 1% to $18.3 million for the second quarter of 1997
compared to $18.4 million for the second quarter of 1996. The decrease in sales
resulted primarily from lower residential construction activity in Lowy's trade
area and a decrease in activity by a single, large commercial customer.
Cost of sales remained $12.9 million for the second quarter of 1997
compared to the second quarter of 1996. Gross profit decreased 4% to $5.3
million (29% of net sales) for the second quarter of 1997 versus $5.6 million
(30% of net sales) for the second quarter of 1996. The decrease in gross profit
as a percent of net sales was primarily due to lower overhead absorption on
lower sales.
Selling, general and administrative expense decreased slightly to $4.0
million during the second quarter of 1997 compared to $4.1 million during the
second quarter of 1996.
Lowy Group's operating income increased $0.2 million to $1.7 million for
the second quarter of 1997 compared to $1.5 million for the first six months of
1996, primarily as a result of a $0.4 million gain on the sale-leaseback of a
warehouse facility.
EFP
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales increased 9% to $15.6 million for the first six months of 1997
compared to $14.4 million for the comparable period of 1996, primarily due to
sales from the door core business started during 1996 and increased Styrocast(R)
sales.
Cost of sales increased 5% to $12.5 million during the 1997 period
compared to $11.9 million during 1996. Gross profit increased to $3.2 million
(20% of net sales) for the first six months of 1997 compared to $2.5 million
(17% of net sales) for the first six months of 1996. The increase in gross
profit as a percentage of sales was due to lower raw material costs and a more
favorable product mix.
Selling, general and administrative expenses increased 20% to $2.0
million (12% of net sales) for the first six months of 1997 compared to $1.7
million (12% of net sales) during the comparable period of 1996. The increase
was primarily due to greater selling expense on higher sales.
EFP's operating income increased to $1.2 million for the first six
months of 1997 compared to $0.9 million for the first six months of 1996, due
primarily to improved absorption of overhead expenses including selling, general
and administrative expenses.
Second Quarter 1997 Compared to Second Quarter 1996
Net sales increased 8% to $7.9 million for the second quarter of 1997
compared to $7.4 million for the comparable period of 1996.
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<PAGE>
Cost of sales of $6.2 million during the 1997 period approximated the
$6.2 million during 1996. Gross profit increased $0.6 million to $1.7 million
(22% of net sales) for the second quarter of 1997 compared to $1.1 million (15%
of net sales) for the second quarter of 1996.
Selling, general and administrative expense increased 22% to $1.0
million (13% of net sales) for the second quarter of 1997 compared to $0.8
million (11% of net sales) during the comparable period of 1996, primarily due
to increased sales personnel and advertising costs.
EFP's operating income increased $0.4 million to $0.7 million for the
second quarter of 1997, compared to operating income of $0.3 million for the
same period of 1996.
Magnetic Instruments
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Net sales increased 20% to $15.2 million for the first six months of
1997 compared to $12.6 million during the comparable period in 1996 as a result
of strong demand for oil field service related products.
Cost of sales increased 21% to $10.7 million for the first six months of
1997 compared to $8.9 million for the first six months of 1996. Gross profit
increased to $4.4 million (29% of net sales) for the first six months of 1997
compared to $3.8 million (30% of net sales) for the first six months of 1996.
Selling, general and administrative expenses increased to $1.6 million
(11% of net sales) for the first six months of 1997 compared to $1.4 million
(11% of net sales) for the comparable period in 1996.
Operating income increased by $0.5 million to $2.8 million for the first
six months of 1997 compared to $2.3 million for the first six months of 1996.
Second Quarter 1997 Compared to Second Quarter 1996
Net sales increased 23% to $7.8 million for the second quarter of 1997
compared to $6.4 million during the comparable period in 1996. This increase in
net sales was due to increased demand from energy service companies, Magnetic
Instrument's primary market.
Cost of sales increased 23% to $5.5 million for the second quarter of
1997 compared to $4.5 million for the second quarter of 1996. Gross profit
increased 21% to $2.3 million or 30% of net sales during 1997 compared to $1.9
million or 30% of net sales during the same period in 1996.
Selling, general and administrative expense increased $0.1 million to
$0.8 million for the second quarter of 1997 compared to $0.7 million for the
second quarter of 1996. Selling, general and administrative expense as a percent
of net sales was 11% during both periods.
Operating income increased to $1.5 million for the second quarter of
1997 compared to $1.2 million for the second quarter of 1996, primarily due to
the increased net sales and resultant gross profit.
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<PAGE>
Liquidity and Capital Resources
Operating activities during the six months ended June 30, 1997 used cash
of $1.3 million compared to generating cash of $5.9 million during the same
period in 1996 primarily due to increased investment in working capital. Working
capital decreased $3.2 million at June 30, 1997 compared to June 30,1996.
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 June 30, 1997 the Company had total borrowing capacity of $50.0
million, of which $6.4 million was used to secure letters of credit and finance
trade transactions. Additionally, $33.3 million had been borrowed to fund
operations resulting in unused available borrowing capacity of $10.3 million. At
August 1, 1997 the Company had unused available borrowing capacity of $12.2
million under the terms of the Revolving Credit Agreement.
The Company realized proceeds of $3.6 million, from the sale of certain
warehouse facilities by Lowy, which will be used to fund operations. Capital
expenditures of $4.1 million increased 20% during the six months ended June
30,1997 compared to 1996. Capital expenditures relate primarily to the
maintenance of existing capacity.
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 of the Revolving Loan Agreement.
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.
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
- 13 -
<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: August 12, 1997 By: S. Magee
-----------------------------------------------
S. Magee, Chief Financial Officer and Treasurer
By: R. S. Whatley
-----------------------------------------------
R. S. Whatley, Chief Accounting Officer
- 14 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE 1997 2ND
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,737
<SECURITIES> 0
<RECEIVABLES> 42,450
<ALLOWANCES> 1,835
<INVENTORY> 56,243
<CURRENT-ASSETS> 104,207
<PP&E> 50,191
<DEPRECIATION> 0
<TOTAL-ASSETS> 187,836
<CURRENT-LIABILITIES> 78,075
<BONDS> 105,388
0
0
<COMMON> 16,486
<OTHER-SE> (12,113)
<TOTAL-LIABILITY-AND-EQUITY> 187,836
<SALES> 230,328
<TOTAL-REVENUES> 230,328
<CGS> 179,405
<TOTAL-COSTS> 179,405
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,495
<INCOME-PRETAX> 2,943
<INCOME-TAX> 1,521
<INCOME-CONTINUING> 1,422
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,422
<EPS-PRIMARY> 0.465
<EPS-DILUTED> 0.465
<FN>
OTHER EXPENSES ARE INCLUDED IN SELLING, GENERAL AND ADMINISTRATIVE ON
THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
