EXHIBIT 99.1
Company Press Release November 30, 2000, titled "Stewart & Stevenson Services
Reports Third Quarter Results."
STEWART & STEVENSON SERVICES
REPORTS THIRD QUARTER RESULTS
THIRD QUARTER REVENUES UP 21 PERCENT
OPERATING PROFIT INCREASES 41 PERCENT
HOUSTON - NOVEMBER 30, 2000 - Stewart & Stevenson Services, Inc. (NASDAQ:SSSS),
a leading manufacturer, service provider, and distributor of industrial and
energy related equipment, announced today that sales for the third fiscal
quarter ended October 28, 2000 grew 21 percent to $284.2 million compared to
sales of $234.7 million for the third quarter of 1999. Operating profit for the
Company's segments was $17.3 million for the quarter, up 41 percent over last
year's third quarter of $12.3 million. Net earnings for the third quarter of
2000 increased 16 percent to $8.6 million, or $0.30 per diluted share, compared
to net earnings of $7.4 million, or $0.26 per share in the third quarter of
1999. Last year's third quarter included a $2.7 million after-tax gain, the
equivalent of $0.09 per share, on the sale of an investment. Excluding this
gain, net earnings in the third quarter of fiscal 2000 increased 85 percent.
Sales for the first nine months of 2000 grew 30 percent to $808.5 million
versus $624.3 million for the first nine months of 1999. Net earnings for the
first nine months totaled $23.9 million, or $0.84 per diluted share, compared to
$12.5 million, or $0.45 per share, in the same period last year.
Michael L. Grimes, President and Chief Executive Officer, stated: "We are
again very pleased with the growth we achieved during the third quarter, which
is our seventh consecutive quarter of improved earnings. We are particularly
pleased with the improved earnings performance in our Power Products and
Petroleum Equipment segments, as well as the sustained progress in generating
positive cash flow. We continue to focus on five key initiatives to: (1)
strengthen business leadership, (2) improve cash flow management, (3) enhance
supply chain productivity, (4) revitalize business growth, and (5) implement a
new enterprise-wide information system. We are counting on these initiatives to
continue to drive earnings improvements and fuel organic growth."
SEGMENT DATA
The Petroleum Equipment segment manufactures and services equipment for
oil and gas exploration, production, and well stimulation industries. Sales for
this segment totaled $25.5 million for the third quarter, compared to $18.1
million in the second quarter of 2000 and $12.8 million for the third quarter of
1999. Operating profit for Petroleum Equipment totaled $1.5
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million, compared to a $0.4 million profit in the second quarter of 2000 and a
$1.4 million loss a year ago. Order backlog for this segment grew to $65.6
million at quarter end, up $10.0 million over the backlog reported at the end of
the second quarter of 2000.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment, recorded third
quarter sales of $162.5 million, compared to $130.4 million for the third
quarter of 1999. Operating profit for the Power Products segment totaled $6.3
million for the quarter, compared to a $4.9 million profit a year ago. Third
quarter results reflected improved parts and service revenues in all five
regions.
The Tactical Vehicle Systems segment, which manufactures and services
medium duty trucks for the U.S. Army and others, recorded sales of $69.0
million, compared to $51.6 million a year ago. Operating profit for the third
quarter of 2000 amounted to $10.0 million, compared to $10.1 million a year ago.
Results for the quarter included $2.0 million in unfavorable non-recurring
items, principally provisions for warranty costs and certain billing
adjustments.
The Airline Products segment, which manufactures airline ground support
products and mobile railcar movers, recorded sales of $26.8 million in the third
quarter, compared to last year's third quarter results of $29.0 million. The
$0.5 million operating loss for the quarter included new product development
expenditures as well as timing of volume rebates. A profit of $0.2 million was
recorded in last year's third quarter. The new S&S Tug management leadership
team, which was assembled earlier this year, continues to take actions to
position this business for future profitable growth.
Other business activities not identified in a specific segment include
predominantly gas compression equipment sales or leases. Sales in the third
quarter totaled $0.4 million, compared to $11.0 million in the third quarter of
1999. Operating losses of $0.1 million and $1.5 million were reported in the
third quarter of this year and last year, respectively. As previously reported,
the gas compression leasing business was sold during the second quarter 2000,
which led to the reduced sales and operating losses.
Cash balances and equivalents at the end of the third quarter totaled
$105.1 million, an increase of $43.2 million during the quarter, largely due to
$44.6 million of net cash provided by operating activities.
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CONFERENCE CALL
Stewart & Stevenson has scheduled a conference call for Thursday, November
30, 2000 at 11:00 a.m. Eastern Time to review third quarter results. To listen
to the call, dial 1-913-981-5519 at least ten minutes before the conference call
begins and ask for the Stewart & Stevenson Services conference call. Investors,
analysts, and the general public will also have the opportunity to listen to the
conference call free over the Internet by visiting the Company's web site at
WWW.SSSS.COM. To listen to the live call on the web, please visit the Stewart &
Stevenson web site at least fifteen minutes early to register, download, and
install any necessary audio software. For those who cannot listen to the live
web cast, an archive will be available shortly after the call ends.
Stewart & Stevenson Services, Inc., founded in 1902, is a
[STEWART &] billion-dollar company that manufactures, distributes, and
[STEVENSON] provides service for a wide range of industrial products and
[SERVICES,] diesel-powered equipment to key industries worldwide,
[INC. LOGO] including petroleum, power generation, defense, airline,
marine, and transportation.
CAUTIONARY STATEMENTS
This press release contains forward-looking statements that are based on
management's current expectations, estimates, and projections. Any such
statements set forth herein or otherwise made in writing or orally by the
Company with regard to its goals or expectations for revenues, its projected or
estimated earnings, its results of operations, or other aspects of its business
are not guarantees of future performance and involve a number of risks,
uncertainties and assumptions and are made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. Many
factors, including those discussed more fully elsewhere in this release and in
the Company's filings with the Securities and Exchange Commission, particularly
its latest annual report on Form 10-K, as well as others, could cause actual
results to differ materially from those stated. These factors include, but are
not limited to: risks associated with newly acquired businesses or other
business combinations; changes in the costs or availability of the Company's raw
materials or other factors of production; changes in pricing or product or
service offerings by the Company's foreign and domestic competitors; changes in
demand for the Company's products and services; technological developments and
changes; the Company's or others' ability to continue to introduce competitive
new products and services on a timely, cost effective basis; the mix of products
and services sold or marketed by the Company; the achievement of reduced costs
and expenses; the gain or loss of significant customers; technological,
implementation, and cost or financial risks in use of large, multi-year
contracts; the cyclical nature of markets served by the Company; the outcome of
pending and future litigation, governmental proceedings or other actions against
the Company; the continued availability of financing, financial instruments and
financial resources in the amount, at the times and on the terms required to
support the Company's business; the assessment of unanticipated taxes or
imposition of eminent domain by foreign or domestic governmental authorities;
the risk of cancellation or adjustment of specific orders and termination of
significant government programs; disruptions in production and/or increased
costs due to labor disputes and enactment of adverse state, federal or foreign
legislation or changes in government policy or regulation. In addition, such
forward-looking statements could be affected by general industry and market
conditions and growth rates, general domestic and international conditions
including interest rates, inflation and currency exchange rates and other future
factors. Actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
- TABLES TO FOLLOW -
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
------------------------------------ ------------------------------------
OCTOBER 28, 2000 OCTOBER 30, 1999 OCTOBER 28, 2000 OCTOBER 30, 1999
---------------- ---------------- ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales .............................................. $ 808,499 $ 624,267 $ 284,227 $ 234,716
Cost of sales ...................................... 677,808 527,505 236,441 199,095
---------------- ---------------- ---------------- ----------------
Gross profit ....................................... 130,691 96,762 47,786 35,621
Selling and administrative expenses ................ 91,361 76,431 31,878 26,166
Interest expense ................................... 6,739 8,812 2,383 2,102
Interest and investment income ..................... (6,230) (854) (1,318) (185)
Other income, net .................................. 1,051 (2,924) 1,364 (154)
---------------- ---------------- ---------------- ----------------
92,921 81,465 34,307 27,929
---------------- ---------------- ---------------- ----------------
Earnings before income taxes ....................... 37,770 15,297 13,479 7,692
Income tax expense ................................. 13,903 5,673 4,889 2,857
---------------- ---------------- ---------------- ----------------
Earnings of consolidated companies ................. 23,867 9,624 8,590 4,835
Gain on sale of investment, net of tax ............. -- 2,746 -- 2,746
Equity in net earnings of unconsolidated affiliates. -- 142 -- (192)
---------------- ---------------- ---------------- ----------------
Net earnings ....................................... $ 23,867 $ 12,512 $ 8,590 $ 7,389
================ ================ ================ ================
Weighted average shares outstanding:
Basic ........................................... 28,018 27,988 28,041 27,992
Diluted ......................................... 28,277 28,036 28,478 28,082
Earnings per share:
Basic ............................................ $ 0.85 $ 0.45 $ 0.31 $ 0.26
Diluted .......................................... $ 0.84 $ 0.45 $ 0.30 $ 0.26
Cash dividends per share ........................... $ 0.255 $ 0.255 $ 0.085 $ 0.085
</TABLE>
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STEWART & STEVENSON SERVICES, INC.
SEGMENT INFORMATION
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
------------------------------------- ------------------------------------
OCTOBER 28, 2000 OCTOBER 30, 1999 OCTOBER 28, 2000 OCTOBER 30, 1999
---------------- ---------------- ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SALES
Power Products ..................... $ 443,751 $ 396,578 $ 162,520 $ 130,381
Tactical Vehicle Systems ........... 203,346 63,588 69,021 51,555
Petroleum Equipment ................ 58,575 64,899 25,517 12,787
Airline Products ................... 83,308 74,863 26,785 29,026
Other Business Activities .......... 19,519 24,339 384 10,967
---------------- ---------------- ---------------- ----------------
Total ............................ $ 808,499 $ 624,267 $ 284,227 $ 234,716
================ ================ ================ ================
OPERATING PROFIT (LOSS)
Power Products ..................... $ 8,747 $ 15,660 $ 6,330 $ 4,869
Tactical Vehicle Systems ........... 38,980 13,248 10,023 10,105
Petroleum Equipment ................ 1,224 2,222 1,493 (1,427)
Airline Products ................... (4,802) (547) (465) 214
Other Business Activities .......... 2,519 (1,076) (113) (1,476)
---------------- ---------------- ---------------- ----------------
Total ............................ 46,668 29,507 17,268 12,285
NON-OPERATING INCOME/(EXPENSE)
Corporate expense, net ............. (8,389) (5,427) (3,044) (2,491)
Interest income .................... 6,230 29 1,638 --
Interest expense ................... (6,739) (8,812) (2,383) (2,102)
---------------- ---------------- ---------------- ----------------
EARNINGS BEFORE INCOME TAXES ......... $ 37,770 $ 15,297 $ 13,479 $ 7,692
================ ================ ================ ================
OPERATING PROFIT (LOSS) PERCENTAGE
Power Products ..................... 2.0% 3.9% 3.9% 3.7%
Tactical Vehicle Systems ........... 19.2 20.8 14.5 19.6
Petroleum Equipment ................ 2.1 3.4 5.9 (11.2)
Airline Products ................... (5.8) (0.7) (1.7) 0.7
Other Business Activities .......... 12.9 (4.4) N/M (13.5)
</TABLE>
N/M - Not Meaningful
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STEWART & & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
-------------------------- --------------------------
OCTOBER 28, OCTOBER 30, OCTOBER 28, OCTOBER 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating Activities
Net earnings from continuing operations ........................... $ 23,867 $ 12,512 $ 8,590 $ 7,389
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Accrued postretirement benefits ............................... 801 775 183 59
Depreciation and amortization ................................. 16,135 15,895 5,110 5,069
Deferred income taxes, net .................................... (980) (225) (226) (54)
Gain on sale of business assets ............................... (5,649) -- -- --
Change in operating assets and liabilities net of the effect
of acquisition, divestiture and discontinued operations:
Accounts and notes receivable, net ......................... 86,284 (33,494) 49,338 (12,946)
Recoverable costs and accrued profits not yet billed ....... (12,756) 90,689 (8,020) 26,439
Inventories ................................................ (21,511) 23,900 (37,469) 14,189
Accounts payable ........................................... (28,839) (10,383) 8,993 15,769
Accrued payrolls and incentive ............................. (5,492) (5,065) (1,160) (1,760)
Current income taxes, net .................................. 6,413 15,998 (3,714) 2,066
Other current liabilities .................................. 26,862 (9,204) 19,643 (5,674)
Other--principally long-term assets and liabilities ........ (1,015) (8,479) 3,359 (2,628)
----------- ----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ......................... 84,120 92,919 44,627 47,918
----------- ----------- ----------- -----------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment .................... (26,255) (24,690) (5,697) (8,005)
Proceeds from sale of business assets ............................. 52,622 -- 8,000 --
Disposal of property, plant and equipment, net .................... 2,212 14,054 (76) 6,101
----------- ----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ............... 28,579 (10,636) 2,227 (1,904)
----------- ----------- ----------- -----------
FINANCING ACTIVITIES
Additions to long-term borrowings ................................. 20,417 16,234 370 --
Payments on long-term borrowings .................................. (20,522) (81,896) (296) (15,295)
Net short-term payments ........................................... (12,172) (2,507) (1,448) (10,585)
Dividends paid .................................................... (7,138) (7,138) (2,377) (2,380)
Exercise of stock options ......................................... 58 -- 53 --
----------- ----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES ............................. (19,357) (75,307) (3,698) (28,260)
----------- ----------- ----------- -----------
Increase in cash and cash equivalents ................................ 93,342 6,976 43,156 17,754
Cash and cash equivalents, beginning of period ....................... 11,715 12,959 61,901 2,181
----------- ----------- ----------- -----------
Cash and cash equivalents, end of period ............................. $ 105,057 $ 19,935 $ 105,057 $ 19,935
=========== =========== =========== ===========
</TABLE>
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In thousands)
<TABLE>
<CAPTION>
OCTOBER 28, 2000 JANUARY 31, 2000
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................... $ 105,057 $ 11,715
Accounts and notes receivable, net .......................... 160,641 242,625
Recoverable costs and accrued profits not yet billed ........ 20,907 8,151
Income tax receivable ....................................... 18,053 26,255
Deferred tax asset .......................................... 11,067 9,076
Inventories:
Power Products ........................................... 167,250 150,844
Petroleum Equipment ...................................... 40,857 30,151
Airline Products ......................................... 31,585 26,029
Other Business Activities ................................ -- 33,762
Excess of current cost over LIFO values .................. (50,506) (49,839)
---------------- ----------------
189,186 190,947
---------------- ----------------
TOTAL CURRENT ASSETS ..................................... 504,911 488,769
PROPERTY, PLANT AND EQUIPMENT .................................. 284,115 290,355
Allowances for depreciation and amortization ................ (171,298) (160,821)
---------------- ----------------
112,817 129,534
DEFERRED INCOME TAX ASSET ...................................... 370 166
INVESTMENTS AND OTHER ASSETS ................................... 22,724 23,881
---------------- ----------------
$ 640,822 $ 642,350
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable ............................................... $ 13,097 $ 25,269
Accounts payable ............................................ 61,324 90,163
Accrued payrolls and incentives ............................. 13,209 18,701
Current income taxes ........................................ 3,459 3,257
Current portion of long-term debt ........................... 29,384 8,955
Other current liabilities ................................... 91,865 65,455
---------------- ----------------
TOTAL CURRENT LIABILITIES ................................ 212,338 211,800
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT ................................................. 57,747 78,281
DEFERRED INCOME TAXES .......................................... 182 958
ACCRUED POSTRETIREMENT BENEFITS ................................ 13,549 12,748
DEFERRED COMPENSATION .......................................... 2,160 2,436
OTHER LONG-TERM LIABILITIES .................................... 2,980 1,048
---------------- ----------------
TOTAL LIABILITIES .......................................... 288,956 307,271
---------------- ----------------
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000 shares
authorized; 28,059,416 and 27,992,203 shares issued at
October 28, 2000 and January 31, 2000, respectively .......... 47,780 47,722
Retained earnings ........................................... 304,086 287,357
---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY ............................... 351,866 335,079
---------------- ----------------
$ 640,822 $ 642,350
================ ================
</TABLE>
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STEWART & STEVENSON SERVICES, INC.
SELECTED OTHER INFORMATION
ORDER BACKLOG
-------------------------------------------------
JANUARY 31, APRIL 29, JULY 29, OCTOBER 28,
($ Millions) 2000 2000 2000 2000
----------- --------- --------- -----------
Tactical Vehicle Systems ... $ 914.5 $ 839.5 $ 795.7 $ 742.8
Power Products ............. 77.6 89.9 116.7 119.2
Petroleum Equipment ........ 17.2 26.5 55.6 65.6
Airline Products ........... 29.7 22.2 21.1 21.3
Other Business Activities .. 24.0 14.7 10.1 16.5
----------- --------- --------- -----------
$ 1,063.0 $ 992.8 $ 999.2 $ 965.4
=========== ========= ========= ===========
SELECTED TACTICAL VEHICLE SYSTEMS INFORMATION
<TABLE>
<CAPTION>
FISCAL YEAR 2000
-------------------------------------------- FISCAL YEAR
Unit Shipments 1Q 2Q 3Q 4Q* TOTAL* 2001*
------ ------ ------ ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
MTV ............................ 311 186 339 503 1,339 1,683
LMTV ........................... 91 74 0 30 195 509
Trailers ....................... 0 0 0 0 0 690
------ ------ ------ ------ -------- -----------
402 260 339 533 1,534 2,882
====== ====== ====== ====== ======== ===========
Estimated Sales ($ millions) ... -- -- -- -- $ 300* $ 400*
====== ====== ====== ====== ======== ===========
</TABLE>
*Based on current US Army forecast and other data.
See "Cautionary Statements" above for information regarding forward-looking
statements.
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