EXHIBIT INDEX
99.1 Company Press Release August 24, 2000, titled "Stewart & Stevenson Reports
Second Quarter Results."
------------------
Exhibit 99.1
Client: Stewart & Stevenson Services, Inc.
Contact: John Doster, CFO
Stewart & Stevenson Services, Inc.
713-868-7602
Ken Dennard / [email protected]
Lisa Elliott / [email protected]
Easterly Investor Relations
713-529-6600
STEWART & STEVENSON SERVICES
REPORTS SECOND QUARTER RESULTS
SECOND QUARTER REVENUES UP 32 PERCENT
NET EARNINGS INCREASE 159 PERCENT
DILUTED EPS GROWS 145 PERCENT TO $0.27
HOUSTON - AUGUST 24, 2000 - Stewart & Stevenson Services, Inc.
(NASDAQ:SSSS), a leading manufacturer and distributor of industrial and energy
related equipment, announced today that sales for the second fiscal quarter
ended July 29, 2000 grew 32 percent to $265.1 million compared to sales of
$200.6 million for the second quarter of 1999. Net earnings for the second
quarter of 2000 increased 159 percent to $7.8 million, or $0.27 per diluted
share, compared to net earnings of $3.0 million, or $0.11 per share, in the
second quarter of 1999.
Sales for the first six months of 2000 grew 35 percent to $524.3 million
versus $389.6 million for the first six months of 1999. First half net earnings
tripled to $15.3 million, or $0.54 per diluted share, compared to $5.1 million,
or $0.18 per share, in last year's first half.
Michael L. Grimes, President and Chief Executive Officer, stated: "We are
very pleased with the growth we achieved during the second quarter, which is our
sixth consecutive quarter of improved earnings. We have dramatically improved
our balance sheet which enhances our future business options. Recent
organization changes have resulted in further identification of business process
improvement opportunities, as evidenced by further rationalization of the
Airline Products product line and revisions to bid and proposal activity in the
newly established power generation business. 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."
SEGMENT DATA
The Tactical Vehicle Systems segment, which manufactures and services
transportation systems for the U.S. Army and others, recorded sales of $55.7
million, compared to $78.7 million in the first quarter of 2000 and $5.8 million
for the second quarter of 1999. The U.S. Army's most recent delivery schedule
shifted some truck deliveries from the second quarter to the fourth quarter of
fiscal 2000. Operating profit for the second quarter of 2000 amounted to $14.3
million, compared to $14.6 million in the first quarter and $2.0 million a year
ago, and included a $3.1 million recovery from a canceled Australian contract
and a $1.0 million favorable adjustment for lower than expected overhead costs
and additional billing recoveries.
The Petroleum Equipment segment manufactures and services equipment for oil
and gas exploration, production and well stimulation industries. Sales for this
segment totaled $18.1 million for the second quarter, compared to $14.9 million
in the first quarter and $23.6 million for the second quarter of 1999. Operating
profit for Petroleum Equipment totaled $0.4 million, compared to a $0.7 million
loss in the first quarter and a $1.7 million profit a year ago. The order
backlog for petroleum equipment, which now exceeds $55 million, has increased
substantially during the first half and is expected to drive future earnings
improvement in this segment.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment, recorded second
quarter sales of $154.1 million, compared to $127.1 million in the first quarter
and $144.9 million for the second quarter of 1999. Operating profit for the
Power Products segment totaled $3.2 million for the quarter compared to a $0.8
million loss in the first quarter and a $7.7 million profit a year ago. Second
quarter results were adversely impacted by $2.1 million lower than expected
profit margins on orders in the newly established power generation business and
a $2.5 million increase in reserves primarily for inventories. The first quarter
included special charges totaling $6.4 million, principally in connection with a
potentially uncollectible account and note receivable.
The Airline Products segment, which manufactures airline ground support
products and mobile railcar movers, recorded sales of $28.3 million in the
second quarter, equal to the first quarter sales and 20 percent above last
year's second quarter results of $23.6 million. The $4.3 million operating loss
for the quarter included $4.3 million in inventory write downs, principally
associated with a decision to make changes in the existing product portfolio.
These actions are being taken by the new S&S Tug management leadership team,
which was assembled earlier this year, after completing an assessment of current
and future product planning requirements. This segment reported breakeven
results in the first quarter of fiscal 2000 and a $0.8 million loss for the
second quarter of fiscal 1999.
Other business activities not identified in a specific segment include
predominantly gas compression equipment sales or leases. Sales in the second
quarter totaled $8.9 million, compared to $10.2 million in the first quarter and
$2.7 million for the second quarter of 1999. Operating profit for the second
quarter totaled $3.3 million and included a $5.6 million gain on sale of the gas
compression leasing business. Operating losses for the first quarter of 2000 and
second quarter of 1999 were $0.6 million and $0.4 million, respectively.
Cash balances and equivalents at the end of the second quarter totaled
$61.9 million, an increase of $46.5 million which included $44.6 million in cash
proceeds from the sale of the gas compression rental business. Net cash provided
by operating activities totaled $14.0 million in the second quarter and $39.5
million for the first half.
Management's 11:00AM EDT conference call discussing today's release will be
webcast live on Stewart & Stevenson Services' website at www.ssss.com.
<PAGE>
Stewart & Stevenson Services, Inc., founded in 1902, is a
billion-dollar company that manufactures and distributes a wide range of
industrial products and diesel-powered equipment to key industries worldwide,
including petroleum, power generation, defense, airline, marine and
transportation.
This press release contains forward-looking statements that are based on
management's current expectations, estimates, and projections. These statements
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 results to
differ materially from those stated. These factors include, but are not limited
to, risks associated with newly acquired businesses; increasing price and
product/service competition by foreign and domestic competitors; rapid
technological developments and changes; the ability to continue to introduce
competitive new products and services on a timely, cost effective basis; the mix
of products/services; the achievement of lower costs and expenses; reliance on
large customers; technological, implementation and cost/financial risks in use
of large, multi-year contracts; the cyclical nature of the markets served; the
outcome of pending and future litigation and governmental proceedings; 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 by foreign or domestic
governmental authorities; and the risk of cancellation or adjustment of specific
orders and termination of significant government programs. 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 -
<PAGE>
<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share data)
SIX MONTHS ENDED THREE MONTHS ENDED
-------------------------------------- ----------------------------
JULY 29, 2000 JULY 31, 1999 JULY 29, 2000 JULY 31, 1999
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $ 524,272 $ 389,551 $ 265,065 $ 200,640
Cost of sales 441,367 328,410 228,050 169,360
-------------- ------------- ------------- -------------
Gross profit 82,905 61,141 37,015 31,280
Selling and administrative expenses 59,483 50,265 23,392 24,774
Interest expense 4,356 6,710 2,047 3,259
Other income, net (5,225) (3,439) (791) (1,244)
-------------- ------------- ------------- -------------
58,614 53,536 24,648 26,789
-------------- ------------- ------------- -------------
Earnings before income taxes 24,291 7,605 12,367 4,491
Income tax expense 9,014 2,816 4,588 1,663
-------------- ----------- ------------- -------------
Earnings of consolidated companies 15,277 4,789 7,779 2,828
Equity in net earnings of unconsolidated affiliates - 334 - 175
-------------- ----------- ------------- -------------
Net earnings $ 15,277 $ 5,123 $ 7,779 $ 3,003
============== =========== ============= =============
Weighted average shares outstanding:
Basic 28,005 27,986 28,013 27,989
Diluted 28,175 28,010 28,299 28,086
Earnings per share:
Basic $ 0.55 $ 0.18 $ 0.28 $ 0.11
Diluted $ 0.54 $ 0.18 $ 0.27 $ 0.11
Cash dividends per share $ 0.170 $ 0.170 $ 0.085 $ 0.085
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
SEGMENT INFORMATION
(In thousands)
SIX MONTHS ENDED THREE MONTHS ENDED
------------------------------------ ---------------------------------
JULY 29, 2000 JULY 31, 1999 JULY 29, 2000 JULY 31, 1999
---------------- --------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES
Power Products $ 281,231 $ 266,197 $ 154,140 $ 144,909
Tactical Vehicle Systems 134,325 12,033 55,652 5,818
Petroleum Equipment 33,058 52,112 18,131 23,648
Airline Products 56,523 45,837 28,252 23,585
Other Business Activities 19,135 13,372 8,890 2,680
------------- ------------- ------------- -------------
Total $ 524,272 $ 389,551 $ 265,065 $ 200,640
============= ============= ============= =============
OPERATING PROFIT (LOSS)
Power Products $ 2,417 $ 10,791 $ 3,233 $ 7,701
Tactical Vehicle Systems 28,957 3,143 14,321 2,037
Petroleum Equipment (269) 3,649 404 1,691
Airline Products (4,337) (761) (4,341) (765)
Other Business Activities 2,632 400 3,266 (432)
------------- ------------- ------------- -------------
Total 29,400 17,222 16,883 10,232
Corporate expense, net (5,345) (2,936) (2,869) (2,484)
Non-operating interest income 4,592 29 400 2
Interest expense (4,356) (6,710) (2,047) (3,259)
------------- ------------- ------------- -------------
Earnings from continuing
operations before income taxes $ 24,291 $ 7,605 $ 12,367 $ 4,491
============= ============= ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In thousands)
<S> <C> <C>
JULY 29, 2000 JANUARY 31, 2000
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 61,901 $ 11,715
Accounts and notes receivable, net 217,977 242,625
Recoverable costs and accrued profits not yet billed 12,887 8,151
Income tax receivable 14,823 26,255
Deferred Tax Asset 10,469 9,076
Inventories:
Power Products 138,035 150,844
Petroleum Equipment 26,096 30,151
Airline Products 28,636 26,029
Other Business Activities 8,696 33,762
Excess of current cost over LIFO values (49,746) (49,839)
------------- -------------
151,717 190,947
------------- -------------
TOTAL CURRENT ASSETS 469,776 488,769
PROPERTY, PLANT AND EQUIPMENT 280,585 290,355
Allowances for depreciation and amortization (168,431) (160,821)
------------- -------------
112,154 129,534
DEFERRED INCOME TAX ASSET 128 166
INVESTMENTS AND OTHER ASSETS 23,097 23,881
------------- -------------
$ 605,155 $ 642,350
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 14,545 $ 25,269
Accounts payable 52,331 90,163
Accrued payrolls and incentives 14,369 18,701
Current income taxes 3,345 3,257
Current portion of long-term debt 29,014 8,955
Other current liabilities 72,221 65,903
------------- -------------
TOTAL CURRENT LIABILITIES 185,825 212,248
------------- -------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 58,043 78,281
DEFERRED INCOME TAXES 166 958
ACCRUED POSTRETIREMENT BENEFITS 13,366 12,748
DEFERRED COMPENSATION 2,154 2,436
OTHER LONG-TERM LIABILITIES - 600
------------- -------------
TOTAL LIABILITIES 259,554 307,271
------------- -------------
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000 shares
authorized; 27,992,203 and 28,026,440 shares issued at
July 29, 2000 and January 31, 2000, respectively 47,727 47,722
Retained earnings 297,874 287,357
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 345,601 335,079
------------- -------------
$ 605,155 $ 642,350
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEWART & & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
-------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED
-------------------------------------------------------------------------------
JULY 29, 2000 JULY 31, 1999 JULY 29, 2000 JULY 31, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES
Net earnings from continuing operations $ 15,277 $ 5,123 $ 7,779 $ 3,003
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Accrued postretirement benefits 618 716 370 207
Depreciation and amortization 11,025 10,826 5,493 5,623
Deferred income taxes, net (754) (171) (790) (134)
Gain on sale of business assets (5,649) - (5,649) -
Change in operating assets and liabilities net of the effect
of acquisition, divestiture and discontinued operations:
Accounts and notes receivable, net 36,946 (20,548) (8,018) (7,066)
Recoverable costs and accrued profits not yet billed (4,736) 64,250 1,247 34,241
Inventories 15,958 9,711 28,272 16,525
Accounts payable (37,832) (26,152) (27,803) 11,257
Accrued payrolls and incentive (4,332) (3,305) 89 4,539
Current income taxes, net 10,127 13,932 5,836 12,938
Other current liabilities 7,219 (3,530) 10,058 (2,701)
Other--principally long-term assets and liabilities (4,374) (5,851) (2,905) (5,032)
------------- ------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 39,493 45,001 13,979 73,400
------------- ------------- ------------- -------------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (20,558) (16,685) (10,279) (8,864)
Proceeds from sale of business assets 44,622 - 44,622 -
Disposal of property, plant and equipment, net 2,288 7,953 2,165 6,286
------------- ------------- ------------- -------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 26,352 (8,732) 36,508 (2,578)
------------- ------------- ------------- -------------
FINANCING ACTIVITIES
Additions to long-term borrowings 20,047 16,234 - -
Payments on long-term borrowings (20,226) (66,601) (197) (66,268)
Net short-term borrowings (payments) (10,724) 8,078 (1,234) (1,646)
Dividends paid (4,761) (4,758) (2,382) (2,379)
Repurchase of common stock - - - -
Exercise of stock options 5 - (217 -
------------- ------------- ------------- -------------
NET CASH USED IN FINANCING ACTIVITIES (15,659) (47,047) (4,030) (70,293)
------------- ------------- ------------- -------------
(Decrease) increase in cash and cash equivalents 50,186 (10,778) 46,457 529
Cash and cash equivalents, beginning of period 11,715 12,959 15,444 1,652
------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $ 61,901 $ 2,181 $ 61,901 $ 2,181
============= ============= ============= =============
</TABLE>
