Brush Engineered Materials Reports Strong Sales and Improved Earnings for the First Quarter 2001
CLEVELAND--April 26, 2001--Brush Engineered
Materials Inc. (NYSE:BW) today reported first quarter sales of $145.5
million, the second highest quarterly sales in the Company's history
and a 7.5% increase over 2000 first quarter sales of $135.4 million.
The stronger dollar negatively affected sales growth by approximately
1.5%. During the first quarter the strong sales performance was driven
by demand for telecommunications, computer and optical media product
applications.
Net income for the first quarter 2001 was $6.2 million or $0.37
per share diluted, versus first quarter 2000 net income of $2.2
million or $0.14 cents per share diluted, an increase of $0.23 per
share.
Gross margin for the first quarter 2001 as a percent of sales was
23.4% versus 20.9% for the same period last year, an improvement of
2.5 percentage points, primarily due to improved yield and
productivity and increased prices in Alloy Products and overall
favorable product mix. The margin growth was negatively affected by
foreign currency. Selling, administrative and general expense as a
percent of sales was down by over 1% compared to the first quarter of
2000.
Business Segment Reporting
The first quarter 2001 operating profit results for each segment
include certain corporate and shared service allocated expense and
other costs and expenses due to the reorganization of the Company's
corporate and capital structure approved by shareholders on May 2,
2000 and completed on January 1, 2001. Financial results for each
segment have been adjusted for the first quarter 2000 to reflect these
changes.
Metal Systems Group
The Metal Systems Group consists of Alloy Products, Technical
Materials, Inc. (TMI) and Beryllium Products.
The Metal Systems Group's first quarter sales of $98.6 million
grew 8% over 2000 first quarter sales of $91.2 million. First quarter
operating profits were $6.6 million, an increase of $7.3 million over
the first quarter 2000 operating loss.
Alloy Product sales of $71.2 million were up 6% over 2000 first
quarter sales and up 2% over fourth quarter sales of 2000. Margins
were impacted favorably by improved yield and productivity across the
Alloy strip manufacturing supply chain, product mix and price
increases.
During the first quarter, equipment utilization rates associated
with the alloy strip expansion project at Elmore, Ohio continued to
improve. This progress, along with ongoing improvements at the
Reading, Pennsylvania facility, is continuing to increase the
finishing capacity across the Alloy strip supply chain.
The weaker economy began to impact strip sales, especially North
America computer and telecommunications product applications, in the
latter part of the quarter. It is anticipated that this slowdown will
continue through the second quarter. Overall, Alloy strip
international sales remained strong, driven particularly by demand in
Europe and Southeast Asia. Alloy bulk products markets, including oil
and gas, undersea and aerospace, remain strong and thus far have only
moderately been affected by the economic slowdown. Alloy Products
comprise approximately half of the Company's total sales.
Technical Materials, Inc.'s first quarter sales of $20.5 million
grew 9% over the same period last year. Sales, however, were flat with
fourth quarter 2000 sales. TMI is experiencing slowness in
telecommunications, automotive electronics and computer/ semiconductor
market applications. It is anticipated that this slowdown will
continue through the third quarter of 2001.
Beryllium Products' first quarter sales of $6.9 million are up 32%
over first quarter 2000 sales. Robust demand for aerospace/defense and
medical market applications continued through the first quarter and
order rates remain strong for the second quarter.
Microelectronics Group
The Microelectronics Group includes Williams Advanced Materials
Inc. (WAM), and Electronic Products. (Electronic Products includes
Zentrix Technologies Inc. and Brush Ceramic Products Inc.)
The Microelectronics Group's first quarter sales of $46.9 million
were up 13% over first quarter 2000 sales of $41.6 million. Operating
profit of $2.4 million was slightly over first quarter 2000 operating
profit of $2.1 million.
WAM's first quarter sales of $35.4 million grew 11% over the same
period last year. Absent precious metal prices, sales were up 8%
compared to the first quarter of 2000. Strong sales continued to be
fueled by demand for physical vapor deposition and packaging materials
used for photonic devices and fiber optic components. WAM's improved
performance in the first quarter resulted in record profits.
Electronic Products' sales of $11.5 million increased 18% over the
same period last year, fueled by strong demand for circuitry and
electronic package products for wireless base station and fiber
optics. Electronic Products is, however, experiencing a slowdown in
older and higher volume beryllia ceramic automotive electronic and
wireless telecommunications product applications.
Outlook
Sales of $145.5 million for the first quarter of 2001 were
slightly below the fourth quarter 2000 record sales of $147.2 million.
Overall sales to the Company's major markets, including
telecommunications, computers and optical media, were strong during
most of the first quarter. However, the growth rate in several of
these markets has slowed, particularly telecommunications and
computer. Announcements from certain key demand generators in these
markets have reported excess inventory positions and advised caution
regarding their future revenue growth and earnings.
The length and magnitude of the U.S. economic slowdown will
determine the extent of the impact on the Company's sales and earnings
for the remainder of 2001. The Company anticipates, however, that the
growth in revenue will continue to soften in the second quarter and
that earnings are likely to fall short of analysts' current earnings
estimates, which range from $0.32 to $0.35 per share for the second
quarter. Our current expectation is for earnings for the second
quarter of 2001 to be similar to the earnings of $0.24 per share in
the second quarter of 2000.
Chairman's Comments
Commenting on the results, Gordon D. Harnett, Chairman, President
and Chief Executive Officer, said, "I am delighted with the strong
sales and substantial earnings improvement we had during the first
quarter. I am particularly pleased with the yield and productivity
improvement and progress with equipment reliability that we
experienced with the Alloy Products' strip expansion. Although we are
experiencing some of the effects of the weakness in the U.S. economy,
I am convinced, long-term, that our major target markets including
telecommunications, computer, automotive electronics and optical media
are the right place to be for the future growth of the Company."
Forward-looking Statements
Any forward-looking statements in this announcement, including
those in the Outlook Section, are based on current expectations. The
Company's performance may differ from that contemplated by the
forward-looking statements as a result of a variety of factors,
including the global and domestic economy, manufacturing yields and
operating performances at the Company's various facilities, changes in
product mix, the timely and successful completion of pending capital
expansions, tax rates, exchange rates and energy costs.
Brush Engineered Materials Inc. is headquartered in Cleveland,
Ohio. The Company, though its wholly-owned subsidiaries, supplies
worldwide markets with Beryllium Products, Alloy Products, Electronic
Products, Precious Metal Products, and Engineered Material Systems.
-0-
*T
FOR FURTHER INFORMATION, PLEASE CONTACT:
Investors:
Michael C. Hasychak
Brush Engineered Materials Inc.
17876 St. Clair Ave.
Cleveland, OH 44110
216/383-6823
Media:
Patrick S. Carpenter
Brush Engineered Materials Inc.
17876 St. Clair Ave.
Cleveland, OH 44110
216/383-6835
http://www.BEMinc.com
Brush Engineered Materials Inc.
Digest of Earnings
March 30, 2001
2001 2000
----------- ------------
First Quarter
Net Sales $145,524,000 $135,424,000
Net Income $6,206,000 $2,249,000
Share Earnings - Basic $0.38 $0.14
Average Shares - Basic 16,467,368 16,206,038
Share Earnings - Diluted $0.37 $0.14
Average Shares - Diluted 16,677,767 16,314,518
Year-to-date
Net Sales $145,524,000 $135,424,000
Net Income $6,206,000 $2,249,000
Share Earnings - Basic $0.38 $0.14
Average Shares - Basic 16,467,368 16,206,038
Share Earnings - Diluted $0.37 $0.14
Average Shares - Diluted 16,677,767 16,314,518
Consolidated Balance Sheets
Mar. 30, Dec. 31,
(Dollars in thousands) 2001 2000
----------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $2,912 $4,314
Accounts receivable 93,804 92,334
Inventories 128,279 115,643
Prepaid expenses 7,638 8,525
Deferred income taxes 30,082 29,263
---------- ---------
Total Current Assets 262,715 250,079
Other Assets 32,825 31,967
Property, Plant and Equipment 456,375 449,697
Less allowances for depreciation,
depletion and impairment 284,081 279,237
---------- ---------
172,294 170,460
---------- ---------
$467,834 $452,506
========== =========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $29,068 $25,435
Accounts payable 28,487 34,714
Other liabilities and accrued
items 38,089 39,021
Dividends payable 1,986 1,987
Income taxes 9,356 5,535
---------- ---------
Total Current Liabilities 106,986 106,692
Other Long-Term Liabilities 18,287 15,878
Retirement and Post-employment Benefits 39,579 39,576
Long-term Debt 51,305 43,305
Deferred Income Taxes 18,009 17,148
Shareholders' Equity 233,668 229,907
---------- ---------
$467,834 $452,506
========== =========
See notes to consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
First Quarter Ended
(Dollars in thousands except March 30, March 31,
share and per share amounts) 2001 2000
------------------------------------------------------------
Net sales $ 145,524 $ 135,424
Cost of sales 111,490 107,129
----------- -----------
Gross Margin 34,034 28,295
Selling, administrative
and general expenses 21,506 21,818
Research and development
expenses 1,692 2,014
Other-net 802 228
----------- -----------
Operating Profit 10,034 4,235
Interest expense 974 1,120
----------- -----------
Income before income taxes 9,060 3,115
Income taxes 2,854 866
----------- -----------
Net Income $ 6,206 $ 2,249
=========== ===========
Per Share of Common Stock: Basic $ 0.38 $ 0.14
Weighted average number
of common shares outstanding 16,467,368 16,206,038
Per Share of Common Stock: Diluted $ 0.37 $ 0.14
Weighted average number
of common shares outstanding 16,677,767 16,314,518
Cash dividends per common share $ 0.12 $ 0.12
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Three Months Ended
March 30, March 31,
(Dollars in thousands) 2001 2000
-----------------------------------------------------------
Net Income $ 6,206 $ 2,249
Adjustments to Reconcile
Net Income to Net Cash
Provided From Operating
Activities:
Depreciation, depletion
and amortization 5,520 6,331
Decrease (Increase) in
accounts receivable 412 (11,385)
Decrease (Increase) in
inventory (13,170) 8,414
Decrease (Increase) in
prepaid and other
current assets 276 327
Increase (Decrease) in
accounts payable and
accrued expenses (10,785) 2,741
Increase (Decrease) in
interest and taxes payable 4,467 968
Increase (Decrease) in
deferred income taxes (131) (62)
Increase (Decrease) in
other long-term liabilities 2,574 1,060
Other - net (1,238) (280)
-------- --------
Net Cash Provided From
(Used in) Operating
Activities (5,869) 10,363
Cash Flows from Investing Activities:
Payments for purchase of property,
plant and equipment (7,415) (3,480)
Payments for mine development (76) (70)
Proceeds from (Payments for)
other investments -- --
-------- --------
Net Cash Provided From
(Used in) Investing
Activities (7,491) (3,550)
Cash Flows from Financing Activities:
Proceeds from issuance/ (repayment
of) short-term debt 5,146 (5,665)
Proceeds from issuance of
long-term debt 15,500 9,000
Repayment of long-term debt (7,500) (6,000)
Issuance of Common Stock
under stock option plans 950 5
Purchase of Common Stock
for treasury -- --
Payments of dividends (1,987) (1,959)
-------- --------
Net Cash Provided From
(Used in) Financing
Activities 12,109 (4,619)
Effects of Exchange Rate Changes (151) (134)
-------- --------
Net Change in Cash
and Cash Equivalents (1,402) 2,060
Cash and Cash Equivalents
at Beginning of Period 4,314 99
-------- --------
Cash and Cash Equivalents
at End of Period $ 2,912 $ 2,159
======== ========
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note A - Accounting Policies
In management's opinion, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position as of March 30, 2001 and December 31, 2000 and the
results of operations for the first quarter ended March 30, 2001 and
March 31, 2000.
Note B - Inventories
Mar. 30, Dec. 31,
(Dollars in thousands) 2001 2000
----------------------------------------------------
Principally average cost:
Raw materials and supplies $ 17,799 $ 19,458
In process 101,940 88,956
Finished goods 34,877 33,202
-------- --------
Gross inventories 154,616 141,616
Excess of average cost over LIFO
Inventory value 26,337 25,973
-------- --------
Net inventories $128,279 $115,643
======== ========
Note C - Comprehensive Income
During the first quarter 2001 and 2000, comprehensive income amounted
to $5,616,039 and $1,847,763 respectively. The difference between net
income and comprehensive income is the cumulative translation
adjustment for the periods presented.
Note D - Segment Reporting
As a result of the recent corporate restructuring, the Company changed
how costs flowed between its businesses. Certain costs that were
previously included in the "All Other" column in the segment
disclosures are being charged to Metal Systems and Microelectronics
beginning in the first quarter 2001. Beginning in 2001, the "All
Other" column includes the operating results of BEM Services Inc. and
Brush Resources Inc., two wholly-owned subsidiaries of the Company, as
well as the parent company's operating expenses. BEM Services charges
a management fee for the services provided to the other businesses
within the Company on a cost-plus basis. Brush Resources may sell
beryllium hydroxide, produced from its mine and extraction mill in
Utah, to outside customers and to businesses within the Metal Systems
Group. Segment results from the prior year have been restated to
reflect these changes on a pro forma basis.
Metal Micro- Total All
Systems Electronics Segments Other Total
-------- -------- -------- ------- --------
(Dollars in thousands)
First Quarter 2001
-----------------------
Revenues from
external customers $ 98,629 $ 46,895 $145,524 $ 0 $145,524
Intersegment revenues 1,586 829 2,415 4,847 7,262
Segment profit (loss)
before interest
and taxes 6,560 2,418 8,978 1,056 10,034
First Quarter 2000
-----------------------
Revenues from
external customers 91,175 41,607 132,782 2,642 135,424
Intersegment revenues 1,554 286 1,840 5,267 7,107
Segment profit (loss)
before interest
and taxes (739) 2,121 1,382 2,853 4,235
*T
Contact: | Brush Engineered Materials Inc., Cleveland
|
| Michael C. Hasychak, 216/383-6823 (Investors)
|
| Patrick S. Carpenter, 216/383-6835 (Media)
|
| http://www.BEMinc.com |