Oilgear Reports Increased Third Quarter Sales and Earnings
The Oilgear Company (NASDAQ/NMS:OLGR) today reported sales and earnings for the third quarter ended September 30, 2005.
For the third quarter of 2005, Oilgear reported net sales of $25,516,000, a 2.0% increase from sales of $25,031,000 for the same period in 2004. The company reported net earnings of $533,000 or $0.26 per diluted share for the third quarter of 2005, compared to net earnings of $202,000 or $0.10 per diluted share for the third quarter of 2004.
Net sales for the first three quarters of 2005 were $77,039,000, a 10.7% increase from sales of $69,593,000 for the same period in 2004. Net earnings for the first three quarters of 2005 were $1,579,000 or $0.78 per diluted share, compared to net earnings of $214,000 or $0.11 per diluted share for the same period in 2004.
Orders for the third quarter of 2005 were $21.3 million, a 14% decrease from orders of $24.8 million for the same period in 2004. Orders for the first three quarters of 2005 were $77.8 million, a 2% increase from orders of $76.2 million for the same period in 2004. The backlog at September 30, 2005 was $34.8 million, a 2% increase from the beginning of the year.
“As has been the case all year, the domestic segment generated the increased sales in the third quarter. Domestic shipments increased 18% in the third quarter and 24% for the first three quarters of 2005,” said David A. Zuege, president and chief executive officer.
“Orders declined in the third quarter by 14% when compared to the same period in 2004 and were down 21% from the record level of the 2005 second quarter. The decrease was due to a reduction in large contracts for customized systems. Because of their size, these large contracts create significant fluctuations in the level of reported orders. Recently, sales activity for large customized systems has picked up and is reasonably strong at this time. The backlog declined by $4.2 million in the third quarter. We are currently negotiating the cancellation of a $2.3 million order, due to the fact that the government halted funding of our customer’s program. This cancellation will reduce the backlog by $1.9 million, but will have no significant impact on reported sales or earnings,” said Zuege.
“As previously reported, in 2003 we entered into an agreement for the sale of our facility in Leeds, England, and were in negotiations to lease a smaller and more efficient facility. Since then, we have had some false starts in locating a new site, but now believe that we are close to finalizing an arrangement. The Barclays loan of 3.2 million pounds related to the financing of our facility in England has been extended until August 15, 2006, and we believe that our move to the new facility will be completed prior to that date. As previously noted, the consummation of the sale upon completion of our move will result in a significant capital gain,” said Zuege.
“Economists presenting their forecasts at the National Fluid Power Association economic conference held in August 2005 projected that domestic shipments of fluid power equipment would be up 6 – 9% for 2005 vs. 2004 and that the industry will experience growth in the 5% range in 2006. Based on these industry projections, we remain cautiously optimistic about our near-term prospects,” said Zuege.
A leader in the fluid power industry, The Oilgear Company provides advanced technology in the design and production of unique fluid power components and electronic controls. The company serves customers in the primary metals, machine tool, automobile, petroleum, construction equipment, chemical, plastic, glass, lumber, rubber and food industries. Its products are sold as individual components or integrated into high performance applications.
Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company “believes,”"anticipates,”"expects” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following could impact the business and financial prospects of the Company: factors affecting the economy generally, including the financial and business conditions of the Company’s customers, the demand for customers’ products and services that utilize the Company’s products, and national and international events; factors affecting the Company’s financial performance or condition, including restrictions or conditions imposed by current or prospective lenders, tax legislation, and changes in accounting principles; factors affecting percentage of completion contracts, including the accuracy of estimates and assumptions regarding the timing and levels of costs to complete those contracts; factors affecting the Company’s international operations, including fluctuations in currencies, changes in laws and political or financial insecurity of foreign governments; factors affecting the Company’s ability to hire and retain competent employees, including unionization of non-union employees and strikes or work stoppages; any further decrease in stock price as a result of market conditions; changes in the law or standards applicable to the Company, including environmental laws and accounting pronouncements; availability of raw materials; unanticipated technological developments that result in competitive disadvantages and may impair existing assets; and factors set forth in the Company’s periodic reports filed with the SEC in accordance with the Securities Exchange Act. Shareholders, potential investors and other readers are urged to consider these factors and those set forth in the Company’s filings with the SEC carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The Oilgear Company Consolidated Condensed Operating Statement (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ———— ———— ———— ———— Net sales $25,516,000 $25,031,000 $77,039,000 $69,593,000 Cost of sales 18,405,000 19,437,000 56,164,000 53,318,000 ———— ———— ———— ———— Gross profit 7,111,000 5,594,000 20,875,000 16,275,000 Selling, general and administrative expenses 5,671,000 4,862,000 16,881,000 14,531,000 ———— ———— ———— ———— Operating income $ 1,440,000 $ 732,000 $ 3,994,000 $ 1,744,000 ———— ———— ———— ———— Interest expense 647,000 346,000 1,859,000 1,003,000 Other non-operating income (loss), net (51,000) 40,000 81,000 15,000 ———— ———— ———— ———— Earnings before income taxes 742,000 426,000 2,216.000 756,000 Income tax expense 170,000 223,000 512,000 486,000 ———— ———— ———— ———— Net earnings before minority interest 572,000 203,000 1,704,000 270,000 Minority interest 39,000 1,000 125,000 56,000 ———— ———— ———— ———— Net earnings $ 533,000 $ 202,000 $ 1,579,000 $ 214,000 ============ ============ ============ ============ Basic earnings per share of common stock $ 0.27 $ 0.10 $ 0.79 $ 0.11 ============ ============ ============ ============ Diluted earnings per share of common stock $ 0.26 $ 0.10 $ 0.78 $ 0.11 ============ ============ ============ ============ Basic weighted average outstanding shares 2,001,000 1,961,000 1,994,000 1,960,000 Diluted weighted average outstanding shares 2,038,000 1,979,000 2,028,000 1,979,000 The Oilgear Company Consolidated Condensed Balance Sheet (Unaudited) September 30, December 31, 2005 2004 ————- ————- ASSETS Current Assets Cash and cash equivalents $ 4,644,000 $ 4,109,000 Accounts receivable 17,859,000 17,030,000 Inventories 25,672,000 25,529,000 Other current assets 4,465,000 5,861,000 ————- ————- Total current assets $52,640,000 $52,529,000 ————- ————- Net property, plant and equipment 16,053,000 18,163,000 Other assets 2,727,000 2,123,000 ————- ————- $71,420,000 $72,815,000 ============= ============= LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Current debt $16,055,000 $21,334,000 Accounts payable 8,884,000 10,830,000 Other current liabilities 7,752,000 8,508,000 ————- ————- Total current liabilities $32,691,000 $40,672,000 ————- ————- Long-term debt 8,062,000 1,302,000 Unfunded employee benefit costs 22,482,000 23,024,000 Other non-current liabilities 706,000 694,000 ————- ————- Total liabilities $63,941,000 $65,692,000 ————- ————- Minority interest in consolidated subsidiary 1,116,000 1,037,000 Shareholders’ equity 6,363,000 6,086,000 ————- ————- $71,420,000 $72,815,000 ============= =============