Decoma International Inc. (TSE:DEC.A; Nasdaq:DECAF) today announced its financial results for the fourth quarter and fiscal year ended July 31, 2000.
<< Three Months Ended Twelve Months Ended July 31 July 31 2000 1999 2000 1999 (millions of Canadian dollars, except per share figures) Sales $ 271.7 $ 221.8 $1,045.6 $ 901.4 Operating Income $ 20.0 $ 9.5 $ 84.3 $ 57.2 Net Income $ 12.5 $ 4.8 $ 59.1 $ 41.6 Fully diluted earnings per share $ 0.23 $ 0.10 $ 1.11 $ 0.81 Weighted average number of shares outstanding on a fully diluted basis (millions) 59.4 59.2 59.2 59.2 >>
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Sales for the fourth quarter of fiscal 2000 rose 23% to a record $271.7 million. The increase in sales is due to a 6% rise in vehicle production and 2% growth in Decoma’s content per vehicle to $49.30 compared to the same period last year. For the twelve months ended July 31, 2000, sales rose 16% to a record $1,045.6 million.
Tooling sales included in the above of $60.1 million and $129.2 million for the quarter and year ended July 31, 2000 respectively, were also records for the Company. The growth in tooling sales is a result of Decoma’s increased share of the global fascia market and the awarding of a number of new and replacement contracts during the year.
Operating income in the fourth quarter of fiscal 2000 increased 110% to $20.0 million compared to $9.5 million in the fourth quarter of fiscal 1999. This improvement reflects the higher profit contribution arising from the Company’s sales growth and improved operating margins resulting from Decoma’s focus on cost reductions and production efficiencies throughout the organization. Operating income for fiscal 2000 increased 47% to a record $84.3 million compared to $57.2 million for fiscal 1999. This improvement was achieved despite an increase in design and engineering costs for new programs and the launch of a significant number of new programs at Decoma’s Mexican operation and other facilities.
Equity income for the fourth quarter of fiscal 2000 was break-even compared to $0.6 million in the fourth quarter of fiscal 1999. Equity income was affected in the quarter by the consolidation and restructuring of various operating facilities and the costs associated with the launch of a new facility. Overall, equity income for fiscal 2000 was positive and increased by $1.9 million to $10.9 million compared to $9.0 million in fiscal 1999.
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By GlobalDataDecoma’s effective income tax rate for fiscal 2000 was 42% compared to 38% in fiscal 1999. The increase in the effective income tax rate is attributed to losses at Decoma’s Mexican facility that were not tax benefited and the reversal of prior year Mexican tax losses previously benefited.
Net income for the fourth quarter of fiscal 2000 rose an impressive 160% to $12.5 million compared to $4.8 million in the fourth quarter of fiscal 1999. Net income for fiscal 2000 increased 42% to $59.1 million compared to $41.6 million the prior year. The improvement in fiscal 2000 net income reflects improved operating margins resulting from the sales growth produced in the period and the Company’s focus on cost reduction and production efficiencies.
For the fourth quarter of fiscal 2000 fully diluted earnings per share rose 130% to $0.23 compared to $0.10 in the fourth quarter of fiscal 1999. For the year ended July 31, 2000 fully diluted earnings per share increased 37% to $1.11 from $0.81 in fiscal 1999.
During fiscal 2000 cash generated from operations was $117.7 million before investing $27.4 million in non-cash working capital. During the year, the Company invested $65.8 million in fixed assets.
On September 19, 2000 Decoma announced that its Board of Directors declared a quarterly dividend in respect of the fourth quarter of fiscal 2000 of $0.06 per share on the Class A Subordinate Voting Shares and Class B Shares payable on October 13, 2000 to shareholders of record on September 29, 2000. This dividend is in addition to that paid on the 5% Convertible Series Preferred Shares, and is in keeping with the shareholder profit participation commitment set out in Decoma’s Corporate Constitution.
Al Power, President and CEO, commented: “We are very proud of our record performance in the fourth quarter and in fiscal 2000. As a result of our sales growth and profit improvements, we have the critical mass and financial strength necessary to continue to capitalize on the significant growth opportunities available in our marketplace.”
Decoma’s Special Committee of independent directors continues to review the previously announced proposed global exteriors transaction with Magna International Inc. The proposed transaction would more than double the Company’s sales and would solidify Decoma as a premier worldwide supplier of exterior products and components to the global automotive industry.
On August 4, 2000, Decoma’s Board of Directors approved the change of the Company’s year end from July 31 to December 31. In addition, commencing with the new fiscal year ending December 31, 2001, the Board of Directors has also approved the change in the Company’s financial reporting currency to U.S. Dollars. These changes reflect the increasing global nature of Decoma’s business and will enable the Company’s financial performance to be compared more readily to that of its peer group within the automotive parts supply industry.
Decoma will hold a conference call to discuss its fourth quarter and year- end results on Wednesday, September 20, 2000 at 9:30 a.m. EST. The dial-in numbers for the conference call are (416) 641-6448 and (877) 331-7860 for out of town callers with call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by S. Randall Smallbone, Vice President, Finance and CFO. Attending the conference call will be Alan J. Power, President and CEO along with other members of senior management. The conference call will be recorded and copies of the recording will be made available by request. The conference call will also be available by live webcast at www.newswire.ca/webcast and will be available for a period of 30 days.
Decoma designs, engineers and manufactures automotive fascias and related components, plastic body panels and exterior appearance systems for cars and light trucks, principally for automobile manufacturers in Canada, the United States, Mexico and Europe. Decoma has approximately 5,800 employees in 14 manufacturing and engineering operations in Canada, the United States, Mexico, Belgium and England.
