KATY NEWS
FOR IMMEDIATE RELEASE
REPORTS 2009 FIRST QUARTER RESULTS
During the first
quarter of 2008, Katy reported expense for restructuring and other
non-recurring or unusual items of $0.3 million, including severance,
restructuring and related costs of $0.1 million and loss on disposal of assets
of $0.5 million, offset partially by $0.3 million income from activity of
discontinued businesses. There were no such charges in the first quarter of
2009.
Financial
highlights for the first quarter of 2009, as compared to the same period in the
prior year, included:
·
Net sales in the first
quarter of 2009 were $35.1 million, a decrease of $6.6 million, or 15.8%,
compared to the same period in 2008. The decrease resulted from lower volumes across
all of the business
units driven by market softness, as well as the decision to exit certain
unprofitable business lines.
·
Selling, general
and administrative expenses were $0.4 million higher in the first quarter of
2009 than in the first quarter of 2008. The increase was driven primarily by costs
associated with the transition and hiring of executive level personnel,
restructuring of the commercial organization and costs related to the plan to
deregister the Company’s common stock under the Securities and Exchange Act of
1934, as amended, which was abandoned on March 12, 2009.
·
Debt at April 3,
2009 was $17.0 million (50% of total capitalization), versus $17.5 million (48%
of total capitalization) at December 31, 2008.
·
Operations
generated $1.2 million of free cash flow in the first quarter of 2009 compared
to a $6.2 million usage during the same period a year ago. The fluctuation was
a result of lower net loss quarter over quarter, lower inventory and accounts
receivable balances, and a reduction in capital spending. Free cash flow, a
non-GAAP financial measure, is discussed further below.
“While we reported a net loss in the first quarter of
2009, our results showed improvement over both the first and fourth quarters of
2008,” said David J. Feldman, Katy’s President and Chief Executive Officer. “We
remain optimistic that the remainder of 2009 will bring additional improvements.”
Non-GAAP
Financial Measures
To
provide transparency about measures of Katy’s financial performance which
management considers most relevant, the Company supplements the reporting of
Katy’s consolidated financial information under GAAP with a non-GAAP financial
measure, Free Cash Flow. Free cash flow is defined by Katy as cash flow from
operations less capital expenditures and cash dividends paid. Details regarding
this measure and a reconciliation of this non-GAAP measure to a comparable GAAP
measure are provided in the “Statements of Cash Flows” accompanying this press
release. This non-GAAP financial measure should be considered in addition to,
and not as a substitute or superior to, the other measures of financial
performance prepared in accordance with GAAP. Using only the non-GAAP financial
measure to analyze the Company’s performance would have material limitations because
its calculation is based on the subjective determinations of management
regarding the nature and classification of events and circumstances that
investors may find material. Management compensates for these limitations by
utilizing both the GAAP and non-GAAP measures reflected below to understand and
analyze the results of its business. Katy believes this measure is nonetheless
useful to management and investors in measuring cash generated that is
available for repayment of debt obligations, investment in growth through
acquisitions, new business development and stock repurchases.
This press release
may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements include all statements of the
Company’s plans, beliefs or expectations with respect to future events or
developments and often may be identified by such words or phrases as “should”,
“intends”, “is subject to”, “expects”, “will”, “continue”, “anticipate”,
“estimated”, “projected”, “may”, “we believe”, “future prospects”, or similar
expressions. These forward-looking statements are based on the
opinions and beliefs of Katy’s management, as well as
assumptions made by, and information currently available to, the
Company’s management. Additionally, the
forward-looking statements are based on
Katy’s current expectations and projections about
future events and trends affecting the financial condition of its
business. The forward-looking statements are
subject to risks and uncertainties that may lead to results that differ
materially from those expressed in any forward-looking statement made by the Company or on its behalf.
These risks and uncertainties include, without limitation, conditions in the
general economy and in the markets served by the Company, including changes in
the demand for its products; success of any restructuring or cost control
efforts; an increase in interest rates; competitive factors, such as price
pressures and the potential emergence of rival technologies; interruptions of
suppliers’ operations or other causes affecting availability of component
materials or finished goods at reasonable prices; changes in product mix, costs
and yields; labor issues at the Company’s facilities or those of its suppliers;
legal claims or other regulator actions; and other risks identified from time
to time in the Company’s filings with the SEC, including its Report on Form
10-K for the year ended December 31, 2008. Katy undertakes no obligation to
revise or update such statements to reflect current events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Katy
Industries, Inc. is a diversified corporation focused on the manufacture,
import and distribution of commercial cleaning products and consumer home
products.
Company
contact:
Katy
Industries, Inc.
James
W. Shaffer
(314)
656-4321