KATY NEWS
FOR IMMEDIATE RELEASE
REPORTS 2009 SECOND QUARTER RESULTS
Financial highlights
for the second quarter of 2009, as compared to the same period in the prior
year, included:
·
Net sales in the
second quarter of 2009 were $37.7 million, a decrease of $7.5 million, or
16.5%, compared to the same period in 2008.
The decrease resulted from lower volumes across almost 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 $1.1 million lower in the second quarter of
2009 than in the second quarter of 2008.
Prior year expenses included a net charge of $0.9 million associated
with the transition and hiring of our Chief Executive Officer (“CEO”) and
forfeiture of stock options by our former CEO.
Other favorable variances quarter over quarter included a $0.2 million
reduction in commissions as related sales are down, $0.2 million of lower
consulting and professional fees, $0.2 million less expense related to
self-insurance programs, and a $0.1 million reduction in bad debt expense. Partially offsetting these net favorable
variances were current quarter costs of $0.5 million associated with the
transition and hiring of executive level personnel.
During the second
quarter of 2008, Katy reported income from severance, restructuring and related charges of $0.5 million, which resulted primarily
from favorable adjustments to accruals for lease exit costs, as well as net
activity from discontinued operations of $0.6 million, which included the
recognition of a final working capital adjustment of business units sold in
2007.
Katy also reported
a net loss for the six months ended July 3, 2009 of $3.0 million ($0.37 per
share), versus a net loss of $7.6 million ($0.96 per share), for the six months
ended June 30, 2008. Operating loss was $2.8
million (3.9% of net sales) for the six months ended July 3, 2009, compared to
$8.8 million (10.1% of net sales) in the same period in 2008.
Financial
highlights for the six months ended July 3, 2009, as compared to the six months
ended June 30, 2008, included:
·
Net sales for the
six months ended July 3, 2009 were $72.8 million, a decrease of $14.1 million,
or 16.2%, compared to the same period in 2008.
The decrease resulted from lower volumes across almost all of the business units
driven by market softness, as well as the decision to exit certain unprofitable
business lines.
For the first half
of 2008, Katy reported income from severance, restructuring and related charges
of $0.4 million, which resulted primarily from favorable adjustments to
accruals for lease exit costs, as well as net activity from discontinued
operations of $0.9 million, which included the recognition of a final working
capital adjustment of business units sold in 2007.
Operations
generated $2.4 million of free cash flow during the six months ended July 3,
2009 compared to a $10.4 million usage during the six months ended June 30, 2008. The fluctuation was primarily a result of
lower net loss year over year and was also positively impacted by reduced
capital spending and lower inventory balances.
Free cash flow, a non-GAAP financial measure, is discussed further
below.
Debt at July 3,
2009 was $16.9 million (50% of total capitalization), versus $17.5 million (48%
of total capitalization) at December 31, 2008.
“The second quarter performance, an improvement over
last year’s second quarter as well as sequentially, was a result of the changes
we have made to the business over the last year. The upgrading of our senior and middle
management, and our focus on execution and business basics are paying off,”
said David J. Feldman, Katy’s President and Chief Executive Officer. “We remain
optimistic that we will see continued performance improvements in the coming
quarters as the overall economy stabilizes.”
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