-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GPCoWSZauEBettIvURuLMWbQbnMSLxO5fJvsTCELt4c52n4yHjqWYpXlBEN7Dm2V 9LOETW/5DiHb0k6pJovSDw== 0000950129-03-002511.txt : 20030507 0000950129-03-002511.hdr.sgml : 20030507 20030507101040 ACCESSION NUMBER: 0000950129-03-002511 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030506 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATCO GROUP INC CENTRAL INDEX KEY: 0001057693 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 222906892 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15603 FILM NUMBER: 03685286 BUSINESS ADDRESS: STREET 1: BROOKHOLLOW CENTRAL III STREET 2: 2950 NORTH LOOP WEST STE 750 CITY: HOUSTON STATE: TX ZIP: 77092 BUSINESS PHONE: 7136839292 MAIL ADDRESS: STREET 1: BROOKHOLLOW CENTERL III STREET 2: 2950 NORTH LOOP WEST STE 750 CITY: HOUSTON STATE: TX ZIP: 77092 8-K 1 h05540e8vk.txt NATCO GROUP INC. - DATED MAY 6, 2003 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): May 6, 2003 NATCO Group Inc. (Exact Name of Registrant as Specified in its Charter) DELAWARE 001-15603 22-2906892 (State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 2950 North Loop West, 7th Floor Houston, Texas 77092 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (713) 683-9292 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press Release, dated May 6, 2003 ITEM 9. REGULATION FD DISCLOSURE NATCO Group Inc., a Delaware corporation (the "Company"), is furnishing this Current Report on Form 8-K pursuant to the requirements of "ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION" of Form 8-K. On May 6, 2003, the Company issued a press release announcing its operating results for the first quarter of 2003. This press release is filed as Exhibit 99.1 to this Current Report on Form 8-K, and the contents of such Exhibit are incorporated herein by reference. The Company has presented within this press release certain non-GAAP financial measures that are clearly identified and reconciled to the most directly comparable financial measure in tabular form, and has provided a statement from the Company's management disclosing the purpose of using these non-GAAP financial measures. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: May 6, 2003 NATCO Group Inc. By: /s/ NATHANIEL A. GREGORY --------------------------------- Nathaniel A. Gregory Chairman of the Board and Chief Executive Officer INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 99.1 Press Release, dated May 6, 2003
EX-99.1 3 h05540exv99w1.txt PRESS RELEASE DATED MAY 6, 2003 EXHIBIT 99.1 (NATCOGROUP LOGO) PRESS RELEASE 2950 North Loop West, Suite 700 Houston, TX 77092 PHONE: (713) 685-8062 FAX: (713) 683-7841 - -------------------------------------------------------------------------------- NATCO GROUP REPORTS FIRST QUARTER RESULTS HOUSTON, MAY 6, 2003 - -------------------------------------------------------------------------------- NATCO Group Inc. (NYSE: NTG) today announced first quarter 2003 revenue and earnings of $68.0 million and $0.1 million ($0.00 per diluted share) respectively, compared to revenue and earnings of $73.6 million and $1.8 million ($0.11 per diluted share), respectively, for the first quarter of 2002. Included in the first quarter 2003 earnings are certain items, classified as other expense, net, for severance and relocation costs totaling $0.6 million associated with reductions in force in the US and the previously announced consolidation of operations in Canada, as well as foreign exchange transaction losses, primarily on intercompany balances. Earnings for the quarter before these charges were $0.4 million, or $0.03 per diluted share (see footnote (1) below). The decrease in revenue compared to the first quarter of last year was primarily due to a decline in sales of traditional equipment and services in the US and Canada. This area of the business historically lags the trend in rig activity. With the North American rig count increasing significantly in the first quarter of 2003 and current month, the company expects traditional equipment and services in the US and Canada to show improving results during the second half of 2003. The company's internal profit (see footnote (2) below) for the first quarter of 2003 was $3.2 million, compared to $4.7 million for the first quarter of the prior year. The decrease in internal profit was primarily due to lower sales of replacement membranes and a decrease in contribution to margin from projects for Pemex year over year. The company expects solid growth from both CO2 operations and projects for Pemex in 2003, although revenues and margins may fluctuate significantly from quarter to quarter. Also contributing to the decline in profit was the lower volume of traditional business described above, partially offset by initiatives to reduce operating expenses. The company's gross profit as a percentage of revenue in the first quarter of 2003 fell to 23.2% from 24.8% for the first quarter of 2002, due, in part, to a smaller portion of revenue attributable to CO2 operations and projects for Pemex, which typically command higher margins. Also, margins declined as a result of the completion in 2002 of several high margin projects at the company's Axsia subsidiary, partially offset in the current quarter by margin improvements from execution performance on two key West African jobs. Finally, margin percentage fell at the company's Automation and Control Systems segment. However, revenue for the Automation and Control Systems segment increased 28% over prior year, and contribution to internal profit from that segment increased 45% to $1.3 million. Bookings for first quarter 2003 were $60.7 million, an increase of 23% compared to the first quarter of last year, with backlog at quarter-end 8% higher than at March 31, 2002. New bookings in the quarter included oil treating and desalting systems for projects in Brazil and offshore Angola, a water treating system in the North Sea, and a hydrogen plant in Kazakhstan. "While poor market conditions obviously had a negative effect on the quarter, we look for results to improve as the year progresses, based on the current level of bid activity and increasing North American rig counts," commented Nat Gregory, Chairman and CEO. The company will hold a webcast May 6, 2003, at 9:00 a.m. central standard time to discuss the results of the quarter. To listen, log on at http//www.firstcallevents.com/service/ajwz381341559gf12.html NATCO Group Inc. is a leading provider of wellhead process equipment, systems and services used in the production of oil and gas. NATCO has designed, manufactured and marketed production equipment and services for more than 75 years. NATCO production equipment is used onshore and offshore in most major oil and gas producing regions of the world. Statements made in this press release that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. The forward-looking statements included in this press release are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2002 filed by NATCO Group Inc. on March 21, 2003. (1) These figures represent non-GAAP financial measures as defined under Regulation G. The most directly comparable financial measures calculated in accordance with GAAP are presented in the first sentence of the first paragraph of this press release. A schedule reconciling the non-GAAP and GAAP presentations is included in tabular form at the end of this press release. (2) The company calculates internal profit as segment profit (loss) adjusted for other expense, net, research and development costs, and corporate overhead allocations. Segment profit (loss), as defined in the company's Annual Report on Form 10-K as of December 31, 2002, is calculated as income before net interest expense, income taxes, depreciation and amortization expense and accounting changes. The company believes reporting internal profit provides the reader of the financial statements with useful information concerning the company's profitability by segment. This presentation is used internally by the company's management to evaluate the results of operations. The company's management has chosen to present this information to investors as comparative information about the company's on-going financial performance. NATCO GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31, 2003 2002 --------- ------------ ASSETS (unaudited) Current assets: Cash and cash equivalents .............................................. $ 1,282 $ 1,689 Trade accounts receivable, net ......................................... 80,914 74,677 Inventories ............................................................ 33,325 32,400 Prepaid expenses and other current assets .............................. 9,859 7,611 --------- ------------ Total current assets ............................................. 125,380 116,377 Property, plant and equipment, net ....................................... 33,104 31,485 Goodwill, net ............................................................ 79,356 78,977 Deferred income tax assets, net .......................................... 2,846 2,984 Other assets, net ........................................................ 1,584 1,772 --------- ------------ Total assets ..................................................... $ 242,270 $ 231,595 ========= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt ................................. $ 14,558 $ 7,097 Accounts payable ....................................................... 42,094 36,074 Accrued expenses and other ............................................. 34,826 37,243 Customer advances ...................................................... 536 1,354 --------- ------------ Total current liabilities ........................................ 92,014 81,768 Long-term debt, excluding current installments ........................... 30,640 45,257 Postretirement benefit and other long-term liabilities ................... 12,544 12,718 --------- ------------ Total liabilities ................................................ 135,198 139,743 --------- ------------ Series B convertible preferred stock $.01 par value. 15,000 shares authorized, issued and outstanding (net of issuance costs)(3) ... 14,101 -- Stockholders' equity: Series A preferred stock $.01 par value. Authorized 500,000 shares; no shares issued and outstanding(3) .......................... -- -- Common stock, $.01 par value. Authorized 50,000,000 shares; issued and outstanding 15,803,797 shares as of ....................... 158 158 March 31, 2003 and December 31, 2002 Additional paid-in capital ............................................. 97,223 97,223 Accumulated earnings ................................................... 8,764 8,734 Treasury stock, 795,692 shares at cost as of March 31, 2003 and December 31, 2002 ................................................ (7,182) (7,182) Accumulated other comprehensive loss ................................... (2,266) (3,395) Notes receivable from officers and stockholders ........................ (3,726) (3,686) --------- ------------ Total stockholders' equity ....................................... 92,971 91,852 --------- ------------ Commitments and contingencies Total liabilities and stockholders' equity ....................... $ 242,270 $ 231,595 ========= ============
(3) The company has one class of preferred stock, $.01 par value, having 5,000,000 authorized shares of which 500,000 is designated Series A preferred stock and 15,000 is designated Series B convertible preferred stock. NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 2003 2002 -------- -------- Revenues ................................................................... $ 68,013 $ 73,578 Cost of goods sold ......................................................... 52,202 55,315 -------- -------- Gross profit .......................................................... 15,811 18,263 Selling, general and administrative expense ................................ 12,644 13,545 Depreciation and amortization expense ...................................... 1,230 1,159 Interest expense ........................................................... 1,062 1,017 Interest cost on postretirement benefit liability .......................... 209 122 Interest income ............................................................ (49) (56) Other expense, net ......................................................... 576 (397) -------- -------- Income before income taxes and cumulative effect of change in accounting principle ..................................... 139 2,873 Income tax provision ....................................................... 50 1,100 -------- -------- Net income before cumulative effect of change in accounting principle ........................................... 89 1,773 Cumulative effect of a change in accounting principle (net of tax benefit of $18) ............................................ 34 -- -------- -------- Net income ....................................................... $ 55 $ 1,773 ======== ======== Earnings per share--basic: Net income before cumulative effect of change in accounting principle ...... $ -- $ 0.11 Cumulative effect of change in accounting principle ........................ -- -- -------- -------- Net income ....................................................... $ -- $ 0.11 ======== ======== Earnings per share--diluted: Net income before cumulative effect of change in accounting principle ...... $ -- $ 0.11 Cumulative effect of change in accounting principle ........................ -- -- -------- -------- Net income ....................................................... $ -- $ 0.11 ======== ======== Basic weighted average number of shares of common stock outstanding ................................................. 15,804 15,804 Diluted weighted average number of shares of common stock outstanding .............................................. 15,874 15,936
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED SEGMENT INFORMATION (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ----------------------- 2003 2002 -------- -------- Revenue: North American Operations $ 28,615 $ 38,376 Engineered systems 26,046 25,109 Automation & Control Systems 15,241 11,865 Eliminations (1,889) (1,772) -------- -------- Total revenue $ 68,013 $ 73,578 ======== ======== Gross profit: North American Operations $ 7,354 $ 10,250 Engineered Systems 5,871 5,852 Automation & Control Systems 2,586 2,161 Eliminations -- -- -------- -------- Total gross profit $ 15,811 $ 18,263 ======== ======== Gross profit % of revenue: North American Operations 25.7% 26.7% Engineered Systems 22.5% 23.3% Automation & Control Systems 17.0% 18.2% Total gross profit % of revenue 23.2% 24.8% Selling, general and administrative expense: North American Operations $ 5,415 $ 6,005 Engineered Systems 4,103 4,027 Automation & Control Systems 1,267 1,249 Technology & Product Development 922 819 Corporate and other 937 1,445 -------- -------- Total selling, general and administrative expense $ 12,644 $ 13,545 ======== ======== Internal profit (2): North American Operations $ 1,939 $ 4,245 Engineered Systems 1,768 1,825 Automation & Control Systems 1,319 912 Technology & Product Development (922) (819) Corporate and other (937) (1,445) -------- -------- Total internal profit $ 3,167 $ 4,718 ======== ======== Bookings: North American Operations $ 24,881 $ 30,042 Engineered Systems 22,108 10,211 Automation & Control Systems 13,721 9,073 -------- -------- Total bookings $ 60,710 $ 49,326 ======== ========
AS OF MARCH 31, ----------------------- Backlog: 2003 2002 -------- -------- North American Operations $ 10,968 $ 16,159 Engineered Systems 67,151 56,003 Automation & Control Systems 4,677 4,849 -------- -------- Total backlog $ 82,796 $ 77,011 ======== ========
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF EARNINGS AND EARNINGS PER SHARE, ADJUSTED FOR CERTAIN ITEMS (IN THOUSANDS)
FOR THE QUARTER ENDED MARCH 31, 2003 -------------------------------------------- INCOME SHARES PER SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income $ 55 Less: Preferred stock dividends accrued (25) Add: Other expense, net 576 Tax effect of other expense, net (206) ----------- Earnings (adjusted for certain items) $ 400 BASIC EPS (ADJUSTED FOR CERTAIN ITEMS) Earnings available to common stockholders $ 400 15,804 $ .03 ========= EFFECT OF DILUTIVE SECURITIES Stock options -- 70 ----------- ------------- -- 15,874 DILUTED EPS (ADJUSTED FOR CERTAIN ITEMS): Earnings available to common stockholders + assumed conversions $ 400 15,874 $ .03 =========== ============= =========
FOR THE QUARTER ENDED MARCH 31, 2002 -------------------------------------------- INCOME SHARES PER SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income $ 1,773 Less: Other, net (397) Tax effect of other expense, net 152 ----------- Earnings (adjusted for certain items) $ 1,528 =========== BASIC EPS (ADJUSTED FOR CERTAIN ITEMS): Earnings available to common stockholders $ 1,528 15,804 $ 0.10 ========= EFFECT OF DILUTIVE SECURITIES Stock options -- 132 ----------- ------------- DILUTED EPS (ADJUSTED FOR CERTAIN ITEMS): Earnings available to common stockholders + assumed conversions $ 1,528 15,936 $ 0.10 =========== ============= =========
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF SEGMENT PROFIT (LOSS) TO INTERNAL PROFIT (IN THOUSANDS)
----------------------------------------------------------------------------------------- QUARTER ENDED MARCH 31, 2003 ----------------------------------------------------------------------------------------- TECHNOLOGY & NORTH AMERICAN ENGINEERED AUTOMATION & PRODUCT CORPORATE & OPERATIONS SYSTEMS CONTROL SYSTEMS DEVELOPMENT ELIMINATIONS TOTAL -------------- ---------- --------------- ------------- ------------ --------- Segment profit (loss): $ 1,264 $ 972 $ 1,319 -- $ (964) $ 2,591 Other, net 453 (87) -- -- 210 576 R&D and other 222 883 -- $ (922) (183) -- ------- ------ ------- ------- ------ ------- Internal profit (loss) $ 1,939 $1,768 $ 1,319 $ (922) $ (937) $ 3,167 ======= ====== ======= ======= ====== =======
----------------------------------------------------------------------------------------- QUARTER ENDED MARCH 31, 2003 ----------------------------------------------------------------------------------------- TECHNOLOGY & NORTH AMERICAN ENGINEERED AUTOMATION & PRODUCT CORPORATE & OPERATIONS SYSTEMS CONTROL SYSTEMS DEVELOPMENT ELIMINATIONS TOTAL -------------- ---------- --------------- ------------- ------------ --------- Segment profit (loss): $ 3,927 $1,336 $ 912 -- $(1,060) $ 5,115 Other, net 74 (511) -- -- 40 (397) R&D and other 244 1,000 -- $ (819) (425) -- ------- ------ ------- ------- ------- ------- Internal profit (loss) $ 4,245 $1,825 $ 912 $ (819) $(1,445) $ 4,718 ======= ====== ======= ======= ======= =======
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