-----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, EhoAFN686XwlmKkUDcbgNsRkk8KFTphVoOrtkZgaZUsxYU9CWsgjdIi6/Sqn4VMw zYMTn2Wp86FMLZNQjjT9kA== 0000950129-04-008506.txt : 20041104 0000950129-04-008506.hdr.sgml : 20041104 20041104165903 ACCESSION NUMBER: 0000950129-04-008506 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041104 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041104 DATE AS OF CHANGE: 20041104 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: 041120269 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 h19806e8vk.txt NATCO GROUP INC. - DATED 11/4/2004 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): November 4, 2004 NATCO Group Inc. (Exact Name of Registrant as Specified in its Charter) DELAWARE 001-15603 22-2906892 (State of (Commission (IRS Employer Incorporation) File Number) 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 ----------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 2 - FINANCIAL INFORMATION ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On November 4, 2004, NATCO Group Inc. issued a press release announcing its financial and operating results for the third quarter of 2004, and revised its prior guidance for 2004. This press release is filed as Exhibit 99.1 to this Current Report on Form 8-K, and its contents are incorporated by reference into this report. In accordance with Regulation G, we have presented within this press release certain non-GAAP financial measures that are identified and reconciled to the most directly comparable financial measure in tabular form, and have provided a statement from our management disclosing the purpose of using these non-GAAP financial measures. SECTION 7 - REGULATION FD ITEM 7.01 REGULATION FD DISCLOSURE. In accordance with General Instruction B.2. of Form 8-K, the following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. NATCO Group held a conference call on its third quarter earnings on November 4, 2004. Interested parties will be able to access the call by visiting the Investor Relations section of our web site at: http://www.natcogroup.com. SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99.1 Press Release, dated November 4, 2004 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: November 4, 2004 NATCO Group Inc. By: /s/ Richard W. FitzGerald --------------------------------- Richard W. FitzGerald Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description ------- ----------- 99.1 Press Release, dated November 4, 2004 EX-99.1 2 h19806exv99w1.txt PRESS RELEASE DATED NOVEMBER 4, 2004 EXHIBIT 99.1 [NATCO GROUP LOGO] PRESS RELEASE 2950 North Loop West, Suite 700 Houston, TX 77092 Phone: (713) 685-8062 Fax: (713) 683-7841 - -------------------------------------------------------------------------------- NATCO GROUP ANNOUNCES Q3 RESULTS/REDUCES 2004 GUIDANCE NOVEMBER 4, 2004 - -------------------------------------------------------------------------------- November 4, 2004 - Houston, Texas: NATCO Group Inc. (NYSE: NTG) today announced third quarter 2004 revenues of $84.3 million and a net loss of $0.3 million, or ($0.02) per share, as compared with revenues of $65.8 million and a net loss of $0.2 million, or ($0.01) per share, for the third quarter of 2003. The 2004 third quarter results include charges of $2.7 million, primarily related to severance expenses for the Company's former chief executive officer, and $ 0.4 million related to net foreign exchange transaction losses. Results for the third quarter of 2003 included $0.7 million of closure and severance costs related to the consolidation of certain manufacturing facilities. Excluding all such charges from their respective periods, the Company's net income available to common shareholders would have been $1.4 million, or $0.09 per share for this year's quarter compared with $0.2 million, or $0.01 per share for the same period last year. Total segment profit for the third quarter of 2004 was $5.7 million compared with $3.4 million for the same period last year and $4.0 million for the second quarter of 2004. The increase over both periods was the result of continued strengthening in the Company's North American Operations segment. The Company reported bookings of $61.4 million, compared with $58.6 million for the same period last year. Modestly higher bookings were the result of increased activities in the Company's North American Operations segment, offset in part by lower bookings in its Engineered Systems and Automation and Controls segments. Bookings of $244.8 million for the nine months ended September 30, 2004 represent a 32% increase over bookings for the comparable period in 2003, while backlog at September 30, 2004 of $79.1 million represents an 11% increase over the prior year. John U. Clarke, Chairman and Interim Chief Executive Officer said, "We experienced continued improvement in our revenues as industry spending on production-related equipment and services, particularly in the North America onshore market, continues to strengthen. However, expenditures on offshore Gulf of Mexico and larger international projects have lagged the market generally, in spite of historically high prices for natural gas and oil. In addition, new bookings with Pemex came later in the quarter than expected, as the timing of this business remains difficult to predict with certainty." Mr. Clarke continued, "Although segment profit for the quarter represents a 68% increase over the prior year and a 40% increase over the second quarter of 2004, we are not yet satisfied with our overall performance and level of profitability. As a result, management, with the support of the Company's board of directors, is reviewing incremental growth and cost management initiatives to be implemented over the next several months." The Company is revising its guidance for the full year and expects earnings, before certain charges, to approximate $0.25 to $0.30 per share for 2004. The Company intends to provide guidance with respect to the growth and cost initiatives and 2005 earnings before year-end. Revenues in the Company's North American Operations segment for the third quarter of 2004 were $50.9 million, a 56% increase over the prior year's quarter. Segment profit was $6.8 million compared with $2.9 million for the same period last year. Results for the quarter benefited from a significant increase in revenue on activities, including the Lukoil project, which will be delivered by year-end, and greater throughput at the Company's CO2 separation facility where additional capacity was added at the beginning of 2004. However, gross profit as a percentage of revenues decreased during the most recent quarter to 24.7% from 26.2% last year, and 27.0% last quarter, due to a relative shift toward equipment sales during the quarter which were adversely affected by higher manufacturing costs, including increased steel prices. Segment bookings for the quarter increased 30% to $47.6 million year-over-year, while backlog increased 75% to $34.0 over the same period. Bookings for North American Operations were buoyed by strong sales of traditional equipment in the onshore market and the continued expansion of business with Pemex late in the quarter. Third quarter 2004 revenues and segment profit for the Company's Automation and Controls Systems segment were $14.1 million and $0.8 million, respectively, compared with $13.4 million and $1.3 million, respectively, for the third quarter of 2003. Revenues for the quarter increased modestly year-over-year, in spite of continued weakness in the Gulf of Mexico market, and the loss of several days of call-out service work due to storm-related work stoppages. Growth in revenues resulted from the run-off of a large Kazakhstan panel project. Segment profit declined, however, due to a lower average gross margin percentage resulting from a higher mix of lower margin sales of equipment in segment revenues, offset in part by lower operating expenses. Segment bookings for the quarter declined $3.0 million year-over-year and $0.2 million from the previous quarter, to $8.1 million. The resulting backlog, as of September 30, 2004, was $5.1 million, up 49% over last September, but down nearly 50% since June 30, 2004. The decline in backlog since mid-year reflects lower panel sales activities during the third quarter 2004 and the run-off of a large Kazakhstan panel project. However, damage to Gulf of Mexico production facilities resulting from a series of summer hurricanes and a recently awarded service contract in Angola should contribute to improved financial results in the fourth quarter and beyond. Revenues for the third quarter of 2004 for the Company's Engineered Systems segment were $20.7 million, essentially flat with last year's quarter, but down 9% from the preceding quarter due to the continuing slippage of large project awards and competition. As a result, new bookings for the third quarter were $5.7 million, down from both last year's quarterly bookings of $10.9 million and second quarter 2004 bookings of $24.8 million. Segment backlog fell to $40.1 million as of September 30, 2004 compared with $55.0 million at the end of the second quarter and $48.6 million at the end of September 2003. Segment profit for Engineered Systems was $0.6 million for the quarter compared with $0.2 million in the third quarter of 2003. The increase in segment profit was due to lower operating expenses, resulting from cost reduction initiatives implemented since last year, offset in part by lower average gross margin percentage resulting from under-performance on several jobs by the Company's U.K.-based subsidiary. Gross margin as a percentage of revenues was 21.5% compared with 24.1% for the third quarter 2003. Corporate and other expenses increased significantly compared with last year's quarter as a result of higher expenses for outside services primarily associated with the Company's Sarbanes-Oxley Act Section 404 implementation efforts. 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. These statements may differ materially from actual future events or results. Readers are referred to documents filed by NATCO Group Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which identifies significant risk factors which could cause actual results to differ from those contained in the forward-looking statements. NATCO GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 2004 2003 ------------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents ................................................... $ 1,520 $ 1,751 Trade accounts receivable, net .............................................. 76,899 70,902 Inventories ................................................................. 39,106 34,573 Prepaid expenses and other current assets ................................... 9,457 7,770 ---------- ---------- Total current assets .................................................. 126,982 114,996 Property, plant and equipment, net ............................................ 35,838 37,076 Goodwill, net ................................................................. 80,231 80,097 Deferred income tax assets, net ............................................... 3,357 4,290 Other assets, net ............................................................. 1,424 1,269 ---------- ---------- Total assets .......................................................... $ 247,832 $ 237,728 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt ...................................... $ 6,526 $ 5,617 Accounts payable ............................................................ 39,136 38,976 Accrued expenses and other .................................................. 30,556 30,257 Customer advances ........................................................... 12,348 5,527 ---------- ---------- Total current liabilities ............................................. 88,566 80,377 Long-term debt, excluding current installments ................................ 37,976 38,003 Postretirement benefit and other long-term liabilities ........................ 12,965 12,771 ---------- ---------- Total liabilities ..................................................... 139,507 131,151 ---------- ---------- Series B redeemable convertible preferred stock (aggregate redemption value of $15,000), $.01 par value. 15,000 shares authorized, issued and outstanding (net of issuance costs) ................. 14,222 14,101 Stockholders' equity: Preferred stock $.01 par value. Authorized 5,000,000 shares (of which 500,000 are authorized under Series A and 15,000 are authorized under Series B); no shares issued and outstanding (except Series B shares above) .................................. -- -- Series A preferred stock, $.01 par value. Authorized 500,000 shares; no shares issued and outstanding .................................. -- -- Common stock, $.01 par value. Authorized 50,000,000 shares; issued and outstanding 15,833,793 and 15,854,067 shares as of September 30, 2004 and December 31, 2003, respectively ................................................................ 158 159 Additional paid-in capital .................................................. 97,070 97,351 Accumulated earnings ........................................................ 7,620 8,115 Treasury stock, 897,060 and 795,692 shares at cost as of September 30, 2004 and December 31, 2003, respectively .................................. (8,504) (7,182) Accumulated other comprehensive loss ........................................ (2,241) (2,127) Notes receivable from officers and stockholders ............................. -- (3,840) ---------- ---------- Total stockholders' equity ............................................ 94,103 92,476 ---------- ---------- Commitments and contingencies Total liabilities and stockholders' equity ............................ $ 247,832 $ 237,728 ========== ==========
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Revenues .............................................. $ 84,313 $ 65,801 $ 229,642 $ 204,427 Cost of goods sold .................................... 65,353 49,777 176,237 156,045 --------- --------- --------- --------- Gross profit ................................ 18,960 16,024 53,405 48,382 Selling, general and administrative expense ........... 13,290 12,647 40,165 38,291 Depreciation and amortization expense ................. 1,312 1,167 4,051 3,651 Closure and other ..................................... 2,677 722 2,762 947 Interest expense ...................................... 903 950 2,709 3,089 Write-off of unamortized loan costs ................... -- -- 667 -- Interest cost on postretirement benefit liability ..... 225 209 675 628 Interest income ....................................... (5) (42) (111) (141) Other, net ............................................ 420 (74) 1,394 830 --------- --------- --------- --------- Income before income taxes and cumulative effect of change in accounting principle ........ 138 445 1,093 1,087 Income tax provision .................................. 85 255 463 499 --------- --------- --------- --------- Net income before cumulative effect of change in accounting principle ...................... 53 190 630 588 Cumulative effect of change in accounting principle (net of tax benefit of $18 in 2003) ............... -- -- -- 34 --------- --------- --------- --------- Net income .................................. $ 53 $ 190 $ 630 $ 554 Preferred stock dividends ............................. 375 378 1,125 777 --------- --------- --------- --------- Net income (loss) available to common stockholders ........................... $ (322) $ (188) $ (495) $ (223) ========= ========= ========= ========= Earnings per share--basic: Net income (loss) before cumulative effect of change in accounting principle .................... $ (0.02) $ (0.01) $ (0.03) $ (0.01) Cumulative effect of change in accounting principle ... -- -- -- -- --------- --------- --------- --------- Net income (loss) ........................... $ (0.02 $ (0.01) $ (0.03) $ (0.01) ========= ========= ========= ========= Earnings per share--diluted: Net income (loss) before cumulative effect of change in accounting principle .................... $ (0.02) $ (0.01) $ (0.03) $ (0.01) Cumulative effect of change in accounting principle ... -- -- -- -- --------- --------- --------- --------- Net (loss) income ........................... $ (0.02) $ (0.01) $ (0.03) $ (0.01) ========= ========= ========= ========= Basic weighted average number of shares of common stock outstanding .......................... 15,770 15,854 15,867 15,836 Diluted weighted average number of shares of common stock outstanding ....................... 15,770 15,854 15,867 15,836
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED SEGMENT INFORMATION (IN THOUSANDS)
Three Months Ended ------------------------------------- Nine Months Ended September 30, June 30, September 30, ----------------------- ---------- -------------- -------- 2004 2003 2004 2004 2003 --------- --------- ---------- --------- --------- Revenue: North American Operations ........ $ 50,912 $ 32,717 $ 42,076 $ 130,494 $ 92,289 Engineered systems ............... 20,738 20,837 22,674 67,520 74,144 Automation & Control Systems ..... 14,143 13,404 9,682 35,443 42,652 Eliminations ..................... (1,480) (1,157) (1,085) (3,815) (4,658) --------- --------- --------- --------- --------- Total revenue .................... $ 84,313 $ 65,801 $ 73,347 $ 229,642 $ 204,427 ========= ========= ========= ========= ========= Gross profit: North American Operations ........ $ 12,590 $ 8,566 $ 11,357 $ 34,965 $ 24,180 Engineered Systems ............... 4,456 5,029 4,556 13,260 16,819 Automation & Control Systems ..... 1,914 2,429 1,718 5,180 7,383 Eliminations ..................... -- -- -- -- -- --------- --------- --------- --------- --------- Total gross profit ............... $ 18,960 $ 16,024 $ 17,631 $ 53,405 $ 48,382 ========= ========= ========= ========= ========= Gross profit % of revenue: North American Operations ........ 24.7% 26.2% 27.0% 26.8% 26.2% Engineered Systems ............... 21.5% 24.1% 20.1% 19.6% 22.7% Automation & Control Systems ..... 13.5% 18.1% 17.7% 14.6% 17.3% Total gross profit % of revenue .. 22.5% 24.4% 24.0% 23.3% 23.7% Operating expenses: North American Operations ........ $ 5,834 $ 5,675 $ 6,047 $ 18,055 $ 17,257 Engineered Systems ............... 3,832 4,837 3,972 12,231 14,569 Automation & Control Systems ..... 1,098 1,175 1,155 3,413 3,562 Corporate and other .............. 2,526 960 2,410 6,466 2,903 --------- --------- --------- --------- --------- Total operating expenses ......... $ 13,290 $ 12,647 $ 13,584 $ 40,165 $ 38,291 ========= ========= ========= ========= ========= Segment profit: North American Operations ........ $ 6,756 $ 2,891 $ 5,310 $ 16,911 $ 6,923 Engineered Systems ............... 624 192 584 1,028 2,250 Automation & Control Systems ..... 816 1,254 563 1,767 3,821 Corporate and other .............. (2,526) (960) (2,410) (6,466) (2,903) --------- --------- --------- --------- --------- Total segment profit ............. $ 5,670 $ 3,377 $ 4,047 $ 13,240 $ 10,091 ========= ========= ========= ========= ========= Bookings: North American Operations ........ $ 47,600 $ 36,572 $ 46,234 $ 148,170 $ 96,665 Engineered Systems ............... 5,739 10,915 24,775 62,373 51,347 Automation & Control Systems ..... 8,106 11,110 8,296 34,258 37,771 --------- --------- --------- --------- --------- Total bookings ................... $ 61,445 $ 58,597 $ 79,305 $ 244,801 $ 185,783 ========= ========= ========= ========= ========= As of September 30, -------------------- As of June 30, 2004 2003 2004 -------- --------- -------------- Backlog: North American Operations ........ $ 33,957 19,420 $ 36,812 Engineered Systems ............... 40,074 48,636 55,024 Automation & Control Systems ..... 5,078 3,399 10,142 -------- --------- --------- Total backlog .................... $ 79,109 $ 71,455 $ 101,978 ======== ========= =========
NATCO GROUP INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF EARNINGS AND EARNINGS PER SHARE TO NON-GAAP DISCLOSURES (IN THOUSANDS)
FOR THE QUARTER ENDED SEPTEMBER 30, 2004 ------------------------------------------ INCOME SHARES PER-SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- ---------- (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income .................................... $ 53 Certain adjustments: Closure and other .......................... 2,677 Loss on foreign exchange, net(1) ........... 372 Tax effect of certain adjustments(2) ....... (1,293) ------- Adjusted net income ........................... $ 1,809 Preferred stock dividends accrued ............. (375) ------- Income available to common shareholders (adjusted for certain items) ............ $ 1,434 ======= BASIC EPS (ADJUSTED FOR CERTAIN ITEMS): Income available to common stockholders ....... $ 1,434 15,770 $ 0.09 ======= EFFECT OF DILUTIVE SECURITIES Stock Options ................................. -- 90 ------- ------- DILUTED EPS (ADJUSTED FOR CERTAIN ITEMS): Income available to common stockholders ....... $ 1,434 15,860 $ 0.09 ======= ======= =======
FOR THE QUARTER ENDED SEPTEMBER 30, 2004 ------------------------------------------ INCOME SHARES PER-SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- ---------- (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income .................................... $ 190 Certain adjustments: Closure and other .......................... 722 Loss on foreign exchange, net(1) ........... -- Tax effect of certain adjustments(2) ....... (331) ------- Adjusted net income ........................... $ 581 Preferred stock dividends accrued ............. (378) ------- Income available to common shareholders (adjusted for certain items) ............ $ 203 BASIC EPS (ADJUSTED FOR CERTAIN ITEMS): Income available to common stockholders ....... $ 203 15,854 $ .01 ======= EFFECT OF DILUTIVE SECURITIES Stock options ................................. -- 85 ------- ------- DILUTED EPS (ADJUSTED FOR CERTAIN ITEMS): Income available to common stockholders ....... $ 203 15,939 $ .01 ======= ======= =======
(1) Included in Other Expense, Net in the accompanying income statement. (2) Calculated at the effective tax rate. -----END PRIVACY-ENHANCED MESSAGE-----