EX-99.1 3 c78584exv99w1.txt SECOND QUARTER EARNING PRESS RELEASE news release from EXHIBIT 99.1 [BUTLER (R) LOGO] BUTLER MANUFACTURING COMPANY (NYSE:BBR) KANSAS CITY, MISSOURI CONTACT LARRY MILLER, VICE PRESIDENT-FINANCE (816) 968-3216 FOR IMMEDIATE RELEASE BUTLER MANUFACTURING COMPANY REPORTS SECOND QUARTER RESULTS KANSAS CITY, MO, July 29, 2003 -- Butler Manufacturing Company (NYSE:BBR), reported sales for the second quarter ended June 30, 2003 were $174 million compared with $213 million in the same period last year. The after-tax charges related to the previously announced sale of the Lester wood building business of $4.2 million, or $0.66 per share, resulted in the company recording a $9.1 million, or $1.43 per share, loss for the quarter, compared with net earnings of $0.3 million, or $.05 per share last year. The second quarter loss, net of the Lester after-tax charges, was $4.9 million. Commenting on the results, John Holland, chairman and chief executive officer, said, "This was one of our more disappointing quarterly financial results in many years, highlighting how difficult the current conditions have been. According to F. W. Dodge, domestic nonresidential construction contract awards were down 8% through June, continuing the steep decline that began in 2001. The pricing environment remained fiercely competitive, and this, along with the lower volume due to low demand, resulted in reduced standard margins and higher unabsorbed fixed costs. "Each of our business units reported lower demand during the quarter. While there were shipping delays caused by wet weather, especially along the east coast of the United States, the fundamental cause of the reduced revenue was the scarcity of construction projects generally. Hardest hit was our metal buildings business, followed by the decline at Bucon, our general contracting subsidiary. We continued to implement cost cutting measures during the quarter and increase niche revenues in previously underserved markets. We will continue both of these efforts throughout 2003 -- and beyond. 5 "The North American Building Systems segment sales were approximately $82 million during the second quarter compared with $98 million a year ago. The majority of the decline in sales occurred in the metal building business reflecting the weak markets, particularly manufacturing end-uses which represent a significant percentage of Butler revenues. Our programs to increase sales in the commercial and community markets continued to make progress in the second quarter. The commercial and community markets have not been as hard hit as the manufacturing sector. The lower volume and gross margins, together with the $7 million in charges related to the announced sale of our Lester operation, resulted in a segment pretax loss of $13.4 million compared with a pretax loss of $1.6 million last year. Excluding the effect of the $7 million in charges related to the Lester sale, the loss was $6.4 million. We are on schedule to complete the construction of our previously announced Mexican pre-engineered metal building plant later this year. This lower cost facility will enhance our competitive position in Latin America and domestically as well. During the second quarter we implemented a major enterprise resource planning system in our metal buildings business. This system replaces an aging legacy computer system. We are incurring extra costs as we move up the learning curve on this system and anticipate those costs will decline gradually over the remainder of the year. "The International Building Systems segment sales for the second quarter, all from China in the current year, were approximately $25 million, compared with $32 million a year ago. Excluding the $6 million of sales recorded for the European business in 2002, sales for this segment were down 4% compared with a year ago. The lower volume in China was related to the overall economic slowdown primarily caused by the SARS virus. Order rates have picked up of late and we expect year-over-year sales growth during the remainder of this year. Despite the lower volume, margins and expenses were well managed and pretax income was $1.9 million compared with $2.0 million last year. Excluding the European results, 2002 second quarter pretax income was $1.6 million. Our new plant in the north of China that opened earlier this year is progressing on schedule providing important capacity to support this growing business. "Sales in the Vistawall Architectural Products segment were $54 million compared with $56 million last year. Pretax earnings were $2.8 million compared with $3.0 million a year ago. Gross profit margins were only slightly lower in spite of recent weaker demand in the commercial construction markets. We are well positioned with low cost capacity to grow our share of the architectural products market with Vistawall. "Our project related businesses, Butler Construction and Butler Real Estate, accounted for approximately half of the decline in Butler sales when compared to the second quarter of 2002. Butler Construction's sales were $15 million compared with $27 million last year, reflecting not only lower demand generally but the dearth of larger building projects specifically. The lower volume led to a pretax loss of $0.6 million compared with pretax earnings of $0.3 million in 2002. The Real Estate segment had no sales in the second quarter compared with sales of $6 million a year ago. Pretax earnings were $0.3 million compared with $.9 million last year with the drop in earnings both revenue and rental income related. 6 "The poor financial results for the first half of the year and weak outlook were factors that led to the mid-June announcement to reduce the cash dividend to $0.04 per share. At the end of the second quarter we were in compliance with all provisions of our bank and note agreements. However, given the continued weakness in the marketplace, our ability to comply in the future with the existing financial covenants of our credit agreements is uncertain. Therefore, we are working to restructure our debt agreements to provide more financial and operating flexibility and also to protect against any potential default scenarios during this prolonged downturn in the nonresidential construction market. "While economic signals point toward a gradual improvement in the economy, there are no signs of increased investment in nonresidential construction beyond the seasonal summer-fall pick-up. Backlog at June 30, 2003 was $295 million compared with $310 million a year ago, excluding backlogs of the Lester and European businesses. Backlog of the products businesses were 6% lower while those of the construction business were 3% lower. We remain focused on reducing costs and expenses in line with current demand, while targeting growth opportunities in commercial and community markets positioning the company for improved operating results when economic conditions improve," Mr. Holland concluded. Butler Manufacturing Company is the world's leading producer of pre-engineered building systems, a leading supplier of architectural aluminum systems and components, and provides construction and real estate services for the nonresidential construction market. ----------------------------------- 7 CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------------ (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Net sales $ 174,035 $ 213,421 $ 343,802 $ 396,273 Cost of sales 153,051 184,210 301,398 344,943 ---------- ----------- ---------- ---------- Gross profit 20,984 29,211 42,404 51,330 Selling, general and administrative expenses 26,408 27,909 52,950 55,746 Asset impairment charge 6,234 - 6,234 - ---------- ----------- ---------- ---------- Operating income (loss) (11,658) 1,302 (16,780) (4,416) Other income (expense), net (400) 686 (1,396) 616 ---------- ----------- ---------- ---------- Earnings (loss) before interest and taxes (12,058) 1,988 (18,176) (3,800) Interest expense 2,404 1,975 4,550 3,933 ---------- ----------- ---------- ---------- Pretax earnings (loss) (14,462) 13 (22,726) (7,733) Income tax benefit 5,371 281 9,720 2,659 ---------- ----------- ---------- ---------- Net earnings (loss) $ (9,091) $ 294 $ (13,006) $ (5,074) ========== =========== ========== ========== Basic earnings (loss) per common share $ (1.43) $ 0.05 $ (2.05) $ (0.81) ========== =========== ========== ========== Diluted earnings (loss) per common share $ (1.43) $ 0.05 $ (2.05) $ (0.81) =========== =========== ========== ========== Basic weighted average number of shares 6,344,612 6,315,046 6,339,951 6,302,643 Diluted weighted average number of shares 6,344,612 6,324,684 6,339,951 6,302,643
A $7.0 million pre-tax charge recorded in the second quarter related to the sale of Lester included a $6.2 million impairment charge and a charge for $.8 million other selling and legal costs recorded in other expense. Net losses for the current quarter, excluding the after-tax Lester charge of $4.2 million ($.66 per share), were $4.9 million ($.77 per share). For the six months, net losses excluding the after-tax Lester charge were $8.8 million ($1.39 per share). SELECTED SEGMENT INFORMATION
------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, NET SALES 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------ (DOLLARS IN THOUSANDS) North American Building Systems $ 82,363 $ 97,725 $ 162,844 $ 176,212 International Building Systems 25,351 31,980 47,511 53,572 Architectural Products 54,350 56,102 107,216 107,683 Construction Services 14,519 27,387 33,320 65,137 Real Estate - 6,075 - 6,075 Other (2,548) (5,848) (7,089) (12,406) ------------ ------------ ------------ ------------- $ 174,035 $ 213,421 $ 343,802 $ 396,273 ============ ============ ============ ============= ------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, PRETAX EARNINGS (LOSS) 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------ (DOLLARS IN THOUSANDS) North American Building Systems $ (13,369) $ (1,589) $ (19,804) $ (5,841) International Building Systems 1,888 1,957 3,999 1,928 Architectural Products 2,849 3,022 4,914 3,931 Construction Services (645) 311 (364) 1,088 Real Estate 306 927 (311) 1,482 Other (5,491) (4,615) (11,160) (10,321) ----------- --------- ---------- ----------- $ (14,462) $ 13 $ (22,726) $ (7,733) =========== ========= ========== ===========
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CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------------------------------------------------------------------ AT JUNE 30, 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------------ (DOLLARS IN THOUSANDS) LIABILITIES &ASSETS: SHAREHOLDERS' EQUITY: Cash and equivalents $ 56,750 $ 44,431 Short-term debt $ 12,346 $ 7,980 Receivables, net 101,916 115,555 Accounts payable 58,467 76,179 Inventories 62,609 60,014 Accrued liabilities 89,742 91,386 Real estate developments 5,789 18,459 Taxes on income 11,339 3,960 Assets held for sale under contract 7,592 - Dividends payable 254 1,136 --------- ---------- Net current deferred tax assets 16,805 16,635 Total current liabilities 172,148 180,641 Other current assets 5,667 8,468 ---------- ----------- Total current assets 257,128 263,562 Investments and other assets 74,751 52,777 Net noncurrent deferred tax liabilities - 3,683 Assets held for sale 3,684 3,684 Other non-current liabilities 49,706 18,041 Plant and equipment, net 113,926 138,335 Long-term debt 93,194 97,916 Shareholders' equity 134,441 158,077 ---------- ----------- --------- ---------- $ 449,489 $ 458,358 $ 449,489 $ 458,358 ========== =========== ========= ========== CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED JUNE 30, 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------------ (DOLLARS IN THOUSANDS) CASH FROM CASH FROM OPERATING ACTIVITIES: FINANCING ACTIVITIES: Net loss $ (13,006) $ (5,074) Dividends (2,274) (2,264) Asset impairment charge 6,234 - Net change in long-term debt 751 (328) Depreciation and amortization 10,268 9,000 Net change in short-term debt 2,446 263 Change in assets and liabilities (15,168) (2,700) Purchase and sale of Other, net 83 55 treasury stock, net 404 673 ----------- ---------- ---------- ---------- Total (11,589) 1,281 Total 1,327 (1,656) ----------- ---------- ---------- ---------- CASH FROM INVESTING ACTIVITIES: EFFECT OF EXCHANGE RATE CHANGES (638) 75 ---------- ---------- Capital expenditures - PP&E (6,010) (3,068) Capital expenditures - software (2,118) (4,770) DECREASE IN ----------- ---------- Total (8,128) (7,838) CASH AND EQUIVALENTS $ (19,028) $ (8,138) ----------- ---------- ========== ==========
Statements in this press release concerning the company's business outlook or future economic performance; anticipated profitability, revenues, expenses or other financial items, together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under the Federal Securities Laws. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated in such statements. Such risks and uncertainties include, but are not limited to, industry cyclicality, fluctuations in customer demand and order pattern, the seasonal nature of the business, changes in pricing or other actions by competitors, and general economic conditions, as well as other risks detailed in the company's 2002 Annual Report to Shareholders on page 16. 7/29/03 9