EX-99.1 2 l89512aex99-1.txt EXHIBIT 99.1 1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE - JULY 19, 2001 CONTACT: LINDA A. PLEIMAN DIRECTOR OF INVESTOR RELATIONS AND CORPORATE COMMUNICATIONS NS GROUP, INC. (859) 292-6809 www.nsgrouponline.com --------------------- NS GROUP ANNOUNCES RECORD QUARTERLY EARNINGS COMPANY REPORTS $0.41 EPS FOR SECOND QUARTER 2001 (NEWPORT, KENTUCKY - July 19, 2001) NS Group announced record quarterly earnings of $0.41 per diluted share for the quarter ended June 30, 2001. Net sales for the June 2001 quarter were $102.7 million, a 25 percent increase from the March 2001 quarter. Operating income for the quarter was $10.0 million compared to $2.4 million, before restructuring charges, in the first quarter of 2001. Income from continuing operations for the quarter was $8.9 million, or a record $0.41 per diluted share, compared to $1.7 million, or $0.08 per diluted share, before restructuring charges, in the first quarter of 2001. Net sales for the six-month period ended June 30, 2001 were $184.8 million, compared to $186.9 million for the six months ended June 30, 2000. Operating income for the first six months of 2001 was $12.4 million, before restructuring charges, compared to an operating loss of $10.5 million for the comparable prior year period. The company reported net income, before restructuring charges, of $10.7 million, or $0.49 per diluted share, compared to a net loss of $12.3 million, or a $0.57 loss per diluted share, in the prior year period. EBITDA (earnings from continuing operations before extraordinary items, net interest expense, taxes, depreciation and amortization and restructuring charges) was $13.1 million in the second quarter of 2001 compared to $8.9 million in the first quarter of 2001. EBITDA was $22.0 million for the first six months of 2001 compared to $4.0 million in the first six months of 2000. President and Chief Executive Officer, Rene J. Robichaud, stated, "We are very pleased with the company's solid performance and record earnings of $0.41 per share for the second quarter. Demand for our energy products was good during the quarter as drilling for natural gas and oil rose almost 9 percent compared to the March quarter to an average 1,239 rigs in operation. As a result, total shipments of our energy products increased 28 percent and we achieved record quarterly shipments of our seamless energy products. In addition, our results were positively impacted by i) cost savings associated with our decision to purchase rather than make hot rolled coils for our welded tubular operations and ii) reduced losses stemming from exiting the SBQ business. I congratulate all our employees for their terrific efforts and achievements immediately following our difficult company restructuring." 2 The company estimates that it has achieved, on an annualized basis, over 90 percent of the expected annual costs savings of $16 to $18 million. Robichaud said, "Even though our shipping volumes and average selling prices are good, they remain below the peak levels achieved in 1997-98. In addition, imports of OCTG products continued to account for approximately 30 percent of domestic shipments. This level is nearly twice the average market share garnered by imports over the last 10 years. We are hopeful that the International Trade Commission Section 201 investigation, requested by President Bush, will curb unfair surges of OCTG imports. Further, international drilling continues to be strong suggesting that more foreign OCTG supply can be absorbed outside North America." Robichaud continued, "There is currently a lot of discussion in the marketplace concerning the outlook for OCTG products. Natural gas prices, although healthy by historical measures, are significantly below recent peak levels. Current pricing for natural gas has been affected by the slowdown in the economy, milder weather and fuel switching, which has resulted in strong injection rates into natural gas storage. While these factors, and others, will ultimately dictate whether drilling activity may or may not soften in the near term, we are taking a more cautious view. We are assuming that rig activity will soften some. Regardless, given the uncertainty in the near term, our customers have indicated that they will seek to slightly reduce inventories in the next 90 days. Based on these factors, we are adjusting our expected earnings for the September 2001 quarter to be in the area of $0.25 per diluted share and for the full year 2001 to be in the area of $0.94, before restructuring charges." Robichaud concluded, "The U.S. and global economies are expected to rebound later this year. This means greater consumption of energy and a healthy outlook for OCTG consumption in 2002. Also, the laws of supply and demand cut both ways. Now that the price of natural gas is lower, we expect consumption and prices to increase again which bodes well for drilling next year. This should result in increasing OCTG consumption and replenishment of OCTG inventory levels early next year. Lastly, we expect stronger shipments of line pipe, which historically has followed stronger consumption of oil country tubular goods." NS Group is scheduled to host a conference call and simultaneous web cast on Friday, July 20, 2001 at 10:00 a.m. Eastern Time. Details concerning the conference call and web cast are available on the company's web site, www.nsgrouponline.com. NS Group, Inc. is a leading producer of seamless and welded tubular products serving the energy industry. The Company's tubular products are used in the drilling and exploration as well as the transmission of oil and natural gas. The Company's tubular products are marketed primarily in the United States and certain foreign markets. NS Group is traded on the NYSE under the symbol NSS. NS Group, Inc. is headquartered in Newport, Kentucky. To learn more about NS Group log on to www.nsgrouponline.com. --------------------- ################## THIS REPORT CONTAINS FORWARD-LOOKING INFORMATION WITH RESPECT TO THE COMPANY'S OPERATIONS AND BELIEFS. ACTUAL RESULTS MAY DIFFER FROM THESE FORWARD-LOOKING STATEMENTS DUE TO NUMEROUS FACTORS, INCLUDING THOSE DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. 3 NS Group, Inc. Summarized Financial Data (In thousands, except per share amounts, tons shipped, selling price and rig count) (Unaudited)
Three Months Ended Six Months Ended ------------------------------------- ----------------------- June 30 March 31 June 30 June 30, 2001 2001 2000 2001 2000 --------- --------- --------- --------- --------- Net sales $ 102,727 $ 82,114 $ 96,655 $ 184,841 $ 186,931 Cost of products sold 87,268 74,717 95,675 161,985 186,552 --------- --------- --------- --------- --------- Gross profit (loss) 15,459 7,397 980 22,856 379 Selling, general and administrative expenses 5,476 5,625 5,304 11,101 10,870 Restructuring charges - 55,585 - 55,585 - --------- --------- --------- --------- --------- Operating income (loss) (a) 9,983 (53,813) (4,324) (43,830) (10,491) Other income (expense) Investment income 1,286 838 571 2,124 627 Interest expense (2,580) (2,522) (2,910) (5,102) (5,825) Other, net 206 1,099 1,835 1,305 2,165 --------- --------- --------- --------- --------- Income (loss) from continuing operations before income taxes and extraordinary items 8,895 (54,398) (4,828) (45,503) (13,524) Provision (benefit) for income taxes - - (251) - (410) --------- --------- --------- --------- --------- Income (loss) from continuing operations before extraordinary items 8,895 (54,398) (4,577) (45,503) (13,114) Income from discontinued operations, net of income taxes - - 460 - 766 --------- --------- --------- --------- --------- Income (loss) before extraordinary items 8,895 (54,398) (4,117) (45,503) (12,348) Extraordinary items, net of income taxes - (59) - (59) --------- --------- --------- --------- --------- Net income (loss) (a) $ 8,895 $ (54,457) $ (4,117) $ (45,562) $ (12,348) ========= ========= ========= ========= ========= Per common share - diluted Income (loss) from continuing operations $ 0.41 $ (2.60) $ (0.21) $ (2.17) $ (0.61) Income from discontinued operations, net of income taxes - - 0.02 - 0.04 Extraordinary items, net of income taxes - - - - - --------- --------- --------- --------- --------- Net income (loss) (a) $ 0.41 $ (2.60) $ (0.19) $ (2.17) $ (0.57) ========= ========= ========= ========= ========= Weighted average shares outstanding Basic 20,994 20,948 21,632 20,971 21,574 Diluted 21,689 20,948 21,632 20,971 21,574 EBITDA (b) $ 13,057 $ 8,910 $ 3,779 $ 21,967 $ 3,966 Product shipments (tons): Energy products - welded 95,900 74,200 110,200 170,100 215,900 Energy products - seamless 57,000 45,000 41,700 102,000 79,200 Industrial products - SBQ 9,900 14,000 33,900 23,900 76,300 Average selling price per ton: Energy products - welded $ 490 $ 498 $ 440 $ 493 $ 428 Energy products - seamless 899 871 802 886 779 Industrial products - SBQ 390 428 417 412 415 Average rig count 1,239 1,139 848 1,189 809
(a) Total restructuring charges of $56.2 million, or $2.68 per share, were recorded in the quarter ended March 31, 2001. Excluding these charges, operating income, net income and earnings per diluted share for the quarter ended March 31, 2001 would have been $2.4 million, $1.7 million and $0.08, respectively. For the six month period ended June 30, 2001, operating income, net income and earnings per diluted share would have been $12.4 million, $10.7 million and $0.49, respectively, before the restructuring charges. (b) Represents earnings (loss) before net interest expense, taxes, depreciation, amortization and restructuring charges and is calculated as income (loss) from continuing operations plus net interest expense, taxes, depreciation, amortization and restructuring charges. Note: Reclassifications have been made to certain prior period amounts to conform with the current period's presentation for freight costs.