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Leicester, NY, August 10, 1999 CPAC, Inc. (Nasdaq NNM: CPAK) a specialty
chemical manufacturer operating in two business segments – Cleaning/Personal Care and
Imaging -- today announced first quarter results for the period ended June 30, 1999.
CPAC’s first quarter consolidated sales were $26.5 million, down two percent
compared to $27.0 million for the same quarter last year. Earnings for the first quarter
on a fully diluted basis were $0.18 per share this year and last year, although net income
was down 9.8 percent to $1.14 million versus $1.26 million last year. Cash flow from
operations remained strong at $0.47 per share compared to $0.44 per share for the prior
year quarter. Weighted average shares outstanding for the first quarter were 6,284,819
compared to 6,980,328 for the first quarter of fiscal year 1999.
Fuller Brands’ segment sales were $16.16 million, a decrease of six percent,
compared with $17.16 million for the prior year quarter. Gross profits for the segment
were $7,651,806, a decrease of five percent compared to the June 30, 1998 quarter.
Operating income for the segment was $1.32 million, down 10.2 percent versus $1.47 million
for the same period last year.
Commenting on segment results, Thomas N. Hendrickson, CPAC President and Chief
Executive Officer, said, "Fuller Brands’ segment sales were short of our
expectations for the quarter. This was due to both a decline in orders from a major
sweepstakes marketing customer, as well as inventory adjustments by distributors in
Cleaning Technologies Group (CTG), as a result of a successful fourth quarter marketing
campaign." Mr. Hendrickson continued, "The shortfall in profits in the Fuller
Brands segment was attributable to the performance of Cleaning Technologies Group. CTG
continues to fall short of our internal profit objectives. However, we remain convinced
that the positive fundamental business synergies will be realized in this fiscal
year." He added that profits in Fuller Brands’ consumer business exceeded last
year’s results.
CPAC Imaging segment sales were up five percent to $10.3 million in the first quarter
from $9.85 million last year. Operating income for the segment was $860,000, an increase
of 18 percent, versus $726,000 for the same period last year. Operating margin for the
segment increased significantly reflecting a decrease in selling, administrative and
engineering expenses, both in comparison to the prior quarter and as a percentage of
sales.
Mr. Hendrickson commented that, "The increase in Imaging segment sales for the
quarter reflects improved performance from our domestic imaging chemical companies, as
well as strong sales growth in Asia. In addition, our new manufacturing plant, CPAC Asia,
will begin serving customers from Thailand in August 1999."
Mr. Hendrickson also announced that the Board of Directors is now reviewing a
preliminary report from an investment banking firm of CPAC’s business segment
operations. The study was initiated to evaluate methods of increasing shareholder value.
"We expect this study will help us focus on immediately improving our CTG operations
for long-term profit improvement for CPAC," he said.
On Monday, August 9,1999, CPAC’s Board of Directors declared a regular quarterly
cash dividend of $0.065 per share, payable on September 24, 1999 to shareholders of record
at the close of business on August 27, 1999.
CPAC, Inc. is a specialty chemical manufacturer operating in two business segments:
Cleaning and Personal Care, under its brand name The Fuller Brush Company, and Imaging,
with its trademarks Trebla and Allied Diagnostic Imaging Resources, Inc. chemicals. CPAC,
Inc. shares are traded over the Nasdaq National Market System under the ticker symbol,
‘CPAK’.
Except for the historical matters contained herein, statements in this press release
are forward looking and are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Investors are cautioned that forward looking statements
involve risks and uncertainties which may affect CPAC’s business and prospects,
including economic, competitive, governmental technological and other factors discussed in
CPAC’s filings with the Securities and Exchange Commission.
CPAC, Inc.
RESULTS OF OPERATIONS
JUNE 30, 1999, AND JUNE 30, 1998
(UNAUDITED)
Three months ended
|
1999 |
1998 |
%
change |
| Net sales: |
|
|
|
Fuller Brands
Imaging
Total sales: |
$
16,163,449
10,316,105
$ 26,479,554 |
$
17,160,131
9,846,579
$ 27,006,710 |
(5.8)
4.8
(2.0) |
Net income |
$
1,135,570 |
$
1,259,009 |
(9.8)
|
|
|
|
|
Income per
common share
(diluted): |
|
|
|
|
Net income |
$ 0.18 |
$ 0.18 |
-- |
| Operating cash flows* |
$
2,937,317 |
$
3,063,877 |
(4.1) |
| Weighted average number of
common shares outstanding – diluted |
6,284,819 |
6,980,328 |
|
* Earnings before interest, taxes, depreciation, and amortization
CPAC, Inc.
SUPPLEMENTAL SEGMENT DATA
JUNE 30, 1999, AND JUNE 30, 1998
(UNAUDITED)
Three months ended 199
|
FULLER BRANDS |
IMAGING |
COMBINED |
Net sales
Cost of sales
Gross profits
Selling, administrative and
engineering expenses
Research and development
expense
Operating income
|
$ 16,163,449
8,511,643
7,651,806
6,201,066
130,952
$ 1,319,788 |
$ 10,316,105
6,567,569
3,748,536
2,827,358
61,350
$ 859,828 |
$ 26,479,554
15,079,212
11,400,342
9,028,424
192,302
2,179,616 |
Corporate
income (expense)
Interest expense |
|
|
(59,818)
(200,228) |
| Pretax
income |
|
|
$ 1,919,570 |
Three months ended 1998
|
FULLER
BRANDS |
IMAGING |
COMBINED |
| Net
sales |
$
17,160,131 |
$
9,846,579 |
$
27,006,710 |
Cost of
sales
Gross profits |
9,093,631
8,066,500 |
6,017,965
3,828,614 |
15,111,596
11,895,114 |
Selling,
administrative and
engineering expenses |
6,475,172 |
3,042,894 |
9,518,066 |
Research
and development
expense
Operating income
|
121,035
$ 1,470,293
|
59,345
$ 726,375
|
180,380
2,196,668
|
Corporate
income (expense)
Interest expense |
|
|
108,416
(183,075) |
| Pretax
income |
|
|
$ 2,122,009 |
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