Citation Corporation | News | Press Releases

Press Releases : 1998

CITATION CORPORATION
2 Office Park Circle, Suite 204
Birmingham, AL 35223
Contact: Stanley B. Atkins
205-871-5731

July 15, 1998

CITATION CORPORATION REPORTS RECORD $0.54 EPS FOR THIRD FISCAL QUARTER

BIRMINGHAM, Alabama -- Citation Corporation (Nasdaq: CAST) today announced all-time record sales and earnings for its fiscal third quarter and nine months ended June 28, 1998.

Sales for the third fiscal quarter of 1998 were $196.4 million, a 10.5 percent increase from third quarter sales of $177.9 million last year.

Earnings for the 1998 quarter were $9.7 million versus $7.8 million in the third quarter of fiscal 1997, a 24.3 percent increase.

Diluted earnings per share (EPS) for the 1998 third quarter was $0.54 versus $0.44 in the third quarter of 1997. This is the largest EPS for any quarter since Citation became a public company.

For the fiscal nine months, sales were $559.8 million, a 14.5 percent increase over fiscal 1997 nine months sales of $488.8 million.

Earnings for the 1998 nine months were $23.2 million, a 31.5 percent increase over last year's nine months's earnings of $17.7 million.

Diluted EPS for the 1998 fiscal nine months was $1.29 versus last year's nine months of $0.99. This equals the $1.29 diluted EPS for the full year of fiscal 1997.

The sales increase for the third quarter was attributable to the acquisitions in fiscal 1998. Excluding the impact of acquisitions, sales for the "same store" units were flat for the quarter. For the nine months, same store sales increased by 5 percent.

Operating margins for the 1998 third quarter were 10.2 percent versus 9.3 percent in the third quarter of fiscal 1997. The improvement in margins was attributable to improved operating efficiencies of the divisions. In addition, sales, general and administrative (SG & A) expenses declined as a percentage of sales.

Although SG & A increased from $15.6 million in the third quarter of fiscal 1997 to $15.9 million in the corresponding quarter this year, SG & A as a percentage of sales declined to 8.1 percent in the fiscal 1998 third quarter versus 8.8 percent in the same quarter last year. This improvement results from the sales growth in the quarter without a corresponding increase in headquarters and administrative personnel head count.

During the quarter, Citation added a fifth operating group - the Aluminum Group - which consists of Southern Aluminum, Bohn Aluminum, Dycast, Inc. Citation Precision and Oberdorfer Industries. Previously, the aluminum operations had been combined with the Special Foundry Group. The Special Foundry Group now consists of Texas Steel, Castwell Products and the proposed joint venture foundry with Caterpillar in Mexico. The joint venture foundry will begin construction in late 1998.

Citation also has a High Volume Foundry Group, a Medium Volume Foundry Group and a Forging Group.

T. Morris Hackney, Chairman and CEO, said, "It is very gratifying for Citation to continue its record sales and earnings performance, particularly given that our third quarter last year was relatively so strong a quarter.

"Automotive demand, despite the General Motors labor dispute, and heavy truck demand were strong in the quarter. Construction equipment, mining equipment, and oil tools, which were fairly strong early in the quarter, softened somewhat in the latter part of the quarter. "The softness in construction equipment, mining equipment and oil tools, if it continues, would primarily impact performance of Interstate Forging, Texas Steel, and Mabry Foundry.

"While General Motors is not nearly as significant a customer to Citation as Ford and Chrysler, the strikes at GM facilities and the resulting shut down of assembly plants did have limited impact on operations at Texas Foundries, Bohn Aluminum and Dycast in the third quarter.

"However, our forecast for the fourth quarter includes ramp up of several new programs which primarily affect our High Volume Group. Should the GM strikes continue significantly beyond the shutdown periods in July, it is possible Citation's financial results would show some impact. It is impossible to predict the possible effect at this time because new car sales have been very strong and we expect that increased orders from Ford and Chrysler would offset a portion of any GM reduced business.

"Despite this," Mr. Hackney said, "we believe we will continue our strong performance into next year. New programs that will begin in the next year should take us to a higher level of capacity than currently. Further, there appears to be a good market with many opportunities for acquisitions, and, where appropriate, we hope to take advantage of that," he said.

Citation Corporation is a metal components supplier to capital and durable goods industries. The company currently operates 19 manufacturing divisions in 10 states and employs more than 6,500 employees. Sales for fiscal 1997 were $649 million.

Note: The statements in this news release that are not historical fact are forward-looking statements that involve risks and uncertainties including, but not limited to, changes in the economy, demand for durable goods, pricing by competitors, entry of new competitors, and other risks detailed in the Company's 10-K for the year ended September 28, 1997, the 10-Q for the quarter ended March 29, 1998, and other filings with the Securities and Exchange Commission.