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CST: 18/08/2019 12:14:17   

Uniroyal Global Engineered Products, Inc. Reports Financial Results for the Second Quarter Ended June 30, 2019

12 Days ago

SARASOTA, Fla., Aug. 05, 2019 (GLOBE NEWSWIRE) -- Uniroyal Global Engineered Products, Inc. (OTCQB: UNIR) today reported its second quarter financial results for the three months ended June 30, 2019.

Financial Highlights

  •  Net Sales declined 7.4% to $24.1 million versus $26.0 million in the prior year
  •  Net Income declined to $363,047 versus $924,493 in the prior year
  •  Loss per Common Share of $0.02 versus a prior year profit of $0.01

Overview

Our second quarter faced several major headwinds particularly at the UK operations where a weak European economy, particularly in the automotive segment, and currency fluctuations negatively impacted our overall results. Despite disappointing European results which negatively impacted our overall performance this quarter, we are encouraged by the results of our US operations particularly in our Automotive segment where we were awarded new platforms.

Our focus continues to be on retrofitting our UK operations, cutting costs and redirecting our manufacturing capabilities to improve our product mix with an emphasis on higher margin product lines. At our US operations we also continue to target higher margin product lines particularly in the Automotive segment focusing on the heavy truck and SUV vehicle segments. Overall, this will lead to better Gross Profit margins which have been negatively impacted by product mix and the timing of raw material costs which we expect to be largely offset over time.

An area of particular success has been our targeted goal of reducing Operating Expenses as we reduced expenses $208,664 or 6.3% for the second quarter as compared to the prior year.

Net Sales

Net Sales for the three months ended June 30, 2019 declined 7.4% to $24,095,783 versus $26,023,233 in the prior year. Approximately 51.5% of the total Net Sales for the quarter were from our European operations and significant fluctuations in currency conversions negatively impacted overall Net Sales in the current quarter versus the prior year. Excluding the effect of currency fluctuations related to exchange rates, overall Net Sales would have declined 4.6% for the quarter as compared to the prior year.

Automotive net sales which comprised 65.7% of overall Net Sales, declined 11.3% for the second quarter as compared to last year. The UK operations which continued to be challenged by a weak European economy, declined 16.9% for the quarter offsetting a solid performance for the US operations which increased 3.6% for the second quarter.

Industrial net sales which comprised 34.3% of overall Net Sales, increased 1.2% for the second quarter. Our US operations account for approximately 81.0% of total Industrial net sales. Increased sales of seating applications for off the road equipment manufacturers offset a decline in sales to contract upholsterers.

Operating Income

Operating Income for the second quarter was $1,131,774 or 4.7% of Net Sales as compared to $1,474,897 or 5.7% of Net Sales for the prior year, a decline of $343,123 or 23.3%. A decline in Gross Profit of $551,787 was offset by reduced Operating Expenses of $208,664.

The decline in Gross Profit was due to temporary operational inefficiencies at our UK operations as we convert the manufacturing capabilities to target higher margin product lines and the timing of raw material price increases as compared to price increases which generally lag the increase in costs.

The decline in Operating Expenses was due to a reduction in General and Administrative expenses.

Net Income (Loss) Allocable to Common Shareholders

Net Loss Allocable to Common Shareholders for the second quarter was $416,899 or $(0.02) per share compared to Net Income Allocable to Common Shareholders of $148,389 or $0.01 per share. In addition to the decline of operating income, the decline of Net Income Allocable to Common Shareholders was impacted by the increase in Other Expense of $205,730. Other Expense is principally the currency gains and losses recognized on foreign currency transactions and the change in the fair value of financial assets and liabilities that are denominated in Euros.

Weighted average shares outstanding for June 30, 2019 were 18,684,755 as compared to 18,690,030 for July 1, 2018.

For further details, see the Company’s Form 10-Q filed on August 5, 2019.

About Uniroyal Global Engineered Products, Inc.:

Uniroyal Global Engineered Products, Inc . (UNIR) is a leading manufacturer of vinyl-coated fabrics that are durable, stain resistant, cost-effective alternatives to leather, cloth and other synthetic fabric coverings. Uniroyal Global Engineered Products, Inc.’s revenue in 2018 was derived 66.2% from the automotive industry and approximately 33.8% from the recreational, industrial, indoor and outdoor furnishings, hospitality and healthcare markets. Our primary brand names include Naugahyde®, BeautyGard®, Flame Blocker™, Spirit Millennium®, Ambla®, Amblon®, Velbex®, Cirroflex®, Plastolene® and Vynide®.

Forward-Looking Statements:

Except for statements of historical fact, certain information contained in this press release constitutes forward-looking statements, including, without limitation, statements containing the words “believe,” “expect,” “anticipate,” “intend,” “should,” “planned,” “estimated” and “potential” and words of similar import, as well as all references to the future. These forward-looking statements are based on Uniroyal Global Engineered Products, Inc.’s current expectations. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company's business include, but are not limited to, the following: uncertainties relating to economic conditions, uncertainties relating to customer plans and commitments, the pricing and availability of equipment, materials and inventories, currency fluctuations, technological developments, performance issues with suppliers, economic growth, delays in testing of new products, the Company’s ability to successfully integrate acquired operations, the Company’s dependence on key personnel, the Company’s ability to protect its intellectual property rights, the effectiveness of cost-reduction plans, rapid technology changes and the highly competitive environment in which the Company operates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Uniroyal Global Engineered Products, Inc. Public Relations :

TTC Group, Inc.

Vic Allgeier, 646-290-6400

vic@ttcominc.com

 
Uniroyal Global Engineered Products, Inc.
Consolidated Balance Sheets
     
  (Unaudited)
ASSETS June 30, 2019 December 30, 2018
CURRENT ASSETS    
Cash and cash equivalents $ 724,198   $ 1,028,841  
Accounts receivable, net   14,130,970     12,422,330  
Inventories, net   19,900,278     19,460,260  
Other current assets   780,573     965,520  
Related party receivable   28,963     20,118  
Total Current Assets   35,564,982     33,897,069  
PROPERTY AND EQUIPMENT, NET   25,618,778     18,878,949  
OTHER ASSETS    
Intangible assets   3,209,574     3,217,997  
Goodwill   1,079,175     1,079,175  
Other long-term assets   3,723,620     3,693,367  
Total Other Assets   8,012,369     7,990,539  
TOTAL ASSETS $ 69,196,129   $ 60,766,557  
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES    
Checks issued in excess of bank balance $ 765,612   $ 855,210  
Lines of credit   21,196,050     19,325,116  
Current maturities of long-term debt   1,478,311     1,369,967  
Current maturities of finance lease liabilities   275,958     388,862  
Accounts payable   9,687,140     9,335,235  
Accrued expenses and other liabilities   4,147,493     3,326,291  
Related party obligation   126,313     84,154  
Current portion of postretirement benefit liability - health and life   139,095     139,095  
Total Current Liabilities   37,815,972     34,823,930  
LONG-TERM LIABILITIES    
Long-term debt, less current portion   3,681,760     3,967,754  
Finance lease liabilities, less current portion   22,625     109,446  
Related party lease financing obligation   2,712,003     2,613,717  
Long-term debt to related parties   3,190,655     2,990,655  
Postretirement benefit liability - health and life, less current portion   2,089,154     2,101,892  
Other long-term liabilities   6,842,712     653,653  
Total Long-Term Liabilities   18,538,909     12,437,117  
Total Liabilities   56,354,881     47,261,047  
STOCKHOLDERS' EQUITY    
Preferred units, Series A UEP Holdings, LLC, 200,000 units issued and outstanding ($100 issue price)   617,571     617,571  
Preferred units, Series B UEP Holdings, LLC, 150,000 units issued and outstanding ($100 issue price)   463,179     463,179  
Preferred stock, Uniroyal Global (Europe) Limited, 50 shares issued and outstanding ($1.51 stated value)   75     75  
Common stock, 95,000,000 shares authorized ($.001 par value) 18,680,030 and 18,690,030 shares issued and outstanding as of June 30, 2019 and December 30, 2018, respectively   18,680     18,690  
Additional paid-in capital   35,275,646     35,244,770  
Accumulated deficit   (22,702,471 )   (22,136,130 )
Accumulated other comprehensive loss   (831,432 )   (702,645 )
Total Stockholders' Equity   12,841,248     13,505,510  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 69,196,129   $ 60,766,557  
             


 
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Operations
(Unaudited)
       
    Three Months Ended
    June 30, 2019 July 1, 2018
       
NET SALES   $ 24,095,783   $ 26,023,233  
       
COST OF GOODS SOLD     19,883,392     21,259,055  
       
Gross Profit     4,212,391     4,764,178  
       
OPERATING EXPENSES:      
Selling     1,183,803     1,200,051  
General and administrative     1,449,060     1,658,665  
Research and development     447,754     430,565  
OPERATING EXPENSES     3,080,617     3,289,281  
       
Operating Income     1,131,774     1,474,897  
       
OTHER EXPENSE:      
Interest and other debt related expense     (523,218 )   (473,663 )
Other expense     (224,950 )   (19,220 )
Net Other Expense     (748,168 )   (492,883 )
       
INCOME BEFORE TAX PROVISION     383,606     982,014  
       
TAX PROVISION     20,559     57,521  
       
NET INCOME     363,047     924,493  
       
Preferred stock dividend     (779,946 )   (776,104 )
       
NET INCOME (LOSS) ALLOCABLE TO COMMON SHAREHOLDERS   $ (416,899 ) $ 148,389  
       
INCOME (LOSS) PER COMMON SHARE:      
Basic   $ (0.02 ) $ 0.01  
Diluted   $ (0.02 ) $ 0.01  
WEIGHTED AVERAGE SHARES OUTSTANDING:      
Basic     18,684,755     18,690,030  
Diluted     18,684,755     18,690,030  
               


 
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Operations
(Unaudited)
     
  Six Months Ended
  June 30, 2019 July 1, 2018
     
NET SALES $ 49,489,643   $ 52,452,920  
     
COST OF GOODS SOLD   40,963,050     43,071,248  
     
Gross Profit   8,526,593     9,381,672  
     
OPERATING EXPENSES:    
Selling   2,286,841     2,549,081  
General and administrative   2,959,860     3,606,966  
Research and development   924,718     852,528  
Other operating expenses   343,003     -  
OPERATING EXPENSES   6,514,422     7,008,575  
     
Operating Income   2,012,171     2,373,097  
     
OTHER EXPENSE:    
Interest and other debt related expense   (1,037,514 )   (930,027 )
Other income   3,183     14,062  
Net Other Expense   (1,034,331 )   (915,965 )
     
INCOME BEFORE TAX PROVISION   977,840     1,457,132  
     
TAX PROVISION (BENEFIT)   (18,309 )   43,000  
     
NET INCOME   996,149     1,414,132  
     
Preferred stock dividend   (1,562,490 )   (1,560,563 )
     
NET LOSS ALLOCABLE TO COMMON SHAREHOLDERS $ (566,341 ) $ (146,431 )
     
LOSS PER COMMON SHARE:    
Basic $ (0.03 ) $ (0.01 )
Diluted $ (0.03 ) $ (0.01 )
WEIGHTED AVERAGE SHARES OUTSTANDING:    
Basic   18,687,393     18,690,030  
Diluted   18,687,393     18,690,030  
     

 

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