MAYFIELD HEIGHTS, Ohio, Jul 23, 2002 /PRNewswire-FirstCall via COMTEX/ -- NACCO Industries, Inc. (NYSE: NC) today announced net income for the second quarter of 2002 of $2.8 million, or $0.34 per share, compared to net income for the second quarter of 2001 of $6.1 million, or $0.74 per share. Revenues for the second quarter of 2002 were $609.6 million compared to $668.0 million for the second quarter of 2001. The elimination of goodwill amortization contributed approximately $4.0 million, or $0.49 per share, to net income in the second quarter of 2002. The Company, in accordance with new rules requiring testing for goodwill impairment, completed its analysis during the second quarter of 2002. No goodwill impairment write-off was required.
For the six months ended June 30, 2002, net income was $9.1 million, or $1.11 per share. Net income for the first six months of 2001, after the cumulative effect of accounting changes in the first quarter of 2001, was $19.2 million, or $2.34 per share. Revenues for the first six months of 2002 were $1.2 billion compared to $1.4 billion for the first six months of 2001.
Discussion of Results
NMHG Wholesale
NMHG Wholesale reported net income of $2.5 million in the second quarter of 2002 on lift truck shipments of 16,135 units compared to net income of $4.9 million on shipments of 18,402 units in the second quarter of 2001 and net income of $5.6 million on shipments of 14,971 units in the first quarter of 2002. Lift truck shipments increased 12 percent compared, respectively, to 14,452 and 14,451 units in the third and fourth quarters of 2001. Revenues for the second quarter of 2002 were $347.2 million, compared to $392.0 million for the second quarter of 2001 and $327.7 million for the first quarter of 2002.
Operating profit improved to $13.8 million in the second quarter of 2002 compared to $7.8 million in the second quarter of 2001 and $7.0 million in the first quarter of 2002. Operating profit improved despite reduced unit volume during the second quarter of 2002, compared to the second quarter of 2001, which was caused by soft markets in the United States and Europe. Lower manufacturing costs driven by the completion of the Danville restructuring program in the fourth quarter of 2001, global procurement and cost control programs, a favorable shift to sales of higher margin lift trucks and the elimination of goodwill amortization of $2.9 million contributed to the improved operating results. Net income, however, declined in the second quarter of 2002, compared to the second quarter of 2001, due to nonrecurring insurance recovery income in the second quarter of 2001, and costs resulting from the refinancing of NMHG's debt in the second quarter of 2002, which included an increase in the effective interest rate, amortization of deferred financing fees and the negative effect of interest rate swap agreements.
Demand for NMHG lift trucks improved in the second quarter of 2002 as NMHG Wholesale's worldwide backlog increased 24 percent to 17,500 units compared to 14,100 units at the end of the second quarter of 2001. Backlog increased 7 percent compared to 16,300 units at the end of the first quarter of 2002, 16 percent compared to 15,100 units at the end of the fourth quarter of 2001 and 22 percent compared to 14,400 units at the end of the third quarter of 2001.
For the six months ended June 30, 2002, NMHG Wholesale reported net income of $8.1 million on revenues of $674.9 million compared to net income of $17.3 million on revenues of $834.9 million for the first six months of 2001.
NMHG Wholesale - Outlook
NMHG Wholesale expects that previously initiated cost reduction activities, including restructuring programs, procurement initiatives, and other strategic and cost reduction programs, have positioned the company for improved results in the second half of 2002, compared to the second half of 2001. Furthermore, NMHG Wholesale does not expect to incur the inefficiencies of the second half of 2001, when production was dramatically reduced. NMHG Wholesale expects improved operating results but also to incur, as a result of the refinancing of NMHG's debt, increased interest expense, amortization of deferred financing fees and the negative effect of interest rate swap agreements during the second half of 2002, compared to the second half of 2001.
NMHG Retail
NMHG Retail's operations, which include the required elimination of intercompany transactions between NMHG Wholesale and company owned retail dealerships, incurred a net loss for the second quarter of 2002 of $3.7 million on revenues of $41.5 million compared to a net loss of $3.7 million on revenues of $52.7 million for the second quarter of 2001.
The decrease in revenues in the second quarter of 2002, compared to the second quarter of 2001, was primarily due to the sale of NMHG Retail's German Hyster(R) operations in the fourth quarter of 2001 and lower sales volume. Improved results at NMHG Retail's operations in Europe, where restructuring programs were implemented in 2001, were offset by lower sales worldwide, expenses for implementing cost reduction programs designed to achieve break- even operations in Asia-Pacific and unfavorable foreign currency movements.
For the six months ended June 30, 2002, NMHG Retail had a net loss of $5.0 million on revenues of $85.6 million compared to a net loss of $7.8 million on revenues of $105.4 million for the first six months of 2001.
NMHG Retail - Outlook
NMHG Retail expects to continue its programs to improve the performance of its wholly owned dealerships as part of its objective for reaching at least break-even results.
NACCO Housewares Group
NACCO Housewares Group, which includes NACCO's Hamilton Beach\Proctor- Silex and Kitchen Collection subsidiaries, reported net income of $0.4 million for the second quarter of 2002 on revenues of $134.5 million compared to net income of $0.1 million for the second quarter of 2001 on revenues of $140.1 million.
Revenues at NACCO Housewares Group decreased in the second quarter of 2002, compared to the second quarter of 2001, due primarily to lower unit volumes at Hamilton Beach\Proctor-Silex as a result of the company's strategic decision to withdraw from selected low-margin, opening price point business. Sales of Hamilton Beach\Proctor-Silex home health products were also lower in the second quarter of 2002, compared to the second quarter of 2001, due to the timing of advertising and promotions for TrueAir(TM) home odor eliminators as well as increased competition in this market segment. Decreased revenues were partially offset by increased sales of General Electric-branded products to Wal*Mart.
Net income at NACCO Housewares Group increased slightly during the second quarter of 2002, compared to the second quarter of 2001, primarily as a result of lower manufacturing costs at Hamilton Beach\Proctor-Silex's Mexican plants and reduced selling, general and administrative expenses partially offset by lower unit volume and a $2.2 million after-tax partial write-off of pre- bankruptcy Kmart receivables. Kitchen Collection recorded substantial increases in comparable store sales, average sales transaction size and the total number of sales transactions per store for the second quarter of 2002, compared to the second quarter of 2001. Kitchen Collection operated 169 stores at June 30, 2002, compared to 160 stores at June 30, 2001.
For the six months ended June 30, 2002, NACCO Housewares Group had a net loss of $2.4 million on revenues of $256.1 million compared to a net loss of $3.0 million on revenues of $278.4 million for the first six months of 2001.
NACCO Housewares Group - Outlook
Hamilton Beach\Proctor-Silex is cautiously optimistic that markets for consumer goods will continue to improve in the second half of 2002. The company expects an improved product mix due to additional product placements and new product introductions. Hamilton Beach\Proctor-Silex anticipates that programs to reduce and consolidate its Mexican manufacturing capacity will result in continued improvements in manufacturing efficiencies and manufacturing overhead costs in the second half of 2002 in comparison to the second half of 2001. The company anticipates that cash flow will improve as a result of ongoing inventory management programs and tightly controlled capital spending.
Kitchen Collection expects comparable store revenues to continue improving over the next two quarters. The company anticipates opening additional Kitchen Collection(R) stores in outlet malls and Gadgets & More(R) stores in enclosed malls.
North American Coal
North American Coal's net income for the second quarter of 2002 was $4.2 million compared to $5.4 million for the second quarter of 2001. Results for the second quarter of 2002 included an $0.8 million after-tax gain from the sale of undeveloped Eastern coal reserves that were not aligned with North American Coal's development strategies. Results for the second quarter of 2001 included $3.3 million after-tax of contractual liquidated damages payments received by North American Coal's Red Hills Mine in Mississippi as a result of delays in achieving commercial operation status at its customer's Red Hills Power Plant. No contractual liquidated damages were recognized in the second quarter of 2002.
The Red Hills Mine achieved normal operating volume in the second quarter of 2002, resulting in enhanced cash flow but also lower earnings due to additional operating expenses compared to the second quarter of 2001. Net income in the second quarter of 2002 was also reduced by decreased lignite coal sales at the Red River Mine in Louisiana due to lower customer requirements in comparison to the second quarter of 2001.
A total of 7.7 million tons of lignite coal were delivered during the second quarter of 2002 compared to 7.1 million tons of lignite coal delivered in the second quarter of 2001. North American Coal's Florida dragline operations delivered 2.8 million cubic yards of limerock in the second quarter of 2002 compared to 2.1 million cubic yards of limerock in the second quarter of 2001.
For the six months ended June 30, 2002, North American Coal's net income was $10.6 million compared to an unusually high $14.6 million for the first six months of 2001, which included $6.6 million after-tax of liquidated damages payments received by the Red Hills Mine and unusually high lignite coal sales at the Red River Mine.
North American Coal - Outlook
North American Coal anticipates that lignite coal deliveries for the second half of 2002 will increase, compared to the second half of 2001, as a result of increased demand from the Red Hills Power Plant. Lignite coal deliveries at the Red Hills Mine are expected to be approximately 2.8 million tons in 2002. The Red River Mine is expected to sell fewer tons of lignite coal in the second half of 2002 due to lower customer requirements.
In conjunction with this news release, the management of NACCO Industries, Inc. will host a conference call on Wednesday, July 24, at 11 a.m. eastern time. The call may be accessed by dialing (800) 360-9865 or over the Internet through NACCO Industries' Web site at www.nacco.com or at www.ccbn.com . Please allow 15 minutes to register, download and install any necessary audio software required to listen to the broadcast. The online archive of the broadcast will be available for 72 hours at the NACCO Web site.
The statements contained in the news release that are not historical facts are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties which could cause actual results to differ materially from those presented in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Such risks and uncertainties with respect to each subsidiary's operations include, without limitation:
NACCO Materials Handling Group: (1) changes in demand for lift trucks and related aftermarket parts and service on a worldwide basis, especially in the U.S. where the company derives a majority of its sales, (2) changes in sales prices, (3) delays in delivery or changes in costs of raw materials or sourced products and labor, (4) delays in manufacturing and delivery schedules, (5) exchange rate fluctuations, changes in foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which NMHG operates and/or sells products, (6) product liability or other litigation, warranty claims or returns of products, (7) delays in or increased costs of restructuring programs, (8) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement initiatives, (9) acquisitions and/or dispositions of dealerships by NMHG, (10) costs related to the integration of acquisitions, (11) the impact of the introduction of the euro, including increased competition, foreign currency exchange movements and/or changes in operating costs and (12) uncertainties regarding the impact the September 11, 2001 terrorist activities and the subsequent climate of war may have on the economy or the public's confidence in general.
NACCO Housewares Group: (1) changes in the sales prices, product mix or levels of consumer purchases of kitchenware and small electric appliances, (2) bankruptcy of or loss of major retail customers or suppliers, (3) changes in costs of raw materials or sourced products, (4) delays in delivery or the unavailability of raw materials or key component parts, (5) exchange rate fluctuations, changes in the foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which Hamilton Beach\Proctor-Silex buys, operates and/or sells products, (6) product liability, regulatory actions or other litigation, warranty claims or returns of products, (7) increased competition, (8) customer acceptance of, changes in costs of, or delays in the development of new products, including the GE- branded products sold to Wal*Mart and new home environment products, (9) weather conditions or other events that would affect the number of customers visiting Kitchen Collection stores and (10) uncertainties regarding the impact the September 11, 2001 terrorist activities and the subsequent climate of war may have on the economy or the public's confidence in general.
North American Coal: (1) weather conditions and other events that would change the level of customers' fuel requirements, (2) weather or equipment problems that could affect lignite deliveries to customers, (3) changes in maintenance, fuel or other similar costs, (4) costs to pursue international opportunities and (5) changes in the U.S. economy or in the power industry that would affect demand for North American Coal's Eastern U.S. underground reserves.
NACCO Industries, Inc. is an operating holding company with three principal businesses: lift trucks, housewares and lignite coal mining. NACCO Materials Handling Group designs, engineers, manufactures and sells a full line of lift trucks and replacement parts marketed worldwide under the Hyster(R) and Yale(R) brand names. NACCO Housewares Group consists of Hamilton Beach\Proctor-Silex, Inc., a leading manufacturer and marketer of small electric motor and heat-driven household appliances as well as commercial products for restaurants, bars and hotels, and The Kitchen Collection, Inc., a national specialty retailer of brand-name kitchenware, small electrical appliances and related accessories. The North American Coal Corporation mines and markets lignite coal primarily as fuel for power generators. For more information about NACCO Industries, visit the Company's Web site at www.nacco.com .
UNAUDITED CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
(In millions, except per share data)
Total revenues $609.6 $668.0 $1,186.1 $1,385.2
Income before cumulative effect of
accounting changes* $2.8 $6.1 $9.1 $20.5
Cumulative effect of accounting
changes - - - (1.3)
Net income* $2.8 $6.1 $9.1 $19.2
Earnings before cumulative effect of
accounting changes per share* $0.34 $0.74 $1.11 $2.50
Cumulative effect of accounting
changes - - - (0.16)
Earnings per share* $0.34 $0.74 $1.11 $2.34
Cash dividends per share $0.245 $0.235 $0.480 $0.460
Average shares outstanding 8.197 8.193 8.196 8.187
(All amounts are subject to annual audit by independent public auditors.)
*Prior year's results reflect the amortization of goodwill of $4.0 million
or $0.49 per share and $8.0 million or $0.98 per share in the
three and six months ending June 30, 2001, respectively.
UNAUDITED CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
(In millions, except per share data)
Revenues
NACCO Materials Handling Group
Wholesale $347.2 $392.0 $674.9 $834.9
NACCO Materials Handling Group
Retail (incl. elims.) 41.5 52.7 85.6 105.4
NACCO Materials Handling Group 388.7 444.7 760.5 940.3
NACCO Housewares Group 134.5 140.1 256.1 278.4
North American Coal 86.3 83.1 169.4 166.4
NACCO and Other 0.1 0.1 0.1 0.1
609.6 668.0 1,186.1 1,385.2
Amortization of goodwill
NACCO Materials Handling Group
Wholesale - 2.9 - 5.8
NACCO Materials Handling Group
Retail (incl. elims.) - 0.4 - 0.7
NACCO Materials Handling Group - 3.3 - 6.5
NACCO Housewares Group - 0.7 - 1.5
- 4.0 - 8.0
Operating profit (loss)
NACCO Materials Handling Group
Wholesale 13.8 7.8 20.8 33.6
NACCO Materials Handling Group
Retail (incl. elims.) (2.8) (2.8) (2.6) (6.2)
NACCO Materials Handling Group 11.0 5.0 18.2 27.4
NACCO Housewares Group 3.2 1.2 0.6 (1.8)
North American Coal 12.4 14.8 27.4 31.7
NACCO and Other (1.0) (2.9) (1.8) (6.1)
25.6 18.1 44.4 51.2
Other income (expense)
NACCO Materials Handling Group
Wholesale (10.2) (0.1) (12.3) (2.7)
NACCO Materials Handling Group
Retail (incl. elims.) (3.0) (2.5) (4.9) (5.1)
NACCO Materials Handling Group (13.2) (2.6) (17.2) (7.8)
NACCO Housewares Group (2.6) (1.1) (4.6) (3.5)
North American Coal (6.8) (7.5) (14.2) (12.1)
NACCO and Other 0.7 2.3 1.3 4.5
Income before income taxes, minority
interest and cumulative effect of
accounting changes 3.7 9.2 9.7 32.3
Provision for income taxes 1.2 3.3 1.1 12.2
Income before minority interest and
cumulative effect of accounting
changes 2.5 5.9 8.6 20.1
Minority interest 0.3 0.2 0.5 0.4
Income before cumulative effect of
accounting changes
NACCO Materials Handling Group
Wholesale 2.5 4.9 8.1 18.6
NACCO Materials Handling Group
Retail (incl. elims.) (3.7) (3.7) (5.0) (7.8)
NACCO Materials Handling Group (1.2) 1.2 3.1 10.8
NACCO Housewares Group 0.4 0.1 (2.4) (3.0)
North American Coal 4.2 5.4 10.6 14.6
NACCO and Other (0.6) (0.6) (2.2) (1.9)
2.8 6.1 9.1 20.5
Cumulative effect of accounting
changes - - - (1.3)
Net income $2.8 $6.1 $9.1 $19.2
(All amounts are subject to annual audit by independent public auditors.)
