Uniroyal Global Engineered Products, Inc. Reports Net Income of $837,803, or $0.06 Per Share for the Third Quarter 2015 Versus $527,481 or $0.04 Per Share for the Third Quarter 2014 Before Dividends of $698,499

For the first nine months of 2015, net income was $3,904,169, or $0.27 per share versus $2,006,458, or $0.14 per share for the first nine months of 2014 before dividends of $2,088,373. Net income available for common shareholders was $139,304, or $0.01 per share for the third quarter 2015 versus $527,481, or $0.04 per share for the third quarter 2014. For the first nine months of 2015 net income available for common shareholders was $1,815,796, or $0.13 per share versus $2,006,458, or $0.14 for the first nine months of 2014.

  • Revenue for the third quarter 2015 was $23.2 million versus $23.9 million in 2014. Revenue for the first nine months of 2015 was $76.5 million versus $73.7 million in 2014.
  • Operating income expands 71% to $5.5 million for the first nine months of 2015 versus $3.2 million in 2014.
  • Continued expansion of unit volume and operating margins despite unfavorable foreign exchange translations.

SARASOTA, Fla., Nov. 04, 2015 (GLOBE NEWSWIRE) — Uniroyal Global Engineered Products, Inc. (OTCQB:UNIR) (“Uniroyal Global Engineered Products, Inc.” or the “Company”) filed its Form 10-Q last night reporting its results for the three months and nine months ended October 4, 2015.

“We remain pleased with our quarterly and year to date results of operations. We continue to perform well against our stated objectives of customer diversification, deeper penetration into our current customers and continuous margin improvement through cost reduction and productivity gains,” said Howard Curd, Chairman and CEO.

“We continue to see favorable volume and margin comparisons from last year that are somewhat masked by the recent decline in the Euro and British Pound Sterling.  Excluding  $1.5 million in the third quarter and $5.8 million year to date of negative impact of currency translations, our revenues would have been up  3.5% and 11.4% from the third quarter and year to date results, respectively, versus  the 2014 comparable period,” added Mr. Curd. “Despite the negative effects of the currency on revenue we continued to expand our operating profit in excess of 50% for the quarter and 70% year to date versus last year.”

The following is a brief discussion of the results:

Revenue:

Total revenue for the three months ended October 4, 2015 decreased $702,956, or 2.9%, to $23,225,199 from $23,928,155 for the three months ended September 28, 2014. This decrease was principally caused by a $1.5 million unfavorable impact of currency exchange rate changes. Excluding this impact, revenues for the three months ended October 4, 2015 would have increased by approximately $830,000, or 3.5%, over the three months ended September 28, 2014.

Total revenue for the nine months ended October 4, 2015 increased $2,787,787, or 3.8%, to $76,486,188 from $73,698,401 for the nine months ended September 28, 2014. The increase would have been approximately $8.6 million, or 11.4%, but it was offset by $5.8 million of unfavorable impact of currency exchange rates for 2015 compared to 2014.

Sales volumes and pricing for the three months and nine months 2015 were ahead of the corresponding prior year period primarily due to new automotive platform launches. For the nine-month period, there was an additional reporting week included in 2015.

Gross Profit:

Total gross profit for the three months ended October 4, 2015 increased $519,116, or 10.7%, to $5,383,728 from $4,864,612 for the three months ended September 28, 2014. The gross profit percentage was 23.2% of sales for the three months ended October 4, 2015 compared to 20.3% for the three months ended September 28, 2014. The gross profit increase was offset by approximately $400,000 of unfavorable impact of currency exchange rate changes.

Total gross profit for the nine months ended October 4, 2015 increased $2,391,334, or 16.8%, to $16,594,746 from $14,203,412 for the nine months ended September 28, 2014. The gross profit percentage was 21.7% of sales for the nine months ended October 4, 2015 compared to 19.3% for the nine months ended September 28, 2014. The gross profit increase was offset by approximately $1.7 million of unfavorable impact of currency exchange rate changes.

The gross profit percentage increased for the three months and nine months 2015 primarily due to the rolling off of lower margin automotive platforms which were replaced with higher margin platforms and the positive results of cost efficiency programs implemented during 2014.

Operating Expenses:

Selling expenses for the three months ended October 4, 2015 increased $140,711, or 12.5%, to $1,268,656 from $1,127,945 for the three months ended September 28, 2014. Selling expenses for the nine months ended October 4, 2015 increased $571,488, or 16.4%, to $4,065,951 from $3,494,463 for the nine months ended September 28, 2014. The increase resulted primarily due to increases in commissions and additional support staff expenses added during the second half of 2014.

General and administrative expenses for the three months ended October 4, 2015 decreased by $256,900, or 10.5%, to $2,192,559 from $2,449,459 for the three months ended September 28, 2014. General and administrative expenses for the nine months ended October 4, 2015 decreased by $542,558, or 8.5%, to $5,850,880 from $6,393,438 for the nine months ended September 28, 2014. The decrease for the three month period was principally due to 2014 pre-acquisition expenses incurred in the three months ended September 28, 2014. In addition to the pre-acquisition expenses, the decrease for the nine month period 2015 was impacted by statutory severance payments in 2014 of $460,000 as a result of labor reduction programs at our U.K. facility.  These decreases were partially offset by higher labor and administrative costs in 2015 in preparing the Company to become a multinational SEC reporting company.

Research and development expenses for the three months ended October 4, 2015 increased by $87,561, or 24.8%, to $440,257 from $352,696 for the three months ended September 28, 2014. Research and development expenses for the nine months ended October 4, 2015 increased by $80,420, or 7.3%, to $1,185,051 from $1,104,631 for the nine months ended September 28, 2014. The increase was due to increased expenditures for new product development.

Operating Income:

Operating income for the three months ended October 4, 2015 increased by $547,744, or 58.6%, to $1,482,256 from $934,512 for the three months ended September 28, 2014. The operating income percentage was 6.4% of sales for the three months ended October 4, 2015 compared to 3.9% for the three months ended September 28, 2014. Operating income for the nine months ended October 4, 2015 increased by $2,281,984, or 71.1%, to $5,492,864 from $3,210,880 for the nine months ended September 28, 2014. The operating income percentage was 7.2% of sales for the nine months ended October 4, 2015 compared to 4.4% for the nine months ended September 28, 2014.

The operating income increased primarily due to the gross margin improvements as stated above and a reduction in general and administrative expenses. The amount of increases was offset by increased selling expenses and approximately $300,000 and $1,250,000 of unfavorable impact of currency exchange rates for the three months and nine months ended October 4, 2015, respectively.

Interest expense:

Interest expense for the three months ended October 4, 2015 increased by $10,115, or 2.6%, to $406,242 from $396,127 for the three months ended September 28, 2014. Interest expense for the nine months ended October 4, 2015 decreased by $55,429, or 4.4%, to $1,199,008 from $1,254,437 for the nine months ended September 28, 2014. The increase for the three months 2015 was attributable to average higher debt balances in 2015. Both periods were effected by a lower weighted average effective rate for 2015 compared to 2014 and a favorable impact of the foreign exchange rates.

Other Income:

Other income for the three months ended October 4, 2015 decreased $191,837 to an expense of $103,051 from income of $88,786 for the three months ended September 28, 2014. Other income for the nine months ended October 4, 2015 decreased $128,780, or 64.9% to $69,653 from $198,433 for the nine months ended September 28, 2014. The decrease was principally due to losses and lower net gains on the settlement and changes in fair values of financial instruments related to currency translations from Euro to the British Pound in the subsidiary.

Net Income:

Net income for the three months ended October 4, 2015 increased $310,322, or 58.8%, to $837,803 from $527,481 for the three months ended September 28, 2014 before the preferred dividend of $698,499. Net income for the nine months ended October 4, 2015 increased $1,897,711, or 94.6%, to $3,904,169 from $2,006,458 before the preferred dividend of $2,088,373.

Net income available to common shareholders for the three months ended October 4, 2014 decreased to $0.01 per share from $0.04 per share for the three months ended September 28, 2014. Net income per share on a fully diluted basis for three months 2015 decreased to $0.01 from $0.03 in 2014. Net income available to common shareholders for the nine months ended October 4, 2014 decreased to $0.13 per share from $0.14 per share for the nine months ended September 28, 2014. Net income per share on a fully diluted basis for nine months 2015 decreased to $0.10 from $0.11 in 2014. The decrease in net income is primarily the result of the preferred dividend in 2015.

About Uniroyal Global Engineered Products, Inc.:

Uniroyal Global Engineered Products, Inc. (OTCQB: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 2014 was derived 63% from the automotive industry and approximately 37% from the recreational, industrial, indoor and outdoor furnishings, hospitality and health care markets.

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,” “expect,” “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, 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.
Consolidated Statements of Operations
(Unaudited)
                   
  Three Months Ended   Nine Months Ended    
  October 4,
2015
  September
28, 2014
  October 4,
2015
  September
28, 2014
   
                   
NET SALES $ 23,225,199     $ 23,928,155     $ 76,486,188     $ 73,698,401      
                   
COST OF GOODS SOLD   17,841,471       19,063,543       59,891,442       59,494,989      
                   
Gross Profit   5,383,728       4,864,612       16,594,746       14,203,412      
                   
OPERATING EXPENSES:                  
Selling   1,268,656       1,127,945       4,065,951       3,494,463      
General and administrative   2,192,559       2,449,459       5,850,880       6,393,438      
Research and development   440,257       352,696       1,185,051       1,104,631      
OPERATING EXPENSES   3,901,472       3,930,100       11,101,882       10,992,532      
                   
Operating Income   1,482,256       934,512       5,492,864       3,210,880      
                     
OTHER INCOME (EXPENSE):                  
Interest and other debt related expense   (406,242 )     (396,127 )     (1,199,008 )     (1,254,437 )    
Other income (expense)   (103,051 )     88,786       69,653       198,433      
Net Other Expense   (509,293 )     (307,341 )     (1,129,355 )     (1,056,004 )    
                   
INCOME BEFORE TAX PROVISION   972,963       627,171       4,363,509       2,154,876      
                   
TAX PROVISION   135,160       99,690       459,340       148,418      
                   
NET INCOME   837,803       527,481       3,904,169       2,006,458      
                   
Preferred stock dividend   (698,499 )           (2,088,373 )          
                   
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 139,304     $ 527,481     $ 1,815,796     $ 2,006,458      
                   
EARNINGS PER COMMON SHARE:                  
Basic $ 0.01     $ 0.04     $ 0.13     $ 0.14      
Diluted $ 0.01     $ 0.03     $ 0.10     $ 0.11      
WEIGHTED AVERAGE SHARES OUTSTANDING:                  
Basic   14,264,699       14,128,309       14,323,414       14,148,717      
Diluted   19,021,532       18,885,142       19,080,247       18,905,550      

Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
                   
  Three Months Ended   Nine Months Ended    
  October 4,
2015
  September 28,
2014
  October 4,
2015
  September 28,
2014
   
                   
NET INCOME $ 837,803     $ 527,481     $ 3,904,169     $ 2,006,458      
                   
OTHER COMPREHENSIVE INCOME (LOSS):                  
Minimum benefit liability adjustment   (45,226 )     (147,474 )     (135,685 )     (442,422 )    
Foreign currency translation adjustment   (237,772 )     (277,447 )     (198,839 )     (96,840 )    
Unrealized gain (loss) on effective hedge:                  
Reclassification of amounts to earnings         9,335             42,478      
Unrealized loss for the year                     (1,561 )    
OTHER COMPREHENSIVE LOSS   (282,998 )     (415,586 )     (334,524 )     (498,345 )    
                   
COMPREHENSIVE INCOME   554,805       111,895       3,569,645       1,508,113      
                   
Preferred stock dividend   (698,499 )           (2,088,373 )          
                   
COMPREHENSIVE INCOME (LOSS) TO
  COMMON SHAREHOLDERS
$ (143,694 )   $ 111,895     $ 1,481,272     $ 1,508,113      

Uniroyal Global Engineered Products, Inc.
Consolidated Balance Sheets
         
         
ASSETS October 4,
2015
(Unaudited)
  December 28,
2014
 
CURRENT ASSETS        
Cash and cash equivalents $ 2,058,534     $ 604,234    
Accounts receivable, net   15,674,772       14,607,787    
Inventories, net   18,563,488       17,421,082    
Other current assets   1,938,997       2,130,282    
Related party receivable   22,510       74,931    
Total Current Assets   38,258,301       34,838,316    
PROPERTY AND EQUIPMENT   13,964,761       12,001,128    
OTHER ASSETS        
Intangible assets   3,590,405       3,668,956    
Goodwill   1,079,175       1,079,175    
Other long-term assets   1,377,218       1,295,965    
Total Other Assets   6,046,798       6,044,096    
TOTAL ASSETS $ 58,269,860     $ 52,883,540    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Checks issued in excess of bank balance $ 515,070     $ 438,145    
Line of credit   17,738,392       16,396,306    
Current maturities of long-term debt   553,402       522,095    
Current maturities of capital lease obligations   574,804       96,071    
Accounts payable   8,743,466       9,409,062    
Accrued expenses   4,267,835       3,408,143    
Related party payable         20,260    
Current portion of postretirement benefit liability – health and life   115,039       115,039    
Total Current Liabilities   32,508,008       30,405,121    
LONG-TERM LIABILITIES        
Long-term debt, less current portion   1,626,934       1,355,297    
Capital lease obligations, less current portion   2,044,952       238,836    
Related party lease financing obligations   2,164,360       2,162,393    
Long-term debt to related parties   4,706,473       4,740,728    
Postretirement benefit liability – health and life, less current portion   2,649,427       2,662,570    
Other long-term liabilities   900,702       840,378    
Total Long-Term Liabilities   14,092,848       12,000,202    
Total Liabilities   46,600,856       42,405,323    
STOCKHOLDERS’ EQUITY        
Convertible Preferred Stock: 5,000,000 shares authorized ($100 value):        
Series A, 9,715 shares issued and outstanding   798,500       798,500    
Series B, 2,702  shares issued and outstanding   270,160       270,160    
Series C, 16,124 shares issued and outstanding   1,600,467       1,600,467    
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, Engineered Products Acquisition Limited, 50 shares
  issued and outstanding ($1.51 stated value)
  75       75    
Common stock, 95,000,000 shares authorized ($.001 par value)
  14,193,252 and 14,351,398 shares issued and outstanding as of
  October 4, 2015 and December 28, 2014, respectively
  14,194       14,352    
Additional paid in capital   32,259,258       32,549,585    
Accumulated deficit   (24,810,838 )     (26,626,634 )  
Accumulated other comprehensive income   456,438       790,962    
Total Stockholders’ Equity   11,669,004       10,478,217    
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 58,269,860     $ 52,883,540    

CONTACT: Uniroyal Global Engineered Products, Inc. Corporate Contact: Elizabeth Henson; telephone: 941-870-3950; email: LHenson@UniroyalGlobal.com

Uniroyal Global Engineered Products, Inc. Public Relations: Vic Allgeier; TTC Group, Inc.; telephone: 646-290-6400; email: vic@ttcominc.com

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