IMPCO Technologies, Inc. (Nasdaq:IMCO) today reported results for its fourth quarter and year ended December 31, 2005, reflecting contributions from the full consolidation of its BRC acquisition beginning in the second quarter of 2005.
Revenues during the fourth quarter of 2005 increased 91.5 percent to $51.9 million from $27.1 million in the same period a year earlier primarily due to the addition of BRC revenues. The company reported a net loss for the 2005 fourth quarter of $0.5 million, or $0.02 per share, compared with a net loss of $17.9 million, or $0.96 per share, a year ago.
Revenues for the year ended December 31, 2005, increased 47.5 percent to $174.5 million from $118.3 million during the same period in the prior year. The increase in revenues was primarily due to the inclusion of BRC revenues beginning in the second quarter of 2005. For the year, the company reported a net loss of $10.7 million, or $0.40 per share, compared with a net loss of $15.9 million, or $0.85 per share, a year ago.
For the fourth quarter of 2005, consolidated gross profit increased $10.9 million compared with the same period in 2004. Consolidated operating expenses decreased $1.6 million during the fourth quarter of 2005 to $9.7 million from $11.3 million during the same period in the prior year, primarily due to:
-- a $2.8 million goodwill impairment loss and $0.9 million higher
operating expenses which were included in the prior year related
to two international operations;
-- a decrease in operating expenses of $0.9 million in U.S.
operations and $0.9 million in international operations;
-- a partial offset by an increase of $3.9 million in operating
expenses associated with BRC
As a result of the above factors, consolidated operating income increased $12.5 million during the fourth quarter of 2005 to $3.7 million from an operating loss of $8.8 million during the same period in the prior year.
For the year ended December 31, 2005, consolidated gross profit increased $20.8 million compared with the same period in 2004, primarily due to the addition of BRC revenues beginning in the second quarter of 2005.
Consolidated operating expenses for the year ended December 31, 2005 increased $15.2 million to $43.0 million from $27.8 million during the same period in 2004, primarily due to:
-- a $13.3 million increase in operating expenses associated with
BRC,including $1.3 million in amortization costs for intangible
assets acquired;
-- $2.2 million higher compensation and benefit costs related to
two former officers;
-- a $1.6 million increase in outside professional fees relating to
SEC filings and Sarbanes-Oxley compliance;
-- a $1.5 million increase in R&D costs related to the Seattle
facility closure
The above increases were offset by a decrease of $2.8 million goodwill impairment loss related to two international operations in the prior year.
As a result, consolidated operating income for the year ended December 31, 2005 increased $5.6 million to $4.5 million from an operating loss of $1.1 million during the same period in 2004. Other income of $0.5 million for the year ended December 31, 2005 consisted primarily of net unrealized foreign exchange gains as a result of movements between the U.S. dollar and the euro.
Income tax expense increased $11.7 million to $14.0 million for the year ended December 31, 2005 from $2.3 million for the same period in 2004. Income tax expense for 2005 and 2004 includes $8.5 million and $1.3 million, respectively, of non-cash charges associated with an increase in the valuation allowance for deferred tax assets related to domestic operations.
"Our focus in 2005 was on the integration of BRC, streamlining our business operations and on cost-reduction initiatives necessary to return the company to profitability. With these activities now nearing a close, we will bring a strict focus to our core business operations and markets. As we look forward, we see growing interest in our alternative fuel products driven by broad economic, political, and environmental initiatives on a global basis, and we look forward to capitalizing on the significant opportunities available to IMPCO as the company's strategic plan is implemented," said Mariano Costamagna, president and chief executive officer.
Teleconference and Web Cast
Mariano Costamagna, president and chief executive officer, Brad Garner, chief operating officer, and Thomas M. Costales, chief financial officer, will host an investor conference call today at 1:00 p.m. Pacific Time to discuss the company's financial results and operations for the year. The call will be open to all interested investors, either through a live audio Web broadcast via the Internet at http://www.impco.ws or live by calling (866) 715-8813 (domestic) or (706) 634-1323 (international) with call ID number 7527702. For those who are not available to listen to the live broadcast, the call will be archived for two weeks on IMPCO's Web site. A telephone playback of the conference call will also be available from 2:00 p.m. PDT Monday, April 3 through 9:00 p.m. Thursday, April 6 by calling (800) 642-1687 (domestic) or (706) 645-9291 (international) and using access code: 7527702.
About IMPCO Technologies
IMPCO designs, manufactures, markets and supplies advanced product and systems to enable internal combustion engines to run on clean burning gaseous fuels such as natural gas, propane and biogas. IMPCO is leader in the heavy duty, industrial, power generation and stationary engines sectors. Headquartered in Cerritos, California, IMPCO has offices throughout Asia, Europe, Australia and North America. Additional information is available at www.impco.ws.
About BRC Gas Equipment
BRC produces a complete range of systems for converting vehicles to gaseous fuel to meet market requirements. BRC is a leader in the light duty and automobile alternative fuel sectors and has established alliances with several major automobile manufacturers for OEM projects. Headquartered in Cherasco, Italy, BRC has offices throughout Asia, Europe and South America. Additional information is available at BRC's web site, http://www.brc.it.
Some matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in any forward-looking statement. Those forward looking statements include statements relating to our intended focus to our core business operations and markets, the expected growing interest in our alternative fuel products, the expected broad economic, political, and environmental initiatives supporting alternative fuel products on a global basis, and our intent to capitalize on the significant opportunities available to IMPCO as the company's strategic plan is implemented. Factors that could cause or contribute to such differences between our expected future results and actual results include, but are not limited to, prevailing market and global economic conditions; changes in environmental regulations that impact the demand for the company's products; the company's ability to manage its leverage and address operating covenant restrictions relating to its indebtedness; the company's ability to negotiate and comply with waivers pertaining to existing loan covenant defaults; the company's ability to design and market advanced fuel metering, fuel storage and electronic control products; the company's ability to meet OEM specifications; and the level and success of the Company's development programs with OEMs. Readers also should consider the risk factors set forth in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, those contained in "Management's Discussion & Analysis of Financial Condition and Results of Operation -- Risk Factors" section of the Company's Annual Report on Form 10-K, for the year ended December 31, 2005. The company does not undertake to update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.
(Tables follow)
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2004 2005(a) 2004 2005(a)
---- ---- ---- ----
Revenue $ 27,147 $ 51,856 $ 118,292 $ 174,539
Costs and expenses:
Cost of revenue 24,680 38,508 91,554 126,971
Research and
development expense 1,445 1,549 4,634 8,052
Selling, general
and administrative
expense 7,049 8,813 20,331 33,541
Amortization of
intangibles acquired -- (571) -- 1,334
Impairment loss
of goodwill 2,833 -- 2,833 --
Acquired in-process
technology -- (105) -- 99
-------- -------- -------- --------
Total costs and
expenses 36,007 48,194 119,352 169,997
Operating (loss)
income (8,860) 3,662 (1,060) 4,542
Other (expense) income (4) (409) -- 547
Loss on extinguishment
of debt (6,752) -- (6,752) --
Interest expense, net (1,346) (185) (5,509) (690)
-------- -------- -------- --------
(Loss) income before
income taxes and
equity share in
income of
unconsolidated
affiliates (16,962) 3,068 (13,321) 4,399
Equity share in income
of unconsolidated
affiliates 439 85 1,157 1,075
Write-off of equity in
unconsolidated
affiliates (214) (1,045) (214) (1,045)
Income tax expense (827) (2,376) (2,325) (14,025)
-------- -------- -------- --------
Loss before minority
interests and
cumulative effect of a
change in accounting
principle (17,564) (268) (14,703) (9,596)
Minority interest in
income of consolidated
subsidiaries (322) (192) (1,176) (975)
-------- -------- -------- --------
Loss before cumulative
effect of a change
in accounting
principle (17,886) (460) (15,879) (10,571)
Cumulative effect of a
change in accounting
principle, net of
taxes -- -- -- (117)
-------- -------- -------- --------
Net loss $ (17,886) $ (460) $ (15,879) $ (10,688)
======== ======== ======== ========
Net loss per share
before cumulative
effect of a change in
accounting principle:
Basic and diluted $ (0.96) $ (0.02) $ (0.85) $ (0.39)
======== ======== ======== ========
Per share effect of the
cumulative effect of a
change in accounting
principle:
Basic and diluted $ -- $ -- $ -- $ (0.01)
======== ======== ======== ========
Net loss per share:
Basic and diluted $ (0.96) $ (0.02) $ (0.85) $ (0.40)
======== ======== ======== ========
Number of shares used
in per share
calculation:
Basic and diluted 18,646 28,903 18,608 26,977
======== ======== ======== ========
(a) The results of the three and twelve months ended
December 31, 2005 include the consolidation of BRC's statement of
operations following the acquisition of the remaining 50% of BRC on
March 31, 2005.
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
December 31, December 31,
2004 2005(b)
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 8,418 $ 27,110
Accounts receivable less
allowance for doubtful accounts
of $1,687 and $3,194 18,072 37,447
Inventories:
Raw materials and parts 8,624 23,226
Work-in-process 233 1,256
Finished goods 3,747 9,049
-------- --------
Total inventories 12,604 33,531
Deferred tax assets 182 --
Other current assets 1,956 4,475
Related party receivables 2,746 3,306
-------- --------
Total current assets 43,978 105,869
Equipment and leasehold
improvements
Dies, molds and patterns 7,174 7,196
Machinery and equipment 8,039 16,599
Office furnishings and equipment 7,809 9,818
Automobiles and trucks 409 1,043
Leasehold improvements 3,474 3,649
-------- --------
26,905 38,305
Less accumulated depreciation
and amortization 19,702 24,231
-------- --------
Net equipment and leasehold
improvements 7,203 14,074
Goodwill 7,973 36,338
Deferred tax assets, net 8,183 1,097
Intangible assets, net -- 11,009
Investment in affiliates 27,046 1,387
Business acquisition costs 788 --
Other assets 2,430 3,501
Non-current related party receivable 851 3,570
-------- --------
Total Assets $ 98,452 $176,845
======== ========
(b) Includes the consolidation of BRC's balance sheet at
December 31, 2005.
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
December 31, December 31,
2004 2005(c)
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,914 $ 34,427
Accrued payroll obligations 2,889 5,247
Other accrued expenses 6,238 12,589
Current revolving line of credit 7,680 6,248
Current maturities of term debt 140 2,912
Current portion of related
party term loan 2,600 --
Deferred tax liabilities -- 1,921
Related party payables -- 4,925
--------- ---------
Total current liabilities 29,461 68,269
Term loans -- 7,688
Related party term loan 19,400 --
Capital leases 151 774
Deferred tax liabilities -- 4,997
Other liabilities 1,702 3,679
Minority interest 2,907 3,152
Stockholders' equity:
Preferred stock, $.001 par value,
authorized 500,000 shares; none
issued and outstanding at
December 31, 2004 and 2005 -- --
Common stock, $.001 par value,
authorized 100,000,000 shares;
18,737,437 issued at
December 31, 2004 and
28,902,791 issued at
December 31, 2005 19 29
Additional paid-in capital 135,291 192,055
Shares held in treasury (528) (616)
Accumulated deficit (90,872) (101,560)
Accumulated other comprehensive
income (loss) 921 (1,622)
--------- ---------
Total stockholders' equity 44,831 88,286
--------- ---------
Total Liabilities and
Stockholders' Equity $ 98,452 $ 176,845
========= =========
(c) Includes the consolidation of BRC's balance sheet at
December 31, 2005.
CONTACT: Maier & Company, Inc.
Gary S. Maier/Crystal Warner
(310) 442-9852