-- Revenue Climbs 17.6 Percent; Operating Income Jumps
72.5 Percent --
-- Company to Host Special Conference Call following Stockholders
Meeting August 23 --
SANTA ANA, Calif., Aug. 10, 2006 (PRIMEZONE) -- IMPCO Technologies, Inc. (Nasdaq:IMCO) today reported results for its second quarter ended June 30, 2006 -- reflecting strong international demand for alternative fuel systems and components, particularly within the transportation market.
Revenue for the second quarter climbed 17.6 percent to $57.2 million from $48.6 million last year, primarily due to the strength of BRC and IMPCO's other international operations. Operating income increased 72.5 percent to $4.5 million from $2.6 million a year ago, reflecting improvements in both BRC and IMPCO operations -- primarily due to higher revenue, as well as certain cost-control initiatives implemented in 2005. Other expense in the second quarter of 2006 totaled $905,000, primarily from unrealized foreign exchange losses on an inter-company loan, compared with other income of $1.1 million during the same quarter in 2005, consisting primarily of unrealized foreign exchange gains on the same inter-company loan. Income tax expense, which primarily represents foreign taxes, was $2.0 million in the second quarter of 2006, compared with $2.0 million in the same quarter of 2005. Net income for the second quarter increased 9.0 percent to $1.3 million, or $0.04 per diluted share, compared with net income of $1.2 million, or $0.04 per diluted share, during the same period one year ago.
For the six months ended June 30, revenue jumped 53.8 percent to $113.2 million from $73.6 million compared to the same period a year earlier. Operating income during the same period increased to $11.3 million from $426,000 during the same period in 2005. Both the increases to revenue and to operating income reflect the inclusion of 100 percent of BRC results for the entire six-month period of 2006 compared with only 50 percent of BRC's first quarter results and 100 percent of its second quarter results for the six-month period in 2005, as well as growth in the transportation market and IMPCO's other international operations. Other expense of $1.1 million for the six months in 2006 consists primarily of unrealized foreign exchange losses on an inter-company loan, compared with other income of $1.0 million in the same period of the prior year, primarily from unrealized foreign exchange gains on the same inter-company loan. Income tax expense, which primarily consists of foreign taxes, was $4.7 million during the first half of 2006, compared with $2.4 million for the same period last year. Net income was $5.0 million, or $0.17 per diluted share for the first six months of 2006, compared with a net loss of $1.0 million, or $0.04 per diluted share, a year ago, reflecting improvements in both IMPCO and BRC operations.
Outlook
"Our results for the second quarter demonstrate continued momentum in the transportation market supported by escalating oil prices and an increasing global focus on tangible energy security and clean air solutions. The company is on track to reach revenue of approximately $200 million for the year, gross profit of 25 to 27 percent and operating income of approximately 10 percent," said Mariano Costamagna, president and chief executive officer.
He noted that while the market growth drivers look favorable, the company's European business, particularly the transportation market, is subject to seasonality and is stronger in the first half of the year. The company continues to anticipate increased sales to the industrial market beginning later this year as demand for product from its OEM customers increases in response to new U.S. EPA emission regulations.
Costamagna noted the relocation of the company's U.S. headquarters to a new state-of-the art manufacturing facility located in Santa Ana, California was completed during the quarter. The new facility enables the company to streamline its operations and move to the next level of service and professionalism as it continues to grow its global business.
Reorganization and Name Change
As previously announced, the company's annual meeting is scheduled for August 23 and stockholders are being asked to vote on a corporate reorganization and a proposed name change to Fuel Systems Solutions, Inc., among other matters. IMPCO Technologies, Inc. and Fuel Systems Solutions, Inc. (FSS) have filed with the SEC a joint proxy statement/prospectus and other relevant materials in connection with the proposed corporate reorganization involving IMPCO and FSS pursuant to the terms of an agreement and plan of merger and reorganization. A joint proxy statement/prospectus has been mailed to the stockholders of IMPCO. Stockholders of IMPCO are urged to read the joint proxy statement/prospectus and the other relevant materials because they contain important information about IMPCO, FSS and the proposed reorganization. The joint proxy statement/prospectus and other relevant materials, and any other documents filed by IMPCO or FSS with the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In addition, investors and stockholders may obtain free copies of the documents filed with the SEC by contacting Mellon Investor Services at (800) 814-0304.
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 a special investor conference call following the annual meeting of stockholders on August 23, 2006 at 1:30 p.m. PDT to discuss the company's reorganization and related matters. 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 4419241. 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 2:30 p.m. PDT Wednesday, August 23 through 9:00 p.m. Saturday, August 26 by calling (800) 642-1687 (domestic) or (706) 645-9291 (international) and using access code: 4419241.
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 a leader in the heavy duty, industrial, power generation and stationary engines sectors. Headquartered in Santa Ana, California, IMPCO has offices throughout Asia, Europe, Australia and North America. Additional information is available at www.impcotechnologies.com
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.
The matters discussed in this press release under the heading "Outlook" 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 expected growing interest in alternative fuel products, the expected broad economic, political, and environmental initiatives supporting alternative fuel products on a global basis, and the company's intention to capitalize on the significant opportunities available to IMPCO as the company's strategic plan is implemented, as well as IMPCO's ability to achieve its revenue target of $200 million, gross profit of 25 to 27 percent and operating income of 10 percent in 2006. 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 Quarterly Report on Form 10-Q, for the quarter ended June 30, 2006. 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.
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2006 2005 2006 2005(a)
---- ---- ---- -----
Revenue $ 57,159 $ 48,605 $ 113,240 $ 73,610
Costs and expenses:
Cost of revenue 44,350 37,228 84,748 56,292
Research and development
expense 1,993 2,674 4,120 4,015
Selling, general and
administrative expense 5,853 6,093 12,142 12,802
Amortization of
intangibles assets 460 -- 899 --
Acquired in-process
technology -- -- -- 75
--------- --------- --------- ---------
Total costs and expenses 52,656 45,995 101,909 73,184
Operating income 4,503 2,610 11,331 426
Other income (expense),
net (905) 1,077 (1,135) 979
Interest expense, net (126) (123) (270) (380)
--------- --------- --------- ---------
Income before income
taxes and equity share
in income of
unconsolidated
affiliates 3,472 3,564 9,926 1,025
Equity share in income
of unconsolidated
affiliates, net 219 (58) 446 852
Income tax expense (2,020) (2,040) (4,710) (2,367)
--------- --------- --------- ---------
Income before minority
interests 1,671 1,466 5,662 (490)
Minority interest in
income of consolidated
subsidiaries 393 294 685 519
--------- --------- --------- ---------
Net income $ 1,278 $ 1,172 $ 4,977 $ (1,009)
========= ========= ========= =========
Net income (loss) per
share:
Basic net income $ 0.04 $ 0.04 $ 0.17 $ (0.04)
========= ========= ========= =========
Diluted net income $ 0.04 $ 0.04 $ 0.17 $ (0.04)
========= ========= ========= =========
Number of shares used in
per share calculation:
Basic 29,510 28,586 29,272 25,164
========= ========= ========= =========
Diluted 30,515 28,847 30,106 25,164
========= ========= ========= =========
(a) The six months ended June 30, 2005 results 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)
June 30, December 31,
2006 2005
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,621 $ 27,110
Accounts receivable less allowance for
doubtful accounts of $3,194
and $3,577 49,585 37,447
Inventories:
Raw materials and parts 32,759 22,349
Work-in-process 1,934 1,256
Finished goods 18,513 9,926
-------- --------
Total inventories 53,206 33,531
Other current assets 4,359 4,475
Related party receivables 2,262 3,306
-------- --------
Total current assets 127,033 105,869
Equipment and leasehold improvements
Dies, molds and patterns 7,581 7,196
Machinery and equipment 17,920 16,599
Office furnishings and equipment 8,281 9,818
Automobiles and trucks 1,206 1,043
Leasehold improvements 5,031 3,649
-------- --------
40,019 38,305
Less accumulated depreciation and
amortization 23,437 24,231
-------- --------
Net equipment and leasehold
improvements 16,582 14,074
Goodwill 38,119 36,338
Deferred tax assets, net 1,258 1,097
Intangible assets, net 10,755 11,009
Investment in affiliates 1,208 1,387
Other assets 2,324 3,501
Non-current related party receivable 3,502 3,570
-------- --------
Total Assets $200,781 $176,845
======== ========
IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, December 31,
2006 2005
---- ----
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 47,680 $ 34,427
Accrued payroll obligations 4,706 5,247
Other accrued expenses 12,277 12,589
Current revolving line of credit 1,451 6,248
Current maturities of other loans 2,984 2,634
Current maturities of capital leases 314 278
Deferred tax liabilities 1,672 1,921
Related party payables 6,194 4,925
--------- ---------
Total current liabilities 77,278 68,269
Term loans 6,884 7,688
Capital leases 884 774
Other liabilities 4,114 3,679
Minority interest 3,094 3,152
Deferred tax liabilities 4,842 4,997
--------- ---------
Total liabilities 97,096 88,559
--------- ---------
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 500,000 shares; none
issued and outstanding at December
31, 2005 and June 30, 2006 -- --
Common stock, $0.001 par value,
authorized 100,000,000 shares;
28,902,791 issued and outstanding
at December 31, 2005 and
30,016,087 issued and
outstanding at June 30, 2006 30 29
Additional paid-in capital 197,449 192,055
Shares held in treasury (520) (616)
Accumulated deficit (96,583) (101,560)
Accumulated other comprehensive income
(loss) 3,309 (1,622)
--------- ---------
Total stockholders' equity 103,685 88,286
--------- ---------
Total Liabilities and Stockholders'
Equity $ 200,781 $ 176,845
========= =========