EUGENE, Ore., Feb. 15, 2007 (PRIME NEWSWIRE) -- PW Eagle, Inc. (Nasdaq:PWEI) today reported its financial results for the three months and year ended December 31, 2006.
Revenues for the fourth quarter totaled $137.0 million, a decrease of 36 percent compared with revenues of $213.8 million in last year's fourth quarter, which benefited significantly from the increases in demand and selling prices caused by Hurricanes Katrina and Rita.
Fourth quarter net income was $3.2 million, or $0.26 per fully diluted share, compared with net income of $39.1 million, or $3.56 per fully diluted share, for the three months ended December 31, 2005. The current period included non-cash, after-tax expenses of approximately $0.6 million, or $0.05 per fully-diluted share, related to employee and director stock options, reflecting the company's January 1, 2006 adoption of FAS 123(R), which requires the expensing of options and other stock based compensation. Net income for the fourth quarter of 2005 included an after tax gain of $10.8 million, or approximately $1.00 per share, from the sale of the company's interest in an unconsolidated subsidiary. Weighted average diluted shares outstanding totaled 12.2 million during the current quarter, compared with 11.0 million in last year's fourth quarter, reflecting the combined effect of the issuance of common stock pursuant to exercised options and warrants in 2006, and a private placement of approximately 1.0 million shares of common stock in December 2005.
Revenues for the full year 2006 totaled $714.1 million, up 3 percent compared with revenues of $694.2 million recorded in 2005. Net income for 2006 totaled $60.7 million, or $5.02 per fully diluted share, compared with $47.0 million, or $4.65 per fully diluted share, for 2005.
"As anticipated, we experienced a decrease in our financial performance during the fourth quarter," said Jerry Dukes, Chairman and CEO. "Unit volume demand decreases across all markets were somewhat larger than the typical seasonal slowdown, which we believe was due to efforts by our distributors to work down their inventory levels in anticipation of pipe prices bottoming out. PVC resin costs also decreased significantly during the quarter and, as is typical for our industry, PVC pipe prices decreased faster than PVC resin costs, resulting in significantly lower gross margins. While the record results of the fourth quarter of 2005 made for a difficult comparison, our fourth quarter 2006 results compare favorably to 2004's fourth quarter net sales of $132.2 million and net loss of $(4.4) million."
Scott Long, Chief Financial Officer, stated, "We continued our share repurchase program in the fourth quarter with purchases of 151,310 shares of our common stock at a cost of $4.8 million. Through February 15, 2007, we have repurchased a total of 990,614 shares at an aggregate cost of $31.5 million under our $40 million share repurchase authorization. We ended the year with $38.1 million of cash on hand and no amounts outstanding under our revolving credit agreements."
JMM Merger Status
On January 15, 2007, PW Eagle and J-M Manufacturing Company, Inc. ("JMM") announced that they had signed a definitive merger agreement under which JMM will acquire all the outstanding common shares of PW Eagle for $33.50 per share in cash. The merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval by PW Eagle's shareholders. JMM and PW Eagle filed the Notification and Report required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 on February 14, 2007. PW Eagle filed a preliminary proxy statement for the special meeting of shareholders to vote on approval of the JMM merger with the Securities and Exchange Commission on February 14, 2007. The Company intends to schedule the date of the shareholders' meeting as soon as is practicable following receipt of regulatory approvals for the merger.
Due to the ongoing regulatory and shareholder approval process related to the proposed merger with JMM, the company will not be conducting a conference call to discuss its fourth quarter and year end financial results.
Additional Information and Where to Find It
In connection with the proposed merger, a definitive proxy statement of PW Eagle and other materials will be filed with the SEC. PW Eagle shareholders are urged to read the definitive proxy statement and these other materials carefully when they become available because they will contain important information about PW Eagle and the proposed merger. Shareholders will be able to obtain free copies of the definitive proxy statement (when available) as well as other filed documents containing information about PW Eagle at http://www.sec.gov, the SEC's free internet site, and from PW Eagle's Investor Relations Manager at (541) 343-0200 or on the company's website at www.pweagleinc.com.
Participants in the Solicitation
PW Eagle and its executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from PW Eagle's shareholders with respect to the proposed merger. Information regarding the officers and directors of PW Eagle is included in its definitive proxy statement for its 2006 annual meeting filed with the SEC on May 10, 2006. More detailed information regarding the identity of potential participants in the solicitation, and their direct or indirect interests, by securities, holdings or otherwise, which interests may be different from those of PW Eagle shareholders generally, will be set forth in the definitive proxy statement and other materials to be filed with SEC in connection with the proposed merger.
About PW Eagle, Inc.
PW Eagle, Inc. is a leading extruder of PVC pipe products and its wholly-owned subsidiary, USPoly Company, LLC, is a leading manufacturer of polyethylene pipe and fittings. Together they operate twelve manufacturing facilities across the United States. PW Eagle's common stock is traded on the Nasdaq Global Market under the symbol "PWEI".
Forward Looking Statements
Statements that PW Eagle, Inc. may publish, including those in this announcement that are not strictly historical are "forward looking" statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made in this press release, which include those that relate to our proposed merger with JMM, involve known and unknown risks and uncertainties that may cause the actual results to differ materially from those expected and stated in this announcement. The following specific factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (i) the risks and costs to PW Eagle if the merger does not close; (ii) the satisfaction of the conditions to consummate the merger, including the receipt of the required shareholder approval and regulatory approvals; (iii) the uncertain effects the pendency of the merger may have on our business relationships, operating results and business generally, including our ability to retain key employees, suppliers and customers; (iv) potential adverse effects on our business, properties and operations because of certain covenants we agreed to in the merger agreement that restrict the conduct of PW Eagle's business prior to the completion of the merger; (v) the risk that the financing contemplated by JMM's financing commitment letter for the consummation of the merger might not be obtained; (vi) the risk that until the merger is completed or the merger agreement is terminated, PW Eagle will not be able to enter into a merger or business combination with another party because of restrictions contained in the merger agreement; (vii) the risk that the restrictions on the conduct of PW Eagle's business prior to the consummation of the merger, may delay or prevent PW Eagle from undertaking business opportunities that may arise pending the completion of the merger; (viii) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including circumstances that may require us to pay a termination fee and related expenses to JMM; (ix) the risk that the merger may not be completed in a timely manner or at all, which may materially adversely affect our business, future prospects and the price of our common stock; (x) risks that may arise if any litigation is initiated with respect to the merger; and (xi) risks related to diverting management's attention from our ongoing business operations.
In addition, actual results could differ as a result of general factors, including those set forth in our filings with the SEC, including the Annual Report on Form 10-K for our most recent fiscal year, especially in the Management's Discussion and Analysis section, our most recent Quarterly Report on Form 10-Q and our Current Reports on Form 8-K.
All forward-looking statements included in this Press Release are based on information available to us on the date of this Press Release. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historical results. As such, you should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or potential inaccurate assumptions. We undertake no obligation to update "forward-looking" statements.
PW EAGLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
NET SALES $137,027 $213,823 $714,112 $694,244
COST OF GOODS SOLD 114,874 130,339 539,470 534,855
-------- -------- -------- --------
Gross profit 22,153 83,484 174,642 159,389
OPERATING EXPENSES:
Freight expense 8,921 10,682 38,897 38,687
Selling expenses 4,348 4,975 18,194 17,719
General and
administrative expenses 4,225 5,420 17,301 15,973
Other (income) expense,
net (179) 68 311 (1,771)
-------- -------- -------- --------
17,315 21,145 74,703 70,608
-------- -------- -------- --------
OPERATING INCOME 4,838 62,339 99,939 88,781
NON OPERATING INCOME 762 18,363 897 18,363
INTEREST EXPENSE, NET (539) (13,988) (3,800) (27,051)
-------- -------- -------- --------
INCOME BEFORE INCOME
TAXES AND MINORITY
INTEREST 5,061 66,714 97,036 80,093
Income tax expense 1,910 27,550 36,341 32,915
Minority interest in
income of USPoly
Company -- (106) -- (228)
-------- -------- -------- --------
NET INCOME $ 3,151 $ 39,058 $ 60,695 $ 46,950
======== ======== ======== ========
EARNINGS PER SHARE:
Basic $ 0.26 $ 3.91 $ 5.09 $ 5.28
Diluted $ 0.26 $ 3.56 $ 5.02 $ 4.65
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic 11,963 9,990 11,930 8,888
Diluted 12,158 10,980 12,096 10,094
Adjustments to reconcile
net income to EBITDA:
Net income $ 3,151 $ 39,058 $ 60,695 $ 46,950
Non operating income (762) (18,363) (897) (18,363)
Minority Interest -- 106 -- 228
Interest 539 13,988 3,800 27,051
Taxes 1,909 27,550 36,341 32,915
Depreciation and
amortization 2,142 3,056 11,077 12,618
-------- -------- -------- --------
EBITDA $ 6,979 $ 65,395 $111,016 $101,399
======== ======== ======== ========
EBITDA is not intended to be an alternative to the financial
results presented under generally accepted accounting principles
(GAAP) in the United States of America. We believe EBITDA is a
commonly used measure of financial performance by our lenders and
the investment community and allows for a more complete analysis of
our cash flows and results of operations. We also use this non-GAAP
measure internally to monitor performance of our businesses.
PW EAGLE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
December 31
2006 2005
---------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,064 $ 5,671
Accounts receivable, net 60,337 87,062
Inventories 68,990 64,239
Other current assets 5,752 5,243
-------- --------
Total current assets 173,143 162,215
Property and equipment, net 52,626 56,301
Other long-term assets 16,805 15,940
-------- --------
TOTAL ASSETS $242,574 $234,456
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under revolving
credit facilities $ -- $ 7,184
Current maturities of long-term
financing leases 224 182
Other current liabilities 73,414 116,582
-------- --------
Total current liabilities 73,638 123,948
Financing lease obligations, less
current maturities 19,302 19,525
Other long-term liabilities 4,237 4,944
-------- --------
TOTAL LIABILITIES 97,177 148,417
-------- --------
Stockholders' equity 145,397 86,039
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $242,574 $234,456
======== ========
Segment Income Statement Information
(In thousands, unaudited)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
------------------- -------------------
PW Eagle PVC Business
Net Sales $120,765 $193,700 $631,901 $612,258
Gross Profit 19,946 79,443 159,068 144,886
Operating Income 4,503 61,144 94,354 84,387
Adjustments to reconcile
to EBITDA:
Depreciation and
amortization 1,747 2,406 8,735 9,987
-------- -------- -------- --------
EBITDA $ 6,250 $ 63,550 $103,089 $ 94,374
======== ======== ======== ========
USPoly PE Business
Net Sales $ 16,262 $ 20,123 $ 82,211 $ 81,986
Gross Profit 2,207 4,041 15,574 14,502
Operating income 335 1,195 5,585 4,394
Adjustments to reconcile
to EBITDA:
Depreciation and
amortization 394 650 2,342 2,631
-------- -------- -------- --------
EBITDA $ 729 $ 1,845 $ 7,927 $ 7,025
======== ======== ======== ========
The combined total of the above amounts may differ from the consolidated amounts due to the impact of consolidation and elimination entries.
EBITDA is not intended to be an alternative to the financial results presented under generally accepted accounting principles (GAAP) in the United States of America. We believe EBITDA is a commonly used measure of financial performance by our lenders and the investment community and allows for a more complete analysis of our cash flows and results of operations. We also use this non-GAAP measure internally to monitor performance of our businesses.