Detrex Corporation (OTCQX:DTRX), today announced 2014 second quarter net income from continuing operations of $521,140, or $0.30 per fully diluted share, compared to net income of $914,499 or $0.52 per fully diluted share, in the second quarter of 2013. Year-to-date 2014 net income from continuing operations was $1,063,085, or $0.61 per fully diluted share. This compares to 2013 year-to-date net income of $1,953,152, or $1.13 per fully diluted share. In the second quarter of 2014 the Company settled a dispute with the buyer of the Harvel Plastics, Inc. business in order to collect the escrow related to the transaction. The net income charge for the settlement and associated legal costs was $304,139. This amount is reflected in discontinued operations and second quarter net income after discontinued operations is $217,001, or $0.12 per fully diluted share, and on a year-to-date basis is $758,946, or $0.43 per fully diluted share. The Company also announced that it will pay a $0.25 quarterly dividend on September 17, 2014 to shareholders of record as of September 3, 2014.
Second quarter 2014 revenues of $9.7 million represent a continuation of activity levels during the first quarter of the year and represents a 13.3% year-over-year revenue reduction. On a year-to-date basis, 2014 sales were $19.9 million compared to $22.4 million for the year-to-date period in 2013. This represents a 11.1% year-over-year reduction. The reduction in revenue for both the quarter and year-to-date was largely the result of reduced sales of a product line that tends to fluctuate in volume from month to month and remained below prior year levels for the first six months. Sales to new and existing customers have partially offset this reduction in sales.
Earnings declined in the second quarter and year-to-date compared to 2013 due to reduced sales and unfavorable sales product mix. In addition the Company continued the program to strengthen Elco’s capabilities in sales, distribution, product development as well as infrastructure. Partially offsetting these investment costs are reduced expenses at the corporate level where measures have been taken to reduce executive and board compensation as well as other discretionary items. As part of these measures, Tom Mark assumed the role of Chairman at the April Board meeting. While the claim settlement for the Harvel transaction resulted in a charge to income, it facilitated the collection of the Harvel sale escrow in the second quarter of $2.1 million. The cash was used to pay down bank debt.
President and CEO, Tom Mark said, “Market conditions were sluggish in the first part of the second quarter but improved in June. July sales have shown continued improvement. We are continuing to invest in Elco while taking measures to offset a portion of the costs with reductions in corporate expense and finalizing legacy items. We continue to be focused on strategic opportunities to generate shareholder value and we look forward to keeping you informed of our progress.”
About Detrex Corporation
Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.
Forward Looking Statements
Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.
| Detrex Corporation and Subsidiaries | |||||||||||||||||
| Condensed Consolidated Statement of Operations | |||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||
| Three Months Ended | Year to date | ||||||||||||||||
| June 30 | June 30 | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Net sales | $ | 9,732 | $ | 11,224 | $ | 19,918 | $ | 22,391 | |||||||||
| Cost of sales | 6,825 | 7,335 | 13,766 | 14,737 | |||||||||||||
| Selling, general and administrative expense | 1,715 | 2,214 | 3,734 | 4,035 | |||||||||||||
| Provision for depreciation and amortization | 337 | 299 | 676 | 599 | |||||||||||||
| Provision for corporate environmental reserves | - | - | - | - | |||||||||||||
| Interest Expense | 54 | 18 | 109 | 17 | |||||||||||||
| Other (Income) Expense, net | 11 | 22 | 22 | 44 | |||||||||||||
| Income from continuing operations | |||||||||||||||||
| before income taxes | 790 | 1,336 | 1,611 | 2,959 | |||||||||||||
| Provision for income taxes | 269 | 422 | 548 | 1,006 | |||||||||||||
| Net Income from continuing operations | 521 | 914 | 1,063 | 1,953 | |||||||||||||
| Discontinued operations: | |||||||||||||||||
| Settlement (loss) on sale of Subsidiary, net of tax | (304 | ) | 0 | (304 | ) | 0 | |||||||||||
| Net income | $ | 217 | $ | 914 | $ | 759 | $ | 1,953 | |||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||
| From continuing operations | $ | 0.31 | $ | 0.55 | $ | 0.63 | $ | 1.17 | |||||||||
| From discontinued operations | (0.18 | ) | - | (0.18 | ) | - | |||||||||||
| Net earnings per share | $ | 0.13 | $ | 0.55 | $ | 0.45 | $ | 1.17 | |||||||||
| Fully diluted earnings (loss) per common share: | |||||||||||||||||
| From continuing operations | $ | 0.30 | $ | 0.53 | $ | 0.61 | $ | 1.13 | |||||||||
| From discontinued operations | (0.18 | ) | - | (0.18 | ) | - | |||||||||||
| Net earnings per share | $ | 0.12 | $ | 0.53 | $ | 0.43 | $ | 1.13 | |||||||||
| Shares outstanding,basic | 1,676 | 1,676 | 1,676 | 1,676 | |||||||||||||
| Shares outstanding,fully diluted | 1,730 | 1,723 | 1,730 | 1,723 | |||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (unaudited - in thousands) | |||||||||
| June 30 | Dec 31 | ||||||||
| 2014 | 2013 | ||||||||
| Assets | |||||||||
| Current Assets | $ | 14,902 | $ | 16,777 | |||||
| Property and equipment, net | 9,589 | 10,009 | |||||||
| Other Assets | 3,480 | 3,377 | |||||||
| Total assets | $ | 27,971 | $ | 30,163 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities | $ | 7,478 | $ | 8,202 | |||||
| Non-current liabilities | 6,221 | 7,610 | |||||||
| Stockholders' equity | 14,272 | 14,351 | |||||||
| Total liabilities and stockholders' equity | $ | 27,971 | $ | 30,163 | |||||
