BENSALEM, Pa., Aug. 12, 2002 (PRIMEZONE) -- Strategic Distribution, Inc. (Nasdaq:STRD), a leading provider of maintenance, repair and operating (MRO) supply chain management services, today reported financial results for the second quarter ended June 30, 2002.
Revenues for the second quarter of 2002 were $92.6 million, as compared to $81.8 million reported in the 2001 second quarter and $72.4 million reported in the 2002 first quarter. Second quarter 2002 revenues include the $26.2 million sale of inventory to Kraft Foods North America, Inc. (Kraft) completed as part of the previously announced termination of the Kraft industrial supply services agreement. Excluding the Kraft inventory sale, revenues declined to $66.4 million in the 2002 second quarter, reflecting site closings, including unprofitable In-Plant Store(r) contracts, and economic weakness within our manufacturing and energy customer base. Partially offsetting these declines were revenues from new contracts added during the past twelve months. In the 2002 second quarter, SDI revenues from Kraft, excluding the Kraft inventory sale, were $20.9 million compared to $20.5 million in the 2001 second quarter and $23.2 million in the 2002 first quarter. As previously disclosed, SDI revenues from Kraft are expected to decline, pursuant to the termination of the Kraft agreement, to $5 million and zero in the 2002 third and fourth quarters, respectively.
The Company reported a net loss of $2.2 million or 73 cents per share in the 2002 second quarter, which includes $4.5 million or $1.46 per share of severance and long-lived asset impairment expenses related to the termination of the Kraft industrial supply services agreement, partially offset by $1.7 million or 55 cents per share of profit on the sale of the Kraft inventory. This compares to a net loss of $1.1 million or 37 cents per share for the same period of the prior year. Excluding these Kraft termination related items, second quarter 2002 operating income was $0.4 million, compared to operating income of $0.4 million reported in the 2002 first quarter and a $1.6 million operating loss reported in the 2001 second quarter. Second quarter 2002 operating income, exclusive of the Kraft termination items, reflects the benefit of significant administrative cost reductions commenced in 2001 and continued in the first six months of 2002 to offset lower revenues attributable to economic weakness and site closures.
First half 2002 revenues were $165.0 million, including the Kraft inventory sale, compared to $166.8 million for the same period in the prior year. The decline in 2002 first half revenues, excluding the Kraft inventory sale, is attributable to site closings, including unprofitable In-Plant Store contracts, and economic weakness within our manufacturing and energy customer base, partially offset by new contracts added in the past twelve months. First half 2002 SDI revenues from Kraft, excluding the Kraft inventory sale, were $44.1 million, compared to $39.6 million for the same period of the prior year. The Company reported a first half 2002 net loss of $3.9 million or $1.27 per share that includes the Kraft termination items previously discussed and a $1.9 million or 63 cents per share non-cash charge related to the first quarter adoption of the new accounting standard for goodwill. This compares to a net loss of $3.1 million or 99 cents per share for the first half of 2001. First half 2002 operating income, excluding the Kraft termination items, was $0.8 million and reflects a significant improvement from the prior year's operating loss of $4.3 million. The improvement is attributable to the culling of unprofitable contracts, the addition of profitable new contracts, enhanced operating performance and significant cost reductions.
The Company ended the quarter with $39.5 million of cash and equivalents, a $27.9 million increase during the quarter that is primarily attributable to the $26.2 million Kraft inventory sale and second quarter operating results excluding non-cash expenses.
Strategic Distribution's President and Chief Executive Officer, Ron Whitaker, commented on the results stating, "I am gratified that the professionals at SDI continue to show their true talents in making the hard decisions, effectively executing the plans and attending to shareholder value. In the midst of these soft economic conditions and despite the distraction of transferring, in an orderly manner, MRO responsibilities back to Kraft, we achieved a small operating profit. We are confident that our focus on customer satisfaction, operational excellence and account profitability will continue to move us toward our profit and return on investment goals."
"We expect economic activity within our customer base to remain slow throughout the remainder of 2002, dampening our true progress. However, the operational metrics and revised processes we have put in place over the past eighteen months should protect us from the cash drain that we experienced in the past, even in soft economic times. Our cash position provides us with the flexibility necessary to take advantage of business opportunities as they present themselves in the inevitable consolidation of this industry, as well as to explore the expansion of our business model to include higher value activities for our existing customer base."
Strategic Distribution will hold a conference call to discuss these results on August 13, 2002 at 8:30 a.m. Eastern Time. To listen to this call, please click on the webcast link that is available on Strategic Distribution's web site at www.in-plantstore.com or visit www.companyboardroom.com. The webcast will also be archived for later listening at the same web addresses. The call will feature President and CEO, Ron Whitaker, and Chief Financial Officer, Michael Bonner.
Strategic Distribution, Inc. is a leading provider of industrial supply services to commercial and industrial customers as well as institutions of higher education. The Company provides proprietary services that reduce costs and inefficiencies in the procurement and management of maintenance, repair and operating ("MRO") materials. Additional information about SDI and the In-Plant Store program can be found on the Company's web site at www.in-plantstore.com. The foregoing paragraphs contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2001 annual report as filed on Form 10-K with the Securities and Exchange Commission.
STRATEGIC DISTRIBUTION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
(in thousands, except share data)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenues $ 92,582 $ 81,790 $ 164,974 $ 166,841
Cost and expenses:
Cost of materials 78,182 66,767 136,630 136,949
Operating wages
and benefits 5,197 6,559 10,902 13,479
Other operating
expenses 1,845 2,627 3,844 5,156
Selling, general
and administra-
tive expenses 5,270 7,485 11,118 15,539
Severance and
asset impairment
expenses 4,500 -- 4,500 --
---------- ---------- ---------- ----------
Total costs
and expenses 94,994 83,438 166,994 171,123
---------- ---------- ---------- ----------
Operating loss (2,412) (1,648) (2,020) (4,282)
Interest income
(expense):
Interest expense -- (96) -- (376)
Interest income 100 21 116 27
---------- ---------- ---------- ----------
Interest income
(expense), net 100 (75) 116 (349)
---------- ---------- ---------- ----------
Loss before
income taxes (2,312) (1,723) (1,904) (4,631)
Income tax benefit
(expense) 64 584 (75) 1,571
---------- ---------- ---------- ----------
Loss from opera-
tions before
cumulative effect
of accounting
change (2,248) (1,139) (1,979) (3,060)
Cumulative effect
of accounting
change -- -- (1,939) --
========== ========== ========== ==========
Net loss $ (2,248) $ (1,139) $ (3,918) $ (3,060)
========== ========== ========== ==========
Net loss per common
share - basic and
diluted:
Loss from
operations $ (0.73) $ (0.37) $ (0.64) $ (0.99)
Cumulative effect
of accounting
change -- -- (0.63) --
========== ========== ========== ==========
Net loss $ (0.73) $ (0.37) $ (1.27) $ (0.99)
========== ========== ========== ==========
Weighted average
number of shares
of common stock
outstanding:
Basic 3,088,758 3,088,521 3,088,758 3,089,164
========== ========== ========== ==========
Diluted 3,088,758 3,088,521 3,088,758 3,089,164
========== ========== ========== ==========