03 Dec 04. Stewart & Stevenson Services, Inc. (NYSE: SVC) announced its operating results for the third quarter of fiscal 2004, which ended on October 30, 2004.
Sales for the third quarter of fiscal 2004 totaled $291.2m,(2003: $275.7m). Net earnings in the third quarter of fiscal 2004 were $2.1m or $0.07 per diluted share compared to a net loss of $15.4m or $0.54 per diluted share in the third quarter of fiscal 2003. Net earnings from continuing operations in the third quarter of fiscal 2004 were $8.4m or $0.29 per diluted share compared to a net loss of $11.3m or $0.39 per diluted share in the third quarter of fiscal 2003.
As previously announced, the company is pursuing a possible sale of its Airline Products business. Operating results have been restated to reflect the Airline Products business as a discontinued operation and restated quarterly segment operating results for fiscal 2004 and 2003 are attached.
The company’s results from discontinued operations for the third quarter of fiscal 2004 include a $6.0 million after-tax charge to reflect the recent settlement of outstanding litigation related to the company’s blowout preventer and drilling riser business, which was sold during fiscal 2002. Results from discontinued operations for the third quarter of fiscal 2004 were an after tax loss of $6.3m or $0.22 per diluted share compared to a loss of $4.2m or $0.15 per diluted share for the same period of fiscal 2003.
Max L. Lukens, the company’s President and Chief Executive Officer, stated, “We are encouraged by the significantly improved results from our continuing operations. These results reflect the positive impact of the many actions we have taken since we began our strategic review of all our businesses approximately one year ago. We will continue to build upon this progress and take the necessary actions in all of our businesses to position the company for acceptable, sustainable returns going forward.”
Segment Data
The Tactical Vehicle Systems segment, which manufactures tactical vehicles for the U.S. Army and others, recorded sales of $133.4m in the third quarter of fiscal 2004, (2003: $110.0m). Operating profit for the third quarter of fiscal 2004 decreased to $16.0m, (2003: $16.8m), as the impact of the higher sales volume was more than offset by higher material costs, primarily related to increased steel pricing, and a change in product mix. Deliveries under the new multi-year contract with the U.S. Army to produce the Family of Medium Tactical Vehicles (“FMTV”) began during November 2004. During the third quarter, the company also received a contract award valued at $32.8m for the production of 385 Low Signature Armored Cabs (“LSAC”) for use on the FMTV. The cabs will be manufactured in Sealy, Texas with deliveries scheduled through February 28, 2005. The contract has recently been modified to add 813 additional LSACs, for which the delivery schedule and pricing are expected to be finalized by the end of the year.
The Power Products segment, which is responsible for sales and aftermarket support of a wide range of industrial and transportation equipment, recorded sales of $129.8m in the third quarter of fiscal 2004, (2003: $128.9m) million
The Engineered Products segment recorded sales of $25.4m for the third quarter of fiscal 2004, (2003: $29.2m).
The Distributed Energy Solutions segment recorded third quarter 2004 sales of $2.6m, (2003;$7.5m). Third quarter 2004 operating loss totaled $5.2m compared to a $20.7m loss in the comparable period of last year. In the third quarter of fiscal 2003, the company announced its decision to exit the turnkey engineering, procurement, and construction (“EPC”) activities of this segment and continues to wind up the remaining contractual obligations associated with such activity.
Liquidity
Total cash and short-term investments were $83.0m at October 30, 2004 as compared to $99.8m at the end of the se