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3rd QUARTER RESULTS
TORONTO - November 9, 2004
Automodular Corporation ("Automodular") reports net earnings of $1.6 million or $0.09 per share for the nine months ended September 30, 2004 compared to $3.1 million or $0.16 per share in the same period in 2003. Last year's results included only eight months of sales of Tec-Mar Distribution Services, Inc., acquired January 31, 2003.
Net loss for the quarter ended September 30, 2004 was $0.1 million or $0.01 per share compared to a loss of $0.2 million or $0.01 per share in the same period in 2003. The current year has been a difficult one for the Company. Termination of the Delaware contract and expiration of two contracts at Oshawa and Lansing car plants adversely impacted earnings. The majority of the closeout costs on these contracts were reflected as a charge to operations in the second quarter. Many commodities for which the Company provides services have had trouble meeting planned production volumes within standard working hours which has impacted profitability.
Subsequent to September 30, Automodular learned that it was unsuccessful in its bid to extend and expand its Lansing, Michigan contracts. As such, absent new business awards, the Company will be closing its Lansing facilities in late 2005 and 2006. Further, Pontiac Truck Assembly plant announced a reduction from a three shift to a two shift operation. As a result of these issues, the Company is reviewing the carrying value of its capital assets, goodwill and intangible assets and expects to record a charge against fourth quarter earnings.
On the labour front, Automodular negotiated its first labour agreement with the CAW and negotiated a three year extension of its contract with the UAW for its Michigan based operations.
The nine month results are summarized below:
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2004
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2003
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| Sales |
$74,915
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$79,962
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| Net Earning |
$1,647
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$3,079
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| Earnings per share |
$0.09
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$0.16
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| Fully diluted shares outstanding |
19,081
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19,035
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The Company recently opened its Lordstown facility to provide commodities for the Chevrolet Cobalt. Full production is scheduled for January, 2005. In the fourth quarter, Automodular will finalize the construction of its new Oshawa facility to consolidate its Canadian car operations and to accommodate new business awards.
On the new business front, Automodular has been selected as the preferred source for a major program with another automotive OEM subject to completion of a definitive agreement. Automodular will announce the details of this program if and when a final agreement is reached.
The Company does not expect a material improvement in earnings before 2006 at which time full scale production in new facilities would be reached and the cost of closing excess facilities been addressed.
Automodular Corporation is a supplier of sub-assembly, sequencing, transportation and logistics services to six General Motors plants in Ontario, Michigan and Ohio. The company has eight plants and employs over 1,000 people.
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