Katy Industries, Inc. Reports 2014 First Quarter Results - WLOX.com - The News for South Mississippi

Katy Industries, Inc. Reports 2014 First Quarter Results

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SOURCE Katy Industries, Inc.

BRIDGETON, Mo., May 12, 2014 /PRNewswire/ -- Katy Industries, Inc. (OTC BB: KATY) today reported net income in the first quarter of 2014 of $1.2 million, or $0.15 per basic ($0.04 per diluted) share, versus a net loss of $0.8 million, or $0.10 per basic and diluted share, in the first quarter of 2013.  Income from continuing operations was $1.2 million in the first quarter of 2014, versus a loss of $1.4 million in the first quarter of 2013.  Operating loss was $0.9 million, or 4.5% of net sales, in the first quarter of 2014, compared to $1.3 million, or 6.9% of net sales, for the same period in 2013. 

Financial highlights for the first quarter of 2014, as compared to the same period in the prior year, included:

  • Net sales in the first quarter of 2014 were $19.9 million, an increase of $1.8 million, or 9.7%, compared to the same period in 2013.  The increase was a result of our acquisition of Ft. Wayne Holdings, Inc. ("FTW") on February 19, 2014, which contributed $1.6 million in net sales for the three months ended March 28, 2014, and increased demand in our Continental business unit. The increase in net sales was partially offset, however, by a volume shortfall in our Wilen business unit and two less shipping days in the first quarter 2014 versus the first quarter 2013.
  • Gross margin was 15.0% in the first quarter of 2014, an increase from 13.3% in the first quarter of 2013.  The increase in gross margin was primarily a result of higher margins on our sales mix in our Continental business unit.
  • Selling, general and administrative expenses were $0.5 million higher in the first quarter of 2014 than in the first quarter of 2013.  The increase was primarily due to the acquisition of FTW and incentive compensation expense for the three months ended March 28, 2014.
  • Income tax benefit for the three months ended March 28, 2014 includes a benefit as a result of the acquisition of FTW. The Company recorded deferred tax liabilities of $2.4 million which reduced its net deferred tax assets. The reduction in deferred tax assets caused a release of a valuation allowance of $2.3 million.

Cash used by operating activities before changes in operating assets and liabilities was $0.4 million in the first quarter of 2014 as compared to $0.7 million in the same period of 2013.  Changes in operating assets and liabilities from continuing operations used $2.9 million in the first quarter of 2014 as compared to $1.0 million in the same period of 2013. The increase in usage is primarily attributable to posting cash collateralization of $1.5 million with PrivateBank and Trust Company in connection with our letters of credit.

Cash flows used by investing activities in the first quarter of 2014 reflect an $11.2 million increase due to the purchase of FTW. 

Debt at March 28, 2014 was $22.5 million, versus $7.7 million at December 31, 2013.

"During the first quarter of 2014 we successfully acquired Ft. Wayne Holdings, Inc.," said David J. Feldman President & CEO of Katy Industries. "Going forward we will continue our commitment to our core business and remain focused on additional operational improvements that will move us to profitability in the future."

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.  Forward-looking statements include all statements of the Company's plans, beliefs or expectations with respect to future events or developments and often may be identified by such words or phrases as "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "may," "should," "will," "continue," "is subject to," or similar expressions.  These forward-looking statements are based on the opinions and beliefs of Katy's management, as well as assumptions made by, and information currently available to, the Company's management.  Additionally, the forward-looking statements are based on Katy's current expectations and projections about future events and trends affecting the financial condition of its business.  The forward-looking statements are subject to risks and uncertainties that may lead to results that differ materially from those expressed in any forward-looking statement made by the Company or on its behalf.  These risks and uncertainties include, without limitation, conditions in the general economy and in the markets served by the Company, including changes in the demand for its products; success of any restructuring or cost control efforts; an increase in interest rates; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers' operations or other causes affecting availability of component materials or finished goods at reasonable prices; changes in product mix, costs and yields; labor issues at the Company's facilities or those of its suppliers; legal claims or other regulator actions; and other risks identified from time to time in the Company's filings with the SEC, including its Report on Form 10-K for the year ended December 31, 2013. Katy undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Katy Industries, Inc. is a diversified corporation focused on the manufacture, import and distribution of commercial cleaning products and consumer home products.

Company contact:
Katy Industries, Inc.
James W. Shaffer
(314) 656-4321

 

KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS AND COMPREHENSIVE LOSS- UNAUDITED

(In thousands, except per share data)



Three Months Ended



March 28,


March 29,



2014


2013






Net sales

$          19,926


$          18,161

Cost of goods sold

16,937


15,748


Gross profit

2,989


2,413

Selling, general and administrative expenses

3,890


3,385

Severance, restructuring and related charges

-


284


Operating loss

(901)


(1,256)

Interest expense

(281)


(170)

Other, net

40


34


Loss from continuing operations before income tax benefit (expense)

(1,142)


(1,392)

Income tax benefit (expense) from continuing operations

2,304


(7)


Income (loss) from continuing operations

1,162


(1,399)

Income from operations of discontinued business (net of tax)

-


569


Net income (loss)

$            1,162


$             (830)











Net income (loss)

$            1,162


$             (830)

Other comprehensive income





Foreign currency translation

(38)


(12)

Total comprehensive income (loss)

$            1,124


$             (842)











Income (loss) per share of common stock - Basic





Income (loss) from continuing operations

$              0.15


$            (0.17)


Discontinued operations

-


0.07


Net income (loss)

$              0.15


$            (0.10)






Income (loss) per share of common stock - Diluted





Income (loss) from continuing operations

$              0.04


$            (0.17)


Discontinued operations

-


0.07


Net income (loss)

$              0.04


$            (0.10)






Weighted average common shares outstanding:





Basic and diluted

7,951


7,951


Diluted

26,810


7,951






Other Information:









LIFO adjustment expense

$               158


$               171






 

 

KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED

(In thousands)








March 28,


December 31,

Assets

2014


2013

Current assets:





Cash

$        561


$              708


Accounts receivable, net

11,349


7,206


Inventories, net

12,390


10,004


Other current assets

2,197


663


Assets held for sale

21


74

Total current assets

26,518


18,655






Other assets:





Goodwill

2,788


-


Intangibles, net

4,052


-


Other

1,821


1,375






Other Assets

8,661


1,375






Property and equipment

60,041


55,495

Less: accumulated depreciation

(49,039)


(48,533)

Property and equipment, net

11,002


6,962






Total assets

$   46,181


$         26,992











Liabilities and stockholders' equity




Current liabilities:





Accounts payable

$     8,106


$           5,983


Book overdraft

186


264


Accrued expenses

9,218


8,473


Payable to related party

3,275


2,750


Deferred revenue

186


186


Revolving credit agreement

22,489


7,706

Total current liabilities

43,460


25,362






Deferred revenue

279


316

Other liabilities

3,798


3,794

Total liabilities

47,537


29,472






Stockholders' equity:





Convertible preferred stock

108,256


108,256


Common stock

9,822


9,822


Additional paid-in capital

27,110


27,110


Accumulated other comprehensive loss

(886)


(848)


Accumulated deficit

(124,221)


(125,383)


Treasury stock

(21,437)


(21,437)

Total stockholders' equity

(1,356)


(2,480)






Total liabilities and stockholders' equity

$   46,181


$         26,992

 

 

KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)




Three Months Ended




March 28,


March 29,




2014


2013

Cash flows from operating activities:





Net income (loss)

$     1,162


$      (830)


Income from discontinued operations

-


569



Income (loss) from continuing operations

1,162


(1,399)


Depreciation and amortization of long-lived assets

539


542


Amortization of debt issuance costs

161


48


Stock-based compensation

44


79


Deferred income taxes

(2,318)


-




(412)


(730)


Changes in operating assets and liabilities:






Accounts receivable

(2,616)


(1,556)



Inventories

(981)


(973)



Other assets

(1,300)


(363)



Accounts payable

1,512


1,507



Accrued expenses

535


817



Payable to related party

125


(125)



Deferred revenue

(38)


(46)



Other

(172)


(278)




(2,935)


(1,017)








Net cash used in continuing operations

(3,347)


(1,747)


Net cash provided by discontinued operations

53


756


Net cash used in operating activities

(3,294)


(991)







Cash flows from investing activities:





Payment for acquisition, net of cash received

(11,006)


-


Capital expenditures

(208)


(94)


Net cash used in investing activities

(11,214)


(94)







Cash flows from financing activities:





Net borrowings

14,783


1,371


Loan from related party

400


-


Decrease in book overdraft

(78)


(225)


Direct costs associated with debt facilities

(672)


(19)


Net cash provided by financing activities

14,433


1,127







Effect of exchange rate changes on cash from continuing operations

(69)


(40)

Effect of exchange rate changes on cash from discontinued operations

(3)


(16)

Effect of exchange rate changes on cash 

(72)


(56)







Net decrease in cash

(147)


(14)

Cash, beginning of period

708


621

Cash, end of period

$        561


$        607

©2012 PR Newswire. All Rights Reserved.

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