Mity Enterprises (NASDAQ:MITY)
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Bradley T Nielson, president and chief executive officer
of MITY Enterprises, Inc. (NASDAQ: MITY), today announced operating
results for the first quarter ended June 30, 2006.
Net sales for the first quarter totaled a record $14.7 million
compared to $14.4 million a year ago, an increase of 2 percent. Net
income was $1.3 million versus $1.5 million for the comparable period
a year ago. Basic and diluted earnings per share for the recent
quarter were $0.33 and $0.32, respectively, compared to the previous
year's first quarter basic and diluted earnings per share of $0.36 and
$0.34, respectively.
As compared to the first quarter of fiscal 2006, the increase in
net sales was primarily attributable to growth in the healthcare
seating operation, which grew by 25 percent. Sales at the multipurpose
room operation were down 1 percent. Markets that were up included
hospitality, office and government. Multipurpose room chair sales were
up 4 percent. International sales accounted for 12 percent of total
sales. Gross margins for the quarter were down due to fence costs and
the Company's production struggles.
"The good news is that customer demand continues to increase,"
said Nielson. "Our bookings have been strong. In fact, we experienced
our strongest bookings quarter ever. That increase in demand, though,
combined with the tight local labor markets, has made it difficult for
us to fully staff our production operations with trained workers. As a
result, our backlogs have grown and lead times have been extended from
three weeks to almost six weeks. In response, we have increased the
average production wages and increased the amount of overtime worked.
We have also added to our maintenance and engineering personnel to
help us focus on process reliability and stability. We believe the
steps we have taken will be adequate to return the backlog and lead
times to more normal levels during the next three months.
"We also are encouraged by the progress of our new MITY Fence
Systems venture. June was a tough month as we had to rework the molds
to ensure product quality was up to our standards. As a result, we
shipped very little product during June and incurred incremental
fence-related costs totaling almost $200,000 during the quarter,
adversely affecting our gross margin. However, during July, we have
been able to catch up with demand and have begun to see success with
some large projects. Although we still have a long way to go, we
remain optimistic about our future prospects with the fence product
line."
"Another cause of our reduced margins during the quarter was the
adoption of SFAS 123R, resulting in incremental stock-based
compensation expense of $56,000 that we did not recognize in the prior
year's quarter," said Paul R. Killpack, chief financial officer.
"Despite the lower margins, we continue to be optimistic about our
future and believe that one of our best investments is in ourselves.
Stock repurchases in the quarter totaled 284,000 shares for $5.3
million, which leaves 84,000 shares of stock remaining in the stock
buy back authorization. We also believe that net sales will be up to
10 percent higher in the second quarter as compared to the prior
year's second quarter."
The Company will host a follow-up live broadcast over the Internet
to discuss the financial results at 4:30 PM Eastern Time today. The
live web simulcast of the conference call will be available to the
public online at www.mityinc.com or on StreetEvent's Individual
Investor Center at www.streetevents.com. Listeners are encouraged to
log on five to ten minutes prior to the start time to ensure
participation from the beginning. A replay of the broadcast will be
available within approximately one hour for a week following the call
at the referenced websites.
Copies of the Company's Form 10-Q for the fiscal quarter ended
June 30, 2006 will be available online at www.mityinc.com.
Founded in 1987, MITY Enterprises, Inc. designs, manufactures and
markets innovative institutional furniture created to meet the
efficiency needs of its customers. MITY Enterprises focuses on
providing premium quality institutional furniture products to niche
markets. The product lines consist of multipurpose room furniture and
healthcare seating. MITY's products are marketed under the Mity-Lite,
Broda and Versipanel tradenames. Headquartered in Utah, MITY
Enterprises serves national and international customers directly and
through distributors. For further information, visit MITY Enterprises
online at www.mityinc.com.
This press release contains forward-looking statements related to
(i) customer demand, (ii) the Company's backlog and lead times, (iii)
the Company's future prospects with the fence product line, and (iv)
the Company's anticipation of continued strong growth, including the
Company's belief that sales for the second quarter will be as much as
10 percent higher as compared to last year's sales for the same
period. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that forward-looking statements inherently
involve risks and uncertainties that could cause actual results to
differ materially from those contemplated in the forward-looking
statements. Factors that could cause or contribute to such differences
include, but are not limited to (i) whether the steps taken by the
Company will be adequate to reduce backlog and lead times, (ii)
continued global economic uncertainty resulting from terrorism
threats, current world tensions and related U.S. military actions and
their potential impact on the Company's operations; (iii) whether the
economy will continue to strengthen and whether the Company's market
segments will continue to improve; (iv) increased price and
quality-based competitors, particularly in the multipurpose room
furniture segment; (v) lack of available capital and other resources
to develop or acquire and commercialize new products, and (vi) all
other risks and uncertainties outlined in MITY Enterprises's documents
filed with the Securities and Exchange Commission. All forward-looking
statements and other information in this press release are based upon
information available as of the date of this release. Such information
may change or become invalid after the date of this release, and by
making these forward-looking statements, MITY Enterprises undertakes
no obligation to update these statements after the date of this
release, except as required by law.
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MITY Enterprises, Inc.
Unaudited Financial Highlights
Three Months Ended
June 30,
2006 2005
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Net sales $14,702,000 $14,384,000
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Income from operations 1,922,000 2,274,000
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Pre-tax income 1,922,000 2,380,000
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Net income 1,269,000 1,518,000
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Basic earnings per share $0.33 $0.36
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Weighted average number of common shares-basic 3,870,136 4,273,517
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Diluted earnings per share $0.32 $0.34
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Weighted average common and common equivalent
shares-diluted 3,994,336 4,438,701
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