Knape & Vogt (NASDAQ:KNAP)
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Knape & Vogt Reports Second Quarter Results and Relocation of
Muncie, Indiana Operations
GRAND RAPIDS, Mich., Jan. 24 /PRNewswire-FirstCall/ -- Knape & Vogt
Manufacturing Co. (NASDAQ:KNAP) today announced results for the second quarter
ended January 1, 2005, marked by sales growth and continued new product
introductions.
The Grand Rapids, Mich.-based manufacturer and distributor of drawer slides,
shelving, storage and ergonomic office products reported that net sales
increased 9.2% percent to $37.5 million for the second quarter of fiscal 2005,
compared with net sales of $34.3 million during the same period a year ago. KV
reported its sales growth continued to be led by new products, which
represented $4.9 million for the second quarter of fiscal 2005 compared with
$4.4 million in the second quarter of the prior year.
"Our sales growth is being driven by new products including the Polaris(TM)
adjustable keyboard arm, our line of height-adjustable tables and the Virtu(TM)
line of kitchen and closet products," said Bill Dutmers, chairman and CEO.
"These products continue to demonstrate our ability to bring innovative,
upscale solutions to the marketplace."
"In addition, we are introducing our products and our strong KV(R) brand name
through new vehicles. In November 2004, we opened the KV Product Gallery
showroom in the LuxeHome(TM) Boutique in the Chicago Merchandise Mart. This is
our first showroom, and we believe that having KV products installed in actual
vignettes will open new channels and generate new interest for our products."
KV reported a net loss of $522,815, or $0.12 per diluted share, for the current
quarter, compared with net income of $441,904, or $0.10 per diluted share,
during the same period in fiscal 2004. The results include approximately $2.1
million in pre-tax impairment charges and additional depreciation, or $0.29 per
share net of tax. Excluding these charges, KV would have posted improved net
income for the second quarter of fiscal 2005. The impairment charges and
additional depreciation are related to certain idle manufacturing equipment and
KV's decision to close its Muncie, Indiana facility. Operations from the
Muncie facility will be relocated to available space in the Grand Rapids,
Michigan facility. The Company estimates the cost of closing this facility
will have a payback period of approximately 1.5 years.
"Despite the high cost of steel, we have been successful in improving our
operating profitability," stated Dutmers. "We have worked closely with our
customers through this period and focused on ways to reduce our manufacturing
costs. One of the outcomes of this company-wide initiative was the careful
review of our manufacturing capabilities, which led us to the decision to close
our Muncie facility."
"While a decision to close a facility is always difficult, this move will lower
our overall manufacturing costs," continued Dutmers. "Maintaining a small
workforce in Muncie has been challenging. Fortunately, we have a deep pool of
stable, skilled employees at our Grand Rapids facility and will be able to
utilize their talents to absorb the Muncie operations and improve our wire
forming capabilities. We will also be able to leverage our existing
manufacturing expertise in our Grand Rapids facility, including our in-house
kaizen staff and industrial engineers. We believe the consolidation of our
operations will improve our speed to market on our kitchen and bath
organization accessories with production in the same location as our new
product engineers and our test lab.
"We estimate that the cost of closing this operation has a short payback
period, and more importantly, we expect this move to improve our performance to
our customers."
For the first six months of fiscal 2005, KV reported a 7.9 percent increase in
net sales to $75.9 million, compared with net sales of $70.4 million in the
prior year period. New products accounted for $11.0 million in sales for the
first six months of fiscal 2005, compared with $9.8 million in the year-ago
period, led by several of KV's new precision drawer slides, upscale wood and
glass shelving kits and kitchen and bath storage products. KV posted a net loss
of $132,304, or $0.03 per diluted share, compared with net income of $1.1
million, or $0.25 per diluted share, for the first six months of fiscal 2004.
Excluding the restructuring charge in the second quarter, KV would have posted
slightly improved net income results for the six month period of fiscal 2005.
"Looking forward, we believe that we are positioning KV as a low-cost producer,
while still providing unparalleled service to our customers through innovative
products and operational excellence," concluded Dutmers.
About Knape & Vogt
Knape & Vogt Manufacturing Co. brings more than a century of experience to the
design, manufacture and distribution of kitchen and bath storage solutions and
office products for original equipment manufacturers, specialty distributors,
office furniture dealers, hardware chains and major home centers throughout the
country. Additional information on KV's product lines is available on
http://www.knapeandvogt.com/ .
Cautionary Statement: This press release contains certain forward-looking
statements that involve risks and uncertainties. When used in this release,
the words "believe," "anticipates," "think," "intend," "optimistic,"
"forecast," "looking forward," "expect," "potential" and similar expressions
identify forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements concerning future improvements in net sales,
margins and profitability. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
expressed or implied by such forward-looking statements, including, but not
limited to, economic, competitive, governmental and technological factors
affecting the Company's operations, markets, products, services and prices.
Readers are cautioned not to place undue reliance on these forward- looking
statements, which speak only as of the date of this press release.
Knape & Vogt Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Six Months Ended Three Months Ended
Jan. 1, 2005 Dec. 27, 2003 Jan. 1, 2005 Dec. 27, 2003
Net sales $75,894,375 $70,355,998 $37,508,605 $34,342,986
Cost of sales 62,130,518 56,143,077 30,549,524 27,182,375
Gross margin 13,763,857 14,212,921 6,959,081 7,160,611
Selling and
administrative
expenses 11,367,449 11,695,019 5,532,198 5,906,795
Impairment
expenses 1,778,447 - 1,778,447 -
Operating income
(loss) 617,961 2,517,902 (351,564) 1,253,816
Interest and
other expenses,
net 718,345 839,627 411,187 446,698
Income (loss)
before income
taxes (100,384) 1,678,275 (762,751) 807,118
Income taxes 31,920 566,497 (239,936) 365,214
Net income (loss) $(132,304) $1,111,778 $(522,815) $441,904
Earnings per
common share -
basic and diluted:
Weighted average
shares
outstanding 4,516,893 4,516,137 4,517,105 4,516,349
Net income (loss)
per share $(0.03) $0.25 $(0.12) $0.10
Cash dividend -
Common stock $0.33 $0.33 $0.165 $0.165
Cash dividend -
Class B
common stock $0.30 $0.30 $0.15 $0.15
Knape & Vogt Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
Jan. 1, 2005 July 3, 2004
(Unaudited) (Audited)
Assets
Current Assets:
Cash and equivalents $6,456,845 $5,278,869
Accounts receivable, net 19,282,799 19,959,442
Inventories 24,151,737 23,955,271
Prepaid expenses and other 831,556 950,911
Total current assets 50,722,937 50,144,493
Property, plant and equipment, net 25,114,752 28,683,714
Other assets 17,215,120 17,423,119
$93,052,809 $96,251,326
Liabilities and Equity
Current liabilities $21,922,429 $22,805,708
Long-term debt and capital leases 24,532,113 24,538,864
Deferred income taxes & other
long-term liabilities 10,526,020 12,082,536
Stockholders' equity 36,072,247 36,824,218
$93,052,809 $96,251,326
Knape & Vogt Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
Jan. 1, 2005 Dec. 27, 2003
From Operating Activities:
Net income (loss) $(132,304) $1,111,778
Depreciation and amortization 3,327,143 3,278,015
Change in retirement plan cost 132,373 172,784
Deferred income taxes (1,204,142) 205,319
Impairment expenses 1,778,447 -
Loss (gain) on disposal
of fixed assets (1,103) (4,349)
Changes in operating assets
& liabilities (140,079) (1,931,557)
Other, net 13,496 -
Net cash provided by
operating activities 3,773,831 2,831,990
From Investing Activities:
Additions to property,
plant & equipment net (1,578,918) (764,415)
Proceeds from sales of
property, plant & equipment 1,750 800
Other, net (13,367) (21,962)
Net cash used for investing activities (1,590,535) (785,577)
From Financing Activities:
Cash dividends paid (1,426,156) (1,424,363)
Net change in long-term
debt/capital leases (6,751) (6,295)
Net cash used for financing activities (1,432,907) (1,430,658)
Effect of Exchange Rates on Cash 427,587 120,805
Net increase in cash and equivalents $1,177,976 $736,560
DATASOURCE: Knape & Vogt Manufacturing Co.
CONTACT: Leslie Cummings, Vice President of Finance and Treasurer of
Knape & Vogt Manufacturing Company, +1-616-459-3311, Ext. 225; Jeff Lambert or
Eric Lubbers of Lambert, Edwards & Associates, Inc., +1-616-233-0500,
, for Knape & Vogt Manufacturing Co.
Web site: http://www.knapeandvogt.com/