Universal Automotive Industries (NASDAQ:UVSL)
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Universal Automotive Industries, Inc. Letter to Shareholders
ALSIP, Ill., Oct. 15 /PRNewswire-FirstCall/ -- Arvin Scott, president and
chief executive officer of Universal Automotive Industries, Inc. (NASDAQ:UVSL),
today sent the following letter to shareholders and customers, addressing the
company's progress integrating a milestone acquisition completed earlier this
year:
October 15, 2004
Dear Fellow Shareholders and Valued Customers:
We are just about at the mid-point between reporting our second and third
quarter results, and I want to update you on the progress we are making
integrating the acquisition completed at the start of this year of certain
assets of TRW Automotive, Inc. -- a transaction that essentially doubled the
size of our company.
I want to assure you that despite the formidable task at hand, we are making
great strides in the process. Our management team is confident that the
acquisition, along with the changes being implemented, will yield outstanding
benefits and tangible returns to our shareholders over the long term, as well
as bring added value and a greater breadth of products and services for our
customers.
Since consummating the transaction, we have closed and consolidated facilities,
significantly cut costs through elimination of redundant functions, and
successfully completed the information technology integration -- a Herculean
accomplishment and one that is now allowing Universal to operate and
communicate as one unified organization.
Sales for the first half of 2004 grew considerably over the same periods of the
prior year. As expected, however, expenses associated with the integration
process, along with a sharp rise in steel and other raw material and freight
costs, impacted our margins and our bottom line, as well as our stock price.
To offset the rise in material costs, we recently raised prices of certain
products. Fortunately, the increase has received a generally favorable
response from our customers. We also implemented a "drum beat," just-in-time
manufacturing cycle and expanded our global material sourcing function. And,
in an effort to lower freight costs and enhance service efficiency, we have
begun transitioning certain customer accounts to a more strategically located
distribution center. This streamlined distribution process already is paying
dividends in the form of helping us to secure new regional business,
specifically by enabling us to sell products to those customers that demand
next day or 48-hour service.
We also are taking aggressive steps to address one of our biggest remaining
challenges -- supply chain management. We have essentially re-invented our
supply chain model, changing our forecasting technology and adding a virtually
new and experienced team of professionals.
Management is placing great emphasis on improving margins and returning
Universal to profitability. Another important measure we have taken toward
meeting this goal has been to invest in more efficient manufacturing
technologies that will enable us to increase the number of internally produced
parts. This will have the dual effect of lowering the cost of producing
finished products, as well as reducing our reliance on third party producers.
Over time, margins are expected to grow as we sell through existing inventories
of higher cost third party sourced products and new tooling comes on-line.
At corporate headquarters, we recently engaged a new auditing firm, Blackman
Kallick Bartelstein LLP, a 200-person firm in Chicago, succeeding Ernst &
Young. Given Universal's size relative to companies served by the Big 4
auditing firms, and the rising costs of auditing fees as a publicly traded
company, we believe our selection is an excellent choice for Universal that not
only will save costs, but provide us with senior advice and prompt attention.
I am also happy to report that Universal recently was selected by one of the
nation's leading automotive aftermarket national buying groups, RPM Group, as
its preferred supplier for brake friction. This is a major win for the
company, underscoring RPM's confidence in Universal and validating the strength
of our brands and quality of our products.
Underlying our strategy is the mandate from our Board of Directors to create a
highly successful, dynamic company that is a leader in our specialized niche
within the automotive sector -- a company that provides top tier service to
customers, offers a breadth of products and delivers tangible returns to our
shareholders. Our milestone acquisition last January was the first step toward
fulfilling that mandate.
Change of the magnitude that is required to transform two companies that were
losing money into one successful, profitable organization does not happen
overnight. Last year, on a combined basis, both companies sustained a loss of
more than $20 million. For 2004, that loss will be reduced dramatically. We
are encouraged by the progress made thus far in 2004. With annualized sales of
approximately $100 million, we are seeing positive signs that our business is
moving in the right direction.
I, along with most of the senior management team and the Board of Directors,
have significant equity in Universal Automotive Industries. As shareholders
and customers, you have our commitment that our singular goal remains to
methodically build a strong and enduring company. Thank you for your support
and loyalty as we build. I look forward to sharing our progress with you in
the months ahead.
Sincerely,
Arvin Scott
President and Chief Executive Officer
* * *
This letter may contain certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, which are intended to be
covered by safe harbors created hereby. Such forward-looking statements
involve known and unknown risks, uncertainties (including those risk factors
referenced in the Company's filings with the Securities and Exchange
Commission), and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance, or achievements of the Company expressed or implied by
such forward-looking statements.
DATASOURCE: Universal Automotive Industries, Inc.
CONTACT: Robert W. Zimmer of Universal Automotive Industries, Inc.,
+1-708-293-4050, ext. 223; or Roger S. Pondel or Robert Jaffe, both of
PondelWilkinson Inc., +1-310-279-5980, for Universal Automotive Industries,
Inc.