CONCORD, Mass., Feb. 23 /PRNewswire/ -- Starmet Corporation (Nasdaq:
STMT), the Concord, Massachusetts based manufacturer of specialized metal
products, today announced financial results for the first quarter ended
December 31, 1998.
The results for the quarter reflect a strategic shift in mix to newer
businesses with higher gross margins. Increases in Specialty Metal products
and Uranium Services and Recycle are replacing the Depleted Uranium Penetrator
Segment which had been the mainstay of the Company's business for the past
twenty years.
Net sales decreased by $660,000 or 8% to $7,419,000 in the first quarter
of fiscal 1999, as compared to the first quarter of fiscal 1998. Sales in the
Depleted Uranium Penetrator segment decreased by $3,138,000, or 66%. Sales in
the Specialty Metal products segment increased by $1,241,000, or 43%. Sales
in the Uranium Services and Recycle segment increased by $1,237,000, or 271%.
Gross profit in the first quarter increased by $1,069,000, or 109% to
$2,047,000, as compared to the first quarter of fiscal 1998. The increase in
gross profit for the quarter is attributable in part to changes in product mix
and cost containment programs. As a percentage of sales, gross profit was 28%
as compared to 12% for the first quarter of fiscal 1998.
Selling, general and administrative expenses decreased by $967,000, or
43%, to $1,280,000 in the first quarter of fiscal 1999, as compared to the
first quarter of fiscal 1998. The decrease in selling, general and
administrative expenses is primarily due to the termination of sales office
leases and various cost containment measures. As a percentage of sales, these
expenses are 17% as compared to 28% for the same period last year.
The Company sustained a net loss of $ (87,000) for the first quarter or $
(0.02) per share on average shares outstanding of 4,791,000. This compares
with a net loss of $ (1,561,000), or $ (0.33) per share on average shares
outstanding of 4,784,000 for the same quarter a year earlier.
The Company was in default of its financial covenants under its bank
arrangement with its principal lender. On February 22, 1999, the Company
entered into an agreement with its principal bank to forebear on all
collection actions until May 31, 1999 as a result of the Company's inability
to comply with certain requirements in the Secured Revolving Line of Credit
including payment of $3,550,000 originally due on November 15, 1998.
Management's plans with regard to the existing capital deficiency are to
adjust spending levels to appropriate amounts to ensure greater financial
stability and to actively pursue additional subordinate secured debt and
partnering relations with target customers. The Company is also managing
payment plans with certain suppliers.
Backlog as of December 31, 1998 was $28.4 million as compared to $27.5
million as of September 30, 1998. During the first quarter the Company
introduced a new Beralcast(R) family of alloys for high volume commercial
applications. The Company received orders from and delivered prototype
hardware to three leading computer hard disc drive manufacturers. These multi-
generational alloys were designed to meet customer cost, performance, and
volume demands. The Company anticipates receiving additional orders for hard
disc drive and other commercial applications utilizing this new family of
engineered materials.
First Quarter Ended
Dec. 31, 1998 Dec. 31, 1997
Sales $7,419,000 $8,079,000
Cost of Sales 5,372,000 7,101,000
Gross profit 2,047,000 978,000
SG&A 1,280,000 2,247,000
Net Income (loss) $(87,000) $(1,561,000)
Basic Income per share $(0.02) $(0.33)
Weighted Average Shares 4,791,000 4,784,000
Outstanding
Dilutive Income Per Share $(0.02) $(0.33)
Weighted Average
Shares Outstanding & Dilutive
Potential Common Shares 4,791,000 4,784,000
Backlog $28,420,600 $24,645,000
Special Note Regarding Forward-looking Statements
Certain statements above, including, without limitation, those concerning
(I) the Company's backlog and the expected timing of orders and income
recognition, (ii) the Company's plans for additional capital expenditures,
(iii) the Company's Beralcast business and expansion plans, and (iv) the
Company's expectations concerning required additional financings to permit
expansion, contain certain forward-looking statements concerning the Company's
operations, economic performance and financial condition. Such forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that could cause such differences include, but are not limited to, those
discussed in Part 1, item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Risk Factors in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 1998. The words
"believe," "expect," "anticipate," "intend" and "plan" and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
the statement was made.
SOURCE Starmet Corporation
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Related links:
http://www.starmet.com
Company News On-Call:
http://www.prnewswire.com/comp/632850.html or fax,
800-758-5804, ext. 632850
CONTACT:
Robert E. Quinn, President or Kenneth A.
Hurley, CFO of Starmet Corporation, 978-369-5410
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