KANSAS CITY, Mo., March 9 /PRNewswire/ -- Payless Cashways, Inc.
(OTC Bulletin Board: PCSH), a full-line building materials and finishing
products company focusing on the professional builder, remodel and repair
contractor, institutional buyer, and project-oriented consumer, today reported
operating results for the first quarter ended February 26, 2000.
Summary of Financial Highlights
(amounts in thousands except percentages and per share amounts)
First Quarter Ended
Feb. 26, 2000 Feb. 27, 1999 Change
Net Sales $347,113 $391,873 -11.4%
Gross Margin $97,407 $105,934 -8.0%
SG&A $93,823 $106,517 -11.9%
EBITDA $4,048 $(238) +1800.8%
Loss Before Income Taxes $(14,974) $(17,786) +15.8%
Net Loss $(5,242) $(9,960) +47.4%
Net Loss Per Common Share $(0.26) $(0.50) +48.0%
Wtd. Avg. Shares Outstanding 20,000 20,000 --
KEY DEVELOPMENTS - FIRST QUARTER 2000
-- Positive first quarter EBITDA, first in three years.
-- EBITDA increased 1800.8% over the same period of 1Q99.
-- Stockholders' equity at $148 million, $7.40 per share book value.
-- Cut net loss by 47%.
-- Significant progress toward goal of profitability in 2000.
"Our tremendous improvement in EBITDA in the first quarter demonstrates
the leverage we are creating with our focus on a solid profit model, even in
what is typically our slowest quarter of the year, due to the winter season.
Our aggressive reduction of SG&A expense by $12.7 million under the first
quarter last year, combined with a 103 basis point improvement in gross
margin, helped deliver positive first quarter EBITDA for the first time in
three years. And, by leveraging this improvement to a 47% reduction in net
loss, we show significant progress toward our goal of being profitable in
2000."
--President & CEO Millard Barron
First Quarter 2000 Results
The Company reported first quarter net loss of $5.2 million compared to a
net loss of $10.0 million in the first quarter of the previous year. Loss per
common share in the first quarter of 2000 was $0.26 compared to $0.50 in the
same quarter of 1999.
Net sales for the first quarter of 2000 were $347.1 million, an 8.4%
same-store decrease and an 11.4% decrease in total, versus first quarter of
1999 sales of $391.9 million. On a same-store sales basis, sales to the
professional customer decreased 3.4%, and sales to the DIY customer decreased
14.3% for the quarter. Same store sales were negatively impacted by inclement
weather conditions in the last week of January and early February. Earnings
before interest, taxes, depreciation, and amortization (EBITDA), a measure of
the Company's operating cash flow, was $4.0 million for the 2000 first
quarter, compared to a loss before interest, taxes, depreciation, and
amortization of $238,000 for the same period last year.
Payless Cashways Management Comments
Payless Cashways Inc. President & CEO Millard Barron remarked, "Our
tremendous improvement in EBITDA in the first quarter demonstrates the
leverage we are creating with our focus on a solid profit model, even in what
is typically our slowest quarter of the year, due to the winter season. Our
aggressive reduction of SG&A expense by $12.7 million under the first quarter
last year, combined with a 103 basis point improvement in gross margin, helped
deliver positive first quarter EBITDA for the first time in three years. And,
by leveraging this improvement to a 47% reduction in net loss, we show
significant progress toward our goal of being profitable in 2000."
Barron added, "We have continued to focus on our target customers while
developing a sustainable profit model, which can be leveraged. During the
quarter we have taken several steps to better serve our customers and our
stockholders. They include,
-- A temporary expansion of our line of credit to allow us to build
seasonal inventory ahead of our selling season;
-- The hiring of two seasoned executives to strengthen our professional
business organization and enable us to accelerate our growth with
professional builders;
-- The expansion of our e-commerce team to take full advantage of the
growing number of business opportunities utilizing the internet;
-- The shift in product mix to higher margin products, and the elimination
of unprofitable, lower margin products and slow-selling items;
-- The collection of fees for value-added services, such as special orders
and delivery.
While we are aware some of these actions may negatively impact our sales
comparisons in the short term, we are managing the business for long-term
profitable growth. All of these elements allow us to profitably position
ourselves as the premier source of building materials to the professional
customer."
About the Company
Payless Cashways, Inc. is a full-line building materials and finishing
products company focusing on the professional builder, remodel and repair
contractor, institutional buyer, and project-oriented consumer. The Company
operates 150 stores in 18 states located in the Midwestern, Southwestern,
Pacific Coast and Rocky Mountain areas. The stores operate under the names
Payless Cashways, Furrow, Lumberjack, Hugh M. Woods, Knox Lumber and
Contractor Supply.
Forward-Looking Statements
Forward-looking statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. There are certain
important factors that could cause results to differ materially from those
anticipated by the forward-looking statements made above. These statements
are based on the current plans and expectations of the Company and investors
are cautioned that all forward-looking statements involve risks and
uncertainty. Among the factors that could cause actual results to differ
materially are the following: competitor activities; stability of customer
demand; stability of the work force; supplier support; consumer spending and
debt levels; interest rates; housing activity; lumber prices; product mix;
growth of certain market segments; weather; an excess of retail space devoted
to the sale of building materials; the successful implementation of an
Internet ordering system; the success of the Company's strategy, including its
e-commerce opportunities; and the successful completion of the new credit
service agreement implementation. Additional information concerning these and
other factors is contained in the Company's SEC filings, which are available
by contacting the Company or on the Company's web site, payless.cashways.com .
PAYLESS CASHWAYS, INC.
First Quarter Ended February 26, 2000
Operating Data (Unaudited) (a)
(In thousands, except percentages and per share amounts)
Thirteen Weeks Ended
February 26, 2000 February 27, 1999
Amount Percent Amount Percent
Net sales $347,113 100.0% $391,873 100.0%
Cost of merchandise sold 249,706 71.9 285,939 73.0
Gross margin 97,407 28.1 105,934 27.0
Selling, general and
administrative 93,823 27.0 106,517 27.2
Other income (464) (.1) (345) (.1)
EBITDA 4,048 1.2 (238) (.1)
Provision for depreciation
and amortization 8,936 2.6 8,936 2.2
Interest expense 10,086 2.9 8,612 2.2
Loss before income taxes (14,974) (4.3) (17,786) (4.5)
Federal and state income taxes (9,732) (2.8) (7,826) (2.0)
NET LOSS $(5,242) (1.5)% $(9,960) (2.5)%
Net loss per common share -
basic $(0.26) -- $(0.50) --
Weighted average common
shares outstanding 20,000 -- 20,000 --
(a) Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentation.
PAYLESS CASHWAYS, INC.
Condensed Balance Sheets (Unaudited) (a)
(In thousands)
February 26, November 27,
February 27,
2000 1999 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,150 $1,111 3,967
Merchandise inventories 377,305 349,332 374,908
Prepaid expenses and other
current assets 15,669 22,013 20,395
Income taxes receivable 675 679 1,164
Deferred income taxes -- -- 5,376
TOTAL CURRENT ASSETS 394,799 373,135 405,810
OTHER ASSETS
Real estate held for sale 6,312 8,851 11,286
Deferred financing costs 3,707 3,944 2,992
Other 1,538 1,549 1,653
LAND, BUILDINGS, EQUIPMENT AND
SOFTWARE, NET 334,966 340,912 348,633
$741,322 $728,391 770,374
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $168 $3,265 $10,150
Trade accounts payable 63,866 51,480 55,323
Other current liabilities 78,725 88,645 105,876
Income taxes payable 1,846 1,851 2,171
Deferred income taxes 4,682 2,157 --
TOTAL CURRENT LIABILITIES 149,287 147,398 173,520
LONG-TERM DEBT, less portion
classified as current liability 402,345 374,154 390,707
NON-CURRENT LIABILITIES 41,635 53,542 54,674
STOCKHOLDERS' EQUITY
Common stock 200 200 200
Additional paid-in capital 183,600 183,600 183,600
Accumulated deficit (35,745) (30,503) (32,327)
TOTAL STOCKHOLDERS' EQUITY 148,055 153,297 151,473
$741,322 $728,391 $770,374
(a) Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentations.
PAYLESS CASHWAYS, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited) (a)
(In thousands)
Thirteen Weeks Ended
February 26, February 27,
2000 1999
Cash Flows from Operating Activities
Net loss $(5,242) $(9,960)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 8,936 8,936
Deferred income taxes (9,732) (7,826)
Other (159) 568
Changes in assets and liabilities (19,164) (39,138)
NET CASH USED IN OPERATING ACTIVITIES (25,361) (47,420)
Cash Flows from Investing Activities
Additions to land, buildings, equipment
and software (2,522) (8,684)
Proceeds from sale of land, buildings
and equipment 2,998 5,101
(Increase) decrease in other assets 11 (162)
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 487 (3,745)
Cash Flows from Financing Activities
Principal payments on long-term debt (5,493) (4,768)
Net proceeds from revolving credit facility 30,587 58,000
Other (181) (50)
NET CASH PROVIDED BY FINANCING ACTIVITIES 24,913 53,182
Net increase in cash and cash equivalents 39 2,017
Cash and cash equivalents, beginning of period 1,111 1,950
Cash and cash equivalents, end of period $1,150 $3,967
(a) Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentation.
PAYLESS CASHWAYS, INC.
Long-Term Debt
(In thousands)
February 26, November 27, February 27,
2000 1999 1999
1999 Credit Agreement,
variable interest rate $213,973 $183,386 $--
1997 Credit Agreement,
variable interest rate 107,314 109,415 308,138
Mortgage loan, variable
interest rate 80,310 83,686 91,653
Other senior debt 916 932 1,066
402,513 377,419 400,857
Less portion classified as
current liability (168) (3,265) (10,150)
$402,345 $374,154 $390,707
SOURCE Payless Cashways, Inc.
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Related links:
http://www.payless.cashways.com
CONTACT:
Millard Barron, President and CEO of Payless
Cashways, Inc., 816-347-6000, or
web.investor@payless.cashways.com; or General, Mark Shaffer,
312-640-6763, or mshaffer@frb.bsmg.com, or Analysts-Investors,
Jack Cotto, 312-640-6755, or jcotto@frb.bsmg.com, both of The
Financial Relations Board
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