BENSALEM, Pa., March 3, 2003 (PRIMEZONE) -- Strategic Distribution, Inc. (Nasdaq:STRD), a leading provider of maintenance, repair and operating (MRO) supply chain management services, today reported financial results for the fourth quarter and year ended December 31, 2002.
Revenues for the 2002 fourth quarter were $40.9 million, compared to $71.3 million reported in the same quarter of the prior year. The decline in revenues reflects the termination of certain services agreements, including the previously announced termination of the Kraft Foods North America, Inc. (Kraft) industrial supply services agreement, as well as general economic weakness within the manufacturing and energy sectors. These factors were partially offset by revenues from new In-Plant Store(r) facilities added during the past twelve months. In the 2002 fourth quarter, there were no revenues from Kraft, compared to $23.1 million in the same quarter of the prior year. The weakened U.S. economy has reduced same store revenues by approximately $5 million in the 2002 fourth quarter compared to the same period of the prior year, for stores opened at least a year. We currently expect this weakness to remain through the first half of 2003 and we continue to closely monitor the financial condition and credit risk of our customers in industries unfavorably impacted by current economic conditions.
The Company reported a net loss of $0.1 million or 3 cents per share in the 2002 fourth quarter compared to a net loss of $6.7 million or $2.16 per share in the same quarter of 2001. Included in the 2002 fourth quarter net loss is a $0.3 million or 10 cents per share benefit related to the recovery of an insured loss. The 2001 fourth quarter net loss includes a charge of $4.5 million or $1.46 per share to increase previously provided allowances for an account that declared bankruptcy in that quarter. Excluding these items in both quarters, there was a $1.8 million year over year improvement in fourth quarter net loss attributable to eliminating unprofitable contracts, adding new profitable contracts and reducing costs. At December 31, 2002, the Company had $43.6 million of cash on hand.
For the full year of 2002, the Company reported revenues of $253.6 million compared to $319.6 million in 2001. The decline in revenues is principally attributable to the termination of certain services agreements, including Kraft, along with economic weakness within the manufacturing and energy sectors, partially offset by new agreements added in the past twelve months. Kraft revenues in 2002 were $77.0 million compared to $86.1 million in 2001. The weakened U.S. economy has reduced same store revenues by approximately $10 million in 2002 compared to 2001, for stores opened at least a year. The remainder of the decline in revenues is attributable to the termination of services agreements, other than Kraft, partially offset by new agreements added in 2002.
The Company reported a net loss of $3.4 million or $1.11 per share for the full year of 2002, which includes $4.5 million of Kraft termination related severance costs and long-lived asset impairment expenses, profit of $1.7 million on the second quarter $26.2 million Kraft inventory sale, a $0.9 million benefit related to a more favorable conclusion of previously estimated contract termination matters, a $0.3 million insurance recovery benefit and a $1.9 million non-cash charge related to the first quarter adoption of the new accounting standard for goodwill. This compares to a net loss of $13.1 million or $4.25 per share for the same period of 2001, which included $7.7 million of charges for uncollectible accounts. Excluding these items in both periods, there was a $5.5 million improvement in 2002 net loss compared to 2001, attributable to eliminating unprofitable contracts, adding new profitable contracts and reducing costs.
Strategic Distribution's Chief Executive Officer, Don Woodring, commented on the results stating, "We are pleased that our hard work in 2002 produced significantly better results than the prior year. In spite of a soft economy, we were able to improve the net loss within our core business by more that $5 million. While we continue to maintain a sharp focus on costs and productivity, we believe that we are well positioned to build upon a good base of business with profitable new contracts."
Strategic Distribution will hold a conference call to discuss these results on March 4, 2003 at 8:30 a.m. Eastern Time. To listen to this call, please click on the webcast link that is available on Strategic Distribution's web site at www.in-plantstore.com. The webcast will also be archived for later listening at the same web address. The call will feature CEO, Don Woodring, and Chief Financial Officer, Michael Bonner.
Strategic Distribution, Inc. is a leading provider of industrial supply services to commercial and industrial customers as well as institutions of higher education. The Company provides proprietary services that reduce costs and inefficiencies in the procurement and management of maintenance, repair and operating ("MRO") materials. Additional information about SDI and the In-Plant Store program can be found on the Company's web site at www.in-plantstore.com.
The foregoing paragraphs contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2001 annual report as filed on Form 10-K with the Securities and Exchange Commission.
STRATEGIC DISTRIBUTION, INC. AND SUBSIDIARIES
Consolidated Summary of Operations
(unaudited)
(in thousands, except for share data)
Three months ended Year ended
December 31, December 31,
--------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Revenues $ 40,870 $ 71,349 $ 253,583 $ 319,619
Costs and expenses:
Cost of materials 32,003 58,521 205,274 262,167
Operating wages
and benefits 3,473 6,226 18,466 26,102
Other operating
expenses 1,268 2,232 6,537 9,605
Selling, general
and administrative
expenses 4,335 11,053 20,558 34,522
Severance and asset
impairment
expenses -- -- 4,500 --
--------- --------- --------- ---------
Total costs and
expenses 41,079 78,032 255,335 332,396
--------- --------- --------- ---------
Operating loss (209) (6,683) (1,752) (12,777)
Interest income
(expense):
Interest expense -- (16) -- (402)
Interest income 158 16 437 54
--------- --------- --------- ---------
Interest income
(expense), net 158 -- 437 (348)
--------- --------- --------- ---------
Loss before income
taxes (51) (6,683) (1,315) (13,125)
Income tax expense (54) -- (164) --
--------- --------- --------- ---------
Loss from
operations before
cumulative effect
of accounting
change (105) (6,683) (1,479) (13,125)
Cumulative effect
of accounting
change -- -- (1,939) --
--------- --------- --------- ---------
Net loss $ (105) $ (6,683) $ (3,418) $ (13,125)
========= ========= ========= =========
Net loss per common
share - basic and
diluted:
Loss from
operations $ (0.03) $ (2.16) $ (0.48) $ (4.25)
Cumulative effect
of accounting
change -- -- (0.63) --
--------- --------- --------- ---------
Net loss $ (0.03) $ (2.16) $ (1.11) $ (4.25)
========= ========= ========= =========
Weighted average
number of shares
of common stock
outstanding -
basic and diluted 3,073,699 3,088,638 3,084,964 3,088,896
========= ========= ========= =========