SOUTHFIELD, Mich.--(BUSINESS WIRE)--Detrex Corporation (OTCQX:DTRX), today announced 2014 income from continuing operations of $1.3 million, or $0.74 per fully diluted share, and net income of $1.0 million, or $0.57 per fully diluted share, after discontinued operations. In 2013 income from continuing operations and net income was $2.6 million, or $1.51 per fully diluted share. Sales from the Company’s sole subsidiary, The Elco Corporation, were $40.8 million in 2014, compared to $41.0 million in 2013. The Company also announced that it will pay a $0.25 quarterly dividend on March 26, 2015 to shareholders of record as of March 12, 2015.
The net sales for Elco did not change appreciably from 2013 to 2014 at approximately $41 million, however, there was a substantial change in the underlying mix as well as the timing of orders. In the first half of 2014 sales were $2.5 million below the corresponding period in 2013. The sales pace picked up as the year progressed and second half sales exceeded the second half of 2013 by approximately $2.2 million. In addition, the baseline sales of Elco’s diverse mix of products and customers increased in excess of six percent to compensate for an almost similar decline in sales for a product line that tends to fluctuate from month to month and remained consistently down for the year. Elco’s earnings for the year were negatively impacted by lower margins due to the sales mix and higher costs in both manufacturing and SG&A. The cost increases were the result of increased investments in manufacturing process improvements, regulatory compliance costs, product development and commercialization, a significant strengthening of export sales channels and general employee welfare costs. These investments appear to have begun to yield top line results in the second half of the year and we anticipate continuing improvement in the year to come.
The Company made several strategic moves in the past few years which resulted in follow up activities in 2014. The size of the Corporation and the scope of its legacy liabilities have decreased significantly; in the second quarter of 2014, Board and Corporate compensation levels, as well as other expenses, were reduced to reflect the new circumstances while maintaining the Corporation’s capability to pursue additional strategic opportunities. A claim related to the divestiture of Harvel was resolved; this resulted in the collection of $2.1 million from an escrow account and a related $0.3 million after-tax charge to discontinued operations. The Company’s only environmental liability activities involved the sites that were not transferred in the 2013 liability transfer transaction. An increase in the environmental reserve for the few retained sites was made as progress on these sites indicated the need for additional funds to complete their remediation. At year-end the environmental reserve for these sites was $2.0 million, of which approximately $700K is expected to be spent in 2015.
The Company’s frozen defined benefit plans shifted to a $3.6 million underfunded position at the end of 2014 from an overfunded position of $1.4 million at the end of the prior year. The two major factors in this reduction were reduced discount rates and modified actuarial mortality tables. The reduction in discount rates from 5.0 percent to 4.25 percent resulted in a $2.3 million increase in the liability and new actuarial tables, reflecting longer life spans, increased the liability by $2.9 million. The Company is not required to provide additional funding in the coming year.
At year end the bank loan balance net of cash on hand was $2.7 million compared to the 2013 net loan balance of $6.5 million. Significant spending during 2014 included capital expenditures of $0.7 million, environmental spending of $0.9 million and dividend payments of $1.7 million.
“In 2014 we built on the opportunities that the strategic actions of the past few years have provided and cleared up most of the details generated by these transactions. As a result, I believe that the Company is streamlined and positioned for growth in the global market,” said Chairman, President & CEO, Tom Mark. “In the year to come we will continue to evaluate and embrace strategic opportunities to generate shareholder value and will keep you informed of our progress.”
About Detrex Corporation
Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.
Forward Looking Statements
Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.
| Detrex Corporation and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||
| Years Ended December 31, 2014 and 2013 | ||||||||||||
| (in thousands) | ||||||||||||
| 2014 | 2013 | |||||||||||
| Net sales | $ | 40,755 | $ | 41,038 | ||||||||
| Cost of sales | 28,961 | 26,957 | ||||||||||
| Selling, general and administrative expense | 7,477 | 8,468 | ||||||||||
| Provision for depreciation and amortization | 1,274 | 1,217 | ||||||||||
| Provision for corporate environmental reserves | 1,000 | - | ||||||||||
| Interest (income) expense, net | 169 | 141 | ||||||||||
| Other (Income) Expense, net | (12 | ) | (10 | ) | ||||||||
| Income from continuing operations before income taxes | 1,886 | 4,265 | ||||||||||
| Provision for income taxes | 600 | 1,665 | ||||||||||
| Net Income from continuing operations | 1,286 | 2,600 | ||||||||||
| Discontinued operations: | ||||||||||||
| Loss from sale of Subsidiary, net of tax | (304 | ) | ||||||||||
| Net income | $ | 982 | $ | 2,600 | ||||||||
| Basic earnings per common share: | ||||||||||||
| From continuing operations | $ | 0.77 | $ | 1.55 | ||||||||
| From discontinued operations | (0.18 | ) | - | |||||||||
| Net earnings per share | $ | 0.59 | $ | 1.55 | ||||||||
| Fully diluted earnings per common share: | ||||||||||||
| From continuing operations | $ | 0.74 | $ | 1.51 | ||||||||
| From discontinued operations | (0.17 | ) | - | |||||||||
| Net earnings per share | $ | 0.57 | $ | 1.51 | ||||||||
| Shares outstanding,basic | 1,676 | 1,676 | ||||||||||
| Shares outstanding,fully diluted | 1,730 | 1,725 | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (in thousands) | ||||||||||||
| Dec 31 | Dec 31 | |||||||||||
| 2014 | 2013 | |||||||||||
| Assets | ||||||||||||
| Current Assets | 12,905 | 16,777 | ||||||||||
| Property and equipment, net | 9,397 | 10,009 | ||||||||||
| Other assets | 1,696 | 3,377 | ||||||||||
| Total assets | $ | 23,998 | $ | 30,163 | ||||||||
| Liabilities and stockholders' equity | ||||||||||||
| Current liabilities | $ | 5,634 | $ | 8,202 | ||||||||
| Non-current liabilities | 8,081 | 7,610 | ||||||||||
| Detrex Corporation shareholders' equity | 10,283 | 14,351 | ||||||||||
| Total liabilities and stockholders' equity | $ | 23,998 | $ | 30,163 | ||||||||