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Uniroyal Global Engineered Products, Inc. for the Third Quarter Ended September 30, 2018 Reports Net Sales Increases of 8.1%, Operating Income Increases of 30.2% and Earnings (Loss) Per Share at Breakeven versus a Loss of $0.03 for the Third Quarter Ended October 1, 2017

SARASOTA, Fla., Nov. 05, 2018 (GLOBE NEWSWIRE) -- Uniroyal Global Engineered Products, Inc. (OTCQB: UNIR or the “Company”) today reported its financial results for the third quarter and nine months ended September 30, 2018.

Financial Highlights-Third Quarter

*  Net Sales increase 8.1% on growth in all three major business segments
*  Operating expenses decline to 12.6% of Net Sales versus 14.7% in prior year quarter
*  Operating Income up 30.2% versus prior year quarter
*  Earnings (Loss) Per Common Share at breakeven versus loss of $0.03 in Prior year quarter

Overview 

The third quarter ended September 30, 2018 represents a continuation of improvement in financial performance as a result of the successful implementation of strategic objectives put in place last year.  Of particular note are the increase in Net Sales and a reduction in Operating expenses versus the same quarter of the prior year.  Net Sales increased 8.1% to $24.3 million and Operating expenses declined 7.3% or $241,756 to 12.6% of Net Sales versus 14.7% of the prior year quarter.  The result was a sharp increase in Operating Income of 30.2% versus the previous year.

All three of our major business segments participated in the gains in Net Sales versus the prior year. The Industrial and Contract segments improved principally due to an improved US economy which bolstered sales to equipment manufacturers and the re-upholstery marketplace.  The growth in the Automotive segment is due to “wins” in new platforms which the Company has been positioning for some time. 

The reduction in Operating expenses is a result of strategic initiatives targeted to doing administrative and selling functions in a more efficient manner.  The successes we have achieved in these areas have been very rewarding but the process will continue well into next year and beyond.

On the negative front, raw material costs continue to increase and a negative product mix have weighed on our Gross Profit margins which declined for the current quarter and the nine months 2018 versus the corresponding periods last year.  Price increases in some of our segments are very hard to achieve and take time to implement, therefore we will have to absorb some of these costs and offset them with cost reductions and productivity improvements.  Many of these cost reduction programs and the prices increases have already been implemented and are beginning to have a positive effect on our operating results.

Net Sales

Net Sales for the third quarter increased 8.1% to $24,322,532 versus $22,498,456 recorded in the prior year.  All three major business segments recorded gains versus the comparable prior year period.  The Automotive segment (64.6% of Net Sales) recorded increases of 6.4% versus the prior year with both the US and UK operations showing improvement.  The Industrial segment (including Contract; 35.4% of Net Sales) increased 11.3% versus the previous year.  Our US business is the dominant contributor to this segment and enjoyed the benefits of a robust economy. Sales to the off-road industrial and recreational equipment manufacturers as well as sales to the hospitality and healthcare markets were the principal reasons for the gains in this segment.

Operating Income

Operating Income for the third quarter was $1,138,760 which was an increase of $263,818 or 30.2% from the $874,942 recorded in the third quarter of last year.  Operating Income margins improved to 4.7% of Net Sales versus the 3.9% of last year.  This improvement was due to the increase in Net Sales of 8.1% as well as to a decline in Operating expenses versus the prior year.

The sharp improvement in Operating Income was accomplished despite major increases in raw material prices having a negative impact on Gross Profit margins which declined versus the prior year (17.3% versus 18.6%).  Significant improvement in Gross Profit margins will be a challenge for the Company for the fourth quarter as selling price increases and productivity programs already in place will take some time to be fully realized to offset the raw material increases.

An initiative for the Company has been to reduce Operating expenses.  Reduction in expenses versus the previous year has been realized for the last several quarters and for the third quarter expenses declined $241,756 or 7.3%.  This is a continuous objective for the Company.

Net Income (Loss) Available to Common Shareholders

After Preferred Stock dividends, Net Loss Available to Common Shareholders was $10,118 or a breakeven per common share for the third quarter 2018 as compared to a net loss of $477,553 or $0.03 per common share for the third quarter 2017.  Weighted average shares outstanding were 18,690,030 at September 30, 2018 versus 18,698,030 at October 1, 2017.

For further details, see the Consolidated Statements of Operations in the Company’s Form 10-Q filed on November 5, 2018.  The Company will have comments on the quarter in an earnings conference call on November 6, 2018 at 9:00 am (EST). 

Persons wishing to access the conference call may do so by dialing 888-394-8218 (U.S.) and 323-701-0225 (International), and using the ID #9980193.  Howard F. Curd, President, will discuss our earnings on the call and will be available for questions. The call will also be available by logging on to www.uniroyalglobal.com and accessing the webcast link (http://public.viavid.com/player/index.php?id=132125) in the investor relations section.

A replay of the conference call will be available beginning November 6, 2018 through February 6, 2019 by calling 844-512-2921 (U.S.) or 412-317-6671 (International) and using Pin #9980193. The webcast will be archived on www.uniroyalglobal.com in the investor relations section until November 6, 2019.

About Uniroyal Global Engineered Products, Inc.:

Uniroyal Global Engineered Products, Inc. (UNIR) is a leading manufacturer of vinyl-coated fabrics that are durable, stain resistant, cost-effective alternatives to leather, cloth and other synthetic fabric coverings. Uniroyal Global Engineered Products, Inc.’s revenue in 2017 was derived 67.5% from the automotive industry and approximately 32.5% from the recreational, industrial, indoor and outdoor furnishings, hospitality and healthcare markets. Our primary brand names include Naugahyde®, BeautyGard®, Flame Blocker™, Spirit Millennium®, Ambla®, Amblon®, Velbex®, Cirroflex®, Plastolene® and Vynide®.

Forward-Looking Statements:

Except for statements of historical fact, certain information contained in this press release constitutes forward-looking statements, including, without limitation, statements containing the words “believe,” “expect,” “anticipate,” “intend,” “should,” “planned,” “estimated” and “potential” and words of similar import, as well as all references to the future. These forward-looking statements are based on Uniroyal Global Engineered Products, Inc.’s current expectations. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company´s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company´s forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company´s business include, but are not limited to, the following: uncertainties relating to economic conditions, uncertainties relating to customer plans and commitments, the pricing and availability of equipment, materials and inventories, currency fluctuations, technological developments, performance issues with suppliers, economic growth, delays in testing of new products, the Company’s ability to successfully integrate acquired operations, the Company’s dependence on key personnel, the Company’s ability to protect its intellectual property rights, the effectiveness of cost-reduction plans, rapid technology changes and the highly competitive environment in which the Company operates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Uniroyal Global Engineered Products, Inc. Public Relations:

TTC Group, Inc.

Vic Allgeier, 646-290-6400 vic@ttcominc.com



Uniroyal Global Engineered Products, Inc.
Consolidated Balance Sheets
       
  (Unaudited)    
       
ASSETS September 30,
2018
  December 31,
2017
CURRENT ASSETS      
Cash and cash equivalents $ 1,169,302     $ 1,267,319  
Accounts receivable, net   15,012,234       15,167,468  
Inventories, net   19,313,479       19,769,662  
Other current assets   838,643       846,362  
Related party receivable   50,223       37,116  
Total Current Assets   36,383,881       37,087,927  
PROPERTY AND EQUIPMENT, NET   19,124,549       17,289,058  
OTHER ASSETS      
Intangible assets   3,280,909       3,295,896  
Goodwill   1,079,175       1,079,175  
Other long-term assets   3,770,255       3,902,246  
Total Other Assets   8,130,339       8,277,317  
TOTAL ASSETS $ 63,638,769     $ 62,654,302  
LIABILITIES AND STOCKHOLDERS' EQUITY      
CURRENT LIABILITIES      
Checks issued in excess of bank balance $ 731,076     $ 686,640  
Lines of credit   19,013,818       19,340,468  
Current maturities of long-term debt   1,232,750       1,155,490  
Current maturities of capital lease obligations   405,345       408,425  
Accounts payable   10,733,519       10,358,761  
Accrued expenses and other liabilities   3,947,831       3,594,684  
Related party obligation   876,145       286,955  
Current portion of postretirement benefit liability - health and life   143,287       143,287  
Total Current Liabilities   37,083,771       35,974,710  
LONG-TERM LIABILITIES      
Long-term debt, less current portion   3,350,776       2,467,433  
Capital lease obligations, less current portion   207,645       531,218  
Related party lease financing obligation   2,458,028       2,153,327  
Long-term debt to related parties   2,306,262       2,765,655  
Postretirement benefit liability - health and life, less current
 portion
  2,508,774       2,547,076  
Other long-term liabilities   680,343       822,492  
Total Long-Term Liabilities   11,511,828       11,287,201  
Total Liabilities   48,595,599       47,261,911  
STOCKHOLDERS' EQUITY      
Preferred units, Series A UEP Holdings, LLC, 200,000 units
 issued and outstanding ($100 issue price)
  617,571       617,571  
Preferred units, Series B UEP Holdings, LLC, 150,000 units
  issued and outstanding ($100 issue price)
  463,179       463,179  
Preferred stock, Uniroyal Global (Europe) Limited, 50 shares
   issued and outstanding ($1.51 stated value)
  75       75  
Common stock, 95,000,000 shares authorized ($.001 par value)
   18,690,030 shares issued and outstanding as of both
   September 30, 2018 and December 31, 2017
  18,690       18,690  
Additional paid-in capital   35,200,603       34,944,972  
Accumulated deficit   (20,433,493 )     (20,276,944 )
Accumulated other comprehensive loss   (823,455 )     (375,152 )
Total Stockholders' Equity   15,043,170       15,392,391  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 63,638,769     $ 62,654,302  



Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Operations
(Unaudited)
       
  Three Months Ended
  September 30,
2018
  October 1,
2017
       
NET SALES  $ 24,322,532      $ 22,498,456  
       
COST OF GOODS SOLD   20,112,796       18,310,782  
       
Gross Profit   4,209,736       4,187,674  
       
OPERATING EXPENSES:      
Selling   1,075,064       1,285,822  
General and administrative   1,587,656       1,543,689  
Research and development   408,256       483,221  
OPERATING EXPENSES   3,070,976       3,312,732  
       
Operating Income   1,138,760       874,942  
       
OTHER EXPENSE:      
Interest and other debt related expense   (488,905 )     (418,698 )
Other expense   (22,956 )     (115,482 )
Net Other Expense   (511,861 )     (534,180 )
       
INCOME BEFORE TAX PROVISION   626,899       340,762  
       
TAX PROVISION (BENEFIT)   (132,670 )     65,170  
       
NET INCOME   759,569       275,592  
       
Preferred stock dividend   (769,687 )     (753,145 )
       
NET INCOME (LOSS) AVAILABLE TO
 COMMON SHAREHOLDERS
 $ (10,118 )    $ (477,553 )
       
EARNINGS (LOSS) PER COMMON SHARE:      
Basic  $ (0.00 )    $ (0.03 )
Diluted  $ (0.00 )    $ (0.03 )
WEIGHTED AVERAGE SHARES OUTSTANDING:    
Basic   18,690,030       18,698,030  
Diluted   18,690,030       18,698,030  
   
   
Uniroyal Global Engineered Products, Inc.  
Consolidated Statements of Operations  
(Unaudited)  
         
  Nine Months Ended  
  September 30,
2018
  October 1,
2017
 
         
NET SALES $ 76,775,452   $ 74,334,434  
         
COST OF GOODS SOLD   63,184,044     59,434,030  
         
Gross Profit   13,591,408     14,900,404  
         
OPERATING EXPENSES:        
Selling   3,624,145     3,896,166  
General and administrative   5,194,622     5,294,935  
Research and development   1,260,784     1,454,179  
OPERATING EXPENSES   10,079,551     10,645,280  
         
Operating Income   3,511,857     4,255,124  
         
OTHER EXPENSE:        
Interest and other debt related expense   (1,418,932 )   (1,217,348 )
Other expense   (8,894 )   (108,607 )
Net Other Expense   (1,427,826 )   (1,325,955 )
         
INCOME BEFORE TAX PROVISION   2,084,031     2,929,169  
         
TAX PROVISION (BENEFIT)   (89,670 )   491,099  
         
NET INCOME   2,173,701     2,438,070  
         
Preferred stock dividend   (2,330,250 )   (2,230,381 )
         
NET INCOME (LOSS) AVAILABLE TO
 COMMON SHAREHOLDERS
$ (156,549 ) $ 207,689  
         
EARNINGS (LOSS) PER COMMON SHARE:        
Basic $ (0.01 ) $ 0.01  
Diluted $ (0.01 ) $ 0.01  
WEIGHTED AVERAGE SHARES OUTSTANDING:        
Basic   18,690,030     18,708,427  
Diluted   18,690,030     18,794,087