Continental Materials Corporation Reports Unaudited First Quarter Results
May 15 2018 - 4:15PM
Continental Materials Corporation (NYSE American:CUO) today
reported a net loss of $6,193,000 or $3.65 per share for its first
quarter ended March 31, 2018 compared to a net loss of $422,000 or
25 cents per share for the same period in 2017. The current year
quarter includes the write-off of $6,934,000 ($5,201,000 net of tax
benefit) of deferred development costs associated with a mining
property for which the Company had applied to the state of Colorado
to obtain mining permits. After the permits were denied by the
Reclamation Mining and Safety Division (DRMS) of the Colorado
Department of Natural Resources in 2016, the Company was invited to
resubmit its request and address concerns raised during the first
application hearing. On April 26, 2018, despite the recommendation
of the DRMS staff to approve the application as submitted, the
permit was denied again by the voting committee members. The
Company has not yet received final written notice of the decision,
but has written-off all related capitalized amounts as of March 31,
2018.
Consolidated sales in the first quarter of 2018 were
$36,873,000, an increase of $2,770,000 or 8.1% compared to the
first three months of 2017. Sales in the Concrete, Aggregates and
Construction Supply (“CACS”) segment increased $1,581,000 as demand
for ready-mix concrete improved over the prior year. Sales in the
Door segment were higher by $427,000. Sales in the Heating and
Cooling and Evaporative Cooling segments increased $557,000 and
$207,000, respectively. Furnace sales in the first quarter of 2018
were higher compared to the first quarter of 2017; however, fan
coil sales and backlog have decreased for the same period
comparison.
The consolidated operating loss in the first quarter of 2018,
before the $6,934,000 write-off of deferred development discussed
above, was $1,259,000 compared to a consolidated operating loss of
$611,000 in the first quarter of 2017. The Door segment reported an
increase of $145,000 in operating profit in the first quarter of
2018 compared to the first quarter of 2017. The Heating and Cooling
segment reported a smaller increase of $6,000 for the same
comparison period. The CACS and Evaporative Cooling segments
reported increased operating losses, $404,000 and $199,000,
respectively, for the current first quarter compared to the prior
year first quarter.
Interest expense in the first quarter of 2018 was $108,000
compared to $66,000 in the first quarter of 2017. The increase from
the prior year quarter is attributable to higher average borrowings
partially offset by lower average interest rates negotiated on the
Company’s revolving line effective in the second quarter of
2017.
The Company’s effective income tax rate reflects federal and
state statutory income tax rates adjusted for non-deductible
expenses, tax credits and other tax items. The estimated effective
income tax rate in the first quarter of 2018 was a benefit of 25.0%
compared to a benefit of 34.0% for the first quarter of 2017. The
decrease in benefit is attributable to the recently enacted Tax Act
which reduced the Company’s Federal Tax Rate from 34.0% to
21.0%.
CAUTIONARY STATEMENT-- Statements in this document that are not
historical facts are forward-looking statements. It is important to
note that the company’s actual results could differ materially from
those projected in such forward-looking statements. Additional
information concerning factors that could cause actual results to
differ materially from those suggested in the forward-looking
statements is contained in the company’s Annual Report on Form 10-K
for the year ended December 30, 2017 filed with the Securities and
Exchange Commission, as the same may be amended from time to time.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. The future results
and shareholder values of the company may differ materially from
those expressed in these forward-looking statements. Many of the
factors that will determine these results and values are beyond the
company’s ability to control or predict. Shareholders are cautioned
not to put undue reliance on forward-looking statements. In
addition, the company does not have any intention or obligation to
update forward-looking statements after the date hereof, even if
new information, future events, or other circumstances have made
them incorrect or misleading. For those statements, the company
claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995.
CONTINENTAL MATERIALS CORPORATIONSUMMARY OF SALES
AND EARNINGS
|
|
|
|
|
Three Months Ended |
|
|
March 31, 2018 |
|
April 1, 2017 |
|
|
|
|
|
|
Sales |
$ |
36,873,000 |
|
|
$ |
34,103,000 |
|
|
|
|
|
|
|
Operating loss |
|
(8,193,000 |
) |
|
|
(611,000 |
) |
|
|
|
|
|
|
Interest income |
|
24,000 |
|
|
|
18,000 |
|
|
|
|
|
|
|
Interest expense |
|
(108,000 |
) |
|
|
(66,000 |
) |
|
|
|
|
|
|
Other income, net |
|
19,000 |
|
|
|
20,000 |
|
|
|
|
|
|
|
Loss before income taxes |
|
(8,258,000 |
) |
|
|
(639,000 |
) |
|
|
|
|
|
|
Benefit from income taxes |
|
2,065,000 |
|
|
|
217,000 |
|
|
|
|
|
|
|
Net loss |
|
(6,193,000 |
) |
|
|
(422,000 |
) |
|
|
|
|
|
|
Basic and diluted loss per share |
$ |
(3.65 |
) |
|
$ |
(.25 |
) |
|
|
|
|
|
|
Average shares outstanding |
|
1,696,000 |
|
|
|
1,674,000 |
|
|
|
|
|
|
|
CONTACT:Mark S. Nichter(312) 541-7207
Continental Materials (AMEX:CUO)
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