Thomas Equipment Reveals Q3 Financials
May 24, 2006 — Milwaukee-based Thomas Equipment recently reported financial results for its third quarter 2006 ended March 31, 2005, revealing revenues of $32.9 million compared to revenues $17.0 million for fiscal third quarter 2005 and $36.8 million for fiscal second quarter 2006.
The Thomas division accounted for $20.9 million of the revenues for the quarter, an increase of $8.7 million over the division's year ago quarter, reflecting an increase in sales of hydraulic breakers and forklifts, which was partially offset by a decrease in sales of other Thomas products due to a reassessment of the company's dealer financing program. Since June 2005, the company has not offered its
The company reported net income applicable to common stockholders for the third fiscal quarter of $21.2 million or $1.00 per share on a basic and $(0.08) on a fully diluted basis, versus a net loss of $60.4 million or $(2.96) per share on a basic and fully diluted basis for the prior year third quarter and net income of $2.6 million or $0.12 per share on a basic and $(0.04) on a fully diluted basis for the second quarter 2006. The increase in net income applicable to common stockholders over the prior year third quarter was primarily due to a non cash and unrealized charge, of $56.9 million, related to derivative instruments versus a gain of $27.5 million this quarter.
For the three months ended March 31, 2006, the cost of sales was $29.2 million, which included $20.2 million for Thomas and $9.0 million for Pneutech. As a percentage of sales, cost of sales was 88.9 percent for the three months ended March 31, 2005, compared with 86.7 percent for the quarter ended March 31, 2005 and 88 percent for the prior quarter ended December 31, 2005. This reflects the effect of the lower sales at Thomas on the absorption of manufacturing overheads and the lower-than-normal margins on the sales of hydraulic breakers and forklifts.
Selling, general and administrative expenses were $6.2 million, which included $3.9 million for Thomas and $2.3 million for Pneutech during the quarter compared with $3.8 million for the quarter ended March 31, 2005 and $6 million for the prior quarter ended December 31, 2005. As a percentage of sales, selling, general and administrative expenses were 18.8 percent for the three months ended March 31, 2006, compared with 22.0 percent for the three months ended March 31, 2005. The decrease is primarily a result of a reduction in professional fees related to our prior SEC registration statement filings and organizational start up costs.
Net financial expense for the quarter ended March 31, 2006 was $3.5 million, which consisted mainly of interest on credit facilities, convertible credit facilities and capital leases of $2.0 million, accretion of debt premiums on Laurus borrowings of $696,000, amortization of deferred financing fees of $580,000 and dividends on a subsidiary's preferred stock of $173,000. Net financial expense for the quarter ended March 31, 2005 was $1.4 million, which consisted mainly of interest on credit facilities, convertible credit facilities and capital leases of $938,000, accretion of debt premiums on Laurus borrowings of $177,000, amortization of deferred financing fees of $63,000, and dividends on a subsidiary's preferred stock of $161,000. Derivative instruments income for the quarter ended March 31, 2006 was $27.5 million compared with an expense of $56.9 million for the quarter ended March 31, 2005, representing the net unrealized (non-cash) change during the quarter in the fair value of our derivative instrument liabilities related to certain options, warrants, and embedded derivatives in our debt instruments that have been bifurcated and accounted for separately.
Cash and equivalents on March 31, 2006 were $1.5 million. Accounts receivable at quarter end totaled $45.6 million and inventory levels were at $32.9 million. On May 15, 2006, the company closed on a $15 million financing. Total obligations at quarter end totaled $145 million, compared to $163 million at fiscal year end, June 30, 2005. Derivative financial instruments continue to represent the largest line item totaling $58 million in the most recent quarter.
"This quarter the two businesses we merged together last year, Thomas and Pneutech, operated in unison, providing us the opportunity to proceed with the acquisition of complimentary companies to increase and enhance our product offering enabling us to leverage both our 385 dealer network and the 450 dealer network of our Asian OEM partner,” said Clifford Rhee, CEO of Thomas. “Our backlog continues to be substantial and currently stands at $50 million of orders for the Thomas Equipment business segment and an additional $15 million backlog for the Pneutech business segment. During the quarter, and with the help of our new Chief Operating Officer, James E. Patty, we expect to improve on operational processes and procedures. We are poised to deliver a banner year for Thomas driven by our next generation skid steer line and the dramatic increase in our dealer network as we provide private label products for our Asian strategic partners."
