DSUP Dayton Superior Corp (MM)

Dayton Superior Corporation (NASDAQ: �DSUP�), the leading North American provider of specialized products for the non-residential concrete construction market, reported today its highest fourth quarter and full year income from operations. The following results for its fourth quarter ended December 31, 2007, are compared with results for the similar period of 2006: Net sales were $116 million, equal to 2006. Income from operations was $11 million compared to $3 million in 2006, reflecting gains in product sales gross profit, as favorable pricing and ongoing cost improvement programs continued to expand margins; Net loss of $3 million, or $0.18 per share, improved from net loss of $10 million, or $0.91 per share. The net loss includes $2 million, or $0.12 per share, of non-recurring items. Eric R. Zimmerman, Dayton Superior�s President and Chief Executive Officer, said, �Our operating performance improvement trends that began in 2006 are evident in our fourth quarter and full year results. Considering that the construction industry experienced challenges through most of the year, and that non-residential construction activity was flat to down, these results validate the work of the Dayton Superior team to improve our processes, customer service, and operating results.� For the quarter, product sales of Dayton Superior�s concrete construction related products increased 1% to $89 million, stemming both from higher selling prices and higher unit volume. Equipment rental revenues decreased 16% to $15 million, while the revenues from sales of used rental equipment increased 12% to $11 million. Gross profit on product sales was $22 million, or 25% of product sales, a 400 basis point improvement over the fourth quarter of 2006, as the Company�s cost saving initiatives continued to outpace inflation. Rental gross profit was $7 million, or 47% of rental revenue, compared with $8 million, or 43% of rental revenue, in the fourth quarter of 2006. Fourth quarter gross profit as a percent of sales of used rental equipment increased to 85% from 78% in last year's fourth quarter. Selling, general, and administrative expenses at $27 million and 23% of sales were down from $31 million and 27% of sales in 2006 due to lower consulting fees and stock compensation expense. Other expenses of $2 million in the fourth quarter related to terminated merger discussions. The following results for all of 2007, are compared with results for the similar period of 2006: Net sales were $483 million, compared to $479 million for 2006. Income from operations was $42 million compared to $33 million in 2006, reflecting gains in product sales gross profit, as favorable pricing and ongoing cost improvement programs continued to expand margins; Net loss of $7 million, or $0.37 per share, improved from net loss of $18 million, or $1.76 per share, despite $2 million, or $0.12 per share, of non-recurring items. Dayton Superior is proceeding with the previously reported refinancing of its revolving credit facility and 10-3/4% Senior Second Secured Notes, and expects to close this refinancing in the first quarter of 2008. "The annual and quarterly improvement trends in gross margins validate our strategy and our direction. Gross margin, less SG&A, showed a 40% improvement for the year. In short, 2007 was a very solid operating year for Dayton Superior. We expect our regionalization, new product development, and manufacturing initiatives to continue to lead improved operating results as we focus on those activities that are closest to our customers. As 2008 unfolds, Dayton Superior is positioned well and looking forward to another record year," Zimmerman said. Dayton Superior has determined that it overstated Deferred Income Taxes in 2004 by approximately $11 million and, as a result, had reflected higher liabilities and higher Shareholders� Deficit in periods from 2004 and subsequent by that amount. The overstatement resulted from failing to reduce the tax valuation allowance for accelerated depreciation that will reverse within net operating loss carry forward periods. As a result, Dayton Superior restated financial statements subsequent to December 31, 2004 to reflect lower total liabilities and lower shareholders� deficit�by approximately $11 million. The restatement has been reflected in the summary balance sheet attached to this release. The restatement does not affect Dayton Superior�s consolidated statement of operations for any period subsequent to 2004. The Company has scheduled a conference call at 11:00 a.m. ET, Friday, February 15, 2008 to discuss the fourth quarter and full year 2007 results. The conference call can be accessed by dialing 1-800-226-0630 and entering ID#33887790 at least ten minutes before the start of the call. A replay of the call will be available from 2:00 p.m. ET on Friday, February 15, 2008 through 11:59 p.m. EDT on Monday, February 25, 2008 by calling 1-800-642-1687 or 1-706-645-9291 and entering ID#33887790. Dayton Superior is the leading North American provider of specialized products consumed in non-residential, concrete construction, and we are the largest concrete forming and shoring rental company serving the domestic, non-residential construction market. Our products can be found on construction sites nationwide and are used in non-residential construction projects, including: infrastructure projects, such as highways, bridges, airports, power plants and water management projects; institutional projects, such as schools, stadiums, hospitals and government buildings; and commercial projects, such as retail stores, offices and recreational, distribution and manufacturing facilities. Note: Certain statements made herein concerning anticipated future performance are forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation): depressed or fluctuating market conditions for our products and services; operating restrictions imposed by our existing debt; increased raw material costs and operating expenses; our ability to increase manufacturing efficiency, leverage our purchasing power and broaden our distribution network; the competitive nature of our industry in general, as well as our specific market areas; changes in prevailing interest rates and the availability of and terms of financing to fund the anticipated growth of our business. This list of factors is not intended to be exhaustive, and additional information concerning relevant risk factors can be found in Dayton Superior�s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and current Reports on Form 8-K filed with the Securities and Exchange Commission. Dayton Superior Corporation Summary Income Statement, Unaudited (amounts in thousands, except per share amounts) � For the fiscal quarter ended: December 31, 2007 � December 31, 2006 Amount � % of Sales Amount � % of Sales � Product Sales $ 88,727 76.7 % $ 87,565 75.4 % Rental Revenue 15,460 13.4 % 18,341 15.8 % Used Rental Equipment Sales 11,410 9.9 % 10,217 8.8 % Net Sales 115,597 100.0 % 116,123 100.0 % � Product Cost of Sales 66,786 75.3 % 69,359 79.2 % Rental Cost of Sales 8,166 52.8 % 10,515 57.3 % Used Rental Equipment Cost of Sales 1,737 15.2 % 2,271 22.2 % Cost of Sales 76,689 66.3 % 82,145 70.7 % Product Gross Profit 21,941 24.7 % 18,206 20.8 % Rental Gross Profit 7,294 47.2 % 7,826 42.7 % Used Rental Equipment Gross Profit 9,673 84.8 % 7,946 77.8 % Gross Profit 38,908 33.7 % 33,978 29.3 % � Selling, General & Administrative (SG&A) 27,045 23.4 % 30,805 26.6 % Gross Profit Less SG&A(1) 11,863 10.3 % 3,173 2.7 % � Facility Closing and Severance Expenses 1,162 1.0 % 50 --- (Gain) Loss on Disposals of Property, Plant, and Equipment 82 0.1 % 271 0.2 % Income from Operations 10,619 9.2 % 2,852 2.5 % � Interest Expense, net 11,757 10.2 % 12,556 10.8 % Other Expense 2,181 1.9 % 447 0.4 % Income (Loss) Before Income Taxes (3,319 ) (2.9 %) (10,151 ) (8.7 %) Provision for Income Taxes (17 ) --- � (65 ) (0.1 %) Net Income (Loss) $ (3,302 ) (2.9 %) $ (10,086 ) (8.6 %) � Weighted Average Shares Outstanding 18,314 11,124 Basic and Diluted Net Income (Loss) Per Share $ (0.18 ) $ (0.91 ) � � Rental Depreciation $ 4,478 $ 4,929 Other Depreciation 2,224 2,016 Total Depreciation $ 6,702 $ 6,945 Rental Gross Profit Without Depreciation 11,772 76.1 % 12,755 69.5 % � (1) Gross Profit Less SG&A is�calculated and�reconciled to Gross Profit ($38,908 and $33,978, respectively,�for the three months ended December 31, 2007 and�December 31, 2006) by subtracting SG&A expenses ($27,045 and $30,805, respectively, for the three months ended December 31, 2007 and December 31, 2006) from Gross Profit. Dayton Superior Corporation Summary Income Statement, Unaudited (amounts in thousands, except per share amounts) � � For the year ended: December 31, 2007 � December 31, 2006 Amount � % of Sales Amount � % of Sales � Product Sales $ 398,404 82.4 % $ 388,100 81.0 % Rental Revenue 59,671 12.4 % 62,769 13.1 % Used Rental Equipment Sales 24,883 5.2 % 28,441 5.9 % Net Sales 482,958 100.0 % 479,310 100.0 % � Product Cost of Sales 292,946 73.5 % 296,351 76.4 % Rental Cost of Sales 33,295 55.8 % 36,845 58.7 % Used Rental Equipment Cost of Sales 4,951 19.9 % 7,706 27.1 % Cost of Sales 331,192 68.6 % 340,902 71.1 % � Product Gross Profit 105,458 26.5 % 91,749 23.6 % Rental Gross Profit 26,376 44.2 % 25,924 41.3 % Used Rental Equipment Gross Profit 19,932 80.1 % 20,735 72.9 % Gross Profit 151,766 31.4 % 138,408 28.9 % � Selling, General & Administrative (SG&A) 106,882 22.1 % 106,453 22.2 % Gross Profit Less SG&A(1) 44,884 9.3 % 31,955 6.7 % � Facility Closing and Severance Expenses 1,753 0.4 % 423 0.1 % (Gain) Loss on Disposals of Property, Plant, and Equipment 560 0.1 % (1,504 ) (0.3 %) Income from Operations 42,571 8.8 % 33,036 6.9 % � Interest Expense, net 46,526 9.6 % 50,096 10.5 % Other Expense 2,300 0.5 % 555 0.1 % Income (Loss) Before Income Taxes (6,255 ) (1.3 %) (17,615 ) (3.7 %) Provision for Income Taxes 437 0.1 % 394 0.1 % Net Income (Loss) $ (6,692 ) (1.4 %) $ (18,009 ) (3.8 %) � Weighted Average Shares Outstanding 18,284 10,225 Basic and Diluted Net Income (Loss) Per Share $ (0.37 ) $ (1.76 ) � Rental Depreciation $ 16,623 $ 19,156 Other Depreciation 8,561 6,763 Total Depreciation $ 25,184 $ 25,919 Rental Gross Profit Without Depreciation 42,999 72.1 % 45,080 71.8 % � (1) Gross Profit Less SG&A is�calculated and�reconciled to Gross Profit ($151,766 and $138,408 respectively,�for the fiscal year ended December 31, 2007 and�December 31, 2006) by subtracting SG&A expenses ($106,882 and $106,453, respectively, for the fiscal year ended December 31, 2007 and December 31, 2006) from Gross Profit. Dayton Superior Corporation Summary Balance Sheet, Unaudited (in thousands) � As of: December 31, 2007 � Restated December 31, 2006 Summary Balance Sheet: Cash $ 3,381 $ 26,813 Accounts Receivable, Net 68,593 71,548 Inventories 66,740 58,396 Other Current Assets � 6,458 � � 6,230 � Total Current Assets 145,172 162,987 � Rental Equipment, Net 67,640 63,766 Property & Equipment, Net 56,812 45,697 Goodwill & Other Assets � 47,629 � � 49,188 � Total Assets $ 317,253 � $ 321,638 � � Revolving Credit Facility $ - $ - Current Portion of Long-Term Debt 172,597 2,551 Accounts Payable 39,204 40,883 Other Current Liabilities � 34,933 � � 38,195 � Total Current Liabilities 246,734 81,629 � Other Long-Term Debt 152,000 319,899 Other Long-Term Liabilities � 8,162 � � 10,332 � Total Liabilities � 406,896 � � 411,860 � Stockholders� Deficit � (89,643 ) � (90,222 ) Total Liabilities & Stockholders� Deficit � $ 317,253 � $ 321,638 � Dayton Superior Corporation Summary Cash Flow Statement, Unaudited (in thousands) � For the year ended: December 31, 2007 � December 31, 2006 � Net Loss $ (6,692 ) $ (18,009 ) Non-Cash Adjustments to Net Loss 14,638 10,772 Changes in Assets and Liabilities � (9,121 ) � 10,987 � Net Cash Used in Operating Activities � (1,175 ) � 3,750 � � Property, Plant and Equipment Additions, Net � (19,905 ) (13,216 ) Rental Equipment Additions, Net � (1,515 ) � 1,997 � Net Cash Used in Investing Activities � (21,420 ) � (11,219 ) � Net Repayments Under Revolving Credit Facility � - (48,700 ) Repayments of Other Long-Term Debt (2,318 ) (2,880 ) Financing Costs Incurred (712 ) (1,272 ) Issuance of Shares of Common Stock 791 87,009 Net Change in Loans to Stockholders � 1,183 � � 180 � Net Cash Provided By Financing Activities � (1,056 ) � 34,337 � � Other, Net � 219 � � (55 ) Net Increase (Decrease) in Cash $ (23,432 ) $ 26,813 � Dayton Superior Corporation EBITDA and Reconciliation to Net Income (Loss), Unaudited (in thousands) � For the three months ended: For the year ended: Dec. 31, 2007 � Dec. 31, 2006 Dec. 31, 2007 � Dec. 31, 2006 � Net Income (Loss) $ (3,302 ) $ (10,086 ) $ (6,692 ) $ (18,009 ) Provision for Income Taxes (17 ) (65 ) 437 394 Interest Expense 12,023 12,619 47,019 49,983 Interest Income (266 ) (63 ) (493 ) 113 Depreciation Expense 6,702 6,945 25,184 25,919 Amortization of Intangibles � 114 � � � 75 � � � 247 � � � 560 � EBITDA $ 15,254 � � $ 9,425 � � $ 65,702 � � $ 58,960 � � EBITDA was reduced (increased) by the following items: (Gain) Loss on Disposals of Property, Plant and Equipment 82 271 560 (1,504 ) Facility Closing and Severance Expenses 1,162 50 1,753 423 Stock Compensation Expense 717 1,596 2,779 2,249 Other Expense 2,156 447 2,265 555 EBITDA, a metric used by management to measure operating performance, is defined as earnings (loss) before interest expense, interest income, income taxes, depreciation and amortization of intangibles. Dayton Superior presents EBITDA because our management believes that EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry, some of which present EBITDA when reporting their results. Dayton Superior's management regularly evaluates our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. Dayton Superior believes EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation, amortization and income taxes, which often vary from company-to-company. In addition, Dayton Superior uses EBITDA in evaluating acquisition targets. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income, operating income or any other performance measures derived in accordance with GAAP. Since not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies.