Automodular Corporation

Automodular Corporation

August 07, 2009 08:58 ET

Automodular Corporation: Second Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - Aug. 7, 2009) - Automodular Corporation ("Automodular" or "the Company")(TSX:AM) reports net earnings of $1.6 million or $0.06 per share for the six months ended June 30, 2009 compared to $1.5 million or $0.06 per share in the same period in 2008. Net earnings for the quarter ended June 30, 2009 were $2.6 million or $0.10 per share compared to $1.6 million or $0.06 per share in the same period in 2008.

Second quarter revenues include an accrual of a contract termination fee in the amount of $4.4 million due from GM as a result of the cessation of production at GM's Oshawa Truck Plant in May. Associated with this event Automodular has also expensed $1.6 million in exit costs in the current quarter ($3.0 million year-to-date) related to the idling of its Montecorte facility. It is anticipated additional future exit costs will continue to be incurred and expensed until the end of the facility lease in November, 2011. The contract termination fee is expected to approximate all exit costs incurred to date and those yet to be incurred.

Current quarter and year-to-date earnings are impacted by the accounting for the aforementioned contract termination fee and exit costs, as well as lower production levels in both quarters of 2009 when assembly operations were idled for several weeks.

The results for the first half of the year are summarized below (all figures in '000s except per share):

Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2009 2008 2009 2008
-------- -------- -------- --------

Sales $ 24,103 $ 25,013 $ 37,345 $ 45,823
Net earnings $ 2,577 $ 1,638 $ 1,605 $ 1,461
Earnings per share(i) $ 0.10 $ 0.06 $ 0.06 $ 0.06
Shares outstanding(i) 25,412 22,751 25,412 25,751
(i) (basic and fully diluted)

Automodular was not adversely impacted by the Chapter 11 filing by General Motors Corporation in the United States. The automotive industry has changed substantially over this past year and it is not clear at this point in time the impact that these and upcoming changes will have on Automodular.

During the first quarter, the Chevrolet Camaro was launched in Oshawa. Demand for this vehicle is strong, with several overtime shifts currently scheduled.

In our Oakville operations, the Lincoln MKT launched at the beginning of the third quarter. We are also seeing a reduction in the number of production downweeks that were previously scheduled for the balance of the year.

While Automodular sees some improvement in volumes upcoming we continue to focus on reducing costs, conserving cash and managing our balance sheet. We have limited ability to borrow funds in the credit markets and continue to decline customer quotes that require large capital requirements or significant volume risk and are looking for customers to fund substantial scope changes by providing up front financing or facilitating direct payment of capital costs.

Automodular Corporation is a supplier of sub-assembly, sequencing, transportation and logistics services to three Original Equipment Manufacturer plants in Ontario and Ohio. The Company has four operating facilities and employs over 600 people.

This press release contains forward-looking statements that involve a number of risks and uncertainties. Specific forward-looking statements in the document include those relating to facility costs yet to be incurred relating to the Company's Montecorte facility, the impact of the financial restructuring of North American OEMs and resultant changes to the automotive industry on Automodular, expected volumes and demand for vehicles that we provide services for in Oakville and Oshawa. Among the important factors that could cause actual results to differ materially from those indicated above are market and general economic conditions and the risk factors detailed from time to time in the Company's periodic reports filed with the Canadian securities regulatory authorities and on SEDAR at Readers are cautioned not to rely on forward-looking statements. Except as required under continuous disclosure obligations, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Effective fourth quarter of 2008, Automodular will no longer provide a financial outlook.

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