NEW HAVEN, CT — Transpro has reported results for the second quarter and six months, which ended June 30. On July 27 the company announced that it was reviewing the accounting associated with the revenue recognition impact of shipping terms to certain customers near quarters’ end.
The completed review identified $1.3 million of net sales and $0.2 million of corresponding profit that had been previously recognized when shipped in the first quarter of 2004 rather than when received by the customer in the second quarter of 2004. As a result, although the company said it intends to restate its results for the three-month period, which ended on March 31. There is no impact on the financial results for the six-month period, which ended on June 30. The company has determined that the impact of this issue on other prior periods was not material and that no changes are required with respect to the financial statements for other prior periods. The company plans to file an amended Form 10-Q for the first quarter of 2004 not later than August 20.
For the second quarter of 2004, net sales increased 23.9 percent to $72.2 million, including the sales adjustment noted above, compared to $58.3 million in the second quarter of 2003.
Consolidated gross margin for the second quarter of 2004 was $12.7 million or 17.6 percent of net sales, an improvement over gross margins of $9 million, or 15.4 percent of net sales in the prior year period. The improvements in gross margins reflect the benefits of higher net sales and the company’s cost reduction efforts in both the automotive and light truck and heavy duty segments.
Selling, general and administrative (SG&A) expenses for the 2004 second quarter were $10.9 million, or 15.1 percent of sales, compared to $9.7 million, or 16.6 percent of sales in the year-ago period, reflecting the company’s ability to leverage its current SG&A infrastructure to support higher sales levels along with reduced operating costs.
For the second quarter of 2004, the company reported operating income of $1.7 million, compared to an operating loss in the year ago period of $1.2 million. The operating loss in the year ago period included $0.5 million in restructuring and special charges.
The company reported net income of $0.8 million or 11 cents per diluted share for the second quarter of 2004, compared to a net loss of $0.6 million, or 9 cents per diluted share, in the year ago period.
For the six months, which ended on June 30, 2004, net sales increased 19 percent to $132.1 million, compared to $111 million for the same period in 2003. Operating income for the first half of 2004 was $1.9 million, compared to an operating loss of $5.1 million in the same period a year ago, which included $1 million of restructuring charges. Transpro’s net income for the 2004 six-month period was $0.2 million, or 2 cents per diluted share, compared to a net loss of $4.9 million, or 70 cents per diluted share, for the six months, which ended on June 30, 2003.
Transpro President and CEO Charley Johnson commented, “Given reasonable ongoing market conditions, we continue to expect to generate a net profit in 2004. It is fair to say we have been tempered by the lessons learned in 2003, and recognize that challenges remain for this year, including rising raw material costs, high fuel costs, the softness we see in the market for our Temperature Control products, rising interest rates and a pricing environment that remains highly competitive. While all these factors call for caution, Transpro’s favorable performance so far this year is most encouraging and speaks well of our continued commitment to our ‘Five Strategic Corporate Values’. Going forward, we remain committed to posturing Transpro to meet the challenges of our changing markets.”
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