WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: July 27, 2004
COMPX INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-13905 57-0981653
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 233-1700
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
Item 9: Regulation FD Disclosure
Item 12: Results of Operations and Financial Condition
Pursuant to Items 9 and 12 of this current report, the registrant hereby
furnishes the information set forth in the press release issued on July 27,
2004, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein
by reference.
The information, including the exhibit, the registrant furnishes in this
report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPX INTERNATIONAL INC.
(Registrant)
By: /s/ A. Andrew R. Louis
-------------------------
A. Andrew R. Louis
Secretary
Date: July 27, 2004
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press release dated July 27, 2004 issued by CompX International
Inc.
[LOGO GOES HERE]
PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
CompX International Inc. David A. Bowers
5430 LBJ Freeway, Suite 1700 President & CEO
Dallas, Texas 75240 Tel. 864-286-1122
COMPX REPORTS HIGHER SALES AND PROFITS
FOR SECOND QUARTER 2004
Dallas, TEXAS ... July 27, 2004 ... CompX International Inc. (NYSE: CIX)
announced today sales of $56.7 million for the second quarter of 2004 and net
income of $3.3 million, or $0.22 per diluted share. This represents an increase
in sales of 14% from $49.7 million in the year ago quarter. The Company reported
net income of $300,000 for the comparable 2003 quarter, or $0.02 per diluted
share. Net sales for the six-month period ended June 30, 2004 were $109.9
million compared to $100.7 million for same period of the previous year. Net
income for the six-month period in 2004 was $4.8 million, or $0.32 per diluted
share, compared to $900,000, or $0.06 per diluted share in 2003.
"We benefited this quarter from higher demand across most product segments,"
commented David A. Bowers, President & CEO. "This combined with the benefit of
an improved cost structure, resulting from various operating initiatives over
the last two years, contributed to the improvement in operating income margins."
Security Products Segment
CompX Security Products experienced a 5% increase in net sales in the second
quarter of 2004 to $19.7 million compared to the same quarter last year of $18.8
million. Net sales for this segment increased 3% on a year-to-date basis to
$38.4 million from $37.3 million in 2003 primarily, as a result of increased
sales volumes. Second quarter operating income increased from $2.5 million in
2003 to $2.8 million in 2004. For the year-to-date period, operating income
improved to $5.1 million in 2004 compared to $4.7 million in 2003. The quarter
and year-to-date operating income improvements were primarily due to the
increase in sales volumes which benefited from manufacturing efficiencies as a
result of earlier cost reductions.
Waterloo Segment
Net sales for the Waterloo segment increased 16% to $26.5 million in the second
quarter of 2004 from $22.9 million in the second quarter in 2003 and increased
10% for the six-month period from $46.7 million in 2003 to $51.2 million in
2004. The increase is primarily related to higher precision slide product
volumes at certain customers, increases in certain precision slide product
surcharges and prices, primarily to recover the dramatic rise in steel raw
material prices experienced during the year, and the strengthening of the
Canadian dollar in 2004 in relation to the US dollar. Operating income for this
segment was $2.4 million in the second quarter of 2004 as compared to a loss of
$600,000 in the prior year quarter and improved from a loss of $100,000 in the
first six months of 2003 compared to income of $2.7 million in the first six
months of 2004. Operating income improvements are primarily attributable to
improved margins resulting from a lower fixed cost structure in 2004,
non-recurring expenses of approximately $800,000 in the first six months of 2003
($400,000 in the second quarter) associated with the consolidation of the
Company's two Canadian facilities and, to a lesser extent, product pricing.
Relative changes in currency exchange rates negatively impacted year-to-date
operating income comparisons by approximately $800,000 but did not have a
significant impact on the second quarter results.
Thomas Regout Segment
Net sales for the Thomas Regout segment increased 33% to $10.6 million in the
second quarter of 2004 from $7.9 million in the second quarter of 2003. For the
six-month period, net sales increased 21% to $20.2 million as compared to $16.8
million for 2003. The improvement in net sales is due to an increase in orders
from European customers and the strengthening of the euro in 2004 in relation to
the US dollar. The second quarter of 2004 operating income for this segment was
$400,000 compared to an operating loss of $1.0 million in 2003. The 2004
year-to-date operating income for this segment was $500,000, compared to a loss
of $1.9 million for 2003. The improvement in operating income is primarily the
result of the restructuring actions taken in 2003 combined with an increase in
sales. The impact of relative changes in currency exchange rates on operating
income comparisons was not significant for this segment.
Mr. Bowers concluded, "We are encouraged by the improved demand and favorable
results of our cost control initiatives. The commitment and hard work of our
employees over the past two years are a significant factor in the success of
these initiatives. While demand continues to be good across all product
segments, certain customers are seeking lower cost Asian sources as alternatives
to our products. Although we believe the impact of this will be mitigated
through our ongoing initiatives to expand both new products and new market
opportunities, the recent increase in order rates may be moderated to a certain
extent in the near term. We continue to believe the value proposition of our
collaborative innovative design, high quality products and responsive service,
upon which our partners have come to depend, will continue to be valued by our
customer base."
Liquidity and Cash Flow
Cash provided by operating activities improved to $13.7 million for the 2004
six-month period compared to $8.4 million in the prior year. The improvement in
cash provided by operating activities was due to the improved operating results
and the efficient management of working capital. During the first six months of
2004, the Company utilized a portion of its cash balance to reduce debt by
approximately $24.0 million.
CompX is a leading manufacturer of precision ball bearing slides, security
products and ergonomic computer support systems.
Statements in this release relating to matters that are not historical facts are
forward-looking statements based upon management's belief and assumptions using
currently available information. Although CompX believes the expectations
reflected in such forward-looking statements are reasonable, it cannot give any
assurances that these expectations will prove to be correct. Such statements, by
their nature, involve substantial risks and uncertainties that could
significantly impact expected results, and actual future results could differ
materially from those described in such forward-looking statements. While it is
not possible to identify all factors, CompX continues to face many risks and
uncertainties. Among the factors that could cause actual future results to
differ materially include, but are not limited to, general economic and
political conditions, demand for office furniture, service industry employment
levels, competitive products and prices, fluctuations in currency exchange
rates, the introduction of trade barriers, potential difficulties in integrating
completed acquisitions and other risks and uncertainties detailed in CompX's
Securities and Exchange Commission filings. Should one or more of these risks
materialize (or the consequences of such a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ materially
from those forecasted or expected. CompX disclaims any intention or obligation
to publicly update or revise such statements whether as a result of new
information, future events or otherwise.
* * * * *
COMPX INTERNATIONAL INC.
SUMMARY OF CONSOLIDATED OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2003 2004 2003 2004
------------------------ ------------------------
Net sales $ 49.7 $ 56.7 $ 100.7 $ 109.9
Cost of goods sold 41.8 43.5 84.0 86.6
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Gross profit 7.9 13.2 16.7 23.3
Selling, general and administrative 7.1 7.6 14.0 15.0
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Operating income 0.8 5.6 2.7 8.3
Interest expense (0.3) (0.1) (0.6) (0.4)
Other income (expense) - 0.3 (0.5) 0.5
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Income before income taxes 0.5 5.8 1.6 8.4
Income tax expense 0.2 2.5 0.7 3.6
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Net income $ 0.3 $ 3.3 $ 0.9 $ 4.8
======================== =======================
Net income per diluted
common share $ 0.02 $ 0.22 $ 0.06 $ 0.32
======================== =======================
Weighted average diluted common
shares outstanding 15.1 15.2 15.1 15.1
======================== =======================
COMPX INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
December 31, June 30,
2003 2004
----------------- --------------
Assets (Unaudited)
Current assets:
Cash and equivalents $ 21.7 $ 11.6
Accounts receivable, net 25.7 28.7
Inventories 26.3 24.8
Prepaid expenses and other 6.5 3.1
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Total current assets 80.2 68.2
Intangibles 45.3 44.8
Net property and equipment 83.2 74.9
Other assets 0.8 0.9
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Total assets $ 209.5 $ 188.8
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 24.0 $ 23.2
Accrued income taxes and other 0.5 1.6
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Total current liabilities 24.5 24.8
Long-term debt 26.0 2.1
Other non-current liabilities 4.6 4.2
Stockholders' equity 154.4 157.7
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Total liabilities and stockholders' equity $ 209.5 $ 188.8
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