Bell Industries, Inc. (AMEX:BI) today reported improved net income
on lower revenues for the three and six months ended June 30, 2005.
For the 2005 second quarter, net income rose 15 percent to
$948,000, equal to $0.11 per diluted share, from $827,000, or $0.10
per diluted share, a year ago. Consolidated net revenues for the
quarter amounted to $37.4 million, compared with $43.8 million last
year. Net income for the year-to-date period more than doubled to
$271,000, or $0.03 per diluted share, from $128,000, or $0.02 per
diluted share, for the first half of 2004. Consolidated net
revenues totaled $66.0 million for the current six-month period,
down from $78.2 million a year earlier. "We are encouraged that our
efforts to focus on higher margin business while managing operating
costs resulted in improved profitability for the company, despite
lower revenues," said Russell A. Doll, acting president and chief
executive officer. For the 2005 second quarter, Bell's largest
operating unit, the Tech.logix Group (BTL), experienced a reduction
in product sales, posting revenues of $21.4 million, down from
$27.0 million in the year-ago second quarter. While services
revenues were slightly lower than the prior-year period, product
revenues declined by $5.6 million, principally reflecting one
significant product deployment in the prior-year period that was
not repeated this quarter. Additionally, product sales continue to
experience significant market pressure due to direct sales models,
intense price competition and extended technology purchasing
cycles. Despite lower overall revenues at BTL, operating income for
the division increased more than four-fold to $307,000 for the
second quarter of 2005 from $75,000 a year earlier. "BTL's
profitability was improved from the prior year as a result of an
increase in reverse logistics and depot repair business and
stronger margins from our education account base," Doll said. "As
one of only a few companies designated as a Microsoft Education
Large Account Reseller, BTL continues to experience strength in the
academic sector." Most recently, BTL was awarded the renewal of the
Maryland Education Enterprise Consortium (MEEC) Microsoft License
contract for three years, plus two one-year option terms, extending
through July 31, 2010. The MEEC consortium was formed by the State
of Maryland to facilitate licensing on a more cost effective basis
for all academic institutions statewide, including public library
systems, public museums and teaching hospitals. Based on an
anticipated full-time faculty and staff count of 200,000, the
company said the value of the contract is estimated at
approximately $5 million per year. BTL has provided services to
MEEC under a Microsoft Enterprise License since 1999. Doll said
that following the recent announcement by BTL's largest customer,
Phillip Morris USA, that it will be transitioning certain
outsourcing services and product sales to another vendor, Bell
intends to aggressively realign its cost structure in response to
this development, while continuing its focus on depot repair,
reverse logistics and wireless support services. He said details
have not yet been communicated to the company, but the transition
is expected to begin on or before the contract termination date of
April 2006. Revenues of Bell's Recreational Products Group (RPG) in
the second quarter were impacted by Midwest weather that resulted
in a delay to the start of the spring selling season. For the most
recent second quarter, RPG posted revenues of $13.9 million,
compared with $14.7 million a year ago. Operating income totaled
$834,000 for the 2005 second quarter, compared with $1.0 million in
the same quarter last year. J.W. Miller, Bell's electronic
components operation, recorded a 10 percent increase in operating
income during the most recent second quarter to $510,000 from
$464,000 a year ago, on approximately the same revenues for both
periods, $2.1 million. Although revenues were consistent within
both periods, increased sales of custom products and better vendor
pricing resulted in a higher overall gross margin during the 2005
period. Bell continues to maintain a strong balance sheet with no
bank debt. At June 30, 2005, cash and cash equivalents totaled $8.6
million, and net working capital amounted to $19.3 million,
compared with $8.0 million and $18.7 million, respectively, at June
30, 2004. Shareholders' equity totaled $21.1 million, or $2.50 per
share, at June 30, 2005. Bell's primary business, the Tech.logix
Group, offers a comprehensive portfolio of technology products and
managed lifecycle services, including planning, product sourcing,
deployment and disposal, and support services. Support services
include help desk support, desk side support, technical maintenance
services, and reverse logistics and depot services. Bell also
distributes after-market parts and accessories to the recreational
vehicle market and manufactures and sells standard and custom
magnetic components used in electronic applications for computer,
medical, lighting and telecommunication equipment. Certain matters
discussed in this news release are forward looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from current trends. These include, but are not
limited to, the impact of the announced Philip Morris USA
engagement transition and anticipated realignment of the company's
cost structure, continued growth in the academic sector, potential
opportunities resulting from new engagements and strengthened
business development activities by BTL, and other factors described
in the company's public filings from time to time. -0- *T Bell
Industries, Inc. Consolidated Operating Results (In thousands,
except per share data) (Unaudited) Three months ended Six months
ended June 30 June 30 2005 2004 2005 2004
----------------------------------------------------------------------
Net revenues Products $29,896 $36,250 $51,380 $62,345 Services
7,462 7,568 14,666 15,901 ------- ------- ------- ------- 37,358
43,818 66,046 78,246 ------- ------- ------- ------- Costs and
expenses Cost of products sold 23,374 29,973 40,248 51,388 Cost of
services provided 5,835 6,000 11,847 12,732 Selling and
administrative 7,207 7,012 13,723 14,022 Interest, net (36) (38)
(88) (68) ------- ------- ------- ------- 36,380 42,947 65,730
78,074 ------- ------- ------- ------- Income before income taxes
978 871 316 172 Income tax expense 30 44 45 44 ------- -------
------- ------- Net income $ 948 $ 827 $ 271 $ 128 ======= =======
======= ======= Basic and diluted share data Net income Basic $ .11
$ .10 $ .03 $ .02 ======= ======= ======= ======= Diluted $ .11 $
.10 $ .03 $ .02 ======= ======= ======= ======= Weighted average
common stock Basic 8,460 8,375 8,457 8,373 ======= ======= =======
======= Diluted 8,493 8,475 8,513 8,467 ======= ======= =======
=======
----------------------------------------------------------------------
OPERATING RESULTS BY BUSINESS SEGMENT Net revenues Technology
Solutions Products $13,895 $19,459 $22,123 $31,901 Services 7,462
7,568 14,666 15,901 ------- ------- ------- ------- 21,357 27,027
36,789 47,802 Recreational Products 13,920 14,651 25,311 26,171
Electronic Components 2,081 2,140 3,946 4,273 ------- -------
------- ------- $37,358 $43,818 $66,046 $78,246 ======= =======
======= ======= Operating income (loss) Technology Solutions $ 307
$ 75 $ (460) $ (488) Recreational Products 834 1,002 1,052 1,108
Electronic Components 510 464 935 902 Corporate costs (709) (708)
(1,299) (1,418) ------- ------- ------- ------- 942 833 228 104
Interest, net 36 38 88 68 Income tax expense (30) (44) (45) (44)
------- ------- ------- ------- Net income $ 948 $ 827 $ 271 $ 128
======= ======= ======= ======= Bell Industries, Inc. Consolidated
Condensed Balance Sheet (In thousands) (Unaudited) June 30,
December 2005 31, 2004
----------------------------------------------------------------------
ASSETS Current assets Cash and cash equivalents $ 8,642 $10,801
Accounts receivable, net 19,254 11,455 Inventories 10,920 14,364
Prepaid expenses and other 2,247 1,813 ------- ------- Total
current assets 41,063 38,433 ------- ------- Fixed assets, net
3,314 3,139 Other assets 3,438 3,617 ------- ------- $47,815
$45,189 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $13,949 $11,170 Accrued
payroll and liabilities 7,794 8,178 ------- ------- Total current
liabilities 21,743 19,348 ------- ------- Long-term liabilities
4,930 5,025 Shareholders' equity 21,142 20,816 ------- -------
$47,815 $45,189 ======= ======= *T
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