Cordant Technologies Reports Annual Earnings; Income and Earnings Per Share Increase 47 Percent
SALT LAKE CITY -- Cordant Technologies Inc. reported net income of $142 million or $3.79 per share for the year ended December 31, 1998. The prior year's net income included an extraordinary charge of $7.1 million or $.19 per share, net of income taxes and minority interest, related to Howmet's debt refinancing. Excluding the extraordinary item, income and earnings per share increased 47 percent over the $96.6 million or $2.57 per share reported in 1997. James R. Wilson, Chairman and Chief Executive Officer, commented, "Substantial increases in operating earnings in all business segments resulted in record earnings per share in calendar 1998. Equally important, each business strategically strengthened its competitive position with aggressive improvements in quality, on-time delivery and cost reductions. Significant new customer alliances and product introductions during the year along with these operational improvements provide the basis for a strong 1999. "We remain comfortable with the 1999 and 2000 consensus earnings per share estimates,'' Mr. Wilson continued. "The strength of our industrial markets, combined with improving operating margins in all business segments, should offset the commercial aerospace downturn as well as a slight increase in our effective tax rate. "This expected performance is prior to the accretion in earnings per share resulting from the increased ownership in Howmet International,'' said Mr. Wilson. On February 8, 1999, Cordant announced that its ownership in Howmet was raised from 62 percent to 84.7 percent through the cash purchase of Howmet shares held by the Carlyle Group.
Propulsion Systems Operating Income Up 27 Percent Thiokol Propulsion's sales for the year were flat compared to last year. Higher Space Shuttle Reusable Solid Rocket Motor (RSRM), Missile Defense and Trident program sales were offset by lower sales in the demilitarization and Japanese Technology Transfer programs. Propulsion systems operating income increased 27 percent from the prior year, primarily from significantly higher commercial launch motor and RSRM margins. Operating margins increased from 10 percent in 1997 to 12.8 percent in 1998.
Fastening Systems Operating Income Up 61 Percent Huck's fastening systems sales and operating income for the year were higher than last year, reflecting the Jacobson Manufacturing acquisition during the year and continued strength in both commercial aircraft and industrial markets. Operating income increased 61 percent over the prior year while operating margins for the year were 15.1 percent, compared to 12.6 percent in the prior year. Operating margins continue to benefit from continuing cost control initiatives and increased revenues. Excluding Jacobson's results, sales and income increased 11 and 36 percent, respectively, over the prior year.
Investment Castings Contribution Up 83 Percent Howmet contributed income, after minority interest and taxes, of $65.6 million or $1.75 per share, an 83 percent increase compared to $35.8 million or $.95 per share for the prior year. Cordant Technologies' 13 percent ownership increase in December 1997 contributed $12.1 million or $.32 per share of the increase. Howmet's sales increased $145.8 million or 12 percent over last year, adjusting for the sale of Howmet's refurbishment business. Howmet's increase in income resulted from the higher revenues and increased operating margins. Also contributing to the income increase were reduced debt levels and lower interest rates, which reduced interest expense by $18.3 million or 59 percent.
Quarterly Income Per Share Up 29 Percent Net income for the quarter ended December 31, 1998, was $29.6 million or $.80 per share. The prior year's net income included an extraordinary charge of $7.1 million, or $.19 per share, net of income taxes and minority interest, related to Howmet's debt refinancing. Excluding the extraordinary item, income increased 26 percent over the $23.5 million reported in 1997. Earnings per share before extraordinary item increased 29 percent over the $.62 reported in 1997. Net income for the current quarter includes Howmet Stock Appreciation Rights (SAR) expense of $2.9 million, or $.08 per share. This expense reversed SAR income for the same amount that was recognized in the third quarter. This reversal was due to the rise in Howmet's stock price to the $15 per share SAR ceiling. Excluding the extraordinary item and SAR expense, income increased 38 percent over the prior year period and earnings per share increased 42 percent. All of the per share discussions above reflect diluted earnings per share as required by Financial Accounting Standards Board statement 128 "Earnings per Share,'' and the two-for-one stock split on March 13, 1998. Cordant Technologies Inc. is a strategically balanced global business. Cordant Technologies' Thiokol Propulsion business is the leading producer of solid propulsion systems and its Huck International subsidiary manufactures high performance industrial and aerospace fastener systems. Cordant Technologies also holds a majority interest in Howmet International Inc., a global manufacturer of aircraft and industrial gas turbine engine components.
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Cordant Technologies Reports Annual Earnings; Income and Earnings Per Share Increase 47 Percent
