CHICAGO - Parts supplier Collins & Aikman Corp. on Thursday reported a narrower quarterly net loss as it doubled sales through acquisitions and consolidated operations.
The stock, battered after the company's recapitalization in the second quarter, jumped more than 14 percent in afternoon trading on the New York Stock Exchange.
Collins & Aikman, a maker of instrument panels, plastic trim, fabrics, carpeting and convertible tops has been restructuring under a new management team to integrate a string of acquisitions, including the 2001 purchase of Textron Inc.'s automotive trim unit, TAC-Trim, for $1.2 billion. The acquisition nearly doubled the company's revenue base.
The company shuttered a number of plants in North America and Europe last year, relocating production to lower-cost facilities, and also closed its European headquarters.
"This is a turnaround story," said Richard Hilgert, analyst with Fahnestock & Co., who has a "buy" rating on the stock.
Collins & Aikman, of Troy, Mich., reported a fourth-quarter net loss of $3.1 million, or 4 cents a share, compared with a net loss of $35.6 million, or 72 cents, a year ago.
Excluding restructuring and asset impairment charges, the company posted a profit of $9.9 million, or 12 cents a share, compared with a loss of $23.7 million, or 48 cents.
Charges of $14.1 million in the quarter were primarily for consolidating its European operations, the company said.
"They were slightly to moderately better on the operating level, which is a good sign," said J.P. Morgan analyst David Bradley, who has a "neutral" rating on the stock and does not own shares.
The company said it posted its first operating profit in the fourth quarter, a traditionally weak period due to inventory adjustments and holiday plant closings, since 1999.
"The improvement of operating income is really indicating that we are turning the corner," Bob Krause, who joined Collins & Aikman as its treasurer in September, said in an interview.
He said a new focus on manufacturing efficiencies, with less factory down-time and better quality controls, bolstered the financial performance in the quarter.
The company predicted $30 million in annual profit margin improvements from restructuring actions in the past year.
Bradley, whose firm provides investment banking services to Collins & Aikman, said he wanted to see another quarter of improved results before he would consider raising his future earnings estimates.
"They are taking some small steps in the right direction, but they need to get their European losses under control, and they are not there yet," Bradley said.
Company officials said they were not satisfied with the company's level of profitability in Europe and planned further actions to reduce costs and improve results.
"European performance was the problem child of 2002. It will be the source opportunity for 2003," Jerry Mosingo, Collins & Aikman's new chief executive, said on a conference call.
Collins & Aikman said sales jumped to $963.2 million in the fourth quarter from $482.1 million. Had revenue from acquired businesses been included in the year-ago figures, total sales would have risen 16 percent, the company said.
Collins & Aikman also gave earnings guidance for 2003, excluding charges, of 52 cents to 62 cents a share. It said it was evaluating actions that could result in non-cash charges for impairment of long-held assets during the year.
The company estimated net sales will rise about 1 percent to 2 percent in 2003, with new product launches partly offset by the changeover of a major car program with DaimlerChrysler AG in the second half of the year.
It said it won new business in the past year that will generate more than $800 million in annual sales.
Operating income for 2003 was forecast in the range of $285 million to $300 million, with earnings before interest, tax, depreciation and amortization projected at $410 million to $425 million.
Capital spending was pegged at $145 million to $165 million range for the year.
Collins & Aikman predicted North American light vehicle production would be roughly flat with 2002 at about 16.3 million to 16.5 million units.
Shares of Collins & Aikman climbed 49 cents, or about 14.2 percent, to $3.95 on Thursday afternoon, up from an all-time low of $2 hit last summer. It had traded as high as $28.38 in May.
Private investment firm Heartland Industrial Partners LP of Bloomfield Hills, Mich., owns more than 35 percent of Collins & Aikman's shares.