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T.J.T., Inc. Reports Results for Fiscal Year 2010

^{Published on 2010-12-09 03:21:01 - Market Wire}
 

EMMETT, Idaho--([ BUSINESS WIRE ])--T.J.T., Inc. (the Company) (Pink Sheets: AXLE), T.J.T., Inc., a major supplier of axles, tires, and set-up supplies to the manufactured housing industry, announced a net loss of $1,535,000, or $.34 per diluted share, for fiscal year 2010.

Net sales declined 23% in the final quarter of fiscal 2010 as compared to the same quarter in 2009. Net sales declined 19% during the twelve months ended September 30, 2010 compared to fiscal 2009. According to statistics from the Manufactured Housing Institute, shipments in the Companya™s market area during fiscal 2010 are estimated to have declined approximately 11% when compared to 2009. Net sales of axles and tires decreased 34% and 24% in the three and twelve month periods ending September 30, 2010 compared to the same periods in 2009, respectively. Prior to its closing in October 2009, the Arizona facility contributed sales of $25,000 and $368,000 in the three and twelve month periods of 2009, respectively, of which almost all were wholesale sales of unprocessed inventory. The Company has had minimal sales of unprocessed inventory at wholesale prices outside of its market area in 2010. Excluding wholesale sales from 2009, net sales of axles and tires declined 17% in fiscal 2010 compared to 2009. Lower axle and tire net sales in both 2010 periods were a result of lower sales volumes coupled with reduced selling prices in the fourth quarter. Net sales of accessories increased 6% in the fourth quarter of 2010 compared to the same 2009 quarter, but declined 6% during the twelve months of 2010 as compared to fiscal 2009.

Gross margin increased to 7% during the fourth quarter of fiscal 2010 compared to 4% in the same quarter of 2009. The Companya™s gross margin for both twelve month periods in fiscal 2010 and 2009 was 15%. Margins for axles and tires were impacted by lower of cost or market inventory write-downs of $236,000 and $261,000 in the fourth quarters of 2010 and 2009, respectively. Write-downs of $279,000 were recorded in fiscal 2010 compared to $331,000 in fiscal 2009. Excluding write-downs, axle and tire gross margins were 18% and 15% in the three and twelve months ended September 30, 2010, respectively, compared to 7% and 13% in the same periods a year ago.

Accessories and siding gross margin dropped to 21% in the fourth quarter of 2010 compared to 35% in the same quarter a year ago. Accessories gross margin for the twelve months ended September 30, 2010 was 28% compared to 33% in 2009. Inventory write-downs associated with obsolete or slow moving inventory were $81,000 and $145,000 in the three and twelve month periods of 2010, respectively, compared to zero write-downs in the 2009 fourth quarter and $23,000 in the 2009 fiscal year. Excluding inventory write-downs, gross margin in the accessories and siding segment, quarter over quarter and year over year ranged between 33% and 35%.

Consolidated selling, general and administrative (SG&A) expense decreased 19 percent in the final quarter of 2010 compared to the same quarter in 2009. SG&A for fiscal 2010 decreased 25 percent, or $859,000, compared to the same twelve month period in 2009. SG&A declined in both periods as a result of the cost cutting measures implemented by management and included savings associated with closing the Arizona facility. Overall reductions in wages and employee related benefits, rent, insurance, professional fees, and travel were approximately $177,000 and $663,000 in the three and twelve month periods ended September 30, 2010 as compared to the same periods in 2009, respectively.

The Companya™s net loss in the fourth quarter of 2010 was $504,000 compared to a net loss of $858,000 in the final quarter of 2009. The Company reported a net loss of $1,535,000, or $.34 per diluted share, for the year ending September 30, 2010 compared to a net loss of $1,726,000, or $.38 per diluted share in 2009. Higher margins in spite of lower sales volumes along with significant decreases in SG&A contributed to improvements to the net loss in both periods. Impairment losses on investment property held for sale were $65,000 in 2010 compared to $136,000 in 2009. Inventory write-downs and impairment losses totaled $489,000 and $490,000 in fiscal 2010 and 2009, respectively.

Income tax expense incurred in 2010 is a result of a difference in the estimated net operating loss carryback receivable in fiscal 2009 and the actual refund received in April 2010. The Company did not record a tax benefit in 2010 because there are no carryback provisions available. At September 30, 2009, the Company was able to carryback the entire net operating loss and received refunds in 2010 for $580,000. In accordance with current tax regulations, future net operating losses for both federal and state will be carried forward and used to offset future taxable income. Given the market conditions of the manufactured housing industry, the nature and extent of the deferred tax assets, and the Companya™s history of losses, management recorded a valuation allowance equal to the net deferred tax assets. The valuation allowance recorded in fiscal 2009 resulted in tax expense of $385,000 in the final quarter of 2009.

Established in 1977, T.J.T., Inc. is a major provider of recycled axles and tires to the manufactured housing industry. It operates recycling facilities in Idaho, California, and Colorado, and serves 14 western states. In addition to the recycling business, T.J.T. also sells aftermarket products to manufactured housing, recreational vehicle, and residential markets.

This release contains certain forward-looking statements, which are based on managementa™s current expectations including, but not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values, competition, and changes in legislation or regulations, and other economic, competitive, governmental, regulatory, and technological factors affecting the companya™s operations, pricing, products, and services. Any forward-looking statement speaks only as of the date on which the statement is made, and the Company undertakes no obligation to update any forward-looking statement.

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