賽默飛世爾科技 (TMO) 2001 Q1 法說會逐字稿

This is Bill Rainville, President and CEO of Thermo Fibertek. Thank you for calling the Thermo Fibertek business update. I am pleased to report that we met all our financial goals for the first quarter of 2001, which I outlined in my last business update. Revenues for the quarter were 58.9 million dollars, two percent higher than last year's revenues, 57.9 million dollars. These reported revenues include the effect of the stronger U.S. dollar, which resulted in a two million dollar reduction in revenues in the first quarter of 2001 compared to the first quarter of 2000. Offsetting this partially was a small net increase of three hundred thousand dollars from acquisitions and dispositions that affected both periods. Excluding both of these affects to obtain a more accurate comparison between the two periods, our internally generated revenue growth would have been five percent in the first quarter of 2001 versus the prior year. I am very encouraged that we met our revenue goals in a rapidly expanding fiber-based composites business. We recorded composites revenues of slightly over nine hundred thousand dollars in the first quarter of 2001. I'll talk a lot more about our composites business in a few moments. Also in line with our plan, we reported basic and diluted earnings per share of five cents in the first quarter of 2001 compared to four cents last year excluding the cumulative effect of adapting SAB101 in the 2000 quarter, basic and diluted EPS would have been five cents and six cents in 2001 and 2000 periods respectively. The first quarter of 2001 saw another quarter of solids EBIDA performance. Earnings before interest, taxes, depreciation, and amortization in the first quarter was 7.4 million

dollars or 12.6% of revenues. On a reoccurring basis, first quarter of 2001 EBIDA was up slightly on a sequential basis and down slightly from last year's level of eight million dollars. Our EBIDA margins this quarter continued to be adversely affected by significant start up expansions in our composites business as we put in place the infrastructure for more rapid growth. Already strong balance sheet continued to improve in the first quarter. Cash flow from operations increased by 2.5 million dollars in the first quarter of 2001 compared to last year helping us to end the quarter with total cash and cash equipments of 156.5 million dollars. Even more important than our cash position is our net debt position, that is our total debt minus total cash on hand. This is an important indicator of a company's ability to fund future internal or external growth. Thermo Fibertek net debt in the first quarter of 2001 was approximately 16 million dollars, a reduction of over 50% from the net debt position a year ago. Moreover, our ratio of net debt to total invested capital was a little over eight in the first quarter of 2001, our lowest level since the first quarter of 1997. Since the acquisition of Thermo Black Clawson in early in 1997, we have reduced our net debt position from 77 million dollars to 16 millions dollars. Barring a major acquisition in the meantime, we expect to have a zero net debt position by the end of 2001. Respectable internal revenue growth, consistent and reliable EBIDA performance, a strong and improving balance sheet, these are all indicators of a company optimizing its position in what remains a very challenging industry environment Unfortunately, the paper industry was hit by a perfect storm in the first

quarter. A slowing economy, a high dollar, high energy cost, and high chemical cost. The only cheer that I can take from all this industry news is that it can't get much more challenging from here. The first quarter of 2001 was not a good one for our customers in the pulp and paper industry, most of whom reported sharply lower earnings in the quarter compared to last year. Prices for many grades of paper and packaging products dropped during the quarter, reflecting both lower worldwide demand and higher producer inventories. In response, many paper companies continued to implement aggressive cost containment program including taking significant downtime in their mills to better balance production with demand. There is no question that these programs affected our business, although the impact was more pronounced in our booking results of North America than in Europe. Although I think that most of the declines in the industry are now behind us, I don't expect to see any significant improvements in the fortunes of the pulp and paper industry in the second quarter of 2001. As such, I expect that we will see little, if any sequential revenue growth in the second quarter of 2001 with consolidative of revenues of 55 to 60 million dollars. A delay in the timing of several large recycling orders that we had expected to receive in the first quarter has lead us to moderately reduce both the revenue and EPS expectations for the next two quarters. We are still quite confident in securing these orders and we therefore expect a significant improvement in sequential bookings in the second quarter of 2001. We anticipate that the second quarter EPS will be five to six cents per diluted share. Third quarter, we will have slightly higher revenues than the

second with a one cent sequential increase in EPS partially due to the impact of the anticipated higher bookings in the second quarter. For the full year, we expect consolidative revenues of 225 million to 245 million dollars with an EPS of 24 to 27 cents per share. Our composites business, which is included in these consolidated expectations is expanding as we had forecasted earlier in the year. Although startup businesses are difficult to forecast, we still expect to achieve composite revenues near 10 million dollars for the full year 2001 and be at an annual run rate of nearly 20 million dollars by the fourth quarter. More importantly, we expect to generate positive operating cash flows in this business starting in the second half of the year. Despite the challenging conditions in the pulp and paper industry along with the short term profitability pressures caused by our entry into the composites business, I want to assure you that we are focused on achieving higher shareholder returns armed with technologically advanced products, a powerful balance sheet, consistent operating performance, and the most highly motivated and experienced employees in the industry, I am confident that we can improve our equity returns. Part of our strategy in this regard is to maintain a reliable and solid performance in the in the pulp and paper making segment but at the same time, aggressively accelerating our pursuit of higher growth opportunities, outside the pulp and paper industry. And the most exciting growth opportunity we face today is in our expanding fiber-based composites business. Let me give you a quick update on the considerable progress we have made in developing this business in the first quarter. First and most importantly, we shipped nine hundred thousand dollars of composite products in the first quarter of 2001. We are expanding our distribution network for composite

products and as part of these efforts, we exhibited our sound wall and decking systems at several national and local trades shows. I can report that the reactions from potential customers to our systems at these shows have been extremely positive. In addition, after extensive testing and evaluations performed by independent labs, we submitted an application for BOCA certification of our composite systems. The BOCA standards are the guidelines used for products in the building industry and achieving this stamp approval means that our decking systems meet or exceed various physical and mechanical properties such as strength, reflection, anti-slippage, etc. We expect to receive final BOCA approval in 2001. We also continued to expand our composites manufacturing facility located in Green Bay, Wisconsin. We have a major expansion plan for later this summer that will bring our annual production capacity to over 20 million dollars in revenue. Along with the plants expansion, we are continuing to add key employees in quality control engineering and production. Although our production efforts have so far been focused primarily on our decking and sound wall systems, we have also made major strides in developing our composite roofing tile products during the first quarter. These roofing tiles are made from a unique composite formulation consisting of natural fibers, a high mineral content, and proprietary additives. They are lightweight, have very high impact strength and have enhanced flame resistant properties. In fact, during the first quarter of 2001, we obtained a class A fire resistant rating which is the highest rating possible for these products. We have successfully produced these aesthetically pleasing tiles in various colors, which we believe will afford us an important marketing advantage. We are quite encouraged by the rave reviews from potential customers

at various trade shows where we have exhibited these products. Today, I am pleased to announce that we recently received our first purchase order for one hundred and eighty-four thousand dollars of roofing tiles. Due to the strong favorable reaction to these composite roofing products, we have decided to accelerate our product development efforts in this fast growing product segment. We are currently designing a cedar-shake like and slate-like composite roof tile, enhance our product offerings and address a larger portion of a four billion dollar roofing products market. I hope you can see why I am so enthusiastic about our composites business and why I am equally optimistic about the future of Thermo Fibertek. Our strategy of seeking out higher growth opportunities outside the pulp and paper business is taking hold and we have tangible results to show for our efforts. Fortunately, our consistent and solid performance in the pulp and paper segments of our business affords us the ability to exploit these exciting growth opportunities. This concludes my remarks on our business in the first quarter. Hope to see you at our upcoming annual meeting of stockholders that will be held on Tuesday, May 15, at 3 p.m. at the Weston Hotel in Waltham, Massachusetts. Thank you for you interest.