Date: 16 February 2004
For the fourth quarter of 2003, net sales increased 6.5 percent to $167.1 million, from $156.9 million in the prior year, reflecting a continuation of the stronger sales growth that began in the third quarter. Capital spending for the quarter totaled $38.7 million as the Company performed major reconstruction on the furnace in the Lawrenceburg, Indiana factory and on two of the three furnaces in the Salem, New Jersey factory. All three major rebuilds were completed on budget and the rebuilt furnaces are now fully operational.
The strong growth in sales for the quarter was driven by a 9.3 percent increase in unit shipments, principally in the beer category. The favorable impact of strong sales and overall productivity improvements was offset by a significant increase in downtime costs related to the reconstruction of the three furnaces. The Company absorbed an increase of approximately 200 machine days of downtime compared to the fourth quarter of 2002. Results were also adversely impacted by a year-over-year increase in the cost of natural gas ($2.9 million), and interest expense ($3.9 million). As a result of these factors, the Company reported a net loss for the quarter of $11.3 million. EBITDA (see definition below) totaled $18.0 million for the quarter.
"Sales remained strong during the fourth quarter, continuing the positive trend from the third quarter," said Richard M. Deneau, President and Chief Executive Officer. "We completed three more major capital improvement initiatives in the quarter along with several other minor initiatives. Even with these substantial investments, we ended the year undrawn on our revolver loan, so our liquidity position is excellent. These plant enhancements will drive significant productivity improvements in 2004."
For full-year 2003, net sales were $709.9 million, compared to $715.6 million in the prior year, a small decline of 0.8 percent. EBITDA declined 3.5 percent to $93.1 million, from $96.5 million in the prior year. These results reflect the high cost of natural gas in 2003, which resulted in a year-over-year cost increase of $18.0 million. It also includes the substantial increase in downtime incurred during the year as a result of the major capital improvement projects involving five of Anchor's furnaces. These costs were nearly offset by productivity gains, pricing improvements, lower SG&A costs and reduced rent expenses.
"We are looking forward to returning to a normal downtime schedule in 2004," said Deneau. "We will have approximately 650 fewer days of machine downtime next year. These positive factors, combined with a strong 2004 order book, provide good momentum heading into the new year."
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