Dial Reports 2000 Fourth Quarter, Full-Year Results

The Dial Corporation today announced fourth quarter net income of $11.6 million or $0.13 per share (diluted) excluding special charges. This compares with the First Call consensus estimate of $0.12 per share.

Including special charges, fourth quarter 2000 net loss was $7.5 million or $0.08 per share (diluted). Fourth quarter 1999 net income was $30.7 million or $0.31 per share (diluted).

In the fourth quarter, the company recorded previously announced special charges primarily to restructure its specialty personal care business and the Dial/Henkel joint venture. These charges totaled $25.5 million (approximately $17.9 million after tax) or $0.20 per share. In addition to these charges the company recorded a charge in the fourth quarter of $2.0 million (approximately $1.2 million after tax) or $0.01 per share as a result of renegotiating a lease and opting not to construct a new research and administrative facility in Scottsdale, Ariz.

Net sales in the fourth quarter were $445.5 million, down 2%. The reduction in sales resulted primarily from the company’s concerted effort to reduce end-of-quarter promotions and shipments, as well as increased competition in many of the categories in which the company competes. Lower sales were partially offset by acquisitions made earlier this year that contributed $28.3 million of net sales in the fourth quarter.

Gross margin for the fourth quarter, excluding special charges, was 47.2%, compared to 50.1% in the year ago period. Gross margin in the fourth quarter was negatively impacted primarily by reduced overhead absorption in the company’s manufacturing facilities from lower sales, as well as higher costs for petroleum related materials and activities.

Net sales for the year were down 4.8% to $1,638.5 million.

Total debt at year end was $597.9 million, down $59.1 million from the balance at the end of the second quarter. The reduction in debt was funded from free cash flow generated in the second half, proceeds from dissolution of the Dial/Henkel joint venture in Mexico, and cash on hand.

Herbert M. Baum, chairman, president and CEO of The Dial Corporation, said, “This was a particularly challenging year for Dial. The company began the year weakened by dilutive acquisitions/joint venture, bad business practices and an aggressive stock repurchase program. This resulted in poor operating performance, increased debt and a falling stock price. In less than five months the new leadership team, supported by the continued hard work of Dial’s dedicated employees, has accomplished much to begin the revitalization of Dial, all focused on strengthening the company and increasing shareholder value.

“As we look to a tough competitive environment in 2001,” MR. Baum added, “We are prepared to aggressively support our strong core brands while we sort out non-fit or weaker brands. We believe that our impressive portfolio of brands should position us well and enable sales under the current pricing structure to grow at about 3% or perhaps more. Despite higher energy costs, we will continue our aggressive efforts to reduce operating expenses and improve gross and operating margins. If this occurs, earnings per share for 2001 (excluding any special charges) currently are expected to be well into the earnings estimates ($0.57-$0.67) for our company as currently reported by First Call. Higher marketing costs associated with two key new product introductions and tough comparisons to year ago as a result of bad business practices are expected to result in first quarter performance to be considerably less than last year’s first quarter, with notable improvement expected to occur in the second, third and fourth quarters.”