Wynn’s International Reports Record ’94 Profit : Finance: Maker of automotive chemicals and components is positioned for acquisitions.
Wynn’s International Inc. said Monday that its profit climbed 32% to a record $11.8 million for 1994 as the automotive market served by the company rebounded from a four-year slump.
The earnings jump, coupled with the success of the company’s debt-reduction efforts, sets Wynn’s up to launch an aggressive acquisition program, President James Carroll said in a recent interview.
Monday’s financial report “shows that the company is right on track,” said Brad Noel, an analyst with the brokerage L.H. Friend, Weinress & Frankson Inc. in Irvine. “This is an extremely well-run company” that so far has done just what it has set out to do, Noel said.
Wynn’s annual profit, which came to $2.08 a share, compared to earnings of $9.0 million, or $1.62 a share, for the previous 12 months. Revenue for the maker of automotive chemicals, air conditioning components and auto and industrial sealing products rose 3% to $292.7 million from $285.0 million for 1993.
For the fourth quarter, Wynn’s reported a profit of $2.7 million, or 48 cents a share, up from earnings of $2.2 million, or 40 cents a share, for the same period a year earlier. Three-month revenue was $66.7 million, down from $69.9 million.
While Wynn’s other divisions charted revenue increases for the year, the company’s Climate Systems subsidiary recorded a sharp sales decline in the fourth quarter. The drop came from the previously announced end of sales to Rover Group in England and the conclusion of much of Wynn’s Climate Systems’ assembly work on air conditioning units for cars produced in the United States by Japan’s Mazda Motor Corp.
The work ended as Wynn’s completed a multiyear effort to change the Texas-based subsidiary from an assembler of original equipment systems for car makers like Mazda and Chrysler Corp. into a manufacturer of more profitable air conditioning system components.
In an interview before the release of the company’s 1994 results, Carroll, who is also Wynn’s chief executive, said the Climate Systems unit now is poised to be a state-of-the-art producer of components for the new generation of environmentally friendly auto air conditioning systems.
Wynn’s Climate Systems last year became the first company to produce a kit for retrofitting older air conditioners to use the new R134 refrigerant after production of Freon-based R12 ends Dec. 31 under a ban imposed in the federal Clean Air Act. The company also completed construction of a manufacturing system for aluminum air-conditioning condensers that work with the new refrigerant.
Carroll said the company ended 1994 with almost $100 million in shareholder equity, including $16.4 million in cash; and less than $24 million in long-term debt.
He said the company hopes to double its size in the next few years through what he termed an “aggressive” acquisition program “targeting mid-sized businesses” in the sealing products industry in which its Wynn’s-Precision Inc. subsidiary is a major player.
Precision, a 50-year-old company acquired by Wynn’s in 1985, posted an 18% sales increase for 1994 to nearly $120 million. Over the past four years, Precision’s earnings have more than than doubled on a 53% increase in annual revenue, said Seymour A. Schlosser, Wynn’s chief financial officer.
The sealing products company, based in Lebanon, Tenn., makes gaskets, O-rings and other plastic and rubber-based sealing devices for the automotive, heavy truck and aerospace markets.
Carroll said that the market in the sealing industry is fragmented among a score of small, entrepreneurial companies that are ripe for acquisition by a corporation of Wynn’s size. He said he wants to capture a bigger share of the auto and heavy truck industry’s needs and to expand into the industrial and medical equipment markets.
Wynn’s original operating unit, Wynn’s Oil, remains a growing and profitable subsidiary, Carroll said. Its future growth lies in the expanding European and Latin American markets, he said, rather than in the U.S.
Once the dominant name in aftermarket engine and fuel additives in the U.S., Wynn’s Oil has been eclipsed by STP and other brands in the retail market for additives and appearance products like car waxes and washing liquids.
It remains a major supplier of chemicals, however, to the professional auto repair industry in the United States and to the retail market in Europe.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Yearly Wins for Wynn
Wynn International Inc., an Orange-based supplier of chemical and rubber products, reported a 22% profit increase for its fourth quarter, ended Dec. 31. That helped fuel a 32% increase in annual profits, to $11.8 million. Figures in thousands of dollars, except per-share data:
4th quarter 4th quarter 12 months 12 months 1993 1994 1993 1994 Revenue $ 69,936 $ 66,787 $ 284,957 $ 292,651 Net income $ 2,226 $ 2,719 $ 8,981 $ 11,821 Per share 0.40 0.48 1.62 2.08
Source: Wynn International Inc.; Researched by VALERIE WILLIAMS-SANCHEZ / Los Angeles Times