UVSL Universal Automotive Industries - Common Stock (MM)

Universal Automotive Reports 2004 Third Quarter Financial Results - Sales Rise 89.4% as Company Cites Progress Integrating Milestone Acquisition Completed Earlier This Year - ALSIP, Ill., Nov. 19 /PRNewswire-FirstCall/ -- Universal Automotive Industries, Inc. (NASDAQ:UVSL) today reported that sales for the 2004 third quarter ended September 30, 2004 advanced 89.4% to $26.7 million from $14.1 million in the third quarter last year, primarily reflecting contributions from the acquisition of certain assets of TRW Automotive, Inc., completed in January 2004. As expected, the company registered a net loss for the third quarter of $3.2 million, equal to $0.28 per share, compared with a net loss of $812,217, or $0.10 per share, for the corresponding prior year period. Per share calculations were based on 11.2 million and 8.4 million shares of common stock outstanding for the third quarter of 2004 and 2003, respectively. For the 2004 year-to-date period, sales increased 62% to $75.9 million from $46.9 million in the same period last year. Universal reported net income for the first nine months of 2004 of $1.2 million, equal to $0.08 per diluted share, which includes a non-operating, non-cash gain of $9.9 million on the valuation of assets purchased. This compares with a net loss of $1.8 million, or $0.21 per share, for the first nine months of 2003. Per share calculations were based on 14.7 million and 8.3 million shares of common stock outstanding for the first nine months of 2004 and 2003, respectively. "We are making great strides integrating the two companies, and at the same time, tending to new business and to our customers' needs," said Arvin Scott, Universal's president and chief executive officer. "While change of the magnitude that is required to transform two organizations of equal size does not happen overnight, we are encouraged by the progress thus far and pleased with the positive trending among key financial metrics." Scott said sales of brake parts for the first and second quarters of 2004 increased 45% and 89%, respectively, over the comparable periods of 2003. Brake parts sales for the third quarter of 2004 increased 6% over the preceding 2004 second quarter. Selling, general and administrative expenses (SG&A) were reduced 2.0% compared with the preceding second quarter, despite higher sales. SG&A expenses for 2004 amounted to 19.1% for the second quarter and 17.1% for the third quarter, resulting in a net reduction of $336,000 on a 6% sales increase. Loss from operations for the third quarter of 2004 was 13% lower than the preceding second quarter. However, Scott said margins were adversely impacted in the third quarter by expenses associated with the integration process, along with higher raw material and freight costs, and higher costs associated with the weak dollar in relationship to the Canadian currency. "We are aggressively taking counter measures to improve our gross profit margins," Scott said. "In July, we raised certain prices to offset a portion of the higher costs. The price increases were well accepted by customers, since most automotive companies effected similar changes. We also have instituted a number of additional measures to enhance operating efficiencies and further reduce costs, including implementing a number of steps to improve supply chain management. "We are confident of the company's long-term future and will remain focused on our ultimate objective of enhancing shareholder value," Scott added. During the quarter, the company announced it was selected by a national automotive aftermarket buying organization, RPM Group, as its preferred supplier for brake friction parts. Scott said the new pact is expected to add approximately $3 million in annualized sales. Subsequent to the close of the quarter, Universal's Autospecialty division completed and introduced its 2005 product catalog, featuring more than one million records and representing the most comprehensive product offering in the company's history. Conference Call Information At 10 a.m. (ET) today, the company will host a conference call to review the results of operations for the third quarter ended September 30, 2004. Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's revenues, margins, operating expenses and any comments the company may make about its future in response to questions from call participants. The conference call may be accessed through a live audio Internet broadcast at http://www.fulldisclosure.com/. For those unable to listen to the live broadcast, a playback will be available at both Web sites for one year beginning at approximately noon (ET) the same day. About Universal Automotive Industries, Inc. Universal Automotive Industries distributes and manufactures brake rotors and other brake parts, under its trademarks UBP - Universal Brake Parts, Evolution and Ultimate in the United States and Canada and its proprietary Autospecialty, ValuMaxx and PowerStop brands. The company also provides TRW-branded brake rotors and drums and suspension products. This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by safe harbors created hereby. Such forward-looking statements, including, but not limited to, returning the company to profitability, realizing cost savings, as well as synergies, operating efficiencies and growth opportunities as a result of the acquisition of certain assets from TRW Automotive, involve known and unknown risks, uncertainties (including those risk factors referenced in the company's filings with the Securities and Exchange Commission), and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance, or achievements of the company expressed or implied by such forward-looking statements. UNIVERSAL AUTOMOTIVE INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Net sales $26,674,735 $14,083,051 $75,911,058 $46,938,618 Cost of sales 24,478,257 12,176,229 68,867,231 40,648,203 Gross profit 2,196,478 1,906,822 7,043,827 6,290,415 Selling, general, and administrative expenses 4,558,196 2,457,024 13,777,574 7,323,398 Income (loss) from operations (2,361,718) (550,202) (6,733,747) (1,032,983) Other expense/ (income): Interest expense 825,812 284,816 1,936,884 772,904 Gain on valuation of assets purchased 0 0 (9,886,328) 0 Other 2,208 (22,801) (10,395) (34,283) 828,020 262,015 (7,959,839) 738,621 Income (loss) before provision for income taxes (3,189,738) (812,217) 1,226,092 (1,771,604) Income tax provision 0 0 0 0 Net income (loss) $(3,189,738) $(812,217) $1,226,092 $(1,771,604) Comprehensive income (loss): Net income (loss) $(3,189,738) $(812,217) $1,226,092 $(1,771,604) Other comprehensive income (loss), Foreign currency translation adjustments (13,517) (49,549) (37,640) 308,840 Comprehensive income (loss) $(3,203,255) $(861,766) $1,188,452 $(1,462,764) Earnings (Loss) per share: Basic $(0.28) $(0.10) $0.11 $(0.21) Diluted $(0.28) $(0.10) $0.08 $(0.21) Weighted average number of common shares outstanding: Basic 11,197,572 8,437,589 11,197,572 8,296,608 Common stock equivalents resulting from Conversion of preferred stock 0 0 3,475,297 0 Diluted 11,197,572 8,437,589 14,672,869 8,296,608 Web site: DATASOURCE: Universal Automotive Industries, Inc. CONTACT: Robert W. Zimmer of Universal Automotive Industries, Inc., +1-708-293-4050 ext. 227; or Roger S. Pondel or Robert Jaffe, both of PondelWilkinson Inc., +1-310-279-5980, for Universal Automotive Industries, Inc.

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