Williams Controls Inc. (WMCO, Financial) filed Annual Report for the period ended 2011-09-30.
Williams Controls Inc. has a market cap of $80 million; its shares were traded at around $10.95 with a P/E ratio of 22.4 and P/S ratio of 1.3. The dividend yield of Williams Controls Inc. stocks is 4.4%.
Cost of sales decreased as a percent of sales in fiscal 2010 when compared to fiscal 2009, primarily due to higher sales volumes to distribute fixed overhead costs. Additionally, fiscal 2009 included settlement of outstanding labor issues and severance costs totaling $320 and a $116 write-down to our capitalized license fee related to adjustable pedal technology due to the significant decline in business in the recreational vehicle industry. Repairs and maintenance costs and pension/postretirement medical costs decreased $121 and $115, respectively, in fiscal 2010 from the comparable period in fiscal 2009. Slightly offsetting some of these decreases was an increase in warranty costs of $399 in fiscal 2010 when compared to fiscal 2009 and primarily relates to warranty claims with one customer. In addition, freight and duty costs increased $719 in fiscal 2010 when compared to fiscal 2009.
Administration expenses for fiscal 2011 increased $1,080 when compared to fiscal 2010. In fiscal 2011, administration expenses included $349 related to a potential acquisition that the Company considered but ultimately decided to terminate during due diligence. We also incurred a full year of costs associated with our India facility, which was opened during the third quarter of fiscal 2010. As sales volumes improved during fiscal 2011, we filled positions left vacant during the economic downturn experienced in late 2009 through 2010, which resulted in a $ 268 increase in administration wage expenses in fiscal 2011 as compared to fiscal 2010. Administration expenses in fiscal 2011 also include $228 in legal fees associated with settlement of an old outstanding claim against the Company by a former employee, an increase of $123 over fiscal 2010. Fiscal 2010 included legal fees of $421 associated with the Cuesta class action lawsuit, which was settled in the fourth quarter of fiscal 2010. Other increases in administration expenses in fiscal 2011 as compared to fiscal 2010 include: a $115 increase in taxes and filing fees in China related to new government construction and education taxes, an $84 increase in information technology maintenance costs and a reduction of $111 in fiscal 2010 related to our environmental liability accrual.
In fiscal 2011 and 2010, the Company recorded income tax expense of $1,439 and $338, compared to an income tax benefit of $1,677 in fiscal 2009. The overall tax rate was 30.1% in fiscal 2011 compared to 19.7% in fiscal 2010 and 45.5% in fiscal 2009. The increase in the effective tax rate between fiscal 2011 and fiscal 2010 is primarily due to the mix of pretax earnings between domestic and foreign jurisdictions, primarily in China.
Changes in working capital items used cash of $5,546 for fiscal 2011 compared to use of cash of $745 in fiscal 2010. Changes in receivables in fiscal 2011 were a use of cash of $2,052 compared to a use of cash of $1,267 in fiscal 2010. The increase in receivables is primarily due to higher sales volumes in the latter part of fiscal 2011 as compared to sales volumes near the end of fiscal 2010 and to a much lesser degree timing of collections. Inventories increased $3,822 in fiscal 2011 as compared to an increase of $1,973 in fiscal 2010. The fiscal 2011 increase is primarily due to two factors (i) a build-up of inventory levels in line with sales volume increases throughout fiscal 2011 as compared to fiscal 2010 and (ii) building inventory at our India facility in conjunction with the start of production at that site during the third quarter of fiscal 2011. Additionally, during fiscal 2011 the Company has purchased additional safety stock on certain components to ensure customer deliveries in the event of rapid increases in orders. Accounts payable and accrued expenses increased in fiscal 2011 primarily due to increases in purchases of inventory and supplies in line with the significant increase in sales volumes and to a lesser degree timing of payments on accounts payable. Accounts payable and accrued expenses increased in fiscal 2010 primarily due to increases in purchases of inventories and increases in our warranty provision related to claims with one customer, which were paid during fiscal 2011. Cash flows from operations for fiscal 2011 included payments to our pension plans of $1,042 compared to contributions of $571 for fiscal 2010. Also included in cash flows from operations in fiscal 2010 was the $775 Cuesta class action settlement payment, which is discussed in Note 10 to Consolidated Financial Statements. We believe it is likely we will continue to generate positive cash from operations, however, depending on the continued uncertainty in the worldwide economic market, we could experience periods of negative cash flow from operations.
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Williams Controls Inc. has a market cap of $80 million; its shares were traded at around $10.95 with a P/E ratio of 22.4 and P/S ratio of 1.3. The dividend yield of Williams Controls Inc. stocks is 4.4%.
Highlight of Business Operations:
Net sales to NAFTA truck customers increased 36% when compared to fiscal 2010, primarily due to general improvements in the economic environment and freight hauling industry. Various industry forecasts indicate that truck sales volumes in the NAFTA market may continue to increase due to the continued economic recovery and the overall advanced age of the NAFTA truck fleet. However, this is dependent on a number of factors, including the overall strength of the U.S. economy. European truck sales increased 59% in fiscal 2011 over fiscal 2010. This increase was primarily due to increases in heavy truck and off-road build rates by our European customers. In addition, our European sales were relatively low during much of fiscal 2010 as these customers were working through higher than normal inventory levels created when the worldwide economy declined in 2009. Asian truck sales increased 19%, and sales to Asian off-road customers increased 31% when compared to fiscal 2010. The increase in Asian off-road sales is primarily due to off-road sales in China, where the adoption of more stringent emission standards has mandated the inclusion of electronic throttle controls on new vehicles, thus allowing us to expand our customer base in this market. Worldwide off-road sales, which were up 13% for the fiscal year ended September 30, 2011, were the highest in the Companys history and comprised approximately 24% of the Companys total sales for the year.Cost of sales decreased as a percent of sales in fiscal 2010 when compared to fiscal 2009, primarily due to higher sales volumes to distribute fixed overhead costs. Additionally, fiscal 2009 included settlement of outstanding labor issues and severance costs totaling $320 and a $116 write-down to our capitalized license fee related to adjustable pedal technology due to the significant decline in business in the recreational vehicle industry. Repairs and maintenance costs and pension/postretirement medical costs decreased $121 and $115, respectively, in fiscal 2010 from the comparable period in fiscal 2009. Slightly offsetting some of these decreases was an increase in warranty costs of $399 in fiscal 2010 when compared to fiscal 2009 and primarily relates to warranty claims with one customer. In addition, freight and duty costs increased $719 in fiscal 2010 when compared to fiscal 2009.
Administration expenses for fiscal 2011 increased $1,080 when compared to fiscal 2010. In fiscal 2011, administration expenses included $349 related to a potential acquisition that the Company considered but ultimately decided to terminate during due diligence. We also incurred a full year of costs associated with our India facility, which was opened during the third quarter of fiscal 2010. As sales volumes improved during fiscal 2011, we filled positions left vacant during the economic downturn experienced in late 2009 through 2010, which resulted in a $ 268 increase in administration wage expenses in fiscal 2011 as compared to fiscal 2010. Administration expenses in fiscal 2011 also include $228 in legal fees associated with settlement of an old outstanding claim against the Company by a former employee, an increase of $123 over fiscal 2010. Fiscal 2010 included legal fees of $421 associated with the Cuesta class action lawsuit, which was settled in the fourth quarter of fiscal 2010. Other increases in administration expenses in fiscal 2011 as compared to fiscal 2010 include: a $115 increase in taxes and filing fees in China related to new government construction and education taxes, an $84 increase in information technology maintenance costs and a reduction of $111 in fiscal 2010 related to our environmental liability accrual.
In fiscal 2011 and 2010, the Company recorded income tax expense of $1,439 and $338, compared to an income tax benefit of $1,677 in fiscal 2009. The overall tax rate was 30.1% in fiscal 2011 compared to 19.7% in fiscal 2010 and 45.5% in fiscal 2009. The increase in the effective tax rate between fiscal 2011 and fiscal 2010 is primarily due to the mix of pretax earnings between domestic and foreign jurisdictions, primarily in China.
Changes in working capital items used cash of $5,546 for fiscal 2011 compared to use of cash of $745 in fiscal 2010. Changes in receivables in fiscal 2011 were a use of cash of $2,052 compared to a use of cash of $1,267 in fiscal 2010. The increase in receivables is primarily due to higher sales volumes in the latter part of fiscal 2011 as compared to sales volumes near the end of fiscal 2010 and to a much lesser degree timing of collections. Inventories increased $3,822 in fiscal 2011 as compared to an increase of $1,973 in fiscal 2010. The fiscal 2011 increase is primarily due to two factors (i) a build-up of inventory levels in line with sales volume increases throughout fiscal 2011 as compared to fiscal 2010 and (ii) building inventory at our India facility in conjunction with the start of production at that site during the third quarter of fiscal 2011. Additionally, during fiscal 2011 the Company has purchased additional safety stock on certain components to ensure customer deliveries in the event of rapid increases in orders. Accounts payable and accrued expenses increased in fiscal 2011 primarily due to increases in purchases of inventory and supplies in line with the significant increase in sales volumes and to a lesser degree timing of payments on accounts payable. Accounts payable and accrued expenses increased in fiscal 2010 primarily due to increases in purchases of inventories and increases in our warranty provision related to claims with one customer, which were paid during fiscal 2011. Cash flows from operations for fiscal 2011 included payments to our pension plans of $1,042 compared to contributions of $571 for fiscal 2010. Also included in cash flows from operations in fiscal 2010 was the $775 Cuesta class action settlement payment, which is discussed in Note 10 to Consolidated Financial Statements. We believe it is likely we will continue to generate positive cash from operations, however, depending on the continued uncertainty in the worldwide economic market, we could experience periods of negative cash flow from operations.
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