Volume 34, Number 12, December 1999

 

INDUSTRY NEWS

Auto Glass Companies Face Financial Difficulties; 
Close Some Shops

A number of the large auto glass chains are facing financial difficulties as Standard and Poor’s (S&P) has placed Diamond Triumph Auto Glass Inc. of Kingston, PA, on CreditWatch with negative implications. In addition, S&P has given its single B-plus corporate credit and bank loan ratings and single B-minus subordinated debt rating for Safelite Glass Corporation of Columbus, OH, on CreditWatch with negative implications.
S&P says the rating was a result of Diamond’s weaker-than-expected operating performance, which led to a failure to achieve expected debt reduction measures. S&P’s attributes part of Diamond’s operating results to competitive pricing in the auto glass industry.
For the first nine months of the year, the company reported a 21 percent drop in earnings before interest, taxes, depreciation and amortization (EBITDA) compared with the same period in 1998. S&P is particularly concerned about the drop in EBITDA due to the company’s leveraged capital structure from an aggressive growth structure and recapitaliztion in 1998. The company’s debt to EBITDA is currently more than five times and its cash interest coverage is estimated to be about 1.6 times.
“Weak industry conditions have caused our 1999 results to be lower than anticipated,” said Ken Levine, co-chief executive officer of Diamond Triumph. “This resulted in S&P’s decision to put their ratings on CreditWatch pending a formal review with senior management sometime in early 2000. Diamond Triumph will continue its expansion program and remains one of the most profitable enterprises in the glass replacement industry.”
S&P’s Safelite announcement follows Allstate Insurance Company’s decision not to renew its Best Effort Agreement with the company for automotive, repair, replacement and administrative services. According to S&P, the loss of Allstate’s revenues, which totaled about $120 million or 14 percent of Safelite’s total sales during the fiscal year that ended in March 1999, could have an adverse impact on the company’s financial profile (see November 1999 USGlass, page 16).
Both Harmon Auto Glass of Minneapolis, and Harding Glass of Overland Park, KS, are also having difficulty. Apogee said its recent third quarter losses were mainly due to difficult industry conditions in auto glass (see page 23). Additionally, Harding recently announced plans to close 17 of its locations in various areas of the country due to a “lack of profitability,” according to chief executive officer Bud Cornelius.

Oldcastle and Pella Acquire New Companies

In what the company says is an effort to focus on its core business segments, International Aluminum Corporation of Monterey Park, CA, announced the sale of the operating assets of its two glass fabrication subsidiaries, International California Glass Corporation and International Carolina Glass Corporation. The subsidiaries were sold to the Oldcastle Glass Group (OGC) for an undisclosed amount. According to Olcastle, the newly acquired businesses, with operations in Fontana, CA, and Rock Hill, SC, will be known as Oldcastle Specialty Glass.
“These acquisitions add new capabilities and market segments to OGC,” said Ted Hathaway, chief operating officer. “We will invest more than $1.5 million in these new companies to install state-of-the-art glass processing equipment and information systems technology.”
OGC acquired Freestate Glass, through a cash transaction with the owner. According to Hathaway, Freestate, an architectural glass fabricator, will continue to operate as Freestate Glass Industries. The company is located in Warrenton, VA.
And on the window manufacturing end, it looks as if one of the large window manufacturing giants, Pella Corporation, based in Pella, IA, will expand its size and strength even further. The company recently announced its acquisition of Pease Industries, a manufacturer of entrance doors.

Pilkington to Close OE Plant

Pilkington LOF of Toledo, OH, announced recently that its original equipment manufacturing operation is being shut down. The Lathrop, CA-based operation employs 175 employees and produces automotive glass components. The company is eliminating 150 positions due to the closure.
Existing production will be transferred to other Pilkington North American operations, according to the company. The float glass manufacturing operation, also located in Lathrop, will continue.


CONTRACT GLAZING

Top Ten Buildings of the Century

Did you ever admire a building’s architecture and think, “That’s one of the most memorable buildings I’ve ever seen?” Chances are, your list wasn’t published. But, Michael J. Crosbie, an associate with the architectural research and consulting firm of Steven Winter Associates in Norwalk, CT, has compiled his list of the ten most interesting, influential and memorable buildings constructed this century. His list was published in the November issue of The Construction Specifier.

Building                                         Location                         Architect                                      Date
Unity Temple                                 Oak Park, IL                 Frank Lloyd Wright                           1908
Chrysler Building                           New York, NY            William Van Alen                               1930
Fallingwater                                   Bear Run, PA                Frank Lloyd Wright                           1936
Gropius House                             Lincoln, MA                   Walter Gropius                                  1938
Bavinger House                            Norman, OK                 Bruce Goff                                         1950
TWA Terminal                                 New York, NY            Eero Saarinen                                 1962
U.S. Air Force Academy Chapel    Colorado Springs, CO     Skidmore, Owings & Merrill         1962
Salk Institute                             La Jolla, CA                         Louis Kahn                                     1966
Thorncrown Chapel                 Eureka Springs, AR            E. Fay Jones                                     1980
Vietnam Veterans Memorial    Washington, DC                  Maya Lin                                          1982


CODES/REGULATIONS

ICC Publishing Updated Codes

At its September 12-17 meeting in St. Louis, the Building Officials and Code Administrators International (BOCA), International Conference of Building Officials (ICBO) and Southern Building Code Congress International (SBCCI) met to develop a single group of comprehensive and coordinated model construction codes. The three organizations, which comprise the International Code Council (ICC), will publish the 2000 edition of the International Codes early next year.
“This is a great accomplishment and shows the commitment of the three model code groups to work together, speaking with one voice to improve public safety in the built environment through the production of a single comprehensive and coordinated family of model codes,” said ICC president Jon Traw.
Many existing international residential codes have been updated. One of these, code RB223-99, adds stair enclosures to the list of hazardous areas where humans can impact glass. For determining allowable loads on glass, RB225-99 has removed glass load charts and tables.

Apogee Fails to Meet Financial Expectations

Russ Huffer, chief executive officer of Apogee Enterprises Inc., described the company’s current financial status recently. “We’re in a slump,” he said in a letter to employees and shareholders, which was recently published in Apogee’s fall newsletter.
According to Huffer, with the exception of Harmon Inc., Curvlite and Tru Vue, none of Apogee’s companies are performing as expected this year. “All of our other companies are not measuring up to the expectations set at the beginning of the year,” he said.
“The cumulative effect is a serious slump in delivering value to various stakeholders.”
Despite the downfalls, Huffer said the company is optimistic that each business is currently in a position to improve. “Opportunities are plentiful for us to improve our results,” he said. “Each of our businesses has significant capacity available to do more business, and each has identified customers, products, and services that will begin to fill those capacities. It is clear that the opportunities to satisfy all of our stakeholders are within our control and capabilities. This is good news—success is ours to achieve.”
Following the newsletter’s release, the company issued a press release on November 23 concerning Apogee’s third quarter and FY 2000 outlook. According to the company, it expects a third-quarter loss from continuing operations in the range of $0.15 to $0.20 per dilluted share compared with earnings from continuing operations of $0.20 per share in last year’s third quarter. For the fourth quarter, Apogee says it expects a slight loss and fiscal 2000 dilluted earnings from continuing operations ranging between $0.10 and $0.16 per share.
This is compared to diluted earnings of $0.71 per share in fiscal 1999. Huffer said Apogee’s reduced third and fourth quarter earnings expectations were due in part to difficult industry conditions in the auto glass market. Huffer said the reduced earning expectations are particularly disappointing given the strong demand in the Glass Technologies segment. “Demand is strong in Glass Technologies, but our execution at Viracon and Viratec has not met our expectations,” he said. “Therefore we are sharpening the focus of our senior management team.” According to Huffer, Larry Stordahl, executive vice president, will concentrate on Viracon and Viratec, while Bob Barbieri, vice president, finance and chief financial officer, will take responsibility for Wausau and TruVue. “At both Glass Technologies and Glass Services, we have brought in new segment CFOs to more closely monitor progress and improve financial performance. We are very determined to produce bottom-line results that reflect our top-line strength,” said Huffer.


KUDOS

Guardian Pledges $20 Million

Auburn Hill, MI-based Guardian Industries has pledged $20 million to the Weizmann Institute of Science in Rehovot, Israel, to create the Davidson Institute for Science Education. The new institute is aimed at improving the level of science teaching through curricula development, innovative educational methods and new teaching materials. This gift is the largest private donation the Weizmann Institute has ever received.
The new building will be named for William Davidson, Guardian’s president and chief executive officer, who has a long history with the institute. He has made annual donations for the past 14 years and supports the Weizmann Institute’s programs promoting education, developing market economies throughout the world, improving Michigan’s quality of life and promoting Jewish leadership.

Contractors Rebuild Inner-City School

Companies in the glass industry united together to assist UBM Inc. of Chicago in the effort to rebuild Hales Franciscan High School, Chicago’s sole Catholic high school for African-American boys, which had deteriorated in the past 20 years.
UBM helped coordinate the rebuild effort and the company’s chairman, Paul King, served as chair of the school’s building committee. With his leadership, King was able to convince area contractors to donate almost $700,000 in materials, services and money necessary to fix the school.
Many industry companies decided to lend a hand and donate labor and materials. These include: Carolina Mirror, North Wilkesboro, NC; Glass America, Chicago; Klein-Dickert, Madison, WI; MTH Industries, Chicago; Salem Distributing, Clemmons, NC; and U.S. Aluminum, Waxahachie, TX. The donation effort was organized by Lyle Hill, president of MTH Industries.


PARTNERSHIPS

OIT Partners with GMIC

The Office of Industrial Technologies (OIT) Glass Team has announced that it signed a cooperative agreement with the Glass Manufactur-ers Industry Council (GMIC). As part of the agreement, GMIC will help the OIT Team build relationships with the industry that are in line with its strategic mission and goals.
Michael Greenman, GMIC’s acting executive director, said, “The agreement formalizes our relationship and helps assure this will be a long-term partnership that will benefit all sectors of the American glass industry.”  


USG

Copyright 1999 Key Communications, Inc. All rights reserved. No reproduction of any type without expressed written permission.