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.
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 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.
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
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.
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.
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.
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.
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.