Debt-ridden Kirschner reports higher earnings
Debt-ridden Kirschner Medical Corp. made a profit during the second quarter, the company announced yesterday. But an analyst said that he is only guardedly optimistic about the prospects for the Timonium-based medical equipment company.
Kirschner said that it earned $797,000, or 32 cents a share, during the three months that ended June 30. In the same months of 1990, the company earned $437,000 on continuing operations, or 18 cents a share.
The company said that the better earnings on continuing operations were helped by strong customer acceptance of Kirschner's new artificial knee joints.
But John Barham, a company spokesman, said that the company still has not reached an agreement with Maryland National Bank on restructuring its short-term debt.
Maryland National holds a $12 million note and a $15.9 million credit line of Kirschner's, Mr. Barham said. The bank charges Kirschner an interest rate 2 percentage points above the prime rate, which usually means a bank considers a customer a higher-than-average credit risk. Mr. Barham said that Kirschner has been making only interest payments on the debt and has not been regularly repaying principal.
The company's current obligations total $60.5 million, well above its $49.9 million in current assets.
"This remains a very leveraged company," said Lawrence C. Marsh, a health-care industry analyst for Wheat First Securities Inc. in Richmond, Va.
Mr. Marsh said that he was pleased by the earnings report. "I anticipated a good report, and this was," he said. But he added that Kirschner also posted decent profits in the first half of the last two years, then had fourth-quarter losses of $7.7 million in 1990 and $14.8 million in 1989, mostly due to one-time write-offs, that wiped out the profits and made both years money-losers for Kirschner.
Mr. Marsh said that he remains neutral on the stock.
Mr. Barham said that the company doesn't expect any unusual write-offs during the second half of this year.
Mr. Marsh said the strong earnings, which he forecast last week, have raised investors' hopes that Kirschner will be able to reduce its debt payments and be able to lure equity investors to shore up its finances.
"Their success will depend on reducing their bank debt," he said. "The report of two profitable quarters will aid attempts to renegotiate."
Those hopes helped Kirschner's stock rise $5 last week, to $20 per share, before falling $3.25 yesterday to close at $16.75.
Cyclops Industries Inc.
Depressed demand from everyone from carmakers to shipbuilders pushed the Pittsburgh-based owner of Eastern Stainless Steel and several other steel plants into the red in the second quarter, the company announced yesterday.
"The recession has caused overcapacity within the industry and fierce competition in the marketplace," driving prices and profits down, the company explained.
Cyclops said that more than a third of its $5.3 million quarterly loss was due to its Baltimore operation, which makes stainless steel sheets and plates for construction and shipbuilding markets.
Eastern Stainless Steel said yesterday that it lost $2.1 million on sales of $46.9 million in the second quarter. Eastern made a profit of $1.6 million on sales of $45.3 million in the same quarter a year ago.
Eastern had made a slight profit in the first quarter.
Though Eastern said that it benefited from growing sales by its new sheet division, continuing slack demand for steel hurt profits.
Tyson Foods Inc.
The Springfield, Ark.-based owner of several chicken operations on the Eastern Shore announced yesterday that growing consumer demand for chicken contributed to a record quarterly profit in the three months that ended June 29.
Though sales were up nearly 4 percent, compared with the year-ago period, Tyson's selling expenses and overhead fell by the same percentage, buoying profits to a record $40.6 million for the company's third fiscal quarter.
Integrated Health Services
This Hunt Valley-based nursing home operator reported sharply higher revenues and a return to profitability during the past three months, its first full quarter as a publicly held company.
IHS, which operates 43 facilities, compared with 27 a year ago, credited much of the improved results on an increasing number of units within its long-term care centers that focus on special medical needs as well as the rapid expansion.
Earnings from continuing operations during the second quarter more than doubled, rising to $1.1 million from $454,000 last year. The results for the past three months are the first since IHS changed its fiscal year to a calendar year.
Nova Pharmaceutical Corp.
This Baltimore-based pharmaceutical company reported a net loss of $3.8 million, or 14 cents a share, for the quarter that ended June 30. For the first six months, the net loss was $7.5 million, or 28 cents per share.
Dr. Hans Mueller, Nova's president and chief executive officer, cited several milestones achieved during the the second quarter. They included Nova's filing of an application with the Food and Drug Administration for permission to begin clinical trials for a drug delivery system to treat chronic bone infections.