Executives at Milwaukee-based Jason Industries, Inc. said Thursday the company’s “disappointing” second quarter results were caused by a number both within and outside of their control.
They also said the company would be exiting businesses that account $50 million to $75 million in annual revenue and plan additional plant closures in the next 18 months. Jason had annual revenue of $708 million last year.
The company reported a loss of $2.4 million during the second quarter, compared with an $865,000 loss during the same period last year. The loss increased from 7 cents to 13 cents per diluted share.
Jason is the parent company of manufacturing companies in seating, finishing, components and automotive acoustics markets. Those companies include Milsco in Milwaukee, DRONCO in Germany, Janesville Acoustics in Michigan, Metalex in Illinois, Osborn in Indiana and Germany and Sealeze in Virginia.
Revenue was down 1 percent to $185.7 million. The company reported a 14 percent increase in sales for its finishing segment and a 13 percent jump for the acoustics segment. But the seating segment was off 14 percent and the components segment was down 26 percent.
“It was a very disappointing quarter for us,” said Jeffry Quinn, Jason chairman and chief executive officer.
Quinn said an early end to the turf care season and declining revenues in the heavy industry and motorcycle end markets hurt the seating business, which is made up of Milwaukee-based Milsco.
President and chief operating officer Brian Kobylinski said the seats for motorcycles can range from $45 to $300 per seat. As customers push to do more business internationally and at the entry-level, the company is delivering less content per vehicle, he said.
The components segment was hurt by cancelled orders for railcars and softer industrial demand, Quinn said.
While revenue in the acoustics segment benefited from new platform launches, startup inefficiencies hurt margins in that business.
“There were some self-inflicted wounds,” Quinn said. “We must do better managing change in the manufacturing environment.”
The company announced a cost reduction program early this year that is aiming for $30 million in annual savings in three years. Kobylinski said the efforts on cutting selling, general and administrative costs were on track, but there was more work to do on optimizing operations.
“We continue to work on streamlining and simplifying our footprint to reduce our fixed cost structure,” Kobylinski said.
Those actions include the consolidation of three facilities in Europe and four other facilities in the next 18 months.
Quinn said Jason had made a lot of progress to improve its operations but “what we have done is simply not enough.”
He had previously said the company was considering three non-core businesses for divestiture and announced Jason would move forward with exiting two of the them. He said the third would be refocused and enhanced. Quinn did not disclose which businesses he was referring to and said the company would provide additional information on its next earnings call.