Investors critical of Reptron

By MICHAEL BRAGA

© St. Petersburg Times, published October 26, 2000

TAMPA -- Reptron Electronics reported strong growth in revenues and earnings for the third quarter and said it expected positive results through the end of the year. But investors weren't impressed.

They sent Reptron's stock down 15.7 percent Wednesday to close at $12.06. The reason: It appears the Tampa electronics manufacturer and distributor will not meet fourth-quarter earnings expectations of 35 cents a share.

At the same time, the company said it is shutting its Tampa warehouse and relocating the facility to Reno, Nev. The move is expected to affect about 25 jobs in the Tampa area.

During a conference call Wednesday, Reptron reported revenues of $153-million for the quarter ended Sept. 30, up 63 percent from the same period a year ago. And although net income of $1.9-million, or 27 cents a share, was lower than the $2.9-million, or 47 cents a share, earned a year earlier, executives said that was because the company had reported a $4.5-million one-time gain last year from paying down debt.

"This growth has been fueled by industry consolidation, leaving less competition in the mid-tier segments, and by strong market demand," Reptron chief executive Michael Musto said.

Looking ahead to the fourth quarter, Reptron expects revenues to increase 5 percent to 8 percent from the $153-million recorded in the third quarter, and earnings per share to increase 8 percent to 15 percent. That means earnings per share will be between 29 cents and 31 cents a share, 4 cents lower than consensus analyst expectations.

To finance its growth, Reptron executives said they have doubled the amount they can borrow from banks to $120-million and have increased the number of banks in its syndicate from two to five. Comerica Bank, IBM Credit Corp. and Firstar recently joined Reptron's lead banks of PNC Bank and Bank of America.

Reptron intends to spend some of the money it borrows to expand a Minnesota manufacturing facility and to relocate its distribution warehouse from Tampa to a 71,500-square-foot facility in Reno. The reason for the warehouse move: to be closer to about 40 percent of its customers who are clustered in the Silicon Valley area.

"A lot of our suppliers bring product in via the West Coast," Reptron chief financial officer Michael Branca said. "We then take product to this dead-end zone called Tampa and have to bring it back out to the West Coast market again."

Branca said warehouse workers in Tampa are being given the opportunity to move to Reno or to shift from distribution to manufacturing jobs within the company. He said the space vacated by warehouse operations will be used to house the company's expanding manufacturing operations.

Reptron also said it has hired sales representatives in Austin, Texas, and Guadalajara, Mexico, to approach suppliers and contract manufacturers in those areas. Reptron plans to hire additional sales representatives in Europe and Asia in the coming quarter.

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