Riviera Nearly Doubles Net Sales
The company attributed the increase to significant new tooling programs for the Mercedes Benz M Class sports utility vehicle and a new crossover vehicle, both secured during fiscal 2003.
Net income was $237,929, or 7 cents per diluted share, for the first quarter ended Nov. 31, compared to a loss of $188,914, or 6 cents per share, for the year-ago quarter.
According to Riviera Tool, net income was boosted by new contracts for tooling systems and additional its engineering and die management services.
Riviera had a contract backlog of $22 million as of Nov. 30, reflecting increased orders in the latter half of fiscal 2003, along with approximately $2.2 million in new contracts secured in the first quarter of 2004.
President and CEO Kenneth Rieth said the new contracts awarded in fiscal 2003 were a direct result of the company’s new approach to stamping die management.
That approach? Collaborating with other West Michigan and Midwest tooling suppliers and serving as lead project manager over multi-million dollar contracts in which all collaborators share.
Collaborators work so closely it’s like working with a single company, he said.
As he recalled, it started two and a half years ago in a conference room in Detroit where some of the largest tooling suppliers in the United States gathered to figure out a survival strategy for the industry.
How would the industry remain competitive in the face of foreign competition and OEM demands for cost cutting?
“We developed a new business design that allows us to do the large programming that’s very focused on technology, collaboration and, ultimately, global sourcing.”
Rieth said that has involved shifting the mindset of the OEMs and opening their eyes to the benefits of total system cost savings.
Riviera, for example, landed $40 million in contracts for two Mercedes lines in March 2002 and took the role of lead program manager, overseeing the work of 10 other tooling suppliers and taking full responsibility for product quality and on-time delivery.
Rieth said Riviera is currently bidding, in conjunction with eight of the largest Midwest tooling companies, on a “substantial program” for a domestic vehicle that includes working directly with a “very significant design house.”
If awarded the contract, Riviera would be one lead manager among several lead managers that will have networks of other tooling suppliers underneath them, he explained.
Manufacturing is in a shifting and restructuring mode, he observed.
“You make some of it up as you go. We think we have a good start. If something is broken, or wrong or needs to be tweaked, then you deal with it.
“China is there, and if you don’t do aggressive and outgoing things and take some chances, you’re not going to be around, whether you make refrigerators or automobiles.”
Among other first quarter 2004 highlights, Riviera:
- Increased gross margin from 6.8 percent to 10.2 percent in the first quarter
- Reduced selling, general and administrative expenses to 4.9 percent of sales, down from 7.4 percent in 2003’s first quarter
- Generated $4.5 million of cash flow from operations in the first quarter and used it to cut long-term debt in half
“Although we still see some softness in the overall domestic tooling industry, our quoting activity continues at a brisk pace,” Rieth said.
“We anticipate that this market will improve during the latter half of 2004 based on early indications from the Detroit Auto Show and other industry gatherings that domestic and European automakers and their Tier One suppliers are committing to new model and restyling introductions for vehicles.”