WDHD Woodhead Industries (MM)

Woodhead Industries, Inc., (NASDAQ:WDHD) today announced financial results for its fiscal fourth quarter and full year ended October 1, 2005. It is important to note that as a result of the Company being on a statistical calendar, the 2005 fiscal fourth quarter had one less week of operations than the same period in 2004. This has reduced all reported revenue comparisons shown below by 7.7 points for the quarter and 2.0 points for the year. Highlights for the 2005 fourth quarter and fiscal year include: -- Revenue increased 6.6% for the year. -- North American Connectivity sales improved 15.5% for the quarter, and 17.2% for the year. -- Income from operations increased 18.2% for the quarter, and 17.3% for the year. Philippe Lemaitre, Woodhead Industries' Chairman and Chief Executive Officer, commented, "Our North American Connectivity business continues to benefit from the growth initiatives implemented in 2004. Connectivity revenues from this region were robust during the fourth quarter, climbing 16% year over year. Unfortunately, this strong performance was partially offset by lower revenue from our European markets, which declined 17%. This weakness was most pronounced in Italy and the U.K., which continue to be affected by challenging economic conditions. However, end-market demand for our products has begun to increase in Europe, and we expect top-line growth to improve during fiscal 2006." Fourth Quarter Results Revenues for the 2005 fiscal fourth quarter totaled $53.0 million, equal to the same period last year. Income from operations was $3.4 million, up $0.5 million from the fourth quarter of 2004. Net income totaled $2.7 million, or $0.22 a share for the quarter, compared to net income of $3.4 million and $0.28 a share for the same period in 2004. Non-operating items (primarily foreign exchange gains and tax rates) totaled $0.06 per share in the 2005 fourth quarter, compared to $0.16 per share for the same period last year. Income from operations grew 18.2% year over year after absorbing $1.1 million, or $0.06 per share, of costs related to Sarbanes-Oxley (SOX). In the Connectivity segment, fourth quarter sales were $39.7 million, flat with that reported in the 2004 fourth quarter. Income from operations totaled $3.6 million, up $1.6 million or 77%, from $2.0 million for the same period last year due to lower operating expenses and improved gross margins. Revenue in the Electrical segment totaled $13.4 million, equal to the same period last year. Income from operations was $1.2 million, down $0.3 million from $1.5 million in the same period last year. The decline in operating margin is primarily the result of higher LIFO costs and product mix. Fiscal 2005 Results Revenues for the 2005 fiscal year were $215.0 million, an increase of 6.6% compared to $201.7 million in 2004. Income from operations increased to $11.6 million, up 17.3% from $9.9 million in 2004. Net income was $8.4 million, or $0.68 per share, compared to $8.0 million, or $0.66 per share for the 2004 fiscal year. Non-operating items (primarily product line divestitures, foreign exchange gains, and tax rates) totaled $0.16 per share in 2005, compared to $0.26 in 2004. Additionally, 2005 full year SOX costs were an incremental $2.4 million, or $0.13 per share. Connectivity Segment sales were $162.3 million in fiscal 2005 versus $147.0 million in 2004, an increase of 10.4%. Income from operations was $9.7 million, more than doubling the $4.6 million realized last year due to the higher revenue, better plant utilization and improved margins. Electrical Segment sales in fiscal 2005 were $52.7 million, compared to sales of $54.7 million for the 2004 fiscal year, representing a decrease of 3.6%. Income from operations was $4.8 million in 2005, compared to $6.6 million in 2004. Sales for this segment were lower on a year-over-year basis primarily because of several large, non-recurring government shipments, worth $3.1 million, that occurred in the second and third quarters of 2004. Margins were affected primarily by product mix and operational issues that occurred during the 2005 first quarter. While substantial progress was made on these issues over the course of the year, their impact adversely affected full year results. Outlook Philippe Lemaitre explained, "As we begin our 2006 fiscal year, we expect our North American operations to continue producing robust growth. However, our overall growth rate will be tempered slightly by the expected persistence of near-term weakness in Europe. As a result, we are currently forecasting revenue growth of 8 to 10% for the 2006 fiscal year. However, we expect improved margin performance to drive earnings growth at a meaningfully higher rate." Lemaitre added, "We expect first half revenue to be $113 to $115 million, and earnings per share between $0.42 and $0.45. For the second half of our 2006 fiscal year, we expect revenue of $118 to $120 million, and earnings per share between $0.47 and $0.50. The first half estimate includes $0.07 per share of profit associated with a recently announced legal settlement. The full year estimate also includes $0.04 per share of incremental cost related to stock award expensing." This press release contains statements that are forward-looking. These statements are based on current expectations that are subject to risks and uncertainties. In particular, such risks include future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, general economic and business conditions, competition, and other issues discussed in our Form 10-K and other SEC filings. Conference Call Woodhead Industries, Inc., will host a conference call today, November 18, 2005, at 11:00 AM Eastern Time to discuss performance and financial results for the fiscal fourth quarter and full year. To access a live internet webcast of the conference call, visit the Company's website at www.woodhead.com and select the webcast icon. The dial-in phone number is 800-500-3792 or 719-457-2734. The Access code is 9429215. A replay of the conference call will be archived and available on the Company's website following the live event. About Woodhead Industries, Inc. Woodhead Industries (NASDAQ:WDHD) develops, manufactures and markets network and electrical infrastructure products engineered for performance in harsh, demanding, and hazardous industrial environments. Woodhead is known in the global industrial market by its recognized brands which include Brad Harrison(R), BradPower(TM), BradControl(TM), SST(TM), Daniel Woodhead(R), mPm(R), applicom(R), Aero-Motive(R) and RJ-Lnxx(R). Our expertise extends from mechanical, electrical, and electronics to communication software products and technologies. Woodhead operates from 21 locations in 10 countries spanning North America, Europe and Asia/Pacific. For further information, contact: Robert Fisher, Vice President, Finance and CFO, 847-317-2400, e-mail: rfisher@woodhead.com. (Tables to Follow) -0- *T WOODHEAD INDUSTRIES, INC. Consolidated Balance Sheet (Amounts in thousands) ---------------------- Assets 10/1/2005 10/2/2004 ---------------------- Current Assets Cash and short-term investments $13,887 $16,709 Accounts receivable 39,040 35,759 Inventories 21,173 19,106 Prepaid expenses 5,785 4,948 Refundable income taxes 2,097 2,863 Deferred income taxes 2,164 3,043 ---------------------------------------------------------------------- Total current assets 84,146 82,428 Property, plant and equipment, net 54,758 58,289 Goodwill, net 35,730 36,769 Deferred income taxes 2,746 2,427 Other Assets 1,000 1,151 ---------------------------------------------------------------------- Total Assets $178,380 $181,064 ---------------------------------------------------------------------- Liabilities and Stockholders' Investment Current Liabilities Accounts payable $11,080 $9,423 Accrued expenses 11,531 13,245 Income taxes payable 1,053 1,272 Current portion of long-term debt 5,700 5,700 ---------------------------------------------------------------------- Total current liabilities 29,364 29,640 Long-term debt 19,500 25,200 Deferred income taxes 4,698 4,451 Other liabilities 4,139 4,339 ---------------------------------------------------------------------- Total Liabilities 57,701 63,630 Stockholders' investment: Common stock at par (shares issued: 12,260 at 10/1/05, 12,147 at 10/2/04) 12,260 12,147 Additional paid-in capital 21,596 20,236 Deferred stock compensation (397) (552) Accumulated other comprehensive income 4,726 6,602 Retained earnings 82,494 79,001 ---------------------------------------------------------------------- Total stockholders' investment 120,679 117,434 ---------------------------------------------------------------------- Total Liabilities and Stockholders' Investment $178,380 $181,064 ---------------------------------------------------------------------- WOODHEAD INDUSTRIES, INC. Consolidated Income Statement (Amounts in thousands, except per share data) Quarter Ended: Twelve Months Ended -------------------- ------- -------------------- ------- % % 10/1/2005 10/2/2004 Change 10/1/2005 10/2/2004 Change -------------------- ------- -------------------- ------- Net Sales $53,009 $53,097 (0.2%) $215,036 $201,735 6.6% Cost of Sales 32,887 33,077 (0.6%) 135,400 125,665 7.7% -------------------- -------------------- Gross Profit 20,122 20,020 0.5% 79,636 76,070 4.7% % of Net Sales 38.0% 37.7% 37.0% 37.7% Operating Expenses 16,746 17,275 (3.1%) 68,036 65,088 4.5% Restructuring and Other Related Charges - (112) - 1,093 -------------------- -------------------- Total Operating Expense 16,746 17,163 (2.4%) 68,036 66,181 2.8% % of Net Sales 31.6% 32.3% 31.6% 32.8% Income From Operations 3,376 2,857 18.2% 11,600 9,889 17.3% -------------------- -------------------- % of Net Sales 6.4% 5.4% 5.4% 4.9% Other Expenses Interest Expense 208 571 (63.6%) 1,644 2,337 (29.7%) Other (Income)/ Expenses, Net (313) (1,283) (1,421) (2,304) -------------------- -------------------- Other (Income)/ Expenses (105) (712) 223 33 Income Before Taxes 3,481 3,569 (2.5%) 11,377 9,856 15.4% % of Net Sales 6.6% 6.7% 5.3% 4.9% Provision For Income Taxes 811 155 423.2% 2,991 1,818 64.5% -------------------- -------------------- Net Income $2,670 $3,414 (21.8%) $8,386 $8,038 4.3% % of Net Sales 5.0% 6.4% 3.9% 4.0% ==================== ==================== Earnings per share Diluted $0.22 $0.28 (21.4%) $0.68 $0.66 3.0% Weighted- average common shares outstanding Diluted 12,309 12,205 0.9% 12,266 12,202 0.5% ==================== ==================== Dividends Per Share $0.10 $0.10 0.0% $0.40 $0.40 0.0% ==================== ==================== SEGMENT DATA Quarter Ended: Twelve Months Ended -------------------- ------- -------------------- ------- % % 10/1/2005 10/2/2004 Change 10/1/2005 10/2/2004 Change -------------------- ------- -------------------- ------- Net Sales --------- Connectivity $39,658 $39,693 (0.1%) $162,291 $147,036 10.4% Electrical 13,351 13,404 (0.4%) 52,745 54,699 (3.6%) -------------------- -------------------- Total $53,009 $53,097 (0.2%) $215,036 $201,735 6.6% ==================== ==================== Income From Operations ----------- Connectivity $3,557 $2,007 77.2% $9,696 $4,575 111.9% Electrical 1,168 1,524 (23.4%) 4,812 6,551 (26.5%) Corporate and Other (1,349) (674) (2,908) (1,237) -------------------- -------------------- Total $3,376 $2,857 18.2% $11,600 $9,889 17.3% ==================== ==================== *T