CLARCOR Inc. (NYSE: CLC):
Unaudited Fourth Quarter and Fiscal
Year 2010 Highlights
(Amounts in millions, except per share
data and percentages)
Quarter Ended Year Ended
11/27/10 11/28/09 Change
11/27/10 11/28/09 Change
Net sales $ 275.7 $ 234.4 18 % $ 1,011.4 $
907.7 11 % Operating profit 43.8 34.7 26 % 144.6 105.7 37 %
Net earnings – CLARCOR 29.0 24.7 17 % 96.1 71.5 34 % Diluted
earnings per share $ 0.57 $ 0.49 16 % $ 1.88 $ 1.40 34 % Operating
margin 15.9 % 14.8 % 1.1 pts
14.3 % 11.6 % 2.7 pts
CLARCOR Inc. (NYSE: CLC) reported its financial
results for the fourth quarter and fiscal year 2010. Diluted
earnings per share for fiscal year 2010 grew by 34% from 2009 to a
record high of $1.88, driven by an 11%, or $103.7 million, increase
in net sales and a 2.7 point improvement in operating margin from
full year 2009. Full year 2010 highlights include the
following:
- Consolidated gross margin of 33.5% was
highest in nineteen years
- Consolidated operating margin of 14.3%
matched 2008, the highest since 1992
- Engine/Mobile segment grew sales 20%
with an operating margin of 20.7%
- Industrial/Environmental segment
operating margin exceeded 10% in last six months
- Packaging segment thirty year high in
sales and ten year high in operating margin
- Generated in excess of $140 million of
cash from operations
- Continued to enhance technological
capability, especially in media development
For the fourth quarter of 2010, diluted earnings per share
increased 16% to $0.57 on $41.3 million, or 18%, higher net sales
from the same period in 2009. Operating margin in the fourth
quarter of 2010 improved just over one point to 15.9%. Changes in
foreign currency exchange rates negatively impacted fourth quarter
2010 net sales by $0.3 million but positively impacted operating
profit by $0.2 million compared to the fourth quarter of 2009.
Changes in foreign currency exchange rates positively impacted full
year 2010 net sales by $6.6 million and operating profit by $1.7
million compared to the full year 2009.
Norm Johnson, CLARCOR’s Chairman and Chief Executive Officer,
said, “We finished 2010 with another solid quarter. Our strong
operating performance in the fourth quarter allowed us to cap off
our year with record high earnings per share of $1.88, two cents
better than our previous record high in 2008. This record
performance is reflective of our recovery from the negative impact
of the recession and the benefits of the various cost reduction
initiatives we have put in place including the restructuring of our
HVAC filter operations. Our 14.3% operating margin in 2010 matched
our 2008 operating margin, the highest in the past eighteen years.
Our 2010 success positions us well for another anticipated record
year in 2011.
“Our Baldwin business unit continues to be our backbone.
Performance at Baldwin in 2010 drove our 20% sales growth and 20.7%
operating margin in our Engine/Mobile Filtration segment. As a
testament to Baldwin’s long-term success, 2010 was the tenth
consecutive year that operating margin exceeded 20% in our
Engine/Mobile Filtration segment. We expect this success to
continue as Baldwin further solidifies its position as a leader in
the heavy-duty engine filtration market in the U.S. and pursues
exciting growth opportunities in China and other international
markets.
“We are certainly proud of the significant improvements in the
operating margin at our Industrial/Environmental Filtration segment
in 2010. We posted operating margins in this segment in excess of
10.0% in each of the third and fourth quarters of 2010. We
anticipate building upon this success to exceed 10% operating
margin in this segment for the full year 2011.
“Our 33.5% gross margin in 2010 was our highest gross margin
percentage in almost twenty years—exceeding the 32.1% gross margin
percentage in 2008 despite 2010 sales being 5% lower than 2008
sales. This gross margin improvement from 2008 despite lower sales
reflected the benefits of the restructuring of our HVAC filter
operations and our ongoing focus on eliminating cost and improving
efficiency at all of our businesses through our continuous
improvement culture.
“We believe our current cost structure positions us well to
capitalize on our anticipated growth going forward. We are focused
on growth through the introduction of new filtration solutions and
leveraging the strength of existing products and technologies into
new markets, both domestically and abroad.”
Fourth Quarter Results:
Engine/Mobile Filtration
Segment
Net sales at our Engine/Mobile Filtration segment for the fourth
quarter of 2010 increased $18.3 million, or 18%, compared with the
fourth quarter of 2009. Most of this increase was related to
additional heavy-duty engine filter sales, which have been
positively influenced by the renewed strength in the U.S. trucking
industry. Through November 2010, heavy-duty truck tonnage in the
U.S. was approximately 6% higher compared with the same period in
2009. International sales of heavy-duty engine filters continue to
be strong, notably in China, where sales increased almost 50% in
the fourth quarter of 2010 compared with the fourth quarter of
2009. Our growth in China is primarily the result of the
development of new products sold to existing OEM customers for both
first-fit and aftermarket applications as we continue to expand our
China product offering.
Operating profit at our Engine/Mobile Filtration segment for the
fourth quarter of 2010 increased $3.3 million, or 15%, from the
fourth quarter of 2009. This increase was primarily the result of
higher year-over-year heavy-duty engine filter sales. Despite the
improvement in operating profit, operating margin declined in the
fourth quarter to 21.1% from 21.7% from the comparable period last
year. This reduction was primarily the result of approximately $6.0
million of additional selling and administrative expenses, the
majority of which was employee compensation associated with our
company-wide profit sharing program.
Industrial/Environmental Filtration
Segment
The operating margin in the fourth quarter of 2010 in our
Industrial/Environmental Filtration segment was 12.2%. The fourth
quarter was the second consecutive quarter where we exceeded our
long-term operating margin goal of 10.0% for this segment. The just
over three point improvement in operating margin from the fourth
quarter of 2009 was driven by an $18.2 million, or 16%, increase in
net sales and the corresponding absorption of fixed costs, the
improved cost structure following the restructuring at our HVAC
filter operations and the continued improvement in operating
performance at our Total Filtration Services (“TFS”) distribution
business—which has improved operating margin for seven consecutive
quarters.
Our European net sales in the Industrial/Environmental
Filtration segment increased slightly in the fourth quarter of 2010
compared to the same period last year. However, our European net
sales in this segment increased almost 28% from the third quarter
of 2010 on the strength of natural gas vessel orders sold into the
Mideast, a geographic market we serve from our European operations.
We anticipate continued growth in the Mideast in 2011 as we further
develop our market presence there.
Sales of our natural gas vessels and aftermarket filters outside
Europe in the fourth quarter of 2010 increased $6.8 million, or
33%, from the fourth quarter of 2009 and $5.6 million, or 25%, from
the third quarter of 2010. This increase was the result of a
significant natural gas vessel and element order for a large
project in Malaysia. We anticipate continued overall growth in our
natural gas market as we maintain our natural gas vessel business
while growing our natural gas element aftermarket business.
Packaging Segment
Net sales in our Packaging segment increased $4.8 million, or
22%, to $27.0 million in the fourth quarter of 2010 as compared to
the same period in the prior year. This increase was primarily
driven by additional sales of smokeless tobacco packaging and
decorated flat sheet metal. Operating profit in the fourth quarter
of 2010 rose from 2009 primarily due to the incremental profit from
this increase in sales.
2011 Guidance
Norm Johnson, Chairman and Chief Executive Officer, commented on
CLARCOR’s 2011 guidance, “We expect to build upon our 2010 success
in fiscal year 2011. We will focus on the continued growth of our
top-line through the introduction of innovative products while
leveraging our technology capabilities, including media
development. In addition, we will continue to expand our
geographical presence in developing markets, notably China and the
rest of Asia—where we expect to grow sales in excess of 30% next
year. Moreover, consistent with our continuous improvement culture,
we will continue to focus on reducing costs while optimizing
process efficiencies.”
We expect to generate diluted earnings per
share in the range of $2.10 to $2.25 in fiscal year 2011.
Anticipated sales growth and operating margin by segment and on a
consolidated basis are as follows:
2011 Estimated
Sales Growth
2011 Estimated
Operating Margin
Engine/Mobile Filtration 9.0% to 11.0% 20.0% to 22.0%
Industrial/Environmental Filtration 10.0% to 12.0% 10.0% to 11.0%
Packaging -9.0% to -7.0% 8.0% to 9.0% CLARCOR 8.0% to 10.0% 14.5%
to 15.5%
We expect 2011 cash from operations will be between $120 and
$130 million, capital expenditures will be between $30 and $40
million and our effective tax rate will range between 32% and 33%.
Our 2011 guidance does not include the impact of our recently
announced Transweb acquisition which we expect to be slightly
accretive in fiscal year 2011.
Engine/Mobile Filtration
We expect continued solid growth in this segment in 2011,
primarily from sales of heavy-duty engine filters in both U.S. and
international markets—notably China and the rest of Asia. Although
we anticipate stronger growth internationally, our domestic sales
are targeted to grow in excess of 6% in 2011. Achieving this
domestic growth is dependent upon the continued expansion of the
U.S. economy and the related increase in truck tonnage in 2011.
Industrial/Environmental Filtration
We project 2011 operating margin in this segment will exceed our
long-stated goal of 10.0%. We expect that continued cost
improvements at our HVAC filter and TFS businesses, in conjunction
with several growth opportunities we foresee in this segment, will
facilitate us reaching this goal. Our anticipated double-digit
sales growth is driven by the further development of new products,
the full launch of our self-supported pleat (“SSP”) HVAC filter
product, the continued penetration of the natural gas element
aftermarket and the growth of our current filtration products in
international markets, including the Mideast and Brazil.
Packaging
Our Packaging segment had a very successful 2010 with a 9.4%
operating margin and its highest sales level in almost 30 years. We
project sales in this segment to decline in 2011 primarily due to a
no-margin, $4.6 million equipment and tooling sale to one of our
customers in 2010 that will not repeat in 2011. Sales to the
smokeless tobacco and flat sheet metal markets in this segment are
anticipated to remain strong in 2011.
CLARCOR will be holding a conference call to discuss the fourth
quarter results at 10:00 a.m. CDT on January 13, 2011. Interested
parties can listen to the conference call at www.clarcor.com or
www.viavid.net. A replay will be available on these websites and
also at 877-870-5176 or 858-384-5517 by providing confirmation code
8791734. The replay will be available through January 27, 2011 by
telephone and for 30 days on the Internet.
CLARCOR is based in Franklin, Tennessee, and is a diversified
marketer and manufacturer of mobile, industrial and environmental
filtration products and consumer and industrial packaging products
sold in domestic and international markets. Common shares of
CLARCOR are traded on the New York Stock Exchange under the symbol
CLC.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements made in this press release other than
statements of historical fact, are forward-looking statements.
These statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may include, among other things:
statements and assumptions relating to future growth, as well as
management's short-term and long-term performance goals; statements
regarding anticipated order patterns from our customers or the
anticipated economic conditions of the industries and markets that
we serve; statements related to the performance of the U.S. and
other economies generally; statements relating to the anticipated
effects on results of operations or financial condition from recent
and expected developments or events; statements relating to the
Company's business and growth strategies; and any other statements
or assumptions that are not historical facts. The Company believes
that its expectations are based on reasonable assumptions. However,
these forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
Company's actual results, performance or achievements, or industry
results, to differ materially from the Company's expectations of
future results, performance or achievements expressed or implied by
these forward-looking statements. The Company's past results of
operations do not necessarily indicate its future results. In
addition, the Company’s results of operations for fiscal year 2010
are subject to finalization of the Company’s year-end financial and
accounting procedures. These and other uncertainties are discussed
in the "Risk Factors'' section of the Company’s 2009 Form 10-K. The
future results of the Company may fluctuate as a result of these
and other risk factors detailed from time to time in the Company's
filings with the Securities and Exchange Commission. You should not
place undue reliance on any forward-looking statements. These
statements speak only as of the date of this press release. Except
as otherwise required by applicable laws, the Company undertakes no
obligation to publicly update or revise any forward-looking
statements or the risk factors described in this press release,
including projected sales and profit levels for any business
segment in any given quarter, whether as a result of new
information, future events, changed circumstances or any other
reason after the date of this press release.
CLARCOR 2010 FOURTH QUARTER RESULTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in
thousands except per share data)
Quarter Ended
Twelve Months Ended
November 27, November 28, November 27,
November 28, 2010 2009 2010 2009
Net sales $ 275,659 $ 234,392 $ 1,011,429 $ 907,748 Cost of
sales 183,461 159,628 673,022
628,460 Gross profit 92,198 74,764
338,407 279,288 Selling and administrative expenses
48,349 40,028 193,758
173,555 Operating profit 43,849
34,736 144,649 105,733
Other income (expense): Interest expense (206 ) (272 ) (546 )
(2,120 ) Interest income 102 8 288 278 Other, net (386 )
1,124 (968 ) 1,758
(490 ) 860 (1,226 ) (84 )
Earnings before income taxes 43,359 35,596 143,423 105,649
Provision for income taxes 14,321 10,933
47,072 33,819 Net
earnings 29,038 24,663 96,351 71,830
Net (earnings) losses attributable to
noncontrolling interests
(34 ) 15 (270 ) (287 )
Net earnings attributable to CLARCOR Inc $ 29,004 $ 24,678
$ 96,081 $ 71,543 Net earnings per
share attributable to CLARCOR Inc: Basic $ 0.57 $ 0.49
$ 1.90 $ 1.41 Diluted $ 0.57 $ 0.49
$ 1.88 $ 1.40 Average number of shares
outstanding: Basic 50,614,269 50,546,964
50,678,617 50,851,933 Diluted
51,189,705 50,847,813 51,156,229
51,120,286 Dividends paid per share $
0.1050 $ 0.0975 $ 0.3975 $ 0.3675
CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars
in thousands)
November 27,
November 28, 2010 2009 ASSETS Current
assets: Cash and cash equivalents $ 117,022 $ 59,277 Restricted
cash 708 762 Short-term investments - 32,171
Accounts receivable, less allowance for
losses of $11,428 for 2010 and $15,150 for 2009
188,186 164,545 Inventories: Raw materials 67,011 57,579 Work in
process 26,219 23,405 Finished products 89,154
76,432 Total inventories 182,384
157,416 Deferred income taxes 25,081 27,567 Income tax
receivable 7,324 - Prepaid expenses and other current assets
5,568 6,790 Total current assets
526,273 448,528 Plant assets at cost,
456,547 447,241 less accumulated depreciation (275,372 )
(259,150 ) 181,175 188,091
Assets held for sale 2,000 - Goodwill 228,105 228,182
Acquired intangibles, less accumulated amortization 91,174 95,990
Deferred income taxes 1,000 630 Other noncurrent assets
12,684 12,469 Total assets $ 1,042,411
$ 973,890
LIABILITIES Current liabilities:
Current portion of long-term debt $ 146 $ 99 Accounts payable
64,630 54,627 Accrued insurance liabilities 11,473 10,572 Accrued
salaries, wages and commissions 31,497 8,599 Customer deposits
7,732 8,705 Compensated absences 8,172 7,903 Other accrued
liabilities 36,702 36,018 Income taxes 3,105
5,419 Total current liabilities 163,457
131,942 Long-term debt, less current portion 17,331
52,096 Postretirement healthcare benefits 540 689 Long-term pension
liabilities 65,584 61,746 Deferred income taxes 31,266 32,136 Other
long-term liabilities 5,138 5,394 Total
liabilities 283,316 284,003
Contingencies Redeemable noncontrolling interest 1,568 1,412
SHAREHOLDERS' EQUITY Capital stock 50,335 50,393 Capital in
excess of par value 33,698 36,814 Accumulated other comprehensive
loss (35,041 ) (32,879 ) Retained earnings 707,478
632,291 Total CLARCOR Inc. equity 756,470
686,619 Noncontrolling interests 1,057
1,856 Total shareholders' equity
757,527 688,475 Total liabilities and
shareholders' equity $ 1,042,411 $ 973,890
CONSOLIDATED CONDENSED CASH FLOWS (Dollars in
thousands)
Twelve Months Ended
November 27, November 28, 2010
2009 Cash flows from operating activities: Net
earnings $ 96,351 $ 71,830 Depreciation 26,119 26,005 Amortization
4,802 4,957 Stock-based compensation expense
4,602 4,088 Excess tax benefit from stock-based compensation
(2,500 ) (1,854 ) Changes in short-term investments
32,171 (24,902 )
Changes in assets and liabilities,
excluding short-term investments
(19,774 ) 32,459 Other, net
512 821 Net cash provided by operating
activities
142,283 113,404
Cash flows
from investing activities: Additions to plant assets
(23,371 ) (21,740 ) Proceeds from disposition of plant assets
2,296 815 Business acquisitions, net of cash acquired
- (7,326 ) Proceeds from insurance claim
557 500 Investment in affiliates
(199 ) (1,794 ) Other, net
- (65 ) Net cash used in investing activities
(20,717 ) (29,610 )
Cash flows from
financing activities: Net payments under line of credit (35,000
) (40,000 ) Borrowings under long-term debt - 8,410 Payments on
long-term debt (164 ) (838 )
Sale of capital stock under stock option
and employee purchase plans
7,290 3,616 Acquisition of noncontrolling interest (732 ) (4,592 )
Purchase of treasury stock (16,277 ) (19,767 ) Excess tax benefits
from stock-based compensation 2,500 1,854 Cash dividends paid
(20,143 ) (18,682 ) Net cash used in financing
activities (62,526 ) (69,999 ) Net effect of
exchange rate changes on cash (1,295 ) 4,767
Net change in cash and cash equivalents 57,745 18,562
Cash and cash equivalents, beginning of period 59,277
40,715 Cash and cash equivalents, end of
period $ 117,022 $ 59,277 Cash paid during the
period for: Interest $ 1,161 $ 708 Income taxes $
54,560 $ 32,208
QUARTERLY INCOME
STATEMENT DATA BY SEGMENT (Dollars in thousands)
2010 Quarter Quarter
Quarter Quarter Ended Ended
Ended Ended Twelve February 27 May
29 August 28 November 27 Months Net
sales by segment: Engine/Mobile Filtration $ 96,428 $ 113,434 $
118,753 $ 117,489 $ 446,104 Industrial/Environmental Filtration
102,027 117,566 119,589 131,177 470,359 Packaging 16,676
26,869 24,428 26,993
94,966 $ 215,131 $ 257,869 $
262,770 $ 275,659 $ 1,011,429
Operating profit by segment: Engine/Mobile Filtration $
17,862 $ 23,643 $ 25,937 $ 24,804 $ 92,246 Industrial/Environmental
Filtration 4,283 10,371 12,887 15,974 43,515 Packaging 751
2,198 2,868 3,071
8,888 $ 22,896 $ 36,212 $ 41,692
$ 43,849 $ 144,649
Operating margin by
segment: Engine/Mobile Filtration 18.5 % 20.8 % 21.8 % 21.1 %
20.7 % Industrial/Environmental Filtration 4.2 % 8.8 % 10.8 % 12.2
% 9.3 % Packaging 4.5 % 8.2 % 11.7 %
11.4 % 9.4 % 10.6 % 14.0 % 15.9 %
15.9 % 14.3 %
2009
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Twelve
February 28 May 30 August 29 November
28 Months Net sales by segment: Engine/Mobile
Filtration $ 85,380 $ 92,277 $ 96,445 $ 99,193 $ 373,295
Industrial/Environmental Filtration 113,458 119,889 114,630 113,023
461,000 Packaging 14,852 17,229
19,196 22,176 73,453 $ 213,690
$ 229,395 $ 230,271 $ 234,392 $ 907,748
Operating profit by segment: Engine/Mobile
Filtration $ 13,301 $ 18,457 $ 21,904 $ 21,554 $ 75,216
Industrial/Environmental Filtration 663 5,864 7,944 10,241 24,712
Packaging (277 ) 909 2,232
2,941 5,805 $ 13,687 $ 25,230
$ 32,080 $ 34,736 $ 105,733
Operating margin by segment: Engine/Mobile Filtration 15.6 %
20.0 % 22.7 % 21.7 % 20.1 % Industrial/Environmental Filtration 0.6
% 4.9 % 6.9 % 9.1 % 5.4 % Packaging -1.9 % 5.3 %
11.6 % 13.3 % 7.9 % 6.4 % 11.0 %
13.9 % 14.8 % 11.6 %
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