CLARCOR Inc. (NYSE: CLC):
Unaudited Fourth Quarter and Full Year
2011 Highlights
(Amounts in millions, except per share
data and percentages)
Quarter Ended
Year Ended 12/3/11 11/27/10
Change 12/3/11 11/27/10
Change Net sales $ 307.5 $ 275.7 12 % $
1,126.6 $ 1,011.4 11 % Operating profit 54.7 43.8 25
% 181.3 144.6 25 % Net earnings – CLARCOR 37.2 29.0 28 % 124.0 96.1
29 % Diluted earnings per share $ 0.73 $ 0.57 28 % $ 2.42 $ 1.88 29
% Operating margin 17.8 % 15.9 % 1.9
pts 16.1 % 14.3 % 1.8 pts
CLARCOR Inc. (NYSE: CLC) reported its financial
results for the fourth quarter and full year 2011. Diluted earnings
per share for 2011 grew by 29% from 2010 to a record high of $2.42,
driven by an 11% increase in net sales and a 1.8 percentage point
improvement in operating margin. Significant full year financial
and strategic highlights for 2011 include the following:
- 16.1% operating margin and 34.0% gross
margin were highest in twenty years
- Industrial/Environmental segment
operating margin of 11.1% was highest in over thirty years
- Engine/Mobile segment operating margin
exceeded 20.0% for eleventh consecutive year
- China heavy-duty engine filter sales
increased by almost 30% from 2010
- Generated $119 million of cash from
operations and returned $51 million to shareholders
- Purchased TransWeb to enhance internal
development of media technology
- Committed $28.0 million to invest in
additional heavy-duty engine filter capacity
The Company’s fourth quarter 2011 diluted earnings per share
increased 28% from last year to a record quarterly high of $0.73,
exceeding the previous high by 14%. This increase in diluted
earnings per share from the fourth quarter of 2010 was driven by a
12% increase in net sales and a 1.9 percentage point improvement in
operating margin. Changes in average foreign currency exchange
rates positively influenced net sales by $0.5 million and had no
significant impact on operating profit in the fourth quarter of
2011 compared with the fourth quarter of 2010. Changes in average
foreign currency exchange rates positively influenced net sales by
$12.5 million and operating profit by $2.3 million for the full
year 2011 compared with the full year 2010. In addition, our fiscal
year 2011 included fifty-three weeks while our fiscal year 2010
included fifty-two weeks. We estimate that the additional week in
2011 positively influenced net sales growth from 2010 by
approximately 1.5%.
Chris Conway, CLARCOR’s Chief Executive Officer, commented, “We
capped off another successful year with record fourth quarter
results. We are particularly proud of our 17.8% operating margin in
the fourth quarter—almost two percentage points higher than last
year’s fourth quarter and our highest quarterly operating margin
since 1991. This operating margin improvement combined with our
continued sales growth facilitated our fourth quarter being the
eighth consecutive quarter where we exceeded our previous year’s
quarterly diluted earnings per share by at least 15%. Once again,
this consistent success is a result of the continued execution of
our long-term strategy including a commitment to sustainable sales
growth, cost containment and continuous improvement.
“All of our reporting segments contributed to our strong full
year 2011 financial performance. Supported by the continued
strength of our Baldwin heavy-duty engine filter business, our
Engine/Mobile Filtration segment grew sales 14% and improved its
operating margin 1.4 percentage points. Our
Industrial/Environmental Filtration segment increased sales 11% and
exceeded its 2011 operating margin goal of 10% by more than a full
percentage point. Our Packaging segment improved its operating
margin by 1.7 percentage points despite relatively flat sales. The
stronger performance at each of our reporting segments enabled our
consolidated operating margin to improve to 16.1%, the highest
level in twenty years.
“This 2011 success would not have been possible without our
continued focus on profitable growth. Our sales growth in 2011 was
geographically balanced—U.S. sales grew 12% and foreign sales grew
11%. Our foreign sales growth was driven by a 19% increase in sales
in our Engine/Mobile Filtration segment in part due to increased
sales in China. Despite a temporary reduction in heavy-duty engine
filter sales in the third quarter of 2011, sales in China returned
to expected levels in the fourth quarter and increased by 29% for
the full year. Going forward, we intend to continue to focus on
growth both in the U.S. and abroad through the introduction of new
filtration solutions while leveraging the strength of our existing
products and technologies.
“Our culture of managing costs prudently while supporting our
profitable growth was evident in our 2011 financial results. Sales
grew 11%, but selling and administrative expenses increased only
4%. As a result, our selling and administrative expenses as a
percentage of sales declined 1.3 percentage points. We believe our
current cost structure positions us well to capitalize on our
anticipated growth initiatives moving into 2012.”
Fourth Quarter Results:
Engine/Mobile Filtration
Segment
Net sales at our Engine/Mobile Filtration segment increased 17%
compared with the fourth quarter of 2010. This increase was
primarily related to higher volume of heavy-duty engine filter
sales in the U.S. and abroad. Overall, the higher net sales were
the result of 13% growth domestically and 26% growth outside the
U.S. Domestic growth was driven by higher aftermarket sales
including market share gains. Foreign growth was aided by 31%
higher sales in China compared with last year’s fourth quarter.
This foreign sales growth was also supported by higher export sales
from the U.S. and an increase in our heavy-duty engine filter sales
in Europe.
Operating profit at our Engine/Mobile Filtration segment
increased 28% from the fourth quarter of 2010. This increase was
primarily the result of higher heavy-duty engine filter sales. Our
operating margin improved 2.0 percentage points from last year’s
fourth quarter to 23.1%. This higher operating margin was primarily
the result of our ability to leverage our manufacturing overhead
and selling and administrative costs.
Industrial/Environmental Filtration
Segment
Net sales at our Industrial/Environmental Filtration segment
increased 11% from the fourth quarter of 2010. Net sales in the
U.S. rose 22% while net sales outside the U.S. declined 12%. Our
growth in domestic sales was the result of higher natural gas
vessel sales, increased sales of new air filtration products and
incremental sales from our acquisition of TransWeb, which was
completed at the end of December 2010. The reduction in sales
outside the U.S. was heavily influenced by a reduction in Asian
sales primarily due to several large natural gas vessel projects
completed in the fourth quarter of 2010 that did not repeat in the
fourth quarter this year.
Operating profit at our Industrial/Environmental Filtration
segment increased 31% from the fourth quarter of 2010. This
increase was across the broad markets we serve in this reporting
segment including $1.3 million as a result of our acquisition of
TransWeb. Our 14.4% operating margin in the fourth quarter
increased 2.2 percentage points from last year including a 1.6
percentage point improvement in gross margin percentage and a 0.6
percentage point reduction in selling and administrative costs as a
percentage of sales. This 14.4% operating margin in the fourth
quarter propelled our 2011 operating margin in this reporting
segment to 11.1%—exceeding our full year 10% operating margin
goal.
Packaging Segment
Net sales at our Packaging segment declined $2.4 million, or 9%,
from the fourth quarter of 2010. This reduction was primarily the
result of lower sales of decorated flat sheet metal including lower
holiday promotional sales. As a result of these lower sales,
operating profit in our Packaging segment declined $1.2 million, or
38%, and operating margin decreased 3.6 percentage points from the
fourth quarter of 2010. However, for the full year 2011, operating
profit increased $1.5 million, or 17%, and operating margin
increased 1.7 percentage points from last year.”
2012 Guidance
Chris Conway commented on 2012 guidance: “We expect 2012 to be
another record year where we will build upon our foundation of
success and continue to develop our core strategic initiatives
including growing the top-line through the introduction of
innovative products while leveraging our technology and media
development capabilities. As always, we intend to continue to
advance our deeply engrained culture of cost containment and
continuous improvement in support of our profitable growth.
“We anticipate continued growth in our Engine-Mobile Filtration
segment in 2012 primarily from higher sales of heavy-duty engine
filters in both the U.S. and foreign markets. We expect that our
foreign growth will be higher than our domestic growth due to
increased sales in China and export sales to South America and the
Middle East. We expect our operating margin in our
Industrial-Environmental Filtration segment to continue to expand
in 2012. This expansion should be driven by an increased sales mix
of higher margin process liquid filtration products and improved
margins in our air filtration markets. We anticipate some
challenges in our Packaging segment in 2012, but we still expect a
strong 2012 operating margin in this segment with a mid-point
projection of 10%. On a consolidated basis, we expect our organic
sales growth in 2012 to be between 6% and 8%, or between 7.5% and
9.5% excluding the impact of the fifty-third week in 2011.”
Our guidance for 2012 diluted earnings per share is $2.55 to
$2.70. Our guidance does not consider major global economic
disruptions in 2012 including in Europe and the U.S. Anticipated
sales growth from 2011 and operating margin by segment and on a
consolidated basis are as follows:
2012 EstimatedSales
Growth
2012 EstimatedOperating
Margin
Engine/Mobile Filtration 7.0% to 9.0% 22.0% to 23.0%
Industrial/Environmental Filtration 7.0% to 9.0% 11.0% to 12.0%
Packaging -7.0% to -5.0% 9.0% to 11.0% CLARCOR 6.0% to 8.0% 16.0%
to 17.0%
We project 2012 cash from operations to be between $130 million
and $140 million, capital expenditures to be between $45 million
and $55 million and our effective tax rate to be between 31.5% and
32.0%.
CLARCOR will be holding a conference call to discuss the fourth
quarter 2011 results at 10:00 a.m. CST on January 19, 2012.
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 6302094. The replay will be available
through February 2, 2012 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 may be identified from use of the words “may,”
“should,” “could,” “potential,” “continue,” “plan,” “forecast,”
“estimate,” “project,” “believe,” “intent,” “anticipate,” “expect,”
“target,” “is likely,” “will,” or the negative of these terms, and
similar expressions. 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 anticipated future
growth and results of operations, including the anticipated 2012
performance of the Company and each of its segments, and our
projections with respect to 2012 estimated sales growth and 2012
estimated operating margins for the Company and each of its
segments; statements regarding 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 regarding the development of our
core strategic initiatives, including growing our top-line through
the introduction of innovative products while leveraging our
technology and media development capabilities; statements regarding
our ability to continue our culture of cost containment and ongoing
improvement in support of profitable growth; statements regarding
the introduction of new filtration solutions and leveraging the
strength of our existing products and technologies; statements
regarding our current cost structure positions and ability to
capitalize on anticipated growth initiatives; 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. The Company’s future
results may differ materially from the Company’s past results as a
result of various risks and uncertainties, including the risk
factors discussed in the “Risk Factors” section of the Company’s
2010 Form 10-K 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 estimated sales growth and estimated
operating margin levels for 2012 for the Company and its business
segments, whether as a result of new information, future events,
changed circumstances or any other reason after the date of this
press release.
TABLES FOLLOW
CLARCOR INC. 2011 UNAUDITED FOURTH
QUARTER RESULTS
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
Quarter
Ended Twelve Months Ended December 3,
November 27, December 3, November 27,
2011 2010 2011 2010 Net sales $
307,529 $ 275,659 $ 1,126,601 $ 1,011,429 Cost of sales
200,397 183,461 743,180
673,022 Gross profit 107,132 92,198 383,421 338,407
Selling and administrative expenses 52,397
48,349 202,154 193,758
Operating profit 54,735 43,849
181,267 144,649 Other income
(expense): Interest expense (117 ) (206 ) (469 ) (546 ) Interest
income 203 102 649 288 Other, net 273 (386 )
(139 ) (968 ) 359 (490 )
41 (1,226 ) Earnings before income
taxes 55,094 43,359 181,308 143,423 Provision for income
taxes 17,694 14,321 56,947
47,072 Net earnings 37,400 29,038
124,361 96,351 Net earnings attributable to noncontrolling
interests, net of tax (156 ) (34 ) (358 )
(270 ) Net earnings attributable to CLARCOR Inc $
37,244 $ 29,004 $ 124,003 $ 96,081
Net earning per share attributable to CLARCOR Inc. - Basic $
0.74 $ 0.57 $ 2.46 $ 1.90 Net earning
per share attributable to CLARCOR Inc. - Diluted $ 0.73 $
0.57 $ 2.42 $ 1.88 Weighted average
number of shares outstanding - Basic 50,316,699
50,614,269 50,501,842 50,678,617
Weighted average number of shares outstanding - Diluted
50,995,657 51,189,705 51,191,435
51,156,229 Dividends paid per share $
0.1200 $ 0.1050 $ 0.4350 $ 0.3975
CLARCOR INC. 2011 UNAUDITED FOURTH QUARTER
RESULTS, continued
CONSOLIDATED BALANCE
SHEETS (Dollars in thousands)
December 3, November
27, 2011 2010 ASSETS Current assets: Cash
and cash equivalents $ 155,999 $ 117,022 Restricted cash 1,105 708
Accounts receivable, less allowance for losses of $9,795 and
$11,428, respectively 206,664 188,186 Inventories 200,274 182,384
Deferred income taxes 25,974 25,081 Income tax receivable 3,373
7,324 Prepaid expenses and other current assets 7,510
5,568 Total current assets 600,899
526,273 Property, plant and equipment, at
cost, less accumulated depeciation 184,992 181,175 Assets held for
sale 2,000 2,000 Goodwill 235,530 228,105 Acquired intangible
assets, less accumulated amortization 98,674 91,174 Deferred income
taxes 749 1,000 Other noncurrent assets 12,089
12,684 Total assets $ 1,134,933 $ 1,042,411
LIABILITIES Current liabilities: Current portion of
long-term debt $ 1,289 $ 146 Accounts payable and accrued
liabilities 155,585 160,206 Income taxes payable 3,176
3,105 Total current liabilities 160,050
163,457 Long-term debt, less current
portion 15,981 17,331 Long-term pension and postretirement
healthcare benefits liabilities 74,524 66,124 Deferred income taxes
36,194 31,266 Other long-term liabilities 11,069
5,138 Total liabilities 297,818
283,316 Contingencies Redeemable noncontrolling
interests 1,557 1,568
SHAREHOLDERS' EQUITY Capital
stock 50,145 50,335 Capital in excess of par value 19,453 33,698
Accumulated other comprehensive loss (44,391 ) (35,041 ) Retained
earnings 809,520 707,478 Total CLARCOR
Inc. equity 834,727 756,470
Noncontrolling interests 831 1,057
Total shareholders' equity 835,558 757,527
Total liabilities and shareholders' equity $ 1,134,933
$ 1,042,411 CLARCOR INC. 2011
UNAUDITED FOURTH QUARTER RESULTS, continued
CONSOLIDATED CASH FLOWS (Dollars in thousands)
Twelve Months Ended December 3, November 27,
2011 2010 Cash flows from operating
activities: Net earnings $ 124,361 $ 96,351 Depreciation 26,826
26,119 Amortization 5,609 4,802 Other noncash items 281 (101 ) Net
loss on disposition of plant assets 452 337 Impairment of
long-lived 87 276 Stock-based compensation expense 5,477 4,602
Excess tax benefit from stock-based compensation (5,100 ) (2,500 )
Changes in short-term investments - 32,171 Changes in assets and
liabilities, excluding short-term investments (38,544 )
(18,655 ) Net cash provided by operating activities
119,449 143,402
Cash flows from
investing activities: Restricted cash 149 (1,119 ) Business
acquisitions, net of cash acquired (16,758 ) - Additions to plant
assets (22,486 ) (23,371 ) Proceeds from disposition of plant
assets 327 2,296 Investment in affiliates (496 ) (199 ) Proceeds
from insurance claim 200 557 Net cash
used in investing activities (39,064 ) (21,836 )
Cash flows from financing activities: Net payments
under multicurrency revolving credit agreement - (35,000 ) Payments
on long-term debt (1,853 ) (164 ) Sale of capital stock under stock
option and employee purchase plans 8,449 7,290 Acquisition of
noncontrolling interests - (732 ) Purchase of treasury stock
(29,317 ) (16,277 ) Excess tax benefits from stock-based
compensation 5,100 2,500 Dividend paid to noncontrolling interests
(321 ) - Cash dividends paid (21,961 ) (20,143 ) Net
cash used in financing activities (39,903 ) (62,526 )
Net effect of exchange rate changes on cash (1,505 )
(1,295 ) Net change in cash and cash equivalents
38,977 57,745 Cash and cash equivalents, beginning of period
117,022 59,277 Cash and cash
equivalents, end of period $ 155,999 $ 117,022
Cash paid during the period for: Interest $ 300 $
1,318 Income taxes, net of refunds $ 37,959 $ 54,560
CLARCOR INC. 2011
UNAUDITED FOURTH QUARTER RESULTS, continued
QUARTERLY INCOME STATEMENT DATA BY SEGMENT (Dollars in
thousands)
2011 Quarter Quarter
Quarter Quarter Ended Ended
Ended Ended Twelve February 26 May
28 August 27 December 3 Months Net
sales by segment: Engine/Mobile Filtration $ 111,328 $ 131,276
$ 129,467 $ 137,941 $ 510,012 Industrial/Environmental Filtration
112,119 133,499 132,380 145,028 523,026 Packaging 22,273
23,758 22,972 24,560
93,563 $ 245,720 $ 288,533 $
284,819 $ 307,529 $ 1,126,601
Operating profit by segment: Engine/Mobile Filtration $
21,202 $ 29,592 $ 30,175 $ 31,870 $ 112,839
Industrial/Environmental Filtration 7,248 16,179 13,650 20,951
58,028 Packaging 2,841 3,009
2,636 1,914 10,400 $ 31,291
$ 48,780 $ 46,461 $ 54,735 $ 181,267
Operating margin by segment:
Engine/Mobile Filtration 19.0 % 22.5 % 23.3 % 23.1 % 22.1 %
Industrial/Environmental Filtration 6.5 % 12.1 % 10.3 % 14.4 % 11.1
% Packaging 12.8 % 12.7 % 11.5 % 7.8 %
11.1 % 12.7 % 16.9 % 16.3 % 17.8
% 16.1 %
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 %
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