CLARCOR Inc. (NYSE: CLC):
Unaudited Second Quarter 2012
Highlights
(Amounts in millions, except per share data and
percentages)
Three Months Ended Six Months Ended
6/2/12 5/28/11 Change
6/2/12 5/28/11 Change Net sales
$ 284.9 $ 288.5 -1 % $ 542.1 $ 534.3 1 % Operating profit 49.1 48.8
1 % 83.4 80.1 4 % Net earnings – CLARCOR 32.9 32.8 0 % 56.4 54.7 3
% Diluted earnings per share $ 0.65 $ 0.64 2 % $ 1.11 $ 1.07 4 %
Operating margin 17.2 % 16.9 % 0.3 pts 15.4 %
15.0 % 0.4 pts
CLARCOR Inc. (NYSE: CLC) reported that its diluted
earnings per share grew 2% from the second quarter of 2011 to a
record second quarter high of $0.65. Higher diluted earnings per
share were achieved despite a 1% reduction in net sales as
operating margin expanded 0.3 percentage points from last year’s
second quarter to 17.2%. Second quarter earnings were impacted by
lower operating results at the company’s Packaging segment where
net sales declined $4.2 million, or 18%, and operating profit
declined $1.3 million, or 42%, from the second quarter of 2011.
These Packaging segment results negatively influenced consolidated
diluted earnings per share by approximately $0.02 compared with
last year’s second quarter.
Changes in average foreign currency exchange rates reduced net
sales by $3.9 million, or 1%, and operating profit by $0.8 million,
or 2%, in the second quarter of 2012 compared with last year’s
second quarter. For the first six months of 2012, changes in
average foreign currency exchange rates reduced net sales by $4.7
million, or 1%, and operating profit by $0.8 million, or 1%, from
the first six months of 2011.
Chris Conway, CLARCOR’s Chief Executive Officer, commented, “We
experienced headwinds across our top-line in the second quarter, as
sales growth in several markets including our global natural gas
filtration market were more than offset by the negative effects of
foreign currency exchange rates and softness in several markets
including our U.S. heavy-duty engine aftermarket filtration
business, our China first-fit OEM heavy-duty engine filtration
business and our Packaging segment. However, our execution remained
strong as we improved our operating margin to 17.2% from 16.9% in
the second quarter of last year. Our 34.5% gross margin percentage
was consistent with last year—our highest second quarter gross
margin percentage in the last twenty years. Our selling and
administrative expenses as a percentage of net sales declined 0.3
percentage points as we continued our culture of managing
administrative expenses while supporting profitable growth. We
anticipate this execution to continue throughout 2012 as we expect
our full year operating margin to improve from the record 16.1%
operating margin from last year.
“Our second quarter results were impacted by reduced domestic
heavy-duty engine filter volume sold through our aftermarket
independent distributors. Sales through these distributors—our
primary domestic sales channel—were approximately flat with the
second quarter of 2011 after growing approximately 17% in the first
quarter of 2012 from the first quarter of 2011. Based upon
discussions with our distributors and other industry participants,
we believe that the slower growth was indicative of slowing
industry demand. To highlight the decline in order activity from
the first to second quarter, our sales to independent distributors
in February 2012 increased 23% from the prior year while our March
2012 sales declined 3% from March of 2011. Despite this slowing
industry demand, we believe we have maintained or increased our
market share through the first six months of 2012 as we have added
net independent distributors. In addition, we recently developed
and launched two significant OEM aftermarket programs previously
held by competitors. These two programs should support our domestic
heavy-duty engine filter market beginning in the third quarter of
2012 and going forward.
“Our second quarter first-fit OEM heavy-duty engine filter sales
in China were $2.4 million, or 25%, lower than the second quarter
of 2011. These lower China sales were almost entirely driven by a
decline in the local production of diesel engines in 2012. Although
conditions for the remainder of the year are uncertain, we believe
our customer relationships remain strong, and we are
well-positioned to capitalize on China’s projected long-term
heavy-duty engine filtration growth across all products and markets
including first-fit and the aftermarket.
“We continue to improve our financial performance at our
Industrial/Environmental Filtration segment where our second
quarter operating margin improved to 13.2% from 12.1% in last
year’s second quarter. For the first six months of 2012, our
operating margin in this reporting segment improved 1.6 percentage
points to 11.1% and our operating profit increased 21% from the
first six months of 2011. With our continued focus on profitable
growth by introducing higher margin air filtration products and the
continued growth of our process liquid filtration markets, we
believe we are well-positioned to achieve our long-term operating
margin goal of 15% in this reporting segment in the next three to
four years. We believe that a significant contributor to our
expected continued profitable growth will be the further
development of our natural gas filtration business both in the U.S.
and internationally. In the U.S., our natural gas filtration sales
are expected to grow close to 10% in 2012 compared with 2011 as we
continue to focus on aftermarket element growth while further
penetrating upstream and downstream opportunities. Internationally,
we are particularly excited about our natural gas filtration growth
potential in Asia Pacific. Our natural gas filtration sales in Asia
grew almost 50% in the second quarter compared with the second
quarter of 2011 and are expected to grow at a similar rate for the
second half of this year from the comparable period last year. In
Australia, our second quarter acquisition of Modular Engineering
Pty Ltd. provides a solid platform for us to take advantage of the
high growth of natural gas extraction and transportation that is
underway in Western Australia and throughout the region. We believe
we are strongly positioned to participate in the expected global
growth in the natural gas filtration market—a market we believe has
as much long-term potential as any other filtration market.”
Second Quarter Results:
Engine/Mobile Filtration
Segment
Net sales at our Engine/Mobile Filtration segment declined less
than 1% from the second quarter of 2011. Overall, we experienced 1%
growth domestically and a 2% reduction in sales outside the U.S.
Our slower domestic growth was driven by lower orders from
independent distributors due to softer industry demand. The 2%
reduction in foreign sales (1% growth when adjusted for changes in
foreign currency) was driven by a 25% reduction in heavy-duty
engine filter sales in China. Despite recent monetary initiatives
to address slower economic activity, our outlook for China for the
remainder of 2012 remains uncertain. Lower sales in China in the
second quarter were partially offset by higher heavy-duty engine
filter sales into other foreign markets including Europe and
Northern Africa where sales increased a combined 6% from the second
quarter of 2011.
Operating profit at our Engine/Mobile Filtration segment was
comparable with the second quarter of 2011. Our operating margin
improved 0.2 percentage points from last year’s second quarter to
22.7%—the highest second quarter operating margin in our
Engine/Mobile Filtration segment in at least ten years.
Industrial/Environmental Filtration
Segment
Net sales at our Industrial/Environmental Filtration segment
increased 1% from the second quarter of 2011. Overall, these higher
net sales were the result of less than 1% sales growth domestically
and 3% sales growth outside the U.S. Our growth in domestic sales
was heavily influenced by continued strong sales at our Total
Filtration Services (TFS) distribution business which has steadily
increased sales and operating profit over the last several years.
These higher sales were offset by lower sales of aviation and
marine fuel filtration products and lower natural gas vessel sales
due to the timing of several large orders in the second quarter of
2011. The 3% increase in foreign sales (9% when adjusted for
changes in foreign currency) was driven by an approximate 34%
increase in natural gas vessel and aftermarket filter sales in
several international markets including Asia, Australia and Canada.
In addition, our European sales in this reporting segment rebounded
in the second quarter. After declining 9% in the first quarter
compared with the first quarter of 2011, our European sales grew by
8% from last year’s second quarter. This sales growth was the
result of strong dust collector system sales at our United Air
Specialist (UAS) business and higher military marine fuel
filtration sales in the U.K. Although uncertainty persists for our
outlook for the remainder of the year in Europe, we are cautiously
optimistic that our backlog heading into our second half will
facilitate the continuation of sales growth in the third and fourth
quarters.
Operating profit at our Industrial/Environmental Filtration
segment grew $1.6 million, or 10%, from the second quarter of 2011.
Our 13.2% operating margin in this reporting segment in the second
quarter increased 1.1 percentage points from last year’s second
quarter primarily due to a reduction in selling and administrative
costs as a percentage of net sales.
Packaging Segment
Net sales at our Packaging segment declined $4.2 million, or
18%, from the second quarter of 2011. Similar to the first quarter,
this reduction was primarily driven by lower smokeless tobacco
packaging sales, lower confection packaging sales and lower sales
in other markets due to inventory and production scheduling
adjustments. Lower smokeless tobacco packaging sales were primarily
due to one of our major customers qualifying a second source
supplier according to their corporate policy. The $1.3 million
reduction in operating profit and the 3.8 percentage point
reduction in operating margin compared with the second quarter of
2011 were primarily the result of lower sales.
Our operating performance in our Packaging segment significantly
improved from the first quarter as evidenced by our 8.9% operating
margin in the second quarter. We will continue to aggressively
pursue several significant sales opportunities in our pipeline over
the remainder of the year. Accordingly, we expect our Packaging
segment operating performance to continue to improve sequentially
over the third and fourth quarters of 2012.
2012 Guidance
Chris Conway commented on 2012 guidance: “Although our second
quarter earnings were the second highest in Company history, we
experienced softer demand in several of our geographic and product
markets. We believe most of this softer demand was influenced by
generally uncertain economic activity. However, our operational
execution remained strong, as evidenced by our continued
improvement in operating margin despite relatively flat sales.
However, based upon our year-to-date financial results and due to
continuing economic uncertainty, we are reducing our guidance for
2012 diluted earnings per share to $2.50 to $2.65 from our previous
guidance of $2.55 to $2.70.
"Despite lower full year financial guidance, we are cautiously
optimistic about sales growth in many of our markets in the second
half of 2012 compared with both the first half of 2012 and the
second half of 2011. We anticipate that our domestic heavy-duty
engine filter sales will be supported by the launch of two
significant OEM aftermarket programs. We expect sales growth at our
Industrial/Environmental Filtration segment to be driven by sales
of air filtration products to the swine industry in addition to a
backlog of aviation fuel, marine fuel and petrochemical filtration
sales in Europe, the Middle East and Africa. Finally, our Packaging
segment sales should sequentially improve in the third and fourth
quarters of 2012 as we recover from the turnover of significant
programs in the first half of the year.”
Anticipated sales growth from 2011 and operating margin by
segment and on a consolidated basis are as follows:
2012 Estimated Sales Growth 2012 Estimated
Operating Margin Engine/Mobile Filtration 3.0% to 5.0%
22.0% to 23.0% Industrial/Environmental Filtration 6.0% to 8.0%
11.0% to 12.5% Packaging -12.0% to -10.0% 9.0% to 10.0% CLARCOR
3.0% to 5.0% 16.0% to 17.0%
We project 2012 cash from operations to be between $125 million
and $135 million, capital expenditures to be between $40 million
and $50 million and our effective tax rate to be between 32.0% and
32.5%.
CLARCOR will be holding a conference call to discuss the second
quarter 2012 results at 10:00 a.m. CST on June 21, 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
1664629. The replay will be available through July 5, 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, our
projections with respect to 2012 estimated sales growth and 2012
estimated operating margins for the Company and each of its
segments, and our projections with respect to 2012 cash from
operations, 2012 capital expenditures and 2012 effective tax rates;
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 our anticipated execution throughout
2012 of managing administrative costs while supporting profitable
growth; statements regarding uncertain conditions in China for the
remainder of 2012, the strength of our customer relationships in
China, and our ability to capitalize on China’s projected long-term
filtration growth; statements related to the anticipated support to
our domestic heavy-duty engine filter sales from the launch of two
significant OEM aftermarket programs; statements regarding our
ability to achieve our long-term operating margin goal of 15% in
the Industrial/Environmental segment in the next three to four
years; statements regarding the further development of our natural
gas business in the U.S. and internationally, the anticipated
growth of natural gas sales in the U.S. and Asia in 2012, our
ability to participate in the expected global growth in the natural
gas market, and the long-term potential of the natural gas market;
statements regarding our outlook for China in the Mobile/Engine
Filtration segment for the remainder of 2012; statements regarding
our uncertain outlook in Europe for the Industrial/Environmental
Filtration segment for the remainder of 2012, and that our strong
backlog in this segment in Europe, the Middle East and Africa along
with expected sales growth driven by sales of air filtration
products to the swine industry could facilitate the continuation of
sales growth in the third and fourth quarters; statements regarding
our aggressive pursuit of significant sales opportunities in our
Packaging segment pipeline over the remainder of 2012, and our
expectations regarding sequential improvements in our Packaging
segment over the third and fourth quarters of 2012; 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
2011 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. 2012 UNAUDITED SECOND QUARTER RESULTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in
thousands except per share data)
Quarter Ended Six Months June 2, May
28, June 2, May 28, 2012 2011
2012 2011 Net sales $ 284,855 $ 288,533 $
542,119 $ 534,253 Cost of sales 186,670
189,071 357,719 353,838
Gross profit 98,185 99,462 184,400 180,415 Selling and
administrative expenses 49,074 50,682
100,977 100,344 Operating profit
49,111 48,780 83,423
80,071 Other income (expense): Interest
expense (88 ) (221 ) (188 ) (265 ) Interest income 169 239 303 276
Other, net (117 ) (228 ) 495
(428 ) (36 ) (210 ) 610
(417 ) Earnings before income taxes 49,075 48,570 84,033
79,654 Provision for income taxes 15,996
15,689 27,462 24,852
Net earnings 33,079 32,881 56,571 54,802
Net (earnings) losses attributable to
noncontrolling interests
(152 ) (73 ) (165 ) (113 ) Net
earnings attributable to CLARCOR Inc $ 32,927 $ 32,808
$ 56,406 $ 54,689 Net earning per share
attributable to CLARCOR Inc. - Basic $ 0.65 $ 0.65 $
1.12 $ 1.08 Net earning per share attributable to
CLARCOR Inc. - Diluted $ 0.65 $ 0.64 $ 1.11 $
1.07 Weighted average number of shares outstanding -
Basic 50,378,164 50,594,963
50,394,680 50,581,731 Weighted average number
of shares outstanding - Diluted 50,980,347
51,282,383 51,037,366 51,284,811
Dividends paid per share $ 0.1200 $ 0.1050 $
0.2400 $ 0.2100 CLARCOR INC. 2012 UNAUDITED SECOND
QUARTER RESULTS, continued
CONSOLIDATED
CONDENSED BALANCE SHEETS (Dollars in thousands)
June 2,
December 3, 2012 2011 ASSETS Current
assets: Cash and cash equivalents $ 140,574 $ 155,999 Restricted
cash 616 1,105
Accounts receivable, less allowance for
losses of $10,266 and $9,795, respectively
208,130 206,664 Inventories 210,896 200,274 Deferred income taxes
26,156 25,974 Income tax receivable - 3,373 Prepaid expenses and
other current assets 7,169 7,510 Total
current assets 593,541 600,899
Plant assets, at cost, less accumulated depreciation of
$303,845 and $293,111, respectively 192,105 184,992 Assets held for
sale 2,000 2,000 Goodwill 240,740 235,530 Acquired intangibles,
less accumulated amortization 98,071 98,674 Deferred income taxes
505 749 Other noncurrent assets 15,898 12,089
Total assets $ 1,142,860 $ 1,134,933
LIABILITIES Current liabilities: Current portion of
long-term debt $ 1,321 $ 1,289 Accounts payable and accrued
liabilities 142,610 155,585 Income taxes payable 847
3,176 Total current liabilities 144,778
160,050 Long-term debt, less current portion
16,598 15,981 Long-term pension and postretirement healthcare
benefits liabilities 59,921 74,524 Deferred income taxes 42,240
36,194 Other long-term liabilities 8,759
11,069 Total liabilities 272,296
297,818 Contingencies Redeemable noncontrolling
interests 1,615 1,557
SHAREHOLDERS' EQUITY Capital
stock 50,141 50,145 Capital in excess of par value 16,773 19,453
Accumulated other comprehensive loss (52,698 ) (44,391 ) Retained
earnings 853,959 809,520 Total CLARCOR
Inc. equity 868,175 834,727
Noncontrolling interests 774 831 Total
shareholders' equity 868,949 835,558
Total liabilities and shareholders' equity $ 1,142,860 $
1,134,933 CLARCOR INC. 2012 UNAUDITED SECOND QUARTER
RESULTS, continued
CONSOLIDATED CONDENSED CASH FLOWS
(Dollars in thousands)
Six Months Ended
June 2, May 28, 2012 2011 Cash flows
from operating activities: Net earnings $ 56,571 $ 54,802
Depreciation 13,192 13,956 Amortization 2,877 2,750 Other noncash
items (67 ) (175 ) Net loss (gain) on disposition of plant assets
(553 ) 31 Stock-based compensation expense 4,152 3,700 Excess tax
benefit from stock-based compensation (2,487 ) (2,041 ) Deferred
income taxes 8,890 (729 ) Changes in assets and liabilities
(49,197 ) (33,138 ) Net cash provided by operating
activities 33,378 39,156
Cash
flows from investing activities: Restricted cash 91 172
Business acquisitions, net of cash acquired (10,510 ) (10,455 )
Additions to plant assets (19,398 ) (9,271 ) Proceeds from
disposition of plant assets 446 233 Investment in affiliates
(357 ) - Net cash used in investing activities
(29,728 ) (19,321 )
Cash flows from financing
activities: Payments on long-term debt (79 ) (1,797 ) Payment
of financing costs (564 ) - Sale of capital stock under stock
option and employee purchase plans 3,864 5,820 Purchase of treasury
stock (11,383 ) (8,892 ) Excess tax benefits from stock-based
compensation 2,487 2,041 Cash dividends paid (12,096 )
(10,618 ) Net cash used in financing activities
(17,771 ) (13,446 ) Net effect of exchange rate
changes on cash (1,304 ) (1,468 ) Net change
in cash and cash equivalents (15,425 ) 4,921 Cash and cash
equivalents, beginning of period 155,999
117,022 Cash and cash equivalents, end of period $
140,574 $ 121,943
Cash paid during the
period for: Interest $ 144 $ 70 Income taxes, net
of refunds $ 18,849 $ 13,785 CLARCOR INC. 2012
UNAUDITED SECOND QUARTER RESULTS, continued
QUARTERLY
INCOME STATEMENT DATA BY SEGMENT (Dollars in thousands)
Quarter Ended Six Months June
2, May 28, June 2, May 28, 2012
2011 2012 2011 Net sales by segment:
Engine/Mobile Filtration $ 130,677 $ 131,276 $ 250,960 $ 242,604
Industrial/Environmental Filtration 134,629 133,499 255,743 245,618
Packaging 19,549 23,758 35,416
46,031 $ 284,855 $ 288,533 $
542,119 $ 534,253
Operating profit by
segment: Engine/Mobile Filtration $ 29,628 $ 29,592 $ 52,925 $
50,794 Industrial/Environmental Filtration 17,747 16,179 28,452
23,427 Packaging 1,736 3,009
2,046 5,850 $ 49,111 $ 48,780 $
83,423 $ 80,071
Operating margin by
segment: Engine/Mobile Filtration 22.7 % 22.5 % 21.1 % 20.9 %
Industrial/Environmental Filtration 13.2 % 12.1 % 11.1 % 9.5 %
Packaging 8.9 % 12.7 % 5.8 % 12.7 %
17.2 % 16.9 % 15.4 % 15.0 %
Clarcor (NYSE:CLC)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Clarcor (NYSE:CLC)
Historical Stock Chart
Von Jul 2023 bis Jul 2024