CLARCOR Inc. (NYSE: CLC):
Unaudited Fourth Quarter and Full Year 2014
Highlights
(Amounts in millions, except per share data and
percentages)
GAAP Financial Results:
Three Months Ended Full Year
Ended 11/29/14 11/30/13
Change 11/29/14 11/30/13
Change Net sales $ 413.4 $ 297.8 39 % $
1,512.9 $ 1,130.8 34 % Operating profit 65.8 49.4 33
% 210.4 174.6 21 % Net earnings - CLC 43.5 32.9 32 % 144.1 118.1 22
% Diluted EPS $ 0.86 $ 0.65 32 % $ 2.83 $ 2.34 21 % Operating
margin 15.9 % 16.6 % -0.7 pts 13.9 %
15.4 % -1.5 pts
Non-GAAP Adjusted Financial Results:
The full year 2014 contained integration, purchase accounting
and deal related costs associated with three fiscal year 2014
acquisitions (none of such costs were incurred in fourth quarter
2014). In addition, full year 2014 contained a bargain purchase
gain related to the Bekaert Advanced Filtration acquisition. The
fourth quarter 2013 contained $2.7 million of acquisition related
costs and full year 2013 contained $2.7 million of acquisition
related costs and two pre-tax, non-cash charges aggregating $7.7
million, consisting of a $4.6 million loss on the disposal of
equipment and a $3.1 million charge to account for the settlement
of a final pension obligation. The following table reflects 2013
and 2014 fourth quarter and full year GAAP results adjusted for
each of these items (provided, there were no adjustments for fourth
quarter 2014). A reconciliation of non-GAAP financial measures,
shown in the following table, adjusting for these items in fourth
quarter 2013 and full year 2013 and 2014 to GAAP figures is
provided on pages 11 - 13 of this release.
Three Months Ended Full Year
Ended 11/29/14 11/30/13
Change 11/29/14 11/30/13
Change Net sales $ 413.4 $ 297.8 39 % $
1,512.9 $ 1,130.8 34% Adjusted operating profit 65.8
52.2 26 % 224.3 185.1 21% Adjusted net earnings - CLC 43.5 34.7 25
% 151.0 124.9 21% Adjusted diluted EPS $ 0.86 $ 0.69 25 % $ 2.97 $
2.47 20% Adjusted operating margin 15.9% 17.5% -1.6
pts 14.8% 16.4% -1.6 pts
CLARCOR Inc. (NYSE: CLC) reported that its diluted
earnings per share for the fourth quarter of 2014 increased 32%
from the fourth quarter of 2013 to a record fourth quarter high of
$0.86. Net sales increased $115.6 million, or 39%, from last year’s
fourth quarter, primarily driven by $88.0 million of additional
sales from three acquisitions completed in fiscal year 2014. Base
business net sales increased $27.6 million, or 9%, from the fourth
quarter of 2013, including 10% organic sales growth in the
Industrial/Environmental Filtration segment and 8% organic sales
growth in the Engine/Mobile Filtration segment. All references in
this earnings release to the financial results of our “base
business” or “organic” financial results, at the consolidated or
reporting segment level, refer to our consolidated or segment
results without giving effect to the three fiscal year 2014
acquisitions.
Chris Conway, CLARCOR’s Chairman, President and Chief Executive
Officer, commented, “Our fourth quarter financial and operating
performance capped off a transformative 2014—a year where we
completed two of the largest acquisitions in CLARCOR’s history, we
achieved solid organic growth with base business sales expanding 7%
year-over-year, we generated a record high 2014 non-GAAP adjusted
diluted earnings per share of $2.97 and we committed to the
continued development of value-added technology with a new
innovation center. We believe this positive 2014 momentum will
extend into 2015 and beyond as we continue to focus on achieving
our long-term strategic objectives.
“Two significant events transpired in the first half of 2014
with the successful acquisitions of GE Air Filtration and Stanadyne
Filtration. Each acquisition was strategically transformative in
its own right. The GE Air Filtration acquisition provides us with
new strategic access to several filtration markets including gas
turbine inlet, and the Stanadyne Filtration acquisition further
extends our distribution channel access to OE first-fit and OE
aftermarket customers in our heavy-duty engine filtration market.
We have been pleased with the financial performance of each
acquisition as net sales at GE Air Filtration, renamed CLARCOR
Industrial Air, increased 9% in 2014 including a 16% increase in
gas turbine filtration sales, with full year operating margin
approximating 10%, which we believe has the potential to expand to
15% in the long-run. From acquisition date, net sales at Stanadyne
Filtration, renamed CLARCOR Engine Mobile Solutions, increased 2%
from the comparable period in 2013, and operating margin was at the
upper-end of our historic Engine/Mobile Filtration segment
operating margin range. We successfully completed the most
significant tasks to carve-out CLARCOR Industrial Air from GE’s
internal systems and processes at the end of the third quarter, and
our integration of CLARCOR Engine Mobile Solutions remains on
schedule to be completed mid-year 2015. We are pleased with the
integration process for each of these acquisitions in 2014 and are
excited about the strategic value each offers as we work to
leverage their products and channels across other CLARCOR operating
companies. Going-forward, we anticipate continuing our
opportunistic acquisition strategy, as evidenced by our first
quarter 2015 acquisition of Filter Resources—which we believe will
significantly augment our access to oil & gas filtration at
domestic refineries and petrochemical facilities.
“While we have invested significant time and resources in 2014
to complete and integrate these acquisitions, we have maintained
focus on growing our base business. Our consolidated organic sales
increased 7% for the full year, including 9% in the fourth quarter.
This organic growth was driven by many of our filtration markets,
but it was notably led by our U.S. heavy-duty engine filtration
aftermarket sales which increased 10% for the full year and 17% in
the fourth quarter. We believe our U.S. organic growth is due to
the further penetration of relatively new distribution channels and
additional market share at some of our larger existing customers.
We anticipate continued execution of our long-term strategic growth
initiatives including penetrating new distribution channels, and we
expect 2015 sales growth in our U.S. heavy-duty engine filtration
aftermarket to be in the mid- to upper-single digits compared to
2014. Consistent with recent years, also contributing to our strong
2014 organic growth was our oil & gas filtration
market—excluding off-shore oil drilling—which expanded 8% for the
full year and 10% in the fourth quarter. Notwithstanding potential
risks resulting from recent declines in oil prices, we anticipate
strong sales growth in our oil & gas filtration market from
continued shale development in the U.S. and our further expansion
into international markets. Accordingly, we expect annual oil &
gas filtration sales growth in excess of 10% for 2015. Several of
our smaller filtration markets also demonstrated strong growth in
2014 including our locomotive market which increased sales 12% from
2013 due to strength in domestic rail activity and our dust
collection system market which grew 23% from 2013 due to continued
penetration of several OE customers. In summary, despite the
significant business development activity this year, we have not
taken our focus off of our base business and our long-term organic
growth initiatives. We believe our current year acquisitions only
add to the strategic position of an already strong core filtration
portfolio.
“This past year also saw our continued commitment to the
development of product, process and information technology, as we
began the build-out of our new $10 million CLARCOR Innovation
Center in Columbia, Tennessee and announced plans to significantly
upgrade our enterprise information technology systems—beginning
with a multi-year implementation at our Engine/Mobile Filtration
segment global operating units. Our investments in technology and
other growth initiatives do come at a cost, which partly
contributed to a reduction in our full year base business operating
margin in 2014. However, base business operating margin improved
sequentially each quarter as we progressed through the year, and we
anticipate full year operating margin in 2015 to exceed our 2014
non-GAAP adjusted operating margin as we begin to leverage these
investments with sales growth. Despite the short-term impact these
investments have on operating margin, we consider our commitment to
product, process and information technology to be critical to
support our strategic initiatives and sustain our long-term growth
into the future.”
2015 Guidance
Our 2015 guidance for consolidated diluted earnings per share is
$3.15 to $3.35. These expected 2015 results are based upon
projected consolidated net sales between $1,620 million and $1,650
million and consolidated operating margin between 14.8% and 15.7%.
This guidance assumes full year average 2015 foreign currency
exchange rates consistent with current spot exchange rates.
Accordingly, we anticipate year-over-year changes in foreign
currency exchange rates to negatively impact our projected 2015
consolidated sales by approximately $30 million, or 2%, and our
projected 2015 consolidated diluted earnings per share by
approximately $0.05.
Expected sales growth from 2014 and operating margin by
reporting segment and on a consolidated basis in support of our
2015 diluted earnings per share guidance is as follows:
2015 EstimatedSales
Growth
2015 EstimatedOperating
Margin
Engine/Mobile Filtration 12.0% to 14.0% 20.5% to 21.5%
Industrial/Environmental Filtration 4.0% to 6.0% 11.0% to 12.0%
Packaging 2.0% to 4.0% 6.0% to 9.0% CLARCOR 7.0% to 9.0% 14.8% to
15.7%
Sales Growth
Expected 2015 sales growth in our Engine/Mobile Filtration
segment is partially driven by the anticipated full year impact of
the Stanadyne Filtration acquisition, which was included in our
2014 results for just seven months from the date of acquisition. We
estimate that this full year impact will contribute approximately
8.0 percentage points to expected sales growth in this reporting
segment in 2015. The remaining 4.0% to 6.0% expected sales growth
from 2014 is primarily driven by anticipated continued strength in
our U.S. heavy-duty engine filtration aftermarket while we expect
continued economic and foreign currency exchange rate headwinds in
our international markets—notably Europe and China—in 2015.
Expected 2015 sales growth in our Industrial/Environmental
Filtration segment is primarily driven by the continued expectation
of oil & gas filtration product sales growth in excess of
10%—despite the negative foreign currency impact—as we anticipate
continuing to benefit from shale development in the U.S. partially
based upon a strong backlog at the end of 2014, and we expect our
acquired Filter Resources business to contribute approximately $20
million in net sales in 2015. We expect our 2015 gas turbine
filtration sales to be slightly down compared with 2014 as an
anticipated significant increase in the sales of gas turbine
aftermarket filters is expected to be more than offset by a
reduction in gas turbine inlet filtration systems. We expect
low-single digit sales growth in the remaining diverse filtration
markets in this reporting segment in 2015.
Operating Margin
At the mid-point of 15.25%, we expect 2015 consolidated
operating margin to expand approximately 45 basis points from the
full year 2014 non-GAAP adjusted operating margin of 14.8%. We
estimate that 30 basis points of this improvement would be from the
full year inclusion of sales and operating profit pursuant to the
Stanadyne Filtration acquisition and 15 basis points would be
driven primarily from a reduction in selling and administrative
expenses as a percentage of net sales in comparison to 2014
non-GAAP adjusted selling and administrative expenses—despite
estimated incremental expense of $4.0 million to $5.0 million
pursuant to the further development of our information technology
infrastructure and ERP implementation.
Cash Flow, Taxes, Interest Expense and
Shares
We project 2015 cash from operations to be between $190 million
and $210 million, capital expenditures to be between $75 million
and $95 million and our effective tax rate to be between 31.25% and
31.75%. We expect 2015 interest expense to be between $6.5 million
and $7.5 million and assume 51.0 million average diluted shares
outstanding.
CLARCOR will be holding a conference call to discuss the fourth
quarter 2014 results at 10:00 a.m. CT on January 15, 2015.
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 5013691. The replay will be available
through January 29, 2015 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 2015
performance of the Company and each of its segments, our
projections with respect to 2015 sales growth and 2015 operating
margin for the Company and each of its segments, our projections
with respect to 2015 diluted earnings per share, and our
projections with respect to 2015 cash from operations, 2015 capital
expenditures, 2015 effective tax rate, 2015 interest expense and
2015 average diluted shares outstanding; 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 which
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
expectation that positive 2014 momentum will extend into 2015 and
beyond as we continue to focus on achieving our long-term strategic
objectives; statements regarding the anticipated future operating
margin of CLARCOR Industrial Air; statements regarding our schedule
for integrating CLARCOR Engine Mobile Solutions; statements
regarding our anticipated continuing acquisition strategy;
statements regarding our belief that our acquisition of Filter
Resources will significantly augment our access to oil & gas
filtration at domestic refineries and petrochemical facilities;
statements regarding our anticipated continued execution of our
long-term strategic growth initiatives including penetrating new
distribution channels; statements regarding the anticipated 2015
sales growth in our U.S. heavy-duty engine filtration aftermarket;
statements regarding the anticipated 2015 sales growth in our oil
& gas filtration market from continued shale development in the
U.S. and our further expansion into international markets;
statements regarding the anticipated impact on our 2015 operating
margin of investments in technology and other growth initiatives;
statements regarding the expected impact on our projected 2015
consolidated sales and diluted earnings per share from changes in
foreign currency exchange rates; statements regarding the
anticipated full year impact of the Stanadyne Filtration
acquisition to expected sales growth in our Engine/Mobile
Filtration segment in 2015; statements that we anticipate continued
strength in our U.S. heavy-duty engine filtration aftermarket,
while we expect continued economic and foreign currency exchange
rate headwinds in our international markets -notably Europe and
China - in 2015; statements regarding our expected 2015 sales
growth in our Industrial/Environmental Filtration segment;
statements regarding our continued expectation of oil & gas
filtration product sales growth in excess of 10%,and our
expectation that we will continue to benefit from shale development
in the United States; statements regarding the anticipated
contribution of Filter Resources to 2015 net sales; statements
regarding our expected 2015 gas turbine inlet system filtration and
gas turbine aftermarket filter sales, and our anticipated sales
growth in the remaining diverse filtration markets in the
Industrial/Environmental reporting segment in 2015;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
Annual Report on Form 10-K for the fiscal year 2013 filed on
January 24, 2014, 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 or other statements included
in this press release, whether as a result of new information,
future events, changed circumstances or any other reason.
TABLES FOLLOW
CLARCOR INC. 2014 UNAUDITED FOURTH
QUARTER RESULTS
CONSOLIDATED STATEMENTS OF
EARNINGS
(Dollars in thousands, except per share
data)
Quarter Ended Twelve Months Ended November 29,2014
November 30,2013 November 29,2014 November
30,2013 Net sales $ 413,375 $ 297,790 $ 1,512,854 $ 1,130,770 Cost
of sales 273,622 199,181 1,015,819 760,561
Gross profit 139,753 98,609 497,035 370,209
Selling and administrative expenses 73,964 49,194
286,607 195,593 Operating profit 65,789
49,415 210,428 174,616 Other income
(expense): Interest expense (1,294 ) (164 ) (3,700 ) (615 )
Interest income 116 162 420 690 Other, net 549 (321 ) 4,415
(391 ) (629 ) (323 ) 1,135 (316 ) Earnings
before income taxes 65,160 49,092 211,563 174,300 Provision
for income taxes 21,629 16,196 67,380 55,950
Net earnings 43,531 32,896 144,183 118,350
Net earnings attributable to
noncontrolling interests, net of tax
(23 ) (40 ) (99 ) (274 ) Net earnings attributable to
CLARCOR Inc. $ 43,508 $ 32,856 $ 144,084 $
118,076 Net earnings per share attributable to
CLARCOR Inc. - Basic $ 0.87 $ 0.65 $ 2.86 $
2.36 Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 0.86 $ 0.65 $ 2.83 $ 2.34
Weighted average number of shares outstanding - Basic
50,249,889 50,200,491 50,405,549 49,988,577
Weighted average number of shares outstanding - Diluted
50,732,090 50,712,641 50,871,249 50,538,947
Dividends paid per share $ 0.2000 $ 0.1700
$ 0.7100 $ 0.5750
CLARCOR INC. 2014 UNAUDITED FOURTH
QUARTER RESULTS, continued
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 29,2014
November 30,2013
ASSETS Current assets: Cash and cash equivalents $ 94,064 $
411,562 Restricted cash — 763 Accounts receivable, less allowance
for losses of $10,811 and $9,183, respectively 305,580 224,829
Inventories 274,718 218,786 Deferred income taxes 37,749 25,313
Income taxes receivable — 1,000 Prepaid expenses and other current
assets 16,796 9,868 Total current assets 728,907
892,121
Plant assets, at cost, less accumulated
depreciation of $357,564 and $332,787, respectively
288,356 208,953 Goodwill 507,172 241,299 Acquired intangible
assets, less accumulated amortization 347,578 89,881 Other
noncurrent assets 16,756 16,589 Total assets $
1,888,769 $ 1,448,843
LIABILITIES Current
liabilities: Current portion of long-term debt $ 233 $ 50,223
Accounts payable 97,885 79,164 Accrued liabilities 120,036 78,374
Income taxes payable 6,226 — Total current
liabilities 224,380 207,761 Long-term debt,
less current portion 411,330 116,413 Long-term pension and
postretirement healthcare benefits liabilities 33,266 19,792
Deferred income taxes 104,250 64,415 Other long-term liabilities
8,853 5,753 Total liabilities 782,079 414,134
Contingencies Redeemable noncontrolling interests
1,587 1,836
SHAREHOLDERS' EQUITY Capital stock 50,204 50,371
Capital in excess of par value 10,644 22,278 Accumulated other
comprehensive loss (54,080 ) (29,814 ) Retained earnings 1,097,292
989,013 Total CLARCOR Inc. equity 1,104,060
1,031,848 Noncontrolling interests 1,043 1,025
Total shareholders' equity 1,105,103 1,032,873 Total
liabilities and shareholders' equity $ 1,888,769 $ 1,448,843
CLARCOR INC. 2014 UNAUDITED FOURTH
QUARTER RESULTS, continued
CONSOLIDATED CASH FLOWS
(Dollars in thousands)
Twelve Months Ended
November 29,2014
November 30,2013
Cash flows from operating activities: Net earnings $ 144,183
$ 118,350 Depreciation 30,065 26,329 Amortization 20,362 5,904
Other noncash items 995 1,754 Net loss on disposition of plant
assets 67 3,862 Bargain purchase gain (2,815 ) — Stock-based
compensation expense 7,278 5,060 Excess tax benefit from
stock-based compensation (2,769 ) (8,528 ) Deferred income taxes
911 1,216 Changes in assets and liabilities, net of business
acquisitions (41,931 ) (18,706 ) Net cash provided by operating
activities 156,346 135,241
Cash flows from
investing activities: Restricted cash 1,339 (197 ) Business
acquisitions, net of cash acquired (595,328 ) — Additions to plant
assets (69,681 ) (44,651 ) Proceeds from disposition of plant
assets 491 3,373 Investment in affiliates (1,073 ) (615 ) Net cash
used in investing activities (664,252 ) (42,090 )
Cash
flows from financing activities:
Net (payments) borrowings under
multicurrency revolving credit agreement
(50,000 ) 50,000 Borrowings under term loan facility 315,000
100,000 Payments on term loan facility (20,000 ) —
Payments on long-term debt, including
business acquisition-related seller financing
(1,620 ) (4,037 ) Payments of financing costs (752 ) (298 ) Sale of
capital stock under stock option and employee purchase plans 12,076
35,047 Payments for repurchase of common stock (32,822 ) (27,708 )
Excess tax benefit from stock-based compensation 2,769 8,528
Dividend paid to noncontrolling interests (166 ) (206 ) Cash
dividends paid (35,805 ) (28,744 ) Net cash provided by financing
activities 188,680 132,582 Net effect of exchange
rate changes on cash 1,728 333 Net change in cash and
cash equivalents (317,498 ) 226,066 Cash and cash equivalents,
beginning of period 411,562 185,496 Cash and cash
equivalents, end of period $ 94,064 $ 411,562
Cash paid during the period for: Interest $ 3,028 $
374 Income taxes, net of refunds $ 67,534 $ 42,602
CLARCOR INC. 2014 UNAUDITED FOURTH
QUARTER RESULTS, continued
QUARTERLY INCOME STATEMENT DATA BY
SEGMENT
(Dollars in thousands)
2014
QuarterEndedMarch
1
QuarterEndedMay
31
QuarterEndedAugust
30
Quarter EndedNovember 29
TwelveMonths
Net sales by segment: Engine/Mobile Filtration $ 122,497 $
148,398 $ 165,910 $ 167,000 $ 603,805 Industrial/Environmental
Filtration 174,863 219,592 213,752 224,893 833,100 Packaging 15,325
18,652 20,490 21,482 75,949 $
312,685 $ 386,642 $ 400,152 $ 413,375 $
1,512,854
Operating profit by segment:
Engine/Mobile Filtration $ 22,874 $ 26,972 $ 36,741 $ 35,778 $
122,365
Industrial/Environmental Filtration
8,146 23,005 23,873 28,327 83,351 Packaging 246 1,170
1,612 1,684 4,712 $ 31,266 $ 51,147
$ 62,226 $ 65,789 $ 210,428
Operating margin by segment: Engine/Mobile Filtration 18.7 %
18.2 % 22.1 % 21.4 % 20.3 % Industrial/Environmental Filtration 4.7
% 10.5 % 11.2 % 12.6 % 10.0 % Packaging 1.6 % 6.3 % 7.9 % 7.8 % 6.2
% 10.0 % 13.2 % 15.6 % 15.9 % 13.9 %
2013
QuarterEndedMarch
2
QuarterEndedJune
1
QuarterEndedAugust
31
Quarter EndedNovember 30
TwelveMonths
Net sales by segment: Engine/Mobile Filtration $ 117,675 $
132,372 $ 129,148 $ 127,829 $ 507,024 Industrial/Environmental
Filtration 122,626 136,660 139,659 150,801 549,746 Packaging 15,970
18,551 20,319 19,160 74,000 $
256,271 $ 287,583 $ 289,126 $ 297,790 $
1,130,770
Operating profit by segment:
Engine/Mobile Filtration $ 23,449 $ 29,096 $ 28,611 $ 25,189 $
106,345 Industrial/Environmental Filtration 9,678 18,411 11,315
22,592 61,996 Packaging 688 1,894 2,059 1,634
6,275 $ 33,815 $ 49,401 $ 41,985
$ 49,415 $ 174,616
Operating margin by
segment: Engine/Mobile Filtration 19.9 % 22.0 % 22.2 % 19.7 %
21.0 % Industrial/Environmental Filtration 7.9 % 13.5 % 8.1 % 15.0
% 11.3 % Packaging 4.3 % 10.2 % 10.1 % 8.5 % 8.5 % 13.2 % 17.2 %
14.5 % 16.6 % 15.4 %
CLARCOR INC. 2014 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Fourth Quarter 2013 GAAP
Financial Results to Non-GAAP Adjusted Results(Dollars in
thousands, except share data)
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP
operating profit, non-GAAP operating margin, non-GAAP net earnings
and non-GAAP basic and diluted earnings per share for the quarter
ended November 30, 2013. These non-GAAP financial measures are not
in accordance with, or an alternative for, generally accepted
accounting principles in the United States. The GAAP measures most
directly comparable to these non-GAAP measures are cost of sales,
gross profit, selling and administrative expenses, operating
profit, operating margin, net earnings and basic and diluted
earnings per share, respectively.
The quarter ended November 30, 2013 non-GAAP financial measures
provided in this release exclude approximately $2.7 million of
acquisition related costs. Although the comparison of data
excluding these costs in our fourth quarter ended November 30, 2013
is not a measure of financial performance under GAAP, the Company
believes that providing these non-GAAP financial measures better
enables investors to understand and evaluate the Company's
historical and prospective operating performance. Management
believes that removing the impact of these costs provides a more
comparable measure of the changes in selling and administrative
expenses, operating profit, operating margin, net earnings and
basic and diluted earnings per share for the quarter ended November
30, 2013 compared to the quarter ended November 29, 2014.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
(Dollars in
thousands, except per share data)
FourthQuarter
2013GAAP
AcquisitionRelatedCosts
Fourth Quarter2013
Non-GAAPAdjusted
Net sales $ 297,790 $ — $ 297,790 Cost of sales 199,181
— 199,181 Gross profit 98,609 — 98,609 Selling
and administrative expenses 49,194 (2,736 ) 46,458
Operating profit 49,415 2,736 52,151 Other
income (expense): Interest expense (164 ) — (164 ) Interest income
162 — 162 Other, net (321 ) — (321 ) (323 ) — (323 )
Earnings before income taxes 49,092 2,736 51,828 Provision for
income taxes 16,196 903 17,099 Net earnings
32,896 1,833 34,729
Net earnings attributable to
noncontrolling interests, net of tax
(40 ) — (40 )
Net earnings attributable to CLARCOR
Inc.
$ 32,856 $ 1,833 $ 34,689 Net earnings per
share attributable to CLARCOR Inc. - Basic $ 0.65 $ 0.04
$ 0.69 Net earnings per share attributable to CLARCOR
Inc. - Diluted $ 0.65 $ 0.04 $ 0.69 Operating
margin 16.6 % 0.9 % 17.5 %
CLARCOR INC. 2014 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Full Year 2014 GAAP Financial
Results to Non-GAAP Adjusted Results(Dollars in thousands,
except share data)
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP
operating profit, non-GAAP operating margin, non-GAAP net earnings
and non-GAAP basic and diluted earnings per share for the full year
ended November 29, 2014. These non-GAAP financial measures are not
in accordance with, or an alternative for, generally accepted
accounting principles in the United States. The GAAP measures most
directly comparable to these non-GAAP measures are cost of sales,
gross profit, selling and administrative expenses, operating
profit, operating margin, net earnings and basic and diluted
earnings per share, respectively.
The full year ended November 29, 2014 non-GAAP financial
measures provided in this release exclude integration, purchase
accounting and deal related costs associated with the GE Air
Filtration acquisition, the Bekaert Advanced Filtration acquisition
and the Stanadyne Filtration acquisition and a bargain purchase
gain recognized pursuant to the Bekaert Advanced Filtration
acquisition. Although the comparison of data excluding these
selected items in our full year ended November 29, 2014 is not a
measure of financial performance under GAAP, the Company believes
that providing these non-GAAP financial measures better enables
investors to understand and evaluate the Company's historical and
prospective operating performance. Management believes that
removing the impact of these selected items provides a more
comparable measure of the changes in cost of sales, gross profit,
selling and administrative expenses, operating profit, operating
margin, net earnings and basic and diluted earnings per share for
the full year ended November 29, 2014 compared to the full year
ended November 30, 2013.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
Certain Acquisition Related
Costs (Dollars in thousands, except per share data)
Full Year 2014GAAP
GE
AirFiltrationAcquisition
BekaertAdvancedFiltrationAcquisition
StanadyneFiltrationAcquisition
Full Year
2014Non-GAAPAdjusted
Net sales $ 1,512,854 $ — $ — $ — $ 1,512,854 Cost of sales
1,015,819 (4,342 ) 1 (240 ) 1 (1,368 ) 1 1,009,869
Gross profit 497,035 4,342 240 1,368 502,985 Selling and
administrative expenses 286,607 (4,715 ) 2 (130 ) 2 (3,035 )
2 278,727 Operating profit 210,428 9,057 370
4,403 224,258 Other income (expense): Interest
expense (3,700 ) — — — (3,700 ) Interest income 420 — — — 420
Other, net 4,415 — (2,814 ) 3 — 1,601
1,135 — — — (1,679 ) Earnings before
income taxes 211,563 9,057 (2,444 ) 4,403 222,579 Provision for
income taxes 67,380 2,436 123 1,501
71,440 Net earnings 144,183 6,621 (2,567 ) 2,902 151,139
Net earnings attributable to
noncontrolling interests, net of tax
(99 ) — — — (99 )
Net earnings attributable to CLARCOR
Inc.
$ 144,084 $ 6,621 $ (2,567 ) $ 2,902 $ 151,040
Net earnings per share attributable to CLARCOR Inc. - Basic
$ 2.86 $ 0.13 $ (0.05 ) $ 0.06 $ 3.00
Net earnings per share attributable to CLARCOR Inc. - Diluted $
2.83 $ 0.13 $ (0.05 ) $ 0.06 $ 2.97
Operating margin 13.9 % 0.6 % 0.0 % 0.3 % 14.8 %
1 - Purchase accounting step-up in
inventory basis.
2 - Integration costs and accelerated
amortization of backlog pursuant to purchase accounting.
3 - Bargain purchase gain
(non-taxable)
CLARCOR INC. 2014 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Full Year 2013 GAAP Financial
Results to Non-GAAP Adjusted Results(Dollars in thousands,
except share data)
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP
operating profit, non-GAAP operating margin, non-GAAP net earnings
and non-GAAP basic and diluted earnings per share for the full year
ended November 30, 2013. These non-GAAP financial measures are not
in accordance with, or an alternative for, generally accepted
accounting principles in the United States. The GAAP measures most
directly comparable to these non-GAAP measures are cost of sales,
gross profit, selling and administrative expenses, operating
profit, operating margin, net earnings and basic and diluted
earnings per share, respectively.
The full year ended November 30, 2013 non-GAAP financial
measures provided in this release exclude a loss on disposal of
equipment, a charge to account for a final pension obligation and
acquisition related costs. Although the comparison of data
excluding these selected items in our full year ended November 30,
2013 is not a measure of financial performance under GAAP, the
Company believes that providing these non-GAAP financial measures
better enables investors to understand and evaluate the Company's
historical and prospective operating performance. Management
believes that removing the impact of these selected items provides
a more comparable measure of the changes in cost of sales, gross
profit, selling and administrative expenses, operating profit,
operating margin, net earnings and basic and diluted earnings per
share for the full year ended November 30, 2013 compared to the
full year ended November 29, 2014.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
(Dollars in thousands, except
per share data)
Full Year 2013GAAP
Loss onDisposal
ofEquipment
Settlement ofFinal
PensionObligation
AcquisitionRelated Costs
Full Year
2013Non-GAAPAdjusted
Net sales $ 1,130,770 $ — $ — $ — $ 1,130,770 Cost of sales
760,561 (4,631 ) — — 755,930 Gross
profit 370,209 4,631 — — 374,840 Selling and administrative
expenses 195,593 — (3,111 ) (2,736 ) 189,746
Operating profit 174,616 4,631 3,111 2,736
185,094 Other income (expense): Interest expense (615
) — — — (615 ) Interest income 690 — — — 690 Other, net (391 ) —
— — (391 ) (316 ) — — —
(316 ) Earnings before income taxes 174,300 4,631 3,111 2,736
184,778 Provision for income taxes 55,950 1,667 1,120
903 59,640 Net earnings 118,350 2,964 1,991
1,833 125,138
Net earnings attributable to
noncontrolling interests, net of tax
(274 ) — — — (274 )
Net earnings attributable to CLARCOR
Inc.
$ 118,076 $ 2,964 $ 1,991 $ 1,833 $
124,864 Net earnings per share attributable to CLARCOR Inc.
- Basic $ 2.36 $ 0.06 $ 0.04 $ 0.04 $
2.50 Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 2.34 $ 0.06 $ 0.04 $ 0.03 $
2.47 Operating margin 15.4 % 0.4 % 0.3 % 0.2 % 16.4 %
CLARCOR Inc.David J. Fallon,. 615-771-3100Chief Financial
Officer
Clarcor (NYSE:CLC)
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