CLARCOR Inc. (NYSE: CLC):
Unaudited Second Quarter 2015
Highlights
(Amounts in millions, except per share data and percentages)
GAAP Financial Results:
Three Months Ended Six Months Ended
5/30/15 5/31/14 Change
5/30/15 5/31/14 Change Net sales
$ 399.8 $ 386.6 3% $ 750.9 $ 699.3 7% Operating profit 58.9 51.1
15% 98.1 82.4 19% Net earnings — CLC 38.5 34.6 11% 65.2 58.9 11%
Diluted EPS $ 0.76 $ 0.68 12% $ 1.28 $ 1.16 10% Operating margin
14.7% 13.2% 1.5 pts 13.1 % 11.8 % 1.3 pts
Non-GAAP Adjusted Financial Results:
The second quarter and first six months of 2014 contained
integration, purchase accounting and transaction related costs
associated with the GE Air Filtration, Bekaert Advanced Filtration
and Stanadyne Filtration acquisitions and a bargain purchase gain
related to the Bekaert Advanced Filtration acquisition. The
following table reflects second quarter and first six months of
2014 GAAP results adjusted to exclude these costs and this bargain
purchase gain, as well as 2015 GAAP results. Reconciliations of
these non-GAAP financial measures for the second quarter and first
six months of 2014, adjusted for each of these items, are provided
on pages 10 and 11 of this release
Three Months Ended Six Months Ended
5/30/15(Actual)
5/31/14(Adjusted)
Change
5/30/15(Actual)
5/31/14(Adjusted)
Change Net sales $ 399.8 $ 386.6 3% $ 750.9 $ 699.3
7% Adjusted operating profit 58.9 57.5 2% 98.1 95.7 3% Adjusted net
earnings — CLC 38.5 38.9 -1% 65.2 65.4 0% Adjusted diluted EPS $
0.76 $ 0.76 0% $ 1.28 $ 1.28 0% Adjusted operating margin 14.7%
14.9% -0.2 pts 13.1 % 13.7 % -0.6 pts
CLARCOR Inc. (NYSE: CLC) reported that its diluted
earnings per share for the second quarter of 2015 increased 12%
from the second quarter of 2014 to a record second quarter high of
$0.76. Net sales increased $13.2 million, or 3%, from last year’s
second quarter. These higher net sales were favorably influenced by
$23.1 million, or 6%, of aggregate additional sales from the second
quarter 2014 acquisition of Stanadyne Filtration and the first
quarter 2015 acquisition of Filter Resources. Net sales were
negatively impacted by $13.1 million, or 4%, from changes in
average foreign currency exchange rates from last year’s second
quarter.
Chris Conway, CLARCOR’s Chairman, President and Chief Executive
Officer, commented, “Although we faced top-line headwinds in
several of our major end-markets in the second quarter and we were
unfavorably impacted by changes in average foreign currency
exchange rates, our consolidated net sales increased $13.2 million,
or 3%, from last year’s second quarter. Our ability to generate
year-over-year sales growth despite challenging macroeconomic and
industry environments is testament to our execution upon our
long-term strategic growth initiatives. Our top-line growth in the
second quarter was not only favorably impacted by the strategic
business acquisitions of Stanadyne Filtration and Filter Resources,
but we also benefited from additional sales from a significant new
domestic heavy-duty engine filtration customer procured late last
year in a relatively new distribution channel for us. The
penetration of new distribution channels in our heavy-duty engine
filtration business to complement our historical strength in the
independent aftermarket is a strategic growth initiative we have
focused on for several years. Our recent success in driving this
initiative is evidenced by both last year’s acquisition of
Stanadyne Filtration and our recent procurement of this new
significant customer.
“Net sales in our Engine/Mobile Filtration segment increased
$12.9 million, or 9%, from the second quarter of 2014 driven by a
$15.0 million, or 16%, increase in U.S. net sales partially offset
by a $2.1 million, or 4%, reduction in international net sales. The
increase in U.S. net sales from last year’s second quarter was
driven by additional U.S. sales of $10.9 million pursuant to the
Stanadyne acquisition and an 18% increase in heavy-duty engine
filtration sales in our independent distribution aftermarket.
Similar to the first quarter, this domestic independent aftermarket
strength was the result of the positive impact of the significant
new customer noted above. Excluding this new customer, sales into
our domestic independent aftermarket would have declined from last
year’s second quarter—which we believe is primarily the result of
slowing macroeconomic activity and industry-wide softness that has
driven inventory de-stocking at many of our independent aftermarket
distributors in both on-road and off-road markets. Net sales in our
other domestic heavy-duty engine filtration markets, including
automotive and sales to other filter companies, also declined in
the second quarter of 2015 compared to the prior year quarter.
“International sales in our Engine/Mobile Filtration segment
were positively influenced by $7.1 million from additional
international sales pursuant to our Stanadyne Filtration
acquisition, but these additional sales were more than offset by
the negative impact of $4.3 million from changes in average foreign
currency exchange rates, as well as by continued challenges in
several international markets that first arose in our first
quarter. We experienced a significant reduction in heavy-duty
engine filtration sales in China and in U.S. export filtration
sales in the second quarter compared to the prior year quarter. We
believe lower sales in China were driven by slowing macroeconomic
activity in general and lower end-market diesel engine sales in
particular. The decline in export filtration sales was partially
driven by lower filter purchases from a significant global rental
equipment customer—we believe based upon their end-market
dynamics.
“Net sales in our Industrial/Environmental Filtration segment
remained relatively flat—declining $0.9 million—from last year’s
second quarter. However, these segment net sales were negatively
influenced by $8.7 million, or 4%, from changes in average foreign
currency exchange rates from last year’s second quarter. Overall,
we experienced mixed net sales performance at our primary
filtration end-markets in this reporting segment with our oil &
gas filtration net sales increasing $5.0 million, or 8%, and our
gas turbine filtration net sales declining $6.7 million, or 22%,
from the second quarter of 2014. Geographically, oil & gas net
sales were generally stronger in the U.S., and several
international markets demonstrated solid second quarter net sales
growth including Europe and Asia. We remain cautiously optimistic
that our oil & gas net sales will continue to grow in excess of
10% for the full year 2015. However, we continue to be mindful of
top-line risk dependent upon future oil prices and the timing of
several significant natural gas filtration vessel orders scheduled
to ship in our fourth quarter. The decline in net sales in our gas
turbine filtration market from last year’s second quarter was
primarily driven by a decrease in net sales of first-fit filters
and systems arising from the timing of several large system sales
which occurred during the prior-year quarter. We expect net sales
of first-fit gas turbine filters and systems to continue to be
relatively low in the third quarter. However, based upon visibility
to a solid backlog, we anticipate a significant increase in our
fourth quarter, when we expect to ship approximately 50% of our
full year 2015 gas turbine first-fit filters and systems. Second
quarter net sales performance for other filtration end-markets in
this reporting segment was mixed but relatively flat overall in
comparison to the prior year quarter.
“Our 14.7% operating margin in the second quarter declined from
our 14.9% adjusted operating margin in last year’s second quarter.
This 0.2 percentage point reduction was driven by a 0.6 percentage
point increase in selling and administrative expenses as a
percentage of net sales, partially offset by a 0.4 percentage point
improvement in gross margin. Higher selling and administrative
expenses as a percentage of net sales were primarily driven by
higher amortization expense pursuant to the Stanadyne Filtration
acquisition and additional headcount and related costs to support
growth initiatives, partially offset by a $1.8 million gain on sale
of an asset in the second quarter of 2015. The 0.4 percentage point
improvement in gross margin from last year’s second quarter was
primarily driven by improved margin at our CLARCOR Industrial Air
business in part due to a higher mix of aftermarket filter sales in
relation to lower margin gas turbine first-fit filters and
systems.”
2015 Guidance
We are revising our guidance for 2015 consolidated diluted
earnings per share from our prior estimate of $3.15 to $3.35 to our
current estimate of $3.00 to $3.15. These revised expected 2015
results are based upon projected consolidated net sales between
$1,590 million and $1,620 million and consolidated operating margin
between 14.2% and 15.3%. Expected sales growth (on a GAAP basis)
from 2014 and operating margin by reporting segment and on a
consolidated basis are as follows:
2015 EstimatedSales
Growth
2015 EstimatedOperating
Margin
Engine/Mobile Filtration 6.0% to 8.0% 19.5% to 20.5%
Industrial/Environmental Filtration 5.0% to 7.0% 11.0% to 12.0%
Packaging 2.0% to 4.0% 6.0% to 9.0% CLARCOR 5.0% to 7.0% 14.2% to
15.3%
The primary changes from our prior financial guidance relate to
our Engine/Mobile Filtration segment. Based upon our expectation
for continued softness in our international markets—including
export sales from the U.S., and China—and based upon market
dynamics experienced in the second quarter of 2015 in our domestic
heavy-duty engine filtration market, we have reduced our estimated
2015 net sales for this reporting segment by approximately $30.0
million in comparison to our prior full year 2015 estimate. In
addition, primarily based upon these lower expected sales and the
related lower absorption of fixed costs, we have lowered our
estimate for full year operating margin for our Engine/Mobile
Filtration segment from 21.0% at the mid-point to 20.0% at the
mid-point.
Our full year 2015 guidance assumes changes in foreign currency
exchange rates from full year 2014 to negatively impact projected
2015 net sales by approximately $45 million, or 3%, and to
negatively impact our projected 2015 diluted earnings per share by
approximately $0.07.
We project 2015 cash from operations to be between $180 million
and $200 million, capital expenditures to be between $75 million
and $95 million and our effective tax rate to be between 31.5% and
32.5%. We expect 2015 interest expense to be between $6.0 million
and $7.0 million and assume 50.8 million average diluted shares
outstanding.
CLARCOR will be holding a conference call to discuss the second
quarter 2015 results at 10:00 a.m. CT on June 18, 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 8710909. The replay will be available
through July 2, 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, our projections
with respect to 2015 consolidated net sales and consolidated
operating margin; the anticipated impact that year-over-year
changes in foreign currency exchange rates from full year 2014 will
have on projected 2015 net sales and projected 2015 diluted
earnings per share; 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 cautious optimism with respect to
our anticipated oil & gas net sales growth in 2015; statements
regarding continued top-line risk with respect to anticipated oil
& gas net sales based upon future oil prices and the timing of
several significant natural gas filtration vessel orders scheduled
to ship in our fourth quarter; statements regarding our
anticipation that net sales of first-fit filters and systems will
continue to be relatively low in the third quarter; statements
regarding our expectation that, based upon visibility to a solid
backlog, we will experience a significant increase in net sales of
first-fit filters and systems in the fourth quarter, and our
expectation that approximately 50% of our full year 2015 gas
turbine first-fit filter and system sales will occur in the fourth
quarter; statements regarding our expectation of continued softness
in our international markets, including export sales from the U.S.,
and China; 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
2014 filed on January 26, 2015, 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.
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS
CONSOLIDATED CONDENSED STATEMENTS OF
EARNINGS
(Dollars in thousands, except share
data)
Three Months Ended Six Months Ended May 30,2015 May
31,2014 May 30,2015 May 31,2014 Net sales $ 399,799 $
386,642 $ 750,922 $ 699,327 Cost of sales 266,189 261,272
504,337 477,370 Gross profit 133,610
125,370 246,585 221,957 Selling and administrative expenses
74,667 74,223 148,449 139,544
Operating profit 58,943 51,147 98,136 82,413
Other income (expense): Interest expense (1,556 )
(670 ) (2,627 ) (1,070 ) Interest income 90 96 231 203 Other, net
(422 ) 174 (538 ) 4,145 (1,888 ) (400 ) (2,934 )
3,278 Earnings before income taxes 57,055 50,747
95,202 85,691 Provision for income taxes 18,482
16,201 29,892 26,804 Net earnings
38,573 34,546 65,310 58,887
Net (earnings) loss attributable to
noncontrolling interests, net of tax
(76
) 6 (104 ) (14 ) Net earnings attributable to CLARCOR
Inc. $ 38,497 $ 34,552 $ 65,206 $ 58,873
Net earnings per share attributable to CLARCOR Inc. -
Basic $ 0.77 $ 0.68 $ 1.30 $ 1.17 Net
earnings per share attributable to CLARCOR Inc. - Diluted $ 0.76
$ 0.68 $ 1.28 $ 1.16 Weighted
average number of shares outstanding - Basic 50,209,215
50,513,588 50,232,565 50,488,651 Weighted
average number of shares outstanding - Diluted 50,791,198
50,945,090 50,791,840 50,934,768
Dividends paid per share $ 0.2000 $ 0.1700 $ 0.4000
$ 0.3400
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Dollars in thousands)
May 30,2015
November 29,2014
ASSETS Current assets: Cash and cash equivalents $ 81,837 $
94,064 Accounts receivable, less allowance for losses of $11,132
and $10,811, respectively 280,563 305,580 Inventories 300,885
274,718 Deferred income taxes 38,209 37,749 Prepaid expenses and
other current assets 21,952 16,796 Total current
assets 723,446 728,907 Plant assets, at cost,
less accumulated depreciation of $363,694 and $357,564,
respectively 309,955 288,356 Goodwill 508,273 507,172 Acquired
intangible assets, less accumulated amortization 342,878 347,578
Other noncurrent assets 18,420 16,756 Total assets $
1,902,972 $ 1,888,769
LIABILITIES Current
liabilities: Current portion of long-term debt $ 227 $ 233 Accounts
payable 102,476 97,885 Accrued liabilities 102,360 120,036 Income
taxes payable 4,871 6,226 Total current liabilities
209,934 224,380 Long-term debt, less current
portion 417,800 411,330 Long-term pension and postretirement
healthcare benefits liabilities 32,141 33,266 Deferred income taxes
104,057 104,250 Other long-term liabilities 13,868 8,853
Total liabilities 777,800 782,079
Contingencies Redeemable noncontrolling interests — 1,587
SHAREHOLDERS' EQUITY Capital stock 50,119 50,204 Capital in
excess of par value 6,944 10,644 Accumulated other comprehensive
loss (75,290 ) (54,080 ) Retained earnings 1,142,544
1,097,292 Total CLARCOR Inc. equity 1,124,317
1,104,060 Noncontrolling interests 855 1,043
Total shareholders' equity 1,125,172 1,105,103 Total
liabilities and shareholders' equity $ 1,902,972 $ 1,888,769
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
CONSOLIDATED CONDENSED CASH
FLOWS
(Dollars in thousands)
Six Months Ended
May 30,2015
May 31,2014
Cash flows from operating activities: Net earnings $ 65,310
$ 58,887 Depreciation 15,583 14,870 Amortization 12,523 7,943 Other
noncash items 104 933 Net (gain) loss on disposition of plant
assets (1,418 ) 73 Bargain purchase gain — (2,815 ) Stock-based
compensation expense 6,994 3,654 Excess tax benefit from
stock-based compensation (995 ) (351 ) Changes in assets and
liabilities (30,871 ) (40,444 ) Net cash provided by operating
activities 67,230 42,750
Cash flows from
investing activities: Restricted cash — (642 ) Business
acquisitions, net of cash acquired (20,881 ) (595,621 ) Additions
to plant assets (37,992 ) (28,275 ) Proceeds from disposition of
plant assets 4,792 148 Investment in affiliates (525 ) (473 ) Net
cash used in investing activities (54,606 ) (624,863 )
Cash flows from financing activities: Net borrowings
(payments) on multicurrency revolving credit facility 15,000
(22,000 ) Borrowings under term loan facility — 315,000 Payments on
term loan facility — (20,000 ) Payments on long-term debt (8,536 )
(1,487 ) Payment of financing costs — (723 ) Sale of capital stock
under stock option and employee purchase plans 5,360 2,442
Acquisition of noncontrolling interest (1,239 ) — Payments for
repurchase of common stock (16,110 ) — Excess tax benefit from
stock-based compensation 995 351 Dividend paid to noncontrolling
interests (206 ) (166 ) Cash dividends paid (20,124 ) (17,166 ) Net
cash (used in) provided by financing activities (24,860 ) 256,251
Net effect of exchange rate changes on cash 9 (1,673
) Net change in cash and cash equivalents (12,227 ) (327,535 ) Cash
and cash equivalents, beginning of period 94,064 411,562
Cash and cash equivalents, end of period $ 81,837 $
84,027
Cash paid during the period for:
Interest $ 2,478 $ 598 Income taxes, net of refunds $
26,505 $ 28,812
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
QUARTERLY INCOME STATEMENT DATA BY
SEGMENT
(Dollars in thousands)
Quarter Ended Six Months Ended
May 30, 2015
May 31, 2014 May 30, 2015
May 31, 2014 Net sales by segment:
Engine/Mobile Filtration $ 161,290 $ 148,398 $ 305,748 $ 270,895
Industrial/Environmental Filtration 218,676 219,592 409,592 394,455
Packaging 19,833 18,652 35,582 33,977 $
399,799 $ 386,642 $ 750,922 $ 699,327
Operating profit by segment: Engine/Mobile Filtration
$ 30,564 $ 26,972 $ 55,310 $ 49,846 Industrial/Environmental
Filtration 26,604 23,005 40,612 31,151 Packaging 1,775 1,170
2,214 1,416 $ 58,943 $ 51,147 $
98,136 $ 82,413
Operating margin by
segment: Engine/Mobile Filtration 18.9 % 18.2 % 18.1 % 18.4 %
Industrial/Environmental Filtration 12.2 % 10.5 % 9.9 % 7.9 %
Packaging 8.9 % 6.3 % 6.2 % 4.2 % 14.7 % 13.2 % 13.1 % 11.8 %
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
Reconciliation of Second Quarter 2014
GAAP Financial Results to Non-GAAP Adjusted Results
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 net earnings, non-GAAP basic and diluted
earnings per share, non-GAAP gross margin percentage, non-GAAP
selling and administrative expenses as a percentage of net sales
and non-GAAP operating margin for the quarter ended May 31, 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, net earnings, basic and
diluted earnings per share, gross margin percentage, selling and
administrative expenses as a percentage of net sales and operating
margin, respectively.
The quarter ended May 31, 2014 non-GAAP financial measures
provided in this release exclude integration, purchase accounting
and transaction related costs associated with the GE Air
Filtration, Bekaert Advanced Filtration and Stanadyne Filtration
acquisitions. Although the comparison of data excluding these
selected items in the second quarter ended May 31, 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, net
earnings, basic and diluted earnings per share, gross margin
percentage, selling and administrative expenses as a percentage of
net sales and operating margin for the quarter ended May 31, 2014
compared to the quarter ended May 30, 2015.
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)
SecondQuarter
2014GAAP
GE
AirFiltrationAcquisition
BekaertAdvancedFiltrationAcquisition
StanadyneFiltrationAcquisition
SecondQuarter
2014Non-GAAPAdjusted
Net sales $ 386,642 $ — $ — $ — $ 386,642 Cost of sales
261,272 (664 ) 1 (120 ) 1 (1,368 ) 1 259,120 Gross
profit 125,370 664 120 1,368 127,522 Selling and administrative
expenses 74,223 (1,161 ) 2 — (3,035 ) 2 70,027
Operating profit 51,147 1,825 120 4,403
57,495 Other income (expense): Interest expense (670 ) — — —
(670 ) Interest income 96 — — — 96 Other, net 174 — —
— 174 (400 ) — — — (400 )
Earnings before income taxes 50,747 1,825 120 4,403 57,095
Provision for income taxes 16,201 491 40 1,501
18,233 Net earnings 34,546 1,334 80 2,902 38,862
Net loss attributable to noncontrolling
interests, net of tax
6 — — — 6
Net earnings attributable to CLARCOR
Inc.
$ 34,552 $ 1,334 $ 80 $ 2,902 $ 38,868
Net earnings per share attributable to CLARCOR Inc. - Basic
$ 0.68 $ 0.03 $ — $ 0.06 $ 0.77
Net earnings per share attributable to CLARCOR Inc. - Diluted $
0.68 $ 0.03 $ — $ 0.06 $ 0.76
Gross margin percentage 32.4 % 0.2 % 0.0 % 0.4 % 33.0 % Selling and
administrative expenses as a percentage of net sales 19.2 % (0.3 )%
0.0 % (0.8 )% 18.1 % Operating margin 13.2 % 0.5 % 0.0 % 1.2 % 14.9
%
1 - Purchase accounting step-up in inventory basis.
2 - Integration costs and accelerated amortization of backlog
pursuant to purchase accounting.
CLARCOR INC. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
Reconciliation of First Six Months 2014
GAAP Financial Results to Non-GAAP Adjusted Results
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 other income (expense), non-GAAP net
earnings, non-GAAP basic and diluted earnings per share, non-GAAP
gross margin percentage, non-GAAP selling and administrative
expenses as a percentage of net sales and non-GAAP operating margin
for the first six months ended May 31, 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, other income (expense),
net earnings, basic and diluted earnings per share, gross margin
percentage, selling and administrative expenses as a percentage of
net sales and operating margin, respectively.
The first six months ended May 31, 2014 non-GAAP financial
measures provided in this release exclude integration, purchase
accounting and transaction related costs associated with the GE Air
Filtration, Bekaert Advanced Filtration and Stanadyne Filtration
acquisitions and a bargain purchase gain recognized pursuant to the
Bekaert Advanced Filtration acquisition. Although the comparison of
data excluding these selected items in the second quarter ended May
31, 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, other income (expense), net earnings, basic and
diluted earnings per share, gross margin percentage, selling and
administrative expenses as a percentage of net sales and operating
margin for the first six months ended May 31, 2014 compared to the
first six months ended May 30, 2015.
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)
First SixMonths
2014GAAP
GE
AirFiltrationAcquisition
BekaertAdvancedFiltrationAcquisition
StanadyneFiltrationAcquisition
First SixMonths
2014Non-GAAPAdjusted
Net sales $ 699,327 $ — $ — $ — $ 699,327 Cost of sales
477,370 (4,216 ) 1 (240 ) 1 (1,368 ) 1 471,546 Gross
profit 221,957 4,216 240 1,368 227,781 Selling and administrative
expenses 139,544 (4,263 ) 2 (130 ) 2 (3,035 ) 2 132,116
Operating profit 82,413 8,479 370 4,403
95,665 Other income (expense): Interest expense
(1,070 ) — — — (1,070 ) Interest income 203 — — — 203 Other, net
4,145 — (2,814 ) 3 — 1,331 3,278
— (2,814 ) — 464 Earnings (loss) before income
taxes 85,691 8,479 (2,444 ) 4,403 96,129 Provision for income taxes
26,804 2,281 123 1,501 30,709
Net earnings (loss) 58,887 6,198 (2,567 ) 2,902 65,420
Net earnings attributable to
noncontrolling interests, net of tax
(14 ) — — — (14 )
Net earnings attributable to CLARCOR
Inc.
$ 58,873 $ 6,198 $ (2,567 ) $ 2,902 $ 65,406
Net earnings per share attributable to CLARCOR Inc. - Basic
$ 1.17 $ 0.12 $ (0.05 ) $ 0.06 $ 1.30
Net earnings per share attributable to CLARCOR Inc. - Diluted $
1.16 $ 0.12 $ (0.05 ) $ 0.06 $ 1.28
Gross margin percentage 31.7 % 0.6 % 0.0 % 0.2 % 32.6 % Selling and
administrative expenses as a percentage of net sales 20.0 % (0.6 )%
0.0 % (0.4 )% 18.9 % Operating margin 11.8 % 1.2 % 0.1 % 0.6 % 13.7
%
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. 2015 UNAUDITED SECOND
QUARTER RESULTS, continued
Reconciliation of Second Quarter 2015
Net Sales to Organic Net Sales
The following appendix presents information with respect to
second quarter 2015 organic net sales at the consolidated and
segment level. These organic net sales figures reflect second
quarter 2015 GAAP net sales adjusted to exclude additional sales
pursuant to the Stanadyne Filtration acquisition during the 2015
second quarter occurring prior to May 1, 2015 (the first
anniversary of the completion of this acquisition), additional
sales pursuant to the Filter Resources acquisition, and changes in
average foreign currency exchange rates from the second quarter of
2014. Although the comparison of data adjusted for these items in
the second quarter of 2015 is not a measure of financial
performance under GAAP, the Company believes that presenting
organic net sales for this period may assist investors in
understanding the Company's performance between periods by
excluding the impact of the Stanadyne Filtration and Filter
Resources acquisitions to the extent noted above and the changes in
average foreign currency exchange rates. Organic net sales may have
limitations as an analytical tool, and management does not intend
this measure to be considered in isolation or as a substitute for
GAAP net sales. Following is a reconciliation of GAAP net sales for
the second quarter of 2015 to organic net sales at the consolidated
and segment level.
Second Quarter 2015 2Q 2014
Net Sales
StanadyneAcquisition
FilterResourcesAcquisition
ForeignExchange
OrganicNet Sales
Net Sales
OrganicNet
SalesGrowth
OrganicNet SalesGrowth
%
Engine/Mobile: U.S. $ 109,972 $ (10,920 ) $ —
$ — $ 99,052 $ 95,015 $ 4,037 4 % International 51,318
(7,061 ) — 4,330 48,587 53,383 (4,796 )
(9 )% $ 161,290 $ (17,981 ) $ — $ 4,330 $
147,639 $ 148,398 $ (759 ) (1 )%
Industrial/Environmental: U.S. $ 155,832 $ — $ (5,134
) $ — $ 150,698 $ 141,358 $ 9,340 7 % International 62,844 —
— 8,725 71,569 78,234 (6,665 )
(9 )% $ 218,676 $ — $ (5,134 ) $ 8,725 $
222,267 $ 219,592 $ 2,675 1 %
Packaging: U.S. $ 19,643 $ — $ — $ — $ 19,643 $
18,382 $ 1,261 7 % International 190 — — —
190 270 (80 ) (30 )% $ 19,833 $ —
$ — $ — $ 19,833 $ 18,652 $
1,181 6 %
Consolidated: U.S. $ 285,447
$ (10,920 ) $ (5,134 ) $ — $ 269,393 $ 254,755 $ 14,638 6 %
International 114,352 (7,061 ) — 13,055
120,346 131,887 (11,541 ) (9 )% $ 399,799 $
(17,981 ) $ (5,134 ) $ 13,055 $ 389,739 $ 386,642
$ 3,097 1 %
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version on businesswire.com: http://www.businesswire.com/news/home/20150617006498/en/
CLARCOR Inc.David J. Fallon, 615-771-3100Chief Financial
Officer
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