CLARCOR Inc. (NYSE: CLC):
Unaudited Third Quarter and First Nine
Months 2015 Highlights
(Amounts in millions, except per share
data and percentages)
Three Months Ended
Nine Months Ended 8/29/15
8/30/14 Change
8/29/15 8/30/14
Change Net sales $ 357.6 $ 400.2
-11 % $ 1,108.5 $ 1,099.5 1 % Operating
profit 50.4 62.2 -19 % 148.6 144.6 3 % Net earnings — CLC 36.4 41.7
-13 % 101.7 100.6 1 % Diluted EPS $ 0.72 $ 0.82 -12 % $ 2.00 $ 1.98
1 % Operating margin 14.1 % 15.6 %
-1.5 pts 13.4 %
13.2 % +0.2 pts
CLARCOR Inc. (NYSE: CLC) reported that its diluted
earnings per share for the third quarter of 2015 declined 12% from
the third quarter of 2014 to $0.72. Net sales declined $42.6
million, or 11%, from last year’s third quarter, including a
decline of $13.4 million, or 3%, from changes in the average
foreign currency exchange rates from last year’s third quarter.
The third quarter of 2015 included a $6.7 million impairment
loss from the write-off of non-core investments and a $12.1 million
net gain related to the disposition of our packaging business, J.L.
Clark. To allow investors to better compare and evaluate our
historical financial performance, we are also presenting non-GAAP
adjusted financial results in the table following this paragraph.
These non-GAAP adjusted financial results for 2015 exclude the
impairment loss on the non-core investments, the gain on the sale
of J.L. Clark and operational results for J.L. Clark. Non-GAAP
adjusted financial results for 2014 exclude certain
acquisition-related items associated with the GE Air Filtration,
Bekaert Advanced Filtration and Stanadyne Filtration acquisitions,
and operational results for J.L. Clark. Please refer to pages 11
through 14 of this earnings release for reconciliations and
additional information with respect to these non-GAAP adjusted
financial results.
Non-GAAP Adjusted Financial
Results:
Three Months Ended
Nine Months Ended 8/29/15
8/30/14 Change
8/29/15 8/30/14
Change Adjusted net sales $ 352.2 $ 379.7
-7 % $ 1,067.6 $ 1,045.0
2 % Adjusted operating profit 50.5 61.2 -17 % 146.4 155.4 -6 %
Adjusted net earnings — CLC 33.1 41.1 -19 % 97.1 105.6 -8 %
Adjusted diluted EPS $ 0.66 $ 0.81 -19 % $ 1.91 $ 2.08 -8 %
Adjusted operating margin 14.3 % 16.1 %
-1.8 pts 13.7 %
14.9 % -1.2 pts
Chris Conway, CLARCOR’s Chairman, President and Chief Executive
Officer, commented, “The third quarter was challenging from many
perspectives, as most of our primary end-markets were negatively
influenced by various macroeconomic pressures that proved to be
much stronger than we had anticipated heading into the quarter and
resulted in lower than expected net sales. Lower net sales
contributed significantly to lower third quarter 2015 operating
margin as we were not able to leverage additional growth-related
manufacturing and administrative costs. Third quarter 2015 non-GAAP
adjusted net sales—after removing sales from our packaging business
from all periods—declined approximately 7% from last year’s third
quarter, with approximately 3% of this reduction due to lower
average foreign currency exchange rates. This net sales decline was
heavily influenced by pressures in our gas turbine first-fit,
heavy-duty engine export and heavy-duty engine off-road
markets.
“From a segment perspective, net sales in our Engine/Mobile
Filtration segment declined 9% from the third quarter of 2014, with
approximately 3% of this reduction due to changes in average
foreign currency exchange rates. Lower currency-adjusted net sales
were geographically driven by a 2% decline in the U.S. and a 12%
decline in international markets. Lower domestic sales were the
result of reduced aftermarket demand—in general—but were
particularly influenced by lower sales in the heavy-duty engine
off-road and oil & gas markets and lower demand from other
filtration companies. Lower international sales were primarily
driven by a 30% decline in export filtration sales across all
end-markets including lower sales from the Stanadyne filtration
business acquired last year. Approximately 80% of the export sales
decline from last year’s third quarter was the result of
significantly lower filter purchases from a major international
equipment customer, in part due to a significant filter order
delivered to this customer in the third quarter of 2014. In other
international markets, a 32% decline in heavy-duty engine
filtration sales in China was almost entirely offset by a 19%
increase in filtration sales in Europe compared with last year’s
third quarter.
“Net sales in our Industrial/Environmental Filtration segment
declined 6% from the third quarter of 2014, with approximately 4%
of this decline due to changes in average foreign currency exchange
rates. Lower currency adjusted net sales in this reporting segment
were primarily driven by a $17 million, or 70%, reduction in
first-fit gas turbine filter and system sales, which reduction was
partially offset by higher filtration sales in our gas turbine
aftermarket and natural gas, HVAC and TFS distribution markets. The
third quarter year-over-year reduction in first-fit gas turbine
filtration sales was consistent with our expectations heading into
the quarter. In addition, we believe that this year-over-year third
quarter decline will be significantly offset in the fourth quarter,
when we anticipate over 50% of our full year first-fit gas turbine
filter system sales to be recognized based upon a strong backlog
heading into the quarter. Despite the pressures we have experienced
within our gas turbine first-fit market, sales in our gas turbine
aftermarket continue to grow, including year-over-year 14% sales
growth in the third quarter and approximately 20% sales growth in
the first nine months. Net sales in our natural gas filtration
business—after adjusting for foreign currency and excluding sales
pursuant to our Filter Resources acquisition—increased
approximately 4% in the third quarter and 10% in the first nine
months from comparable prior year periods. Third quarter net sales
in other filtration markets in this reporting segment increased
from last year’s third quarter, including a 6% increase in HVAC
filtration sales and a 4% increase at our TFS distribution
business.
“We are obviously disappointed in our third quarter financial
results and with our need to lower our full year financial
guidance. However, despite the macroeconomic headwinds we have
faced in 2015, our full year consolidated net sales—taking into
account our revised full-year financial guidance and after removing
sales from our packaging business from all periods—are expected to
expand 1% on a GAAP basis and 4% when adjusted for changes in
average foreign currency exchange rates compared to 2014. Despite
difficult market conditions, we have benefitted from our continued
investment in and execution upon our long-term strategic growth
initiatives including our acquisition strategy, our penetration of
new distribution channels in the Engine/Mobile Filtration segment
and our continued development of commercially-applicable
technology. Given our expectation that softer end-market demand
could continue into 2016, it is important for us to continue to
execute upon these long-term strategic growth initiatives going
forward.
“Our 14.3% third quarter adjusted operating margin declined 1.8
percentage points from last year’s third quarter. This decline was
approximately equally split between gross margin percentage and
selling and administrative expenses as a percentage of net sales.
The primary driver of lower adjusted operating margin in the third
quarter was the 7% decline in adjusted net sales and the
corresponding unfavorable impact on absorption of fixed
manufacturing and selling and administrative costs. In addition, we
incurred $1.8 million of legal and other administrative costs in
the third quarter that we do not anticipate recurring on a
consistent go-forward basis. These costs negatively impacted
consolidated and reporting segment adjusted third quarter 2015
operating margins by approximately 0.5 percentage points. Although
we undertook actions to reduce discretionary costs as we progressed
through the third quarter—as evidenced by the $2.3 million
reduction in adjusted selling and administrative expenses from last
year’s third quarter—the weakness on the top-line was more
significant and accelerated more quickly than we were able to
adjust our cost structure. Based upon our current expectations for
end-market demand, we are critically analyzing our cost structure,
including evaluating restructuring and other significant cost
reduction opportunities throughout our company.
Non-core Investments
“Our strategic focus is to be the leading global provider of
filtration products, systems and services. Consistent with this
strategy, we invested significant resources last year to strengthen
and extend our core filtration portfolio with the acquisitions of
GE Air Filtration and Stanadyne Filtration. As part of this focus,
we determined that the J.L. Clark packaging business did not
strategically fit within CLARCOR. Accordingly, we divested this
business in the third quarter for approximately $48.0 million. We
recognized a $15.3 million gain on the sale and incurred
approximately $3.2 million of disposition-related costs. The $12.1
million net gain on sale is included in other income in the third
quarter of 2015. Separately, we recognized an impairment charge of
$6.7 million in the third quarter—also in other income—based upon a
fair value analysis of our investments in BioProcess H2O and Algae,
which resulted in a loss equal to the full carrying value of such
investments. Despite the impairment, we retain our equity ownership
interests in these investments.”
2015 Guidance
We are revising our guidance for 2015 GAAP consolidated diluted
earnings per share from our prior estimate of $3.00 to $3.15 to our
current estimate of $2.70 to $2.80. These revised expected 2015
results are based upon projected consolidated net sales between
$1,480 million and $1,510 million and consolidated operating margin
between 13.5% and 14.1%. Expected sales growth (on a GAAP basis)
from 2014 and operating margin by reporting segment and on a
consolidated basis are as follows:
2015 Estimated
Sales Growth
2015 Estimated
Operating Margin
Engine/Mobile Filtration -1.0% to 1.0% 17.5% to 18.5%
Industrial/Environmental Filtration 1.0% to 3.0% 11.0% to 11.5%
Packaging
-46.0%*
5.0%* CLARCOR -2.0% to 0.0% 13.5% to 14.1%
* Includes financial results for the
Packaging segment only through June 27, 2015, the date of
disposition of J.L. Clark
Our full year 2015 guidance reduces net sales in our
Engine/Mobile Filtration segment by $40 million from our prior
guidance primarily driven by softer market conditions in most of
our end-markets in this reporting segment, particularly in the
domestic heavy-duty engine aftermarket. Lower expected operating
margin in this reporting segment is primarily driven by the lower
expected sales and corresponding lower absorption of fixed
manufacturing and selling and administrative costs. Our guidance
reduces net sales in our Industrial/Environmental Filtration
segment by $35 million from our prior guidance primarily driven by
more challenging market conditions in several of our filtration
aftermarkets in this reporting segment including gas turbine,
industrial air and natural gas. Our guidance includes the 2015
financial results of J.L. Clark through the date of disposition,
which is the primary driver of the significant year-over-year
negative sales variance in our Packaging segment.
Our full year 2015 guidance continues to assume 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.
Our guidance includes in other income the $12.1 million net gain
on sale of J.L. Clark, the $6.7 million impairment loss on our
non-core investments and approximately $6.0 million of net interest
expense. We project 2015 cash from operations to be between $150
million and $160 million, capital expenditures to be between $75
million and $80 million and our effective tax rate to be between
32.0% and 32.5%, and we assume 50.7 million average diluted shares
outstanding.
CLARCOR will be holding a conference call to discuss the third
quarter 2015 results at 10:00 a.m. CT on September 17, 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 5215533. The replay will be available
through October 1, 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 expectations 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 our current expectation that
softer-end market demand could continue into 2016; statements
regarding our expectations with respect to first-fit gas turbine
filter system sales in the fourth quarter based upon a strong
backlog heading into the quarter; 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, but not limited to, risks associated with global and
national macroeconomic pressures, trends with respect to the health
of the markets we serve including with respect to challenging
market conditions in various markets in the Engine/Mobile
Filtration segment and the Industrial/Environmental Filtration
segment, our ability to execute upon long-term strategic growth
initiatives, our ability to execute upon restructuring and other
cost reduction opportunities for the company, customer
concentration issues in certain geographic locations and in respect
of certain of our businesses, our ability to integrate the
businesses we have acquired, currency fluctuations, particularly
increases or decreases in the U.S. dollar against other currencies,
commodity price increases and/or limited availability of raw
materials and component products, including steel, compliance costs
associated with environmental laws and regulations, political
factors, our international operations, highly competitive markets,
governmental laws and regulations, potential information
systems interruptions and intrusions, potential global events
resulting in instability and unpredictability in the world’s
markets, including financial bailouts of sovereign nations,
political changes, military and terrorist activities, health
outbreaks and other factors, changes in accounting standards or
adoption of new accounting standards, adverse effects of natural
disasters, legal challenges with respect to intellectual property,
product liability exposure, changes in tax rates or exposure to
additional income tax liabilities, potential labor disruptions, the
risks 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 risks 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. 2015 UNAUDITED THIRD
QUARTER RESULTSCONSOLIDATED CONDENSED STATEMENTS OF
EARNINGS(Dollars in thousands, except share data)
Three Months Ended Nine
Months Ended August 29,2015 August 30,2014 August
29,2015 August 30,2014 Net sales $ 357,557 $ 400,152
$ 1,108,479 $ 1,099,479 Cost of sales 237,802
264,827 742,139 742,197
Gross profit 119,755 135,325 366,340 357,282 Selling and
administrative expenses 69,333 73,099
217,782 212,643 Operating profit
50,422 62,226 148,558
144,639 Other income (expense): Interest
expense (1,338 ) (1,336 ) (3,965 ) (2,406 ) Interest income 108 101
339 304 Other, net 5,649 (279 ) 5,111
3,866 4,419 (1,514 )
1,485 1,764 Earnings before
income taxes 54,841 60,712 150,043 146,403 Provision for
income taxes 18,332 18,947
48,224 45,751 Net earnings 36,509
41,765 101,819 100,652
Net earnings attributable to
noncontrolling interests, net of tax
(64 ) (62 ) (168 ) (76 ) Net
earnings attributable to CLARCOR Inc. $ 36,445 $ 41,703
$ 101,651 $ 100,576 Net earnings per
share attributable to CLARCOR Inc. - Basic $ 0.73 $ 0.83
$ 2.03 $ 1.99 Net earnings per share
attributable to CLARCOR Inc. - Diluted $ 0.72 $ 0.82
$ 2.00 $ 1.98 Weighted average number of
shares outstanding - Basic 50,099,852
50,395,007 50,188,327 50,457,436
Weighted average number of shares outstanding - Diluted
50,525,049 50,881,594 50,701,490
50,917,020 Dividends paid per share $ 0.2000
$ 0.1700 $ 0.6000 $ 0.5100
CLARCOR INC. 2015 UNAUDITED THIRD
QUARTER RESULTS, continuedCONSOLIDATED CONDENSED BALANCE
SHEETS(Dollars in thousands)
August 29,
2015
November 29,
2014
ASSETS Current assets: Cash and cash equivalents $ 112,180 $
94,064 Accounts receivable, less allowance for losses of $11,926
and $10,811, respectively 260,364 305,580 Inventories 286,906
274,718 Deferred income taxes 38,774 37,749 Prepaid expenses and
other current assets 27,181 16,796
Total current assets 725,405 728,907
Plant assets, at cost, less accumulated depreciation of
$282,476 and $357,564, respectively 295,234 288,356 Assets held for
sale 533 — Goodwill 507,959 507,172 Acquired intangible assets,
less accumulated amortization 337,191 347,578 Other noncurrent
assets 11,078 16,756 Total assets $
1,877,400 $ 1,888,769
LIABILITIES Current
liabilities: Current portion of long-term debt $ 296 $ 233 Accounts
payable 89,701 97,885 Accrued liabilities 99,025 120,036 Income
taxes payable 6,821 6,226 Total current
liabilities 195,843 224,380
Long-term debt, less current portion 402,766 411,330 Long-term
pension and postretirement healthcare benefits liabilities 27,545
33,266 Deferred income taxes 100,608 104,250 Other long-term
liabilities 13,839 8,853 Total
liabilities 740,601 782,079
Contingencies Redeemable noncontrolling interests — 1,587
SHAREHOLDERS' EQUITY Capital stock 49,916 50,204 Capital in
excess of par value — 10,644 Accumulated other comprehensive loss
(77,508 ) (54,080 ) Retained earnings 1,163,559
1,097,292 Total CLARCOR Inc. equity 1,135,967
1,104,060 Noncontrolling interests 832
1,043 Total shareholders' equity
1,136,799 1,105,103 Total liabilities and
shareholders' equity $ 1,877,400 $ 1,888,769
CLARCOR INC. 2015 UNAUDITED THIRD
QUARTER RESULTS, continuedCONSOLIDATED CONDENSED CASH
FLOWS(Dollars in thousands)
Nine Months Ended August 29, 2015
August 30, 2014
Cash flows from operating
activities: Net earnings $ 101,819 $ 100,652 Depreciation
23,133 22,359 Amortization 19,282 14,126 Net (gain) loss on
disposition of plant assets (2,132 ) 67 Net gain on disposal of
J.L. Clark (12,132 ) — Bargain purchase gain — (2,815 ) Impairment
of investments 6,729 — Stock-based compensation expense 7,722 4,909
Excess tax benefit from stock-based compensation (1,138 ) (705 )
Other noncash items (304 ) 972 Changes in assets and liabilities
(41,716 ) (40,716 ) Net cash provided by operating
activities 101,263 98,849
Cash flows from investing activities: Restricted cash —
1,364 Business acquisitions, net of cash acquired (20,881 )
(595,328 ) J.L. Clark disposition, net of cash divested 47,103 —
Additions to plant assets (51,273 ) (52,524 ) Proceeds from
disposition of plant assets 7,322 354 Investment in affiliates
(525 ) (473 ) Net cash used in investing activities
(18,254 ) (646,607 )
Cash flows from
financing activities: Net payments on multicurrency revolving
credit facility — (36,000 ) Borrowings under term loan facility —
315,000 Payments on term loan facility — (20,000 ) Payments on
long-term debt (8,600 ) (1,562 ) Payment of financing costs — (723
) Sale of capital stock under stock option and employee purchase
plans 6,441 4,208 Acquisition of noncontrolling interest (1,239 ) —
Payments for repurchase of common stock (30,196 ) (21,959 ) Excess
tax benefit from stock-based compensation 1,138 705 Dividend paid
to noncontrolling interests (206 ) (166 ) Cash dividends paid
(30,141 ) (25,751 ) Net cash (used in) provided by
financing activities (62,803 ) 213,752 Net
effect of exchange rate changes on cash (2,090 ) 69
Net change in cash and cash equivalents 18,116 (333,937 )
Cash and cash equivalents, beginning of period 94,064
411,562 Cash and cash equivalents, end of period $
112,180 $ 77,625
Cash paid during the
period for: Interest $ 3,738 $ 1,831 Income
taxes, net of refunds $ 48,380 $ 44,226
CLARCOR INC. 2015 UNAUDITED THIRD
QUARTER RESULTS, continuedQUARTERLY INCOME STATEMENT DATA BY
SEGMENT(Dollars in thousands)
Quarter Ended
Nine Months Ended August 29, 2015
August 30, 2014 August 29, 2015
August 30, 2014 Net sales by
segment: Engine/Mobile Filtration $ 151,734 $ 165,910 $ 457,482
$ 436,805 Industrial/Environmental Filtration 200,496 213,752
610,088 608,207 Packaging 5,327 20,490
40,909 54,467 $ 357,557 $
400,152 $ 1,108,479 $ 1,099,479
Operating profit by segment: Engine/Mobile Filtration $
27,728 $ 36,741 $ 83,038 $ 86,587 Industrial/Environmental
Filtration 22,765 23,873 63,377 55,024 Packaging (71 )
1,612 2,143 3,028 $
50,422 $ 62,226 $ 148,558 $ 144,639
Operating margin by segment: Engine/Mobile Filtration
18.3 % 22.1 % 18.2 % 19.8 % Industrial/Environmental Filtration
11.4 % 11.2 % 10.4 % 9.0 % Packaging (1.3 )% 7.9 %
5.2 % 5.6 % 14.1 % 15.6 % 13.4 %
13.2 %
CLARCOR INC. 2015 UNAUDITED THIRD QUARTER RESULTS,
continued
Reconciliation of Third Quarter 2015 GAAP Financial Results
to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP net sales, non-GAAP cost of
sales, non-GAAP gross profit, non-GAAP selling and administrative
expenses, non-GAAP operating profit, non-GAAP other, net, 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 August 29, 2015. 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 net sales, cost of sales, gross profit,
selling and administrative expenses, operating profit, other, net,
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 August 29, 2015 non-GAAP financial measures
provided in this release exclude the financial results from our
J.L. Clark packaging business disposed of on June 27, 2015, a net
gain on the sale of such packaging business, and an impairment loss
related to our BioProcess H2O and Algae investments. Although these
financial measures excluding these selected items in the third
quarter ended August 29, 2015 are not measures 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. In addition, the Company believes that removing the
impact of these selected items provides a more comparable measure
of the changes in net sales, cost of sales, gross profit, selling
and administrative expenses, operating profit, other, net, 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 August 29,
2015 compared to the quarter ended August 30, 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)
Third
Quarter 2015
GAAP
J.L. Clark
Results and
Gain on
Disposition
BioProcess
Investment
Impairment
Third
Quarter 2015
Non-GAAP
Adjusted
Net sales $ 357,557 $ (5,327 )
1
$ — $ 352,230 Cost of sales 237,802 (4,588 )
1
— 233,214 Gross profit 119,755 (739 ) —
119,016 Selling and administrative expenses 69,333
(810 )
1
— 68,523 Operating profit 50,422
71 — 50,493 Other
income (expense): Interest expense (1,338 ) — — (1,338 ) Interest
income 108 — — 108 Other, net 5,649 (12,131 )
2
6,729 247 4,419
(12,131 ) 6,729 (983 ) Earnings before income
taxes 54,841 (12,060 ) 6,729 49,510 Provision for income taxes
18,332 (4,339 ) 2,355
16,348 Net earnings 36,509 (7,721 ) 4,374 33,162
Net earnings attributable to
noncontrolling interests, net of tax
(64 ) — — (64 )
Net earnings attributable to CLARCOR
Inc
$ 36,445 $ (7,721 ) $ 4,374 $ 33,098 Net
earnings per share attributable to CLARCOR Inc. - Basic $ 0.73
$ (0.15 ) $ 0.09 $ 0.66 Net earnings per share
attributable to CLARCOR Inc. - Diluted $ 0.72 $ (0.15 ) $
0.09 $ 0.66 Gross margin percentage 33.5 %
0.3 % 0.0 % 33.8 % Selling and administrative
expenses as a percentage of net sales 19.4 % 0.1 %
0.0 % 19.5 % Operating margin 14.1 %
0.2 % 0.0 % 14.3 %
1 - Third quarter 2015 financial results
for J.L. Clark through disposition date of June 27, 2015
(approximately one month of operations during the third
quarter)
2 - Net gain on third quarter 2015
disposition of J.L. Clark
CLARCOR INC. 2015 UNAUDITED THIRD QUARTER RESULTS,
continued
Reconciliation of Third 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 net sales, 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 August 30, 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
net sales, 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 August 30, 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 financial results of our J.L. Clark packaging
business disposed of during the third quarter of 2015. Although
these financial measures excluding these selected items in the
third quarter ended August 30, 2014 are not measures 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. In addition, the Company believes that removing the
impact of these selected items provides a more comparable measure
of the changes in net sales, 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 August 30, 2014 compared to
the quarter ended August 29, 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)
Third
Quarter 2014
GAAP
GE Air
Filtration
Acquisition
Bekaert
Advanced
Filtration
Acquisition
Stanadyne
Filtration
Acquisition
J.L. Clark
Disposition
Third
quarter 2014
Non-GAAP
Adjusted
Net sales $ 400,152 $ — $ — $ — $ (20,490 )
3
$ 379,662 Cost of sales 264,827 (126 )
1
— — (17,015 )
3
247,686 Gross profit 135,325 126 — — (3,475 ) 131,976
Selling and administrative expenses 73,099
(452 )
2
— — (1,863 )
3
70,784 Operating profit 62,226
578 — — (1,612 )
61,192 Other income (expense): Interest expense (1,336 ) — —
— — (1,336 ) Interest income 101 — — — — 101 Other, net (279
) — — — —
(279 ) (1,514 ) — —
— — (1,514 ) Earnings (loss)
before income taxes 60,712 578 — — (1,612 ) 59,678 Provision for
income taxes 18,947 155 —
— (558 ) 18,544 Net earnings
(loss) 41,765 423 — — (1,054 ) 41,134
Net earnings attributable to
noncontrolling interests, net of tax
(62 ) — — —
— (62 )
Net earnings attributable to CLARCOR
Inc
$ 41,703 $ 423 $ — $ — $ (1,054 ) $
41,072 Net earnings per share attributable to CLARCOR Inc. -
Basic $ 0.83 $ 0.01 $ — $ — $ (0.02 ) $
0.82 Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 0.82 $ 0.01 $ — $ — $ (0.02 )
$ 0.81 Gross margin percentage 33.8 % 0.0 %
0.0 % 0.0 % 0.9 % 34.8 % Selling and
administrative expenses as a percentage of net sales 18.3 %
(0.1 )% 0.0 % 0.0 % 0.4 % 18.6 %
Operating margin 15.6 % 0.1 % 0.0 % 0.0
% 0.4 % 16.1 %
1 - Purchase accounting step-up in
inventory basis.
2 - Integration costs and accelerated
amortization of backlog pursuant to purchase accounting.
3 - Third quarter 2014 financial results
for J.L. Clark
CLARCOR INC. 2015 UNAUDITED THIRD QUARTER RESULTS,
continued
Reconciliation of First Nine Months of 2015 GAAP Financial
Results to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP net sales, non-GAAP cost of
sales, non-GAAP gross profit, non-GAAP selling and administrative
expenses, non-GAAP operating profit, non-GAAP other, net, 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 nine months of 2015. 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 net sales, cost of sales, gross profit, selling and
administrative expenses, operating profit, other, net, 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 nine months of 2015 non-GAAP financial measures
provided in this release exclude financial results from our J.L.
Clark packaging business disposed of on June 27, 2015, a net gain
on the sale of such packaging business recognized in the third
quarter of 2015, and an impairment loss related to our BioProcess
H2O and Algae investments recognized in the third quarter of 2015.
Although these financial measures excluding these selected items in
the first nine months of 2015 are not measures 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. In addition, the Company believes that removing the
impact of these selected items provides a more comparable measure
of the changes in net sales, cost of sales, gross profit, selling
and administrative expenses, operating profit, other, net, 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 nine months of 2015
compared to the first nine months of 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)
First Nine
Months 2015
GAAP
J.L. Clark
Results and
Gain on
Disposition
BioProcess
Investment
Impairment
First Nine
Months 2015
Non-GAAP
Adjusted
Net sales $ 1,108,479 $ (40,909 )
1
$ — $ 1,067,570 Cost of sales 742,139 (33,954
)
1
— 708,185 Gross profit 366,340 (6,955 )
— 359,385 Selling and administrative expenses 217,782
(4,812 )
1
— 212,970 Operating profit
148,558 (2,143 ) — 146,415
Other income (expense): Interest expense (3,965 ) — — (3,965
) Interest income 339 — — 339 Other, net 5,111
(12,131 )
2
6,729 (291 ) 1,485
(12,131 ) 6,729 (3,917 ) Earnings before
income taxes 150,043 (14,274 ) 6,729 142,498 Provision for income
taxes 48,224 (5,305 ) 2,355
45,274 Net earnings 101,819 (8,969 ) 4,374 97,224
Net earnings attributable to
noncontrolling interests, net of tax
(168 ) — — (168 )
Net earnings attributable to CLARCOR
Inc.
$ 101,651 $ (8,969 ) $ 4,374 $ 97,056 Net
earnings per share attributable to CLARCOR Inc. - Basic $ 2.03
$ (0.18 ) $ 0.09 $ 1.94 Net earnings per share
attributable to CLARCOR Inc. - Diluted $ 2.00 $ (0.18 ) $
0.09 $ 1.91 Gross margin percentage 33.0 %
0.6 % 0.0 % 33.7 % Selling and administrative
expenses as a percentage of net sales 19.6 % 0.3 %
0.0 % 19.9 % Operating margin 13.4 %
0.3 % 0.0 % 13.7 %
1 - 2015 financial results for J.L. Clark
through disposition date of June 27, 2015 (approximately seven
months of operations during this nine month period)
2 - Net gain on third quarter 2015
disposition of J.L. Clark
CLARCOR INC. 2015 UNAUDITED THIRD QUARTER RESULTS,
continued
Reconciliation of First Nine 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 net sales, 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
first nine months of 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 net sales, 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 first nine months of 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, a bargain purchase gain recognized pursuant to the
Bekaert Advanced Filtration acquisition, and the financial results
of our J.L. Clark packaging business disposed of during the third
quarter of 2015. Although these financial measures excluding these
selected items in the first nine months of 2014 are not measures 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. In addition, the Company
believes that removing the impact of these selected items provides
a more comparable measure of the changes in net sales, 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 first nine
months of 2014 compared to the first nine months of 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 Nine
Months 2014
GAAP
GE Air
Filtration
Acquisition
Bekaert
Advanced
Filtration
Acquisition
Stanadyne
Filtration
Acquisition
J.L. Clark
Disposition
First Nine
Months 2014
Non-GAAP
Adjusted
Net sales $ 1,099,479 $ — $ — $ — $ (54,467 )
4
$ 1,045,012 Cost of sales 742,197 (4,342 )
1
(240 )
1
(1,368 )
1
(45,728 )
4
690,519 Gross profit 357,282 4,342 240 1,368 (8,739 )
354,493 Selling and administrative expenses 212,643
(4,715 )
2
(130 )
2
(3,035 )
2
(5,712 )
4
199,051 Operating profit 144,639
9,057 370 4,403 (3,027 )
155,442 Other income (expense): Interest expense
(2,406 ) — — — — (2,406 ) Interest income 304 — — — — 304 Other,
net 3,866 — (2,814 )
3
— — 1,052 1,764
— (2,814 ) — —
(1,050 ) Earnings (loss) before income taxes 146,403
9,057 (2,444 ) 4,403 (3,027 ) 154,392 Provision for income taxes
45,751 2,436 123
1,501 (1,049 ) 48,762 Net earnings
(loss) 100,652 6,621 (2,567 ) 2,902 (1,978 ) 105,630
Net earnings attributable to
noncontrolling interests, net of tax
(76 ) — — —
— (76 )
Net earnings attributable to CLARCOR
Inc
$ 100,576 $ 6,621 $ (2,567 ) $ 2,902 $ (1,978
) $ 105,554 Net earnings per share attributable to CLARCOR
Inc. - Basic $ 1.99 $ 0.13 $ (0.05 ) $ 0.06 $
(0.04 ) $ 2.09 Net earnings per share attributable to
CLARCOR Inc. - Diluted $ 1.98 $ 0.13 $ (0.05 ) $ 0.06
$ (0.04 ) $ 2.08 Gross margin percentage 32.5
% 0.4 % 0.0 % 0.1 % 0.9 % 33.9 %
Selling and administrative expenses as a percentage of net sales
19.3 % (0.4 )% 0.0 % (0.3 )% 0.3
% 19.0 % Operating margin 13.2 % 0.8 %
0.0 % 0.4 % 0.5 % 14.9 %
1 - Purchase accounting step-up in
inventory basis.
2 - Integration costs, deal costs
including investment banking and legal expenses, and accelerated
amortization of backlog pursuant to purchase accounting.
3 - Bargain purchase gain
(non-taxable)
4 - First nine months 2014 J.L. Clark
financial results
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150916006740/en/
CLARCOR Inc.David J. Fallon, 615-771-3100Chief Financial
Officer
Clarcor (NYSE:CLC)
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