CLARCOR Inc. (NYSE: CLC):
Unaudited Fourth Quarter and Full Year
2015 Highlights
(Amounts in millions, except per share
data and percentages)
Three Months Ended Full Year Ended
11/28/15 11/29/14
Change 11/28/15
11/29/14
Change Net sales
$
372.5
$ 413.4 -10 %
$
1,481.0
$ 1,512.9 -2 % Operating profit 49.4
65.8 -25 % 197.9 210.4 -6 % Net earnings — CLC 33.1 43.5 -24 %
134.7
144.1 -7 % Diluted EPS $ 0.67 $ 0.86 -22 % $ 2.67 $ 2.83 -6 %
Operating margin 13.3 % 15.9 %
-2.6 pts 13.4 %
13.9 % -0.5 pts
CLARCOR Inc. (NYSE: CLC) reported that its diluted
earnings per share for the fourth quarter of 2015 declined $0.19
from the fourth quarter of 2014. This decline primarily resulted
from an approximate $0.11 reduction from weak end-markets in the
Engine/Mobile Filtration segment, an approximate $0.07 reduction
from $5.6 million of restructuring costs incurred in the fourth
quarter of 2015 related to employee severance and other employee
termination benefits previously announced and an approximate $0.02
reduction from the third quarter 2015 disposition of the packaging
business, J.L. Clark. Excluding the impact of the restructuring
costs and the disposition of J.L. Clark, non-GAAP adjusted diluted
earnings per share were $0.74 in the fourth quarter of 2015 as
compared to $0.84 in the fourth quarter of 2014, as reflected in
the table on page two.
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 $5.6
million of restructuring costs incurred in the fourth quarter, a
$6.7 million impairment loss on non-core investments recognized in
the third quarter, a $12.1 million net gain on the sale of our
packaging business, J.L. Clark, recorded in the third quarter, and
operational results for J.L. Clark prior to its disposition.
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 Full Year Ended
11/28/15 11/29/14
Change 11/28/15
11/29/14 Change Adjusted net sales $
372.5 $ 391.9 -5 % $ 1,440.1
$ 1,436.9 0 % Adjusted operating profit 55.0
64.1 -14 % 201.4 219.5 -8 % Adjusted net earnings — CLC 36.7 42.4
-13 %
133.6
148.0 -10 % Adjusted diluted EPS $ 0.74 $ 0.84 -12 % $ 2.65 $ 2.91
-9 % Adjusted operating margin 14.8 %
16.4 % -1.6 pts 14.0 %
15.3 % -1.3 pts
Chris Conway, CLARCOR’s Chairman, President and Chief Executive
Officer, commented, “Macroeconomic pressures that have been
adversely affecting many U.S. industrial companies also negatively
impacted our financial performance in the fourth quarter, causing
our fourth quarter 2015 non-GAAP adjusted net sales, after removing
net sales from our packaging business from all periods, to decline
approximately 5% from last year’s fourth quarter, with
approximately 3% of this reduction due to lower average foreign
currency exchange rates. From a segment perspective, net sales in
our Engine/Mobile Filtration segment declined 11% while net sales
in our Industrial/Environmental Filtration segment were relatively
flat compared to last year’s fourth quarter. Lower consolidated
adjusted net sales and the resultant lower fixed cost absorption
were the primary drivers of the 1.6 percentage point reduction in
adjusted operating margin from the fourth quarter of 2014.
“The 11% decline in net sales in our Engine/Mobile Filtration
segment was driven by a $15 million reduction in international
sales, including $5 million from lower foreign currency exchange
rates, and a $4 million decline in U.S. sales. Lower international
sales, when adjusted for lower foreign currency exchange rates,
were almost entirely driven by a reduction in export filtration
sales across most end-markets. Lower domestic sales were the result
of reduced aftermarket demand in most end-markets, including
weakness in the heavy-duty engine off-road and oil & gas
markets and lower demand from other filtration companies. Net sales
in our Industrial/Environmental Filtration segment were relatively
flat compared to last year’s fourth quarter but increased
approximately $9 million when adjusted for lower average foreign
currency exchange rates, primarily driven by a $10 million increase
in first-fit gas turbine filter and system sales. Flat currency
adjusted sales in our natural gas filtration business were the
result of higher sales pursuant to the first quarter 2015 Filter
Resources acquisition offset by lower natural gas filtration system
sales in several geographic locations.
“We are disappointed in our recent financial results. However,
despite the macroeconomic headwinds in 2015, our full year
consolidated net sales expanded 3% when adjusted for changes in
average foreign currency exchange rates. Despite challenging 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 into new distribution
channels in the Engine/Mobile Filtration segment and our continued
development of commercially-applicable technology. In spite of our
expectation that softer end-market demand will continue into 2016,
we believe it is important for us to continue to execute upon these
long-term strategic growth initiatives.
“We have taken and continue to take actions across our business
units to align our cost structure with current market dynamics. We
announced a headcount reduction in the fourth quarter of 2015, and
we are also undertaking and evaluating several other significant
cost reduction initiatives. We estimate that the fourth quarter
headcount reduction and other cost reduction initiatives that we
are undertaking or may undertake in 2016 will ultimately
collectively reduce costs by approximately $30.0 million on an
annualized basis. Cost reduction initiatives that we are
undertaking include, but are not limited to, leveraging purchasing
and logistics spending across our historically decentralized
business units and reducing discretionary selling and
administrative expenses. We are also evaluating potential facility
consolidations. We believe we will realize approximately $20.0
million of cost benefit in fiscal year 2016 as a result of the
headcount reduction and these cost reduction initiatives.
“Our 14.8% fourth quarter adjusted operating margin declined 1.6
percentage points from last year’s fourth quarter. This reduction
was primarily driven by a lower adjusted gross margin percentage in
each filtration reporting segment. The 2.4 percentage point
reduction in adjusted gross margin percentage in our Engine/Mobile
Filtration segment was primarily due to lower absorption of fixed
manufacturing costs, resulting from lower net sales. Gross margin
in this reporting segment was also negatively impacted by
unfavorable year-over-year sales mix as higher margin, off-road
agricultural fuel filtration sales declined significantly from the
fourth quarter of 2014. The 1.0 percentage point decline in
adjusted gross margin percentage in our Industrial/Environmental
Filtration segment was primarily driven by a higher sales mix of
lower margin, first-fit gas turbine filters and systems. Non-GAAP
adjusted selling and administrative expenses as a percentage of net
sales remained relatively flat from the fourth quarter of 2014. On
a dollar basis, non-GAAP adjusted selling and administrative
expenses declined $3.6 million from last year’s fourth quarter
primarily due to lower expense related to our company-wide
incentive compensation program in addition to lower headcount
pursuant to the previously announced fourth quarter restructuring
actions.”
2016 Guidance
We project 2016 consolidated diluted earnings per share between
$2.60 and $2.80. These expected results are based upon projected
consolidated net sales between $1,375 million and $1,415 million
and consolidated operating margin between 14.2% and 14.8%.
Our 2016 diluted earnings per share guidance includes an
estimated benefit of $0.25 to $0.30 from approximately $20.0
million of cost reduction initiatives expected to be realized in
2016. However, we expect that this anticipated year-over-year
benefit in 2016 will be substantially offset by additional costs in
2016 related to incremental year-over-year expense from our
company-wide incentive compensation program under which we incurred
limited expense in 2015 and additional expense related to our
strategic growth initiatives including costs to support our
information technology initiative and incremental investment in
research and development capabilities. Our 2016 diluted earnings
per share guidance does not include costs that we may incur in 2016
related to any potential facility consolidations or any other
restructuring or cost savings initiatives.
Our 2016 expected net sales and operating margin performance by
reporting segment and on a consolidated basis (with 2015
consolidated net sales adjusted to remove net sales from the J.L.
Clark business) are as follows:
2016 EstimatedSales
Decline
2016 EstimatedOperating
Margin
Engine/Mobile Filtration -6.5% to -2.5% 18.0% to 18.6%
Industrial/Environmental Filtration -3.0% to -1.0% 11.5% to 12.1%
CLARCOR -4.5% to -1.5% 14.2% to 14.8%
At the mid-point, our guidance assumes a $27.0 million, or 4.5%,
reduction in net sales in our Engine/Mobile Filtration segment from
2015. Approximately $15.0 million of this decline is related to
lower expected sales in off-road fuel filtration products, as we
anticipate continued challenges in global agricultural and
construction equipment markets during 2016. We also expect net
sales in our Engine/Mobile Filtration segment to be negatively
impacted by approximately $5.0 million from our exit of lower
margin automotive filtration business heading into 2016. At the
mid-point, our guidance assumes a $17 million, or 2.0%, reduction
in net sales in our Industrial/Environmental Filtration segment
from 2015. The primary driver of these lower expected sales is a
$24 million, or 9%, anticipated decline in natural gas filtration
sales due to continued broad pressures in the oil and gas markets
heading into 2016. We expect 2016 net sales in our gas turbine
filtration market to be relatively flat from 2015, and net sales in
our other filtration markets in this reporting segment to grow in
the low-single digits from 2015.
Our 2016 earnings guidance includes approximately $8.5 million
of net interest expense. We project 2016 cash from operations to be
between $200 million and $220 million as we anticipate generating
approximately $15 million from lower working capital due to
specific initiatives intended to reduce inventory and optimize
accounts receivable and payable. We expect capital expenditures to
be between $45 million and $55 million, our effective tax rate to
be between 31.0% and 31.5%, and 49.5 million average diluted shares
outstanding.
CLARCOR will be holding a conference call to discuss the fourth
quarter 2015 results at 10:00 a.m. CT on January 14, 2016.
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 8040388. The replay will be available
through January 21, 2016 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 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 2016
performance of the Company and each of its segments, our
projections with respect to 2016 sales expectations and 2016
operating margin for the Company and each of its segments, our
projections with respect to 2016 diluted earnings per share, our
projections with respect to 2016 consolidated net sales and
consolidated operating margin; our projections with respect to 2016
cash from operations, 2016 capital expenditures, 2016 effective tax
rate, 2016 interest expense and 2016 average diluted shares
outstanding; statements regarding potential additional costs we may
incur related to the implementation of various restructuring and
cost reduction initiatives; statements regarding our lower expected
year-over-year sales in off-road fuel filtration sales; statements
regarding our anticipation of continued challenges in the
agricultural and construction equipment markets during 2016;
statements regarding the estimated negative impact on 2016 sales in
our Engine/Mobile Filtration segment as a result of our exit of
lower margin automotive filtration business heading into 2016;
statements regarding our anticipated decline in natural gas
filtration sales in 2016; statements regarding our anticipated 2016
sales in our gas turbine filtration market and in our other
filtration markets within the Industrial/Environmental segment;
statements regarding our current expectation that softer-end market
demand will continue into 2016; statements regarding potential
restructuring and cost reduction initiatives, including anticipated
cost savings and on-going cost benefits that may result from
restructuring and cost reduction initiatives in 2016 and
thereafter; statements that we expect any cost benefits in 2016
from cost reduction initiatives to be substantially offset by
additional costs relating to incremental year-over-year expense
from our company-wide incentive compensation program under which we
incurred limited expense in 2015 and additional expense related to
our strategic growth initiatives including costs to support our
information technology initiative and incremental investment in
research and development capabilities; 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 cost reduction and/or
restructuring initiatives (including that the costs associated with
such initiatives may be greater than anticipated, that we may be
unable to realize anticipated cost savings or other contemplated
benefits in connection with such initiatives, and that such
initiatives may have an adverse impact on our performance),
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 FOURTH
QUARTER RESULTS
CONSOLIDATED STATEMENTS OF
EARNINGS
(Dollars in thousands, except share
data)
Quarter Ended Twelve Months Ended
November 28,2015
November 29,2014
November 28,2015
November 29,2014
Net sales $ 372,547 $ 413,375 $ 1,481,026 $ 1,512,854 Cost of sales
250,258 273,622 992,397 1,015,819
Gross profit 122,289 139,753 488,629 497,035 Selling
and administrative expenses 72,900 73,964 290,682
286,607 Operating profit 49,389 65,789
197,947 210,428 Other income (expense):
Interest expense (1,664 ) (1,294 ) (5,629 ) (3,700 ) Interest
income 104 116 443 420 Other, net 93 549 5,204
4,415 (1,467 ) (629 ) 18 1,135 Earnings
before income taxes 47,922 65,160 197,965 211,563 Provision
for income taxes 14,828 21,629 63,052 67,380
Net earnings 33,094 43,531 134,913 144,183
Net earnings attributable to
noncontrolling interests, net of tax
(41 ) (23 ) (209 ) (99 ) Net earnings attributable to
CLARCOR Inc. $ 33,053 $ 43,508 $ 134,704 $
144,084 Net earnings per share attributable to
CLARCOR Inc. - Basic $ 0.67 $ 0.87 $ 2.70 $
2.86
Net earnings per share attributable to
CLARCOR Inc. - Diluted
$ 0.67 $ 0.86 $ 2.67 $ 2.83
Weighted average number of shares outstanding - Basic 49,359,491
50,249,889 49,981,118 50,405,549
Weighted average number of shares outstanding - Diluted 49,613,346
50,732,090 50,429,454 50,871,249
Dividends paid per share $ 0.2200 $ 0.2000 $ 0.8200
$ 0.7100
CLARCOR INC. 2015 UNAUDITED FOURTH
QUARTER RESULTS, continued
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 28,2015
November 29,2014
ASSETS Current assets: Cash and cash equivalents $ 101,529 $
94,064 Accounts receivable, less allowance for losses of $14,765
and $10,811, respectively 258,280 305,580 Inventories 274,825
274,718 Deferred income taxes — 37,749 Income taxes receivable
3,781 — Prepaid expenses and other current assets 26,380
16,796 Total current assets 664,795 728,907
Plant assets, at cost, less accumulated depreciation of
$286,335 and $357,564, respectively 301,019 288,356 Assets held for
sale 533 — Goodwill 506,265 507,172 Acquired intangible assets,
less accumulated amortization 329,155 347,578 Deferred income taxes
3,651 — Other noncurrent assets 13,038 16,756 Total
assets $ 1,818,456 $ 1,888,769
LIABILITIES
Current liabilities: Current portion of long-term debt $ 7,788 $
233 Accounts payable 87,546 97,885 Accrued liabilities 106,410
120,036 Income taxes payable 1,956 6,226 Total
current liabilities 203,700 224,380 Long-term
debt, less current portion 397,368 411,330 Long-term pension and
postretirement healthcare benefits liabilities 31,577 33,266
Deferred income taxes 64,908 104,250 Other long-term liabilities
10,438 8,853 Total liabilities 707,991 782,079
Contingencies Redeemable noncontrolling interests —
1,587
SHAREHOLDERS' EQUITY Capital stock 49,111 50,204
Capital in excess of par value — 10,644 Accumulated other
comprehensive loss (88,052 ) (54,080 ) Retained earnings 1,148,510
1,097,292 Total CLARCOR Inc. equity 1,109,569
1,104,060 Noncontrolling interests 896 1,043
Total shareholders' equity 1,110,465 1,105,103 Total
liabilities and shareholders' equity $ 1,818,456 $ 1,888,769
CLARCOR INC. 2015 UNAUDITED FOURTH
QUARTER RESULTS, continued
CONSOLIDATED CASH FLOWS
(Dollars in thousands)
Twelve Months Ended
November 28,2015
November 29,2014
Cash flows from operating activities: Net earnings $ 134,913
$ 144,183 Depreciation 31,075 30,065 Amortization 25,528 20,362 Net
(gain) loss on disposition of assets (2,144 ) 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
9,093 7,278 Excess tax benefit from stock-based compensation (1,246
) (2,769 ) Other noncash items (268 ) 995 Changes in assets and
liabilities (37,803 ) (41,020 ) Net cash provided by operating
activities 153,745 156,346
Cash flows from
investing activities: Restricted cash — 1,339 Business
acquisitions, net of cash acquired (20,882 ) (595,328 ) J.L. Clark
disposition, net of cash divested 45,232 — Additions to plant
assets (64,535 ) (69,681 ) Proceeds from disposition of plant
assets 7,469 491 Investment in affiliates (525 ) (1,073 ) Net cash
used in investing activities (33,241 ) (664,252 )
Cash
flows from financing activities: Net borrowings (payments) on
revolving credit facility 197,000 (50,000 ) Borrowings under term
loan facility — 315,000 Payments on term loan facility (195,000 )
(20,000 ) Payments on long-term debt (8,665 ) (1,620 ) Payment of
financing costs (50 ) (752 ) Sale of capital stock under stock
option and employee purchase plans 8,106 12,076 Acquisition of
noncontrolling interest (1,239 ) — Payments for repurchase of
common stock (70,777 ) (32,822 ) Excess tax benefit from
stock-based compensation 1,246 2,769 Dividend paid to
noncontrolling interests (206 ) (166 ) Cash dividends paid (40,972
) (35,805 ) Net cash (used in) provided by financing activities
(110,557 ) 188,680 Net effect of exchange rate changes on
cash (2,482 ) 1,728 Net change in cash and cash equivalents
7,465 (317,498 ) Cash and cash equivalents, beginning of period
94,064 411,562 Cash and cash equivalents, end of
period $ 101,529 $ 94,064
Cash paid during
the period for: Interest $ 4,874 $ 3,028 Income
taxes, net of refunds $ 70,146 $ 67,534
CLARCOR INC. 2015 UNAUDITED FOURTH
QUARTER RESULTS, continued
QUARTERLY INCOME STATEMENT DATA BY
SEGMENT
(Dollars in thousands)
2015
QuarterEndedFebruary
28
QuarterEndedMay
30
QuarterEndedAugust
29
QuarterEndedNovember
28
TwelveMonths
Net sales by segment: Engine/Mobile Filtration $ 144,458 $
161,290 $ 151,734 $ 147,992 $ 605,474 Industrial/Environmental
Filtration 190,916 218,676 200,496 224,555 834,643 Packaging 15,749
19,833 5,327 — 40,909 $ 351,123
$ 399,799 $ 357,557 $ 372,547 $
1,481,026
Operating profit by segment:
Engine/Mobile Filtration $ 24,746 $ 30,564 $ 27,728 $ 25,221 $
108,259 Industrial/Environmental Filtration 14,008 26,604 22,765
24,168 87,545 Packaging 439 1,775 (71 ) —
2,143 $ 39,193 $ 58,943 $ 50,422 $
49,389 $ 197,947
Operating margin by
segment: Engine/Mobile Filtration 17.1 % 18.9 % 18.3 % 17.0 %
17.9 % Industrial/Environmental Filtration 7.3 % 12.2 % 11.4 % 10.8
% 10.5 % Packaging 2.8 % 8.9 % (1.3 )% — % 5.2 % 11.2 % 14.7 % 14.1
% 13.3 % 13.4 %
2014
QuarterEndedMarch
1
QuarterEndedMay
31
QuarterEndedAugust
30
QuarterEndedNovember
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 %
CLARCOR INC. 2015 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Fourth 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 November 28, 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 November 28, 2015 non-GAAP financial measures
provided in this release exclude restructuring costs related to
employee severance and other employee termination benefits incurred
in the fourth quarter in connection with the previously announced
reduction-in-force. Although these financial measures excluding
these restructuring costs in the quarter ended November 28, 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 restructuring
costs 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 November 28, 2015 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
2015GAAP
RestructuringCosts
Fourth Quarter 2015Non-GAAP
Adjusted
Net sales $ 372,547 $ — $ 372,547 Cost of sales 250,258
(1,048 )
1
249,210 Gross profit 122,289 1,048 123,337 Selling and
administrative expenses 72,900 (4,582 )
1
68,318 Operating profit 49,389 5,630 55,019
Other income (expense): Interest expense (1,664 ) — (1,664 )
Interest income 104 — 104 Other, net 93 — 93
(1,467 ) — (1,467 ) Earnings before income taxes 47,922
5,630 53,552 Provision for income taxes 14,828 1,970
16,798 Net earnings 33,094 3,660 36,754
Net earnings attributable to
noncontrolling interests, net of tax
(41 ) — (41 )
Net earnings attributable to CLARCOR
Inc.
$ 33,053 $ 3,660 $ 36,713 Net earnings per
share attributable to CLARCOR Inc. - Basic $ 0.67 $ 0.07
$ 0.74 Net earnings per share attributable to CLARCOR
Inc. - Diluted $ 0.67 $ 0.07 $ 0.74 Gross
margin percentage 32.8 % 0.3 % 33.1 % Selling and administrative
expenses as a percentage of net sales 19.6 % (1.3 )% 18.3 %
Operating margin 13.3 % 1.5 % 14.8 %
1
- Restructuring costs related to employee
severance and other employee termination benefits incurred in the
fourth quarter 2015
CLARCOR INC. 2015 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Fourth 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 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
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 fourth quarter of 2014 non-GAAP financial measures provided
in this release exclude the financial results of our J.L. Clark
packaging business disposed of during the third quarter of 2015.
Although these financial measures excluding the financial results
of our J.L. Clark packaging business in the quarter ended November
29, 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 the financial results
of our J.L. Clark packaging business 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 November 29,
2014 compared to the quarter ended November 28, 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.
(Dollars in thousands, except per share
data)
Fourth Quarter2014 GAAP
J.L. ClarkDisposition
Fourth quarter2014
Non-GAAPAdjusted
Net sales $ 413,375 $ (21,482 )
1
$ 391,893 Cost of sales 273,622 (17,779 )
1
255,843 Gross profit 139,753 (3,703 ) 136,050 Selling and
administrative expenses 73,964 (2,019 )
1
71,945 Operating profit 65,789 (1,684 ) 64,105
Other income (expense): Interest expense (1,294 ) — (1,294 )
Interest income 116 — 116 Other, net 549 — 549
(629 ) — (629 ) Earnings (loss) before income taxes 65,160
(1,684 ) 63,476 Provision for income taxes 21,629 (606 )
21,023 Net earnings (loss) 43,531 (1,078 ) 42,453
Net earnings attributable to
noncontrolling interests, net of tax
(23 ) — (23 )
Net earnings attributable to CLARCOR
Inc.
$ 43,508 $ (1,078 ) $ 42,430 Net earnings per share
attributable to CLARCOR Inc. - Basic $ 0.87 $ (0.02 ) $ 0.85
Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 0.86 $ (0.02 ) $ 0.84 Gross margin
percentage 33.8 % 0.9 % 34.7 % Selling and administrative expenses
as a percentage of net sales 17.9 % 0.5 % 18.4 % Operating margin
15.9 % 0.5 % 16.4 %
1
- Fourth quarter 2014 financial results
for J.L. Clark
CLARCOR INC. 2015 UNAUDITED FOURTH QUARTER RESULTS,
continued
Reconciliation of Full Year 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 full year 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 full year 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, an
impairment loss related to our BioProcess H2O and Algae investments
recognized in the third quarter of 2015, and restructuring costs
related to employee severance and other employee termination
benefits incurred in the fourth quarter of 2015 in connection with
the previously announced reduction-in-force. Although these
financial measures excluding these selected items in the full year
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 full year 2015 compared to the full year 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 Year2015 GAAP
J.L. ClarkResults andGain
onDisposition
BioProcessInvestmentImpairment
RestructuringCosts
Full Year2015
Non-GAAPAdjusted
Net sales $ 1,481,026 $ (40,909 )
1
$ — $ — $ 1,440,117 Cost of sales 992,397 (33,954 )
1
— (1,048 )
3
957,395 Gross profit 488,629 (6,955 ) — 1,048 482,722
Selling and administrative expenses 290,682 (4,812 )
1
— (4,582 )
3
281,288 Operating profit 197,947 (2,143 ) —
5,630 201,434 Other income (expense): Interest
expense (5,629 ) — — — (5,629 ) Interest income 443 — — — 443
Other, net 5,204 (12,131 )
2
6,729 — (198 ) 18 (12,131 ) 6,729
— (5,384 ) Earnings before income taxes
197,965 (14,274 ) 6,729 5,630 196,050 Provision for income taxes
63,052 (5,136 ) 2,355 1,970 62,241
Net earnings 134,913 (9,138 ) 4,374 3,660 133,809
Net earnings attributable to
noncontrolling interests, net of tax
(209 ) — — — (209 )
Net earnings attributable to CLARCOR
Inc.
$ 134,704 $ (9,138 ) $ 4,374 $ 3,660 $
133,600 Net earnings per share attributable to CLARCOR Inc.
- Basic $ 2.70 $ (0.18 ) $ 0.09 $ 0.07
$ 2.68 Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 2.67 $ (0.18 ) $ 0.09 $ 0.07
$ 2.65 Gross margin percentage 33.0 % (0.5 )% 0.0 %
1.0 % 33.5 % Selling and administrative expenses as a percentage of
net sales 19.6 % (0.3 )% 0.0 % 0.2 % 19.5 % Operating margin
13.4 % (0.1 )% 0.0 % 0.7 % 14.0 %
1
- 2015 financial results for J.L. Clark
through disposition date of June 27, 2015 (approximately seven
months of operations during this twelve month period)
2
- Net gain on third quarter 2015
disposition of J.L. Clark
3
- Restructuring costs related to employee
severance and other employee termination benefits incurred in the
fourth quarter 2015
CLARCOR INC. 2015 UNAUDITED FOURTH QUARTER RESULTS,
continuedReconciliation of Full Year 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 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 full year 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, 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 full year 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 full year 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, 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 full year 2014 compared to the full year 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)
Full Year2014 GAAP
GE
AirFiltrationAcquisition
BekaertAdvancedFiltrationAcquisition
StanadyneFiltrationAcquisition
J.L. ClarkDisposition
Full Year2014
Non-GAAPAdjusted
Net sales $ 1,512,854 $ — $ — $ — $ (75,949 )
4
$ 1,436,905 Cost of sales 1,015,819 (4,342 )
1
(240 )
1
(1,368 )
1
(63,506 )
4
946,363 Gross profit 497,035 4,342 240 1,368 (12,443 )
490,542 Selling and administrative expenses 286,607 (4,715 )
2
(130 )
2
(3,035 )
2
(7,731 )
4
270,996 Operating profit 210,428 9,057 370
4,403 (4,712 ) 219,546 Other income (expense):
Interest expense (3,700 ) — — — — (3,700 ) Interest income 420 — —
— — 420 Other, net 4,415 — (2,814 )
3
— — 1,601 1,135 — (2,814 )
— — (1,679 ) Earnings (loss) before income taxes
211,563 9,057 (2,444 ) 4,403 (4,712 ) 217,867 Provision for income
taxes 67,380 2,436 123 1,501 (1,635 )
69,805 Net earnings (loss) 144,183 6,621 (2,567 ) 2,902
(3,077 ) 148,062
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 $ (3,077
) $ 147,963 Net earnings per share attributable to CLARCOR
Inc. - Basic $ 2.86 $ 0.13 $ (0.05 ) $ 0.06 $
(0.06 ) $ 2.94 Net earnings per share attributable to
CLARCOR Inc. - Diluted $ 2.83 $ 0.13 $ (0.05 ) $ 0.06
$ (0.06 ) $ 2.91 Gross margin percentage 32.9 % 0.3 %
0.0 % 0.1 % 0.8 % 34.1 % Selling and administrative expenses as a
percentage of net sales 18.9 % (0.3 )% 0.0 % (0.2 )% 0.5 % 18.9 %
Operating margin 13.9 % 0.6 % 0.0 % 0.3 % 0.5 % 15.3 %
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
- Full year 2014 J.L. Clark financial
results
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160113006350/en/
CLARCOR Inc.David J. Fallon, 615-771-3100Chief Financial
Officer
Clarcor (NYSE:CLC)
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