Pall 8-K 2009
Pall Corporation Reports First Quarter Results
Posts Strong Earnings
Port Washington, NY (December 9, 2009) -- Pall Corporation (NYSE:PLL) today reported financial results for the first quarter ended October 31, 2009.
Sales and Earnings Overview
Net earnings were $67.0 million, compared to $43.1 million in the first quarter of fiscal year 2009. Diluted earnings per share (EPS) were $0.56, compared to $0.36 a year earlier. Pro forma EPS, excluding restructuring and other charges as well as non-recurring favorable items affecting interest expense and provision for income taxes (Discrete Items), were $0.40 on par with last year. The estimated impact of foreign currency translation increased both measures of fiscal year 2010 EPS by $0.01.
As previously reported, first quarter sales were $546.9 million, a decrease of 5.4% compared to the first quarter of fiscal year 2009. Sales in local currency (LC) decreased 6.9%. Foreign currency translation increased reported sales by $8.8 million or 1.5% in the quarter.
Eric Krasnoff, Chairman and CEO, stated, This quarters results exemplify the strength of Palls market and geographic diversity as well as the success of our investments and execution of corporate initiatives. Key Industrial end markets remained depressed. The Life Sciences business was strong, particularly in high value added, differentiated product lines.
Overall, gross margin in the quarter improved 110 basis points over last year. SG&A decreased over $5 million, or 3%, in LC. Both these improvements also reflect ongoing cost reduction and efficiency initiatives. Cash flow from operations was $73 million in the quarter, an increase of 44% over last year."
Life Sciences - First Quarter Highlights
(Dollar Amounts in Thousands and Discussion of Sales Changes are in Local Currency)
Medical sales increased 2.6% in the quarter, with Blood Filtration submarkets growing 4%. Pall-AquasafeTM water filter sales were strong.
BioPharmaceuticals sales increased 10.3% in the quarter with growth in all geographies. Sales within Pharmaceutical submarkets increased 9.8% with strong consumables growth in all geographies. Vaccine production remains high.
Life Sciences gross margin increased 370 basis points to 55.7% primarily driven by favorable market trends and product mix. SG&A as a percentage of sales decreased 90 basis points to 27.4%. Operating profit increased 38% to $57.8 million. Operating margin improved to 24.2% from 19% a year earlier.
Industrial - First Quarter Highlights
(Dollar Amounts in Thousands and Discussion of Sales Changes are in Local Currency)
Energy, Water & Process Technologies (EWPT) sales decreased 12.3% in the quarter. Fuels and Chemicals and Power Generation submarkets were flat and sales to Municipal Water, Food & Beverage and Industrial Manufacturing submarkets were down.
Aerospace & Transportation declined 21.6% in the quarter. Commercial Aerospace submarkets declined 8.5% reflecting a reduction in flights and production of airframes, particularly for private jets. Sales to Military Aerospace submarkets decreased 29.8% compared to a very strong quarter a year ago. Sales to Transportation submarkets were down on continued weakness in mobile equipment production.
Microelectronics sales decreased 19.2% over the prior year, but held steady sequentially over an improved fourth quarter.
Industrial gross margin declined to 44.5% from 46.1% a year ago reflecting the impact of reduced volume and product mix. SG&A decreased 4% in local currency benefitted by the companys cost reduction programs. Operating profit decreased to $31 million. Operating margin declined to 10.1% from 15.4% a year earlier.
Mr. Krasnoff concluded, Life Sciences continues to benefit from the sale of new products targeted to emerging industry trends. While Industrial had a difficult quarter, we believe it has begun to stabilize. There is upside opportunity if the harder hit industrial markets do rebound over the next half-year as many economists expect. We remain confident in Palls ability to execute its growth plans and look forward to reviewing the details at our investor day on December 17, 2009.
We are resuming providing annual guidance. Pro forma EPS is projected to be in a range of $2.02 to $2.19 per share. This guidance includes a $0.17 benefit from foreign currency translation. By also including the Discrete Items from the first quarter, the EPS range is $2.18 to $2.35.
On Thursday, December 10, 2009, at 8:30 am ET, Pall Corporation will host a conference call to review these results. The call will be webcast and individuals can access it at www.pall.com/investor. Listening to the webcast requires audio speakers and Microsoft Windows Media Player software. The webcast will be archived for 30 days.
The company will also host an Investor Day on December 17, 2009 from 911 am ET. The conference will be simultaneously webcast and individuals can access it at www.pall.com/investor.
About Pall Corporation
Pall Corporation (NYSE:PLL) is a filtration, separation and purification leader providing Total Fluid ManagementSM solutions to meet the critical needs of customers in biopharmaceutical, hospital and transfusion medicine, energy and alternative energy, electronics, municipal and industrial water, aerospace, transportation and broad industrial markets. Together with our customers, we foster health, safety and environmentally responsible technologies. The Companys engineered solutions enable process and product innovation and minimize emissions and waste. Pall Corporation, with total revenues of $2.3 billion for fiscal 2009, is an S&P 500 company with more than 10,000 employees servicing customers worldwide. Pall has been named a top "green company" by Newsweek magazine. To see how Pall is helping enable a greener and more sustainable future, visit www.pall.com.
The matters discussed in this release contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Results for the first quarter of fiscal year 2010 are preliminary until the Company's Form 10-Q is filed with the Securities and Exchange Commission on December 10, 2009.
All statements regarding future performance, earnings projections, earnings guidance, managements expectations about its future cash needs and effective tax rate, and other future events or developments are forward-looking statements. Forward-looking statements are those that use terms such as anticipate, should, believe, estimate, expect, intend, plan, predict, potential or similar expressions about matters that are not historical facts. Forward-looking statements contained in this and other written and oral reports are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A, Risk Factors in the 2009 Form 10-K, and other reports the Company files with the Securities and Exchange Commission, including the impact of the current global recessionary environment and its likely depth and duration, the current credit market crisis, volatility in currency exchange rates and energy costs and other macro economic challenges currently affecting the Company, our customers (including their cash flow and payment practices) and vendors; the effectiveness of our initiatives to mitigate the impact of the current environment; and the Companys ability to successfully complete its business improvement initiatives that include integrating and upgrading its information systems and the effect of a serious disruption in the Company's information systems on its business and results of operations. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them.
Management uses certain non-GAAP measurements to assess the Companys current and future financial performance. The non-GAAP measurements do not replace the presentation of the Companys GAAP financial results. These measurements provide supplemental information to assist management in analyzing the Companys financial position and results of operations. The
Company has chosen to provide this information to facilitate meaningful comparisons of past, present and future operating results and as a means to emphasize the results of ongoing operations. Reconciliations of the non-GAAP financial measures used in this presentation to the most directly comparable GAAP measures appear on the last slide of this presentation (in the Reconciliation Appendix) and are also available on Palls website at www.pall.com/investor.
(a) ROTC in the quarter includes severance and other costs related to the Company's cost reduction programs.
Interest (income)/expense, net and provision for income taxes includes the reversal of accrued interest of $8,984 ($7,499 after pro forma tax effect) and income taxes payable of $14,188, principally related to the resolution of a foreign tax audit. Pro forma earnings exclude these items as they are deemed to be non-recurring in nature.
(b) ROTC in the quarter includes severance and other costs related to the Company's cost reduction programs, an increase to previously established environmental reserves, professional fees related to the previously reported matters that were under inquiry by the audit committee of the Companys board of directors, the impairment of investments and a charge to write-off in process research and development acquired in the acquisition of GeneSystems, SA.
Provision for income taxes in the quarter includes benefits related to the repatriation of earnings and newly enacted tax legislation. Pro forma earnings exclude these items as they are deemed to be non-recurring in nature.