FORT SMITH, Ark., Jan. 31 /PRNewswire-FirstCall/ -- Baldor Electric
Company (NYSE:BEZ) markets, designs, and manufactures industrial
electric motors, power transmission products, drives, and
generators and is based in Fort Smith, Arkansas. Today Baldor
announced unaudited results for the fourth quarter and year 2007.
4th Quarter Year-To-Date 2007 2006 2007 2006 (in thousands except
Dec 29, Dec 30, Dec 29, Dec 30, per share data) 2007 2006 %Chg 2007
2006 %Chg Net Sales $457,006 $200,454 128% $1,824,911 $811,280 125%
Cost of Sales 317,881 147,052 1,280,253 597,227 Gross Profit
139,125 53,402 161% 544,658 214,053 154% SG&A 74,822 33,038
291,918 132,994 Operating Profit 64,303 20,364 216% 252,740 81,059
212% Other Income (expense) 831 (105) 2,611 730 Interest Expense
(28,443) (1,508) (108,176) (6,069) Earnings Before Income Taxes
36,691 18,751 96% 147,175 75,720 94% Income Taxes 13,314 6,579
53,073 27,602 Net Earnings $23,377 $12,172 92% $94,102 $48,118 96%
Earnings Per Share -- Diluted $0.51 $0.37 38% $2.08 $1.46 42%
Dividends Per Share $0.17 $0.17 0% $0.68 $0.67 1% Average Diluted
Shares Outstanding 46,283 32,853 45,248 32,954 John McFarland,
Chairman and CEO, commented on the Company's results, "We are
pleased to announce sales for 2007 of $1.82 billion, net earnings
of $94 million, and diluted earnings per share of $2.08. Strong
cash flows from operations of $141 million helped us reduce our
debt by $176 million during the year. Sales for the fourth quarter
of $457 million resulted in net earnings of $23 million and $0.51
diluted earnings per share. Operating margin improved to 14.1% in
the fourth quarter. For the year, operating margin improved to
13.8% compared to 10.0% in 2006. These results include the
operations of Reliance Electric Company which was acquired on
January 31, 2007. "Sales growth for comparable products was over 5%
in both the third and fourth quarters of 2007. During January 2008,
incoming order rates for comparable products increased 7% on a
daily basis compared to January 2007. We believe that our strategy
of having two dedicated sales forces, one focused on Dodge(R) power
transmission products and one focused on motors, drives and
generators, is beginning to show results." SELECTED FINANCIAL DATA
(preliminary, unaudited) 4th Qtr 3rd Qtr Year-To-Date 2007 2007
2007 2006 Dec 29, Sep 29, Dec 29, Dec 30, (in thousands) 2007 2007
(in thousands) 2007 2006 Cash Flows Cash $37,757 $41,931 from
Operations $140,856 $55,638 Trade Depr & Receivables
Amortization 71,779 19,744 -- net 276,304 295,025 Capital
Expenditures 38,896 26,649 Inventories 309,921 321,077 Dividends
31,184 21,891 Total Assets 2,817,077 2,857,503 Total Debt 1,376,346
1,394,025 Depr & Shareholders' Amortization Equity 812,253
800,583 for purchase accounting 21,447 - Following are answers to
questions recently asked by shareholders. Q ... How was business
during the quarter? Compared to the fourth quarter of 2006 (and
including comparable sales for Dodge and Reliance), industrial
motor sales (62% of revenue) were up 8%, power transmission product
sales (28% of revenue) were up 4%, drives sales (7% of revenue)
were down 6% and generator sales (3% of revenue) were flat. Sales
to original equipment manufacturers were up 9%, and sales to
distributors were up 1%. For the year (and including comparable
sales for Dodge and Reliance), sales of industrial motors were up
10%, power transmission products up 2%, drives down 7% and
generators up 5%. Sales to original equipment manufacturers
increased 9% while sales to distributors increased 2%. Q ... Have
you seen improvement in your international business? Sales to
customers outside the U.S. increased more than 25% during the
quarter and are up over 10% for the year. During the quarter, there
were strong sales increases in Asia, Europe and Latin America. Our
plan to strengthen our international business includes adding
inventory in foreign locations, expanding our China facility and
adding sales people where needed. Q ... How were operating cash
flows during 2007? Operating cash flows for the quarter were $26
million and for the year, $141 million. Improved accounts
receivable collections and inventory turns, as well as the timing
of certain payments such as interest on the debt, contributed to
these strong results and provided a significant portion of the
funds used to repay debt. Q ... What is your debt balance? At the
end of 2007, our total debt balance was $1.38 billion, down from a
peak of $1.56 billion. During the 4th quarter, we reduced our debt
by $18 million, bringing our total 2007 debt reduction to $176
million. In 2008, our goal is to reduce our debt by at least $125
million. So far in 2008, we have reduced our debt by $13 million. Q
... What are your motor production schedules for the first quarter?
Current incoming order rates are good for motors, and finished
goods inventories are low. We expect to produce a record number of
motors in the first quarter. Q ... Are you pleased with the 14.1%
operating margin you achieved in the fourth quarter? Yes. Even
though fourth quarter sales were $24 million less than third
quarter, we achieved a higher operating margin. During 2008, we
will continue to implement cost and productivity improvements
throughout the business. Q ... Have your customers indicated they
are concerned about a slowing economy in 2008? Our customers are
optimistic that 2008 will be a good year. The January incoming
order rate is 7% ahead of last January (including comparable sales
for Dodge and Reliance). However, we do realize there is the risk
of a recession. We are prepared to react appropriately should our
business slow down. Q ... What are your capital investment plans
for 2008? In 2008 we expect to increase our capital investments to
approximately $40 million. These investments will expand output in
our China plant, increase the output of small motors in our U.S.
plants, improve productivity in all plants, improve the quality of
our products and add new products. Q ... Are industrial electric
motors included in the recently enacted Energy Bill? Yes, the 2007
Energy Bill will have a big impact on our business. This bill,
which becomes effective December 2010, raises the motor efficiency
standards set in 1992 and extends coverage to many motors not
previously covered. We believe this will affect approximately 50%
of our motors and will generate approximately 10% additional
revenue in 2011 on the affected motors. As we adjust to this change
in product mix, we will also combine the Reliance and Baldor motor
designs for greater manufacturing efficiencies. While the use of
premium-efficient motors is mandated at the end of 2010, a growing
number of customers are making the switch today. Our Super-E(R)
line of motors grew by 25% during 2007, and we expect that growth
rate to continue. In early 2008, we will introduce an
energy-efficient line of Dodge gearmotors to further expand our
leadership position in energy efficiency. Q ... When will your next
update be? We will hold a conference call on Friday, February 1,
2008, at 10:00 a.m. central time. Participants may listen to the
discussion through the Company's website at
http://www.baldor.com/investors or by calling 888-340-7912. A
replay will be available through February 8, 2008 and can be
accessed by calling 888-203-1112 (passcode 3543233). We will also
make a presentation at the Gabelli 18th Annual Pump, Valve &
Motor Symposium at 9:30 a.m. on Wednesday, February 6, in New York
City. The webcast will be available on Baldor's website. Baldor's
Annual Shareholders' Meeting will be held at 10:30 a.m. central
time on Saturday, April 26, 2008, in Fort Smith, Arkansas. Forward
Looking Statement This document contains statements that are
forward-looking, i.e. not historical facts. The forward-looking
statements contained in this document (including "estimate",
"believe", "will", "intend", "expect", "may", "could", "future",
"susceptible", "unforeseen", "anticipate", "would", "subject to",
"depend", "uncertainties", "predict", "can", "expectations", "if",
"unpredictable", "unknown", "pending", "assumes", "continued",
"ongoing", "assumption" or any grammatical forms of these words or
other similar words) are based on the Company's current
expectations and some of them are subject to risks and
uncertainties. Accordingly, you are cautioned that any such forward
looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ
materially from those projected in the forward looking statements
as a result of various factors. The factors that might cause such
differences include, among others, the following: (i) changes in
economic conditions, (ii) developments or new initiatives by our
competitors in the markets in which we compete, (iii) fluctuations
in the costs of select raw materials, (iv) the success in
increasing sales and maintaining or improving the operating margins
of the Company, and (v) other factors including those identified in
the Company's filings made from time-to-time with the Securities
and Exchange Commission. These statements should be read in
conjunction with the Company's most recent annual report (as well
as the Company's Form 10-K and other reports filed with the
Securities and Exchange Commission) containing a discussion of the
Company's business and of various factors that may affect it.
DATASOURCE: Baldor Electric Company CONTACT: John McFarland,
Chairman & CEO, or Ron Tucker, President & COO, or Tracy
Long, Vice President Investor Relations, all of Baldor Electric
Company, +1-479-648-5769, fax, +1-479-648-5701, Web site:
http://www.baldor.com/ http://www.baldor.com/investors
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