FORT SMITH, Arkansas, July 24 /PRNewswire-FirstCall/ -- Baldor
Electric Company (NYSE:BEZ) markets, designs, and manufactures
industrial electric motors, mechanical power transmission products,
drives, and generators and is based in Fort Smith, Arkansas. Today,
Baldor announced unaudited results for the second quarter and
year-to-date 2008. 2nd Quarter Year-To-Date (in thousands except
2008 2007 2008 2007 per share data) Jun 28, Jun 30, % Chg Jun 28,
Jun 30, % Chg 2008 2007 2008 2007 Net sales $ 503,973 $ 491,615 3%
$ 974,499 $ 887,309 10% Cost of sales 351,127 341,531 677,929
623,663 Gross profit 152,846 150,084 2% 296,570 263,646 12%
SG&A 83,920 81,081 160,992 142,403 Operating profit 68,926
69,003 0% 135,578 121,243 12% Other income (expense), net 1,603 773
1,604 1,670 Interest expense (24,630) (30,385) ( 51,222) (50,913)
Income before income taxes 45,899 39,391 17% 85,960 72,000 19%
Income taxes 16,527 14,179 30,949 25,920 Net income $ 29,372 $
25,212 17% $ 55,011 $ 46,080 19% Net earnings per share - diluted
$0.63 $0.54 17% $1.19 $1.04 14% Dividends per share $0.17 $0.17 0%
$0.34 $0.34 0% Avg shares outstanding - diluted 46,453 46,566
46,241 44,110 John McFarland, Chairman and CEO, commented on the
Company's results, "We are pleased to announce record sales, net
income and diluted earnings per share for the 2nd quarter. Sales
increased to $504.0 million, net income to $29.4 million and
diluted earnings per share to $0.63. Even though US economic
conditions seem uncertain, our incoming orders remain solid." "One
disappointment during the quarter was the rate of inflation in the
cost of materials we buy. Costs accelerated for many purchases,
particularly steel, copper, cast iron and transportation, at a much
faster rate than we expected. To offset these higher costs, we
raised prices 5-8% across our entire product line on July 13." "We
continue to aggressively reduce our debt balance. During the 2nd
quarter, we reduced bank debt by $40 million. Since the acquisition
of Reliance Electric Company 15 months ago, we have reduced our
bank debt by a total of $236 million." SELECTED FINANCIAL DATA
(preliminary, unaudited) 2nd Qtr 1st Qtr 2008 2008 (in thousands)
Jun 28, 2008 Mar 29, 2008 Cash $ 26,622 $ 33,103 Trade receivables
- net 325,340 314,449 Inventories 324,886 316,605 Total Assets
2,483,515 2,848,448 Total Debt 1,316,656 1,356,586 Shareholders'
Equity 865,994 835,162 Year-To-Date 2008 2007 (in thousands) Jun
28, 2008 Jun 30, 2007 Cash flows from operations $ 71,559 $ 112,024
Depr and amortization 38,963 34,695 Capital expenditures 14,645
18,628 Dividends 15,668 15,574 Depr and amortization from 12,404
9,599 purchase accounting Following are answers to questions
recently asked by shareholders. Q ... How was business during the
quarter? Net Sales Net Sales in As a % of Chg % Millions $ Total
Sales Q208 v Q207 Motors $ 327,593 65% 5% Power Transmission
140,641 28% 6% Drives * 22,375 4% -2% Generators 13,364 3% 6%
International Sales 85,012 17% 10% 2nd quarter 2007 sales included
$12.4 million of motor repair business which was sold during that
quarter. Excluding that business, comparable sales for the quarter
were up 5%. Domestic sales to new equipment manufacturers increased
6% and sales to distributors increased 2% compared to 2nd quarter
2007. We saw sales growth in basic industrial applications such as
pumps, compressors, fans and blowers as well as mining, material
handling and agricultural end markets. Sales of Super-E(R) premium
efficient motors grew at more than 25% during the quarter. Incoming
orders have been consistent throughout the second quarter and into
the third. Our backlog of unshipped orders is solid at more than
$235 million. * To be consistent with industry standards, we now
include only electronic controls, linear motors and servo motors in
our definition of drives. Q ... Are you seeing strength in your
international business? Yes, our international sales grew by over
10% this quarter compared to last year. The regions with strongest
sales growth were Asia Pacific and Latin America. During the
quarter we completed the expansion of our Shanghai manufacturing
facility. Products from this facility are sold to customers in the
Asia Pacific region. Sales of these products have a compounded
annual growth rate of 20% for the past four years. Q ... How are
you being affected by the rapid increase in material costs?
Material costs increased this quarter at a pace we haven't seen in
decades. While we made good progress in productivity and efficiency
improvements in our plants, that progress was more than offset by
increases in materials such as steel, copper and cast iron. Our
gross margin was slightly less than the same quarter one year ago
because of the rapid increase in material costs. Additionally, we
saw a large increase in the cost of outgoing transportation during
the quarter. This increase had a negative effect on selling
expenses. As a result, we raised prices on July 13, 2008, 5-8%
across our entire product line. We believe this price increase will
cover our increased costs for the near future. However, if material
and transportation costs continue to rise, we will take further
action. Q ... How were cash flows from operations? Cash flows from
operations were $71.6 million for the first half of the year
compared to $112.0 million one year ago. This decrease was due
primarily to increased receivables and the timing of tax payments.
Cash flows during the quarter allowed us to reduce bank debt by $40
million. Q ... How are your inventory levels now? The availability
of our finished goods inventory has improved, particularly for
motors rated less than 15 horsepower. We have also been able to
reduce our lead times in two of our largest motor plants. We
continue to focus on reducing lead times and increasing inventory
availability for our customers. Q ... Are you still on target to
meet your debt reduction goal of $125 million for 2008? Yes, we
continue to believe we will reach our goal. During the first half
of the year, we reduced our bank debt by $60 million. Less debt and
lower interest rates resulted in interest expense that was nearly
$6 million less this quarter than the same quarter one year ago. Q
... How do you feel about sales during the second half of the year?
We expect sales to increase at a mid-single digit rate during the
balance of the year compared to the same period for 2007. Q ...
When will you provide your next update? We will hold a conference
call on Friday, July 25, 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
877-440-5785. A replay will be available through August 1, 2008 and
can be accessed by calling 888-203-1112 (passcode 9949539). During
the third quarter, Baldor will participate in numerous conferences,
including: -- The Hodges Capital Management Investment Forum in
Dallas, TX, on September 4, 2008 -- The Sidoti Institutional
Investor Forum in San Francisco, CA on September 8, 2008 -- The UBS
Best of Americas Conference in London, England, on September 11,
2008 -- The Sterne Agee Best Ideas Conference in Milwaukee, WI on
September 17, 2008 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, Ron Tucker, President & COO,
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/
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