Press Releases
Tecumseh Products Company Reports First Quarter 2001 Net of $0.74 Per Share
PRNewswire
Apr 24, 2001
TECUMSEH, Mich., April 24 /PRNewswire Interactive News Release/ -- Tecumseh Products Company (NASDAQ: TECUA)(NASDAQ: TECUB) announced today its 2001 first quarter results as summarized in the following Consolidated Condensed Statements of Income.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
(Dollars in millions except per share amounts) March 31,
2001 2000
Net Sales $ 404.7 $ 476.2
Cost of sales and operating expenses 355.4 400.1
Selling and administrative expenses 30.5 30.9
Nonrecurring items -- 33.5
Operating Income 18.8 11.7
Interest expense (1.2) (1.4)
Interest income and other, net 4.6 6.9
Income Before Taxes on Income 22.2 17.2
Taxes on Income 8.2 8.2
Net Income $ 14.0 $ 9.0
Basic and Diluted Earnings Per Share $0.74 $0.46
Weighted Average Shares (in thousands of shares) 18,836 19,668
Consolidated net income for the first quarter of 2001 amounted to $14.0 million, or $0.74 per share, compared to $9.0 million or $.46 per share in the first quarter of 2000. Exclusive of nonrecurring charges of $23.3 million net of tax, first quarter 2000 results were $32.3 million, or $1.64 per share. Consolidated net sales in the first quarter of 2001 decreased to $404.7 million from $476.2 million in 2000.
Compressor Business
First quarter 2001 sales in the Company's Compressor Business declined to $236.3 million from $247.1 million in the first quarter of 2000. This decline was caused primarily by lower demand for commercial refrigeration products reflecting the weak economy, as well as low levels of capital expenditures in the beverage dispensing markets. Sales of room air conditioning compressors, although flat, continued at low levels because of continued price competition from Asian producers.
In addition to the effects of lower sales and reduced coverage of fixed costs, Compressor Business operating income was adversely affected by costs and production inefficiencies associated with the closure of its Somerset, Kentucky manufacturing plant. It is expected that the movement of production from that plant will be complete by the end of the second quarter of this year.
Results from the Company's Brazilian compressor operations, while reduced slightly from first quarter 2000 levels, remained strong and comprised approximately 84% of the total Compressor Business operating income in the first quarter of 2001.
Engine & Power Train Business
Results in the Company's Engine & Power Train Business declined significantly in the first quarter of 2001 when compared to the same period of the previous year. Net sales declined to $137.1 million in 2001 compared to $196.3 million in 2000.
Demand for the Company's lawn and garden engines was negatively impacted by poor Spring weather conditions and high customer inventories. As a result of the significantly lower sales, operating income fell to $4.5 million in the first quarter compared to $22.3 million in the first quarter of 2000.
The Company curtailed its engine manufacturing schedules during April to reduce its inventories. This lower level of production and expected continued weak demand are likely to result in second quarter segment sales and earnings significantly below the levels achieved in the second quarter of 2000.
Pump Business
Sales in the Pump Business declined to $31.3 million in the quarter ended March 31, 2001 compared to $32.8 million in the same period of 2000. The primary reason for the sales decrease was a reduction in sales for water gardening applications. This was partially offset by increased sales to the plumbing market. The decline in water gardening sales was primarily a result of poor weather conditions during the quarter.
Pump Business operating income amounted to $3.0 million in 2001 compared to $4.1 million in 2000. Reduced retail sales and increased costs associated with the absorption and integration of the fourth quarter 2000 acquisition of Interon Corporation contributed to the reduction in operating income.
Outlook
Although second quarter sales and earnings are expected to improve over the first quarter, Somerset plant closing costs and continued weakness in the engine and power train business are likely to cause second quarter results to be below those of the second quarter of 2000.
In view of poor market conditions and the over-capacity situation which exists in the Company's two main operating segments, Compressors and Engine & Power Train operations, it is highly likely that the Company will undertake further restructuring and/or realignment actions designed to address capacity issues, as well as to improve overall cost structure and competitive position in all its major markets. Studies are currently underway to determine how best to reorganize the Company's operations in light of current and projected market conditions. As these actions are finalized, future results will be impacted by one or more nonrecurring charges. While the amount and timing of these charges cannot currently be accurately predicted, they may affect several quarterly periods or years, and they could be material to the reported results in the particular quarter or year in which they are recorded.
RESULTS BY BUSINESS SEGMENTS (UNAUDITED)
Three Months Ended
(Dollars in millions) March 31,
2001 2000
Net Sales:
Compressor Products $ 236.3 $ 247.1
Engine & Power Train Products 137.1 196.3
Pump Products 31.3 32.8
Total Net Sales $ 404.7 $ 476.2
Operating Income:
Compressor Products $ 13.5 $ 21.2
Engine & Power Train Products 4.5 22.3
Pump Products 3.0 4.1
Corporate expenses (2.2) (2.4)
Nonrecurring items -- (33.5)
Total Operating Income 18.8 11.7
Interest expense (1.2) (1.4)
Interest income and other, net 4.6 6.9
Income Before Taxes on Income $ 22.2 $ 17.2
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
March 31, December 31,
(Dollars in millions) 2001 2000
Assets
Current Assets:
Cash and cash equivalents $ 221.3 $ 268.2
Accounts receivable, net 315.4 265.6
Inventories 280.2 274.9
Deferred income taxes and other 71.0 74.0
Total Current Assets 887.9 882.7
Property, Plant and Equipment - Net 430.6 444.7
Other Assets 237.5 225.7
Total Assets $1,556.0 $1,553.1
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable, trade $ 137.2 $ 123.5
Short-term borrowings 13.1 6.3
Accrued liabilities 151.5 150.5
Total Current Liabilities 301.8 280.3
Product Warranty and Self-Insured Risks 23.1 24.5
Long-term Debt 14.0 14.2
Pension and Postretirement Benefits 205.7 205.4
Accrual for Environmental Matters 33.0 33.3
Total Liabilities 577.6 557.7
Stockholders' Equity 978.4 995.4
Total Liabilities and Stockholders'
Equity $1,556.0 $1,553.1
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended
(Dollars in millions) March 31,
2001 2000
Total Stockholders' Equity
Beginning Balance $ 995.4 $1,014.2
Comprehensive Income:
Net Income 14.0 9.0
Accumulated Other Comprehensive Income (14.1) (4.5)
Total Comprehensive Income (0.1) 4.5
Cash Dividends Declared (6.0) (6.2)
Stock Repurchases (10.9) (16.5)
Total Stockholders' Equity
Ending Balance $ 978.4 $ 996.0
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
(Dollars in millions) March 31,
2001 2000
Cash Flows From Operating Activities:
Net income $ 14.0 $ 9.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18.9 19.3
Nonrecurring items -- 33.5
Accounts receivable (56.9) (68.1)
Inventories (10.2) (10.3)
Payables and accrued expenses 26.0 42.7
Prepaid pension expense (6.2) (6.3)
Other (3.3) (10.7)
Cash Provided By (Used In)
Operating Activities (17.7) 9.1
Cash Flows From Investing Activities:
Capital expenditures (13.6) (14.9)
Cash Used in Investing Activities (13.6) (14.9)
Cash Flows From Financing Activities:
Dividends paid (6.0) (6.2)
Increase in borrowings, net 7.0 3.7
Repurchases of common stock (10.9) (16.5)
Cash Used In Financing Activities (9.9) (19.0)
Effect of Exchange Rate Changes on Cash (5.7) (2.7)
Decrease in Cash and Cash Equivalents (46.9) (27.5)
Cash and Cash Equivalents:
Beginning of Period 268.2 270.5
End of Period $ 221.3 $ 243.0
Cautionary Statement Relating to Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor provisions created by that Act. In addition, forward-looking statements may be made orally in the future by or on behalf of the Company. Forward-looking statements can be identified by the use of terms such as "expects", "should", "may", "believes", "anticipates", "will", and other future tense and forward-looking terminology.
Readers are cautioned that actual results may differ materially from those projected as a result of certain risks and uncertainties, including, but not limited to: i) changes in business conditions and the economy in general in both foreign and domestic markets; ii) weather conditions affecting demand for air conditioners, lawn and garden products and snow throwers; iii) the extent to which the decline in demand for lawn and garden and utility engines will continue, and the success of the Company's ongoing effort to bring costs in line with projected production levels and product mix; iv) financial market changes, including fluctuations in interest rates and foreign currency exchange rates; v) economic trend factors such as housing starts; vi) governmental regulations; vii) availability of materials; viii) actions of competitors; ix) the ultimate cost of resolving environmental matters; x) the extent of any business disruption resulting from the conversion to the Euro; xi) the Company's ability to profitably develop, manufacture and sell both new and existing products; xii) the extent of any business disruption that may result from the restructuring and realignment of the Company's manufacturing operations and the ultimate cost of those initiatives; and xiii) potential political and economic adversities that could adversely affect anticipated sales and production in Brazil. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Tecumseh Products Company will host a conference call to report on the first quarter results on Tuesday, April 24th at 11:00 a.m. ET. The call will be broadcast live over the Internet and then available for replay through Tecumseh Products Company's website at http://www.tecumseh.com/ .
Press releases and other investor information can be accessed via Tecumseh Products Company's Internet web site at http://www.tecumseh.com/ . Recent quarterly earnings information and press releases can be obtained at no charge, via fax, by calling "Company News On-Call" at 1-800-758-5804, ext. 842875, or by accessing PR Newswire's Internet web site at http://www.prnewswire.com/ .
SOURCE: Tecumseh Products Company
Contact: Pat Walsh, Director of IR of Tecumseh Products Company,
517-423-8455
Website: http://www.tecumseh.com/
Company News On-Call: http://www.prnewswire.com/comp/842875.html or fax,
800-758-5804, ext. 842875