EnPro Industries Announces Third Quarter 2010 Results
Resource from: EnPro Industries Inc. Likes:2950
Nov 05,2010
CHARLOTTE, N.C., Nov. 4, 2010 /PRNewswire-FirstCall/ -- EnPro Industries, Inc. (NYSE: NPO) today reported net income of $4.9 million, or $0.24 a share, for the third quarter of 2010, compared to net income of $1.8 million, or $0.09 a share, in the third quarter of 2009. Net income in the third quarter of 2009 included income from discontinued operations of $0.8 million, or $0.04 cents a share.
Results for the third quarter of 2010 reflect the deconsolidation of Garlock Sealing Technologies LLC (GST) and its subsidiaries, effective June 5, 2010, when GST filed a voluntary petition to establish a trust to resolve all current and future asbestos claims against it under Section 524(g) of the U.S. Bankruptcy Code. GST's operating results are not included in EnPro's consolidated results of operations during the pendency of this asbestos claims resolution process. The deconsolidation has a negative effect on year-over-year comparisons because current accounting regulations do not permit the restatement of results of prior periods when GST and its subsidiaries were consolidated in EnPro's results. GST and its subsidiaries were included in the Sealing Products segment prior to deconsolidation. Companies in the Garlock family of companies that are not involved in the asbestos claims resolution process continue to be consolidated in
EnPro's results and are included in the Sealing Products segment.
To aid in comparisons of year-over-year data, the company has attached a schedule to this press release showing key operating measures on a pro forma basis in the third quarters and first nine months of 2010 and 2009 for both EnPro and GST.
EnPro's consolidated net income in the third quarters of 2010 and 2009 was affected by selected items, including interest expense on intercompany notes due to GST. Before these selected items, EnPro's consolidated net income in the third quarter of 2010 was $9.6 million. In addition, GST's net income before selected items, including asbestos-related expenses and intercompany interest income from EnPro, was $5.7 million in the third quarter of 2010. In the third quarter of 2009, EnPro's net income before selected items was $9.5 million which included GST.
"Our third quarter results benefited from continued recovery in our markets and an improvement in the performance of our businesses," said Steve Macadam, president and chief executive officer. "The strength and depth of the recovery produced strong organic sales growth in all of our operations, and their profitability grew as volumes increased and we benefited from cost improvements. We also continued to make progress on our goals for acquisitions, completing three transactions for Compressor Products International and one in the high performance seals group of the consolidated Garlock companies."
Consolidated sales in the third quarter of 2010 were $194.5 million, a 3% increase over the third quarter of 2009; GST reported an additional $46.1 million of third party sales in the period. In the third quarter of 2009, sales were $189.4 million which included GST.
Consolidated earnings before interest, income taxes, depreciation, amortization, asbestos-related expenses and other selected items (EBITDAA) were $26.5 million, or 13.6% of sales, in the third quarter of 2010; GST reported an additional $9.9 million of EBITDAA in the period. In the third quarter of 2009, consolidated EBITDAA, including GST, was $24.2 million, or 12.8% of sales.
Nine Months Results
For the first nine months of 2010, EnPro reported net income of $149.1 million, or $7.25 a share, compared to a net loss of $100.7 million, or $5.05 a share, in the first nine months of 2009.
Consolidated net income in 2010 benefited from a non-cash, after-tax gain of $33.8 million, or $1.64 a share, reflecting the deconsolidation of GST and the adjustment of its underlying carrying value to its estimated fair value. Consolidated net income in the period also benefited from income from discontinued operations of $94.1 million, or $4.57 a share, primarily reflecting an after-tax gain of $92.5 million from the sale of Quincy Compressor.
The consolidated loss in the first nine months of 2009 included a goodwill impairment charge of $96.1 million, after tax, or $4.81 a share, and income from discontinued operations of $3.6 million, or $0.18 a share.
Before selected items, consolidated net income in the first nine months of 2010 was $42.5 million; in addition, GST recorded net income of $7.2 million on the same basis in the period following its deconsolidation on June 5. In the first nine months of 2009, consolidated net income before selected items was $22.5 million including earnings from GST.
Consolidated sales in the first nine months of 2010 increased by 16% to $673.5 million, including a benefit of about 3% from acquisitions; in addition, GST's third-party sales from June 5 through September 30 were $59.9 million. For the first nine months of 2009, consolidated sales were $579.8 million, including the sales of GST.
Consolidated EBITDAA was $104.3 million in the first nine months of 2010. GST generated additional EBITDAA of $12.3 million following its deconsolidation on June 5. For the first nine months of 2009, when GST was included in consolidated results, EBITDAA was $66.8 million. As a percent of sales, EBITDAA improved to 15.5% in 2010 from 11.5% in 2009.
Garlock Sealing Technologies
GST and its subsidiaries performed well in the third quarter, and business there has continued as usual, with no significant distraction from the asbestos claims resolution process. Third-party sales increased by 23% compared to the third quarter of 2009, when GST was consolidated in EnPro's results. GST benefited from favorable demand in almost all product lines as activity levels picked up in most of its markets. GST's segment profit increased by 64% to $8.7 million and segment profit margins improved by more than four percentage points. GST's income before selected items improved 50% to $5.7 million.
The deconsolidation of GST led Sealing Products sales to decline by $17.4 million to $82.5 million in the third quarter of 2010. GST reported third-party sales of $46.1 million in the third quarter of 2010. Segment profits improved slightly to $15.5 million in 2010, but segment profit margins increased by 370 basis points to 18.8% as volumes grew and prices increased for selected products. GST recorded an additional $8.7 million in segment profits in the third quarter of 2010.
Stemco continued to benefit from increased activity in heavy-duty truck markets, where demand strengthened for original equipment and in the aftermarket. Both sales and profits improved by more than 25% at Stemco. The Garlock companies included in EnPro's consolidated results benefited from increased demand from power generation markets in Europe, China and the United States, improved demand from upstream oil and gas markets, the acquisition of companies involved in aerospace markets and improvements in semiconductor markets. Sales in these operations improved by 14% over the third quarter of 2009.
Sales in the Engineered Products segment benefited from strong organic growth and increased by 28% despite a reduction of 6% for the effect of foreign currency translation. The segment recorded a profit in the third quarter of 2010 after recording a loss in the third quarter of 2009 because of weak markets and low volumes at GGB Bearing Technology. Before the effect of currency translation, sales at GGB improved by more than 40% over the third quarter of 2009 as the business continued to see increased demand from industrial and automotive markets in both Europe and North America. Higher volumes and the benefits of cost reduction programs initiated in 2009 helped GGB return to profitability in the quarter.
At Compressor Products International (CPI), volume increases and the contribution of acquisitions helped sales improve, but profits decreased reflecting higher costs, including those associated with opening new service centers. Activity levels in CPI's European and North American markets were mixed. In Europe, CPI reported higher volumes in the United Kingdom and Germany, but decreases elsewhere. In North America, CPI's refinery markets remained healthy but high storage levels and low commodity prices have dampened activity in its natural gas markets.
Sales in the Engine Products and Services segment benefited from increased aftermarket activity and grew by 20% over the third quarter of 2009. Sales from the shipment of engines and associated equipment were about the same as in the third quarter of 2009. Increased aftermarket sales contributed to a more favorable product mix and the segment's profit margins improved to 22.9% as segment profits increased by more than half.
Cash Flows
At September 30, 2010, the company's cash balance stood at $212.0 million, compared to $76.8 million at December 31, 2009 and $201.1 million at June 30, 2010. GST held a cash balance of $67.2 million at September 30, 2010.
In the nine months ended September 30, 2010, EnPro generated cash of $70.0 million from operating activities (excluding taxes paid on the sale of Quincy Compressor) compared to $24.7 million in 2009. In 2010, the company received about $138.5 million, net of taxes, from the sale of Quincy Compressor. Cash balances were reduced by the reclassification of $29.5 million as a result of the deconsolidation of GST and $25.5 million spent to complete four acquisitions. Capital expenditures were $14.3 million in the first nine months of 2010 compared to $16.5 million in the first nine months of 2009.
Outlook
"We expect market conditions to remain generally favorable through the end of 2010," said Macadam. "However, comparisons to the third quarter of 2010 are likely to reflect seasonal softness in certain markets as year-end approaches and a return to more normal levels of aftermarket demand at Fairbanks Morse, following the unusually high demand experienced in the third quarter. These conditions may impact our results in the fourth quarter. However, we will continue to pursue our strategic objectives, including acquisitions that will add value to our company."
Conference Call and Webcast Information
EnPro will hold a conference call today, November 4, at 10:00 a.m. Eastern Time to discuss third quarter results. Investors who wish to participate in the call should dial 1-800-851-4704 approximately 10 minutes before the call begins and provide conference id number 18368793. A live audio webcast of the call and accompanying slide presentation will be accessible from the company's website, http://www.enproindustries.com. To access the presentation, log on to the webcast by clicking the link on the company's home page.
Non-GAAP Financial Information
This press release contains financial measures that have not been prepared in accordance with GAAP. They include income before asbestos-related expenses and other selected items, EBITDAA, EBITDA and related per share amounts. Tables showing the effect of these non-GAAP financial measures for the third quarter and first nine months of 2010 and 2009 are attached to the release.
Forward-Looking Statements
Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions in the markets served by our businesses, some of which are cyclical and experience periodic downturns; prices and availability of raw materials; and the amount of any payments required to satisfy contingent liabilities related to discontinued operations of our predecessors, including liabilities for certain products, environmental matters, guaranteed debt payments, employee benefit obligations and other matters. In addition, adverse developments could arise in regard to voluntary petitions filed by certain of our subsidiaries in U.S. Bankruptcy Court to establish a trust that would resolve all current and future asbestos claims. Our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarter ended September 30, 2010, describe these and other risks and uncertainties in more detail. We do not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.
About EnPro Industries
EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company's website at http://www.enproindustries.com.
The deconsolidation of GST led Sealing Products sales to decline by $17.4 million to $82.5 million in the third quarter of 2010. GST reported third-party sales of $46.1 million in the third quarter of 2010. Segment profits improved slightly to $15.5 million in 2010, but segment profit margins increased by 370 basis points to 18.8% as volumes grew and prices increased for selected products. GST recorded an additional $8.7 million in segment profits in the third quarter of 2010.
Stemco continued to benefit from increased activity in heavy-duty truck markets, where demand strengthened for original equipment and in the aftermarket. Both sales and profits improved by more than 25% at Stemco. The Garlock companies included in EnPro's consolidated results benefited from increased demand from power generation markets in Europe, China and the United States, improved demand from upstream oil and gas markets, the acquisition of companies involved in aerospace markets and improvements in semiconductor markets. Sales in these operations improved by 14% over the third quarter of 2009.
Sales in the Engineered Products segment benefited from strong organic growth and increased by 28% despite a reduction of 6% for the effect of foreign currency translation. The segment recorded a profit in the third quarter of 2010 after recording a loss in the third quarter of 2009 because of weak markets and low volumes at GGB Bearing Technology. Before the effect of currency translation, sales at GGB improved by more than 40% over the third quarter of 2009 as the business continued to see increased demand from industrial and automotive markets in both Europe and North America. Higher volumes and the benefits of cost reduction programs initiated in 2009 helped GGB return to profitability in the quarter.
At Compressor Products International (CPI), volume increases and the contribution of acquisitions helped sales improve, but profits decreased reflecting higher costs, including those associated with opening new service centers. Activity levels in CPI's European and North American markets were mixed. In Europe, CPI reported higher volumes in the United Kingdom and Germany, but decreases elsewhere. In North America, CPI's refinery markets remained healthy but high storage levels and low commodity prices have dampened activity in its natural gas markets.
Sales in the Engine Products and Services segment benefited from increased aftermarket activity and grew by 20% over the third quarter of 2009. Sales from the shipment of engines and associated equipment were about the same as in the third quarter of 2009. Increased aftermarket sales contributed to a more favorable product mix and the segment's profit margins improved to 22.9% as segment profits increased by more than half.
Cash Flows
At September 30, 2010, the company's cash balance stood at $212.0 million, compared to $76.8 million at December 31, 2009 and $201.1 million at June 30, 2010. GST held a cash balance of $67.2 million at September 30, 2010.
In the nine months ended September 30, 2010, EnPro generated cash of $70.0 million from operating activities (excluding taxes paid on the sale of Quincy Compressor) compared to $24.7 million in 2009. In 2010, the company received about $138.5 million, net of taxes, from the sale of Quincy Compressor. Cash balances were reduced by the reclassification of $29.5 million as a result of the deconsolidation of GST and $25.5 million spent to complete four acquisitions. Capital expenditures were $14.3 million in the first nine months of 2010 compared to $16.5 million in the first nine months of 2009.
Outlook
"We expect market conditions to remain generally favorable through the end of 2010," said Macadam. "However, comparisons to the third quarter of 2010 are likely to reflect seasonal softness in certain markets as year-end approaches and a return to more normal levels of aftermarket demand at Fairbanks Morse, following the unusually high demand experienced in the third quarter. These conditions may impact our results in the fourth quarter. However, we will continue to pursue our strategic objectives, including acquisitions that will add value to our company."
Conference Call and Webcast Information
EnPro will hold a conference call today, November 4, at 10:00 a.m. Eastern Time to discuss third quarter results. Investors who wish to participate in the call should dial 1-800-851-4704 approximately 10 minutes before the call begins and provide conference id number 18368793. A live audio webcast of the call and accompanying slide presentation will be accessible from the company's website, http://www.enproindustries.com. To access the presentation, log on to the webcast by clicking the link on the company's home page.
Non-GAAP Financial Information
This press release contains financial measures that have not been prepared in accordance with GAAP. They include income before asbestos-related expenses and other selected items, EBITDAA, EBITDA and related per share amounts. Tables showing the effect of these non-GAAP financial measures for the third quarter and first nine months of 2010 and 2009 are attached to the release.
Forward-Looking Statements
Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions in the markets served by our businesses, some of which are cyclical and experience periodic downturns; prices and availability of raw materials; and the amount of any payments required to satisfy contingent liabilities related to discontinued operations of our predecessors, including liabilities for certain products, environmental matters, guaranteed debt payments, employee benefit obligations and other matters. In addition, adverse developments could arise in regard to voluntary petitions filed by certain of our subsidiaries in U.S. Bankruptcy Court to establish a trust that would resolve all current and future asbestos claims. Our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarter ended September 30, 2010, describe these and other risks and uncertainties in more detail. We do not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.
About EnPro Industries
EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company's website at http://www.enproindustries.com.
(EnPro Industries Inc.)
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
2.All news edited and translated by us are specially noted the source"CBCC".
3.For investors,please be cautious for all news.We don't bear any damage brought by late and inaccurate news.
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