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Pall Corporation Reports Strong First Quarter Sales and Operating Profit Growth
East Hills, NY (December 4, 2006) - - Pall Corporation (NYSE: PLL - News) today reported sales and earnings results for the first quarter ended October 31, 2006.
First Quarter Results Sales for the quarter were $499.3 million, up 16% compared with the same quarter last year. Net earnings were $24.4 million, or $0.20 per share. Earnings on a pro forma basis, excluding charges principally related to the Company's cost reduction initiatives, were $0.29 per share as compared to $0.20 per share in the same quarter last year. Foreign currency translation increased sales by 2% with minimal impact on earnings.
Eric Krasnoff, Chairman and CEO, said, "Pall's Total Fluid Management(sm) approach to the market continues to drive sales in the Life Sciences and Industrial segments. Our base consumables and systems businesses are both on track. Orders remained strong and we have again entered the next quarter with a record backlog.
The realignment of Pall Corporation into two integrated businesses, Industrial and Life Sciences, is now complete. Our new financial presentation format reflects this and provides greater visibility into Pall for investors."
Mr. Krasnoff added, "We are investing in sales and marketing, customer support and product development programs. At the same time we are working assiduously to reduce cost. Selling, general and administrative expenses continued to decrease as a percentage of sales, reaching 31.5% in the quarter. Gross margins present a tougher challenge. Cost of Sales is the major target of our cost reduction programs and facilities rationalization initiative. These activities are proceeding to plan and we are confident of success."
Consolidated - First Quarter Financial Summary
% CHANGE
OCT. 31, OCT. 31, IN LOCAL
2006 2005 CURRENCY
--------- --------- --------
Sales $499,288 $431,162 14.0
Net Earnings $ 24,434 $ 25,110
Diluted EPS $ 0.20 $ 0.20
Pro Forma Diluted EPS $ 0.29 $ 0.20
Life Sciences - First Quarter Summary
% CHANGE
OCT. 31, IN LOCAL
Sales: 2006 % CHANGE CURRENCY
-------------------------------------- ----------- ---------- --------
Medical $ 103,512 8.8 7.4
BioPharmaceuticals 89,490 21.3 18.6
-----------
Total Life Sciences segment $ 193,002 14.2 12.3
===========
% OF SALES
----------
Gross profit $ 95,226 49.3%
Operating profit $ 29,188 15.1%
Mr. Krasnoff continued, "BioPharmaceuticals sales increased 18.6% with 16% growth in consumables. This reflects a high level of drug production, along with investment in new capacity by the biotechnology sector. Medical sales increased 7.4%, with growth in the Blood Filtration and Hospital portions of the business in the Western Hemisphere and Europe.
Gross margin improved to 49.3% compared with 48.8% last year. Selling, general and administrative expenses improved to 30.3%. Operating profit increased 29.3% and operating margin improved to 15.1% from 13.4% last year."
Industrial - First Quarter Summary
% CHANGE
OCT. 31, IN LOCAL
Sales: 2006 % CHANGE CURRENCY
--------------------------------------- ---------- ---------- --------
General Industrial $ 175,073 13.9 11.4
Aerospace and Transportation 60,332 9.4 7.4
Microelectronics 70,881 32.7 31.7
----------
Total Industrial segment $ 306,286 16.8 14.7
==========
% OF SALES
----------
Gross profit $ 128,873 42.1%
Operating profit $ 33,289 10.9%
"Pall Industrial produced strong top-line sales growth," Mr. Krasnoff commented. "Within the segment, General Industrial sales grew 11.4% driven by strong system sales growth into energy related markets. Microelectronics sales were up 31.7%. New product sales into the consumer electronics market are making an impact. Aerospace and Transportation sales increased 7.4% driven by Military Aerospace sales in the Western Hemisphere.
Gross margins were reduced due to product mix, including the very strong sales performance of the systems business. Selling, general and administrative expenses improved by 3.9% as a percentage of sales to 29.1% reflecting top line leverage and cost reduction initiatives. Operating profit increased 24.3% and operating margin improved to 10.9% from 10.2% last year."
Conference Calls
Tomorrow, December 5, 2006, at 8:30 am ET, Pall Corporation will host its quarterly earnings conference call.
In addition, a conference call providing a detailed discussion of changes to the Company's financial reporting structure will follow the earnings call, at 11:00 am ET.
The calls will be webcast and individuals can access these webcasts from the home page of the Company's website, at www.pall.com/investor. Listening to the webcasts requires speakers and Microsoft Windows Media Player software. The webcast of the quarterly earnings call will be archived for 30 days and the webcast of the call discussing the changes to the Company's financial reporting structure will be archived for 90 days.
About Pall Corporation
Pall Corporation is the global leader in the rapidly growing field of filtration, separation and purification. Pall is organized into two businesses: Life Sciences and Industrial. These businesses provide leading-edge products to meet the demanding needs of customers in biotechnology, pharmaceutical, transfusion medicine, energy, electronics, municipal and industrial water purification, aerospace, transportation and broad industrial markets. Total revenues for fiscal year 2006 were $2.0 billion. The Company headquarters is in East Hills, New York with extensive operations throughout the world. For more information visit Pall at www.pall.com.
Forward Looking Statements
Results for first quarter ended October 31, 2006 are preliminary until the Company's Form 10-Q is filed with the Securities and Exchange Commission. 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. All statements regarding future performance, earnings projections, earnings guidance, events or developments are forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in product mix and product pricing particularly as we expand our systems business in which we experience significantly longer sales cycles and less predictable revenue with no certainty of future revenue streams from related consumable product offerings and services; increases in costs of manufacturing and operating costs including energy and raw materials; the Company's ability to achieve the savings anticipated from cost reduction and margin improvement initiatives including the timing of completion of the facilities rationalization initiative; fluctuations in foreign currency exchange rates and interest rates; regulatory approval and market acceptance of new technologies; changes in business relationships with key customers and suppliers including delays or cancellations in shipments; success in enforcing patents and protecting proprietary products and manufacturing techniques; successful completion or integration of acquisitions; domestic and international competition in the Company's global markets; and global and regional economic conditions and legislative, regulatory and political developments. 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 Pall's current and future financial performance. The non-GAAP measurements do not replace the presentation of Pall's GAAP financial results. These measurements provide supplemental information to assist management in analyzing Pall's financial position and results of operations. Pall 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.
PALL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(AMOUNTS IN THOUSANDS)
OCT. 31, 2006 JUL. 31, 2006
------------- -------------
Assets:
Cash and cash equivalents $ 360,595 $ 317,657
Accounts receivable 469,102 517,632
Inventories 424,051 408,273
Other current assets 143,248 133,419
------------- -------------
Total current assets 1,396,996 1,376,981
------------- -------------
Property, plant and equipment, net 608,868 620,979
Other assets 553,715 554,898
------------- -------------
Total assets $ 2,559,579 $ 2,552,858
============= =============
Liabilities and Stockholders' Equity:
Short-term debt $ 49,259 $ 63,382
Accounts payable, income taxes and other
current liabilities 458,208 467,434
------------- -------------
Total current liabilities 507,467 530,816
------------- -------------
Long-term debt 641,109 640,015
Deferred taxes and other non-current
liabilities 204,096 203,331
------------- -------------
Total liabilities 1,352,672 1,374,162
Stockholders' Equity 1,206,907 1,178,696
------------- -------------
Total liabilities and stockholders'
equity $ 2,559,579 $ 2,552,858
============= =============
PALL CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in thousands, except per share data)
FIRST QUARTER ENDED
-------------------------
OCT. 31, OCT. 31,
2006 2005
------------ ------------
Net Sales $499,288 $431,162
Cost of sales 275,616 (a) 229,485 (b)
--------- ---------
Gross profit 223,672 201,677
--------- ---------
Selling, general and administrative expenses 157,375 149,707
Research and development 14,234 13,066
--------- ---------
Earnings before restructuring and other
charges/(gains), net ("ROTC"), interest
expense, net and income taxes 52,063 38,904
ROTC 17,088 (a) (50)(b)
Interest expense, net 5,786 5,739
--------- ---------
Earnings before income taxes 29,189 33,215
Provision for income taxes 4,755 8,105
--------- ---------
Net earnings $ 24,434 $ 25,110
========= =========
Earnings per share:
Basic $ 0.20 $ 0.20
Diluted $ 0.20 $ 0.20
Average shares outstanding:
Basic 122,812 124,887
Diluted 123,801 125,690
Net earnings as reported $ 24,434 $ 25,110
ROTC and one-time purchase accounting
adjustment, after pro forma tax effect 11,061 171
--------- ---------
Pro forma earnings $ 35,495 $ 25,281
========= =========
Diluted earnings per share as reported $ 0.20 $ 0.20
ROTC and one-time purchase accounting
adjustment, after pro forma tax effect 0.09 -
--------- ---------
Pro forma diluted earnings per share $ 0.29 $ 0.20
========= =========
(a) ROTC includes $13,581 (7 cents per share, after pro forma tax
effect) primarily comprised of severance costs and an impairment
charge for the planned disposal and early retirement of a
building and certain other long-lived assets related to the
Company's cost reduction programs, including its facility
rationalization initiative. In addition, the quarter includes
other charges of $3,507 (2 cents per share, after pro forma tax
effect), primarily related to an increase in environmental
reserves. Cost of sales includes $427 comprised of incremental
depreciation recorded in conjunction with the Company's
facilities rationalization initiative.
(b) ROTC includes a gain of $1,806 (1 cent per share, after pro forma
tax effect) on the sale of an investment partly offset by
severance and other costs of $1,756 ( 1 cent per share, after pro
forma tax effect) primarily related to the Company's business
realignment. Included in cost of sales is a charge of $311,
related to a one-time purchase accounting adjustment to record,
at market value, inventory acquired from BioSepra. This resulted
in a $2,431 increase in acquired inventories in accordance with
SFAS No. 141, "Business Combinations" and a charge to cost of
sales in the quarter concurrent with the sale of a portion of the
underlying inventory.
PALL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(AMOUNTS IN THOUSANDS)
OCT. 31, OCT. 31,
2006 2005
--------- ---------
Net cash provided by operating activities $ 72,092 $ 31,470
--------- ---------
Investing activities:
Capital expenditures (13,829) (21,636)
Other 1,693 (4,638)
--------- ---------
Net cash used by investing activities (12,136) (26,274)
--------- ---------
Financing activities:
Dividends paid (13,436) (12,434)
Notes payable and long-term borrowings (14,192) 19,420
Purchase of treasury stock (3,553) (5,750)
Other 14,096 9,587
--------- ---------
Net cash (used)/provided by financing activities (17,085) 10,823
--------- ---------
Cash flow for period 42,871 16,019
Cash and cash equivalents at beginning of year 317,657 164,928
Effect of exchange rate changes on cash 67 (1,259)
--------- ---------
Cash and cash equivalents at end of period $360,595 $179,688
========= =========
PALL CORPORATION
SUMMARY STATEMENT OF OPERATING PROFIT BY SEGMENT
(Unaudited)
(DOLLAR AMOUNTS IN THOUSANDS)
OCT. 31, OCT. 31,
FIRST QUARTER ENDED 2006 2005
-------------------------------------------------- --------- ---------
Life Sciences
--------------------------------------------------
Sales $193,002 $168,947
Cost of sales (a) 97,776 86,570
--------- ---------
Gross profit 95,226 82,377
% of sales 49.3% 48.8%
Selling, general and administrative expenses 58,392 52,996
Research and development 7,646 6,814
--------- ---------
Operating profit $ 29,188 $ 22,567
% of sales 15.1% 13.4%
========= =========
Industrial
--------------------------------------------------
Sales $306,286 $262,215
Cost of sales 177,413 142,604
--------- ---------
Gross profit 128,873 119,611
% of sales 42.1% 45.6%
Selling, general and administrative expenses 88,996 86,578
Research and development 6,588 6,252
--------- ---------
Operating profit $ 33,289 $ 26,781
% of sales 10.9% 10.2%
========= =========
CONSOLIDATED:
Operating profit $ 62,477 $ 49,348
General corporate expenses (9,987) (10,133)
--------- ---------
Earnings before ROTC, interest expense, net and
income taxes (a) 52,490 39,215
ROTC (a) (17,515) (261)
Interest expense, net (5,786) (5,739)
--------- ---------
Earnings before income taxes $ 29,189 $ 33,215
========= =========
(a) Included in ROTC for the purpose of evaluation of segment
profitability are other adjustments recorded in cost of sales.
For the three months ended October 31, 2006, such adjustments
include incremental depreciation of $427 recorded in conjunction
with the Company's facility rationalization initiative. For the
three months ended October 31, 2005, such adjustments include a
charge of $311 related to a one-time purchase accounting
adjustment to record at market value, inventory acquired from
BioSepra. This resulted in an $2,431 increase in acquired
inventories in accordance with SFAS No. 141 "Business
Combinations" and a charge to cost of sales in the quarter
concurrent with the sale of a portion of the underlying
inventory.
PALL CORPORATION
SUPPLEMENTAL SEGMENT SALES INFORMATION BY MARKET AND GEOGRAPHY
(Unaudited)
(DOLLAR AMOUNTS IN THOUSANDS)
% CHANGE
SALES OCT. 31, OCT. 31, % IN LOCAL
FIRST QUARTER ENDED 2006 2005 CHANGE CURRENCY
--------------------------------- --------- --------- ------- --------
Life Sciences
---------------------------------
By Market:
Medical $103,512 $ 95,147 8.8 7.4
BioPharmaceuticals 89,490 73,800 21.3 18.6
--------- ---------
Total Life Sciences $193,002 $168,947 14.2 12.3
========= =========
By Geography:
Western Hemisphere $ 84,196 $ 76,081 10.7 10.5
Europe 84,672 69,581 21.7 16.6
Asia 24,134 23,285 3.6 5.1
--------- ---------
Total Life Sciences $193,002 $168,947 14.2 12.3
========= =========
Industrial
---------------------------------
By Market:
General Industrial (a) $175,073 $153,671 13.9 11.4
Aerospace and Transportation (a) 60,332 55,136 9.4 7.4
Microelectronics 70,881 53,408 32.7 31.7
--------- ---------
Total Industrial $306,286 $262,215 16.8 14.7
========= =========
By Geography:
Western Hemisphere $ 88,966 $ 78,554 13.3 12.9
Europe 119,433 102,107 17.0 12.1
Asia 97,887 81,554 20.0 19.7
--------- ---------
Total Industrial $306,286 $262,215 16.8 14.7
========= =========
(a) Certain prior year amounts have been reclassified to conform to
the current year presentation.
PALL CORPORATION
SUMMARY STATEMENT OF OPERATING PROFIT BY SEGMENT
Restated Fiscal Year 2006 By Quarter
(Unaudited)
(DOLLAR AMOUNTS IN THOUSANDS)
Q1 Q2 Q3 Q4
--------- --------- --------- ---------
OCT. 31, JAN. 31, APRIL 30, JULY 31, Total Year
2005 2006 2006 2006 2006
--------- --------- --------- --------- -----------
Life Sciences
------------------
Sales $168,947 $187,867 $205,937 $233,554 $ 796,305
Cost of sales (a) 86,570 95,265 103,185 116,204 401,224
--------- --------- --------- --------- -----------
Gross profit 82,377 92,602 102,752 117,350 395,081
% of sales 48.8% 49.3% 49.9% 50.2% 49.6%
Selling, general
and administrative
expenses 52,996 56,356 54,159 61,543 225,054
% of sales 31.4% 30.0% 26.3% 26.4% 28.3%
Research and
development 6,814 8,697 7,625 8,452 31,588
--------- --------- --------- --------- -----------
Operating profit $ 22,567 $ 27,549 $ 40,968 $ 47,355 $ 138,439
% of sales 13.4% 14.7% 19.9% 20.3% 17.4%
========= ========= ========= ========= ===========
Industrial
------------------
Sales $262,215 $290,569 $304,044 $363,697 $1,220,525
Cost of sales (a) 142,604 157,158 167,870 202,227 669,859
--------- --------- --------- --------- -----------
Gross profit 119,611 133,411 136,174 161,470 550,666
% of sales 45.6% 45.9% 44.8% 44.4% 45.1%
Selling, general
and administrative
expenses 86,578 93,564 92,880 101,265 374,287
% of sales 33.0% 32.2% 30.5% 27.8% 30.7%
Research and
development 6,252 5,701 6,886 6,944 25,783
--------- --------- --------- --------- -----------
Operating profit $ 26,781 $ 34,146 $ 36,408 $ 53,261 $ 150,596
% of sales 10.2% 11.8% 12.0% 14.6% 12.3%
========= ========= ========= ========= ===========
CONSOLIDATED:
Operating profit $ 49,348 $ 61,695 $ 77,376 $100,616 $ 289,035
General corporate
expenses (10,133) (9,216) (10,368) (11,972) (41,689)
--------- --------- --------- --------- -----------
Earnings before
ROTC, interest
expense, net and
income taxes (a) 39,215 52,479 67,008 88,644 247,346
ROTC (a) (261) (3,931) (7,646) (2,155) (13,993)
Interest expense,
net (5,739) (5,642) (5,091) (6,505) (22,977)
--------- --------- --------- --------- -----------
Earnings before
income taxes $ 33,215 $ 42,906 $ 54,271 $ 79,984 $ 210,376
========= ========= ========= ========= ===========
(a) Included in ROTC for the purpose of evaluation of segment
profitability are other adjustments of $1,667 recorded in cost of
sales; $769 related to incremental depreciation recorded in
conjunction with the Company's facility rationalization
initiative and $898 related to a one-time purchase accounting
adjustment to record at market value, inventory acquired from
Biosepra. This resulted in a $2,431 increase in acquired
inventories in accordance with SFAS No. 141 and a charge to cost
of sales concurrent with the sale of a portion of the underlying
inventory.
PALL CORPORATION
INDUSTRIAL SEGMENT SALES INFORMATION BY MARKET
Restated Fiscal Year 2006 By Quarter
(Unaudited)
(DOLLAR AMOUNTS IN THOUSANDS)
Q1 Q2 Q3 Q4
--------- --------- --------- ---------
OCT. 31, JAN. 31, APRIL 30, JULY 31, Total Year
2005 2006 2006 2006 2006
--------- --------- --------- --------- -----------
Industrial
------------------
By Market:
General Industrial $153,671 $171,876 $176,043 $218,015 $ 719,605
Aerospace and
Transportation 55,136 56,563 58,524 72,401 242,624
Microelectronics 53,408 62,130 69,477 73,281 258,296
--------- --------- --------- --------- -----------
Total Industrial $262,215 $290,569 $304,044 $363,697 $1,220,525
========= ========= ========= ========= ===========
###
Contact
Lisa McDermott
Pall Corporation
Tel: (516) 801-9808
|
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