The company reported that total company sales for third quarter 2000 increased 28% to $858 million, up from $669 million in third quarter 1999. However, company-wide organic sales, after adjusting for sales to company-owned dealers and currency fluctuations, declined 3%.
Revenues outside of the U.S. and Canada, adjusted for currency fluctuations, declined by 1% in the quarter, representing 12% of total corporate sales.
“Our North American residential products and retail business segments, which account for over two-thirds of our corporate revenues, were significantly influenced by unfavorable weather in the Northeast, Midwest, and much of Canada,” said John Norris, chairman and ceo. “Also, operational and integration issues in our retail and hearth products operations further reduced our Q3 results. We have put in place aggressive cost control measures to help offset the impact.”
Quarterly operating income for the consolidated company declined by 35% from $55 million in third quarter 1999 to $36 million. Net income for the third quarter declined 55% to $12 million from $27 million in 1999, due in part, the company said, to higher interest expenses of almost $5 million from increased borrowing to fund acquisitions. Diluted earnings per share, before one-time pre-tax charges of $5.1 million associated with closing two small commercial air conditioning operations in Latin America, were $0.27. The pro forma calculation, assuming a January 1 initial public offering (IPO), shows earnings per share at $0.61 for the same quarter last year.
“With the growth in distributor inventories that has resulted from the unfavorable weather, we believe we will feel the effects of the weather-related industry slowdown through the rest of 2000 and possibly into the early part of 2001,” said coo Bob Schjerven. “Our diluted EPS for the full year 2000 could be as low as $1.05.”
Schjerven noted that focus in 2001 will be on improving the profitability of acquired businesses, rather than sales growth.
“We project softness in many of our end markets and anticipate that our total corporate revenue growth will be in the low single digits,” he said. “We anticipate EPS growth in 2001 will be in excess of 25%. However, we project the bulk of the improvement will be in the second half of the year due to the seasonality of our business, lagging effects of this year’s industry slowdown, and our timetable for realizing operating improvements in our acquired businesses.”
Schjerven noted the company anticipates earnings in the first quarter of 2001 could be break-even, and year-over-year quarterly EPS comparisons will not be favorable until the second quarter of 2001.
Publication date: 10/30/2000