American Standard Reports Record First Quarter
Earnings, Up 10 Percent
PISCATAWAY, N.J., April 19 American Standard Companies
Inc. today announced record first quarter earnings of 90 cents per
diluted share, up 10 percent from 82 cents a year ago.
"Our company continues to perform very well in a challenging economic
environment," said Frederic Poses, chairman and chief executive officer.
"Because of our productivity initiatives, we delivered profitability in line
with our targets, despite lower sales growth caused by a softer-than-expected
U.S. economy, a significant reduction in U.S. truck builds and a weaker Euro."
Revenues were $1.79 billion, down 2 percent year-over-year from
$1.82 billion, following a particularly strong first quarter last year. In
local currencies, revenues for the quarter rose 1 percent over the previous
year. Operating margin for the quarter increased 0.4 percentage points to
10.2 percent. Free cash flow was $39 million in the quarter, up $111 million
over the prior year.
"We remain confident in our 2001 performance," said Poses. "There's no
question that current economic conditions in the U.S. and Europe are tougher
than most people anticipated even three months ago, and that's unlikely to
change during the second quarter.
"Given the economic climate, our financial performance in the second
quarter should be comparable to the first, and we expect to achieve earnings
growth at the low end of our forecasted 13-17 percent range for the year. The
momentum we're gaining from our productivity, marketing and restructuring
actions will offset, to a large extent, the effects of a soft economy."
QUARTER OPERATING HIGHLIGHTS
Segment income was $183 million, up 3 percent over the prior year
(up 7 percent in local currencies). These results reflected the combination
of productivity initiatives, including Six Sigma, materials management and
cost containment, as well as mix and price.
Air Conditioning Systems and Services sales were $1.07 billion, up
slightly year-over-year (up 2 percent in local currencies). Segment income
increased 7 percent to $101 million, and margin improved from 8.8 percent to
9.4 percent. Residential share gains, price increases, aftermarket volume
growth and cost reductions helped offset the impact of weaker market
conditions.
Working with Trane(R) Comfort Specialist dealers, Home Depot expanded its
pilot program to sell residential air conditioning systems through a total of
150 stores, with the addition of 28 stores in Houston and 40 in South Florida.
Sears named Trane as a "Partner in Progress," an award given to the top
1.5 percent of its suppliers, and is including Trane in its national
advertising. Among its large sales this quarter, the company signed an energy
savings performance agreement with the U.S. Department of State in Seoul,
Korea, valued at about $6 million, which will save the government nearly
$13 million over the 19 years of the contract; new national/global accounts,
including Aardex Corporation, Cooper Medical Buildings, IntraWest, Quattlebaum
Development Company and Simon Properties; and a sale for the $300 million
Westin New York at Times Square, developed by Tishman Realty & Construction
and the largest hotel built in the city in a decade.
Plumbing Products first quarter sales were $455 million, down 1 percent
(up 4 percent in local currencies). Segment income was $36 million, a
decrease of $4 million or 10 percent. In local currencies, segment income
decreased by $1 million. Margin was 7.9 percent, or a decrease of 0.8
percentage points. The improved performance of Plumbing Products in the U.S.
retail market and stable European results lessened the impact of rising energy
costs and softer U.S. wholesale conditions.
During the quarter, Plumbing Products launched a number of new products
and product lines in Europe, including the Venice 21 luxury bathroom suite,
the ClearTap(TM) filtering faucet, a new JADO(R) luxury faucet line as well as
the Dolomite brand for bathroom fixtures and faucets in the U.K. To better
serve customers in the Americas, the company added four new distributors and
combined the fixtures and fittings sales teams supporting wholesale and retail
accounts. In addition, the Americas plumbing group added 50 sales
representatives and appointed new leaders for marketing, sales and finance as
well as operations in Mexico.
Vehicle Control Systems first quarter sales were $265 million, down 10
percent from $296 million. In local currencies, sales were down 3 percent.
Because of increased market penetration and new product introductions,
European sales held steady over the prior year and reduced the impact of a
significant decline in North American truck builds. Segment income rose to
$46 million or 5 percent (up 15 percent in local currencies). Margin improved
from 14.9 percent to 17.4 percent as a result of materials procurement and
other productivity initiatives. North American truck builds fell 45 percent
in the first quarter, reducing equity income from the Meritor WABCO joint
venture by $4 million compared with first quarter 2000.
During the quarter, General Motors started production of its 2002
Oldsmobile Bravada and the GMC Envoy. Both these SUVs use WABCO's new "air
glide" suspension as part of their rear suspension systems. This
electronically controlled air suspension system has received very positive
reviews in the automotive trade press.
NOTE TO REPORTERS: American Standard Chairman and CEO Frederic Poses and
Chief Financial Officer Peter D'Aloia will discuss the company's performance
in a two-way conference call for financial analysts at 11:00 a.m. Eastern time
today. Reporters are invited to listen to the call, which will be broadcast
on American Standard's Web site. The Web site address is
http://www.americanstandard.com. For those unable to connect to the company's
Web site, you may listen via telephone. The dial-in number is 785-832-0201.
Please call five to ten minutes prior to the scheduled start time. The number
of telephone connections is limited.
A rebroadcast of the conference call will be available from 2:00 p.m.
Eastern time today until midnight on April 27, 2001. For the replay, please
dial 719-457-0820. The replay access code is 789434.
Comments in this earnings release contain certain forward-looking
statements, which are based on management's good faith expectations and belief
concerning future developments. Actual results may differ materially from
these expectations as a result of many factors, relevant examples of which are
set forth in the company's 2000 Annual Report on Form 10-K and in the
"Management's Discussion and Analysis" section of the company's Quarterly
Reports on form 10-Q. American Standard does not undertake any obligation to
update such forward-looking statements.
American Standard is a global manufacturer with market leading positions
in three businesses: air conditioning systems and service, sold under the
Trane(R) and American Standard(R) brands for commercial, institutional and
residential buildings; plumbing products, sold under such brands as American
Standard(R) and Ideal Standard(R); and vehicle control systems, including
electronic braking and air suspension systems, sold under the WABCO(R) name to
the world's leading manufacturers of heavy-duty trucks, buses, SUVs and luxury
cars. The company employs approximately 61,000 people and has manufacturing
operations in 27 countries. American Standard is included in the Standard &
Poor's MidCap 400 Index.
For more information, reporters may contact:
Lisa Glover, 732-980-6048, lglover@americanstandard.com, or Shelly London,
732-980-6175, slondon@americanstandard.com
For more information, investors and financial analysts may contact:
Phil Bradtmiller, 732-980-6038, pbradtmiller@americanstandard.com, or
Bruce Fisher, 732-980-6095, bfisher@americanstandard.com
Additional information is available at http://www.americanstandard.com.
U.S. callers can listen to the latest news release and other corporate
information by dialing 888-ASD-NEWS.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
In millions except Three Months Ended March 31,
per share data
2001 2000
Sales
Air Conditioning Systems and
Services $1,071 $1,067
Plumbing Products 455 459
Vehicle Control Systems 265 296
Total $1,791 $1,822
Segment income
Air Conditioning Systems and
Services $101 $94
Plumbing Products 36 40
Vehicle Control Systems 46 44
Total 183 178
Equity in net income of
unconsolidated joint ventures 6 10
189 188
Interest expense 47 48
Corporate and other expenses 38 40
Income before income taxes 104 100
Income taxes 39 40
Net income $65 $60
Per basic common share:
Net income $0.92 $0.85
Per diluted common share:
Net income $0.90 $0.82
Average basic outstanding common shares 70.6 71.0
Average diluted outstanding common shares 72.6 73.1
Data Supplement Sheet
* Prior year shown at current exchange rate
This Data Supplement Sheet includes information on backlog and information
excluding the effect of foreign exchange on operating results.
With approximately half of the Company's business from outside the U.S., the
impact of changes in exchange rates can have significant impact on results
when reported in U.S. Dollars. Management believes that excluding exchange
effects is helpful in assessing the overall performance of the business.
$ in millions Three Months Ended March 31,
Reported Reported % Chg vs. Adj* % Chg vs.
2001 2000 2000 2000 Adj. 2000
Air Conditioning
Systems and
Services
Sales 1,071 1,067 0% 1,054 2%
Segment
Income 101 94 7% 94 7%
Margin 9.4% 8.8% 0.6 pts 8.9% 0.5 pts
Backlog 786 776 1% 763 3%
* Backlog 786 718 9% 705 11%
Plumbing Products
Sales 455 459 -1% 437 4%
Segment Income 36 40 -10% 37 -3%
Margin 7.9% 8.7% -0.8 pts 8.5% -0.6 pts
Vehicle Control
Systems
Sales 265 296 -10% 274 -3%
Segment Income 46 44 5% 40 15%
Margin 17.4% 14.9% 2.5 pts 14.6% 2.8 pts
Backlog 364 409 -11% 373 -2%
Total Company
Sales 1,791 1,822 -2% 1,765 1%
Segment
Income 183 178 3% 171 7%
Margin 10.2% 9.8% 0.4 pts 9.7% 0.5 pts
* Backlog - 2000 has been adjusted to exclude backlog of dispositions.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
March 31, December 31,
2001 2000
Current assets
Cash and cash equivalents $78 $85
Accounts receivable 1,029 1,027
Inventories 688 606
Other current assets 159 161
Total current assets 1,954 1,879
Net facilities 1,345 1,383
Goodwill 927 935
Other assets 544 548
$4,770 $4,745
Current liabilities
Short-term debt $102 $96
Accounts payable 686 660
Accrued liabilities and taxes 1,030 1,051
Total current liabilities 1,818 1,807
Long-term debt 2,278 2,376
Other long-term liabilities
Reserve for postretirement
benefits 403 408
Deferred taxes on income 57 45
Other 512 502
Total liabilities 5,068 5,138
Stockholders' deficit
Common stock, capital surplus and other 662 610
Treasury stock (468) (453)
Accumulated deficit (173) (238)
Deferred Gain/(Loss) on hedge contracts (5) 0
Foreign currency translation effects (314) (312)
Total stockholders' deficit (298) (393)
$4,770 $4,745
