Baldor Electric Company Announces 1st Quarter 2003 Results and Discussion
FORT SMITH, Ark., April 10 -- Baldor Electric Company markets, designs, and manufactures electric motors, drives, and generators and is based in Fort Smith, Arkansas. Today Baldor announced the results of the first quarter of 2003.
(in thousands except per 1st Quarter
share data) 2003 2002
13 weeks ended %
Mar 29 2003 Mar 30 2002 Change
Net Sales $137,389 $133,510 3%
Cost of Sales 99,899 96,354
Gross Profit 37,490 37,156 1%
SG&A 26,006 26,580
Operating Profit 11,484 10,576 9%
Other (Income) Expense 372 715
Profit Sharing 1,352 1,245
Earnings Before Income Taxes 9,760 8,616 13%
Income Taxes 3,625 3,189
Net Earnings $6,135 $5,427 13%
Earnings Per Share - Diluted $0.181 $0.157 15%
Dividends Per Share $0.13 $0.13 0%
Average Shares Outstanding 33,882 34,557 - 2%
In commenting on the results, John McFarland, President and CEO, stated, "First quarter sales increased 3% and net earnings increased 13% over 2002 levels while earnings per share increased 15% to $0.18. Our operating margin of 8.4% was an improvement over the 7.9% margin of the first quarter 2002 and a continuing improvement over the fourth quarter of 2002." (see graph - http://www.baldor.com/images/03Q1_Operating_Margin_Chart.jpg )
McFarland also commented, "Our strong balance sheet allowed us to repurchase 1.5 million shares of our stock and acquire Energy Dynamics, Inc., a generator manufacturer, during the quarter."
R. S. Boreham, Jr., Chairman, commented, "We are pleased this was our second quarter in a row with increasing sales. Our success with new products and new customers makes us believe we are gaining market share in this tough environment."
We have prepared answers to a list of questions often asked by shareholders.
Q ... How were incoming orders for the first quarter of 2003?
We were encouraged by incoming order rates during the first two months of the quarter; however, we saw a slow down during the last few weeks of the quarter. Compared to the first quarter of 2002, incoming orders were flat. Compared with the fourth quarter of 2002, incoming orders were up 3%.
Q ... How does your balance sheet look?
Even though we invested $35 million in the repurchase of 1.5 million shares of our stock and the acquisition of Energy Dynamics, Inc., our balance sheet remains strong with nearly $30 million in cash. We also improved cash flow from operations through better management of our receivables and inventories compared to last year.
Balance Sheet Summary
(in thousands) 2003 2002 2002
Mar 29 2003 Dec 28 2002 Mar 30 2002
Cash & marketable securities $29,260 $51,670 $24,527
Receivables 88,151 83,630 90,430
Inventories 115,837 113,140 123,571
Working capital 172,117 199,023 188,740
Long-term debt 105,564 105,285 107,172
Shareholders' equity 250,533 274,598 265,380
Cash flow from operations
(Year to date) 16,167 53,574 5,185
Q ... Where did you see improvement during the quarter?
Motor and drives sales were relatively flat compared to the first quarter 2002. Generator sales increased from $3.3 million to $6.0 million not including the acquisition of Energy Dynamics, Inc.
Q ... How are inventory levels?
We have improved our raw material inventory turns and our finished goods inventories are in excellent shape. We believe our customers continue to maintain low inventories.
Q ... How is the drives business?
Profitability, quality, and inventory management all improved during the quarter. Incoming orders have also recently improved, including an order for a single motor control valued at $165,000, our largest ever.
Q ... Did you introduce any new products this quarter?
On February 13, 2003, we announced the purchase of Energy Dynamics, Inc., of Mukwonago, Wisconsin. This acquisition added generators in the 200 kW to 2000 kW sizes. Combined with Opti-GEN(R), our new standby generator utilizing adjustable speed technology, we now offer a broad range of generators from 1.3 kW to 2000 kW. We recently introduced a new linear hybrid stepper motor that provides improved performance at a lower cost. In addition, we continue to expand our capability to manufacture custom motors and drives.
Q ... Are you continuing to gain new customers?
We were very successful last year in gaining new customers. This success has continued in the first quarter of 2003 and causes us to believe we are gaining market share.
Q ... When will you update us again?
Our annual Shareholders' Meeting will be held at 10:30 a.m. (local time) on Saturday, May 3, 2003, at the Fort Smith Convention Center. The Shareholders' Meeting will be immediately followed by a Trade Show that will showcase all of our facilities and product lines, as well as many of our key suppliers, in one location. Please call 479-646-4711 to RSVP your attendance.
This document contains statements that are forward-looking, i.e. not historical facts. The forward-looking statements (generally identified by words or phrases indicating a projection or future expectation such as "outlook", "optimistic", "trends", "expect(s)", "assuming", "expectations", "forecasted", "estimates", "expected") are based on the Company's current expectations and some of them are subject to risks and uncertainties. Accordingly, you are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) changes in economic conditions, (ii) developments or new initiatives by our competitors in the markets in which we compete, (iii) fluctuations in the costs of select raw materials, (iv) the success in increasing sales and maintaining or improving the operating margins of the Company, and (v) other factors including those identified in the Company's filings made from time-to-time with the Securities and Exchange Commission. These statements should be read in conjunction with the Company's most recent annual report (as well as the Company's Form 10-K and other reports filed with the Securities and Exchange Commission) containing a discussion of the Company's business and of various factors that may affect it.