Cooper Industries' Third Quarter Per Share Earnings Up 10 Percent
21 October 1999
Cooper Industries' Third Quarter Per Share Earnings Up 10 Percent; Strong Top-Line Growth in Electrical Products Drives Positive Results COOPER INDUSTRIES LOGO Cooper Industries' logo. (PRNewsFoto)[DM] HOUSTON, TX USA 05/13/1999
HOUSTON, Oct. 21 -- Cooper Industries, Inc. today
reported third-quarter earnings per share of 89 cents (assuming dilution), a
9.9 percent increase over third-quarter 1998 earnings of 81 cents per share.
Revenues for the third quarter 1999 were up 6.3 percent to $982.2 million
compared to $924.0 million for the same period last year. Net income for the
third quarter 1999 declined to $84.4 million from $93.2 million in the same
period last year due to the absence of $25.9 million of earnings from the
Automotive Products segment, which was sold in October of last year.
"Our third-quarter results clearly underscore the effectiveness of our
strategy to focus on higher growth, less volatile markets and to relentlessly
attack costs throughout all of our operations," said H. John Riley, Jr.,
chairman, president and chief executive officer, Cooper Industries, Inc. "We
believe that the actions we are taking to grow our Electrical Products
businesses, refine our Tools & Hardware enterprise and markedly reduce costs
will continue to enhance Cooper's profitability.
"Cooper achieved substantial top-line growth during the quarter in our
Electrical Products segment. Revenues were up in all of the Company's
Electrical Products businesses, led by significant growth in our lighting
operations," continued Riley. "This more than offset anticipated weakness in
our Tools & Hardware segment which is undergoing strategic consolidation in
the face of difficult market conditions."
Diluted earnings for the nine months ended September 30, 1999, rose by
6.5 percent to $2.61 per share compared to $2.45 per share for the same period
last year. Revenues for the nine-month period were up 3.4 percent to
$2,864 million compared to $2,769 million for the first nine months of 1998.
Net income for the nine months this year decreased to $248.0 million compared
to last year's nine-month net income of $291.2 million as a result of the
previously mentioned sale of the Automotive Products segment, which added
$84.2 million to net income, or 71 cents to earnings per share, during the
period. The majority of the earnings per share impact of the 1998 Automotive
Products segment sale was offset by the use of the sale proceeds to realign
the Company's capital structure through share repurchases and debt reduction.
For the first nine months of 1999, interest expense decreased 55 percent to
$39.1 million compared to $87.5 million last year, and diluted shares
decreased 20 percent to 95.0 million from 118.8 million last year.
Electrical Products
Third-quarter 1999 revenues from the Electrical Products segment increased
9 percent to $786.0 million from $724.0 million last year. Operating earnings
for the third quarter rose 8 percent to $133.8 million from $124.5 million for
the same period last year.
During the quarter, base business sales in Electrical Products increased
nearly 6 percent. This growth was bolstered by complementary acquisitions
that provided new markets and distribution channels, enhanced product
selections and increased opportunities for cost savings. Cooper acquired five
electrical products businesses this year. The largest, JSB Electrical, plc, a
European manufacturer of emergency lighting, fire detection and security
systems, was purchased in August.
Cooper's lighting fixture business, with double-digit growth during the
quarter, spearheaded solid results in the Electrical Products segment.
Cooper's circuit protection business also grew nicely during the quarter
through increased penetration into the expanding electronics marketplace.
Revenue from the Company's hazardous area construction materials business
showed signs of stabilizing during the quarter, despite continued weakness in
the unit's core energy and petrochemicals markets. Revenues from the
Company's power systems business approached more normal levels as the
operation continued to absorb the implementation of new business systems
technology.
Cooper continues to aggressively expand its Electrical Products
businesses. Recently, the Company announced that it had agreed to buy Regent
Lighting, a U.S. manufacturer of security lighting fixtures for the home
market. Earlier this week, Cooper announced the purchase of the electrical
enclosures business of Weidmuller UK Group Limited. Both businesses are
expected to have a favorable impact on results in 2000.
Continued actions to reduce costs, a disciplined approach to growth in key
markets and a broad range of high quality product offerings characterize
Cooper's Electrical Products segment, which currently accounts for 80 percent
of the Company's revenue stream.
Tools & Hardware
Third-quarter 1999 revenues in the Tools & Hardware segment were
$196.2 million compared to $200.0 million for the same period last year.
Operating earnings for the third quarter 1999 were $20.6 million compared to
$25.3 million for last year's third quarter.
As anticipated, weakness in the industrial hand tool, energy and aerospace
markets impacted Cooper's third quarter performance in the segment. During
the third quarter, the Company embarked on a significant restructuring effort
within its Tools business to leverage operational strengths and further reduce
costs. These actions, coupled with selective acquisitions, will position
Cooper's Tools & Hardware businesses for increased profitability over the next
six to twelve months.
"Cooper's performance in the third quarter remained on track and in line
with our expectations for the year," continued Riley. "We are beginning to
realize the benefits of our concerted efforts to streamline operations and
lower manufacturing costs. At the same time, we are taking actions to
leverage the Company's inherent strengths, which are considerable. We have
strong cash flow, well-recognized brand name products and a disciplined
approach to acquisitions through which we continue to grow our worldwide
customer base in our chosen markets.
"The momentum we attained in earlier quarters, combined with our solid
third-quarter results, positions us to achieve further earnings improvements
over the balance of the year," continued Riley. "Longer term, I am confident
that our current strategies will produce significant earnings gains and
increased shareholder value."
Cooper Industries, with 1998 revenues of $3.7 billion, is a worldwide
manufacturer of electrical products, tools and hardware. Additional
information about Cooper is available on the Company's Internet site:
http://www.cooperindustries.com.
Statements in this news release are forward-looking under the Private
Securities Litigation Reform Act of 1995. These statements are subject to
various risks and uncertainties, many of which are outside the control of the
Company, such as the level of market demand for the Company's products,
competitive pressures and future economic conditions. These factors are
discussed in the Company's 1998 Annual Report on Form 10-K.
Comparisons of 1999 and 1998 third-quarter and year-to-date results
follow.
CONSOLIDATED RESULTS OF OPERATIONS
Quarter Ended September 30,
1999 1998
(in millions where applicable)
Revenues $ 982.2 $ 924.0
Cost of sales 664.4 621.8
Selling and administrative expenses 160.8 151.0
Goodwill amortization 11.5 11.2
Interest expense 13.7 34.8
Continuing Income Before
Income Taxes 131.8 105.2
Income Taxes 47.4 37.9
Continuing Income 84.4 67.3
Discontinued operations, net of tax --- 25.9
Net Income(A) $ 84.4 $ 93.2
Net Income Per Common Share:
Basic
Continuing Operations $ .90 $ .59
Discontinued Operations --- .23
Net Income $ .90 $ .82
Diluted
Continuing Operations $ .89 $ .59
Discontinued Operations --- .22
Net Income $ .89 $ .81
Shares Utilized in Computation
of Income Per Common Share:
Basic 94.0 million 113.5 million
Diluted 95.1 million 114.7 million
PERCENTAGE OF REVENUES
Quarter Ended September 30,
1999 1998
Revenues 100.0% 100.0%
Cost of sales 67.6% 67.3%
Selling and administrative expenses 16.4% 16.3%
Continuing Income Before Income Taxes 13.4% 11.4%
Continuing Income 8.6% 7.3%
(Additional information follows)
(A) Net income is not comparable quarter-to-quarter due to the impact of
the sale of the Automotive Products business and the resulting use of
the proceeds to reduce debt and buy back shares.
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Quarter Ended September 30
Segment Information
Quarter Ended September 30,
1999 1998
(in millions)
Revenues:
Electrical Products $ 786.0 $ 724.0
Tools & Hardware 196.2 200.0
Total $ 982.2 $ 924.0
Segment Operating Earnings:
Electrical Products $ 133.8 $ 124.5
Tools & Hardware 20.6 25.3
Total 154.4 149.8
General Corporate expense 8.9 9.8
Interest expense 13.7 34.8
Consolidated income from continuing
operations before income taxes $ 131.8 $ 105.2
Quarter Ended September 30,
1999 1998
Return on Sales:
Electrical Products 17.0% 17.2%
Tools & Hardware 10.5% 12.7%
Total Segments 15.7% 16.2%
CONSOLIDATED RESULTS OF OPERATIONS
Nine Months Ended September 30,
1999 1998
(in millions where applicable)
Revenues $2,864.4 $2,769.3
Cost of sales 1,926.2 1,863.5
Selling and administrative expenses 473.7 462.5
Goodwill amortization 34.3 32.4
Nonrecurring charges 3.7 ---
Interest expense 39.1 87.5
Continuing Income Before
Income Taxes 387.4 323.4
Income Taxes 139.4 116.4
Continuing Income 248.0 207.0
Discontinued operations, net of tax --- 84.2
Net Income(A) $ 248.0 $ 291.2
Net Income Per Common Share:
Basic
Continuing Operations $ 2.64 $ 1.76
Discontinued Operations --- .72
Net Income $ 2.64 $ 2.48
Diluted
Continuing Operations $ 2.61 $ 1.74
Discontinued Operations --- .71
Net Income $ 2.61 $ 2.45
Shares Utilized in Computation
of Income Per Common Share:
Basic 94.1 million 117.2 million
Diluted 95.0 million 118.8 million
PERCENTAGE OF REVENUES
Nine Months Ended September 30,
1999 1998
Revenues 100.0% 100.0%
Cost of sales 67.2% 67.3%
Selling and administrative expenses 16.5% 16.7%
Continuing Income Before Income Taxes 13.5% 11.7%
Continuing Income 8.7% 7.5%
(Additional information follows)
(A) Net income is not comparable period-to-period due to the impact of
the sale of the Automotive Products business and the resulting use of
the proceeds to reduce debt and buy back shares.
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Nine Months Ended September 30
Segment Information
Nine Months Ended September 30,
1999 1998
(in millions)
Revenues:
Electrical Products $2,265.6 $2,153.9
Tools & Hardware 598.8 615.4
Total $2,864.4 $2,769.3
Segment Operating Earnings
Without Nonrecurring Items:
Electrical Products $ 386.1 $ 364.0
Tools & Hardware 73.0 85.0
Total 459.1 449.0
Segment Nonrecurring Items:
Electrical Products 3.0 ---
Tools & Hardware 1.5 ---
Total 4.5 ---
Segment Operating Earnings
With Nonrecurring Items:
Electrical Products 383.1 364.0
Tools & Hardware 71.5 85.0
Total segment operating earnings 454.6 449.0
General Corporate nonrecurring items (0.8) ---
General Corporate expense 28.9 38.1
Interest expense 39.1 87.5
Consolidated income from continuing
operations before income taxes $ 387.4 $ 323.4
Nine Months Ended September 30,
1999 1998
Return on Sales: (A)
Electrical Products 17.0% 16.9
Tools & Hardware 12.2% 13.8%
Total Segments 16.0% 16.2%
(A) Before Nonrecurring Items.
CONTACT: John Breed of Cooper Industries, 713-209-8835.