Magnetek: Q4 & Fiscal Year 2013 Results

Die untenstehende Meldung ist eine Original-Meldung des Unternehmens. Sie ist nicht von der ECOreporter.de-Redaktion bearbeitet. Die presserechtliche Verantwortlichkeit liegt bei dem meldenden Unternehmen.

Menomonee Falls, Wisconsin - Magnetek, Inc. (MAG):

Q4 Highlights

    Net sales of $25.2 million decreased 15% from last year’s fourth quarter, mainly due to lower sales into material handling markets. Q4 bookings of $26.3 million increased 6% over last year.
    Q4 net income from continuing operations was $0.7 million, or $.22 per share, compared to $0.8 million, or $.25 per share last year. Q4 adjusted EBITDA (see attached reconciliation) totaled nearly $3.0 million, or 11.7% of sales, compared to $4.7 million, or 15.8% of sales, for the same period last year.
    Cash balances totaled $15.2 million as of December 29, 2013. Liquidity remains strong despite Q4 cash contributions to pension plan assets of $8.9 million.

Fiscal Year 2013 Highlights

    FY 2013 sales totaled $103.3 million, a decrease of nearly 10% from the same period last year, mainly due to lower sales into material handling and mining markets, as well as the Company’s withdrawal from renewable energy markets.
    Adjusted EBITDA decreased to $12.5 million, or 12.1% of sales, from $17.9 million, or 15.7% of sales, in fiscal 2012.
    The Company’s pension obligation declined by $54 million during fiscal 2013 to $48 million as of December 29, 2013, from a combination of contributions to pension assets, rising interest rates, and positive asset returns.

Magnetek, Inc. (“Magnetek” or “the Company,” NASDAQ: MAG) today reported the results of its fourth quarter and 2013 fiscal year, ended December 29, 2013.

Fourth Quarter Results

In the fourth quarter of fiscal 2013, Magnetek recorded revenue of $25.2 million, a 15% decrease from the prior year fourth quarter, primarily reflecting lower sales of products for material handling applications, which decreased $4.2 million year-over-year to $18.6 million. Current year fourth quarter operating income was impacted by $0.4 million of unusual charges related to severance, professional fees, and finalization of the Company’s pension expense for fiscal 2013. Despite these charges, the Company’s continuing operations remained firmly profitable, with after-tax income of $0.7 million, or $.22 on a per share basis.

“We experienced continuing softness in our end markets during the fourth quarter, particularly in material handling markets, which we believe peaked at least in the near-term in the second half of 2012. The year-over-year decrease in material handling sales is representative of continuing economic uncertainties, which resulted in a lack of larger project business for us throughout much of 2013. Despite the sales decline, gross margins exceeded 34%, our continuing operations remained firmly profitable, and we continued to make solid progress in reducing our pension obligation,” said Peter McCormick, Magnetek’s president and chief executive officer.

Gross profit amounted to $8.7 million (34.3% of sales) in the fourth quarter of fiscal 2013 versus $9.4 million (31.6% of sales) in the last year’s fourth quarter. Prior year fourth quarter gross profit was impacted by non-cash impairment charges of $1.2 million related to the Company’s renewable energy fixed assets. Excluding the impact of the asset impairment charges, fourth quarter gross profit would have been $10.6 million, or 35.7% of sales.

Total operating expenses, consisting of research and development (“R&D”), pension expense and selling, general and administrative costs, were $7.7 million in the fourth quarter of fiscal 2013, compared to $8.2 million in the prior year fourth quarter. Compared to the prior year, current year fourth quarter operating expenses reflect lower volume-related sales and marketing expenses, lower R&D expenses, and lower pension expense.

Operating income in the fourth quarter of fiscal 2013 decreased to $1.0 million from $1.1 million for the same period last year. Income from continuing operations after provision for income taxes in the fourth quarter was $0.7 million, or $.22 per share, compared to $0.8 million, or $.25 per share, in the same period last year. Including the results of discontinued operations, the Company recorded net income of $.11 per share in the fourth quarter of fiscal 2013 versus $.31 per share in the fourth quarter of fiscal 2012.

Unrestricted cash balances decreased by $5.8 million during the fourth quarter to $15.0 million at December 29, 2013, after contributing $8.9 million during the quarter to the Company’s defined benefit pension plan. In the fourth quarter of fiscal 2013, the Company elected to voluntarily contribute $4.4 million to the pension plan which was scheduled to be contributed in the first quarter of fiscal 2014. As a result, the Company does not anticipate making a contribution to the pension plan during the first quarter of fiscal 2014.

Fiscal Year 2013 Results

For fiscal year 2013, the Company recorded revenue of $103.3 million, down 10% from $114.3 million in fiscal year 2012. The sales decrease was due to lower sales of products for material handling applications, which declined $4.4 million, or 5%, year-over-year, and mining applications, which declined $3.3 million, or 47%, year-over-year. In addition, sales of inverters for renewable energy applications also declined $2.8 million following the Company’s decision to no longer pursue business opportunities in renewable energy markets. Fiscal 2013 gross profit amounted to $35.3 million (34.2% of sales) versus $39.8 million (34.9% of sales) in the prior year. The year-over-year decrease in gross profit and gross margin as a percentage of sales was mainly related to lower sales volume in fiscal 2013.

Operating expenses totaled $30.5 million in fiscal 2013, a decrease of $1.3 million from $31.8 million in fiscal 2012, due mainly to lower R&D and pension expense, lower incentive compensation provisions, and lower volume-related selling expenses. Pension expense, which decreased by $0.6 million in fiscal 2013, was $6.4 million, representing approximately $1.90 on a per share, after-tax basis. The Company recorded income from continuing operations of $3.8 million, or $1.13 per share, versus prior year income from continuing operations of $6.9 million, or a $2.14 per share. The Company recorded a loss from discontinued operations of $0.6 million, or a $.19 loss per share in fiscal 2013, compared to income from discontinued operations of $5.7 million, or $1.76 per share, in fiscal 2012. Fiscal 2012 income from discontinued operations includes a gain of $5.0 million from a settlement agreement entered into by the Company to resolve a legal matter.

Including results of discontinued operations, the Company’s net income totaled $3.1 million, or $.94 per share, in fiscal 2013 compared to prior year income of $12.6 million, or $3.90 per share.

Cash balances decreased during fiscal 2013 by $13.7 million, after cash contributions of $24.9 million to the Company’s pension plan.

“We continued to focus on organic growth, asset management, and cash flow during 2013. Conditions in our end markets were not conducive to growth, and we experienced uneven demand throughout the year. In response to the continuing slow growth environment, we implemented a number of actions in terms of pricing, repositioning, and cost reductions during our third quarter to better assure acceptable levels of profit at existing sales volumes. We also improved our asset management as the year progressed, and generated sufficient cash to fund near-term growth initiatives and meet our pension obligations,” said Mr. McCormick. “Regarding our pension, we contributed nearly $25 million to plan assets during the year in an effort to improve the funded status of the plan, and we made meaningful progress toward that goal during fiscal 2013, aided by asset returns and interest rates increases in addition to our contributions. The improvement in our pension should favorably impact our earnings and cash flow going forward,” continued Mr. McCormick.

Operations and Outlook

Total bookings for the fourth quarter of fiscal 2013 were $26.3 million, resulting in a book-to-bill ratio for the quarter of 104%. Total Company order backlog was $12.8 million at December 29, 2013, comparable to the prior year order backlog of $13.1 million.

“Our level of business activity throughout fiscal 2013 was lower than during 2012, particularly in material handling and mining markets. In addition, our sales mix in 2013 didn’t include as many large scale projects. We expect these conditions to continue through the first half of 2014, although we have seen our quotation log for larger projects increase over the past couple of months,” said Mr. McCormick. “Our growth initiatives in 2014 are centered on a combination of innovative product offerings, market share gains, and entry into new markets. One area of growth for us has been our radio controls business, where our sales increased 15% year-over-year,” continued Mr. McCormick. “In addition, we launched a new line of regenerative drives for the material handling industry, which will provide end-users of these products with not only high performance but further energy savings. We’re targeting expansion of our share of AC controls for the elevator market, and in the mining area, we’ve made investments to expand into Asia and to reduce our dependence on the coal industry, but those efforts are typically longer-term in nature. Looking ahead, we continue to believe that we have great opportunity to enhance shareholder value through a combination of reliable profitability, consistent cash flow generation, and a further reduction in our pension obligation,” concluded Mr. McCormick.

Pension Update

As previously disclosed, Magnetek has an underfunded defined benefit pension plan that was frozen in 2003. Based mainly on the number of participants in the plan and the declining interest rate environment over the past decade, the Company has a fairly large underfunded pension liability, and annual pension expense and cash contributions to the pension plan have been significant for the past several years.

The Company’s non-cash pension expense for fiscal 2013 was $6.4 million, while the Company’s cash contributions to the pension plan were nearly $25 million. Returns on pension plan assets were 14.9% during fiscal 2013, and interest rates increased throughout the year, both of which favorably impacted the Company’s year-end pension plan measurement. As of the end of fiscal 2013, the Company measured its pension plan for accounting purposes using a discount rate assumption of 4.45%, up from 3.5% at the end of fiscal 2012. The combination of the higher discount rate, Company contributions, and better-than-expected returns on pension plan assets resulted in a $54 million decrease in the Company’s pension liability as of December 29, 2013, to $48 million. The pension liability entering fiscal 2013 was $102 million.

“Our pension situation has been quite challenging for some time now, consuming the majority of our cash flow for a number of years. Over the past 6 and ½ years since quarterly pension contributions began, we’ve generated about $81 million of adjusted EBITDA, of which we’ve contributed $75 million to our pension plan, an average of nearly $1 million per month,” said Marty Schwenner, Magnetek’s chief financial officer. “It’s very encouraging for us that at last we’re realizing some benefits from those contributions in the form of a lower pension liability, lower future pension expense, and projected lower future cash contributions. Of course, favorable asset returns during 2013 and the higher discount rate at the end of the year also played a role in improving our pension situation,” continued Mr. Schwenner. “Given the significant improvement in 2013, we’re now turning our attention to actions aimed at reducing some of the risk and volatility of our plan as additional steps toward our longer-term objective of transferring the entire plan to a third party through annuitization,” concluded Mr. Schwenner.

Non-cash GAAP pension expense for fiscal 2014 is expected to total $3.7 million, a decrease of approximately $2.7 million from fiscal 2013 pension expense levels, which represents an improvement in earnings of approximately $.80 on a per share basis. Fiscal 2014 pension contributions are expected to total approximately $15 million, while projected contributions for fiscal 2015 and 2016 are currently estimated at $7 million annually.


Contact:
Magnetek, Inc.
Marty Schwenner, 262-703-4282
[email protected]
Aktuell, seriös und kostenlos: Der ECOreporter-Newsletter. Seit 1999.
Nach oben scrollen
ECOreporter Journalistenpreise
Anmelden
x