CLARCOR Inc. (NYSE: CLC):
Unaudited Second Quarter 2016
Highlights
(Amounts in millions, except per share
data and percentages)
Second Quarter Ended Six Months Ended
5/28/16 5/30/15 Change
5/28/2016 5/30/2015 Change Net
sales $ 365.0 $ 399.8 -9 % $ 681.2 $ 750.9
-9 % Operating profit 53.8 58.9 -9 % 85.7 98.1 -13 % Net
earnings - CLC 53.4 38.5 39 % 74.5 65.2 14 % Diluted EPS $ 1.09 $
0.76 43 % $ 1.52 $ 1.28 19 % Operating margin 14.7 %
14.7 % 0.0 pts 12.6 %
13.1 % -0.5 pts
CLARCOR Inc. (NYSE: CLC) reported that its second
quarter diluted earnings per share were $1.09, a $0.33 increase
from the second quarter of 2015. Higher diluted earnings per share
were driven by a $0.37 per diluted share benefit from the patent
litigation award received in the second quarter of 2016 offset by
an approximate $0.02 reduction from upfront expenses for cost
reduction initiatives incurred in the second quarter of 2016 and an
approximate $0.02 reduction from the disposition of the packaging
business, J.L. Clark, which was sold in June 2015. Excluding the
impact of the litigation award, the upfront expenses for cost
reduction initiatives, and the disposition of J.L. Clark, non-GAAP
adjusted diluted earnings per share were $0.73 in the second
quarter of 2016 and $0.74 in the second quarter of 2015, as
reflected in the table on the next page.
To allow investors to better compare and evaluate our historical
financial performance, we are also presenting non-GAAP adjusted
financial results in the table following this paragraph. Non-GAAP
adjusted financial results for the second quarter of 2016 exclude
the $27.3 million patent litigation award received from 3M Company
and $1.4 million of upfront expenses for cost reduction
initiatives, primarily in our Industrial/Environmental Filtration
segment. Non-GAAP adjusted financial results for the second quarter
of 2015 exclude operational results for J.L. Clark. Please refer to
pages 11 through 14 of this earnings release for reconciliations
and additional information with respect to non-GAAP adjusted
financial results for the second quarter and the first six months
of 2015 and 2016.
Non-GAAP Adjusted Financial
Results:
Second Quarter Ended Six Months Ended
5/28/16 5/30/15 Change
5/28/2016 5/30/2015 Change
Adjusted net sales $ 365.0 $ 380.0 -4 % $ 681.2
$ 715.3 -5 % Adjusted operating profit 55.2 57.2 -4 %
87.9 95.9 -8 % Adjusted net earnings - CLC 36.1 37.4 -3 % 57.8 63.9
-9 % Adjusted diluted EPS $ 0.73 $ 0.74 -1 % $ 1.18 $ 1.25 -6 %
Adjusted operating margin 15.1 % 15.0 %
0.1 pts 12.9 % 13.4 % -0.5 pts
Chris Conway, CLARCOR’s Chairman, President and Chief Executive
Officer, commented, “Our second quarter diluted earnings per share
increased $0.33 from the second quarter of 2015 primarily driven by
the 3M patent litigation settlement award, and our second quarter
non-GAAP adjusted diluted earnings per share and operating margin
were consistent with last year’s second quarter despite continuing
top-line pressures from the same challenging end-markets that
negatively impacted net sales in the first quarter of 2016 and the
second half of 2015--notably weak demand for heavy-duty, off-road
fuel filtration products sold into the agricultural and
construction equipment markets and lower capital vessel activity in
the natural gas filtration market. In general, we believe we are
seeing stabilization in the agricultural and construction equipment
markets, but we continue to operate in an uncertain environment in
our natural gas filtration business. On a consolidated basis,
second quarter net sales declined 9% from last year’s second
quarter including 5% pursuant to the J.L. Clark disposition, 3% due
to organic sales declines primarily driven by challenges in the
aforementioned end-markets and 1% due to lower average foreign
currency exchange rates.
“The $7 million, or 4%, decline in net sales in our
Engine/Mobile Filtration segment from last year’s second quarter
was partially driven by lower average foreign currency exchange
rates which negatively influenced net sales by $2 million, or 1%.
The remaining $5 million reduction was primarily due to a decline
in off-road, fuel filtration product sales to the agricultural and
construction equipment markets. Consistent with our comments at the
end of the first quarter, although demand visibility in our
off-road fuel filtration markets remains challenging, we believe
that sales momentum in these markets has somewhat stabilized from
the end of last year. Sales of heavy-duty engine filtration
products into our U.S. aftermarket declined approximately 3% from
last year’s second quarter. This reduction was driven primarily by
lower second quarter sales to a significant retail filtration
customer obtained at the beginning of 2015 which contributed
additional sales in last year’s second quarter as the result of an
initial sales channel fill. Lower sales in the markets noted above
compared to last year’s second quarter were partially offset by
higher export sales and heavy-duty engine filtration sales in
Europe.
“The $8 million, or 4%, net sales reduction in our
Industrial/Environmental Filtration segment from last year’s second
quarter was partially driven by lower average foreign currency
exchange rates which negatively influenced net sales by $2 million,
or 1%. The remaining $6 million reduction was primarily the result
of lower natural gas and industrial air filtration sales, partially
offset by higher HVAC and gas turbine filtration sales in addition
to additional sales resulting from the TDC acquisition completed in
the first quarter of 2016. Natural gas filtration sales declined
approximately $13 million, or 19%, from last year’s second quarter
as lower capital vessel sales were partially offset by an increase
in aftermarket filtration sales. Almost 80% of the year-over-year
decline in natural gas vessel sales was driven by activity in the
U.S., where we benefited from natural gas shale extraction
infrastructure projects in the second quarter of 2015. Sales of
HVAC filtration products increased $6 million, or 20%, from last
year’s second quarter primarily due to higher sales into the Middle
East, and HVAC filtration sales to traditional commercial and
industrial customers also increased 5% due to continued success in
capturing market share. Net sales into our gas turbine filtration
market increased $3 million, or 11%, from last year’s second
quarter as aftermarket sales increased 22% while first-fit sales
were relatively flat.
“Our second quarter operating margin remained relatively
consistent with last year’s second quarter, as lower gross margin
percentage was offset by lower selling and administrative expenses
as a percentage of net sales. Lower gross margin percentage was
primarily due to unfavorable product mix--including lower sales of
higher margin heavy-duty, off-road fuel filtration products into
the agricultural and construction equipment markets--and lower
absorption of fixed manufacturing costs from lower net sales.
Selling and administrative expenses declined approximately $7
million from the second quarter of 2015 including an estimated $3
million as the result of cost reduction initiatives, $2 million as
the result of the J.L. Clark disposition and $4 million from lower
stock compensation and other expenses, partially offset by $2
million additional expense related to growth initiatives including
research & development and information technology. Upfront
expense of $1.4 million for cost reduction initiatives incurred in
the second quarter was primarily recorded in cost of sales and was
related to the exit of an HVAC facility in the U.S. and severance
and other employee termination benefit costs pursuant to reductions
in force. We believe we are on track to realize in excess of $20
million of cost savings in cost of sales and selling and
administrative expenses in the aggregate in 2016 as a result of
implemented cost reduction initiatives, and we continue to evaluate
other cost reduction initiatives--including potential facility
consolidations--which we believe would likely favorably impact
costs beginning in fiscal year 2017.”
2016 Guidance
We are maintaining our consolidated diluted earnings per share
guidance between $2.60 and $2.80 and our consolidated net sales
guidance between $1,375 million and $1,415 million. We are reducing
our consolidated operating margin guidance range from 14.1% to
14.7% in our previous guidance to the range of 13.9% to 14.5%. Our
2016 diluted earnings per share guidance does not include costs
that we may incur in 2016 related to any potential facility
consolidations or any other restructuring or cost savings
initiatives (including the $2.1 million in upfront expenses from
cost reduction initiatives incurred in the first six months of
2016) or the $27.3 million patent litigation award received in the
second quarter of 2016.
Our 2016 estimated net sales comparison and operating margin by
reporting segment and on a consolidated basis (with underlying 2015
consolidated net sales adjusted to remove net sales from the J.L.
Clark business and 2016 operating margin adjusted to exclude the
expenses related to restructuring and cost savings initiatives
similarly excluded from our diluted earnings per share guidance as
on the previous page) are as follows:
2016 Estimated 2016 Estimated Sales
Decline Operating Margin Engine/Mobile Filtration
-5.5% to -1.5% 18.0% to 18.6% Industrial/Environmental Filtration
-3.8% to -1.8% 11.0% to 11.6% CLARCOR -4.5% to -1.5% 13.9% to 14.5%
Consolidated sales guidance for 2016 remains unchanged from our
previous guidance. However, the composition of expected 2016 net
sales between our two reporting segments has shifted from our
previous guidance. We have increased our sales guidance for our
Engine/Mobile Filtration segment by approximately $6 million, or
1.0%, at the mid-point primarily due to higher expectations for
second half sales in several international markets. We have lowered
our sales guidance for our Industrial/Environmental Filtration
segment by approximately $6 million, or 0.8%, at the mid-point,
primarily due to anticipated continued pressures in our natural gas
filtration market and recent headwinds in some of our industrial
liquid filtration markets, which we anticipate will be partially
offset by improved sales expectations in our HVAC filtration
markets. Due to the sales mix shift from higher margin natural gas
and industrial liquid filtration markets to the lower margin HVAC
filtration market, our expected full year operating margin for the
Industrial/Environmental Filtration segment was lowered from our
previous guidance at the mid-point by approximately 0.3 percentage
points. Our expected full year operating margin guidance for the
Engine/Mobile Filtration segment has remained unchanged.
Our 2016 earnings guidance includes approximately $7.0 million
of net interest and other expense. We project 2016 cash from
operations to be between $200 million and $220 million (excluding
after-tax proceeds from the patent litigation award). We expect
capital expenditures to be between $45 million and $55 million, our
effective tax rate to be between 30.8% and 31.2%, and 49.0 million
average diluted shares outstanding.
CLARCOR will be holding a conference call to discuss the second
quarter 2016 results at 10:00 a.m. CT on June 16, 2016. Interested
parties can listen to the conference call at www.clarcor.com or http://public.viavid.com/index.php?id=119057. A
replay will be available on these websites and also at 877-870-5176
or 858-384-5517 by providing confirmation code 4164181. The replay
will be available through June 30, 2016 by telephone and for 30
days on the internet.
CLARCOR is based in Franklin, Tennessee, and is a diversified
marketer and manufacturer of mobile, industrial and environmental
filtration products sold in domestic and international markets.
Common shares of CLARCOR are traded on the New York Stock Exchange
under the symbol CLC.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements made in this press release other than
statements of historical fact, are forward-looking statements.
These statements may be identified from use of the words “may,”
“should,” “could,” “potential,” “continue,” “plan,” “forecast,”
“estimate,” “project,” “believe,” “intent,” “anticipate,” “expect,”
“target,” “is likely,” “will,” or the negative of these terms, and
similar expressions. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements may include, among other
things: statements and assumptions relating to anticipated future
performance and results of operations, including the anticipated
2016 performance of the Company and each of its segments, our
projections with respect to 2016 sales comparisons and 2016
operating margin for the Company and each of its segments, our
projections with respect to 2016 diluted earnings per share, our
projections with respect to 2016 cash from operations (excluding
after-tax proceeds from the patent litigation settlement), 2016
capital expenditures, 2016 effective tax rate, 2016 interest
expense and 2016 average diluted shares outstanding; statements
regarding potential additional costs we may incur related to any
potential facility consolidations or other restructuring and cost
reduction initiatives; statements regarding our belief that we are
on track to realize in excess of $20.0 million of cost savings in
cost of sales and selling and administrative expenses in the
aggregate in fiscal 2016 as a result of implemented cost reduction
initiatives; statements regarding our belief that other cost
reduction initiatives, including potential facility consolidations,
would likely favorably impact costs beginning in fiscal year 2017;
statements regarding our belief that we are seeing stabilization in
the agricultural and construction equipment markets; statements
regarding our belief that we continue to operate in an uncertain
environment in our natural gas filtration business; statements
regarding our belief that, although demand visibility in our
off-road fuel filtration markets remains challenging, sales
momentum in these markets has somewhat stabilized from the end of
last year; statements regarding anticipated continued pressures in
our natural gas filtration market; statements regarding recent
headwinds in some of our industrial liquid filtration markets,
which we anticipate will be partially offset by improved sales
expectations in our HVAC filtration markets; and any other
statements or assumptions that are not historical facts. The
Company believes that its expectations are based on reasonable
assumptions. However, these forward-looking statements involve
known and unknown risks, uncertainties and other important factors
that could cause the Company's actual results, performance or
achievements, or industry results, to differ materially from the
Company's expectations of future results, performance or
achievements expressed or implied by these forward-looking
statements. The Company's past results of operations do not
necessarily indicate its future results. The Company’s future
results may differ materially from the Company’s past results as a
result of various risks and uncertainties, including, but not
limited to, risks associated with global and national macroeconomic
pressures, trends with respect to the health of the markets we
serve including with respect to challenging market conditions in
various markets in the Engine/Mobile Filtration segment and the
Industrial/Environmental Filtration segment, our ability to execute
upon long-term strategic growth initiatives, our ability to execute
upon any potential facility consolidations or other cost reduction
and/or restructuring initiatives (including that the costs
associated with such initiatives may be greater than anticipated,
that we may be unable to realize anticipated cost savings or other
contemplated benefits in connection with such initiatives, and that
such initiatives may have an adverse impact on our performance),
customer concentration issues in certain geographic locations and
in respect of certain of our businesses, our ability to integrate
the businesses we have acquired, currency fluctuations,
particularly increases or decreases in the U.S. dollar against
other currencies, commodity price increases and/or limited
availability of raw materials and component products, including
steel, compliance costs associated with environmental laws and
regulations, political factors, our international operations,
highly competitive markets, governmental laws and
regulations, potential information systems interruptions and
intrusions, potential global events resulting in instability and
unpredictability in the world’s markets, including financial
bailouts of sovereign nations, political changes, military and
terrorist activities, health outbreaks and other factors, changes
in accounting standards or adoption of new accounting standards,
adverse effects of natural disasters, legal challenges with respect
to intellectual property, product liability exposure, changes in
tax rates or exposure to additional income tax liabilities,
potential labor disruptions, the risks discussed in the “Risk
Factors” section of the Company’s Annual Report on Form 10-K for
the fiscal year 2015 filed on January 22, 2016, and other risks
detailed from time to time in the Company's filings with the
Securities and Exchange Commission. You should not place undue
reliance on any forward-looking statements. These statements speak
only as of the date of this press release. Except as otherwise
required by applicable laws, the Company undertakes no obligation
to publicly update or revise any forward-looking or other
statements included in this press release, whether as a result of
new information, future events, changed circumstances or any other
reason.
TABLES FOLLOW
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER
RESULTS CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in thousands, except share
data)
Three Months Ended Six Months Ended May 28, May 30,
May 28, May 30, 2016 2015 2016 2015 Net sales $ 364,968 $
399,799 $ 681,240 $ 750,922 Cost of sales 243,107 266,189
458,478 504,337 Gross profit 121,861
133,610 222,762 246,585 Selling and administrative expenses
68,077 74,667 137,019 148,449
Operating profit 53,784 58,943 85,743 98,136
Other income (expense): Interest expense (1,869 )
(1,556 ) (3,981 ) (2,627 ) Interest income 130 90 259 231 Other,
net 26,934 (422 ) 27,448 (538 ) 25,195 (1,888
) 23,726 (2,934 ) Earnings before income taxes 78,979
57,055 109,469 95,202 Provision for income taxes 25,608
18,482 34,908 29,892 Net
earnings 53,371 38,573 74,561 65,310
Net earnings attributable to
noncontrolling interests, net of tax
(17 ) (76 ) (44 ) (104 ) Net earnings attributable to
CLARCOR Inc. $ 53,354 $ 38,497 $ 74,517 $
65,206 Net earnings per share attributable to CLARCOR
Inc. - Basic $ 1.10 $ 0.77 $ 1.53 $ 1.30
Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 1.09 $ 0.76 $ 1.52 $ 1.28
Weighted average number of shares outstanding - Basic
48,714,109 50,209,215 48,758,579 50,232,565
Weighted average number of shares outstanding - Diluted
49,153,624 50,791,198 49,128,974 50,791,840
Dividends paid per share $ 0.2200 $ 0.2000
$ 0.4400 $ 0.4000
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continued CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
May 28, 2016 November 28, 2015
ASSETS Current assets:
Cash and cash equivalents $ 117,599 $ 101,529 Accounts receivable,
less allowance for losses of $12,846 and $14,765, respectively
251,177 258,280 Inventories 253,857 274,825 Income taxes receivable
— 3,781 Prepaid expenses and other current assets 18,859
26,380 Total current assets 641,492 664,795
Property, plant and equipment, at cost, less accumulated
depreciation of $296,676 and $286,335, respectively 298,712 301,019
Asset held for sale 533 533 Goodwill 511,483 506,265 Acquired
intangible assets, less accumulated amortization 323,946 329,155
Deferred income taxes 3,535 3,651 Other noncurrent assets 10,256
13,038 Total assets $ 1,789,957 $ 1,818,456
LIABILITIES Current liabilities: Current portion of
long-term debt $ 12,771 $ 7,788 Accounts payable 85,930 87,546
Accrued liabilities 87,970 106,410 Income taxes payable 9,098
1,956 Total current liabilities 195,769
203,700 Long-term debt, less current portion 329,795
397,368 Long-term pension and postretirement healthcare benefits
liabilities 30,412 31,577 Deferred income taxes 75,443 64,908 Other
long-term liabilities 14,452 10,438 Total liabilities
645,871 707,991
SHAREHOLDERS' EQUITY
Capital stock 48,752 49,111 Capital in excess of par value 9,654 —
Accumulated other comprehensive loss (90,172 ) (88,052 ) Retained
earnings 1,175,169 1,148,510 Total CLARCOR Inc.
equity 1,143,403 1,109,569 Noncontrolling interests
683 896 Total shareholders' equity 1,144,086
1,110,465 Total liabilities and shareholders' equity $
1,789,957 $ 1,818,456
CLARCOR INC.
2016 UNAUDITED SECOND QUARTER RESULTS, continued
CONSOLIDATED CONDENSED CASH
FLOWS
(Dollars in thousands)
Six Months Ended May 28, 2016 May 30, 2015
Cash flows from operating
activities:
Net earnings $ 74,561 $ 65,310 Depreciation 16,799 15,583
Amortization 12,395 12,523 Other noncash items 221 104 Net loss
(gain) on disposition of assets 769 (1,418 ) Stock-based
compensation expense 4,335 6,994 Excess tax benefit from
stock-based compensation (923 ) (995 ) Changes in assets and
liabilities 47,819 (30,871 ) Net cash provided by operating
activities 155,976 67,230
Cash flows from
investing activities: Restricted cash (165 ) — Business
acquisitions, net of cash acquired (19,166 ) (20,881 ) Additions to
plant assets (12,415 ) (37,992 ) Proceeds from disposition of plant
assets 257 4,792 Investment in affiliates — (525 )
Net cash used in investing activities
(31,489 ) (54,606 )
Cash flows from financing
activities: Net (payments) borrowings on revolving credit
facility (60,000 ) 15,000 Payments on term loan facility (2,500 ) —
Payments on long-term debt (146 ) (8,536 ) Sale of capital stock
under stock option and employee purchase plans 16,083 5,360
Acquisition of noncontrolling interest — (1,239 ) Payments for
repurchase of common stock (38,211 ) (16,110 ) Excess tax benefit
from stock-based compensation 923 995 Dividend paid to
noncontrolling interests (172 ) (206 ) Cash dividends paid (21,503
) (20,124 ) Net cash used in financing activities (105,526 )
(24,860 ) Net effect of exchange rate changes on cash (2,891 ) 9
Net change in cash and cash equivalents 16,070 (12,227 )
Cash and cash equivalents, beginning of period 101,529
94,064 Cash and cash equivalents, end of period $ 117,599
$ 81,837
Cash paid during the period
for: Interest $ 3,103 $ 2,478 Income taxes, net
of refunds $ 11,921 $ 26,505
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continued QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
Three Months Ended Six Months Ended May
28, May 30, May 28, May 30,
2016 2015 2016 2015 Net sales by
segment: Engine/Mobile Filtration $ 154,019 $ 161,290 $ 288,573
$ 305,748 Industrial/Environmental Filtration 210,949 218,676
392,667 409,592 Packaging — 19,833 — 35,582
$ 364,968 $ 399,799 $ 681,240 $ 750,922
Operating profit by segment: Engine/Mobile
Filtration $ 29,501 $ 30,564 $ 48,568 $ 55,310
Industrial/Environmental Filtration 24,283 26,604 37,175 40,612
Packaging — 1,775 — 2,214
$ 53,784 $ 58,943 $ 85,743 $ 98,136
Operating margin by segment: Engine/Mobile Filtration
19.2 % 18.9 % 16.8 % 18.1 % Industrial/Environmental Filtration
11.5 % 12.2 % 9.5 % 9.9 % Packaging — % 8.9 % — % 6.2 % 14.7 % 14.7
% 12.6 % 13.1 %
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continuedReconciliation of Second Quarter 2016 GAAP
Financial Results to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP
operating profit, non-GAAP other, net, non-GAAP other income
(expense), non-GAAP earnings before income taxes, non-GAAP
provision for income taxes, non-GAAP net earnings, non-GAAP basic
and diluted earnings per share, non-GAAP gross margin percentage,
non-GAAP selling and administrative expenses as a percentage of net
sales and non-GAAP operating margin, for the quarter ended May 28,
2016. These non-GAAP financial measures are not in accordance with,
or an alternative for, generally accepted accounting principles in
the United States. The GAAP measures most directly comparable to
these non-GAAP measures are cost of sales, gross profit, selling
and administrative expenses, operating profit, other, net, other
income (expense), earnings before income taxes, provision for
income taxes, net earnings, basic and diluted earnings per share,
gross margin percentage, selling and administrative expenses as a
percentage of net sales and operating margin, respectively.
The quarter ended May 28, 2016 non-GAAP financial measures
provided in this release exclude the patent litigation award
received from 3M Company, upfront expenses for cost reduction
initiatives including costs associated with the exit of an HVAC
filtration facility in the U.S. and severance and other employee
termination benefit costs pursuant to reductions in force. Although
these financial measures excluding these items in the quarter ended
May 28, 2016 are not measures of financial performance under GAAP,
the Company believes that providing these non-GAAP financial
measures better enables investors to understand and evaluate the
Company's historical and prospective operating performance. In
addition, the Company believes that removing the impact of these
items provides a more comparable measure of the changes in these
financial measures for the quarter ended May 28, 2016 compared to
the quarter ended May 30, 2015.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
Upfront
Second Second Patent
Expenses for
Quarter 2016 Quarter 2016 Litigation
Cost Reduction
Non-GAAP
(Dollars in thousands, except per share
data)
GAAP Award Initiatives Adjusted
Net sales $ 364,968 $ — $ — $ 364,968 Cost of sales 243,107
— (1,175 ) 1 241,932 Gross profit 121,861 — 1,175
123,036 Selling and administrative expenses 68,077 —
(206 ) 1 67,871 Operating profit 53,784 —
1,381 55,165 Other income (expense): Interest expense
(1,869 ) — —
(1,869
) Interest income 130 — — 130 Other, net 26,934 (27,250 ) —
(316 ) 25,195 (27,250 ) — (2,055 ) Earnings
before income taxes 78,979 (27,250 ) 1,381 53,110 Provision for
income taxes 25,608 (9,102 ) 483 16,989 Net
earnings 53,371 (18,148 ) 898 36,121
Net earnings attributable to
noncontrolling interests, net of tax
(17 ) — — (17 )
Net earnings attributable to CLARCOR
Inc.
$ 53,354 $ (18,148 ) $ 898 $ 36,104 Net
earnings per share attributable to CLARCOR Inc. - Basic $ 1.10
$ (0.37 ) $ 0.02 $ 0.74 Net earnings per share
attributable to CLARCOR Inc. - Diluted $ 1.09 $ (0.37 ) $
0.02 $ 0.73 Gross margin percentage 33.4 % — % 0.3 %
33.7 % Selling and administrative expenses as a percentage of net
sales 18.7 % — % (0.1 )% 18.6 % Operating margin 14.7 % — % 0.4 %
15.1 %
1 - Upfront expenses for cost reduction
initiatives incurred in the second quarter of 2016 as noted
above.
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continuedReconciliation of Second Quarter 2015 GAAP
Financial Results to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP net sales, non-GAAP cost of
sales, non-GAAP gross profit, non-GAAP selling and administrative
expenses, non-GAAP operating profit, non-GAAP earnings before
income taxes, non-GAAP provision for income taxes, non-GAAP net
earnings, non-GAAP basic and diluted earnings per share, non-GAAP
gross margin percentage, non-GAAP selling and administrative
expenses as a percentage of net sales and non-GAAP operating
margin, for the quarter ended May 30, 2015. These non-GAAP
financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in the United States.
The GAAP measures most directly comparable to these non-GAAP
measures are net sales, cost of sales, gross profit, selling and
administrative expenses, operating profit, earnings before income
taxes, provision for income taxes, net earnings, basic and diluted
earnings per share, gross margin percentage, selling and
administrative expenses as a percentage of net sales and operating
margin, respectively.
The quarter ended May 30, 2015 non-GAAP financial measures
provided in this release exclude the financial results of our J.L.
Clark packaging business disposed of during the third quarter of
2015. Although these financial measures excluding the financial
results of our J.L. Clark packaging business in the quarter ended
May 30, 2015 are not measures of financial performance under GAAP,
the Company believes that providing these non-GAAP financial
measures better enables investors to understand and evaluate the
Company's historical and prospective operating performance. In
addition, the Company believes that removing the impact of the
financial results of our J.L. Clark packaging business provides a
more comparable measure of the changes in these financial measures
for the quarter ended May 30, 2015 compared to the quarter ended
May 28, 2016.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
Second Second Quarter 2015
Quarter 2015 J.L. Clark Non-GAAP
(Dollars in thousands, except per share
data)
GAAP Disposition Adjusted Net sales $
399,799 $ (19,833 ) 1 $ 379,966 Cost of sales 266,189
(15,944 ) 1 250,245 Gross profit 133,610 (3,889 ) 129,721
Selling and administrative expenses 74,667 (2,114 ) 1 72,553
Operating profit 58,943 (1,775 ) 57,168 Other
income (expense): Interest expense (1,556 ) — (1,556 ) Interest
income 90 — 90 Other, net (422 ) — (422 ) (1,888 ) —
(1,888 ) Earnings before income taxes 57,055 (1,775 ) 55,280
Provision for income taxes 18,482 (616 ) 17,866 Net
earnings 38,573 (1,159 ) 37,414
Net earnings attributable to
noncontrolling interests, net of tax
(76 ) — (76 )
Net earnings attributable to CLARCOR
Inc.
$ 38,497 $ (1,159 ) $ 37,338 Net earnings per share
attributable to CLARCOR Inc. - Basic $ 0.77 $ (0.02 ) $ 0.75
Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 0.76 $ (0.02 ) $ 0.74 Gross margin
percentage 33.4 % 0.7 % 34.1 % Selling and administrative expenses
as a percentage of net sales 18.7 % 0.4 % 19.1 % Operating margin
14.7 % 0.3 % 15.0 %
1 - Second quarter 2015 J.L. Clark
results.
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continuedReconciliation of First Six Months 2016 GAAP
Financial Results to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP
operating profit, non-GAAP other, net, non-GAAP other income
(expense), non-GAAP earnings before income taxes, non-GAAP
provision for income taxes, non-GAAP net earnings, non-GAAP basic
and diluted earnings per share, non-GAAP gross margin percentage,
non-GAAP selling and administrative expenses as a percentage of net
sales and non-GAAP operating margin, for the first six months ended
May 28, 2016. These non-GAAP financial measures are not in
accordance with, or an alternative for, generally accepted
accounting principles in the United States. The GAAP measures most
directly comparable to these non-GAAP measures are cost of sales,
gross profit, selling and administrative expenses, operating
profit, other, net, other income (expense), earnings before income
taxes, provision for income taxes, net earnings, basic and diluted
earnings per share, gross margin percentage, selling and
administrative expenses as a percentage of net sales and operating
margin, respectively.
The first six months ended May 28, 2016 non-GAAP financial
measures provided in this release exclude the patent litigation
award received from 3M Company, upfront expenses for cost reduction
initiatives including lease termination payments related to our
exit of a natural gas filtration vessel manufacturing facility in
Australia, costs associated with the exit of an HVAC filtration
facility in the U.S., and severance and other employee termination
benefit costs pursuant to reductions in force. Although these
financial measures excluding these items in the first six months
ended May 28, 2016 are not measures of financial performance under
GAAP, the Company believes that providing these non-GAAP financial
measures better enables investors to understand and evaluate the
Company's historical and prospective operating performance. In
addition, the Company believes that removing the impact of these
items provides a more comparable measure of the changes in these
financial measures for the first six months ended May 28, 2016
compared to the first six months ended May 30, 2015.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
Upfront
First Six First Six Patent
Expenses for
Months 2016 Months 2016 Litigation
Cost Reduction
Non-GAAP
(Dollars in thousands, except per share
data)
GAAP Award Initiatives Adjusted
Net sales $ 681,240 $ — $ — $ 681,240 Cost of sales 458,478
— (1,901 ) 1 456,577
Gross profit
222,762 — 1,901 224,663 Selling and administrative expenses 137,019
— (240 ) 1 136,779 Operating profit 85,743
— 2,141 87,884 Other income (expense):
Interest expense (3,981 ) — — (3,981 ) Interest income 259 — — 259
Other, net 27,448 (27,250 ) — 198 23,726
(27,250 ) — (3,524 ) Earnings before income taxes
109,469 (27,250 ) 2,141 84,360 Provision for income taxes 34,908
(9,102 ) 749 26,555 Net earnings 74,561
(18,148 ) 1,392 57,805
Net earnings attributable to
noncontrolling interests, net of tax
(44 ) — — (44 )
Net earnings attributable to CLARCOR
Inc.
$ 74,517 $ (18,148 ) $ 1,392 $ 57,761 Net
earnings per share attributable to CLARCOR Inc. - Basic $ 1.53
$ (0.37 ) $ 0.03 $ 1.19 Net earnings per share
attributable to CLARCOR Inc. - Diluted $ 1.52 $ (0.37 ) $
0.03 $ 1.18 Gross margin percentage 32.7 % 0.0 % 0.3
% 33.0 % Selling and administrative expenses as a percentage of net
sales 20.1 % 0.0 % (0.0)% 20.1 % Operating margin 12.6 % 0.0 % 0.3
% 12.9 %
1 - Upfront expenses for cost reduction
initiatives incurred in the first six months of 2016 as noted
above.
CLARCOR INC. 2016 UNAUDITED SECOND QUARTER RESULTS,
continuedReconciliation of First Six Months 2015 GAAP
Financial Results to Non-GAAP Adjusted Results
In addition to the GAAP results, this earnings release presents
information with respect to non-GAAP net sales, non-GAAP cost of
sales, non-GAAP gross profit, non-GAAP selling and administrative
expenses, non-GAAP operating profit, non-GAAP earnings before
income taxes, non-GAAP provision for income taxes, non-GAAP net
earnings, non-GAAP basic and diluted earnings per share, non-GAAP
gross margin percentage, non-GAAP selling and administrative
expenses as a percentage of net sales and non-GAAP operating
margin, for the first six months ended May 30, 2015. These non-GAAP
financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in the United States.
The GAAP measures most directly comparable to these non-GAAP
measures are net sales, cost of sales, gross profit, selling and
administrative expenses, operating profit, earnings before income
taxes, provision for income taxes, net earnings, basic and diluted
earnings per share, gross margin percentage, selling and
administrative expenses as a percentage of net sales and operating
margin, respectively.
The first six months ended May 30, 2015 non-GAAP financial
measures provided in this release exclude the financial results of
our J.L. Clark packaging business disposed of during the third
quarter of 2015. Although these financial measures excluding the
financial results of our J.L. Clark packaging business in the first
six months ended May 30, 2015 are not measures of financial
performance under GAAP, the Company believes that providing these
non-GAAP financial measures better enables investors to understand
and evaluate the Company's historical and prospective operating
performance. In addition, the Company believes that removing the
impact of the financial results of our J.L. Clark packaging
business provides a more comparable measure of the changes in these
financial measures for the first six months ended May 30, 2015
compared to the first six months ended May 28, 2016.
These non-GAAP financial measures may have limitations as
analytical tools, and management does not intend these measures to
be considered in isolation or as a substitute for the related GAAP
measures. Following are reconciliations to the most comparable GAAP
financial measures of these non-GAAP financial measures.
First Six First Six Months 2015
Months 2015 J.L. Clark Non-GAAP
(Dollars in thousands, except per share
data)
GAAP Disposition Adjusted Net sales $
750,922 $ (35,582 ) 1 $ 715,340 Cost of sales 504,337
(29,366 ) 1 474,971 Gross profit 246,585 (6,216 ) 240,369
Selling and administrative expenses 148,449 (4,002 ) 1
144,447 Operating profit 98,136 (2,214 ) 95,922
Other income (expense): Interest expense (2,627 ) — (2,627 )
Interest income 231 — 231 Other, net (538 ) — (538 ) (2,934
) — (2,934 ) Earnings before income taxes 95,202 (2,214 )
92,988 Provision for income taxes 29,892 (768 ) 29,124
Net earnings 65,310 (1,446 ) 63,864
Net earnings attributable to
noncontrolling interests, net of tax
(104 ) — (104 )
Net earnings attributable to CLARCOR
Inc.
$ 65,206 $ (1,446 ) $ 63,760 Net earnings per share
attributable to CLARCOR Inc. - Basic $ 1.30 $ (0.03 ) $ 1.27
Net earnings per share attributable to CLARCOR Inc. -
Diluted $ 1.28 $ (0.03 ) $ 1.25 Gross margin
percentage 32.8 % 0.8 % 33.6 % Selling and administrative expenses
as a percentage of net sales 19.8 % 0.4 % 20.2 % Operating margin
13.1 % 0.3 % 13.4 %
1 - First six months 2015 J.L. Clark
results.
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version on businesswire.com: http://www.businesswire.com/news/home/20160615006584/en/
CLARCOR Inc.David J. Fallon, 615-771-3100Chief Financial
Officer
Clarcor (NYSE:CLC)
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