LAKE MARY, Fla., Jan. 26 /PRNewswire-FirstCall/ -- Bairnco
Corporation (NYSE:BZ) today reported improved sales but reduced
income from continuing operations for the fourth quarter 2005 as
compared to 2004. For the full year 2005, sales were relatively
unchanged and income from continuing operations was down compared
to 2004. Results were reduced by substantial relocation, closing
and start-up costs of $1,516,000 in 2005 and $1,310,000 in 2004.
Performance - Fourth Quarter 2005 Sales in the fourth quarter 2005
were $42,022,000, an increase of 3.6% from $40,544,000 in the
fourth quarter 2004. Arlon's Electronic Materials sales increased
20.8% on strong sales across all product lines. Arlon's Coated
Materials sales decreased 6.2% as foreign sales and certain
automotive and industrial markets have remained weak. Kasco sales
increased $78,000 to $11,213,000 from $11,135,000 in the fourth
quarter 2004. Kasco's North American sales continued to show growth
in service and repair revenue and equipment sales as well as
improvement in U.S. export markets, but this was offset by the
negative currency translation effect of the stronger U.S. dollar
versus the British pound and the euro. Gross profit remained
relatively unchanged at $11,630,000 as compared to $11,610,000 as a
result of higher relocation and closing costs in the fourth quarter
of 2005 versus 2004 as well as poor operating results from Arlon's
Coated Materials San Antonio facility. The gross profit margin as a
percent of sales decreased to 27.7% from 28.6%. Plant level gross
profit at the San Antonio facility improved to a profit of $100,000
from a loss of $300,000 in the third quarter 2005. Continued
improvements are expected in 2006. The transition of Kasco's U.S.
production and equipment to Mexico is complete. The costs of
relocation in the fourth quarter were $86,000. The China
manufacturing facility continued to progress but again had only a
minor impact on gross profit due to the delay in permitting and
licensing. There were no restructuring costs charged to gross
profit in the fourth quarter of 2004. Selling and administrative
expenses increased 1.3% to $10,329,000 from $10,194,000 in the
fourth quarter 2004. Included in selling and administrative
expenses in 2005 are $73,000 of relocation and start-up expenses
for the China manufacturing facility and $140,000 of redundancy
costs related to terminations in Kasco's French operations. 2004
included $53,000 of start-up expenses for the San Antonio facility.
As a percent of sales, selling and administrative expenses
decreased to 24.6% as compared to 25.1% in 2004. Operating profit
(refer to Segment Data table attached) was down 8.1% to $1,301,000
from $1,416,000 in the fourth quarter 2004. Arlon's Electronic
Materials operating profit increased 30.2% to $2,016,000 from
$1,548,000 on increased sales and improved factory performance.
Arlon's Coated Materials operating profit decreased 55.7% to
$228,000 from $515,000 on reduced sales, plant inefficiencies from
lower production volumes and increased selling expenses as the
returns on personnel investments have been slower than expected.
The San Antonio plant's results showed some improvement over last
year but still adversely affected the operating profit in both
quarters. The decrease in Kasco's operating profit of 52.7%, or
$298,000, is due to the $140,000 of redundancy costs at its French
operations, $86,000 of relocation and start-up expenses for Mexico
and certain factory inefficiencies associated with the new Mexico
plant that are not captured as part of the relocation and start-up
expenses. Net interest expense reflected income of $43,000 in 2005
as $65,000 of interest expense related to the construction of the
China facility and equipment was required to be capitalized. Fourth
quarter 2004 net interest expense was $18,000. The effective tax
rate for the fourth quarter 2005 was 35.0% as compared to 27.8% in
the fourth quarter 2004. The lower tax rate in 2004 reflects the
impact of the usage of a net operating loss carry forward from
Kasco's French operations. Income from continuing operations
decreased to $874,000 in 2005 from $1,874,000 in the fourth quarter
2004 including the gain on sale of facility of $790,000. Excluding
the gain on sale of facility, income from continuing operations
decreased 19.4% to $874,000 as compared to $1,084,000 in the fourth
quarter of 2004. Diluted earnings per common share from continuing
operations, which includes $.10 from the gain on sale of facility
for 2004, decreased to $.12 from $.24 in the fourth quarter 2004.
The Corporation repurchased 115,300 of its shares on the open
market during the fourth quarter of 2005 at a total cost of
$1,082,000. Performance - Year Ended December 31, 2005 Sales for
the year ended December 31, 2005 were relatively unchanged at
$165,900,000 from $165,496,000 in 2004. Arlon's Electronic
Materials sales increased 4.8% with increased activity in the
wireless telecommunications and certain industrial markets. Arlon's
Coated Materials sales decreased 4.9% due to weakness in certain
foreign and automotive markets and reduced industrial sales.
Kasco's sales increased 3.5% as compared to last year. Kasco's
North American sales were up 8.1% due to increased service and
repair revenues and equipment sales. Kasco's European operations'
sales were down slightly from the negative currency translation
effect of the stronger U.S. dollar versus the British pound and the
euro. Gross profit of $47,469,000 in 2005 was down slightly from
$47,884,000 in 2004 on flat sales. The gross profit margin as a
percent of sales decreased to 28.6% from 28.9%. Relocation and
closing costs were $1,127,000 in 2005 and $1,133,000 in 2004. These
costs do not reflect the inefficiencies at the new San Antonio
plant. Selling and administrative expenses increased 2.1% to
$41,878,000 from $41,023,000 in 2004 from increased sales and
start-up expenses. As a percent of sales, selling and
administrative expenses increased to 25.2% in 2005 as compared to
24.8% in 2004. 2005 includes $389,000 of increased expenses related
to the development of the new China plant and $140,000 of
redundancy costs related to terminations at Kasco's French
operations. 2004 includes $177,000 of expenses related to the
start-up of the San Antonio facility. Operating profit (refer to
Segment Data table attached) was down 18.5% to $5,591,000 from
$6,861,000 in 2004. Arlon's Electronic Materials operating profit
for 2005 includes $529,000 of start-up costs related to China.
Excluding these start-up costs, operating profit increased 9.7% to
$7,303,000 from $6,656,000 on increased sales and improved factory
performance. Arlon's Coated Materials operating profit decreased
14.2% to $2,232,000 from $2,602,000 in 2004. Excluding the
restructuring costs of $1.3 million for the San Antonio facility in
2004, Arlon's Coated Materials operating profit decreased 42.9% to
$2,232,000 from $3,912,000 on reduced sales, plant inefficiencies
from lower production volumes and increased selling expenses as the
returns on personnel investments have been slower than expected.
The results of the San Antonio facility depressed the operating
profit in both years. Kasco's operating profit decreased 77.7% to
$354,000 from $1,585,000 due to $987,000 of relocation and start-up
expenses for Mexico, $140,000 of redundancy costs at its French
operations and certain factory inefficiencies associated with the
new Mexico plant that are not captured as part of the relocation
and start-up expenses. Net interest expense decreased to $54,000 in
2005 as compared to $566,000 in 2004 due primarily to the reduced
outstanding borrowings. Income before income taxes in 2005
decreased 12.0% to $5,537,000 as compared to $6,295,000 in 2004,
excluding the gain on sale of facility. The effective tax rate in
2005 was 35.0% as compared to 31.7% in 2004. Income from continuing
operations decreased 16.8% to $3,600,000 as compared to $4,329,000
in 2004, excluding the gain on sale of facility of $790,000.
Diluted earnings per common share from continuing operations
decreased to $.47 in 2005 from $.68 in 2004 which includes $.10
from the gain on sale of facility. The Corporation repurchased
231,868 of its shares on the open market during 2005 at a total
cost of $2,349,000. In 2004, net income was $30,829,000 and diluted
earnings per common share were $4.07 reflecting the impact of the
$25,710,000 settlement of the NOL Lawsuit in the third quarter
2004. Outlook Management expects 2006 earnings to increase between
30% and 40%, weighted towards the second half of the year.
Continued gradual improvement in Arlon's Coated Materials San
Antonio plant should result in savings in excess of $1.5 million.
Kasco will not incur the $1.0 million of move and relocation costs
associated with moving the production operations to Mexico or the
$140,000 of redundancy costs incurred in France in the fourth
quarter. Kasco will begin to benefit from the lower cost Mexican
operation and the expanding service business. France will benefit
from the absence of redundancy costs and a lower cost base. The
adverse impact of material cost increases in the fourth quarter of
2005 will be offset by price increases early in 2006. The startup
on the new operation in China will incur expenses of approximately
$500,000 in the first half of the year plus there will be
inefficiencies as production shifts to the China plant during the
second half of the year. New products are expected to account for
an increasing share of sales. Continuous cost improvement programs
are ongoing. Stockholders' Meeting The Company also announced today
that the Annual Meeting of Stockholders in Bairnco Corporation will
be held on Thursday, April 20, 2006, at 9:00 a.m., local time, at
Bairnco's corporate offices, Lake Mary, Florida. The record date
for determination of Stockholders is March 6, 2006. "Safe Harbor"
Statement under the Private Securities Litigation Reform Act of
1995 Statements in this press release referring to the expected
future plans and performance of the Corporation are forward-looking
statements. Actual future results may differ materially from such
statements. Factors that could affect future performance include,
but are not limited to, changes in U.S. or international economic
or political conditions, such as inflation or fluctuations in
interest or foreign exchange rates; the impact on production output
and costs from the availability of energy sources and related
pricing; changes in the market for raw or packaging materials which
could impact the Corporation's manufacturing costs; changes in the
pricing of the products of the Corporation or its competitors; the
market demand and acceptance of the Corporation's existing and new
products; the impact of competitive products; changes in the
product mix; the loss of a significant customer or supplier;
production delays or inefficiencies; the ability to achieve
anticipated revenue growth, synergies and other cost savings in
connection with acquisitions and plant consolidations; the costs
and other effects of legal and administrative cases and
proceedings, settlements and investigations; the costs and other
effects of complying with environmental regulatory requirements;
disruptions in operations due to labor disputes; and losses due to
natural disasters where the Corporation is self-insured. While the
Corporation periodically reassesses material trends and
uncertainties affecting the Corporation's results of operations and
financial condition in connection with its preparation of its press
releases, the Corporation does not intend to review or revise any
particular forward-looking statement referenced herein in light of
future events. Bairnco Corporation is a diversified multinational
company that operates two distinct businesses -- Arlon (Electronic
Materials and Coated Materials segments) and Kasco (Replacement
Products and Services segment). Arlon's principal products include
high technology materials for the printed circuit board industry,
cast and calendered vinyl film systems, custom-engineered laminates
and special silicone rubber compounds and components. Kasco's
principal products include replacement band saw blades for cutting
meat, fish, wood and metal, and on site maintenance primarily in
the meat and deli departments. Kasco also distributes equipment to
the food industry in France. Comparative Consolidated Results of
Operations (Unaudited) Quarter Ended Year Ended Condensed Income
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Statements 2005 2004 2005 2004
Net sales $42,022,000 $40,544,000 $165,900,000 $165,496,000 Cost of
sales 30,392,000 28,934,000 118,431,000 117,612,000 Gross profit
11,630,000 11,610,000 47,469,000 47,884,000 Selling and
administrative expenses 10,329,000 10,194,000 41,878,000 41,023,000
Operating profit 1,301,000 1,416,000 5,591,000 6,861,000 Gain on
sale of facility -- (1,196,000) -- (1,196,000) Interest expense,
net (43,000) 18,000 54,000 566,000 Income before income taxes
1,344,000 2,594,000 5,537,000 7,491,000 Provision for income taxes
470,000 720,000 1,937,000 2,372,000 Income from continuing
operations 874,000 1,874,000 3,600,000 5,119,000 Income from spun
off subsidiary -- 1,015,000 -- 25,710,000 Net income $ 874,000 $
2,889,000 $ 3,600,000 $ 30,829,000 Basic Earnings Per Share of
Common Stock from Continuing Operations $ 0.12 $ 0.25 $ 0.49 $ 0.70
Basic Earnings per Share of Common Stock from Spun Off Subsidiary
-- 0.14 -- 3.49 Basic Earnings per Share of Common Stock $0.12
$0.39 $0.49 $4.19 Diluted Earnings per Share of Common Stock from
Continuing Operations $0.12 $0.24 $0.47 $0.68 Diluted Earnings per
Share of Common Stock from Spun Off Subsidiary -- 0.13 -- 3.40
Diluted Earnings per Share of Common Stock $ 0.12 $ 0.38 $ 0.47 $
4.07 Basic Average Common Shares 7,267,000 7,386,000 7,350,000
7,362,000 Diluted Average Common Shares 7,493,000 7,660,000
7,613,000 7,569,000 Condensed Balance Sheets (Unaudited) Dec. 31,
Dec. 31, 2005 2004 ASSETS Cash $ 5,313,000 $ 3,451,000 Accounts
receivable, net 25,713,000 24,912,000 Inventories 27,231,000
24,964,000 Other current assets 7,387,000 7,702,000 Total current
assets 65,644,000 61,029,000 Plant and equipment, net 34,373,000
34,429,000 Cost in excess of net assets of purchased businesses
14,439,000 14,542,000 Other assets 11,312,000 8,781,000 Total
$125,768,000 $118,781,000 LIABILITIES AND STOCKHOLDERS' INVESTMENT
Short-term debt $ 2,233,000 $ 1,030,000 Current maturities of
long-term debt 134,000 663,000 Accounts payable 12,051,000
10,601,000 Accrued expenses 9,406,000 10,515,000 Total current
liabilities 23,824,000 22,809,000 Long-term debt 7,069,000 231,000
Other liabilities 11,417,000 10,974,000 Stockholders' investment
83,458,000 84,767,000 Total $125,768,000 $118,781,000 Segment
Quarter Ended Year Ended December 31, December 31, Operating
Operating Profit Profit Net Sales (Loss) Net Sales (Loss) Assets
2005 Arlon Electronic Materials $14,449,000 $ 2,016,000 $
53,741,000 $ 6,774,000 $ 31,035,000 Arlon Coated Materials
16,360,000 228,000 68,218,000 2,232,000 45,932,000 Kasco 11,213,000
268,000 43,941,000 354,000 30,436,000 Headquarters -- (1,211,000)
-- (3,769,000) 18,365,000 Total $42,022,000 $ 1,301,000
$165,900,000 $ 5,591,000 $125,768,000 2004 Arlon Electronic
Materials $11,960,000 $ 1,548,000 $ 51,274,000 $ 6,656,000 $
24,283,000 Arlon Coated Materials 17,449,000 515,000 71,752,000
2,602,000 46,262,000 Kasco 11,135,000 566,000 42,470,000 1,585,000
30,290,000 Headquarters -- (1,213,000) -- (3,982,000) 17,946,000
Total $40,544,000 $ 1,416,000 $165,496,000 $ 6,861,000 $118,781,000
DATASOURCE: Bairnco Corporation CONTACT: Kenneth L. Bayne, Vice
President Finance, Bairnco Corporation, +1-407-875-2222, ext. 227
Web site: http://www.bairnco.com/
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