LAKE MARY, Fla., July 25 /PRNewswire-FirstCall/ -- Bairnco
Corporation (NYSE:BZ) today reported improved operating results for
the second quarter 2006 as compared to the same period last year,
excluding the impact of professional fees related to the Steel
Partners Tender Offer ("Offer Fees"). Sales were up 2.1% to
$44,994,000 and, excluding the Offer Fees, net income increased
$23,000 to $1,532,000 and diluted earnings per share increased 5.0%
to $0.21. Net income and diluted earnings per share were $1,349,000
and $0.18, respectively, taking the Offer Fees into consideration.
Bairnco Chairman and Chief Executive Officer Luke E. Fichthorn III
stated, "We are pleased with both our improved operating results
for the second quarter of 2006 and the solid momentum we are
experiencing in many key areas of our business. We are seeing
positive sales trends in our Arlon Electronic Materials and Kasco
divisions, and our initiatives to consolidate our operations and
reduce operating costs have positioned us well to improve quality
and capitalize on compelling market trends, which we believe will
ultimately drive long term growth and enhance shareholder returns.
We are also continuing to actively evaluate potential acquisition
opportunities." Total sales in the second quarter 2006 were
$44,994,000, as compared to $44,088,000 in 2005. Segment results
were as follows: * Arlon's Electronic Materials sales increased
8.7% from the second quarter 2005 due primarily to continuing
strong activity in the electronics markets. * Arlon's Coated
Materials sales decreased 3.7% from the second quarter 2005 as
domestic graphics markets have softened and certain automotive and
industrial markets have remained weak. * Kasco's sales increased
3.4% from the second quarter 2005 due to continued growth in North
American service and repair revenue. Kasco's European sales
improved slightly in local currency but were relatively unchanged
in US dollars due to the change in exchange rates. Gross profit
increased 0.4% to $13,250,000 in the second quarter 2006 from
$13,199,000 in 2005. Gross profit improvement from increased sales
and production volumes at Arlon's Electronic Materials and Kasco's
lower cost Mexican manufacturing, continued cost reductions and
productivity improvements at the San Antonio plant and reduced
relocation and closing costs in the second quarter of 2006 versus
2005, was significantly offset by Arlon's Coated Materials reduced
margins due to the change in mix in the graphics business as
corporate re-imaging was replaced by lower margin print products.
Gross profit margin as a percent of sales decreased to 29.4% in the
second quarter 2006 from 29.9% in 2005, reflecting the mix change
in Arlon's Coated Materials graphics business. Second quarter 2006
gross profit was also reduced by $66,000 due to start-up expenses
related to Arlon's China manufacturing facility. Second quarter
2005 gross profit reflects $248,000 in relocation costs related to
the move of Kasco's manufacturing operations to Mexico, including
the curtailment costs of Kasco's hourly employees' (union) pension
plan, and some China related expenses. Selling and administrative
expenses for the second quarter 2006, excluding the Offer Fees,
were down slightly to $10,836,000. Included in the Company's second
quarter 2006 selling and administrative expenses is $66,000 of
start-up expenses for the China manufacturing facility. 2005
selling and administrative expenses included $147,000 of start-up
expenses related to the China manufacturing facility. The Offer
Fees were $298,000 in the second quarter 2006 bringing total
selling and administrative expenses to $11,134,000. Net interest
expense was $42,000 in 2006 as compared to $33,000 in 2005 due to
increased outstanding borrowings. The effective tax rate for both
the second quarter 2006 and 2005 was 35.0%. Net income decreased
10.6% to $1,349,000 in 2006, as compared to $1,509,000 in the
second quarter of 2005 and diluted earnings per common share
decreased 10.0% to $0.18 in 2006 from $0.20 in 2005. Excluding the
Offer Fees and the related tax benefit, net income in the second
quarter 2006 increased $23,000 to $1,532,000 and diluted earnings
per share increased 5.0% to $0.21. Sales for the first six months
of 2006 increased 4.3% to $87,852,000 from $84,210,000 in 2005
primarily due the solid growth in the Arlon Electronic Materials
segment. Gross profit improved 3.0% to $26,030,000 from $25,282,000
due to strong operating results from Arlon's Electronic Materials,
$450,000 of reduced relocation and plant development costs and cost
improvements at the San Antonio plant which were materially reduced
by lower margins in the Coated Products Segment due to the lower
margins attributable to the product mix shift. Selling and
administrative expenses in the first half of 2006 increased 3.9% to
$22,201,000, including $298,000 of Offer Fees, from $21,360,000 in
2005. Net income decreased 6.0% to $2,361,000 in the first half of
2006 from $2,511,000 in 2005 and diluted earnings per share
decreased 3.0% to $0.32 in 2006 from $0.33 in 2005. Excluding the
Offer Fees, net income in the first half of 2006 increased $33,000
to $2,544,000 and diluted earnings per share increased 3.0% to
$0.34. The Company reaffirmed its guidance as previously stated in
the Company's 14D-9 filing with the Securities and Exchange
Commission on July 6, 2006, including earnings per share for the
second half of 2006 which is expected to be in the range of $0.26
to $0.34, excluding the Offer Fees, as compared to $0.15 for the
same period last year. For the full year 2006, excluding the Offer
Fees, operating profits are expected to be in the range of $7.25
million to $7.75 million, and earnings per share are expected to
grow to between $0.56 and $0.64. "Safe Harbor" Statement under the
Private Securities 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 US 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 product mix;
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; 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. Reconciliation of GAAP to Non-GAAP
Financial Measures Management believes that excluding the unusual
Offer Fees more clearly reflects the performance of the Company and
allows the Company's stockholders to compare comparable financial
statistics across periods. The following tables reconcile certain
Generally Accepted Accounting Principles ("GAAP") financial
measures with the non-GAAP financial measures discussed above for
the quarters and six month periods ended July 1, 2006 and July 2,
2005. The non-GAAP financial measures exclude the Offer Fees.
Quarter Ended July 1, 2006 July 2, 2005 Selling and administrative
expenses $11,134,000 $10,845,000 Offer Fees 298,000 -- Selling and
administrative expenses before Offer Fees $10,836,000 $10,845,000
Operating profit $2,116,000 $2,354,000 Offer Fees 298,000 --
Operating profit before Offer Fees $2,414,000 $2,354,000 Net income
$1,349,000 $1,509,000 Offer Fees, net of $115,000 of tax benefit
183,000 -- Net income before Offer Fees, net of tax $1,532,000
$1,509,000 Diluted Earnings per Share of Common Stock $0.18 $0.20
Impact on diluted earnings per share of common stock of Offer Fees
0.03 -- Diluted earnings per share of common stock before Offer
Fees $0.21 $0.20 Six Months Ended July 1, 2006 July 2, 2005 Selling
and administrative expenses $22,201,000 $21,360,000 Offer Fees
298,000 -- Selling and administrative expenses before Offer Fees
$21,903,000 $21,360,000 Operating profit $3,829,000 $3,922,000
Offer Fees 298,000 -- Operating profit before Offer Fees $4,127,000
$3,922,000 Net income $2,361,000 $2,511,000 Offer Fees, net of
$115,000 of tax benefit 183,000 -- Net income before Offer Fees,
net of tax $2,544,000 $2,511,000 Diluted Earnings per Share of
Common Stock $0.32 $0.33 Impact on diluted earnings per share of
common stock of Offer Fees 0.02 -- Diluted earnings per share of
common stock before Offer Fees $0.34 $0.33 Comparative Results of
Operations (Unaudited) Quarter Ended Six Months Ended Condensed
Income July 1, July 2, July 1, July 2, Statements 2006 2005 2006
2005 Net sales $44,994,000 $44,088,000 $87,852,000 $84,210,000 Cost
of sales 31,744,000 30,889,000 61,822,000 58,928,000 Gross profit
13,250,000 13,199,000 26,030,000 25,282,000 Selling and
administrative expenses 11,134,000 10,845,000 22,201,000 21,360,000
Operating profit 2,116,000 2,354,000 3,829,000 3,922,000 Interest
expense, net 42,000 33,000 178,000 59,000 Income before income
taxes 2,074,000 2,321,000 3,651,000 3,863,000 Provision for income
taxes 725,000 812,000 1,290,000 1,352,000 Net income $1,349,000
$1,509,000 $2,361,000 $2,511,000 Basic Earnings per Share of Common
Stock $0.19 $0.20 $0.33 $0.34 Diluted Earnings per Share of Common
Stock $0.18 $0.20 $0.32 $0.33 Basic Average Common Shares 7,150,000
7,398,000 7,169,000 7,397,000 Diluted Average Common Shares
7,375,000 7,654,000 7,386,000 7,666,000 Condensed Balance Sheets
July 1, Dec 31, 2006 2005 (Unaudited) ASSETS Cash $1,008,000
$5,313,000 Accounts receivable, net 30,474,000 25,713,000
Inventories 29,872,000 27,231,000 Other current assets 6,429,000
7,387,000 Total current assets 67,783,000 65,644,000 Plant and
equipment, net 35,067,000 34,373,000 Cost in excess of net assets
of purchased businesses, net 14,533,000 14,439,000 Other assets
11,039,000 11,312,000 Total Assets $128,422,000 $125,768,000
LIABILITIES AND STOCKHOLDERS' INVESTMENT Short-term debt $1,237,000
$2,233,000 Current maturities of long-term debt 100,000 134,000
Accounts payable 10,882,000 12,051,000 Accrued expenses 11,355,000
9,406,000 Total current liabilities 23,574,000 23,824,000 Long-term
debt 9,990,000 7,069,000 Other liabilities 10,242,000 11,417,000
Stockholders' investment 84,616,000 83,458,000 Total Liabilities
and Stockholders' Investment $128,422,000 $125,768,000 DATASOURCE:
Bairnco Corporation CONTACT: Kenneth L. Bayne, ext. 227, or Larry
C. Maingot, ext. 230, both of Bairnco Corporation, +1-407-875-2222
Web site: http://www.bairnco.com/
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