Hawk Corporation (NYSE Amex: HWK) announced today that sales for
the second quarter ended June 30, 2010 were $61.7 million, an
increase of $22.6 million or 57.8%, from $39.1 million in the
comparable prior year quarter. Net sales for the six months ended
June 30, 2010 were $115.1 million, an increase of 38.0%, from $83.4
million in the comparable prior year period. The economic recovery
and new product introductions have been the principal drivers of
the revenue increases. Sales in all of the Company's end markets,
with the exception of defense, showed improvement during the
quarter. Sales to the defense market were down during the second
quarter of 2010 compared to 2009, as the Company's largest defense
customer continued to align its inventory levels during the period.
Income from operations for the second quarter ended June 30,
2010 was $11.2 million, an increase of $10.0 million, or 833.3%,
from $1.2 million in the prior year period. Income from operations
was favorably impacted by the sales volume increase and the
absorption of manufacturing costs as a result of higher production
volumes in all of Hawk's manufacturing facilities. This increase
was partially offset by the effect of foreign currency exchange
rates and product mix during the quarter. For the six month period
ended June 30, 2010, the Company reported income from operations of
$19.5 million, an increase of $13.8 million, or 242.1%, from $5.7
million in the comparable prior year period.
For the second quarter 2010, the Company reported net income of
$5.5 million, or $0.68 per diluted share, an increase of $6.0
million compared to a net loss of $0.5 million, or $0.07 per
diluted share, in the second quarter of 2009. For the six months
ended June 30, 2010, the Company reported net income of $9.3
million, or $1.13 per diluted share, an increase of $8.3 million,
or 830.0%, compared to $1.0 million, or $0.11 per diluted share,
during the comparable prior year period.
Ronald E. Weinberg, Hawk's Chairman and CEO, said, "We are
extremely pleased with our second quarter and year to date results.
Our second quarter 2010 net sales were up 57.8%, reflecting the
continuing success of our new product sales initiatives and the
strength in our end markets further indicating the global economy
is moving in the right direction. Based on our current financial
guidance, we anticipate that this momentum will continue through
the second half of the year. Additionally, we have been able to
take advantage of increased global production volumes which allowed
us to report operating margins of 18.2% in the second quarter of
2010 compared to 3.1% in the second quarter of 2009. Our cash flow
from operations improved to $10.9 million for the six months ended
June 30, 2010 compared to $1.1 million for the same period last
year, as we benefitted from the structural cost changes in our
operations that were implemented during 2009."
Working Capital and Liquidity Cash and
short-term investments decreased $22.4 million to $60.7 million as
of June 30, 2010, compared to $83.1 million as of December 31,
2009. The decrease in cash and short-term investments was due
primarily to the repurchase of $20.0 million of the Company's
senior notes and $7.2 million of the Company's common stock during
the six months ended June 30, 2010. As a result of the significant
volume increases during the period, the Company experienced an
increase in its accounts receivable and inventory levels at June
30, 2010. The Company believes that the quality of its accounts
receivable remains strong.
Mr. Weinberg continued, "As a result of our strong cash flows
during the period, we are pleased to have been able to reduce our
debt by $20.0 million and repurchase an additional $7.2 million of
our common stock during the six months ended June 30, 2010."
During the six months ended June 30, 2010, the Company spent
$2.1 million on capital expenditures compared to $4.8 million
during the comparable period of 2009. Additionally, the Company
spent $0.5 million for the acquisition of a business in China
during the six months ended June 30, 2010. Depreciation was $3.7
million for the six months ended June 30, 2010 compared to $3.6
million for the six months ended June 30, 2009.
Business Outlook The Company is
reaffirming its previously issued ranges for revenues and operating
income which was announced on June 23, 2010. The Company is
projecting 2010 full year net sales of between $225.0 million and
$232.0 million. In addition, the Company has announced that it
expects 2010 full year operating income to be between $32.0 million
and $35.0 million.
The Company's previously provided capital spending guidance for
2010 remains unchanged at a range of between $7.0 and $9.0
million.
The Company Hawk Corporation is a leading
supplier of friction materials for brakes, clutches and
transmissions used in airplanes, trucks, construction and mining
equipment, farm equipment, recreational and performance automotive
vehicles. The Company also manufactures fuel cell components.
Headquartered in Cleveland, Ohio, Hawk has approximately 1,250
employees at 12 manufacturing, research, sales and international
rep offices and administrative sites in 7 countries.
Forward-Looking Statements This press
release includes forward-looking statements concerning sales,
operating earnings and effective tax rates. These forward-looking
statements are based upon management's expectations and beliefs
concerning future events. Forward-looking statements are
necessarily subject to risks, uncertainties and other factors, many
of which are outside the control of the Company and which could
cause actual results to differ materially from such statements.
These risks and uncertainties include, but are not limited to: the
Company's ability to enter into or consummate a transaction as a
result of the exploration and consideration of possible strategic
alternatives, including a sale of the Company or the Company's
ability to enhance stockholder value through such process; the
effect of regional and global economic and industrial market
conditions, including the Company's expectations concerning the
impact on the markets it serves; the effect of conditions in the
financial and credit markets and their impact on the Company and
its customers and suppliers; the Company's ability to execute its
business plan to meet its sales, operating income, cash flow and
capital expenditure guidance; the Company's ability to utilize its
cash and short-term investments; the impact on the Company's gross
profit margins as a result of changes in product mix; the Company's
vulnerability to industry conditions and competition; the effect of
any interruption in the Company's supply of raw materials,
including steel, or a substantial increase in the price of raw
materials; work stoppages by union employees; ongoing capital
expenditures and investment in research and development; compliance
with government regulations; compliance with environmental and
health and safety laws and regulations; the effect on the Company's
international operations of unexpected changes in legal and
regulatory requirements, export restrictions, currency controls,
tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, political and economic instability,
difficulty in accounts receivable collection and potentially
adverse tax consequences; the effect of foreign currency exchange
rates on the Company's non-U.S. sales; reliance for a significant
portion of the Company's total revenues on a limited number of
large organizations and the continuity of business relationships
with major customers; the loss of key personnel; significant
changes in discount rates and actual investment return on the
Company's pension assets and control by existing preferred
stockholders.
Actual results and events may differ significantly from those
projected in the forward-looking statements. Reference is made to
Hawk's filings with the Securities and Exchange Commission,
including its annual report on Form 10-K for the year ended
December 31, 2009, its quarterly reports on Form 10-Q, and other
periodic filings, for a description of the foregoing and other
factors that could cause actual results to differ materially from
those in the forward-looking statements. Any forward-looking
statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Investor Conference Call A live Internet
broadcast of the Company's conference call discussing quarterly and
year to date results can be accessed via the investor relations
page on Hawk Corporation's web site (www.hawkcorp.com) on Thursday,
August 5, 2010 at 11:00 a.m. Eastern time. An archive of the call
will be available shortly after the end of the conference call on
the investor relations page of the Company's web site.
HAWK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
----------------------- -----------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 61,679 $ 39,077 $ 115,088 $ 83,362
Cost of sales 41,306 30,686 77,493 62,973
----------- ----------- ----------- -----------
Gross profit 20,373 8,391 37,595 20,389
Operating expenses:
Selling, technical and
administrative expenses 9,008 7,007 17,862 14,459
Amortization of finite-
lived intangible assets 138 139 277 277
----------- ----------- ----------- -----------
Total operating expenses 9,146 7,146 18,139 14,736
----------- ----------- ----------- -----------
Income from operations 11,227 1,245 19,456 5,653
Interest expense (1,672) (2,017) (3,519) (4,030)
Interest income 77 106 145 269
Other income (expense),
net (1,001) 167 (1,533) 123
----------- ----------- ----------- -----------
Income from continuing
operations, before income
taxes 8,631 (499) 14,549 2,015
Income tax provision 3,149 (127) 5,262 803
----------- ----------- ----------- -----------
Income from continuing
operations, after income
taxes 5,482 (372) 9,287 1,212
Loss from discontinued
operations, after income
taxes 17 (164) (11) (174)
----------- ----------- ----------- -----------
Net income $ 5,499 $ (536) $ 9,276 $ 1,038
=========== =========== =========== ===========
Earnings per share:
Diluted earnings per
share:
Income from continuing
operations, after
income taxes $ 0.67 $ (0.05) $ 1.13 $ 0.13
Discontinued
operations, after
income taxes - (0.02) - (0.02)
----------- ----------- ----------- -----------
Net earnings per diluted
share (1) $ 0.68 $ (0.07) $ 1.13 $ 0.11
=========== =========== =========== ===========
Average shares and
equivalents outstanding -
diluted 8,068 8,174 8,157 8,693
=========== =========== =========== ===========
(1) The summation to net earnings per diluted share does not
mathematically calculate due to rounding.
HAWK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands)
June 30 December 31
2010 2009
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 55,858 $ 47,206
Short-term investments 4,883 35,930
Accounts receivable, net 37,161 27,578
Inventories 34,130 27,495
Deferred income taxes 1,204 1,305
Other current assets 5,813 5,686
------------ ------------
Total current assets 139,049 145,200
Property, plant and equipment, net 44,382 47,096
Other intangible assets 5,738 6,015
Other assets 6,228 6,181
------------ ------------
Total assets $ 195,397 $ 204,492
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 28,987 $ 16,861
Other accrued expenses 18,307 15,033
------------ ------------
Total current liabilities 47,294 31,894
Long-term debt, net 56,050 77,090
Deferred income taxes 2,845 2,873
Other liabilities 13,888 15,165
Shareholders' equity 75,320 77,470
------------ ------------
Total liabilities and shareholders'
equity $ 195,397 $ 204,492
============ ============
Contact Information Joseph J. Levanduski Senior Vice
President - Chief Financial Officer (216) 861-3553 Thomas A.
Gilbride Vice President - Finance (216) 861-3553 Investor
Relations Contact Information John Baldissera BPC Financial
Marketing (800) 368-1217 Hawk Corporation is online at:
www.hawkcorp.com
Hawk (AMEX:HWK)
Historical Stock Chart
From Aug 2024 to Sep 2024
Hawk (AMEX:HWK)
Historical Stock Chart
From Sep 2023 to Sep 2024