MEMPHIS, Tenn.--(BUSINESS WIRE)--Thomas & Betts Corporation (NYSE:TNB) today reported third quarter 2011 net sales of $604.4 million, up 16.6% compared to 2010 including $23.2 million in sales from acquisitions. Excluding acquisitions, year-over-year sales increased over 12%. Increased volumes in the Electrical and HVAC segments and increased pricing across all segments accounted for approximately 9% of the sales growth. Favorable foreign currency contributed approximately 3%.
Net earnings from continuing operations increased 32% in the third quarter, to $54.3 million or $1.03 per diluted share. In addition to favorable operating results, net earnings benefited from a reduction in the annual effective tax rate. In 2010, third quarter net earnings were $41.1 million or $0.78 per diluted share, excluding a $1.5 million benefit ($0.03 per share) from the release of an income tax reserve.
“Thomas & Betts delivered outstanding financial performance in the third quarter with solid organic sales growth and operating earnings above the high end of our guidance,” said Dominic J. Pileggi, chairman and chief executive officer. “In addition, our Electrical segment reported a record-high segment margin of 21%, exceeding the previous record set in the third quarter of 2008. We are especially pleased with our performance given the overall negative sentiment in the market around second half 2011 economic growth.
“Our sales performance in the quarter reflects continued refinement of our vertical market strategy and the op-ex driven demand for our portfolio of essential, non-discretionary products. We are also pleased to have again achieved price / cost parity in the quarter through a combination of continuous productivity improvements and strategic pricing actions.”
SEGMENT HIGHLIGHTS:
Consolidated segment earnings were $118.7 million, up 14.6% compared to the third quarter of 2010. As a percent of sales, segment earnings were 19.6%, slightly lower than the prior year as a result of the routine purchase accounting impact of the current quarter HVAC acquisition and lower Steel Structures segment margins.
Electrical:
Electrical segment sales increased 14.0% year-over-year to $500.7 million in the quarter. Excluding acquisition and foreign currency impacts, sales rose nearly 8% driven by increased demand in our industrial, construction and utility end markets and commodity-related price increases. A prior-year acquisition contributed slightly more than 2% of the sales growth with the balance attributable to favorable foreign currency.
Electrical segment earnings were $105.2 million or 21.0% of sales, compared to $89.6 million, or 20.4% of sales last year. Improved mix, operating leverage and the impact of current- and prior-year right-sizing activities contributed to the earnings improvement.
Steel Structures:
Third quarter Steel Structures segment sales were $66.9 million, up 16.9% year over year largely as a result of commodity-related price increases. Segment earnings were $10.5 million or 15.7% of sales, in line with expectations, but lower than 2010 as a result of a more competitive pricing environment.
HVAC:
HVAC segment sales were $36.8 million in the quarter compared to $21.8 million last year. The current quarter acquisition of the AmbiRad® Group, a privately held U.K. manufacturer of specialty HVAC products, contributed $11.8 million to year-over-year sales growth. Excluding the AmbiRad acquisition, HVAC sales increased nearly 15% on improved volumes and favorable foreign currency.
HVAC segment earnings were $3.0 million, or 8.2% of sales, compared to $2.9 million, or 13.1% of sales last year. 2011 third quarter earnings were negatively impacted by the routine purchase accounting impact related to the AmbiRad acquisition.
BALANCE SHEET / LIQUIDITY HIGHLIGHTS:
Thomas & Betts ended the quarter with $465.4 million in cash and cash equivalents and over $500 million of availability under its new and pre-existing credit facilities. The primary uses of free cash flow during the quarter were the acquisition of the AmbiRad Group for £18 million or approximately $30 million cash and the repurchase of 500,000 shares of common stock at a total cost of $21.2 million. Management has remaining repurchase authority for up to two million shares through December 31, 2012.
Working capital was 17.9% of sales and total debt to total capitalization was 26.2% at quarter end.
FULL YEAR 2011 GUIDANCE:
“Against a backdrop of market pessimism and potentially slowing economic growth, we will continue to aggressively seek out growth opportunities using our targeted vertical market approach while tightly managing expenses and leveraging productivity in our manufacturing facilities,” said Pileggi.
“For the full-year 2011, we continue to expect solid organic growth to drive consolidated sales improvement in the low-double-digit range. Given the strength of our third quarter performance, we are raising our full-year 2011 operating earnings guidance to a range of $3.40 to $3.45 per diluted share, excluding unusual items. Previously, our earnings range was $3.20 to $3.35 per diluted share.”
CORPORATE OVERVIEW
Thomas & Betts Corporation (NYSE:TNB) is a global leader in the design, manufacture and marketing of essential components used to manage the connection, distribution, transmission and reliability of electrical power in industrial, construction and utility applications. With a portfolio of over 200,000 products marketed under more than 45 premium brand names, Thomas & Betts products are found wherever electricity is used. Headquartered in Memphis, Tenn., Thomas & Betts reported revenues of $2.0 billion and had approximately 8,750 employees in 2010. For more information, please visit www.tnb.com.
CONFERENCE CALL AND WEBCAST INFORMATION:
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Date: |
Thursday, October 20, 2011 | |
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Time: |
11:00 a.m. Eastern (10:00 a.m. Central) | |
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Phone: |
201-689-8341 | |
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Code: |
None | |
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URL: |
www.tnb.com (audio only) |
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Replay: |
201-612-7415, account 9517, ID 379081 (through October 27, 2011). | |
CAUTIONARY STATEMENT
This press release includes forward-looking statements which make assumptions regarding the company’s operations, business, economic and political environment. Actual results may be materially different from any future results expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly release any revisions to any forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.
| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Quarter Ended | Year to Date | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net sales | $ | 604,426 | $ | 518,233 | $ | 1,693,903 | $ | 1,471,842 | ||||||||
| Cost of sales | 412,927 | 352,096 | 1,168,878 | 1,013,310 | ||||||||||||
| Gross profit | 191,499 | 166,137 | 525,025 | 458,532 | ||||||||||||
| Gross profit - % of net sales | 31.7 | % | 32.1 | % | 31.0 | % | 31.2 | % | ||||||||
| Selling, general and administrative | 110,389 | 97,470 | 313,656 | 289,880 | ||||||||||||
| Selling, general and administrative - % of net sales | 18.3 | % | 18.8 | % | 18.5 | % | 19.7 | % | ||||||||
| Earnings from operations | 81,110 | 68,667 | 211,369 | 168,652 | ||||||||||||
| Earnings from operations - % of net sales | 13.4 | % | 13.3 | % | 12.5 | % | 11.5 | % | ||||||||
| Interest expense, net | (8,476 | ) | (9,042 | ) | (24,200 | ) | (26,315 | ) | ||||||||
| Other (expense) income, net | 1,387 | (975 | ) | (315 | ) | 90 | ||||||||||
| Earnings before income taxes | 74,021 | 58,650 | 186,854 | 142,427 | ||||||||||||
| Income tax provision | 19,688 | 16,056 | 53,538 | 41,324 | ||||||||||||
| Effective tax rate | 26.6 | % | 27.4 | % | 28.7 | % | 29.0 | % | ||||||||
| Net earnings from continuing operations | 54,333 | 42,594 | 133,316 | 101,103 | ||||||||||||
| Earnings from discontinued operations | - | 1,510 | - | 4,554 | ||||||||||||
| Net earnings | $ | 54,333 | $ | 44,104 | $ | 133,316 | $ | 105,657 | ||||||||
| Basic earnings (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 1.05 | $ | 0.83 | $ | 2.58 | $ | 1.95 | ||||||||
| Discontinued operations | - | 0.02 | - | 0.09 | ||||||||||||
| Net earnings | $ | 1.05 | $ | 0.85 | $ | 2.58 | $ | 2.04 | ||||||||
| Diluted earnings (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 1.03 | $ | 0.81 | $ | 2.51 | $ | 1.91 | ||||||||
| Discontinued operations | - | 0.03 | - | 0.09 | ||||||||||||
| Net earnings | $ | 1.03 | $ | 0.84 | $ | 2.51 | $ | 2.00 | ||||||||
| Average shares outstanding: | ||||||||||||||||
| Basic | 51,900 | 51,602 | 51,772 | 51,863 | ||||||||||||
| Diluted | 52,990 | 52,641 | 53,108 | 52,912 | ||||||||||||
| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | |||||||||||||||||
| Segment Information | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Quarter Ended | Year to Date | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Net sales: | |||||||||||||||||
| Electrical | $ | 500,693 | $ | 439,172 | $ | 1,427,992 | $ | 1,235,759 | |||||||||
| Steel Structures | 66,893 | 57,232 | 176,604 | 166,753 | |||||||||||||
| HVAC | 36,840 | 21,829 | 89,307 | 69,330 | |||||||||||||
| Total net sales | $ | 604,426 | $ | 518,233 | $ | 1,693,903 | $ | 1,471,842 | |||||||||
| Segment earnings: | |||||||||||||||||
| Electrical | $ | 105,165 | $ | 89,588 | $ | 285,281 | $ | 237,786 | |||||||||
| Steel Structures | 10,497 | 11,092 | 19,078 | 29,027 | |||||||||||||
| HVAC | 3,024 | 2,868 | 10,047 | 9,466 | |||||||||||||
| Total reportable segment earnings | $ | 118,686 | $ | 103,548 | $ | 314,406 | $ | 276,279 | |||||||||
| Corporate expense | (13,709 | ) | (12,615 | ) | (30,424 | ) | (40,205 | ) | |||||||||
| Depreciation and amortization expense | (21,426 | ) | (20,054 | ) | (63,386 | ) | (58,775 | ) | |||||||||
| Share-based compensation expense | (2,441 | ) | (2,212 | ) | (9,227 | ) | (8,647 | ) | |||||||||
| Interest expense, net | (8,476 | ) | (9,042 | ) | (24,200 | ) | (26,315 | ) | |||||||||
| Other (expense) income, net | 1,387 | (975 | ) | (315 | ) | 90 | |||||||||||
| Earnings before income taxes | $ | 74,021 | $ | 58,650 | $ | 186,854 | $ | 142,427 | |||||||||
| Segment earnings - % of net sales: | |||||||||||||||||
| Electrical | 21.0 | % | 20.4 | % | 20.0 | % | 19.2 | % | |||||||||
| Steel Structures | 15.7 | % | 19.4 | % | 10.8 | % | 17.4 | % | |||||||||
| HVAC | 8.2 | % | 13.1 | % | 11.2 | % | 13.7 | % | |||||||||
| Total | 19.6 | % | 20.0 | % | 18.6 | % | 18.8 | % | |||||||||
| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | ||||||
| Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| September 30, | December 31, | |||||
| 2011 | 2010 | |||||
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ASSETS |
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| Current assets: | ||||||
| Cash and cash equivalents | $ | 465,449 | $ | 455,198 | ||
| Receivables, net | 303,962 | 230,203 | ||||
| Inventories | 276,158 | 220,250 | ||||
| Other current assets | 55,144 | 51,444 | ||||
| Total current assets | 1,100,713 | 957,095 | ||||
| Net property, plant and equipment | 298,149 | 305,796 | ||||
| Goodwill | 975,536 | 967,889 | ||||
| Other intangible assets, net | 335,466 | 340,544 | ||||
| Other assets | 49,252 | 61,069 | ||||
| Total assets | $ | 2,759,116 | $ | 2,632,393 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | $ | 335 | $ | 322 | ||
| Accounts payable | 181,411 | 190,839 | ||||
| Accrued liabilities | 137,236 | 126,241 | ||||
| Income taxes payable | 14,954 | 26,263 | ||||
| Total current liabilities | 333,936 | 343,665 | ||||
| Long-term debt, net of current maturities | 574,489 | 574,090 | ||||
| Other long-term liabilities | 230,045 | 247,856 | ||||
| Shareholders' equity | 1,620,646 | 1,466,782 | ||||
| Total liabilities and shareholders' equity | $ | 2,759,116 | $ | 2,632,393 | ||
| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Year to Date | ||||||||
| September 30, | September 30, | |||||||
| 2011 | 2010 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net earnings | $ | 133,316 | $ | 105,657 | ||||
| Adjustments: | ||||||||
| Depreciation and amortization | 63,386 | 60,031 | ||||||
| Share-based compensation expense | 9,227 | 8,730 | ||||||
| Deferred income taxes | 6,693 | (6,491 | ) | |||||
| Incremental tax benefits from share-based payment arrangements | (2,460 | ) | (942 | ) | ||||
| Changes in operating assets and liabilities, net (a): | ||||||||
| Receivables | (65,693 | ) | (56,707 | ) | ||||
| Inventories | (50,608 | ) | (26,463 | ) | ||||
| Accounts payable | (14,286 | ) | 12,258 | |||||
| Accrued liabilities | 8,955 | 18,724 | ||||||
| Income taxes payable | (11,624 | ) | 21,885 | |||||
| Other | (5,522 | ) | 8,238 | |||||
| Net cash provided by (used in) operating activities | 71,384 | 144,920 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of businesses, net of cash acquired | (29,184 | ) | (98,910 | ) | ||||
| Purchases of property, plant and equipment | (30,784 | ) |
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(22,253 | ) | |||
| Other | 2,067 | 37 | ||||||
| Net cash provided by (used in) investing activities | (57,901 | ) |
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(121,126 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Stock options exercised | 23,909 | 5,162 | ||||||
| Repurchase of common shares | (21,155 | ) | (42,853 | ) | ||||
| Debt issuance costs | (2,231 | ) | - | |||||
| Repayment of debt and other borrowings | (304 | ) | (36,092 | ) | ||||
| Incremental tax benefits from share-based payment arrangements | 2,460 | 942 | ||||||
| Net cash provided by (used in) financing activities | 2,679 | (72,841 | ) | |||||
| EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | (5,911 | ) | 5,655 | |||||
| Net increase (decrease) in cash and cash equivalents | 10,251 | (43,392 | ) | |||||
| Cash and cash equivalents at beginning of period | 455,198 | 478,613 | ||||||
| Cash and cash equivalents at end of period | $ | 465,449 | $ | 435,221 | ||||
| Cash payments for interest | $ | 21,482 | $ | 23,769 | ||||
| Cash payments for income taxes | $ | 63,768 | $ | 27,031 | ||||
| (a) Net of foreign exchange and acquisition effects | ||||||||
| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | ||||||||||||||
| Selected Information | ||||||||||||||
| (In millions, except E.P.S.) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Reconciliation of Unusual Items | ||||||||||||||
| Quarter Ended | ||||||||||||||
| September 30, 2011 | September 30, 2010 | |||||||||||||
| Net-of-Tax | E.P.S. | Net-of-Tax | E.P.S. | |||||||||||
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Reported net earnings from continuing operations |
$ | 54.3 | $ | 1.03 | $ | 42.6 | $ | 0.81 | ||||||
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Excluded Items: |
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| Release of a tax reserve for resolution of outstanding tax issue | - | - | (1.5 | ) | (0.03 | ) | ||||||||
| Total excluded items | - | - | (1.5 | ) | (0.03 | ) | ||||||||
| Net earnings excluding items | $ | 54.3 | $ | 1.03 | $ | 41.1 | $ | 0.78 | ||||||
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Note: The Selected Information above is not calculated in accordance with Generally Accepted Accounting Principles (GAAP) and should not be considered a substitute for or superior to financial measures in accordance with GAAP. Management believes these non-GAAP financial measures provide investors and our management with additional useful information to measure and forecast our liquidity and operating results and to compare our liquidity and operating results on a more consistent basis against that of other companies in the markets that we serve. |
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| THOMAS & BETTS CORPORATION AND SUBSIDIARIES | |||||||||||||
| Selected Information (continued) | |||||||||||||
| (In thousands, except ratios) | |||||||||||||
| (Unaudited) | |||||||||||||
| Reconciliation of Free Cash Flow | |||||||||||||
| Year to Date | |||||||||||||
| September 30, | September 30, | ||||||||||||
| 2011 | 2010 | ||||||||||||
| Net cash provided by (used in) operating activities | $ | 71,384 | $ | 144,920 | |||||||||
| Less: Purchases of property, plant and equipment | (30,784 | ) | (22,253 | ) | |||||||||
| Free Cash Flow | $ | 40,600 | $ | 122,667 | |||||||||
| Reconciliation of Working Capital as a Percentage of Sales | |||||||||||||
| September 30, | December 31, | September 30, | |||||||||||
| 2011 | 2010 | 2010 | |||||||||||
| Receivables, net | $ | 303,962 | $ | 230,203 | $ | 271,678 | |||||||
| Inventories | 276,158 | 220,250 | 243,201 | ||||||||||
| Accounts payable | (181,411 | ) | (190,839 | ) | (171,702 | ) | |||||||
| Working capital | $ | 398,709 | $ | 259,614 | $ | 343,177 | |||||||
| Net sales - rolling 4 quarters | $ | 2,226,427 | $ | 2,004,366 | $ | 1,949,487 | |||||||
| Working capital as a percentage of sales | 17.9 | % | 13.0 | % | 17.6 | % | |||||||
| Reconciliation of Total Debt-to-Total Capitalization | |||||||||||||
| September 30, | December 31, | ||||||||||||
| 2011 | 2010 | ||||||||||||
| Current maturities of long-term debt | $ | 335 | $ | 322 | |||||||||
| Long-term debt, net of current maturities | 574,489 | 574,090 | |||||||||||
| Total debt | 574,824 | 574,412 | |||||||||||
| Shareholders' equity | 1,620,646 | 1,466,782 | |||||||||||
| Total capitalization | $ | 2,195,470 | $ | 2,041,194 | |||||||||
| Total debt-to-total capitalization | 26.2 | % | 28.1 | % | |||||||||
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Note: The Selected Information above is not calculated in accordance with Generally Accepted Accounting Principles (GAAP) and should not be considered a substitute for or superior to financial measures in accordance with GAAP. Management believes these non-GAAP financial measures provide investors and our management with additional useful information to measure and forecast our liquidity and operating results and to compare our liquidity and operating results on a more consistent basis against that of other companies in the markets that we serve. |
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