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8-K - TECUMSEH PRODUCTS CO | v177030_8k.htm |
Tecumseh
Products Company Reports Fourth-Quarter and Full Year 2009 Results
ANN
ARBOR, Mich., March
11 /PRNewswire-FirstCall/ -- Tecumseh Products Company (Nasdaq - TECUA, TECUB),
a leading global manufacturer of compressors and related products, today
reported a net loss of $30.5 million, or $1.65 per diluted share, for the fourth
quarter of 2009, compared with a net loss of $63.3 million, or $3.43 per diluted
share, in the same period in 2008.
The
fourth quarter net loss from continuing operations was $26.8 million, or $1.45
per diluted share, which compares with a net loss from continuing operations of
$43.5 million, or $2.35 per diluted share, in the same period in
2008.
The
operating loss in the fourth quarter was $20.5 million, which included $13.8
million in impairments, restructuring charges and other items. The
operating loss in the fourth quarter of 2008 was $48.1 million, which included
impairments, restructuring charges and other items totaling $23.7
million.
Gross
profit (net sales less cost of sales and operating expenses) in the quarter was
$23.2 million, or 11 percent of sales, compared with $5 million, or 3 percent of
sales, a year ago. For the quarter, net sales were $209.6 million, up 24 percent
from $169.3 million in the same period in 2008. The cost of
sales and operating expenses were $186.4 million for the quarter, compared
with $164.3 million in the same period in 2008.
"Our
strategy of focusing on customers, product innovation and making Tecumseh leaner
and more efficient at every level is leading to improved performance in a very
difficult market," said company President James Wainright. "We are
encouraged that the year-over-year sales decline in the last half of 2009 was
less dramatic then we saw in the first half. Nevertheless, we will
continue to focus on cash and capital preservation, cost reductions and
operating improvements."
Prior-year
results have been restated to reflect the reclassification of the company's
Paris, Tenn. operations from discontinued operations to continuing
operations. In 2008, this change decreased the net loss from
continuing operations by $1.9 million, or 10 cents per share. The
impact in the fourth quarter was not significant.
Full-Year
Results
In 2009,
net sales were $735.9 million, compared with $996.4 million in
2008. Excluding the impact of currency translation, net sales during
the first half of 2009 across all product lines were approximately 26 percent
lower than during the first half of 2008, and volumes during the second half of
2009 were approximately 14 percent lower than the second half of
2008.
For the
full year 2009, the company reported a net loss of $93.4 million, or $5.06 per
diluted share, compared with a net loss of $50.5 million, or $2.73 per diluted
share, in 2008.
The
company's net loss from continuing operations was $91.8 million in 2009, or
$4.97 per diluted share, compared with $78 million, or $4.22 per diluted share,
in 2008.
Gross
profit in 2009 was $55.7 million, down from $105.1 million in
2008. Cost of sales and operating expenses was $680.2 million in
2009, compared with $891.3 million in 2008. Volume declines reduced
2009 gross profit (including the effect of lower sales on fixed costs) by $60.4
million, compared to 2008.
Current-year
gross profit was also unfavorably impacted $34.1 million as a result of changes
in sales mix. Other raw material variances were also unfavorable by
$0.6 million. An unfavorable one-time cumulative catch-up
depreciation expense of $3.5 million was recorded in 2009 as a result of the
reclassification of our Paris, Tenn. facility.
Also,
favorable 2008 items did not recur in 2009, including a $4.2 million gain on the
sale of an airplane and a $2.2 million favorable litigation settlement in
2008. The company also recorded $6.1 million less in pension
and other post-retirement benefit credits in 2009. Productivity
improvements of $30.5 million, favorable currency effects of $24.2 million and
lower commodity costs of $11.3 million improved 2009 gross profit, compared with
the same period in 2008. The effect of all other income and expense
items included in cost of sales was unfavorable to 2009 results by $4.3
million.
Selling
and administrative expenses declined by $4.4 million in 2009 to $125.2 million,
compared with 2008. However, these expenses increased as a percentage
of revenue, primarily due to lower sales volume. Over the course of
the year, costs for recurring professional fees and professional fees outside
the ordinary course of business declined by $4.5 million, and payroll, benefits
and other employee-related expenses declined by $8.3 million.
A
reversal of an accrual for environmental expenses and a favorable change in
estimate in 2008 totaling $3.6 million did not recur in
2009. All other selling and administrative expenses increased by
$4.8 million.
The
company recorded impairments, restructuring and other charges of $24.4 million
in 2009, mostly for employee severance, restructuring costs and special
termination benefits, which was down from $43.8 million in 2008, which included
a $20.0 million excise tax and $18.2 million of goodwill
impairments.
Cash and
Liquidity
The
company ended the year with cash and cash equivalents of $90.7 million, down
from $113.1 million at the end of 2008. The availability of various credit
facilities on Dec. 31, 2009, was $38.6 million, mostly at foreign
subsidiaries. Long-term debt was $8 million. Cash provided
by operations was $1.6 million in 2009, compared with $70.6 million in
2008.
The
company expects to receive non operating cash inflows in 2010, primarily from
tax refunds in the United States and Brazil, and the reversion of the company's
hourly pension plan. The increase in net cash for 2010 is expected to
be approximately $35 million to $40 million from the pension plan reversion, and
approximately $1.9 million from additional U.S. tax refunds. The
company expects to recover $29.2 million of refundable taxes in Brazil before
the end of 2010, based upon the historical payment patterns of the Brazilian tax
authority and the U.S. dollar-to-real exchange rate as of Dec. 31,
2009. Capital expenditures in 2010 are projected to remain below $17
million, as the company prioritizes expenditures.
Conference
Call
The
company will broadcast its financial results conference call live over the
Internet on Fri., March 12, 2010 at 11:00 a.m. Eastern. Webcast information can
be found in the Investor Relations section of www.tecumseh.com.
About
Tecumseh Products Company
Tecumseh
Products Company is a full-line, independent global manufacturer of hermetically
sealed compressors for residential and specialty air conditioning, household
refrigerators and freezers, and commercial refrigeration applications, including
air conditioning and refrigeration compressors, as well as condensing units,
heat pumps and complete refrigeration systems. Press releases and
other investor information can be accessed via the Investor Relations section of
Tecumseh Products Company's Website at www.tecumseh.com.
Cautionary
Statements Relating to Forward-Looking Statements
This
release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that are subject to the safe harbor
provisions created by that Act. In addition, forward-looking statements may be
made orally in the future by or on behalf of the company. Forward-looking
statements can be identified by the use of terms such as "expects," "should,"
"may," "believes," "anticipates," "will," and other future-tense and
forward-looking terminology.
Readers
are cautioned that actual results may differ materially from those projected as
a result of certain risks and uncertainties, including, but not limited to, i)
changes in macro-economic conditions and the condition of credit markets, which
may magnify other risk factors; ii) the success of our ongoing effort to bring
costs in line with projected production levels and product mix; iii) financial
market changes, including fluctuations in foreign currency exchange rates and
interest rates; iv) availability and cost of materials, particularly
commodities, including steel and copper, whose cost can be subject to
significant variation; v) actions of competitors; vi) our ability to maintain
adequate liquidity in total and within each foreign operation; vii) the effect
of terrorist activity and armed conflict; viii) economic trend factors, such as
housing starts; ix) the ultimate cost of resolving environmental and legal
matters, including any liabilities resulting from the regulatory antitrust
investigations commenced by the United States Department of Justice Antitrust
Division, the Secretariat of Economic Law of the Ministry of Justice of Brazil
or the European Commission, any of which could preclude commercialization of
products or adversely affect profitability and/or civil litigation related to
such investigations; x) weather conditions affecting demand for replacement
products; xi) emerging governmental regulations; xii) our ability to profitably
develop, manufacture and sell both new and existing products; xiii) the extent
of any business disruption that may result from the restructuring and
realignment of our manufacturing operations or system implementations, the
ultimate cost of those initiatives and the amount of savings actually realized;
xiv) the extent of any business disruption caused by work stoppages initiated by
organized labor unions; xv) potential political and economic adversities that
could adversely affect anticipated sales and production in Brazil; xvi)
potential political and economic adversities that could adversely affect
anticipated sales and production in India, including potential military conflict
with neighboring countries; xvii) increased or unexpected warranty claims; and
xviii) the ongoing financial health of major customers. These forward-looking
statements are made only as of the date of this release, and the company
undertakes no obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise.
CONTACT:
Jim Cain, The Quell Group, +1-248-649-8900, jcain@quell.com