Pall Corporation Reports Third Quarter Results

Pall Corporation Reports Third Quarter Results

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)-- Pall Corporation (NYSE:PLL) today reported financial results for the third quarter of fiscal year 2013 which ended on April 30, 2013.

Third Quarter and Nine Months Continuing Operations Sales and Earnings Overview(1)


Third quarter sales were $641.2 million compared to $658.0 million last year, a decrease of 3%. Sales in local currency ("LC") were flat year over year. Diluted EPS were $0.65 in the quarter, compared to $0.60 last year. Pro forma diluted EPS(2) were $0.74, a 21% increase compared to $0.61 a year earlier, including a negative impact of approximately $0.03 from foreign currency translation.

For the nine months, sales decreased 1% year over year. Sales in LC increased 1%. Diluted EPS were $2.13 in the nine months, compared to $1.74 for the same period last year. Pro forma EPS(2) were $2.15, an 11% increase compared to $1.94 a year earlier, including a negative impact of approximately $0.07 from foreign currency translation.

Larry Kingsley, Pall President and CEO, said, "The best way to summarize our performance for the quarter and nine months is that, in the face of continued economic challenges, we are delivering pretty solid returns. This is largely due to improved operational execution and the effect of our structural cost actions."

Life Sciences - Third Quarter Highlights

(Dollar Amounts in Millions and Discussion of Sales Changes are in Local Currency)

Sales:

APR. 30, 2013

APR. 30, 2012

%

CHANGE

% CHANGE IN

LC

BioPharmaceuticals

$

219

$

202

9

11

Food & Beverage

53

66

(21

)

(19

)

Medical

54

50

8

10

Total Life Sciences segment

$

326

$

318

3

5

Gross profit

$

188

$

180

% of sales

57.5

56.7

Segment profit

$

81

$

75

% of sales

24.9

23.7

BioPharmaceuticals: Consumables sales grew 15% compared to last year, with growth in all regions and 5% sequentially on continued strength in the biotech sector. The year-over-year sales comparison reflects weakness in the third quarter of fiscal year 2012, due to the effect of our global ERP go-live. Systems sales were down 33% in the quarter, primarily due to large projects in the third quarter of last year.

Food and Beverage: Overall sales were down due to weak capital spending and timing of projects in the Americas and Asia. Consumables sales were up 2% due to geographic expansion.

Medical: Consumables sales increased 10% over last year, with growth in all regions, and were up 2% sequentially. This reflects strong sales year over year in the Hospital Critical Care market and blood media.

Industrial - Third Quarter Highlights

(Dollar Amounts in Millions and Discussion of Sales Changes are in Local Currency)

Sales:

APR. 30, 2013

APR. 30, 2012

%

CHANGE

% CHANGE IN

LC

Process Technologies

$

187

$

214

(13

)

(11

)

Aerospace

63

51

25

26

Microelectronics

65

75

(14

)

(10

)

Total Industrial segment

$

315

$

340

(7

)

(5

)

Gross profit

$

146

$

154

% of sales

46.5

45.4

Segment profit

$

46

$

39

% of sales

14.6

11.6

Process Technologies: Consumables sales were down almost 6%, reflecting softness across most end-markets, particularly in Europe and Asia. Systems sales were down 24% on weakness in capital spend and timing of projects.

Aerospace: Aerospace results were driven by particularly strong Commercial performance, with sales up about 40%. Military Aerospace sales were up 14% year over year. The year-over-year sales comparison also reflects the effect of our global ERP go-live last year.

Microelectronics: Sales were down 10% largely due to the continuing weakness in display and data storage end-markets.

Conclusion/Outlook

Kingsley concluded, "While the company is executing well, we're mindful of the slower global environment that many of our customers are experiencing and now expect full year sales to be flat year over year, excluding impact from foreign currency translation. Full-year pro forma EPS is now expected to be in the range of $2.95 to $3.05(2), and within our previously discussed range, but narrowed to the bottom half. If consumables sales are more robust than currently anticipated for the remainder of the fiscal year, we should convert to earnings quite well."

Conference Call

On Friday, May 31, 2013, at 8:30 am ET, Pall Corporation will host a conference call to review these results. The call can be accessed at www.pall.com/investor. The webcast will be archived for 30 days.

About Pall Corporation

Pall Corporation (NYSE:PLL) is a filtration, separation and purification leader providing solutions to meet the critical fluid management needs of customers across the broad spectrum of life sciences and industry. Pall works with customers to advance health, safety and environmentally responsible technologies. The Company's engineered products enable process and product innovation and minimize emissions and waste. Pall Corporation is an S&P 500 company serving customers worldwide. Pall has been named a "top green company" by Newsweek magazine. To see how Pall is helping enable a greener, safer, more sustainable future, follow us on Twitter @PallCorporation or visit www.pall.com/green.

Forward-Looking Statements

The matters discussed in this presentation contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Results for the third quarter of fiscal year 2013 are preliminary until the Company's Form 10-Q is filed with the Securities and Exchange Commission on or before June 10, 2013. Forward-looking statements are those that address activities, events or developments that the Company or management intends, expects, projects, believes or anticipates will or may occur in the future. All statements regarding future performance, earnings projections, earnings guidance, management's expectations about its future cash needs, dilution from the disposition or future allocation of capital and effective tax rate, and other future events or developments are forward-looking statements.

Forward-looking statements are those that use terms such as "may," "will," "expect," "believe," "intend," "should," "could," "anticipate," "estimate," "forecast," "project," "plan," "predict," "potential," and similar expressions. Forward-looking statements contained in this and other written and oral reports are based on management's assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors.

The Company's forward-looking statements are subject to risks and uncertainties and are not guarantees of future performance, and actual results, developments and business decisions may differ materially from those envisaged by the Company's forward-looking statements. Such risks and uncertainties include, but are not limited to, those discussed in Part I-Item 1A.-Risk Factors in the 2012 Form 10-K, and other reports the Company files with the Securities and Exchange Commission, including: the impact of legislative, regulatory and political developments globally; the impact of the uncertain global economic environment; the extent to which adverse economic conditions may affect the Company's sales volume and results; demand for the Company's products and business relationships with key customers and suppliers, which may be impacted by their cash flow and payment practices; delays or cancellations in shipments; the Company's ability to develop and commercialize new technologies or obtain regulatory approval or market acceptance of new technologies; the Company's ability to enforce patents and protect proprietary products and manufacturing techniques; increase in costs of manufacturing and operating costs; the Company's ability to achieve and sustain the savings anticipated from its structural cost improvement initiatives; volatility in foreign currency exchange rates, interest rates and energy costs and other macroeconomic challenges currently affecting the Company; the Company's ability to meet its regulatory obligations; costs and outcome of pending or future claims or litigation; the Company's ability to comply with environmental, health and safety laws and regulations; changes in product mix, market mix and product pricing, particularly relating to the expansion of the systems business; the effect of a serious disruption in the Company's information systems; fluctuations in the Company's effective tax rate; the Company's ability to successfully complete or integrate any acquisitions; competition, including the impact of pricing and other actions by the Company's competitors; the effect of litigation and regulatory inquiries associated with the restatement of the Company's prior period financial statements; the Company's ability to attract and retain management talent or the loss of members of its senior management team; the effect of the restrictive covenants in the Company's debt facilities; and the effect of product defects and recalls. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them, whether as a result of new information, future developments or otherwise.

Management uses certain non-GAAP measurements to assess the Company's current and future financial performance. The non-GAAP measurements do not replace the presentation of the Company's GAAP financial results. These measurements provide supplemental information to assist management in analyzing the Company's financial position and results of operations. The Company has chosen to provide this information to facilitate meaningful comparisons of past, present and future operating results and as a means to emphasize the results of ongoing operations.

Notes to Release:

(1)

As discussed in our news release dated August 1, 2012, the Company completed the sale of certain assets of its Blood product line. Accordingly, discussion of results from continuing operations excludes the Blood product line. Tables appended to this release are presented on a continuing operations basis (with reconciliation to include the discontinued Blood product line).

(2)

Pro forma diluted EPS are defined as Reported diluted EPS on a continuing operations basis adjusted for "Discrete Items." Discrete items are defined as ROTC and other items that are deemed to be non-recurring in nature and/or not considered by management to be indicative of underlying operating performance. A reconciliation of Reported to Pro forma amounts can be found in the Reconciliation of Pro forma Earnings table accompanying this release.

(3)

Reflects assets held for sale related to the Blood product line.

(4)

Cash flows are inclusive of discontinued operations.

PALL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in Thousands)

APR. 30, 2013

JUL. 31, 2012

Assets:

Cash and cash equivalents

$

903,967

$

500,274

Accounts receivable

554,125

655,436

Inventories

406,123

364,766

Other current assets

187,515

195,464

Assets held for sale

-

136,517

(3

)

Total current assets

2,051,730

1,852,457

Property, plant and equipment

757,339

750,993

Other assets

638,172

744,442

Total assets

$

3,447,241

$

3,347,892

Liabilities and Stockholders' Equity:

Short-term debt

$

215,387

$

205,393

Accounts payable, income taxes and other current liabilities

552,896

646,735

Total current liabilities

768,283

852,128

Long-term debt, net of current portion

467,616

490,706

Deferred taxes and other non-current liabilities

476,358

495,023

Total liabilities

1,712,257

1,837,857

Stockholders' equity

1,734,984

1,510,035

Total liabilities and stockholders' equity

$

3,447,241

$

3,347,892

PALL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(Amounts in Thousands, Except Per Share Data)

THIRD QUARTER ENDED

NINE MONTHS ENDED

APR. 30, 2013

APR. 30, 2012

APR. 30, 2013

APR. 30, 2012

Net sales

$

641,190

$

657,976

$

1,931,245

$

1,949,285

Cost of sales

307,111

323,550

928,120

941,342

Gross profit

334,079

334,426

1,003,125

1,007,943

% of sales

52.1

%

50.8

%

51.9

%

51.7

%

Selling, general and administrative expenses

199,595

215,226

601,569

632,982

% of sales

31.1

%

32.7

%

31.1

%

32.5

%

Research and development

22,608

20,780

68,582

60,351

Operating profit

111,876

98,420

332,974

314,610

% of sales

17.4

%

15.0

%

17.2

%

16.1

%

Restructuring and other charges ("ROTC") (a)

12,824

2,861

21,497

31,001

Interest expense, net (c)

5,298

6,351

10,747

17,682

Earnings from continuing operations before income taxes

93,754

89,208

300,730

265,927

Provision for income taxes (b)

19,483

18,270

56,975

60,691

Net earnings from continuing operations

$

74,271