Pall Corporation Reports Fourth Quarter and Full Year Results

Pall Corporation Reports Fourth Quarter and Full Year Results

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)-- Pall Corporation (NYSE:PLL) today reported financial results for the fourth quarter and fiscal year ended July 31, 2013.

Fourth Quarter and Full Year Continuing Operations Sales and Earnings Overview(1)


Fourth quarter sales were $716.8 million compared to $722.4 million last year, a decrease of 1%. Sales in local currency ("LC") were up slightly. Diluted EPS were $0.76 in the quarter, compared to $0.64 last year. Pro forma diluted EPS(2) were $0.90, a 5% increase compared to $0.86 a year earlier, including a negative impact of approximately $0.03 from foreign currency translation.

For the full year, sales declined 1% over last year. Sales in LC increased 1%. Diluted EPS were $2.89 for the full year, compared to $2.39 for the same period last year. Pro forma diluted EPS(2) were $3.04, a 9% increase compared to $2.80 a year earlier, including a negative impact of approximately $0.10 from foreign currency translation.

Larry Kingsley, Pall President and CEO, said, "In light of continued economic challenges, particularly impacting our Industrial business, we delivered solid results this year. This was largely due to improved operational execution and the benefit of our structural cost actions."

Life Sciences - Fourth Quarter Highlights
(Dollar Amounts in Millions and Discussion of Sales Changes are in Local Currency)

           

Sales:

JUL. 31, 2013JUL. 31, 2012

%
CHANGE

% CHANGE IN
LC

BioPharmaceuticals$215$20556
Food & Beverage4750(5)(4)
Medical 54 5155
Total Consumables31630644
Systems 38 293133
Total Life Sciences segment$354$33566
 
Gross profit$201$194
% of sales56.857.9
Segment profit$86$86
% of sales24.225.7
 

BioPharmaceuticals: Consumables sales grew 6% compared to last year, on continued strength in the Biotech sector.

Food and Beverage: Consumables sales were down 4% compared to last year, on weakness in China as well as in several European countries.

Medical: Consumables sales grew 5% compared to last year, on strong sales in Hospital Critical Care and Blood Media.

Systems: Sales increased 33% compared to last year, on timing of BioPharmaceuticals and Food & Beverage capital spend.

Industrial - Fourth Quarter Highlights
(Dollar Amounts in Millions and Discussion of Sales Changes are in Local Currency)

    

Sales:

 JUL. 31, 2013  JUL. 31, 2012  

%
CHANGE

  

% CHANGE IN
LC

Process Technologies$151$151(0)1
Aerospace6067(11)(10)
Microelectronics 73 83(12)(7)
Total Consumables284301(6)(4)
Systems 79 87(9)(9)
Total Industrial segment$363$388(7)(5)
 
Gross profit$168$179
% of sales46.346.0
Segment profit$68$68
% of sales18.817.4
 

Process Technologies: Consumables sales grew 1% compared to last year, on strength in Fuels & Chemicals.

Aerospace: Consumables sales were down 10% compared to last year, on weakness in Military Aerospace. This decline was largely due to strong helicopter program sales last year that did not repeat. Commercial Aerospace consumables sales grew 4%.

Microelectronics: Consumables sales were down 7% compared to last year, on continued weakness in the display and data storage end-markets.

Systems: Sales declined 9% compared to last year, on weakness in Municipal Water.

Conclusion/Outlook

Kingsley concluded, "In fiscal year 2014, we expect revenue growth in the low-to-mid single digits, resulting in pro forma EPS of $3.30 to $3.50, growth of 9% to 15%, representing significant operating leverage."

Conference Call

On Thursday, August 29, 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 fiscal year 2013 are preliminary until the Company's Form 10-K is filed with the Securities and Exchange Commission on or before September 30, 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 Restructuring & Other Charges (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)
 
JUL. 31, 2013JUL. 31, 2012
 
Assets:
 
Cash and cash equivalents$936,886$500,274
Accounts receivable566,335655,436
Inventories381,047364,766
Other current assets165,761195,464
Assets held for sale - 136,517

 (3)

Total current assets 2,050,029 1,852,457
 
Property, plant and equipment774,948750,993
Other assets 647,862 744,442
Total assets$3,472,839$3,347,892
 
Liabilities and Stockholders' Equity:
 
Short-term debt$170,387$205,393
Accounts payable, income taxes and other current liabilities 558,684 646,735
Total current liabilities729,071852,128
 
Long-term debt, net of current portion467,319490,706
Deferred taxes and other non-current liabilities 461,493 495,023
Total liabilities1,657,8831,837,857
 
Stockholders' equity 1,814,956 1,510,035
Total liabilities and stockholders' equity$3,472,839$3,347,892
 
        
PALL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in Thousands, Except Per Share Data)
 
 
FOURTH QUARTER ENDEDYEAR ENDED
JUL. 31, 2013JUL. 31, 2012JUL. 31, 2013JUL. 31, 2012
 
Net sales$716,818$722,371$2,648,063$2,671,656
Cost of sales 347,940  350,216  1,276,060  1,291,558 
Gross profit 368,878  372,155  1,372,003  1,380,098 
% of sales51.5%51.5%51.8%51.7%
Selling, general and administrative expenses208,789210,239810,358843,221
% of sales29.1%29.1%30.6%31.6%
Research and development 25,634  22,581  94,216  82,932 
Operating profit134,455139,335467,429453,945
% of sales18.8%19.3%17.7%17.0%
Restructuring and other charges ("ROTC") (a)18,68535,85740,18266,858
Interest expense, net (c) 4,874  2,495  15,621  20,177 

Earnings from continuing operations before income
taxes

110,896100,983411,626366,910
Provision for income taxes (b) 24,689  25,272  81,664  85,963 
Net earnings from continuing operations$86,207$75,711$329,962$280,947

Earnings/(loss) from discontinued operations, net of
income taxes

 (579)
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