Thursday, Baldor Electric Co. (BEZ), a company which markets, designs and manufactures industrial goods, reported a decline in profit for the fourth quarter due to a decline in sales as well as a tax expense related to a foreign subsidiary dividend the company chose to take.
The net income declined to $2.98 million or $0.06 per share from $18.60 million or $0.40 per share in the year-ago period. Excluding income taxes on a foreign subsidiary dividend, net earnings were $0.13 per share, down from $0.40 per share in the previous year quarter.
On average, 10 analysts polled by Thomson Reuters expected the company to earn $0.17 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter declined by 25% to $356.41 million from $474.02 million a year-ago. Nine Wall Street analysts estimated revenue of $362.25 million for the quarter.
Product-wise, the sale of motors declined by 30% to $221 million, which constituted 62% of total sales. The sale of power transmission declined 19% to $106 million, which constituted 30% of total sales. However, other sales increased by 11% to $29 million, which constituted 8% of total sales. International sales declined by 29% to $61.50 million and constituted 17% of total sales.
According to John McFarland, chairman and chief executive officer, sales were down by 25% in part because 2008 had one additional week. Net income of $3.0 million was affected by a $3.0 million tax expense related to a foreign subsidiary dividend we chose to take. He said that this unusual tax expense, not expected to be recurring, reduced net earnings of $0.13 per share by $0.07 per share.
The company's cost of sales declined to $254.05 million from $339.04 million a year-ago.
Selling, general and administrative expenses declined to $62.88 million from $83.71 million in the year-ago period.
McFarland added, "Incoming order rates have begun to show improvement. As a result, we expect first quarter 2010 sales to be in a range of $380 - $400 million with continued margin improvement on a year-over-year basis. For the full year of 2010, we expect a slight sales increase."
The company said that during 2009, it invested in both new products and new customers, improved productivity in its plants, and reduced costs by $115 million on an annual basis. As a result of these investments and an improving incoming order rate, Baldor expects an increase in 2010 sales and earnings.
Baldor paid a dividend of $0.13 for the quarter, compared with a dividend of $0.40 paid in the year-ago period.
Year-to-date net income declined 40% to $59.79 million or $1.28 per share from $99.42 million or $2.15 per share a year-ago.
Net sales declined 22% to $1.52 billion from $1.95 billion in the prior year period.
The Street estimated earnings of $0.94 per share on a revenue of $1.53 billion for the entire year.
BEZ closed Thursday's last trade at $25.28, down $1.55 or 5.78%, on a volume of 946 thousand shares on the New York Stock Exchange. In the afterhours, the stock traded up $0.27 or 1.07%.
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