Attached files
| file | filename |
|---|---|
| 8-K - WATTS WATER TECHNOLOGIES, INC. - WATTS WATER TECHNOLOGIES INC | eps3794.htm |
Exhibit
99.1
|
FOR IMMEDIATE
RELEASE
|
Contact:
|
William
C. McCartney
|
|
|
Chief
Financial Officer
|
|||
|
Telephone:
|
(978)
688-1811
|
||
|
Fax:
|
(978)
688-2976
|
||
WATTS
WATER TECHNOLOGIES REPORTS FIRST QUARTER 2010 RESULTS
North Andover, MAMay 4,
2010. Watts Water Technologies, Inc. (NYSE: WTS) today
announced results for the first quarter ended April 4, 2010. Sales
for the first quarter of 2010 were $319.3 million, an increase of $28.6 million,
or 10%, compared to the first quarter of 2009. Net income for the first quarter
of 2010 was $11.9 million, or $0.32 per share, compared to $3.4 million, or
$0.09 per share, for the first quarter of 2009.
Net
income for the first quarters of 2010 and 2009 includes the following after-tax
items:
|
2010
|
2009
|
||||
|
Amount
in $
millions
|
Diluted
EPS
Effect
|
Amount
in $
millions
|
Diluted
EPS
Effect
|
||
|
Loss
from discontinued operations
|
($0.3)
|
($0.01)
|
($0.7)
|
($0.02)
|
|
|
Impairment
charges
|
($0.1)
|
-
|
($0.2)
|
($0.01)
|
|
|
Restructuring/other
charges
|
($4.1)
|
($0.11)
|
($4.7)
|
($0.12)
|
|
Restructuring
and other charges in 2010 were primarily for severance and other costs from the
recently announced restructuring program in France and a tax charge related to
the sale of an entity in China. The 2009 restructuring charges
primarily relate to a tax charge of $3.9 million, or $0.11 per share, relating
to previously realized tax benefits.
Income
from continuing operations for the first quarter of 2010 increased by $8.1
million to $12.2 million, or $0.33 per share, compared to $4.1 million, or $0.11
per share, for the first quarter of 2009. Favorable foreign currency
movements positively affected income from continuing operations by $0.02 per
share in the first quarter of 2010.
Patrick
S. O’Keefe, Chief Executive Officer, commented, “We were encouraged by the
increased levels of activity in the first quarter, both in the retail and
wholesale markets in the U.S. Although there were four additional workdays in
the first quarter of 2010, which affected quarter over quarter comparisons, we
also experienced an increase in orders and noticed some minor customer
restocking. Europe also performed well, with stronger quarterly results than in
the previous year.”
Commenting
on first quarter sales, Mr. O’ Keefe noted, “Sales increased 10% from the same
quarter last year with an organic sales increase of $19.6 million, or 7%, and
favorable changes in foreign exchange rates of $9.0 million, or 3%.
“Sales
in our North American segment increased for the first quarter of 2010 by $21.0
million, or 12%, to $198.5 million compared to $177.5 million for first quarter
of 2009. This increase was the result of an increase in organic sales
of $18.2 million, or 10%, and by favorable foreign exchange movements of $2.8
million, or 2%, associated with the strengthening of the Canadian dollar versus
the U.S. dollar.
“Organic
sales in our North American wholesale market for the first quarter of 2010
increased 9% as compared to the first quarter of 2009. Organic sales
in our North American home improvement retail market increased 14% for the first
quarter of 2010 compared to the first quarter of 2009. The increase in both the
wholesale and retail markets sales were primarily from increased sales
volumes.
“We
derived 37% of our total sales for the first quarter of 2010 from our European
segment. European sales increased $8.3 million, or 8%, to $116.5 million
compared to $108.2 million for the first quarter of 2009. This
increase was the result of an increase in organic sales of $2.1 million, or 2%,
and favorable foreign exchange movements of $6.2 million, or 6%, associated with
the strengthening of the Euro versus the U.S. dollar. The organic sales increase
was primarily attributable to increased sales in the European wholesale
market.
“Sales
in our China segment in the first quarter of 2010 decreased $0.7 million, or
14%, to $4.3 million, compared to $5.0 million for the first quarter of 2009 due
to organic sales volume declines.”
Mr.
O’Keefe concluded, “Our operating income for the first quarter of 2010 increased
by $10.5 million, or 68%, to $26.0 million as compared to $15.5 million in the
first quarter of 2009. Organic operating earnings increased $11.8 million, or
76%, and foreign exchange movements were favorable by $1.2 million, offset in
part by increased net restructuring costs and asset impairments of $2.5
million. Operating margins in the first quarter of 2010 increased by
approximately 2.8% to 8.1% as compared to 5.3% in the first quarter of 2009.
Restructuring costs and impairment charges decreased operating margins in the
first quarter of 2010 and the first quarter of 2009 by approximately 1.3% and
0.5%, respectively. Compared to last year, our operating margins were
positively affected by favorable commodities costs and efficiencies realized
through our LEAN programs, partially offset by higher general and administrative
expenses, primarily for legal and personnel related costs.”
We
completed the sale of Watts Valve (Changsha) Co., Ltd., formerly an indirect
wholly-owned subsidiary of the Company in January 2010. As previously disclosed,
we have conducted an investigation into payments made by employees of Watts
Valve (Changsha) Co., Ltd., to employees of state-owned agencies in China.
Such payments may violate the United States Foreign Corrupt Practices Act.
We have voluntarily disclosed this matter to the United States Department of
Justice and the Securities and Exchange Commission. We cannot predict the
outcome of this matter at this time or whether it will have a materially adverse
impact on our financial condition or results of
operations. Therefore, we are presently unable to estimate an
amount of probable loss or a range of loss related to this matter.
Watts
Water Technologies, Inc. will hold a live web cast of its conference call to
discuss first quarter results for 2010 on Tuesday, May 4, 2010, at 5:00 p.m.
Eastern Time. This press release and the live web cast can be accessed by
visiting the Investor Relations section of the Company's website at
www.wattswater.com. Following the web cast, an archived version of the call will
be available at the same address until May 4, 2011.
The
Company's 2010 Annual Meeting of Stockholders will be held at 9:00 a.m. on
Wednesday, May 12, 2010 at The Andover Country Club, 60 Canterbury Street,
Andover, Massachusetts.
Watts
Water Technologies, Inc. is a world leader in the manufacture of innovative
products to control the efficiency, safety, and quality of water within
residential, commercial, and institutional applications. Its expertise in a wide
variety of water technologies enables it to be a comprehensive supplier to the
water industry.
This
Press Release includes statements that are not historical facts and are
considered forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking
statements reflect Watts Water Technologies’ current views about future results
of operations and other forward-looking information. In some cases
you can identify these statements by forward-looking words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should” and “would”
or similar words. You should not rely on forward-looking statements because
Watts’ actual results may differ materially from those indicated by these
forward-looking statements as a result of a number of important
factors. These factors include, but are not limited to, the
following: the current economic and financial condition, which can
affect levels of housing starts and remodeling, affecting the markets where the
Company’s products are sold, manufactured, or marketed, shortages in and pricing
of raw materials and supplies, loss of market share through competition,
introduction of competing products by other companies, pressure on prices from
competitors, suppliers, and/or customers, changes in variable interest rates on
Company borrowings, identification and disclosure of
material
weaknesses in our internal control over financial reporting, failure to expand
our markets through acquisitions, failure or delay in developing new products,
lack of acceptance of new products, failure to manufacture products that meet
required performance and safety standards, foreign exchange rate fluctuations,
cyclicality of industries, such as plumbing and heating wholesalers and home
improvement retailers, in which the Company markets certain of its products,
environmental compliance costs, product liability risks, the results and timing
of the Company’s manufacturing restructuring plan, changes in the status of
current litigation, the outcome of our investigation into potential violations
of the Foreign Corrupt Practices Act and other risks and
uncertainties discussed under the heading “Item 1A. Risk Factors” in the Watts
Water Technologies, Inc. Annual Report on Form 10-K for the year ended December
31, 2009 filed with the Securities Exchange Commission and other reports Watts
files from time to time with the Securities and Exchange
Commission. Watts does not intend to, and undertakes no duty to,
update the information contained in this Press Release, except as required by
law.
|
WATTS
WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Amounts
in millions, except per share information)
|
|
(Unaudited)
|
|
First
Quarter Ended
|
||||||||
|
April
4,
|
March
29,
|
|||||||
|
2010
|
2009
|
|||||||
|
STATEMENTS OF
INCOME
|
||||||||
|
Net
sales
|
$ | 319.3 | $ | 290.7 | ||||
|
Income
from continuing operations
|
$ | 12.2 | $ | 4.1 | ||||
|
Loss
from discontinued operations
|
(0.3 | ) | (0.7 | ) | ||||
|
Net
income
|
$ | 11.9 | $ | 3.4 | ||||
|
DILUTED EARNINGS PER
SHARE
|
||||||||
|
Weighted
Average Number of Common Shares & Equivalents
|
37.3 | 37.0 | ||||||
|
Income
(loss) per Share
|
||||||||
|
Continuing
operations
|
$ | 0.33 | $ | 0.11 | ||||
|
Discontinued
operations
|
(0.01 | ) | (0.02 | ) | ||||
|
Net
income
|
$ | 0.32 | $ | 0.09 | ||||
|
Cash
dividends per share
|
$ | 0.11 | $ | 0.11 | ||||
WATTS
WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Amounts
in millions, except share information)
(Unaudited)
|
April
4,
|
December
31,
|
|||||||
|
ASSETS
|
2010
|
2009
|
||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
and cash equivalents
|
$ | 252.7 | $ | 258.2 | ||||
|
Short-term
investment securities
|
6.3 | 6.5 | ||||||
|
Trade
accounts receivable, less allowance for doubtful accounts
of
|
||||||||
|
$9.6
million in 2010 and $7.5 million in 2009
|
196.2 | 181.3 | ||||||
|
Inventories,
net:
|
||||||||
|
Raw
materials
|
102.7 | 88.0 | ||||||
|
Work
in process
|
24.2 | 36.5 | ||||||
|
Finished
goods
|
137.7 | 142.2 | ||||||
|
Total
Inventories
|
264.6 | 266.7 | ||||||
|
Prepaid
expenses and other assets
|
23.6 | 22.1 | ||||||
|
Deferred
income taxes
|
36.1 | 35.4 | ||||||
|
Assets
held for sale
|
11.2 | 11.3 | ||||||
|
Assets
of discontinued operations
|
10.4 | 23.1 | ||||||
|
Total
Current Assets
|
801.1 | 804.6 | ||||||
|
PROPERTY,
PLANT AND EQUIPMENT:
|
||||||||
|
Property,
plant and equipment, at cost
|
442.5 | 454.9 | ||||||
|
Accumulated
depreciation
|
(243.0 | ) | (248.4 | ) | ||||
|
Property,
plant and equipment, net
|
199.5 | 206.5 | ||||||
|
OTHER
ASSETS:
|
||||||||
|
Goodwill
|
414.0 | 425.1 | ||||||
|
Intangible
assets, net
|
143.6 | 151.2 | ||||||
|
Deferred
income taxes
|
3.0 | 3.0 | ||||||
|
Other,
net
|
8.4 | 8.8 | ||||||
|
TOTAL
ASSETS
|
$ | 1,569.6 | $ | 1,599.2 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable
|
$ | 105.3 | $ | 102.3 | ||||
|
Accrued
expenses and other liabilities
|
110.8 | 105.9 | ||||||
|
Accrued
compensation and benefits
|
36.7 | 45.9 | ||||||
|
Current
portion of long-term debt
|
50.9 | 50.9 | ||||||
|
Liabilities
of discontinued operations
|
0.8 | 9.8 | ||||||
|
Total
Current Liabilities
|
304.5 | 314.8 | ||||||
|
LONG-TERM
DEBT, NET OF CURRENT PORTION
|
303.6 | 304.0 | ||||||
|
DEFERRED
INCOME TAXES
|
40.2 | 43.0 | ||||||
|
OTHER
NONCURRENT LIABILITIES
|
54.5 | 57.8 | ||||||
|
STOCKHOLDERS'
EQUITY:
|
||||||||
|
Preferred
Stock, $.10 par value; 5,000,000 shares authorized;
|
||||||||
|
no
shares issued or outstanding
|
- | - | ||||||
|
Class
A Common Stock, $.10 par value; 80,000,000 shares
authorized;
|
||||||||
|
1
vote per share; issued and outstanding: 29,601,475 shares in
2010
|
||||||||
|
and
29,506,523 shares in 2009
|
3.0 | 3.0 | ||||||
|
Class
B Common Stock, $.10 par value; 25,000,000 shares
authorized;
|
||||||||
|
10
votes per share; issued and outstanding: 7,173,880 shares in
2010
|
||||||||
|
and
7,193,880 in 2009
|
0.7 | 0.7 | ||||||
|
Additional
paid-in capital
|
397.4 | 393.7 | ||||||
|
Retained
earnings
|
458.8 | 452.1 | ||||||
|
Accumulated
other comprehensive income
|
6.9 | 30.1 | ||||||
|
Total
Stockholders' Equity
|
866.8 | 879.6 | ||||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 1,569.6 | $ | 1,599.2 | ||||
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Amounts
in millions, except per share information)
(Unaudited)
|
First
Quarter Ended
|
||||||||
|
April
4,
|
March
29,
|
|||||||
|
2010
|
2009
|
|||||||
|
Net
sales
|
$ | 319.3 | $ | 290.7 | ||||
|
Cost
of goods sold
|
201.7 | 193.7 | ||||||
|
GROSS
PROFIT
|
117.6 | 97.0 | ||||||
|
Selling,
general & administrative expenses
|
88.3 | 80.0 | ||||||
|
Restructuring
and other charges
|
3.1 | 1.2 | ||||||
|
Other
indefinite-lived intangible asset impairment charges
|
0.2 | 0.3 | ||||||
|
OPERATING
INCOME
|
26.0 | 15.5 | ||||||
|
Other
(income) expense:
|
||||||||
|
Interest
income
|
(0.2 | ) | (0.2 | ) | ||||
|
Interest
expense
|
5.2 | 5.6 | ||||||
|
Other
|
(0.2 | ) | (0.5 | ) | ||||
| 4.8 | 4.9 | |||||||
|
INCOME
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
21.2 | 10.6 | ||||||
|
Provision
for income taxes .
|
9.0 | 6.5 | ||||||
|
INCOME
FROM CONTINUING OPERATIONS
|
12.2 | 4.1 | ||||||
|
Loss
from discontinued operations, net of taxes
|
(0.3 | ) | (0.7 | ) | ||||
|
NET
INCOME
|
$ | 11.9 | $ | 3.4 | ||||
|
BASIC
EPS
|
||||||||
|
Income
(loss) per share:
|
||||||||
|
Continuing
operations
|
$ | 0.33 | $ | 0.11 | ||||
|
Discontinued
operations.
|
(0.01 | ) | (0.02 | ) | ||||
|
NET
INCOME
|
$ | 0.32 | $ | 0.09 | ||||
|
Weighted
average number of shares
|
37.1 | 36.9 | ||||||
|
DILUTED
EPS
|
||||||||
|
Income
(loss) per share:
|
||||||||
|
Continuing
operations.
|
$ | 0.33 | $ | 0.11 | ||||
|
Discontinued
operations
|
(0.01 | ) | (0.02 | ) | ||||
|
NET
INCOME
|
$ | 0.32 | $ | 0.09 | ||||
|
Weighted
average number of shares
|
37.3 | 37.0 | ||||||
|
Dividends
per share
|
$ | 0.11 | $ | 0.11 | ||||
WATTS
WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts
in millions)
(Unaudited)
|
First
Quarter Ended
|
||||
|
April
4,
|
March
29,
|
|||
|
2010
|
2009
|
|||
| OPERATING ACTIVITIES | ||||
|
Net
income
|
$
|
11.9
|
$
|
3.4
|
|
Loss
from discontinued operations
|
(0.3)
|
(0.7)
|
||
|
Income
from continuing operations
|
12.2
|
4.1
|
||
|
Adjustments
to reconcile net income from continuing operations to net
|
||||
|
cash
provided by continuing operating activities:
|
||||
|
Depreciation
|
8.2
|
|
7.6
|
|
|
Amortization
of intangibles
|
3.4
|
3.2
|
||
|
Stock-based
compensation
|
1.2
|
1.3
|
||
|
Deferred
income taxes (benefit)
|
(2.3)
|
|
(2.0)
|
|
|
Other
|
0.1
|
0.1
|
||
|
Changes
in operating assets and liabilities, net of effects
|
||||
|
from
business acquisitions and divestures:
|
||||
|
Accounts
receivable
|
(19.2)
|
9.5
|
||
|
Inventories
|
(2.9)
|
|
18.1
|
|
|
Prepaid expenses
and other assets
|
(1.2)
|
|
(3.4)
|
|
|
Accounts
payable, accrued expenses and other liabilities
|
5.2
|
|
(20.5)
|
|
|
Net
cash provided by continuing operating activities
|
4.7
|
18.0
|
||
| INVESTING ACTIVITIES | ||||
|
Additions
to property, plant and equipment
|
(6.8)
|
|
(4.2)
|
|
|
Proceeds
from the sale of property, plant and equipment
|
0.2
|
|
0.2
|
|
|
Proceeds
from sale of securities
|
0.3
|
-
|
||
|
Net
proceeds from purchase price settlement
|
-
|
|
1.1
|
|
|
Business
acquisitions, net of cash acquired
|
(0.5)
|
|
(0.3)
|
|
|
Net
cash used in investing activities
|
(6.8)
|
(3.2)
|
||
| FINANCING ACTIVITIES | ||||
|
Proceeds
from long-term borrowings
|
-
|
0.3
|
||
|
Payments
of long-term debt
|
(0.2)
|
(3.8)
|
||
|
Payments
of capital lease
|
(0.4)
|
(0.3)
|
||
|
Proceeds
from exercise of stock options
|
-
|
0.1
|
||
|
Tax
benefit of stock awards exercised
|
(0.5)
|
(0.4)
|
||
|
Dividends
|
(4.2)
|
(4.1)
|
||
|
Net
cash used in financing activities
|
(5.3)
|
(8.2)
|
||
| Effect of exchange rate changes on cash and cash equivalents |
(1.4)
|
(0.8)
|
||
| Net cash used in operating activities of discontinued operations |
(1.8)
|
(1.2)
|
||
| Net cash provided by investing activities of discontinued operations |
5.1
|
-
|
||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(5.5)
|
4.6
|
||
| Cash and cash equivalents at beginning of period |
258.2
|
165.6
|
||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$
|
252.7
|
$
|
170.2
|
|
WATTS
WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
|
|
SEGMENT
INFORMATION
|
|
(Amounts
in millions)
|
|
(Unaudited)
|
| Net Sales | ||||||||
|
First
Quarter Ended
|
||||||||
|
April
4,
|
March
29,
|
|||||||
|
2010
|
2009
|
|||||||
|
North
America
|
$ | 198.5 | $ | 177.5 | ||||
|
Europe
|
116.5 | 108.2 | ||||||
|
China
|
4.3 | 5.0 | ||||||
|
Total
|
$ | 319.3 | $ | 290.7 | ||||
| Operating Income (Loss) | ||||||||
|
First
Quarter Ended
|
||||||||
|
April
4,
|
March
29,
|
|||||||
| 2010 | 2009 | |||||||
|
North
America
|
$ | 27.6 | $ | 14.5 | ||||
|
Europe
|
10.6 | 9.9 | ||||||
|
China
|
(1.1 | ) | (0.2 | ) | ||||
|
Corporate
|
(11.1 | ) | (8.7 | ) | ||||
|
Total
|
$ | 26.0 | $ | 15.5 | ||||
| Intersegment Sales | ||||||||
|
First
Quarter Ended
|
||||||||
|
April
4,
|
March
29,
|
|||||||
| 2010 | 2009 | |||||||
|
North
America
|
$ | 1.0 | $ | 1.1 | ||||
|
Europe
|
2.1 | 1.9 | ||||||
|
China
|
24.5 | 26.3 | ||||||
|
Total
|
$ | 27.6 | $ | 29.3 | ||||