Tecumseh Products Company (TECUA)
Q3 2008 Earnings Call Transcript
November 6, 2008, 11:00 am ET
Teresa Hess – Director, IR
Ed Buker – President & CEO
Jim Nicholson – VP & CFO
Charlie Rentschler – Wall Street Access
Brian Grad [ph] – DLS Capital Management
Rand Gessing [ph] – Neuberger Berman
Jason Nelson – Roumell Asset
Previous Statements by TECUA
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Thank you, Katie. Good morning and welcome to Tecumseh Products third quarter 2008 conference call. On the call today are Ed Buker, President and CEO, and Jim Nicholson, Vice President, Treasurer, and Chief Financial Officer.
Yesterday afternoon, we announced the company’s third quarter 2008 results for the period ended September 30, 2008. If you did not yet receive a copy of the press release, please contact Amanda Passage at 616-233-0500 to have one sent to you. Please note that the release is also available on many news sites and it can be viewed on our corporate website at www.tecumseh.com.
Before I turn the call over to Ed and Jim to comment on our results, I would like to remind you that this conference call contains certain statements regarding the company’s plans and expectations, which are forward-looking statements and are made pursuant to the Safe Harbor provision of the Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company’s views at the time such statements are made with respect to the company’s future plans, objectives, events, and financial results such as revenues, expenses, income, earnings per share, operating margins, financial position, expected results of operation, and other financial items, as well as industry trends and observations.
In addition, words such as estimate, expect, intend, should, could, will, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. There are a number of factors, many of which are beyond the company’s control, which could cause actual results and outcomes to differ materially from those described in the forward-looking statements.
Risk factors exist and new risk factors emerge from time to time that may cause actual results to differ materially from those contained in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the company expressly disclaims any obligation to update, amend, or clarify forward-looking statements.
In addition to the foregoing, several risk factors are discussed in the company’s most recently filed Annual Report on Form 10-K and other SEC filings under the titles Risk Factors or Cautionary Statements with Regard to Forward-Looking Statements. And those discussions regarding risk factors as well as the discussion of forward-looking statements in such sections are incorporated by reference in this call.
With that said, I would now like to turn the call over to Ed Buker, President and CEO of Tecumseh Products.
Thank you, Teresa. Good morning and welcome to our third quarter conference call. The call is being simultaneously broadcast on the Internet and will also be archived for replay starting this afternoon. The replay can be accessed at our website, www.tecumseh.com.
Today I will provide you with an update on our business from several perspectives. First, I will provide some context for our third quarter results as well as broader markets and their impact on those results. Then I’ll turn the call over to our CFO, Jim Nicholson, to go over our financial results for the quarter and nine months in greater detail. Then I’ll update you on our initiative to transform our company to world-class compressor and condensing unit manufacturer. Finally, we will open up the call to your questions.
It’s a very busy year so far. We made a lot of progress. Unfortunately, the condition of the global economy is served to mask some results of our efforts. The recent global slowdown had a detrimental effect on our sales volumes. The current decline has been marked by lack of credit availability for our customers, increased borrowing rates for those who are able to secure lines of credit, slowdowns in the housing market and double-digit inflation rates in some countries where we have key business operations. Any one of these factors taken independently would have had an inverse, adverse impact on our sales volume. Combined, the impact has been significant.
We are a global business. And under normal circumstances, declines in economic activities that affect one regional market would be balanced against great growth in other parts of the global. Unfortunately, the current slowdown is affecting all of our global markets with nearly equal severity with the declines in the third quarter and expected declines in the fourth quarter, greatly exceeding our previous expectations.
In response, many of our customers quickly reduced production volumes and canceled their delayed orders in an effort to reduce inventory levels. Although we responded quickly to this slowdown, including reducing our global headcount by 1,200 people over the course of the third quarter, instituting temporary shutdowns at many facilities and aggressively consolidating our manufacturing footprint, the impact on our financial results was significant.