Peerless Manufacturing Co. (PMFG)
F4Q09 Earnings Call
September 14, 2009 10:00 am ET
Kevin McGrath – Cameron Associates
Peter J. Burlage – President and Chief Executive Officer
Henry G. Schopfer III – Chief Financial Officer
Richard Hoss - Roth Capital Partners LLC
Richard Ryan - Doughtery & Company LLC
Ted Kundtz - Needham & Company
David Cohen - Midwood Capital Management
[David Cohen – Aveena Capital Management]
Previous Statements by PMFG
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I would now like to turn the presentation over to your host for today’s call, Mr. Kevin McGrath of Cameron Associates.
Good morning everyone and thank you for joining the PMFG conference call and webcast to discuss the company’s financial results for the fourth quarter fiscal year 2009 ended June 30, 2009.
During this call non-GAAP financial measures will be discussed. Reconciliations to the most directly comparable GAAP financial measures are included in the company’s earnings release for the fourth quarter which is available on the Investor Relations page of the company’s website at www.peerlessmfg.com.
Before I turn the call over to Peter Burlage, the President and CEO of PMFG, I need to inform you that certain statements made in this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact made during this call are forward-looking statements. These forward-looking statements include statements that reflect the current views of PMFG’s senior management with respect to our financial performance and future events with respect to our business and our industry in general. Statements that include the words anticipate, preliminary, expect, believe, intend and similar statements of a future or forward-looking nature identify forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements address matters that involve risks and uncertainty.
Accordingly there are or will be important factors that could cause the company’s actual results to differ materially from those indicated in these statements. Important information regarding factors that may affect the company’s future performance are included in the public reports that the company files with the Securities and Exchange Commission including the information in Item 1.A, Risk Factors of Part 1 of our annual report on Form 10-K for the fiscal year ended June 30, 2009, which we intend to file later today.
The company undertakes no obligation to update or revise any forward-looking statement. The inclusion of any statement in this conference call does not constitute an admission by the company or any person that the events or circumstances described in such statement are material.
With that said I will now turn the call over to Peter Burlage, President and CEO of PMFG.
Peter J. Burlage
Thank you, Kevin and welcome everyone to our fourth quarter and year-end conference call. Joining me today is Hank Schopfer, our Chief Financial Officer.
I will address our overall business and then Hank will provide you with our financial results for the fourth quarter. Following Hank’s remarks we will open the call up to your questions.
Fourth quarter and full year results reflect the impact of the worldwide recession that has caused our customers in natural gas, refining, petrochemical and power markets to lower capital spending and delay purchases. However, we are starting to see some early signs of stabilization in our end markets, continued strong activity in the nuclear power market and a more stable credit market. Additionally we have begun to see a modest pick up in our sales activity in the Environmental segment, specifically in the area of peaker power projects. The challenge for us during these uncertain times is predicting when the recovery will occur, how robust it will be and perhaps more importantly, when will the customer make the purchase order commitment.
Looking back for a moment, we entered into fiscal year 2009 in a very strong position and a substantial backlog but then the global recession hit our customers and consequently us. We focused on what we could control and that included our operating expenses, procurement, customer service and the necessary investments to maintain our competitiveness, grow our market share and preserve our reputation as a provider of high quality, reliable products. Throughout the second half of fiscal year ’09 we continued our internal initiatives to align our business resources appropriately with the demand. These initiatives were company wide with particular focus on controlling our manufacturing and operation costs. I am pleased to report that the integration of Nitram Energy has proceeded very well and we are continuing to see the benefit from their manufacturing, product offering and customer relationships in our Process Product segment.
Revenues in Q4 were down 8.1% with both our business segments negatively impacted and across most of our major regions of operation. Our Process Product segment revenues declined by 6.7%, while the Environmental segment saw a decline of 13.4%. On an annual comparison our Environmental segment was up against a tough comparison due to one large order flowing through the first three quarters of fiscal year 2008. Additionally, lower energy demand coupled with the reduction in large capital goods projects contributed to the decrease in demand for SCR equipment.