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Tecumseh Products Company (TECUA)

Q3 2009 Earnings Call Transcript

November 5, 2009 11:00 am ET


Teresa Hess – Director, Financial Reporting & IR

Jim Wainright – Acting President

Jim Nicholson – VP and CFO


Charlie Rentschler – Wall Street Access



Good morning and welcome to Tecumseh Products Company's third quarter 2009 earnings conference call. All participants will be in a listen-only mode until the question-and-answer session of the conference. This conference call is being recorded at the request of Tecumseh Products. If anyone has any objections, you may disconnect at this time.

I would now like to introduce Ms. Teresa Hess, Director of Financial Reporting and Investor Relations at Tecumseh Products. Ms. Hess, you may proceed.

Teresa Hess

Thank you, Jamie. Good morning, everyone, and welcome to Tecumseh Products third quarter 2009 conference call. I’m joined on the call today by Jim Wainright, President; Jim Nicholson, Vice President, Treasurer, and Chief Financial Officer; and Lynn Dennison, Vice President, Law and Risk Management, Secretary and General Counsel.

Yesterday afternoon, we announced the company's third quarter results for the period ended September 30, 2009. Please note that the release is available on many news sites and it can be viewed on our corporate website at Also this call is being simultaneously broadcast on the Internet and will be archived for replay starting this afternoon. The replay can also be accessed at our website.

Before I turn the call over to Jim Wainright 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 10-K and other SEC filings under the titles Risk Factors or Cautionary Statements related 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 Jim Wainright, President of Tecumseh Products. Unfortunately for his first call, Jim has a bit of laryngitis today. So we are glad he is still able to join us.

Jim Wainright

Thank you, Teresa. Good morning and welcome to our third quarter 2009 conference call. Today we have a number of items to cover. But first let me acknowledge how pleased I am to have this opportunity to discuss our results with you today. Having been named Acting President a little more than a month ago, I’m making every effort to ensure that Tecumseh team continues working hard to return the company to profitability, enhance cash flow, and improve our operating efficiencies.

And speaking for my new vantage, I’m pleased to report my confidence in Tecumseh’s future. We will start the call today with a few high level comments to establish some context for our third quarter results, including the impact of the broader markets and global economic conditions. And then I’ll have our Vice President, Treasurer and Chief Financial Officer, Jim Nicholson, cover those financial results in some greater detail.

After that review, I would like to share with you our progress, the progress we are making to improve our results and the actions we have taken to pave the way for Tecumseh’s future success. I will continue our formal comments with our view of the remainder of the year, and finally we will open the call up for your questions.

Overall, the third quarter margin improved from the first half of the year. While we continued to face a significant drop in volume, the magnitude of the decline wasn’t nearly as large as we experienced in the preceding two quarters. And despite the volume decline, we were able to show some improvement in our results versus prior year third quarter. That said, we are still not satisfied with our overall financial performance, and we are committed to improving it.

In the third quarter, we saw signs of economic improvement, which helped to begin reversing the trend we saw in the first half. After removing the effect of currency translation, our first quarter sales ran approximately 36% below the prior year; our second quarter was 32% below the prior year; and the third quarter after removing the effect of currency translation, our sales ran just 12.5% below prior year. While we cannot say with any certainty that we are out of the recessionary loads, we view this as an encouraging indication that we may have seen the worst of the current downturn.

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