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CLARCOR Inc. (CLC)
F4Q09 Earnings Call
January 14, 2010 11:00 am ET
Norman Johnson - Chief Executive Officer and President
Bruce Klein - Chief Financial Officer
Tom Lawrence - Dye Van Mol & Lawrence
Jeff Hammond - KeyBanc Capital Market
Rick Eastman - Robert W. Baird
Adam Brook - Sidoti & Co.
Brian [Bonheimer – Gabelli & Co.]
Gary Farber – CL King
Kevin Maczka - BB&T Capital Markets
David Lebowitz - Horizon Asset Management
Walter Schenker – Titan Capital
Brian Drab - William Blair
Previous Statements by CLC
» CLARCOR Inc. F3Q09 (Qtr End 08/29/09) Earnings Call Transcript
» CLARCOR Inc. F1Q09 (Qtr End 02/28/09) Earnings Call Transcript
» CLARCOR Inc. F3Q08 (Qtr End 08/30/08) Earnings Call Transcript
Thank you and good morning. We appreciate your interest in joining us on CLARCOR’s conference call to discuss results for the fourth quarter and 2009 year-end. By now everyone should have received a copy of the news release that was distributed yesterday. If anyone does need a copy, it is available on CLARCOR’s website at www.clarcor.com, or you can call Shay Jones at 615-244-1818 and she will send you a copy immediately.
Before I turn the call over to Norm Johnson, CLARCOR’s Chairman and CEO, I remind you that all statements made in the news release dated January 13, 2010 and during this conference call, other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
The company believes that its expectations are based on reasonable assumptions; however, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the company’s actual results, performance or achievements or industry results to differ materially from the company’s expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the company’s past results of operations do not necessarily indicate its future results.
Finally, we wanted to let people know that the information statements made during the call are made as of the date of the call, January 14, 2010. Those listening to any replay should understand that the passage of time by itself will diminish the quality of these statements. Also, the contents of the call are the property of the company and the replay or transmission of the call maybe done only with the consent of CLARCOR.
It is now my pleasure to turn the call over to Norm Johnson for his opening remarks.
Thanks Tom. Good morning and thank you for joining us today. With me are Bruce Klein, Chief Financial Officer; [Dave Fallon] Vice President of Finance and Kim Orr, Vice President and Treasurer.
We are pleased we ended the year with our best quarter of 2009 compared to both the prior year and the previous three quarters of this year. Earnings were at the high end of our guidance but still below 2008. As we discussed during prior calls we could not react fast enough to offset the decline in the economy in the first quarter but each quarter since has improved sequentially as we have reduced costs and increased sales.
Operating margins at 14.8% were the highest of any quarter this year and were more than the 14.3% we made for all of 2008. I am especially pleased our industrial environmental operating margin was over 9% for the quarter. We expect to reach 8-10% in 2010 and be over 10% in 2011.
Our people have done a great job in reducing costs and at the same time positioning us for the future. Obviously forecasting was a challenge in 2009. I am glad we were finally able to beat earnings estimates for a quarter. Hopefully this is the beginning of a trend which will continue for a long time. While we fully expect 2010 to be another challenging year we are more optimistic than we were a year ago. I will go over our outlook for 2010 and the growth we expect from our business units when Bruce is finished with his review of 2009.
Thank you Norm. As Norm said our fourth quarter results this year came in at the upper end of the forecast we issued in September. In most of our businesses in the last half of 2009 and particularly during the fourth quarter the sales decline we saw earlier in 2009 compared to 2008 fell greatly.
Though we did not see an across the board improvement it was true that many of our businesses began to see some growth in sales compared to earlier in the year. This was the case for heavy duty engine filters, HVAC filters excluding the loss of the 3M business, for our photo distribution business except for maintenance [under] to automobile companies and for our aviation fuel filter business.
In fact, our aviation fuel filter business in Europe actually grew in the 2009 fourth quarter compared to the fourth quarter of 2008 as did our heavy duty engine filter operations in Australia, South Africa and China. As you know, our packaging business had strong fourth quarter sales compared to 2008.
Operating margin continued to improve during the year but overall margins were certainly down from 2008. Having said that, we did see higher operating margin in 2009’s fourth quarter compared to 2008’s fourth quarter for domestic heavy duty engine filters, for HVAC filters excluding a $1 million charge we took in the fourth quarter to write down the value of a manufacturing plant we had for sale, for our European aviation fuel filtration business and for our natural gas filtration business.