Rexnord Corp. chief executive officer Todd Adams said the company is on track to complete its supply chain and footprint repositioning program during the current quarter and “increasingly optimistic” the annual savings will exceed the $30 million the company targeted.
“This process was and is incredibly difficult and complex for a variety of reasons, not the least of which is the impact it has had on literally thousands of people,” Adams said.
The project aimed to reduce the company’s manufacturing footprint by 20 percent and included the closure of seven facilities totaling 821,000 square feet. The project has been ongoing over the last several years, but drew national attention late last year when the President-elect Donald Trump criticized the closure of an Indiana facility on Twitter.
Adams said on the company’s February earnings call he didn’t see Trump’s policies changing the company’s actions or making the decision “something that we would regret.”
Rexnord has incurred more than $100 million in restructuring costs since the start of its 2012 fiscal year, including $66.5 million over the last two years. In fiscal 2017 alone the company reported $22.7 million in costs related to employee termination benefits.
“The ultimate measure of success is and will be whether it puts us in a position to perform better than we did before we started this initiative two years ago,” Adams said on Thursday’s earnings call. He added the final pieces of equipment from the last plant move were being brought online during the current quarter and the company would continue to look to improve productivity.
He also said the company is considering a second phase of restructuring that would be smaller in scope and cost than the current project. More details about those actions could be announced at the end of the first or second quarter of fiscal 2018.
In fiscal 2017, the company reported net income of $74.1 million, a 9.1 percent increase over the previous year. Earnings, however, were down slightly from 66 to 64 cents per diluted share after $7.3 million in dividends on preferred stock.
Revenue for the year was slightly less than $1.92 billion, a decline of just 0.3 percent. During the fourth quarter of the fiscal year, revenue improved 2.2 percent to $503.6 million.
Net income in the quarter was $27.4 million, up from a $400,000 loss during the same period in fiscal 2016. The company reported earnings of 21 cents per diluted share, up from essentially zero cents per share last year.
“Looking into our fiscal 2018, we are excited about our expanding pipeline of innovation, the expected realization of targeted cost savings and expanding free cash flow, and Rexnord’s prospects for enhanced core growth and shareholder value creation,” Adams said.
