Wisconsin Manufacturing News

Brady Corp. incurs quarterly loss of $26.7 million; Actuant warns of steep decline in sales; Ruud Lighting cuts 50 jobs; Modine restructures debt as losses mount

Brady Corp. incurs quarterly loss of $26.7 million

Brady Corp., a Milwaukee-based provider of identification solutions, has reported a fiscal second quarter net loss of $4.2 million, or 8 cents per share, compared with net income of $26.7 million, or 48 cents per share, in the same period a year ago.

The most recent quarter included after-tax restructuring charges of $14.0 million, or 27 cents per share.

Brady’s sales for the quarter dropped 26.8 percent to $266.4 million from $364.1 million in the same period a year earlier.

"The rapidly weakening economy and a strengthening dollar, coupled with many customers taking extended shut-downs during the various global holidays, as well as inventory reduction efforts by both our customers and our channel partners, made this a very tough quarter for us," said Brady president and chief executive officer Frank Jaehnert. "As previously announced, we implemented cost-control measures in December, including a 10 percent workforce reduction and significant reduction of discretionary spending. We further reduced costs by eliminating an additional 10 percent of our workforce through a reduction in contract labor. These early and swift actions allowed us to significantly reduce our cost structure, albeit not at the same rate as the rapid decline in sales. We are closely monitoring business conditions and are ready to take additional action if needed."

"We continue to aggressively manage our expenses and working capital, and our financial position remains strong. In the quarter we saw an increase in cash bringing our total cash balance to $185 million," said Brady chief financial officer Thomas Felmer. "Based on current economic conditions and currency exchange rates, we are reducing our net income guidance to between $65 and $75 million, from $75 to $85 million, including after-tax restructuring charges of approximately $20 million. We are reducing earnings per diluted share guidance to between $1.23 and $1.42, from $1.40 to $1.59. Excluding restructuring charges, we expect net income of between $85 and $95 million, down from $95 to $105 million; and earnings per diluted share of between $1.61 and $1.80, down from $1.78 to $1.97."

Actuant warns of steep decline in sales

Actuant Corp. warned that its sales for the two months ended Jan. 31 totaled $202 million, a 23-percent reduction from the comparable prior year period.

Butler-based Actuant chairman and chief executive officer Robert Arzbaecher said, "We’ve seen accelerated deterioration in sales as the second quarter has progressed. Our core sales for the first two months of the quarter declined 25 percent, exceeding our original projections. Demand in virtually all of our end markets is weaker than we contemplated in our guidance. We’ve been aggressively lowering our cost structure, which is showing tangible results and we’ll be taking further cost reduction actions during the balance of the year. The combination of weaker demand and additional restructuring costs will cause us to come in below our earnings guidance for both the current quarter and full year."

The company will provide further information on its second fiscal quarter results, end market trends and restructuring actions when its second fiscal quarter earnings are announced on March 18.

Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools and supplies.

Ruud Lighting cuts 50 jobs

Racine-based Ruud Lighting Inc. eliminated about 50 jobs from its workforce of nearly 600 employees last week.

The workforce reductions were part of a company-wide restructuring, said Chris Ruud, executive vice president of the firm.

"There is softness in the construction portion of the business, but strength in the LED portion," he said. "We need to be prudent, and with these economic times, we needed to take these steps."

Ruud Lighting manufactures lights and lighting products for the commercial, industrial and residential markets. The company also has divisions that make LED lights for those same markets.

The employee cuts were made company wide, Ruud said, affecting management, production and other areas. He said the company does not anticipate additional layoffs.

"We believe that we’ve taken the steps necessary at this time," Ruud said. "We want to put our employees on solid ground and give them at least some peace of mind that thats over."

Modine restructures debt as losses mount

As its losses continue to mount, Modine Manufacturing Co. announced that it reached agreement with its primary lenders and note holders on a waiver of defaults and amendments to its revolving credit and note purchase agreements.

"As we focus on preserving cash and liquidity, we are pleased we were able to complete this amendment process," said Bradley Richardson, executive vice president of corporate strategy and chief financial officer. "We believe these amended agreements, which are structured based on our assumptions about operating in a recessionary environment, will provide the company sufficient liquidity to execute our plans and consistently maintain our day-to-day business activities."

The Racine-based manufacturer also said it lost $56.1 million, or $1.75 per share, in the third quarter, compared with a loss of $54.8 million, or $1.71 per share, in the same period a year ago.

Stung by the decline in the automotive sector, Modine reported quarter net sales of $365.2 million, down from $480.6 million a year earlier.

Modine president and chief executive officer Thomas Burke said, "Obviously these results are disappointing. The weakening global economy and severe downturn in the vehicular markets have contributed to significant sales volume declines and margin compression, particularly in Europe. Despite these unprecedented conditions, we generated strong cash flow during the first nine months of fiscal 2009 with net debt declining since March 31, 2008. We continue to take aggressive actions to address our business performance and lower our underlying cost structure in light of the near-term economic outlook … With renewed support from our creditors, actions we are taking to align our cost structure to the market demands, and a more focused technology portfolio, we are confident Modine is solidly positioned to weather this recession."


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