Earnings Releases
Fedders Reports First Quarter 2006 Results
CONTACT:
Robert Laurent, Jr.
Fedders Corporation
(908) 604-8686
investorrelations@fedders.com
LIBERTY CORNER, New Jersey -- May 10, 2006 -- Fedders Corporation (NYSE: FJC), a leading global manufacturer of air treatment products, including air conditioners, furnaces, air cleaners, dehumidifiers, and humidifiers for residential, commercial, and industrial markets, today announced its results for the first quarter of 2006.
Net sales of $99.7 million in the 2006 first quarter increased by 36.8% from $72.9 million in the prior-year quarter. Net sales within the Heating, Ventilation, Air Conditioning, and Refrigeration (HVACR) segment increased by 40.0% during the period due primarily to higher sales of room air conditioners in North America. Sales also increased for dehumidifiers, residential ducted air conditioners, and commercial air conditioners. Sales in the Engineered Products segment increased by 2.3%.
Gross profit for the first quarter of 2006 declined to $12.7 million, compared with $13.6 million in the prior-year quarter, and decreased to 12.7% of net sales during the period versus 18.7% in the prior-year period. Gross profit declined primarily as a result of increased copper, aluminum, and plastic costs of $4.2 million that could not be passed along in the form of price increases to customers with fixed-price contracts for room air conditioners and dehumidifiers. Also impacting gross profit in 2006 was a significantly higher sales mix of lower-margin room air conditioners. These lower-margin sales were partly offset by increased sales of higher-margin residential ducted air conditioners and commercial air conditioners.
Selling, general, and administrative (SG&A) expenses declined 14.4% to $15.0 million in the first quarter of 2006, compared with $17.6 million in the prior-year quarter. This reduction is a result of cost-savings programs initiated in late 2005 and management's continued focus on reducing costs.
The operating loss for the first quarter of 2006 was $2.3 million, or 2.4% of net sales, compared with $4.1 million, or 5.7% of net sales, in the prior-year quarter. The improvement reflects lower SG&A costs and reduced factory expenses despite higher raw material costs.
The net loss applicable to common stockholders in the first quarter of 2006 was $9.9 million, or $0.32 per diluted common share. The net loss applicable to common stockholders in the prior-year period was $9.1 million, or $0.30 per diluted common share.
Commenting on the first quarter, Fedders' Chairman and Chief Executive Officer, Sal Giordano, Jr. said, "Sharp increases in commodity costs, especially copper, masked operational improvements from plant consolidations and reduced SG&A expenses. An additional plant consolidation, continued SG&A reductions, and passing through higher commodity costs in the form of price increases should have a positive effect going forward."
FEDDERS CORPORATION
RESULTS FOR THE FIRST QUARTER ENDED
MARCH 31, 2006 AND 2005
(amounts in thousands, except per share data)
THREE MONTHS ENDED (UNAUDITED) March 31,
2006 2005
Net sales $ 99,701 $ 72,898
Cost of sales 87,006 59,286
Gross profit 12,695 13,612
Selling, general and administrative expense 15,040 17,569
Restructuring (income)/expense - 175
Total operating expenses 15,040 17,744
Operating income/(loss) (2,345) (4,132)
Interest expense, net 5,473 5,358
Partners' net interest in joint venture results 147 (379)
Other (income)/expense 559 (607)
Income/(loss) from continuing operations
before income taxes (8,524) (8,504)
Income tax expense/(benefit) 277 228
Income/(loss) from continuing operations (8,801) (8,732)
Income/(loss) from discontinued operations - 635
Net income/(loss) $ (8,801) $ (8,097)
Preferred stock dividends 1,143 1,005
Net income/(loss) applicable to
common stockholders $ (9,944) $ (9,102)
Basic and diluted net income/(loss) per
common share $(0.32) $(0.30)
Basic and diluted weighted average
shares outstanding 30,832 30,534
Selected balance sheet items as of
March 31, 2006 and 2005 (unaudited) 2006 2005
Cash and cash equivalents $ 10,135 $ 13,499
Accounts receivable 65,310 62,079
Inventories 78,006 143,927
Accounts payable 79,551 62,697
Short-term notes 55,989 99,617
Long-term debt, including current portion 160,560 161,654
This news release includes forward-looking statements that are covered under the "Safe-Harbor" clause of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations and assumptions. Actual results could differ materially from those currently anticipated as a result of known and unknown risks and uncertainties including, but not limited to, weather and economic, political, market and industry conditions and reliance on key customers. Such factors are described in Fedders' SEC filings, including its most recently filed annual report on Form 10-K. The company disclaims any obligation to update any forward-looking statements to incorporate developments occurring after release of this announcement. Visit the Fedders investor information website at http://www.fedders.com to access additional information on Fedders.
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