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Weekly UpdatesOverview Sales for the six months were $1.1 billion, a decrease of 5.5% or 1.7% in LC, from a year earlier. Net earnings were $82 million, compared to $84.1 million in the period last year. Diluted earnings per share (EPS) were $0.68, on par with a year earlier. Pro forma EPS, excluding restructuring and other charges as well as non-recurring favorable tax items, were $0.78 versus last year's $0.82. The estimated impact of foreign currency translation reduced earnings per share by $0.03 in both the quarter and six months. Second quarter sales were $543.3 million compared to $625.7 million in the second quarter of fiscal 2008. Foreign exchange reduced sales by $38 million or 6%. Net earnings were $38.9 million compared to $48 million in the second quarter of fiscal 2008. Diluted EPS were $0.33, down from $0.39 a year earlier. Pro forma EPS, excluding restructuring and other charges, were $0.38 versus last year's $0.46.
Eric Krasnoff, chairman and CEO, stated, "While the economy deteriorated during our second quarter, Pall is weathering the storm. Our market and geographic diversity provides some shelter. Well-established productivity improvement and cost-reduction programs have been advanced to stay ahead of forecasted changes in market demand. The results can be seen clearly in the 110 basis point improvement in gross margins.
Our ability to respond to the economic downturn contributed to a $13 million reduction in SG&A expenses compared to the first quarter. We are also executing on further plans to align operating costs to this business climate. Pall maintains a sound balance sheet and solid liquidity. We returned $95 million of cash to shareholders in the six months and increased the quarterly dividend to 141/2 cents per share. We are managing to the current reality while preserving our longer-term perspective. Pall should be well-positioned when the economy rebounds." Life Sciences - Second Quarter Highlights
(Dollar Amounts in Thousands)
Sales: JAN. 31, 2009 % CHANGE % CHANGE IN LC Medical (a) $ 96,887 (9.0) (3.4) BioPharmaceuticals (a) 128,135 (7.2) (0.1) Total Life Sciences segment $ 225,022 (8.0) (1.5)
% OF SALES
Gross profit $ 115,302 51.2 Operating profit $ 48,602 21.6
(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. The amounts above reflect this change.
Medical sales decreased 3.4% in the quarter. This is in line with expectations and reflects lower Blood Filtration sales in the Western Hemisphere. Both Cell
Therapy and OEM market sales increased.
Sales in BioPharmaceuticals were essentially flat compared to 16.7% growth in the prior year. Pharmaceutical customers were working down inventory levels and delaying capital projects. Laboratory sales were up 10.1% (in LC) with growth in
Europe and Asia particularly robust. Gross margins improved 160 basis points to 51.2% driven by price and market mix changes. SG&A dollars decreased about 2% in LC and decreased 40 basis points as a percentage of sales to 25.4%.Operating profit in the quarter was $48.6 million. Operating profit margin improved to 21.6%. Industrial - Second Quarter Highlights
(Dollar Amounts in Thousands)
Sales: JAN. 31, 2009 % CHANGE % CHANGE IN LC Energy, Water & Process Technologies $ 201,332 (13.2) (6.3) Aerospace & Transportation 66,388 (6.5) 1.3 Microelectronics 50,554 (35.4) (34.7) Total Industrial segment $ 318,274 (16.5) (10.7)
% OF SALES Gross profit $ 141,047 44.3 Operating profit $ 35,882 11.3
Energy, Water & Process Technologies (EWPT) sales decreased 6.3% reflecting global weakness in Industrial Manufacturing which declined 23%. On the positive side, Power Generation grew 10% globally. Other bright spots included double-digit sales growth in the Municipal Water market in the Western Hemisphere and in Food & Beverage in the Western Hemisphere and Asia.
In Aerospace & Transportation, Military sales continued to be strong increasing 12.9% (in LC). Commercial Aerospace and Transportation were down. Microelectronics sales decreased in all geographies driven by continued weakness in the semiconductor and consumer electronics markets. Gross margins improved 50 basis points to 44.3% driven by price and the benefits of lean manufacturing and cost reduction initiatives. SG&A was flat (in LC). Operating profit was $35.9 million, while operating profit margin was 11.3%.
Conclusion/Outlook
Mr. Krasnoff concluded, "Pall's strategic market positions across the globe can help mitigate the impact of the present global macroeconomic environment. We also continue strong cost control measures to palliate the impact of the recession. In light of the turbulent global economic environment, we are not providing specific guidance on sales and earnings. We remain committed to keeping the public informed of conditions and prospects for key markets, trends that affect the business and of our long-term vision and strategy. While the timing and triggers of economic recovery are unknown at this juncture, what is clear to us is that the long-term drivers for Pall's enabling technologies are compelling."
About Pall Corporation
Pall Corporation is the global leader in the field of filtration, separation and purification. Pall is organized into two businesses: Life Sciences and Industrial. These businesses provide leading-edge products to meet the demanding needs of customers in biotechnology, pharmaceutical, transfusion medicine, energy, electronics, water purification, aerospace, transportation and broad industrial markets. Total revenues for fiscal year 2008 were $2.6 billion. The company is headquartered in East Hills, New York and has extensive operations around the world. For more information visit Pall at http://www.pall.com.
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