Baldor Electric Company (BEZ) filed Quarterly Report for the period ended 2009-10-03.
Baldor Electric Company operates in one industry segment which includes the design, manufacture, and sale of electric motors and drives and related products. Baldor has made several small acquisitions; however, the majority of its growth has come internally through broadening its markets and product lines. Baldor Electric Company has a market cap of $1.27 billion; its shares were traded at around $27.35 with a P/E ratio of 24.7 and P/S ratio of 0.7. The dividend yield of Baldor Electric Company stocks is 2.5%. Baldor Electric Company had an annual average earning growth of 5.4% over the past 10 years.
Highlight of Business Operations:
We are not dependent on any one industry or customer for our financial performance, and no single customer represented more than 10% of our net sales for the quarters and nine months ended October 3, 2009, and September 27, 2008. For the quarters ended October 3, 2009 and September 27, 2008, domestic net sales generated through distributors, representing primarily sales of replacement products, amounted to 52.4% and 49.7% of total product sales, respectively. For the nine month periods ended October 3, 2009 and September 27, 2008, domestic net sales generated through distributors amounted to 49.2% and 49.1%, respectively. Domestic sales to OEMs were approximately 47.6% and 50.3% of total domestic product sales for the quarters ended October 3, 2009 and September 27, 2008, respectively. For the nine month periods ended October 3, 2009 and September 27, 2008, domestic sales to OEMs were approximately 50.8% and 50.9%, respectively. OEMs primarily use our products in new installations. This expands our installed base and leads to future replacement product sales through distributors.
Net sales for the quarter decreased 24.8% to $380.4 million, compared to $506.2 million in 2008. Sales of industrial electric motor products decreased 27.4% for the quarter as compared to third quarter 2008 and comprised 63.4% of total sales for the quarter compared to 65.6% for the same period last year. Sales of mounted bearings, gearing, and other mechanical power transmission products, decreased 21.3% for the quarter as compared to third quarter 2008 and comprised 29.1% of total sales compared to 27.8% for the same period last year. Sales of other products decreased 13.8% for the quarter as compared to third quarter 2008 and
comprised 7.5% of total sales for the quarter compared to 6.6% for the same period last year. While sales of Super-E® premium-efficient motors declined 3.7% for the quarter, they increased to 14.9% of total motor sales. We expect sales of premium-efficient motors to continue to outperform standard-efficiency motors as customers prepare for the December 2010 implementation of the 2007 Energy Independence and Security Act (EISA). Once the EISA takes effect in 2011, we expect sales of premium-efficient products to be approximately 50% of our total motor sales.
Gross profit margin increased to 30.2% in the third quarter of 2009 compared to 29.0% in the third quarter 2008 and operating profit margin increased to 13.8% from 12.2% in the third quarter 2008. Third quarter 2009 manufacturing costs included approximately $1.5 million of one-time costs related to the consolidations of our Ft. Mill, SC and Columbus, IN manufacturing facilities into other existing facilities in the U.S. As a result of continued product design improvements, reduction of waste, and price improvement in certain commodities, our materials cost as a percentage of sales improved in the third quarter of 2009 when compared to the same period last year. In addition, we achieved significant manufacturing cost reductions during the third quarter of 2009 when compared to third quarter 2008. These cost reductions combined with the improvement in materials costs more than offset the impact of decreased net sales and one-time restructuring costs, resulting in improved gross profit margin. As we did in manufacturing, we realized reductions in selling and administrative overhead costs from our cost reduction initiatives. These reductions combined with materials and manufacturing reductions offset the impact of decreased net sales and resulted in improved operating margin when compared to third quarter 2008. In addition, third quarter 2009 operating profit margin included approximately $3.7 million gain (approximately 1% of operating profit margin) on sale of long-lived property.
gearing, and other mechanical power transmission products, decreased 20.8% for the first nine months of 2009 as compared to the first nine months of 2008 and comprised 28.6% of total sales compared to 28.5% for the same period last year. The first nine months of sales for 2009 include approximately $17.8 million from the operations of Maska compared to $2.7 million in 2008 for the period beginning August 29, 2008. Sales of other products decreased 22.1% for the first nine months of 2009 as compared to the first nine months of 2008 and comprised 6.2% of total sales for both periods. Sales of Super-E® premium-efficient motors grew 10.7% for the first nine months of 2009 when compared to the same period last year and comprised 13.8% of total motor sales. We believe premium-efficient motors will continue to become a larger portion of total product sales as customers prepare for the December 2010 implementation of the 2007 Energy Bill.
Gross profit margin decreased to 29.1% in the first nine months of 2009 compared to 29.9% in the first nine months of 2008 and operating profit margin decreased to 12.1% from 13.3% for the same period. Improved materials costs combined with manufacturing cost reductions have partially offset the impact of decreased net sales on our gross profit margin. Our materials cost improvements and reductions in manufacturing and selling and administrative overhead costs realized in the first nine months of 2009, helped to partially offset the impact of decreased net sales on our operating margin.
BEZ is in the portfolios of David Dreman of Dreman Value Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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