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CLARCOR Inc. Reports Operating Results (10-Q)

June 22, 2012 | About:
10qk

10qk

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CLARCOR Inc. (CLC) filed Quarterly Report for the period ended 2012-06-02.

Clarcor Inc has a market cap of $2.49 billion; its shares were traded at around $46.04 with a P/E ratio of 20.2 and P/S ratio of 2.2. The dividend yield of Clarcor Inc stocks is 1%. Clarcor Inc had an annual average earning growth of 7.5% over the past 10 years. GuruFocus rated Clarcor Inc the business predictability rank of 4-star.

Highlight of Business Operations:

Our $3.7 million, or 1%, decrease in net sales in the second quarter of 2012 from the second quarter of 2011 was due to a $4.2 million, or 18%, reduction in net sales at our Packaging segment and a less than 1% decrease in net sales at our Engine/Mobile Filtration segment, partially offset by a 1% increase in net sales at our Industrial/Environmental Filtration segment. Net sales at our Engine/Mobile Filtration segment decreased less than 1%, including a 1% increase in U.S. sales and a 2% reduction in foreign sales. Lower growth in this segment in the U.S. compared to recent prior quarters was driven by lower heavy-duty engine filter order volume from our independent distributors--our primary distribution channel. Lower foreign sales in this segment was heavily influenced by a 25% reduction in heavy-duty engine filter sales in China as a result of lower diesel engine manufacturing volume. Net sales at our Industrial/Environmental Filtration segment increased 1%, including flat sales in the U.S. and a 3% increase in foreign sales. Flat sales in this segment in the U.S. were primarily the result of strong sales at our Total Filtration Services (TFS) distribution business offset by lower sales of aviation and marine fuel filtration vessels and aftermarket filters to both commercial and military customers. The 3% increase in foreign sales was driven by higher natural gas vessel and aftermarket filter sales in Asia and other geographies throughout the world. The $4.2 million, or 18%, reduction in net sales at our Packaging segment was primarily driven by lower smokeless tobacco and confection packaging sales and lower sales in other markets due to inventory and production scheduling adjustments. The decline in smokeless tobacco packaging sales was due to one of our customers qualifying a second sourced supplier according to their corporate policy at the end of 2011, and the reduction in confection packaging sales was due to lost business from a large customer.

Our $7.9 million, or 1%, increase in net sales was due to a combined $18.5 million, or 4%, increase in net sales at our Engine/Mobile Filtration and Industrial/Environmental Filtration segments partially offset by a $10.6 million, or 23%, reduction in net sales at our Packaging segment. Net sales at our Engine/Mobile Filtration segment increased 3%, including a 6% increase in U.S. sales and flat foreign sales. Our growth in the U.S. was driven by strong heavy-duty engine filter aftermarket demand in the first quarter of 2012 partially offset by slower sales growth in the second quarter. Flat foreign sales in this segment in the first six months of 2012 was heavily influenced by strong export growth of heavy-duty engine filtration products from the U.S. offset by an approximate 25% reduction in heavy-duty engine filter sales in China due to lower diesel engine manufacturing volume. Net sales at our Industrial/Environmental Filtration segment increased 4%, including a 6% increase in U.S. sales and flat foreign sales. Higher sales in this segment in the U.S. were primarily the result of strong sales at our Total Filtration Services (TFS) distribution business and higher natural gas vessel sales to support shale gas drilling activity partially offset by lower aviation and marine fuel filtration vessels and aftermarket filters to both commercial and military customers. The $10.6 million, or 23%, reduction in net sales at our Packaging segment was primarily driven by lower smokeless tobacco and confection packaging sales and lower sales in other markets due to inventory and production scheduling adjustments by our customers. The decline in smokeless tobacco packaging sales was due to one of our customers qualifying a second sourced supplier according to their corporate policy at the end of 2011, and the reduction in confection packaging sales was due to lost business from a large customer.

Our cost of sales increased $3.9 million, or 1%, in the first six months of 2012 from the first six months of 2011. This 1% increase was in line with our 1% increase in net sales. As a result, our cost of sales as a percentage of net sales declined slightly to 66.0% in the first six months of 2012 from 66.2% in the first six months of 2011. Our material costs increased approximately 2% from the first six months of 2011. However, we were effectively able to pass through these higher material costs through 2% higher pricing to our customers. As a result, our material costs as a percentage of net sales remained relatively constant in the first six months of 2012 from the last year's first six months. All other manufacturing costs including direct labor and manufacturing overhead increased consistent with the 1% increase in net sales from the first six months of 2011. As a result, our gross margin percentage in the second quarter of 2012 increased to 34.0% from 33.8% in the first six months of 2011.

Selling and administrative expenses increased $1.2 million, or 3%, in the first six months of 2012 from the first six months of 2011. This increase was primarily the result of $1.2 million higher employee costs to support anticipated future domestic and foreign growth and $0.5 million for the settlement of a patent dispute partially offset by approximately $1.0 million lower legal expenses as the result of the settlement of various legal proceedings. With selling and administrative expenses increasing 3% while our net sales increased 3%, our selling and administrative expenses as a percentage of net sales remained flat at 15.5% in the first six months of 2012 from the first six months of 2011.

We had 50.1 million shares of common stock outstanding at the end of the second quarter of 2012, consistent with the amount outstanding at year-end 2011. Shares issued pursuant to stock incentive plans were offset by shares repurchased in the first six months of 2012. Shareholders equity increased to $868.9 million at the end of the second quarter of 2012 from $835.6 million at year-end 2011. This $33.3 million increase resulted mainly from additional net earnings of $56.4 million, items related to stock compensation and option activity pursuant to incentive plans of $8.7 million, pension amounts affecting Accumulated other comprehensive loss of $2.2 million partially offset by dividend payments of $12.1 million, stock repurchases of $11.4 million and currency translation adjustments of $10.5 million.

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