Tecumseh Products Company (TECUB, Financial) filed Quarterly Report for the period ended 2010-03-31.
Tecumseh Products Company has a market cap of $247.4 million; its shares were traded at around $13.39 with and P/S ratio of 0.3. TECUB is in the portfolios of Charles Brandes of Brandes Investment.
The increase in gross profit in the first quarter of 2010 included the effect of volume increases of $9.2 million as compared to the same quarter of 2009, including the effect of higher sales on fixed costs. Changes in commodity costs of $5.1 million, productivity of $6.4 million, other raw material purchases of $0.5 million, and currency of $5.4 million also had favorable impacts on gross profit as compared to the same quarter of 2009. In contrast, a change in sales mix reduced gross profit by $1.8 million and items that were favorable to the first quarter of 2009 results did not recur in the first quarter of 2010. These include a favorable change in estimate for warranty claims of $2.3 million and a favorable litigation settlement of $1.0 million. We also recorded $1.1 million less in pension and OPEB credits in the current year. The effect of all other income and expense items included in gross profit was unfavorable to 2010 first quarter results by $1.2 million.
Selling and administrative (S&A) expenses decreased by $3.9 million from $32.4 million in the first quarter of 2009 to $28.5 million in the first quarter of 2010. As a percentage of net sales, S&A expenses were 11.9% in the first quarter of 2010 compared to 21.4% in the first quarter of 2009. Professional fees decreased by $3.0 million due to a reduction in professional fees outside the ordinary course of business incurred in the prior year. Payroll, benefits and other related employee expenses decreased by $2.8 million as a result of our continued restructuring efforts and termination of our previous CEO. All other selling and administrative expenses increased in the aggregate by $1.9 million
Net loss from continuing operations for the quarter ended March 31, 2010 was $40.7 million, or $2.20 per share, as compared to $24.4 million, or $1.32 per share, in the same period of 2009. The change was primarily the result of volume increases in the current year offset by the non-cash hourly pension plan reversion charges of $29.2 million, excise taxes of $10.9 million from the reversion, and other factors as discussed above.
In the first quarter of 2010, cash provided by operations amounted to $23.9 million as compared to $28.3 million of cash used in operations in the first quarter of 2009. A significant element of this increase in cash in the first quarter was the net proceeds of $43.6 million (after accrual of excise tax) realized from the reversion of our hourly pension plan. A significant use of cash in the quarter was our net loss of $41.9 million less the non-cash impacts of the settlement charges of the hourly pension plan reversion of $29.2 million, depreciation and amortization of $10.3 million, investment impairment of $0.4 million and share-based compensation of $0.4 million, partially offset by a deferred tax benefit of $3.0 million.
Cash used by investing activities was $0.2 million in the first quarter of 2010 as compared to cash used by investing activities of $2.1 million for the same period of 2009. Cash used in 2009 was primarily due to $1.6 million of capital expenditures, partially offset by $0.8 million of formerly restricted cash that became available to fund our 401(k) matching contributions and $0.5 million in cash from investments.
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Tecumseh Products Company has a market cap of $247.4 million; its shares were traded at around $13.39 with and P/S ratio of 0.3. TECUB is in the portfolios of Charles Brandes of Brandes Investment.
Highlight of Business Operations:
Net sales in the first quarter of 2010 increased $87.4 million, or 57.8%, versus the same period of 2009. Excluding the increase in sales due to the effect of changes in foreign currency translation of $27.0 million, net sales increased by 39.9% from the first quarter of 2009. Sales of compressors used in commercial refrigeration and aftermarket applications increased by $36.0 million, or 45.4%, when compared to the first quarter of 2009. For the commercial refrigeration and aftermarket business, volume increases were primarily driven by stronger economic conditions as well as higher shipments to customers as they too increased inventory balances to better reflect current sales levels. The dollar volume increase in sales of compressors used in household refrigeration and freezer (R&F) applications was $30.7 million, or 75.2%, versus the same period of 2009, primarily due to higher units sold. Volumes for R&F product were also substantially affected by the stronger global economic conditions, as consumer credit became available compared to 2009 and the rate of housing starts has increased. Sales of compressors for air conditioning applications and all other applications also increased by $20.7 million, or 65.5%, primarily due to unusually hotter and more humid weather in our Brazilian market along with customers beginning to increase their inventory levels based upon their current forecasted demands. We also believe that sales volume increases in the commercial refrigeration and aftermarket applications as well as the R&F applications were the result of increased market share while the air conditioning and all other applications market share remained relatively consistent between quarters.The increase in gross profit in the first quarter of 2010 included the effect of volume increases of $9.2 million as compared to the same quarter of 2009, including the effect of higher sales on fixed costs. Changes in commodity costs of $5.1 million, productivity of $6.4 million, other raw material purchases of $0.5 million, and currency of $5.4 million also had favorable impacts on gross profit as compared to the same quarter of 2009. In contrast, a change in sales mix reduced gross profit by $1.8 million and items that were favorable to the first quarter of 2009 results did not recur in the first quarter of 2010. These include a favorable change in estimate for warranty claims of $2.3 million and a favorable litigation settlement of $1.0 million. We also recorded $1.1 million less in pension and OPEB credits in the current year. The effect of all other income and expense items included in gross profit was unfavorable to 2010 first quarter results by $1.2 million.
Selling and administrative (S&A) expenses decreased by $3.9 million from $32.4 million in the first quarter of 2009 to $28.5 million in the first quarter of 2010. As a percentage of net sales, S&A expenses were 11.9% in the first quarter of 2010 compared to 21.4% in the first quarter of 2009. Professional fees decreased by $3.0 million due to a reduction in professional fees outside the ordinary course of business incurred in the prior year. Payroll, benefits and other related employee expenses decreased by $2.8 million as a result of our continued restructuring efforts and termination of our previous CEO. All other selling and administrative expenses increased in the aggregate by $1.9 million
Net loss from continuing operations for the quarter ended March 31, 2010 was $40.7 million, or $2.20 per share, as compared to $24.4 million, or $1.32 per share, in the same period of 2009. The change was primarily the result of volume increases in the current year offset by the non-cash hourly pension plan reversion charges of $29.2 million, excise taxes of $10.9 million from the reversion, and other factors as discussed above.
In the first quarter of 2010, cash provided by operations amounted to $23.9 million as compared to $28.3 million of cash used in operations in the first quarter of 2009. A significant element of this increase in cash in the first quarter was the net proceeds of $43.6 million (after accrual of excise tax) realized from the reversion of our hourly pension plan. A significant use of cash in the quarter was our net loss of $41.9 million less the non-cash impacts of the settlement charges of the hourly pension plan reversion of $29.2 million, depreciation and amortization of $10.3 million, investment impairment of $0.4 million and share-based compensation of $0.4 million, partially offset by a deferred tax benefit of $3.0 million.
Cash used by investing activities was $0.2 million in the first quarter of 2010 as compared to cash used by investing activities of $2.1 million for the same period of 2009. Cash used in 2009 was primarily due to $1.6 million of capital expenditures, partially offset by $0.8 million of formerly restricted cash that became available to fund our 401(k) matching contributions and $0.5 million in cash from investments.
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