CLARCOR Inc. (CLC, Financial) filed Quarterly Report for the period ended 2009-05-30.
Clarcor Inc. is a diversified marketer and manufacturer of mobile industrial and environmental filtration products and consumer and industrial packaging products sold in domestic and international markets. CLARCOR Inc. has a market cap of $1.5 billion; its shares were traded at around $29.5 with a P/E ratio of 17.2 and P/S ratio of 1.4. The dividend yield of CLARCOR Inc. stocks is 1.2%. CLARCOR Inc. had an annual average earning growth of 10.3% over the past 10 years. GuruFocus rated CLARCOR Inc. the business predictability rank of 4.5-star.
The minimum required contribution under the Pension Benefit Guarantee Corporation requirements for one of its U.S. qualified pension plans for fiscal 2009 is expected to be approximately $400,000. The Company, from time to time, makes contributions in excess of the minimum amount required as economic conditions warrant. It will contribute at least $360,000 as a voluntary contribution to one of its U.S. qualified plans in 2009. Also, it expects to contribute $363,000 to its non-U.S. qualified plan and $295,000 to its postretirement health care benefit plan to pay benefits during 2009. Future estimates of the Companys pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements. The Company also has a nonqualified pension plan covering certain employees in the Companys management. The expected payments to be made under this plan are shown in the table above and are largely not funded.
The global recession impacted the Companys first and second quarter 2009 results and it is unclear how long the recession will continue or how severe it will be. The Company believes that its cost reduction efforts and sales and marketing programs are having a positive impact on CLARCOR, and although sales and profits overall will be less in fiscal 2009 than in fiscal 2008, the Company expects each subsequent quarter of fiscal 2009 will be better than the previous 2009 quarter. Sales and operating profit in the third quarter of 2009 are anticipated to be down from the corresponding period of 2008. Based on its first half results and current backlog, the Company expects its 2009 full-year sales to decline by approximately 10% to 12% from 2008, but that second-half sales will decline by 7% to 9% compared to the second half of 2008. Sales improvement in the latter half of fiscal 2009 compared to that of the first half is expected as the Company anticipates that its customers base replacement demand will resume as they deplete their inventory. In addition, the Company has entered into certain sales contracts with new customers under which shipments should start in the remaining quarters of 2009. The Company expects new product introductions to also contribute to future long-term growth. If the current recession does not worsen, diluted earnings per share are estimated to be in the range of $1.40 to $1.60 in 2009 based on the Companys current forecast. In 2010, the Company expects the over-the-road trucking and railroad markets to recover, its HVAC filter manufacturing operation to reach an 8% operating margin on higher sales, and its natural gas filtration business to have another good year. The Company also expects to see a recovery in most other markets, particularly in oil drilling, aerospace and fibers, and a strong year of growth for its packaging operations.
On June 25, 2007, the Companys Board of Directors approved a three-year, $250 million stock repurchase program. Pursuant to the authorization, CLARCOR may purchase shares from time to time in the open market or through privately negotiated transactions through June 25, 2010. CLARCOR has no obligation to repurchase shares under the authorization, and the timing, actual number and values of shares to be purchased will depend on CLARCORs stock price and market conditions. As set forth in the table below, the Company did not repurchase any shares during the fiscal quarter ended May 30, 2009. The amount of $187,210,241 remained available for purchase under such program at the end of the second quarter of 2009.
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Clarcor Inc. is a diversified marketer and manufacturer of mobile industrial and environmental filtration products and consumer and industrial packaging products sold in domestic and international markets. CLARCOR Inc. has a market cap of $1.5 billion; its shares were traded at around $29.5 with a P/E ratio of 17.2 and P/S ratio of 1.4. The dividend yield of CLARCOR Inc. stocks is 1.2%. CLARCOR Inc. had an annual average earning growth of 10.3% over the past 10 years. GuruFocus rated CLARCOR Inc. the business predictability rank of 4.5-star.
Highlight of Business Operations:
Interest payments on the Companys variable rate debt are determined based on current interest rates as of May 30, 2009. The $65 million outstanding as of May 30, 2009 under the Companys five-year revolving line of credit will be due by the end of the five-year term. Annual interest payments related to the $65 million will be approximately $4,230,000 for fiscal year 2009 based on the swap agreement entered into at the beginning of 2008 that expires in January 2010. After that, interest will be paid at a variable rate based on LIBOR plus or minus applicable margins. The amounts in the table above related to the line of credit assume an annual interest rate plus margin of 1.30%, which is slightly higher than LIBOR plus margin was as of May 30, 2009 for the remaining term and that no additional borrowings or payments will be made on the line of credit during the periods presented. At May 30, 2009, the interest rate plus margin was 0.61%.The minimum required contribution under the Pension Benefit Guarantee Corporation requirements for one of its U.S. qualified pension plans for fiscal 2009 is expected to be approximately $400,000. The Company, from time to time, makes contributions in excess of the minimum amount required as economic conditions warrant. It will contribute at least $360,000 as a voluntary contribution to one of its U.S. qualified plans in 2009. Also, it expects to contribute $363,000 to its non-U.S. qualified plan and $295,000 to its postretirement health care benefit plan to pay benefits during 2009. Future estimates of the Companys pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements. The Company also has a nonqualified pension plan covering certain employees in the Companys management. The expected payments to be made under this plan are shown in the table above and are largely not funded.
The global recession impacted the Companys first and second quarter 2009 results and it is unclear how long the recession will continue or how severe it will be. The Company believes that its cost reduction efforts and sales and marketing programs are having a positive impact on CLARCOR, and although sales and profits overall will be less in fiscal 2009 than in fiscal 2008, the Company expects each subsequent quarter of fiscal 2009 will be better than the previous 2009 quarter. Sales and operating profit in the third quarter of 2009 are anticipated to be down from the corresponding period of 2008. Based on its first half results and current backlog, the Company expects its 2009 full-year sales to decline by approximately 10% to 12% from 2008, but that second-half sales will decline by 7% to 9% compared to the second half of 2008. Sales improvement in the latter half of fiscal 2009 compared to that of the first half is expected as the Company anticipates that its customers base replacement demand will resume as they deplete their inventory. In addition, the Company has entered into certain sales contracts with new customers under which shipments should start in the remaining quarters of 2009. The Company expects new product introductions to also contribute to future long-term growth. If the current recession does not worsen, diluted earnings per share are estimated to be in the range of $1.40 to $1.60 in 2009 based on the Companys current forecast. In 2010, the Company expects the over-the-road trucking and railroad markets to recover, its HVAC filter manufacturing operation to reach an 8% operating margin on higher sales, and its natural gas filtration business to have another good year. The Company also expects to see a recovery in most other markets, particularly in oil drilling, aerospace and fibers, and a strong year of growth for its packaging operations.
On June 25, 2007, the Companys Board of Directors approved a three-year, $250 million stock repurchase program. Pursuant to the authorization, CLARCOR may purchase shares from time to time in the open market or through privately negotiated transactions through June 25, 2010. CLARCOR has no obligation to repurchase shares under the authorization, and the timing, actual number and values of shares to be purchased will depend on CLARCORs stock price and market conditions. As set forth in the table below, the Company did not repurchase any shares during the fiscal quarter ended May 30, 2009. The amount of $187,210,241 remained available for purchase under such program at the end of the second quarter of 2009.
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