East Hills, NY (September 12, 2005) - - Pall Corporation (NYSE: PLL) today reported sales and earnings results for the fourth quarter and fiscal year ended July 31, 2005.
Sales for the fourth quarter increased 4% to $524.5 million compared to $504.5 million last year. Reported earnings were $43.4 million or 34 cents per share as compared to $55.5 million or 44 cents per share last year. On a pro forma basis, earnings were $59.2 million or 47 cents per share excluding restructuring and other charges, net of related tax effect, as compared to $56.9 million or 45 cents per share last year. The effect of foreign currency translation was not significant in the quarter.
For the full year, sales increased 7 1/2% to $1.9 billion compared to $1.77 billion last year. Reported earnings were $140.8 million or $1.12 per share as compared to $151.6 million or $1.20 per share last year. Excluding restructuring and other charges, net of related tax effect, earnings on a pro forma basis increased 5% to $167.7 million or $1.34 per share as compared to $159.8 million or $1.26 per share last year. The effect of foreign currency translation added 3 1/2% to revenues and increased earnings per share by 4 cents for the full year. This was more than offset by the first year costs of Sarbanes-Oxley compliance.
Restructuring and other charges of approximately $23.5 million and $38.8 million were recorded in the fourth quarter and full year, respectively, primarily related to progress in the Company's CoRe cost reduction programs and business restructuring as well as a charge related to the early extinguishment, in the fourth quarter, of the Company's $100 million private placement 7.83% unsecured senior notes.
Eric Krasnoff, Chairman and CEO, said, "In fiscal 2005, Pall continued to build top-line growth momentum with sales up 7 1/2%. Our increasing participation and leadership in intrinsically high-growth markets, including water processing, biotechnology, energy and microelectronics, is setting the pace. Our systems business continues to deliver dramatic growth with sales up over 36 1/2% in the quarter and 27 1/2% for the full year. Gross margins were down compared with last year as the savings generated from our CoRe programs were offset by the impact of increased systems business and pricing pressures.
The results reported in local currency by business are:
Overall Industrial sales grew 3 1/2% in the quarter and operating profit margin improved to 17.6%. Operating profit dollars increased 6% to $55.5 million. Full year sales increased 5%.
Looking at the Industrial businesses by reporting segment, Aerospace sales were off 6% in the quarter reflecting the timing of large Military projects. The Aerospace operating margin was 24.7% in the quarter, and operating profit dollars were $11.5 million.
General Industrial sales increased by 6 1/2% in the quarter. The operating profit margin was 13.7%, and operating profit dollars were $28.8 million. Within General Industrial, Water Processing sales grew 25 1/2% for the quarter and the year, and show no sign of slowing. Sales growth in the Western Hemisphere and Asia was strong and we saw a return to growth in Europe. Food and Beverage sales were up 6 1/2%. Machinery and Equipment sales were down 6% as growth in the Western Hemisphere and Asia was offset by a softness in the European market and the divestiture of a machine tool business in Germany. On a pro forma basis, subtracting the divested machine tool business, sales increased 3%. Power Generation sales were flat as strong growth in Asia was offset by declines in the Western Hemisphere and Europe related to the timing of large system sales. For the full year, Power Generation sales were up 8 1/2%.
Microelectronics sales increased slightly in the quarter compared to last year as near double-digit growth in Asia was largely offset by shortfalls in Europe and the Western Hemisphere. The operating profit margin was 25.8% in the quarter and operating profit dollars were $15.3 million. Full year sales were up 4%.
Turning now to Life Sciences, sales increased 2 1/2% in the quarter with continued strong growth in BioPharmaceuticals. Life Sciences operating profit margin was 23.1%. Sales in the BioPharmaceuticals segment increased 16 1/2% compared with last year and 9 1/2%, on a reported basis, sequentially. Sales in Europe increased 27 1/2% driven by increased investments by biotech facilities in the region. Sales in the Western Hemisphere were up 9% fueled by the biotechnology sector. System sales more than doubled in the quarter. The BioPharmaceuticals operating profit margin was 24.4% and operating profit dollars were $22.1 million, up 15%.
Within Medical, the Blood Filtration and Hospital product sectors were down 9 1/2% in the quarter as our customers continue to experience a weakness in U.S. blood collections. The BioSciences portion of the business was up slightly. Medical operating profit margins were 22.1% and operating profit dollars were $26.1 million despite pricing pressures. Full year Medical sales were down 2 1/2% as growth in our BioSciences and Hospital businesses was offset by a decline in Blood Filtration.
The results by geography, with sales reported in local currency, are:
Sales in the Western Hemisphere were down 4% in the quarter, as growth in BioPharmaceuticals and General Industrial was offset by shortfalls in Medical, Microelectronics and Aerospace. Sales for the full year were up 3%. Operating profit margin for the quarter was 20.3%, while operating profit dollars were $52.5 million, up 7 1/2%. Sales in Asia increased 13% in the quarter and 13 1/2% for the full year reflecting strong growth in General Industrial and Microelectronics. Operating profit margin for the quarter was 15.3%, while operating profit dollars were $18.7 million, up 14%. In Europe, we saw a return to growth as sales increased 4 1/2% driven by BioPharmaceuticals and Medical. Operating profit margin was 13.1%, while operating profit dollars were a healthy $32.8 million.
Mr. Krasnoff concluded, "Looking now at fiscal 2006, we anticipate continued good growth in Asia and the Western Hemisphere. In Europe, sales picked up in the last quarter and we expect a continuing recovery during this new year. Alongside this growth in sales, our CoRe cost reduction programs will continue to reduce costs. The impact of stock compensation and the adoption of SFAS No. 123R, "Share-Based Payment", will cost about 8 cents in earnings per share. So, overall we now expect fiscal 2006 earnings per share to be in the range of $1.31 to $1.46, before giving effect to restructuring and other charges that may be incurred."
Tomorrow, September 13, 2005, at 8:30 am EST, Pall Corporation will host its quarterly earnings conference call. Individuals can access the webcast on the home page of the Company's website, http://www.pall.com/. Listening to the webcast requires speakers and Microsoft Windows Media Player software. The webcast will be archived for 30 days.
About Pall Corporation: Pall Corporation is the global leader in the rapidly growing field of filtration, separations and purification. Pall's business is organized around two broad markets: Life Sciences and Industrial. The Company provides leading-edge products to meet the demanding needs of customers in biotechnology, pharmaceutical, transfusion medicine, semiconductor, water purification, aerospace and broad industrial markets. Total revenues for fiscal 2005 were $1.9 billion. The Company headquarters is in East Hills, New York with extensive operations throughout the world. Visit Pall at http://www.pall.com/.
This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current Company expectations and are subject to risks and uncertainties which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in foreign currency exchange rates; regulatory approval and market acceptance of new technologies; changes in product mix and product pricing and in interest rates and cost of raw materials; the Company's success in enforcing its patents and protecting its proprietary products and manufacturing techniques and its ability to achieve the savings anticipated from its cost reduction initiatives; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available on the Web at www.pall.com and is included in the Company's reports filed with the U.S. Securities and Exchange Commission. Copies of such reports can be obtained, without charge, at www.sec.gov.
Management uses certain non-GAAP measurements to assess Pall's current and future financial performance. The non-GAAP measurements do not replace the presentation of Pall's GAAP financial results. These measurements provide supplemental information to assist management in analyzing Pall's financial position and results of operations. Pall has chosen to provide this information to facilitate meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Financial Tables Follow...
Contact: Marcus Wilson Pall Corporation Tel: (516) 801-9800