East Hills, NY (June 1, 2005) - - Pall Corporation (NYSE: PLL) today reported sales and earnings results for the third quarter and nine months ended April 30, 2005.
Sales for the quarter increased 6 1/2% to $493.5 million compared to $463.9 million last year. Reported earnings were $43.7 million or 35 cents per share as compared to $46.5 million or 37 cents per share last year. Excluding restructuring and other charges, net of related tax effect, earnings on a pro forma basis, were $46.3 million or 37 cents per share as compared to $47 million or 37 cents per share last year. The effect of foreign currency translation added 4% to revenues and increased earnings per share by 1 cent in the quarter.
Sales for the nine months increased 9% to $1.38 billion compared to $1.27 billion last year. Reported earnings were $97.4 million or 78 cents per share as compared to $96 million or 76 cents per share last year. Excluding restructuring and other charges, net of related tax effect, earnings on a pro forma basis, increased 5 1/2% to $108.6 million or 87 cents per share as compared to $103 million or 81 cents per share last year. The effect of foreign currency translation added 4 1/2% to revenues and increased earnings per share by 3 cents for the nine months.
Restructuring and other charges of approximately $4.3 million and $15.3 million were recorded in the quarter and nine months, respectively. These costs primarily related to the Company's CoRe cost reduction program and business restructuring along with the write down of a strategic investment in the first quarter.
Eric Krasnoff, Chairman and CEO, said, "The far-reaching realignment of our business is nearing completion. We can already see one of its key objectives, spurring top line growth, starting to show through in the quarter and nine month results. Our earnings are stable and now expected to ramp up more in line with our long-term goals starting next fiscal year. By then, the implementation of SOX and our business restructuring will be behind us.
Our systems business continues to grow and was up over 11% in the quarter. Gross margins were on par with last year as the impact of increased systems business was offset by the savings generated from our CoRe programs.
The results reported in local currency by business are:
Overall Industrial sales grew 3 1/2% in the quarter. The Industrial operating profit margin was 14.2% at a strong $41.5 million.
Looking at the Industrial businesses by reporting segment, Aerospace sales were up 9 1/2% in the quarter fueled by growth in both the Military and Commercial portion of the business in Europe. Aerospace orders worldwide were also very strong in the quarter, increasing 18 1/2%. The Aerospace operating margins, at 20.7% in the quarter, were up 40 basis points compared with last year.
General Industrial sales grew in the quarter by 6 1/2%. The operating profit margin was 12.5%, and operating profit dollars were $23.9 million. Within General Industrial, Water Processing sales grew 27% driven by repeat orders from existing municipal customers. Power Generation and Fuels and Chemicals sales were up 11% and 9%, respectively. Sales growth was strong overall in these markets in the Western Hemisphere, while Asian Power Generation and European Fuels & Chemicals sales also increased strongly. Food and Beverage sales were up 7% led by Asia where sales were up 30% with particular success in the brewing market. Machinery and Equipment sales were down 4 1/2% reflecting softness in the European market. On a pro forma basis and subtracting a divested machine tool business, sales were flat.
Microelectronics sales were down 10 1/2% in the quarter compared to last year due to end market cyclicality. The forecast downturn in the Microelectronics segment was steeper than expected in the large Asian market. Operating profit margin was 14.6% in the quarter.
Turning now to Life Sciences, sales increased 2% in the quarter as strong growth in BioPharmaceuticals was offset by a shortfall in the Medical portion of the business. Life Sciences operating profit margin at 21.6% was on par with last year and operating profit dollars were $43.6 million, up 5%. Sales in the BioPharmaceuticals segment increased 10% compared with last year and 6 1/2% sequentially reflecting increased success selling into the biotechnology sector in the Western Hemisphere. The BioPharmaceuticals operating profit margin was 22.6% and operating profit dollars were up 6%.
Within Medical, the BioSciences portion of the business grew 7% in the quarter reflecting strong Laboratory sales in the Western Hemisphere and Europe. The blood filtration and hospital product sectors were down 7 1/2% in the quarter on weakness in North America. Medical operating profit margins were 20.9% and operating profit dollars were $24.9 million, up 4 1/2%. We have just released our eagerly anticipated Leukotrap® Affinity Prion Reduction Filter for commercial sale in Europe this past week.
The results by geography, with sales reported in local currency, are:
Sales in the Western Hemisphere grew 5% in the quarter, driven by excellent growth in BioPharmaceuticals and General Industrial of 24 1/2% and 27 1/2%, respectively. These gains were partly offset by shortfalls in Microelectronics and Medical. Sales in Asia increased 4% in the quarter with a double-digit increase in General Industrial, modest growth in our Life Sciences business and a decline in Microelectronics. In Europe, sales were flat as Aerospace sales growth of 36 1/2% was offset by reduced Microelectronics and General Industrial sales. We are pleased to see a return to growth in our Medical business in Europe."
Mr. Krasnoff concluded, "Pall's geographic presence is expanding steadily, especially in Asia and Eastern Europe. We are also strengthening our product lines in key markets such as biotechnology, microelectronics, blood filtration and water processing. Alongside these commercial efforts, Pall's cost reduction program continues to benefit the bottom line. Looking out just two months to our new fiscal year, an accelerating sales trend and an improving cost reduction environment should keep Pall on track to achieve its long term objectives."
Tomorrow, June 2, 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 2004 were $1.8 billion. The Company headquarters are 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.
Contact Marc Wilson Pall Corporation Tel: (516) 801-9800