East Hills, NY (March 1, 2005) - - Pall Corporation (NYSE: PLL) today reported sales and earnings results for the second quarter and six months ended January 31, 2005.
Sales for the quarter increased 9 1/2% to $469.5 million compared to $428.1 million last year. Reported earnings were $32 million or 26 cents per share as compared to $24.9 million or 20 cents per share last year. Excluding restructuring and other charges, earnings on a pro forma basis, net of related tax effect, increased 6% to $35.8 million or 29 cents per share as compared to $33.7 million or 26 cents per share last year.
Sales for the six months increased 10% to $884.2 million compared to $802.4 million last year. Reported earnings were $53.7 million or 43 cents per share as compared to $49.5 million or 39 cents per share last year. Excluding restructuring and other charges, earnings on a pro forma basis, net of related tax effect, increased 11% to $62.2 million or 50 cents per share as compared to $56 million or 44 cents per share last year. The effect of foreign currency translation added 4 1/2% to revenues and increased earnings per share by 1 cent for both the quarter and the six months.
Restructuring and other charges of approximately $5.4 million and $11 million were recorded in the quarter and six months, respectively, primarily related to the Company's ongoing cost reduction and business realignment programs and the write-down of a strategic investment in the first quarter.
Eric Krasnoff, Chairman and CEO, said, "We are pleased with our results for the quarter. Sales were up over 9%, while pro forma earnings increased 6%. Our CoRe cost reduction initiatives and business realignment are on track. SG&A improved 20 basis points over last year excluding the impact of foreign exchange. Our systems business, intrinsic to Pall's Total Fluid Management strategy, again saw explosive growth of over 25%. While depressing gross margins slightly, our growing installed systems base consumes higher margin Pall disposables for years to come.
The results by geography, with sales reported in local currency, are:
Sales in Asia increased 16 1/2% in the quarter, led by strong growth in Japan and China. The Asian growth was fueled by increases of 26 1/2% in General Industrial and 14% in Microelectronics. Sales in the Western Hemisphere grew 5 1/2% in the quarter, led by strong growth in BioPharmaceuticals, General Industrial and Microelectronics. In Europe, sales were flat primarily due to reduced sales in Aerospace and Microelectronics as well as the impact of the sale of our machine tool business last August.
The results reported in local currency by business are:
Overall Industrial sales grew 6 1/2% in the quarter driven by growth in General Industrial and Microelectronics. The Industrial operating profit margin was 12.2% at a strong $34.4 million.
Looking at the Industrial businesses by reporting segment, Microelectronics sales increased 8% in the quarter compared to last year. For the six months, sales are up 15 1/2%. Operating profit margin was 17.9% in the quarter. New products and increasing sales beyond our core chip manufacturing applications are driving growth.
General Industrial sales grew in the quarter by 8 1/2%. The operating profit margin was 9.3%, up from 8.4% in last year's second quarter. Within General Industrial, Water Processing sales grew 24 1/2% and Fuels and Chemicals sales increased 19%. Power Generation sales were up modestly. Food and Beverage sales, while down 3 1/2%, saw good orders growth in the quarter, particularly in Asia. Machinery and Equipment grew 9% and, on a pro forma basis subtracting the machine tool business, it grew 15 1/2%.
Aerospace sales were down 4% in the quarter due to the timing of large projects. Military sales were down 6%. Commercial sales, excluding the Marine Water portion of this business, were up 3 1/2% in the quarter. Aerospace operating margins at 17.4% in the quarter showed good improvement over quarter one.
Turning now to Life Sciences, sales increased 4% reflecting strong growth in BioPharmaceuticals. Life Sciences operating profit margins increased to 19.2% and operating profit dollars were up 17 1/2%. Sales in the BioPharmaceuticals segment increased 9% compared with last year and 9 1/2% sequentially. This reflects both particularly strong demand from the biotechnology sector and Pall's expanded array of products designed for this market. The BioPharmaceuticals operating profit margin was 24% and operating profit dollars were up 8 1/2%.
Within Medical, the BioSciences portion of the business grew 8% in the quarter reflecting strong Laboratory sales in all geographies. The blood filtration and hospital product sectors were down 2 1/2% in the quarter on weakness in North America. Medical operating profit margins improved to 15.9% and operating profit dollars were $17.5 million, up 29%. We plan to release our eagerly anticipated Leukotrap® Affinity Prion Reduction Filter for commercial sale in Europe this spring."
Mr. Krasnoff concluded, "We continue to expand Pall's strong geographic presence especially in Asia and Eastern Europe. We are also expanding our product lines in key markets such as biotechnology, microelectronics and water processing. Alongside these commercial efforts, Pall's cost reduction programs are aggressively moving forward to the benefit of the bottom line. With our business realignment coming to fruition, Pall is in full stride."
Tomorrow, March 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