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Fedders Reports Declined Q4, 2005 Results
Apr 4, 2006
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HVAC manufacturer Fedders Corporation announced sales in the 2005 fourth quarter declined 9.4 percent to U.S. $39.0 million compared to $43.0 million in the prior-year quarter due to lower sales of dehumidifiers and sales accruals for chargebacks related to a large customer, offset in part by higher sales of commercial HVAC products. Gross loss in the 2005 fourth quarter was $4.9 million, or 12.7 percent of net sales, compared to $0.8 million, or 1.8 percent of net sales, in the prior-year period.

For the year ended Dec. 31, 2005 declined 25.5 percent to $297.7 million compared to sales of $399.5 million in the prior-year. Net sales in the HVAC/R segment declined 28.1 percent to $267.5 million from $372.0 million in 2004 due primarily to lower sales of room air-conditioners due to increased inventory levels created by unfavorable weather in North America.

The sales decrease was partly offset by a $40.3 million increase in sales of commercial air-conditioners resulting from the acquisitions of Addison Products in November 2004 and Islandaire, Inc. in March 2005. Sales in the Engineered Products segment increased 10 percent over the prior year, due primarily to industrial air cleaning projects in Asia.

Gross profit for the year declined to $39.7 million, or 13.3 percent of net sales, compared to $55.5 in the prior-year period. Gross profit in the HVAC/R segment declined to $32.0 million, or 12.0 percent of net sales in 2005, compared to $46.4 million in 2004. The decline in gross profit resulted from lower sales volume associated with North American room air conditioner inventory in distribution channels.

For the quarter, net loss applicable to common stockholders was $35.4 million, or $1.16 loss per diluted common share, compared to a net loss of $14.5 million, or $0.48 loss per diluted common share, in 2004. For the year, net loss applicable to common stockholders was $66.5 million, or $2.17 loss per diluted common share, compared to a net loss applicable to common stockholders of $30.1 million, or $0.99 loss per diluted common share.

The company said it implemented a restructuring plan during 2005 to reduce costs, enhance its position in the marketplace and return the company to profitability. The plan involved stopping the manufacturing and refurbishing of room air-conditioners in Effingham, Illinois, U.S.; consolidating commercial air conditioner manufacturing from its Longview, Texas, U.S. factory into its Orlando, Florida, U.S. factory; consolidating air filtration manufacturing from its Albuquerque, New Mexico, U.S. factory into its Sanford, North Carolina, U.S. and Suzhou, China factories; consolidating room air-conditioner manufacturing in China from three factories to two factories; and during 2006, consolidating all domestic warehousing from company and third party warehouses into our Effingham, Illinois, U.S. facility.

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