Nacco Industries, Inc. today announced consolidated net income for the third quarter of 2007 of US$21.1 million, or $2.55 per share, an increase of $2.3 million or $0.27 per share, from 2006 third quarter consolidated net income of $18.8 million, or $2.28 per share. Consolidated revenues for the third quarter of 2007 were $875.2 million compared with revenues of $803.1 million for the third quarter of 2006. The company reported improved net income for the 2007 third quarter compared with the prior year as a result of the continued impact of several of the profitability and growth programs put in place in 2007 and prior years.
Consolidated net income for the nine months ended Sept. 30, 2007 was $37.6 million, or $4.55 per diluted share, on revenues of $2.5 billion. This compared with consolidated net income of $36.2 million, or $4.39 per diluted share, on revenues of $2.4 billion for the first nine months of 2006.
Hamilton Beach reported net income of $6.3 million for the third quarter of 2007 on revenues of $140.4 million, compared with net income of $5.0 million for the third quarter of 2006 on revenues of $136.1 million.
Hamilton Beach's third quarter net income increased $1.3 million compared with the third quarter of 2006, the company said, primarily as a result of an improvement in gross profit and lower selling, general, and administrative expenses partially offset by an increase in interest expense as a result of an increase in borrowings to pay a special cash dividend of $110 million in the second quarter of 2007. The improvement in gross profit was driven by increased sales, a favorable shift to sales of higher-margin products, and the movement of production of all products to third-party manufacturers.
Nacco said that current economic factors affecting U.S. consumers, such as high gasoline prices, depressed home sales, and mortgage debt concerns, appear to be among factors unfavorably affecting sales volume at key retailers and creating a challenging environment at the retail level. Yet, Hamilton Beach has secured strong placements and promotional programs for the fourth quarter of 2007.
Over time, continued product innovation, promotions and branding programs at Hamilton Beach are expected to continue to strengthen its market positions, the company said. As a result of its ongoing focus on innovation, Hamilton Beach has a strong assortment of new products, which have been introduced during 2007, with further new product introductions in the pipeline for 2008 and 2009.
Hamilton Beach has also completed its transition out of manufacturing and moved the production of all products to third-party manufacturers. This transition and other programs initiated by Hamilton Beach, as well as anticipated increases in sales resulting from an improved mix of sales of higher-margin products, are expected to have a favorable impact on operating results over time. However, the company said that Hamilton Beach expects continued pricing pressure from suppliers for the remainder of 2007 and in 2008, due to increased commodity costs for resins, copper, steel, and aluminum, which could partially offset expected improvements in operating results.
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