HVAC appliance maker York International Corporation on Wednesday reported its results for the first quarter of 2003.
The company reported a loss of U.S. $13.6 million, or $0.34 per share for the first quarter of 2003. This loss includes $18 million of pre-tax charges related to the actions discussed in a press release in February 2003. Excluding the impact of these charges, the company had net income of $1.6 million, or $0.04 per share.
Commenting on the first quarter performance, Michael Young, president and CEO, said, "Our first quarter operating results of $0.04 per share, excluding the impact of special charges, were somewhat better than expected and cash performance was very strong."
Sales in the first quarter of $868 million increased 3.2 percent from the first quarter of 2002, due to the strengthening Euro and increased sales in Asia and in Unitary Products Group North America, partially offset by lower shipment levels at Bristol, the company said.
First quarter sales for the Global Applied business increased 7.2 percent to $609 million versus $568 million in 2002. EMEA revenue increased due to the strengthening Euro and Asian equipment sales increased due to continued growth in China. These increases were partially offset by the weak commercial equipment market in the Americas, the company said. Global Applied service revenue improved 15 percent as compared to the first quarter of 2002.
Income from operations for Global Applied was $7.5 million in the first quarter of 2003. Reduced margins resulting from lower equipment volume in the Americas and significant pricing pressure in the large equipment market were partially offset by improved operating costs and higher volume in Asia.
Unitary Products Group (UPG)
UPG sales increased 3.3 percent to $164 million from $158 million in the first quarter of 2002, resulting from increased shipments of residential products, partially offset by lower commercial and manufactured housing product shipments.
Income from operations for UPG in the first quarter of 2003 was $8.2 million as compared to a loss of $2.4 million in 2002. The loss in 2002 included a $5.9 million write-off of a distributor receivable. In addition, improvements in production efficiency and shipping costs and the benefits of price increases in 2003 contributed to better results.
Bristol's first quarter sales were $138 million versus $156 million in the first quarter of 2002. The company said the volume decline is primarily the impact of timing of OEM orders and the impact of OEM's continuing to drive further inventory reductions, both internationally and with the North American unitary market customers.
Income from operations for Bristol was $11.3 million as compared to earnings of $16.3 million in the first quarter of 2002. Reduced volume and lower productivity levels resulting from the integration of products from the Sparta, NC, U.S. facility negatively impacted results, York said. Although productivity is improving from the second half of 2002, the costs are currently higher than the first quarter of 2002.
The company cited the current economic and market conditions as key factors affecting the company's current and future performance. Mr. Young said, "In this environment, we are continuing to aggressively address our costs and are completing the actions necessary to ensure the long-term success of each of our operations." He continued, "For the full year of 2003, we expect earnings per share to be approximately $0.25 including all charges related to the cost reduction actions described. Excluding these charges, the Company expects earnings to be approximately $2.50 per share. Net debt reduction is targeted to be $65 million, which includes cash generation for debt reduction of $100 million, offset by the $35 million cash outlay associated with the cost reduction actions." Commenting on second-quarter expectations, Mr. Young said: "We expect earnings per share, excluding the impact of the cost reduction items, to be slightly less than the $1.21 per share we achieved in 2002." This amount, however, excludes the impact of the planned cost reductions because the timing of the specific actions has not been finalized.
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