Jacuzzi Brands, Inc. announced Wednesday its financial results for the 3 and 9 months ended June 30, 2003.
Net sales for the third quarter of fiscal 2003 rose 8.8 percent to U.S. $315.5 million from $289.9 million in the same period last year. Increased net sales were due to higher sales at each of the company's three operating segments, with the Bath Products segment demonstrating the most significant quarterly increase.
Third-quarter operating income declined to $24.2 million from $28.1 million in the same period last year. Operating income in the third quarter of fiscal 2003 and 2002 included restructuring and severance charges of $5.2 million and $6.4 million, respectively. The decrease in operating income was due primarily to costs incurred at the Bath Products segment, the company reported.
Income from continuing operations in the third quarter of fiscal 2003 rose 21.3 percent to $5.7 million, or $0.08 per diluted share, from $4.7 million, or $0.06 per diluted share, in the same period last year. Interest expense of $14.3 million was $3.0 million less than last year's third quarter due to lower overall debt levels.
The Bath Products segment reported sales of $217.2 million for the 3 months ended June 30 compared to $196.5 million for the same period last year. The segment reported sales of $584.5 million for the 9 months ended June 30 compared to $518.0 million for the same period last year.
The company attributed the higher sales primarily to increased sales in the UK bath products and domestic spas and the introduction of the Jacuzzi® whirlpool bath lines into Lowe's home centers and the Eljer® sink lines into Home Depot. The roll-out of the Jacuzzi® whirlpool bath lines into Lowe's home centers was approximately 70 percent complete by the end of the third quarter and is expected to be completed by the end of the fiscal year. These increases offset some weakness in the domestic wholesale sales channel caused by an unusually wet spring season. Sales also benefited by $8.6 million from firming of the British pound and the Euro against the U.S. dollar.
The Plumbing Products segment reported sales of $73.2 million for the 3 months ended June 30 compared to $69.9 million for the same period last year. The segment reported sales of $203.1 million for the 9 months ended June 30 compared to $187.6 million for the same period last year.
Jacuzzi attributed the higher sales primarily to the benefits realized from enhanced product offerings and the implementation of programs designed to increase market share, which offset the impact of continued softness in the U.S. commercial and institutional construction market.
Net sales for the 9 months ended June 30, 2003 increased 10.6 percent to $865.2 million from $782.1 million. Operating income for the 2003 year-to-date period remained stable at $69.3 million from $69.7 million for the same period last year. Operating income for the 2003 and 2002 year-to-date periods also included restructuring and severance charges of $8.3 million and $6.4 million, respectively. Net sales and operating income for the 2003 nine-month period included $8.6 million of revenue from a technology license sale.
Income from continuing operations for the first 9 months of fiscal 2003 increased to $26.0 million, or $0.35 per diluted share, from $1.8 million, or $0.02 per diluted share, for the same period one year ago. Year-to-date interest expense of $46.9 million was favorable to last year by $12.8 million due to reduced overall average debt.
The net loss for the 2003 9-month period was $14.3 million, or $0.19 per diluted share, versus net income of $18.0 million, or $0.24 per diluted share, for the same period last year.
The net loss for the 2003 9-month period included a loss from discontinued operations of $40.3 million, or $0.54 per diluted share, while net income for the corresponding period in 2002 included income from discontinued operations of $16.2 million, or $0.22 per diluted share.
David H. Clarke, chairman and CEO of Jacuzzi Brands, Inc., stated, "We are pleased with our performance despite economic weakness in a number of our markets. We are continuing to take proactive steps to improve operating and cost structures. In particular, the Company is reviewing its Eljer® product line with a view to making significant changes to improve the product mix and restore profitability. Although weather, higher insurance costs and the investments we are making in the Lowe's roll-out impacted the Bath segment's performance in the quarter, we remain confident of its future. The steps taken by the management at our Plumbing segment have allowed Zurn to report favorable comparisons although commercial construction remains sluggish. Rexair continues as expected with excellent cash generation. We are particularly pleased to have completed a refinancing of the Company in July, and look forward to the benefits of our fortified capital structure."
Mr. Clarke continued, "Based on the nine months results, current trends of July and early August and the impact of the $19.3 million refinancing charge ($11.8 million after tax or $0.16 per share), the Company now expects full year sales of approximately $1.18 billion and earnings per share from continuing operations of approximately $0.28 per share. Excluding the $0.16 per share refinancing charge, the $0.44 per share performance from continuing operations is $0.02 per share less than previous guidance. The previous guidance of $0.46 per share did not include the refinancing charge."
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