3/10/2015 9:30:00 PM
HEADLINES
Fastener Companies Report Steady Sales Gains
Most publicly-traded fastener companies reported solid revenue growth in recent months, though gains were not always easy.
For Fastenal, an increasingly strong U.S. dollar combined with harsh winter weather to limit sales growth. For Dorman Products, softer order patterns from tow major customers crimped revenue gains. For NORMA Group, “global economic uncertainties and geopolitical crises” dampened demand.
But each company was able to overcome its particular set of circumstances to achieve gains that investors demand.
Harsh Weather Hurts Fastenal Sales
Fastenal Co. reported net sales rose 8.6% to $298.2 million in February, with daily sales up 8.6% to $14.91 million during the month.
Daily sales to manufacturing customers increased 6.4% to during February, while sales to non-residential construction customers grew at an equal pace.
“Our February 2015 sales were impacted by several factors,” the company noted. “The increasing value of the U.S. dollar lowered our daily sales growth by 1.0%, this was primarily related to Canada. The sharp drop of investment in the oil and gas industry lowered our daily sales by 2.5%.
“Finally, harsh weather lowered our February 2015 and 2014 sales by approximately 2.0% in each year.”
The company’s workforce grew 6.6% to 18,954 employees in February, driven by a 6.2% increase in non-store selling personnel, a 7.3% increase in distribution personnel, and a 5.5% increase in non-selling personnel.
Fastenal opened no new stores during the first two months of 2015, compared to three in the first two months of 2014.
NORMA Group Reports Record Sales
NORMA Group SE reported record sales and earnings for 2014, according to preliminary figures.
The company said sales rose 9.3% to EUR 694.7 million in 2014, boosted by a EUR 22 million contribution from recent acquisitions. Sales grew organically 6.5%.
Adjusted operating earnings gained 7.9% to EUR 121.5 million. The adjusted EBITA margin in financial year 2014 declined two-tenths of a percentage point to 17.5%.
Full-year results included “strong” growth in the fourth quarter of 2014, with sales jumping 15.3% to EUR 176.2 million. Acquisitions contributed EUR 14.9 million toward this figure. Adjusted EBITA increased 6% to EUR 29.2 million.
“NORMA Group managed to continue its growth despite the global economic uncertainties and geopolitical crises,” stated CEO Werner Deggim.
“The scarcity of resources will continue to drive our international business, in particular the shortage of fresh water supplies. The global water market is demanding more efficient and sustainable solutions. For this, we are optimally positioned with the acquisition of the U.S. company National Diversified Sales, Inc. that specialises in water management.”
In January, NORMA Group received a “major order” for quick connectors for use in cooling water systems from a German supplier to the automotive industry.
The order includes manufacturing more than five million NORMAQUICK PS3 quick connectors per year. These quick connectors in the nominal sizes 16 and 32 will be manufactured at NORMA Group’s site in Maintal, Germany, starting in February 2015.
TriMas Sales Grow, But Profit Down
TriMas Corp. reported revenue in its Aerospace segment – which which consists of Allfast Fastening Systems, Monogram Aerospace Fasteners, Mac Fasteners, and Martinic Engineering – increased 28.5% to $35.1 million in the fourth quarter of 2014, primarily due to the results of Allfast, acquired for $360 million in October 2014.
“Fourth quarter 2014 operating profit and the related margin percentage declined as the increase in operating profit earned on the sales from Allfast was more than offset by lower margins at Martinic Engineering, improved but continuing manufacturing inefficiencies related to smaller customer order quantities and less predictable order patterns associated with large distribution customers, a less favorable product sales mix, and costs related to Allfast including purchase accounting adjustments.”
Operating profit dropped 50% to $3.44 million, impacted by a charge for the resolution of a customer claim. With recent additions to the management team of this business, TriMas is focused on improving margins, developing and marketing highly-engineered products for aerospace applications and leveraging the recent acquisitions.
“The Allfast acquisition, completed in October 2014, is meeting the company’s expectations,” TriMas stated.
Full-year Aerospace segment revenue increased 27.2% to $121.5 million, with operating profit down 22% to $17.8 million.
Bossard Reports “Consistent” Gains
Bossard Group reported sales grew 2% to CHF 617.8 million in 2014, with gross margin gaining 4.4% to CHF 197.1 million and net income growing 2% to CHF 57.1 million.
“Last year’s investments produced a consistent improvement in results, particularly in Europe: remarkably, all European markets played a part in this growth.”
Sales in Europe rose 3.5% to CHF 394.7 million.
“Sales growth in Europe was adversely affected in the second half of the year by the weakening of the Euro, uncertainty surrounding the conflict in the Ukraine and sanctions against Russia.”
“Growth in the Asian market is particularly dynamic.” Sales in this region increased 12.3% to CHF 101.1 million.
Bossard said business “fell short of original expectations” in the U.S., where revenues fell 9.2% to CHF 122 million.
“This setback was mainly due to low demand from a major customer. In addition, the planned expansion of production by the largest US electric vehicle manufacturer went more slowly than at first anticipated. This cooperation will however lead to substantially increased sales volumes in the current year.”
For the year, operating profit improved to a record CHF 72.8 million, with EBIT margin increasing further from 11.5% to 11.8%.
“The orientation of the Bossard Group toward high-end products and services is clearly paying off,” stressed CEO David Dean.
TRW Automotive Sees Record Sales
TRW Automotive reported 2014 sales, including fasteners, increased 1% to a record $17.5 billion.
For the year, GAAP net earnings were $293 million, or $2.54 per diluted share. Excluding special items, the company reported record full year 2014 net earnings of $958 million, or $8.18 per diluted share, up 19%.
“2014 was a highly successful year for TRW as the Company set new records for sales and adjusted earnings per share while not only continuing to invest for future growth, but also addressing the level of our legacy pension obligations.” said CEO John Plant.
As previously announced, the company entered into a definitive agreement with ZF Friedrichshafen AG (“ZF”) on September 15, 2014, under which ZF will acquire all outstanding shares of TRW for $105.60 per share in an all-cash transaction valued at approximately $13.5 billion on an enterprise value basis. The transaction is expected to close in the first half of 2015.
Fourth quarter sales declined 3% to $4.3 billion. GAAP fourth quarter net losses were $360 million or $3.22 per share, which compares to net earnings of $363 million or $3.00 per diluted share in the prior year period.
Adjusted Q4 EBITDA was $472 million in the fourth quarter of 2014.
As of December 31, 2014, the company had $1.58 billion of debt and $1.03 billion of cash.
U.S. Demand Drives Tree Island Gains
Tree Island Steel Ltd. reported revenues, including results from fasteners, increased 18.2% to $42.3 million in the fourth quarter of 2014. Volumes increased 16.9% to 31,910 tons, “primarily due to robust and increasing demand in major US markets.”
Gross profit grew 10.5% to $4.2 million and EBITDA rose 20% to $1.2 million.
Full-year revenues increased 19.9% to a record $183.9 million in 2014, with volumes up 23.4% to 139,935 tons.
“Throughout 2014 pricing pressure from both domestic and international competitors depressed overall prices for the products we sold,” the company stated. “Nonetheless, we were able to capitalize on our advantages.”
Factors contributing to growth included increased demand in some end markets (particularly in the U.S.), developing new customer relationships, and expanding geographic reach.
Gross profit in 2014 increased 11.7% to $19.3 million and EBITDA grew 9.1% to $8 million.
“2014 was an exciting year as it marked the company’s 50th anniversary,” noted CEO Dale Maclean.
KLX Eyes Bright Energy Segment Future
KLX Inc. – the former Consumables Management segment of B/E Aerospace – reported 2014 revenues grew 31.3% to $1.7 billion, while adjusted operating earnings increased 15.6% to $303.7 million.
“2014 was a solid year for the businesses which comprise KLX,” stated CEO Amin Khoury. “Exclusive of one-time costs, we reported strong contributions for both the full year and latest quarter from our energy services segment, which complemented the performance of our industry leading aerospace solutions group.”
Full-year aerospace solutions group (ASG) segment revenues gained 3.3% to $1.3 billion, with operating earnings of $237.9 million. On a GAAP basis, ASG operating earnings were $192 million.
“Revenues associated with supporting aerospace manufacturing customers increased by 5.3%,” Khoury explained. “However, defense sales were down and aftermarket sales were flat.”
Khoury added that the “strong new aircraft delivery cycle” and new customer contracts generated an increase in ASG’s revenues.
Khoury also predicted increased business jet production in 2015.
“The outlook for defense sales will remain tied to the procurement budgets approved by Congress.”
Energy services group segment (“ESG”) revenues were $385.5 million in 2014. Adjusted operating earnings were $65.8 million, and adjusted operating margin was 17.1%. On a GAAP basis, ESG operating earnings were $54.8 million.
“This was an auspicious first year for our ESG business,” Khoury noted.
Fourth-quarter revenues increased 35.9% to $440.7 million, while adjusted operating earnings, excluding spin-off costs, rose 24% to $79 million.
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