5/11/2009
HEADLINES
STOCKS: Fastenal, Precision Castparts, Black & Decker, Nucor, Grainger, Bossard, Simpson Strong-Tie

Fastenal Slows Store Openings, Trims Workforce – Reacting to an entrenched recession, Fastenal said it has slowed store openings to 2% to 5% annually and limited new hires.
“We have stopped adding any headcount except for store openings and for stores that are growing,” the company stated.

Fastenal trimmed its workforce by 6.6% to 12,736 during the first quarter of 2009.

The move comes amid a 13.6% drop in sales to $489.3 million during Q1, while net earnings declined 28% to $48.7 million. Sales were hit hardest in Fastenal’s industrial production business, including fasteners.

Fastenal opened 33 new stores during the first quarter, down 37% from the 53 it opened in the opening quarter of 2008. The company had a total of 2,344 stores at the end of March 2009.

Capital expenditures also declined. “We expect our capital expenditures will drop from approximately $95 million in 2008 to $65 million in 2009.” Web: fastenal.com

Precision Castparts’ Fastener Sales Up – Precision Castparts’ Corporation’s fastener sales rose both for the just completed fourth quarter and for its fiscal year.

Fiscal 2009 Fastener Products sales totaled $1.6 billion of the corporation’s $6.8 billion in sales. Fastener sales for the previous year reached $1.4 billion.

Fourth quarter Fastener Products sales of PCC’s fiscal 2009 totaled $386.3 million, up from $377.7 million the previous year.

PCC reported “year over year, operating margins also improved” in the fastener segment as “each plant continues to drive cost improvements and increased productivity.”

Fourth quarter operating income rose to $118.5 million (30.7% of sales) from $105.9 million (28% of sales) in the March quarter a year ago.

“The segment capitalized on continued market share growth to overcome the negative pressures of foreign currency and softening in the business jet market during the quarter, with additional share gains available across a wide spectrum of product families,” according to PCC.

“Delivering strong operational performance on all fronts in the fourth quarter, Fastener Products continues to identify and implement significant opportunities for further margin improvement going forward.”

Fastener fiscal 2009 operating income was $459 million (29.5% of sales), compared with $373.7 million (26.3%) for fiscal 2008.

Corporate highlights for Portland, OR-based PCC included record consolidated segment operating income margin of 24.9%, EPS from continuing operations of $1.87 and cash of $555 million against total debt of $306 million.

Total corporate fourth quarter sales slipped from $1.8 billion for 2008 to $1.6 billion for the same period of 2009.

Fiscal 2009 net income was $1.04 billion, compared with $959 million for fiscal 2008.

CEO Mark Donegan acknowledged PCC “faced some strong headwinds” in the fourth quarter, including slower-than-expected recovery from the Boeing strike, lower metal selling prices and weakening foreign currencies.

“During the first quarter and into the second quarter of fiscal 2010, our aerospace customers are making corrections to their inventories that will take some anticipated growth out of their schedules and will impact each of our three operating segments.” Web: precast.com

Black & Decker Fastener Sales Drop – Fastening and Assembly Systems sales at Black & Decker Corp. dropped 34% to $124.1 million in the first quarter of 2009, while segment profit plunged 91% to $2.4 million.

“Sales to the global automotive industry fell nearly 40%, slightly less than the decline in automotive production,” the company reported. “Sales were also down sharply in the industrial business, as global manufacturing slowed significantly.”

Overall Q1 sales declined 28% to $1.07 billion, with net income shrinking 92% to $4.9 million.

“We expect that the weak demand we saw in the first quarter will continue (to) decline in the second quarter at a rate similar to the first quarter,” the company stated. “For the full year, we expect a sales decline of approximately 20%.” Web: bdk.com

Fastener Segment Sales Down at Nucor – Nucor Corp. reported cold finish steel sales, including fasteners, declined 41% to 80,000 tons during the first quarter of 2009.

Overall net sales dropped 47% to $2.65 billion “due to a 43% decrease in total tons shipped to outside customers and a 7% decrease in average sales price per ton.” This led to a net loss of $189.6 million for the quarter, compared with a $409.8 million profit in the first quarter of 2008.

Nucor’s consolidated net sales decreased 47% to $2.65 billion compared with $4.97 billion in the first quarter of 2008 due to a 43% decrease in total tons shipped and a 7% decrease in average sales price per ton.

The average scrap and scrap substitute cost per ton used remained flat at $333 in the first quarters of 2008 and 2009 and decreased 23% from $435 in the final quarter of 2008.

Nucor’s steel mill utilization rate plunged to 45% in Q1 from 92% in last year’s first quarter and 48% in the fourth quarter, resulting in a total energy cost hike of $11 per ton.

“As we have progressed from September 2008 to March 2009, we have seen business and market conditions worsen each succeeding month,” the company stated. “Entering the second quarter of 2009, both the U.S. economy and steel market conditions have continued to deteriorate, and we expect a second quarter loss greater than the first quarter as a result.” Web: nucor.com

Grainger Sales Slow, Jobs Cut – Grainger reported first quarter sales dropped 12% to $1.5 billion, while net earnings decreased 16% to $96 million.

U.S. sales slumped 10% to $1.3 billion, which included a 25% reduction among its heavy manufacturing customers. Operating earnings in the U.S. dipped 11% to $173.2 million.

Sales in Canada down 19% to $143.8 million, with operating earnings slipping 49% to $5.9 million.

“We do not believe that we’ve seen the bottom to the sales decline and expect increased pricing pressure throughout the remainder of the year,” stated CEO Jim Ryan.

The company reduced headcount by 200 employees, on track to meet workforce reductions of 300-400 in 2009. Web: grainger.com

Bossard Profit Rises Despite Lower Sales – Bossard Group achieved a 9.5% increase in operating profit to CHF 45.1 million (US$39.5 million) during 2008, despite a 5.8% drop in sales to CHF 566 million (US$496.8m). Profit was boosted by improved productivity in the U.S. and Asia.

“The past business year was very successful for us, despite noticeably declining demand in the second half of the year,” the company stated.

Sales in the U.S. grew 2.9% in local currencies, though the result represents a 7.9% drop to CHF 156.3 million, mostly due to a weak U.S. dollar.

Sales in Europe dipped 3.8% to CHF 333.7 million, while revenue from Asia declined 11% to CHF 75.7 million after years of growth.

“Sales development remained positive in Central and Eastern Europe, (but) the sales volume was down in all other regions,” the company reported.

Bossard said its long-term organic growth and lack of debt from any large acquisitions in recent years have given the company a strong foundation in an uncertain global marketplace.

The company had 1,600 employees around the world at the end of 2008, down 9.8% due mainly to cuts in the U.S. and Asia. Web: bossard.com

Simpson Strong-Tie Sales Shrink – Despite an increasing presence in Asia, Simpson Strong-Tie’s first quarter sales, including fasteners and anchor systems, decreased 29%. Revenue declined across all of Simpson Strong-Tie’s major product lines, particularly those used in new home construction.

Overall Q1 sales at parent company Simpson Manufacturing Co. shrunk 28.8% to $119.3 million, producing a Q1 net loss of $8.4 million compared to net income of $8.4 million for the first quarter of 2008.

In April 2009 Simpson held the grand opening of its 175,000 sq ft facility in Zhangjiagang, China, and commenced limited production of its Anchor System products there. Web: simpsonmfg.com