Brush Engineered Materials Inc. Reports Quarterly Sales of $250.3 Million.First Quarter Earnings Per Share $1.12 CLEVELAND -- Brush Engineered Materials Brush Engineered Materials Inc. is a multinational company specializing in high performance engineered materials emphasizing the qualities of strength, reliability, miniaturization and weight savings, thermal dissipation, electrical conductivity and reflectivity. Inc. (NYSE NYSE See: New York Stock Exchange :BW) today reported first quarter 2007 sales of $250.3 million, up $82.6 million or 49% compared to the first quarter of 2006. Net income for the first quarter was $23.1 million or $1.12 per share, diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared to net income of $5.2 million or $0.27 per share, diluted, for the same quarter of the prior year. First quarter sales were the highest sales in the Company's history and the seventeenth consecutive quarter where sales were higher than the comparable quarter of the prior year. The strong sales growth was driven largely by demand for the Company's new hard disk drive materials. Sales for defense-related applications also showed strong growth during the first quarter and higher copper pass through ratios added to sales of the Company's copper-based alloy products. Metal prices accounted for approximately 6% of the sales increase in the quarter. The Company's organic growth was approximately 43%. The first quarter gross margin was 28%, up approximately eight percentage points compared to the first quarter 2006 gross margin of 20%. Approximately seven points of the eight point increase in gross margin as a percent of sales was due primarily to profit on the sale of ruthenium ruthenium (r  thē`nēəm), metallic chemical element; symbol Ru; at. no. 44; at. wt. 101.07; m.p. about 2,310°C;; b.p. about 3,900°C;; sp. gr. 12. inventory that had increased significantly in market value
while in the production system to support the initial ramp up Ramp UpTo increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of the Company's new media related products. The increase in gross margin is also due to a number of other factors, including the higher sales volume and the progress made in achieving higher copper pass through ratios. Net income in the first quarter of 2007 was $23.1 million or $1.12 per share diluted, up $17.9 million compared to $5.2 million or $0.27 per share diluted in the first quarter of 2006. Earnings were positively affected by approximately $0.52 per share from the expected margin benefit related to the sale of ruthenium inventory. Earnings were negatively affected by approximately $0.02 per share due to the sale of a small company subsidiary that had been generating losses. Net of these two factors, earnings from operations was approximately $0.62 per share in the quarter. Earnings from operations were negatively affected by the higher Company stock price, which results in higher expenses from both the Company's stock-based deferred compensation and long-term incentive compensation plans. This reduced earnings per share by approximately $0.08 in the quarter. Reported results for the quarter reflected an income tax rate of approximately 36%, up approximately four percentage points compared to the prior year. The increase in the Company's income tax rate compared to the prior year is principally due to the significantly higher level of income and a reduction in foreign source income benefits. The Company had initially expected the margin benefit on the sale of the existing ruthenium inventory to be approximately $1.00 per share for the year depending upon metal prices and the timing of the sale of the inventory. At this time, and based on current metal prices, the Company expects the margin benefit from the sale of this inventory to be in the range of $0.75 to $0.90 per share for the year. BUSINESS SEGMENT REPORTING Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. Beginning with the fourth quarter of 2006, the Company changed its segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four to more closely align with the way the business is currently managed. Prior-year results have been adjusted for each segment to reflect the change. Advanced Material Technologies and Services The Advanced Material Technologies and Services segment consists of Williams Advanced Materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, Inc. (WAM WAM - Intermediate language for compiled Prolog, used by the Warren Abstract Machine. "An Abstract Prolog Instruction Set", D.H.D. Warren, TR 309, SRI 1983. ). The Advanced Material Technologies and Services' segment sales for the first quarter of 2007 were up 91% to $143.7 million compared to $75.4 million in the first quarter of the prior year. Precious metal prices accounted for approximately 5% of the sales growth. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the first quarter was $32.0 million, up $23.0 million versus $9.0 million for the same period last year. The strong sales growth in the first quarter was driven primarily by demand for WAM's new ruthenium-based magnetic media materials targeted for the data storage market. Orders for domestic wireless and photonics photonics, the science and technology based on and concerned with the controlled flow of photons, or light particles. It is the optical equivalent of electronics, and the two technologies coexist in such innovations as optoelectronic integrated circuits. applications have also been strong. As previously announced, WAM is in the process of expanding its Brewster, New York Brewster is a village located in the Town of Southeast in Putnam County, New York, United States. The population was 2,162 at the 2000 census. The ZIP code for all of Brewster, NY is 10509. facility to support the growth of the data storage market and the related perpendicular magnetic recording opportunity. New segments related to energy, medical and new electronics devices offer continuous opportunities for the core product portfolio at WAM. In addition WAM has continued to expand its geographic reach into Asia and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. to continue to grow and support its critical customers and new markets. Operating profit was 22% of sales in the first quarter versus 12% for the first quarter of 2006. Specialty Engineered Alloys The Specialty Engineered Alloys segment consists of Alloy Products which includes bulk and strip form copper-based alloy products, hydroxide hydroxide (hīdrŏk`sīd), chemical compound that contains the hydroxyl (−OH) radical. The term refers especially to inorganic compounds. and the Company's line of ToughMet[R] materials. Specialty Engineered Alloys' sales for the first quarter were $70.4 million, up 17% or $10.0 million compared to the first quarter 2006 sales of $60.4 million. Operating profit for the first quarter was $5.3 million, an increase of $4.8 million, compared to the prior year. The increase in sales is due largely to higher selling prices from the increased percentage of sales subject to the pass through of current base metal prices. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix was also a factor in the higher sales level. Demand from Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. slightly in the quarter, particularly from handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. applications. This weakness was partially offset by stronger demand from the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. oil and gas and aerospace markets, and strong European sales across all market segments. New products such as ToughMet continue to find their way into application opportunities. Operating profit benefited from a favorable product mix and higher prices associated with the pass through of base metal costs. Beryllium beryllium (bərĭl`ēəm) [from beryl ], metallic chemical element; symbol Be; at. no. 4; at. wt. 9.01218; m.p. about 1,278°C;; b.p. 2,970°C; (estimated); sp. gr. 1.85 at 20°C;; valence +2. and Beryllium Composites The Beryllium and Beryllium Composites segment consists of Beryllium Products including beryllia ceramic manufactured by Brush Ceramic Products Inc. Beryllium and Beryllium Composites' sales for the first quarter of 2007 were $15.2 million, up 46% or $4.8 million compared to the first quarter of 2006. Operating profit for the first quarter was $2.1 million up $1.9 million versus $0.2 million for the same period of the prior year. The Beryllium and Beryllium Composites double-digit sales growth was fueled by demand for medical and industrial x-ray product applications and defense. Order entry backlog for the defense market grew significantly during the first quarter. Also, sales for acoustic speaker applications contributed to the sales growth. Defense sales of AlBeMet[R] materials continued to show strength throughout the quarter driven by tactical optics (including FLIR systems | company_name = FLIR Systems | company_type = Public (NASDAQ: FLIR) | foundation = 1978 | location = Wilsonville, Oregon, United States | key_people = Earl R. Lewis }} FLIR Systems ), airborne electronics and space systems. The improvement in operating profit is due to the increase in sales volume. Engineered Material Systems The Engineered Material Systems segment is comprised of Technical Materials, Inc. (TMI TMI Too Much Information TMI Three Mile Island TMI TRMM Microwave Imager TMI Transactions on Medical Imaging TMI Texas Military Institute TMI Teen Missions International TMI Tauber Manufacturing Institute ). Engineered Material Systems' sales for the first quarter of 2007 were $16.7 million, $1.2 million below the first quarter 2006 sales of $17.9 million. Operating profit in the quarter was $0.6 million compared to an operating profit of $1.4 million in the first quarter of 2006. The decline in TMI sales is due to softer demand from the automotive electronics segment offset in part by strength from the new disk drive materials. New products accounted for 34% of TMI sales in the first quarter of 2007. OUTLOOK Overall, the Company's global markets continued to present significant growth opportunities in the first quarter and the Company expects to see continued growth throughout the balance of 2007. The primary factors driving the previously announced improvement in the outlook for the Company continue to be favorable. Markets, overall, have held up well and inventory corrections to this point have been mild. The noted margin improvement appears to be holding. As the year progresses, the Company expects sales of the new media products to continue to grow and overall stronger market conditions driven by the normal seasonal build for consumer electronics. These factors plus an increased backlog for defense-related applications are currently expected to result in a stronger second half revenue for the Company. As a result of the factors noted above, the Company is reinforcing the previously provided sales outlook for the full year 2007. The Company, at this time, expects 2007 sales growth to be in the 25% to 35% range. Assuming no change in the trends noted above and no significant change in metal prices from current levels, sales for 2007 are expected to be in the $950.0 million to $1.050 billion range. Considering the above and excluding the additional profit on the remaining inventory that was in the production system to support the initial ramp up of the new media-related products, earnings for 2007 are currently expected to be in the range of $2.20 to $2.75 per share. Results for the second quarter are currently expected to be similar to those of the first quarter with sales in the $245.0 million to $255.0 million range. Earnings for the second quarter are currently expected to be in the range of $0.50 to $0.65 per share. It is important to reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it that the Company's sales and earnings estimates for the second quarter and full year 2007 are subject to significant variability based on metal prices and supply assumptions as well as significant fluctuations in demand levels driven by both inventory corrections and new product ramp-up rates in critical markets such as the magnetic media market. The outlook for the quarter and the year are based on the Company's best estimates at this time and are subject to significant fluctuations due to these factors. CHAIRMAN'S COMMENTS Commenting on the results, Dick Hipple, Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated "I am pleased with the strong start to 2007, the reported record quarterly sales and the related profit level for the quarter. Our pipeline of new products and services, as well as our global expansion initiatives are providing the momentum for further growth and even greater value to our customers and shareholders over the balance of this year. The momentum is further supported by our business model that has us aggressively pursuing new avenues of growth. The robust results in the first quarter reflect the initial launch of WAM in to the disk drive media market and the full impact of Alloy's successful implementation of the copper price pass through. We are on track for a very successful 2007." CONFERENCE CALL Brush Engineered Materials will conduct a teleconference in conjunction with today's release. The teleconference begins at 2:00 p.m. Eastern Time, April 26, 2007. The conference call will be available via webcast through the Company's website at www.beminc.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0782, callers outside the U.S. can dial (201) 689-8567. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned herein: * The global and domestic economies; * The condition of the markets which we serve, whether defined geographically or by segment, with the major market segments being telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and computer, magnetic and optical data storage, aerospace and defense, automotive electronics, industrial components and appliance; * Changes in product mix and the financial condition of customers; * Actual sales, operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. and margins for the year 2007; * Our success in developing and introducing new products and new product ramp up rates; * Our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. prices for those materials; * Our success in integrating newly acquired businesses; * Our success in implementing our strategic plans and the timely and successful completion of any capital projects; * The availability of adequate lines of credit and the associated interest rates; * Other financial factors, including cost and availability of materials, tax rates, exchange rates, pension and other employee benefit costs, energy costs, regulatory compliance costs, and the cost and availability of insurance; * The uncertainties related to the impact of war and terrorist activities; * Changes in government regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and the enactment of new legislation that impacts our obligations; and * The conclusion of pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. matters in accordance with our expectation that there will be no material adverse effects. Brush Engineered Materials Inc. is headquartered in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . The Company, through its wholly-owned subsidiaries, supplies worldwide markets with beryllium products, alloy products, electronic products, precious metal products, and engineered material systems. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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