Brush Engineered Materials Inc. Reports Second Quarter Results.MAYFIELD HEIGHTS, Ohio Mayfield Heights is a city in Cuyahoga County, Ohio, United States. The population was 19,386 at the 2000 census. Mayfield Heights was originally part of Mayfield Township. Geography Mayfield Heights is located at (41. -- 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 second quarter 2009 results. Both sales and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. exceeded the Company's expectations. Second quarter sales were $174.1 million, ahead of the previously announced guidance of $150.0 to $160.0 million. The reported net loss for the quarter was $0.04 per share versus the previously announced guidance of up to a $0.20 per share loss. Additionally, the Company also updated the outlook for the year, noting an improvement in order trends. SECOND QUARTER RESULTS Sales for the second quarter of 2009 were $174.1 million, an improvement of 29% or $38.7 million compared to the first quarter 2009 sales of $135.4 million. The significant improvement in quarter over quarter sales is due primarily to an increase in demand for the Company's materials from the consumer electronics-oriented markets. The second quarter was also stronger than the first quarter due to the negative effect that rapid supply chain inventory adjustments at its customers had on first quarter sales. The net loss for the second quarter of 2009 was $0.8 million or $0.04 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. , an improvement of $0.36 per share, diluted, compared to the first quarter 2009 net loss of $8.1 million or $0.40 per share, diluted. The second quarter performance was significantly better than expected due both to the higher sales levels and the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of the previously reported cost reduction initiatives. Sales of $174.1 million in the second quarter 2009 declined $72.5 million, or 29% versus sales of $246.6 million in the second quarter 2008. For the first six months of 2009, sales of $309.5 million were 35% lower than sales of $472.9 million for the first six months of 2008. The second quarter net loss of $0.8 million was a decline of $8.0 million versus the 2008 second quarter net income of $7.2 million. For the first six months of the year, the net loss of $8.9 million was down $20.7 million versus net income of $11.8 million for the same period last year. BALANCE SHEET The Company's already strong balance sheet improved significantly in the quarter. Cash increased by $8.1 million and debt was reduced by $14.3 million. At the end of the quarter, the Company had $2.6 million drawn on its committed revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. . The line totals $240.0 million and matures in November of 2012. COST REDUCTION INITIATIVES As previously reported, during the fourth quarter of 2008 and subsequently during the first and second quarters of 2009 as the global economic downturn began to take hold, the Company responded quickly and effectively with a number of initiatives to reduce costs and to assure that the Company's balance sheet remains strong. The measures implemented included global headcount reductions that reduced total employment by approximately 17% as well as a number of additional initiatives including reducing the salaries of senior executives and senior managers, reducing the annual cash retainer A contract between attorney and client specifying the nature of the services to be rendered and the cost of the services. Retainer also denotes the fee that the client pays when employing an attorney to act on her behalf. fees of the Board of Directors, implementing a general pay freeze, suspending the 401(k) match, reducing discretionary spending and supplier costs, and deferring lower priority initiatives. Efforts to reduce working capital and targeted capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. deferrals were also implemented. It was reported then that the annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. impact of the cost reductions is in the range of $45.0 million to $50.0 million and while the scale of these initiatives is sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. , the Company is taking care not to disrupt
investment in the pipeline of new products that will help during the
difficult macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. environment of 2009 and provide solid growth opportunities for 2010 and beyond. The majority of the cost reduction initiatives were completed early in the second quarter, favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affecting results in the quarter. BUSINESS SEGMENT REPORTING Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. Advanced Material Technologies and Services The Advanced Material Technologies and Services' segment sales for the second quarter of 2009 were $112.3 million compared to $129.3 million in the second quarter of the prior year. Sales for the first six months of 2009 were $192.3 million versus $253.3 million for the same period last year. Metal prices accounted for 55% and 33% of the decline in sales for the second quarter and first six months, respectively. While sales were lower in the second quarter of 2009 versus 2008, the second quarter sales were up 40% over the first quarter of 2009. 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 second quarter was $8.4 million, up $3.4 million versus $5.0 million for the second quarter of 2008. The operating profit in the second quarter of 2008 included the effect of a $6.0 million lower of cost or market lower of cost or market A method for determining an asset's value such that either the original cost or the current replacement cost, whichever is lowest, is used for financial reporting purposes. inventory charge. Operating profit year to date was $9.1 million versus $10.5 million for the first six months of last year. The second quarter sales increase over the first quarter 2009 was due to stronger demand in consumer electronics applications including handsets and magnetic head. A portion of this increase in demand is related to replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. of customer inventory levels throughout the supply chain. Sales to the medical market slightly declined in the second quarter as compared to the first quarter of 2009 but are anticipated to increase over the remainder of the year. Sales 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. media targets in the second quarter and first
half of the year remained weak. However, progress in the
re-qualification of materials with key customers has continued and it is
anticipated that as the data storage market recovers the Company will
have an opportunity to regain some of the market share lost in 2008.
A portion of the operating profit improvement in the second quarter versus the first quarter of 2009 is due to the cost savings initiatives implemented. Specialty Engineered Alloys Specialty Engineered Alloys' sales for the second quarter were $41.2 million, compared to the second quarter of 2008 sales of $83.0 million. Year-to-date sales were $78.1 million as compared to first half 2008 sales of $154.3 million. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the second quarter was $9.3 million as compared to an operating profit of $4.8 million for the second quarter of 2008. The operating loss for the first half of 2009 was $20.2 million compared to the first half 2008 operating profit of $5.5 million. The substantial decline in sales for the second quarter and first half of the year as compared to the same periods last year was primarily due to the effect of the severe global recession on key markets including telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and computer, automotive electronics, oil and gas, aerospace and heavy equipment. A portion of the decline is due to lower metal prices. Demand increased in the second quarter for 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, particularly in Asia. The operating loss for the second quarter and first six months was due primarily to the significantly lower sales volume, manufacturing inefficiencies and machine utilization rates associated with the lower volumes. Cost reduction initiatives including headcount reductions, reduced work hours and wage reductions reduced the amount of the losses. 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 Beryllium and Beryllium Composites' sales for the second quarter of 2009 were $13.1 million compared to second quarter 2008 sales of $14.7 million. For the first six months of the year, sales were $26.1 million in 2009 compared to $28.1 million for the same period last year. Operating profit for the second quarter was $1.0 million versus $2.3 million for the second quarter of 2008. Operating profit for the first six months of 2009 was $2.9 million compared to $2.6 million for the first half of 2008. Growth in sales for defense for the second quarter and first half of 2009 was more than offset by softer demand for commercial and scientific product applications. Operating profit for the second quarter and first half of the year as compared to the same periods last year was affected by the differences in sales volume and product mix. Engineered Material Systems Engineered Material Systems' sales for the second quarter of 2009 were $7.5 million as compared to the second quarter of 2008 sales of $19.6 million. Sales for the first six months of 2009 were $12.9 million compared to the first half 2008 sales of $37.3 million. The operating loss in the second quarter was $0.8 million compared to an operating profit of $2.0 million for the second quarter of 2008. The operating loss for the first six months of 2009 was $3.5 million as compared to the first half 2008 operating profit of $3.4 million. The decline in sales for the second quarter and first six months is due to the effect of the severe global recession on key markets including telecommunications and computer, data storage and automotive electronics. Sales for the second quarter were up 39% over the first quarter 2009 sales as a result of increased demand for disk drive arm product applications. The growth in the second quarter as compared to the first quarter of 2009 is due to new product applications. The operating loss for the second quarter and first half is due to the substantially lower sales volume offset in part by cost reductions. OUTLOOK As the Company previously reported, while it did experience significant widespread weakness and an environment with limited visibility across the majority of its markets throughout the first quarter, the level of overall business activity began to improve as the first quarter ended and the second quarter began. The improving trend has continued throughout the second quarter and into the beginning of the third quarter. Overall, the Company is seeing improvement in its order entry, driven primarily by the consumer electronics-oriented markets. Certain of its other markets, especially the industrial markets, have, however, not shown any significant signs of improvement and the medical and defense markets, which remained strong throughout the first half, have recently shown some signs of modest weakness. While it is difficult in this environment to clearly envision future trends, the Company at this time does expect third quarter sales to improve from second quarter levels and be in the range of $180.0 million to $190.0 million. The higher sales volume and additional impact from the cost reduction activities should result in a further improvement in performance in the third quarter. The Company, therefore, expects to generate a slight profit in the third quarter. It is important to continue 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 outlook is subject to significant variability, especially given the current economic environment. Changes in demand levels, metal price changes, metal supply conditions, new product qualification and ramp-up rates, swings in customer inventory levels, changes in the financial health of key customers and other factors can have a significant effect on actual results. The outlook provided above is based on the Company's best estimates at this time and is subject to significant fluctuations due to these as well as other factors. CHAIRMAN'S COMMENTS Richard 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 progress we made in the second quarter. The Company's leadership and workforce responded quickly and effectively to the challenges brought on by the global recession. The decisive actions taken led to improved operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in the quarter. We ended the quarter with higher cash and lower debt, improving further what was already a strong balance sheet while pressing on with our initiatives to create new revenue streams and extend our market positions. The strong balance sheet provides the ability to both continue to weather the downturn and take advantage of opportunities, such as acquisitions and business augmentations as they may arise." CONFERENCE CALL Brush Engineered Materials' quarterly earnings conference call will be held today at 11:00 a.m. Eastern Time. 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) 407-8033, callers outside the U.S. can dial (201) 689-8033. 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 elsewhere herein: * The global and domestic economies, including the uncertainties related to the impact of the current global financial crisis; * The condition of the markets in which we serve, whether defined geographically or by segment, with the major market segments being telecommunications and computer, data storage, aerospace and defense, automotive electronics, industrial components, appliance and medical; * 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 third quarter and the year 2009; * The successful implementation of cost reduction initiatives; * Our success in developing and introducing new products and new product ramp- up rates, especially in the media market; * 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, including the impact of fluctuating prices on inventory values; * 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 raw materials (both base and precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. ), tax rates, exchange rates, interest rates, metal financing fees, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, and the impact of the Company's stock price on the cost of incentive and deferred compensation plans; * 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 operations; * 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with our expectation that there will be no material adverse effects; and * The risk factors set forth in Part I, Item 1A of the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2008. Brush Engineered Materials Inc. is headquartered in Mayfield Hts., Ohio. The Company, through its wholly-owned subsidiaries, supplies worldwide markets with beryllium products, alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. products, electronic products, precious metal products, and engineered material systems. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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