Revenues declined in the second quarter of 2009 primarily as a result of lower volumes at NACCO's materials handling subsidiary ("NMHG") due to a significant drop in global market demand.
NACCO and Subsidiaries Consolidated Second Quarter Highlights Key perspectives on NACCO's second quarter results are as follows:
- NMHG Wholesale's net loss attributable to stockholders was
$1.3 million in 2009, compared with net income attributable to stockholders of$3.2 million in 2008. The key driver for the change in results at NMHG Wholesale was a significant decline in volume for units and parts, partially offset by favorable foreign currency movements, favorable pricing, lower warranty and inventory carrying costs and benefits from cost containment actions. - NMHG Retail had a net loss of
$1.8 million in 2009, compared with a net loss of$0.6 million in 2008. The key drivers for the increase in the net loss were reduced volumes, unfavorable margins, increased income tax expense and the loss on sale of certain Australian Hyster dealership assets, partially offset by reduced spending.- In light of the current difficult economic conditions, NACCO increased the capitalization of NMHG by making cash and non-cash contributions of
$33.9 million during the second quarter of 2009.
- In light of the current difficult economic conditions, NACCO increased the capitalization of NMHG by making cash and non-cash contributions of
- A weak North American consumer market continued to affect volumes at Hamilton Beach and Kitchen Collection. However, as a result of certain favorable factors, both reported improved results in the second quarter.
- Hamilton Beach's net income increased to
$4.7 million in 2009 from a net loss of$0.6 million in 2008. The increase primarily resulted from sales of higher-priced products and reduced expenses as a result of cost containment actions implemented in late 2008 and early 2009, partially offset by the unfavorable effects of higher costs of products sold. - Kitchen Collection had a smaller net loss of
$1.7 million in 2009 compared with$3.7 million in 2008 primarily due to improved gross margins at comparable stores and a reduction in operating expenses.
- Hamilton Beach's net income increased to
- North American Coal's net income increased to
$7.1 million in 2009 compared with$6.4 million in 2008 primarily due to an increase in coal deliveries, contractual price escalation at the consolidated and unconsolidated mining operations and reduced costs for diesel fuel at the consolidated mining operations.
The Company reported a consolidated net loss attributable to stockholders for the six months ended
Consolidated Outlook for 2009
Economic and market conditions continued to be very weak in the second quarter of 2009 and the global recession appears likely to continue through the remainder of 2009. The forklift truck capital goods market in which NMHG participates continues to be in a significant global downturn that has resulted in unprecedented declines in industry factory bookings in the Americas,
At NMHG, these cost containment actions will not overcome the effect of reduced volumes. NMHG is expected to have a significant full year loss, although NMHG's second half 2009 results are expected to improve compared with the first half of the year, despite an anticipated very weak third quarter. NMHG Retail expects to incur moderate losses in the second half of 2009. While the consumer businesses anticipate continued weak markets in the remainder of 2009, both Hamilton Beach and Kitchen Collection currently expect significantly improved 2009 full year results, with steadily increasing improvements in the third and fourth quarters, compared with very weak 2008 results before charges for goodwill and intangible impairment. Kitchen Collection is expected to benefit significantly from the new Le Gourmet Chef store format that is in place and from the non-recurrence of the prior year's large product clearance program which was successfully completed in the third quarter of 2008. North American Coal expects full year 2009 net income to improve in comparison with 2008, although results in the second half of 2009, exclusive of pending transactions, are expected to be moderately lower than the second half of 2008.
Overall, NACCO expects its subsidiaries to generate substantial cash flow before financing activities over the remainder of 2009 and for the full year. Currently, NACCO has substantial cash availability, which provides the Company with flexibility to capitalize its subsidiaries.
Detailed Discussion of Results
NMHG Wholesale - Second Quarter Results
NMHG Wholesale reported a net loss attributable to stockholders of
Revenues decreased 54 percent in the second quarter of 2009 compared with the second quarter of 2008 primarily as a result of a decrease in units and parts volume in all geographic regions due to the economic downturn in each of these markets. Worldwide shipments in the second quarter of 2009 declined 59 percent to approximately 9,700 units from shipments of approximately 23,400 units in the second quarter of 2008. Unfavorable foreign currency movements as the U.S. dollar strengthened against the British pound and Australian dollar also contributed to the decrease in revenues. A favorable shift in sales mix to higher-priced lift trucks in
Unit revenues and shipments were down significantly from the prior year and were also down nine percent compared with unit shipments of 10,711 in the first quarter of 2009. Parts sales also declined in the second quarter of 2009 compared with both the previous year's second quarter and the first quarter of 2009. NMHG Wholesale's worldwide backlog was approximately 12,300 units at
The
For the six months ended
NMHG Wholesale - Outlook
NMHG Wholesale expects continued significant declines in all lift truck markets for the second half of 2009 compared with the second half of 2008. Global market levels for units do, however, appear to have stabilized at current low levels. Parts volumes also appear to be stabilizing around current levels. NMHG Wholesale is not anticipating a market upturn of any significance during 2009. As a result, the company expects significantly lower unit booking and shipment levels and a reduction in parts sales in the remainder of 2009 compared with the second half of 2008, although parts sales are expected to pick up slightly in the second half of 2009 compared with the first half of 2009.
NMHG Wholesale took a number of steps in late 2008 and the first quarter of 2009 to respond to the market outlook. These steps included capital expenditure restraints, planned plant downtime, reductions-in-force, restrictions on spending and travel, suspension of incentive compensation and profit-sharing, wage freezes and salary and benefit reductions, all of which are expected to continue to reduce expenses in the remainder of 2009 compared with 2008. NMHG Wholesale is closely monitoring its operations and will make additional adjustments if necessary.
NMHG Wholesale is also actively monitoring commodity costs and other supply chain drivers to ensure timely implementation of reductions in pricing because material costs, specifically steel, fuel and freight, have moderated.
NMHG Wholesale's warehouse truck and big truck product development programs, and its important new electric-rider lift truck program, are progressing as planned. The new electric-rider lift truck program is expected to bring a full line of newly designed products to market. During the second quarter of 2009, NMHG Wholesale introduced two series, the 1 to 2 ton three- and four-wheel electric trucks in
NMHG Wholesale is expected to operate at a loss for the 2009 full year. However, modest unit and parts volume improvements, benefits from new product introductions, reduced material and product costs, as well as further general expense reductions, are anticipated in the second half of the year, which are expected to drive an improvement in earnings in the fourth quarter following a very weak third quarter. Cash flow before financing activities is expected to continue to improve significantly in the second half of 2009 compared with 2008 in addition to improvements realized in the first half of 2009 primarily as a result of a reduction in working capital and lower capital expenditures.
Longer-term, NMHG Wholesale has been reviewing ways to strengthen its Hyster and Yale dealer structure in
NMHG Retail - Second Quarter Results
NMHG Retail, which includes the required elimination of intercompany transactions between NMHG Wholesale and NMHG's wholly owned retail dealerships, reported a net loss for the second quarter of 2009 of
Revenues decreased primarily because of unfavorable foreign currency movements due to the weakening of the Australian dollar and British pound. In addition, lower new and used unit and parts volumes and lower rental and service revenues in
NMHG Retail's increased net loss was primarily the result of lower volume, reduced rental margins in
For the six months ended
NMHG Retail - Outlook
NMHG Retail's operations are expected to continue to focus on achieving the company's strategic objective of at least break-even results while building market position. However, if economic conditions in the
Hamilton Beach - Second Quarter Results
Hamilton Beach reported net income of
Revenues decreased in the 2009 second quarter compared with 2008 primarily due to adverse foreign currency movements caused by a weakening Canadian dollar and Mexican peso. This decline was largely offset by Hamilton Beach's strong presence at mass merchants, which drove moderately improved volumes in the second quarter of 2009.
Net income increased in the second quarter of 2009 compared with 2008 primarily as a result of sales of higher-priced products, lower transportation and warehousing costs and cost containment actions implemented in late 2008 and early 2009, which included personnel reductions and the suspension or reduction of several employee-related benefits. The improvement in net income was partially offset by higher costs of products sold in the second quarter of 2009 compared with the second quarter of 2008 mainly due to higher commodity costs.
For the six months ended
Hamilton Beach - Outlook
The global recession and other consumer financial concerns are among factors creating an extremely uncertain and challenging retail environment. As a result, Hamilton Beach's revenues for the second half of 2009 are expected to be lower than the second half of 2008.
As a result of anticipated lower volumes, Hamilton Beach took aggressive cost containment actions in early 2009, including personnel reductions, spending and travel restrictions, suspension of incentive compensation, other employee-related benefit reductions and wage freezes. These actions, along with initiatives to improve pricing and product positioning and to reduce product and transportation costs in light of softening commodity costs for resins, copper, steel, aluminum and fuel, are expected to continue to help Hamilton Beach have significantly improved results for the remainder of the year in comparison with 2008.
Despite the challenging economic environment, Hamilton Beach is placing continued focus on strengthening its market position through product innovation, promotions and branding programs, together with appropriate advertising. New products were introduced in 2008, and additional new product introductions are in the pipeline for 2009. As a result of these new products, Hamilton Beach anticipates continued strong placements in the remainder of 2009, with increased placements and distribution at some retailers.
Overall, 2009 net income and cash flow before financing activities are currently expected to improve significantly compared with very weak 2008 results before the goodwill impairment charge of
Kitchen Collection - Second Quarter Results
Kitchen Collection reported a net loss of
Kitchen Collection's second quarter 2009 revenue increased slightly compared with the prior year. The increase over the prior year was a result of an increase in new store sales and an increase in Kitchen Collection comparable store sales mainly as a result of an increase in the number of store transactions. The increase was partially offset by lower comparable store sales at the Le Gourmet Chef stores due to fewer transactions and a lower average sales transaction value at both Kitchen Collection and Le Gourmet Chef .
Opening and closing stores caused the number of Kitchen Collection and Le Gourmet Chef stores to be 202 and 78, respectively, at
Kitchen Collection had a lower net loss in the second quarter of 2009 compared with the second quarter of 2008. The year over year decrease was primarily due to higher gross margins caused by fewer markdowns in 2009 compared with 2008, lower product and freight costs and a decrease in warehousing costs as a result of the movement of the Le Gourmet Chef warehouse from a third-party provider to a Kitchen Collection-managed distribution operation in the third quarter of 2008.
For the six months ended
Kitchen Collection - Outlook
Uncertainty in the U.S. economy and diminished consumer confidence are expected to continue to affect consumer traffic to outlet and traditional malls and negatively affect retail spending decisions for the remainder of 2009. Nevertheless, Kitchen Collection expects an improved holiday selling season in late 2009 due to the continued strength of Kitchen Collection stores and to the expectation of significantly improved margins at the Le Gourmet Chef stores resulting from the conclusion of new product enhancement and store-merchandising programs and from the completion of a large product clearance program in the Le Gourmet Chef stores that significantly reduced margins in 2008. Capital expenditure restraints and administrative cost control measures implemented in late 2008 and early 2009 are also expected to continue to improve results in the latter half of 2009.
Overall, Kitchen Collection expects that increasing improvements in quarterly results for the second half of the year will lead to significantly improved full year results compared with 2008 results before charges for goodwill and intangible impairment of
Longer term, Kitchen Collection expects to deliver store growth in the Kitchen Collection and Le Gourmet Chef formats. However, the total number of Kitchen Collection and Le Gourmet Chef stores is unlikely to increase in 2009.
North American Coal - Second Quarter Results
North American Coal's net income for the second quarter of 2009 was
North American Coal's lignite coal and limerock deliveries for the second quarter of 2009 compared with the second quarter of 2008 are as follows:
2009 2008
-------- --------
Lignite coal deliveries (tons) (in millions)
Consolidated mines 1.9 1.6
Unconsolidated mines 6.4 6.5
-------- --------
Total lignite coal deliveries 8.3 8.1
======== ========
Limerock deliveries (cubic yards) 0.6 6.3
======== ========
Revenues increased in the second quarter of 2009 compared with the second quarter of 2008 primarily due to increased coal deliveries and contractual price escalation at the
The increase in the 2009 second quarter net income compared with the 2008 second quarter was primarily attributable to favorable operating results at the lignite mining operations and revenues from other mining services. Results at the consolidated mining operations improved as a result of increased tonnage, contractual price escalation and reduced costs for diesel fuel. Results at the unconsolidated mining operations improved mainly due to increased deliveries and contractual price escalation. These increases were partially offset by higher employee-related expenses, expenses from developing new mining opportunities and an increase in income tax expense resulting from a shift in the mix of pre-tax income toward entities with higher income tax rates.
North American Coal - Outlook
North American Coal's lignite coal mining operations have not been significantly affected by the economic downturn because of the long-term contracts with North American Coal's customers and continued stable demand for electricity from the power plants it serves. North American Coal expects improved full year results at its lignite coal mining operations in 2009 provided that its customers continue to achieve currently planned power plant operating levels. Tons delivered by the lignite coal mines are expected to increase for the 2009 full year compared with 2008, but are expected to decline moderately in the second half of 2009 compared with the second half of 2008. In addition, contractual price escalation is not expected to affect second half results as favorably in 2009 as it did in the second half of 2008 because of recent declines in commodity costs.
Limerock customer projections for 2009 third and fourth quarter deliveries continue to be down compared with the prior year. For limerock mining operations within the lake belt region of
Overall, North American Coal expects full year 2009 net income to improve in comparison with 2008, although results in the second half of 2009, exclusive of pending transactions, are expected to be moderately lower than the second half of 2008. Full year cash flow before financing activities is expected to increase due to increased cash flow from operations.
The company has a number of new project opportunities for which it expects to incur additional expenses in 2009. In
Over the longer term, North American Coal expects to continue its efforts to develop new domestic coal projects and is hopeful that more new project opportunities may become available, including opportunities for coal-to-liquids, coal gasification and other clean coal technologies. Further, the company continues to pursue additional non-coal mining opportunities.
Conference Call
In conjunction with this news release, the management of
Forward-looking Statements Disclaimer
The statements contained in the news release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Such risks and uncertainties with respect to each subsidiary's operations include, without limitation:
NMHG: (1) reduction in demand for lift trucks and related aftermarket parts and service on a worldwide basis, including the ability of NMHG's dealers and end-users to obtain financing at reasonable rates as a result of current economic conditions, (2) changes in sales prices, (3) delays in delivery or increases in costs, including transportation costs, of raw materials or sourced products and labor, (4) exchange rate fluctuations, changes in foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which NMHG operates and/or sells products, (5) delays in, increased costs from or reduced benefits from restructuring programs, (6) customer acceptance of, changes in the costs of, or delays in the development of new products, (7) introduction of new products by, or more favorable product pricing offered by, NMHG's competitors, (8) delays in manufacturing and delivery schedules, (9) changes in or unavailability of suppliers, (10) bankruptcy of or loss of major dealers, retail customers or suppliers, (11) product liability or other litigation, warranty claims or returns of products, (12) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (13) acquisitions and/or dispositions of dealerships by NMHG, (14) changes mandated by federal and state regulation, including health, safety or environmental legislation, (15) the ability of NMHG and its dealers and suppliers to access credit in the current economic environment and (16) the ability of NMHG to obtain future financing on reasonable terms or at all.
Hamilton Beach: (1) changes in the sales prices, product mix or levels of consumer purchases of small electric appliances, (2) changes in consumer retail and credit markets, (3) bankruptcy of or loss of major retail customers or suppliers, (4) changes in costs, including transportation costs, of sourced products, (5) delays in delivery of sourced products, (6) changes in, or unavailability of quality or cost effective, suppliers, (7) exchange rate fluctuations, changes in the foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which Hamilton Beach buys, operates and/or sells products, (8) product liability, regulatory actions or other litigation, warranty claims or returns of products, (9) customer acceptance of, changes in costs of, or delays in the development of new products, (10) increased competition, including consolidation within the industry, (11) the ability of Hamilton Beach and its customers and suppliers to access credit in the current economic environment and (12) the ability of Hamilton Beach to obtain future financing on reasonable terms or at all.
Kitchen Collection: (1) changes in gasoline prices, weather conditions, the level of consumer confidence and disposable income as a result of the current financial crisis or other events or other conditions that may adversely affect the number of customers visiting Kitchen Collection and Le Gourmet Chef stores, (2) changes in the sales prices, product mix or levels of consumer purchases of kitchenware, small electric appliances and gourmet foods, (3) changes in costs, including transportation costs, of inventory, (4) delays in delivery or the unavailability of inventory, (5) customer acceptance of new products, (6) increased competition and (7) the ability of Kitchen Collection to obtain future financing on reasonable terms or at all.
North American Coal: (1) weather conditions, extended power plant outages or other events that would change the level of customers' lignite coal or limerock requirements, (2) weather or equipment problems that could affect lignite coal or limerock deliveries to customers, (3) changes in mining permit requirements that could affect deliveries to customers, including the resumption of
About NACCO
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(In millions, except per share data)
Total revenues $545.2 $948.1 $1,103.8 $1,813.1
Cost of sales 452.1 826.2 924.9 1,558.9
---------- ---------- ---------- ----------
Gross profit 93.1 121.9 178.9 254.2
Earnings of unconsolidated
project mining subsidiaries 9.8 9.3 20.3 17.9
Operating expenses
Selling, general and
administrative expenses 88.3 119.7 186.4 243.9
Restructuring charges 1.5 0.8 2.2 1.4
Gain on sale of assets (0.5) - (2.2) (0.2)
---------- ---------- ---------- ----------
89.3 120.5 186.4 245.1
Operating profit (loss) 13.6 10.7 12.8 27.0
Other income (expense) (7.2) (7.6) (15.1) (15.8)
---------- ---------- ---------- ----------
Income (loss) before
income taxes 6.4 3.1 (2.3) 11.2
Income tax provision 5.0 0.7 5.4 3.2
---------- ---------- ---------- ----------
Net income (loss) 1.4 2.4 (7.7) 8.0
Net (income) loss
attributable to
noncontrolling
interest 0.2 (0.1) 0.2 (0.1)
---------- ---------- ---------- ----------
Net income (loss)
attributable to
stockholders $1.6 $2.3 $(7.5) $7.9
========== ========== ========== ==========
Basic and diluted earnings
(loss) per share $0.19 $0.28 $(0.90) $0.95
========== ========== ========== ==========
Cash dividends per share $0.5175 $0.5150 $1.0325 $1.0150
Basic weighted average
shares outstanding 8.289 8.282 8.288 8.278
Diluted weighted average
shares outstanding 8.294 8.288 8.288 8.285
(All amounts are subject to annual audit by our independent registered
public accounting firm.)
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(In millions)
Revenues
NACCO Materials Handling
Group Wholesale $342.7 $742.4 $714.3 $1,420.3
NACCO Materials Handling
Group Retail (including
elims.) 19.3 25.1 36.8 46.1
---------- ---------- ---------- ----------
NACCO Materials
Handling Group 362.0 767.5 751.1 1,466.4
---------- ---------- ---------- ----------
Hamilton Beach 107.2 108.8 201.4 204.0
Kitchen Collection 40.6 39.7 80.3 78.9
North American Coal 36.2 33.1 72.7 65.4
NACCO and Other - - - -
Eliminations (0.8) (1.0) (1.7) (1.6)
---------- ---------- ---------- ----------
Total $545.2 $948.1 $1,103.8 $1,813.1
========== ========== ========== ==========
Operating profit (loss)
NACCO Materials Handling
Group Wholesale $(0.7) $7.3 $(13.5) $20.7
NACCO Materials Handling
Group Retail (including
elims.) (1.0) (0.1) (0.8) (0.3)
---------- ---------- ---------- ----------
NACCO Materials
Handling Group (1.7) 7.2 (14.3) 20.4
---------- ---------- ---------- ----------
Hamilton Beach 9.8 1.3 14.2 4.0
Kitchen Collection (2.6) (5.3) (6.9) (10.8)
North American Coal 9.5 7.9 22.3 14.4
NACCO and Other (1.5) (0.3) (2.6) (1.0)
Eliminations 0.1 (0.1) 0.1 -
---------- ---------- ---------- ----------
Total $13.6 $10.7 $12.8 $27.0
========== ========== ========== ==========
Net income (loss)
attributable to
stockholders
NACCO Materials Handling
Group Wholesale $(1.3) $3.2 $(20.4) $11.1
NACCO Materials Handling
Group Retail (including
elims.) (1.8) (0.6) (1.2) (1.2)
---------- ---------- ---------- ----------
NACCO Materials
Handling Group (3.1) 2.6 (21.6) 9.9
---------- ---------- ---------- ----------
Hamilton Beach 4.7 (0.6) 6.1 (0.5)
Kitchen Collection (1.7) (3.7) (4.5) (6.9)
North American Coal 7.1 6.4 17.9 10.2
NACCO and Other (1.4) (0.6) (2.9) (0.2)
Eliminations (4.0) (1.8) (2.5) (4.6)
---------- ---------- ---------- ----------
Total $1.6 $2.3 $(7.5) $7.9
========== ========== ========== ==========
(All amounts are subject to annual audit by our independent registered
public accounting firm.)
SOURCE: NACCO Industries, Inc.
CONTACT: Christina Kmetko, of NACCO Industries, Inc.,
+1-440-449-9669
Web Site: http://www.nacco.com
