- Email: [email protected]
GL&V Inc, Canada
October 2004
Filtration Industry Analyst
GL&V Inc, Canada
Donaldson Co Inc, USA
Revenues Of Which: Pulp and Paper Group Process Group Water Treatment Group Manufacturing Others and Elimination Cost of Contracts and Goods Sold Gross Margin EBITDA1
2004
2003
124.2
120.9
52.3 60.6 19.5 6.0 (14.3)
49.2 75.3 – 5.1 (8.7)
91.6
87.1
32.6
33.8
5.1
8.8
Earnings/(Loss) Before Financial Expenses and Income Taxes 2.9 Of Which: Pulp and Paper Group (1.2) Process Group 5.2 Water Treatment Group 2.0 Manufacturing 0.4 Others and Elimination (3.5) Net Earnings
Key Figures (US$ million) Fourth quarter ended 31.7
1.3
6.5 1.8 7.1 – 0.4 (2.8) 2.7
1Earnings
before depreciation and amortisation, financial expenses and income taxes.
COMMENT For the three-month period ended 30 June 2004, Groupe Laperrière & Verreault Inc (GL&V) achieved consolidated revenues of C$124.2 million compared to C$120.9 million for the same quarter in 2003. GL&V’s order backlog totalled C$230 million, compared to C$204 million three months earlier; the company puts this increase of almost 13% down to organic growth alone. In GL&V’s markets relevant to filtration, excluding results relating to the new Water Treatment segment, the Process Group recorded an increase of close to 15% in sales, fuelled primarily by a sharp recovery in its major markets around the world; for its part, the new Water
2004
2003
Net Sales
384.0
330.3
Cost of Sales
263.8
223.0
Gross Margin
120.2
107.3
Operating Expenses
86.9
70.2
Operating Income
33.3
37.1
Earnings before Income Taxes
34.5
37.2
Net Earnings
26.2
27.1
Year ended 31.7 Net Sales
2004
2003
1415.0
1218.3
Cost of Sales
964.5
827.1
Gross Margin
450.4
391.2
Operating Expenses
314.5
259.4
Operating Income
141.6
131.8
Earnings before Income Taxes
141.8
130.6
Net Earnings
106.3
95.3
COMMENT Treatment Group posted revenues of approximately C$20 million in the first quarter (Q1), and ended the period with an order backlog of close to C$50 million, mainly driven by further breakthroughs in Europe, Latin America and the Asia-Pacific region. Despite difficult conditions, the Manufacturing Group continues to contribute positively to GL&V’s financial results and, above all, to bring significant support to the performance of the Pulp and Paper and Process Groups. According to president and chief executive officer Laurent Verreault, “the company has never been in such a strong position to grow its business and maximise shareholder value.” ■
Strong results from Donaldson’s Engine Products division pushed the company to a record year in terms of overall sales, US$1.4 billion as opposed to US$1.2 billion in fiscal 2003. The company is benefiting from environmental measures in North America; both truck build rates and aftermarket part usage continue to increase as regulations at federal and state levels create strong demand for Donaldson’s diesel truck emission control products. The company’s European and Asian businesses also performed well. Despite a continuing trend towards record sales, Donaldson’s net income for the fourth quarter (Q4) – US$26.2 million vs. US$27.1 million in 2003 – could have been even
better had it not been for three special adjustments on the balance sheet for Q4: an ongoing patent infringement lawsuit with Engineered Products Company Inc led to Donaldson increasing its reserve by US$5 million; several other adjustments totalling US$6.6 million were also necessary. In addition, high steel prices continue to be a burden. The good news according to president and chief executive officer Bill Cooke, is that Donaldson has been able to capitalise on the broad strength across its end markets. “We have transitioned from three years of weak conditions in many of our end markets to rapid demand acceleration this year,” he added. ■
11
COMPANY WATCH
Key Figures (C$ million) First quarter ended 30.6
Filtration Industry Analyst
GL&V Inc, Canada
Donaldson Co Inc, USA
Revenues Of Which: Pulp and Paper Group Process Group Water Treatment Group Manufacturing Others and Elimination Cost of Contracts and Goods Sold Gross Margin EBITDA1
2004
2003
124.2
120.9
52.3 60.6 19.5 6.0 (14.3)
49.2 75.3 – 5.1 (8.7)
91.6
87.1
32.6
33.8
5.1
8.8
Earnings/(Loss) Before Financial Expenses and Income Taxes 2.9 Of Which: Pulp and Paper Group (1.2) Process Group 5.2 Water Treatment Group 2.0 Manufacturing 0.4 Others and Elimination (3.5) Net Earnings
Key Figures (US$ million) Fourth quarter ended 31.7
1.3
6.5 1.8 7.1 – 0.4 (2.8) 2.7
1Earnings
before depreciation and amortisation, financial expenses and income taxes.
COMMENT For the three-month period ended 30 June 2004, Groupe Laperrière & Verreault Inc (GL&V) achieved consolidated revenues of C$124.2 million compared to C$120.9 million for the same quarter in 2003. GL&V’s order backlog totalled C$230 million, compared to C$204 million three months earlier; the company puts this increase of almost 13% down to organic growth alone. In GL&V’s markets relevant to filtration, excluding results relating to the new Water Treatment segment, the Process Group recorded an increase of close to 15% in sales, fuelled primarily by a sharp recovery in its major markets around the world; for its part, the new Water
2004
2003
Net Sales
384.0
330.3
Cost of Sales
263.8
223.0
Gross Margin
120.2
107.3
Operating Expenses
86.9
70.2
Operating Income
33.3
37.1
Earnings before Income Taxes
34.5
37.2
Net Earnings
26.2
27.1
Year ended 31.7 Net Sales
2004
2003
1415.0
1218.3
Cost of Sales
964.5
827.1
Gross Margin
450.4
391.2
Operating Expenses
314.5
259.4
Operating Income
141.6
131.8
Earnings before Income Taxes
141.8
130.6
Net Earnings
106.3
95.3
COMMENT Treatment Group posted revenues of approximately C$20 million in the first quarter (Q1), and ended the period with an order backlog of close to C$50 million, mainly driven by further breakthroughs in Europe, Latin America and the Asia-Pacific region. Despite difficult conditions, the Manufacturing Group continues to contribute positively to GL&V’s financial results and, above all, to bring significant support to the performance of the Pulp and Paper and Process Groups. According to president and chief executive officer Laurent Verreault, “the company has never been in such a strong position to grow its business and maximise shareholder value.” ■
Strong results from Donaldson’s Engine Products division pushed the company to a record year in terms of overall sales, US$1.4 billion as opposed to US$1.2 billion in fiscal 2003. The company is benefiting from environmental measures in North America; both truck build rates and aftermarket part usage continue to increase as regulations at federal and state levels create strong demand for Donaldson’s diesel truck emission control products. The company’s European and Asian businesses also performed well. Despite a continuing trend towards record sales, Donaldson’s net income for the fourth quarter (Q4) – US$26.2 million vs. US$27.1 million in 2003 – could have been even
better had it not been for three special adjustments on the balance sheet for Q4: an ongoing patent infringement lawsuit with Engineered Products Company Inc led to Donaldson increasing its reserve by US$5 million; several other adjustments totalling US$6.6 million were also necessary. In addition, high steel prices continue to be a burden. The good news according to president and chief executive officer Bill Cooke, is that Donaldson has been able to capitalise on the broad strength across its end markets. “We have transitioned from three years of weak conditions in many of our end markets to rapid demand acceleration this year,” he added. ■
11
COMPANY WATCH
Key Figures (C$ million) First quarter ended 30.6