Noland's Weak Sales in Q1 Lead to Decline in Earnings

Apr 18, 2001, 01:00 ET from Noland Company

    NEWPORT NEWS, Va., April 18 /PRNewswire/ -- Noland Company today reported
 first-quarter net income of $1,212,000, or 34 cents per share (diluted),
 compared to record-high first-quarter 2000 earnings of $2,365,000, or 64 cents
 per share (diluted).  The company blamed the sharp decline on a five percent
 drop in sales that reflected weaker construction and manufacturing conditions
 in its territory.
     Chairman Lloyd U. Noland, III said the slowing economy that reduced demand
 for the wholesale distributor's products and services in the fourth quarter
 worsened in the early part of 2001.  "Electrical/industrial sales, which are
 heavily dependent on manufacturing activity, fell 8.2 percent.  In contrast,
 our air conditioning department managed to equal its year-earlier sales total,
 in part due to expanded operations in Florida."  He added that plumbing sales
 declined by 5.6 percent.
     Total company sales for the first-quarter were $114,931,000, compared to
 the year-earlier period's $120,994,000.
     While gross margins increased slightly, operating expenses rose four
 percent -- in part due to a decline in non-cash pension credits.  The
 combination of lower gross profits and higher expenses led to a 66 percent
 drop in operating profit.
     Noland said the company continued to make progress in improving the
 management of its inventories, reducing its total inventory investment by $8
 million from a year ago and slightly improving its inventory turns.  "This is
 especially gratifying in light of the increased challenges of moving product
 in a softer business environment."
     The lower inventory investment, coupled with lower interest rates,
 contributed to a 25 percent reduction in interest expense in the first
 quarter.  At the same time, total borrowings as of March 31 were $10.4 million
 less than one year earlier.
     Noland said he expects business conditions to remain soft over the next
 few months, but believes the economy could strengthen in the second half of
 the year.  "Meanwhile, we are focusing on aggressively pursuing a larger share
 of the available business while closely watching expenses."
 
                         UNAUDITED FINANCIAL HIGHLIGHTS
 
     For the Three Months
     Ended March 31                                   2001           2000
 
     Merchandise Sales                           $114,930,701   $120,994,151
 
     Net Income(1)                                 $1,211,779     $2,365,208
 
     Basic Earnings Per Share(2)                         $.34           $.65
 
     Diluted Earnings Per Share(3)                       $.34           $.64
 
     (1)  Net income benefited in both years from noncash pension credits as
          follows: $400,000 (11 cents per share) in 2001 and $690,000 (19 cents
          per share) in 2000, on a diluted basis.
 
     (2)  Based on 3,549,783 shares outstanding in 2001 and 3,654,997
          outstanding in 2000.
 
     (3)  Based on 3,581,583 shares outstanding in 2001 and 3,693,764
          outstanding in 2000.
 
     Note: Included in this news release are forward-looking management
 comments and other statements which reflect management's current outlook for
 the future.  Such forward-looking statements are not guarantees of future
 performance and are subject to risks and uncertainties that could cause actual
 results to differ materially from those anticipated in the statements.  Such
 risks and uncertainties include, but are not limited to, general business and
 economic conditions, climatic conditions, competitive pricing pressures, and
 product availability.
 
 

SOURCE Noland Company
    NEWPORT NEWS, Va., April 18 /PRNewswire/ -- Noland Company today reported
 first-quarter net income of $1,212,000, or 34 cents per share (diluted),
 compared to record-high first-quarter 2000 earnings of $2,365,000, or 64 cents
 per share (diluted).  The company blamed the sharp decline on a five percent
 drop in sales that reflected weaker construction and manufacturing conditions
 in its territory.
     Chairman Lloyd U. Noland, III said the slowing economy that reduced demand
 for the wholesale distributor's products and services in the fourth quarter
 worsened in the early part of 2001.  "Electrical/industrial sales, which are
 heavily dependent on manufacturing activity, fell 8.2 percent.  In contrast,
 our air conditioning department managed to equal its year-earlier sales total,
 in part due to expanded operations in Florida."  He added that plumbing sales
 declined by 5.6 percent.
     Total company sales for the first-quarter were $114,931,000, compared to
 the year-earlier period's $120,994,000.
     While gross margins increased slightly, operating expenses rose four
 percent -- in part due to a decline in non-cash pension credits.  The
 combination of lower gross profits and higher expenses led to a 66 percent
 drop in operating profit.
     Noland said the company continued to make progress in improving the
 management of its inventories, reducing its total inventory investment by $8
 million from a year ago and slightly improving its inventory turns.  "This is
 especially gratifying in light of the increased challenges of moving product
 in a softer business environment."
     The lower inventory investment, coupled with lower interest rates,
 contributed to a 25 percent reduction in interest expense in the first
 quarter.  At the same time, total borrowings as of March 31 were $10.4 million
 less than one year earlier.
     Noland said he expects business conditions to remain soft over the next
 few months, but believes the economy could strengthen in the second half of
 the year.  "Meanwhile, we are focusing on aggressively pursuing a larger share
 of the available business while closely watching expenses."
 
                         UNAUDITED FINANCIAL HIGHLIGHTS
 
     For the Three Months
     Ended March 31                                   2001           2000
 
     Merchandise Sales                           $114,930,701   $120,994,151
 
     Net Income(1)                                 $1,211,779     $2,365,208
 
     Basic Earnings Per Share(2)                         $.34           $.65
 
     Diluted Earnings Per Share(3)                       $.34           $.64
 
     (1)  Net income benefited in both years from noncash pension credits as
          follows: $400,000 (11 cents per share) in 2001 and $690,000 (19 cents
          per share) in 2000, on a diluted basis.
 
     (2)  Based on 3,549,783 shares outstanding in 2001 and 3,654,997
          outstanding in 2000.
 
     (3)  Based on 3,581,583 shares outstanding in 2001 and 3,693,764
          outstanding in 2000.
 
     Note: Included in this news release are forward-looking management
 comments and other statements which reflect management's current outlook for
 the future.  Such forward-looking statements are not guarantees of future
 performance and are subject to risks and uncertainties that could cause actual
 results to differ materially from those anticipated in the statements.  Such
 risks and uncertainties include, but are not limited to, general business and
 economic conditions, climatic conditions, competitive pricing pressures, and
 product availability.
 
 SOURCE  Noland Company