Nortek Reports 1st-Quarter Results

Apr 18, 2001, 01:00 ET from Nortek, Inc.

    PROVIDENCE, R.I., April 18 /PRNewswire/ -- Nortek, Inc. (NYSE:   NTK), a
 leading international designer, manufacturer and marketer of high-quality
 building products, today announced results for the first-quarter of 2001.
 
     Key financials for the quarter ended March 31, 2001, included:
 
     -- Net sales of $467 million compared to $492 million for last year's
        exceptionally strong first quarter.  The first quarter of 2001 includes
        $13 million of sales from an acquisition not included in the comparable
        2000 period.
     -- Operating earnings of $19 million compared to last year's $30 million.
     -- EBITDA of $34 million compared to $45 million for the prior year.
     -- Net loss of $2.4 million compared to last year's net earnings of $4.0
        million.
     -- Diluted net loss per share of $(.22) compared to diluted net earnings
        per share of $.35 for the first quarter of 2000.
     -- Diluted net earnings (loss) per share for the first quarter of 2001 and
        the first quarter of 2000 are after amortization of goodwill and other
        intangible assets of $.47 per share and $.44 per share, respectively.
 
     Richard L. Bready, Chairman and Chief Executive Officer, said, "Operating
 results for the first quarter of each year are normally lower due to the
 seasonal nature of Nortek's businesses, particularly its Windows, Doors and
 Siding Group which has a heavy concentration of business in the upper Midwest
 and Northeast regions of the U.S. and the Air Conditioning and Heating
 Products Group which by its nature is a spring to fall business.  This normal
 first-quarter softness was compounded this year by the general economic
 slowdown and the continued decline in the manufactured housing industry, where
 shipments dropped more than 40 percent in the first two months of 2001 after
 falling 28 percent in 2000.  Additionally, unseasonably cold and wet weather
 conditions lasting into March impacted sales by large home improvement
 retailers and delayed outdoor building activities.
     "Going forward, we expect U.S. home construction and remodeling to remain
 reasonably strong for the remainder of the year, but it is difficult at this
 stage to tell if Nortek will be able to offset the earnings shortfall
 experienced in the first quarter.  We do anticipate an improvement in our
 businesses as better spring and summer weather finally arrives.  Internally,
 we will be implementing a number of cost-reduction programs, which we believe,
 will eventually save approximately $20 million on an annual basis.  Future
 results, however, are still dependent on general economic conditions."
 
     Nortek* is a leading international manufacturer and distributor of high-
 quality, competitively priced building, remodeling and indoor environmental
 control products for the residential and commercial markets.  The Company
 offers a broad array of products for improving the environments where people
 live and work.  Its products include range hoods and other spot ventilation
 products, heating and air conditioning systems, wood and vinyl windows and
 doors, vinyl siding products, indoor air quality systems, and specialty
 electronic products.
 
     *As used herein, the term "Nortek" refers to Nortek, Inc., together with
 its subsidiaries, unless the context indicates otherwise. This term is used
 for convenience only and is not intended as a precise description of any of
 the separate corporations, each of which manages its own affairs.
 
     This press release contains forward-looking statements within the meaning
 of the Private Securities Litigation Reform Act of 1995.  These statements are
 based on the Company's current plans and expectations and involve risks and
 uncertainties that could cause actual future activities and results of
 operations to be materially different from those set forth in the forward-
 looking statements.  Important factors impacting such forward looking
 statements include the availability and cost of raw materials and purchased
 components, the level of construction and remodeling activity, changes in
 general economic conditions, the rate of sales growth, and product liability
 claims.  The Company undertakes no obligation to update publicly any forward-
 looking statements, whether as a result of new information, future events, or
 otherwise.  For further information, please refer to the Company's reports and
 filings with the Securities and Exchange Commission.
 
                         NORTEK, INC. AND SUBSIDIARIES
             UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
                    (In thousands except per share amounts)
 
                                                   For the Three Months Ended
                                                     March 31,        April 1,
                                                       2001            2000
                                                           (Unaudited)
 
     Net sales                                       $467,269       $491,557
 
     Cost of products sold                            360,736        374,168
     Selling, general and
      administrative expenses                          82,119         81,837
     Amortization of goodwill
      and intangible assets                             5,784          5,752
                                                      448,639        461,757
 
     Operating earnings                                18,630         29,800
     Interest expense                                (25,338)       (24,310)
     Investment income                                  2,208          1,910
     Earnings (loss) before
      income taxes                                    (4,500)          7,400
     Income tax (benefit)
      Provision                                       (2,100)          3,400
     Net earnings (loss)                              (2,400)          4,000
 
     Net earnings (loss) per
      share of common stock:
       Basic                                           $.(22)           $.35
       Diluted                                         $.(22)           $.35
 
     Weighted average
     number of shares:
       Basic                                           10,916         11,484
       Diluted                                         10,916         11,549
 
     EBITDA                                            34,309         45,355
 
     Capital expenditures                              14,354          7,667
 
     The accompanying notes are an integral part of this unaudited condensed
 consolidated summary of operations.
 
                         NORTEK, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
 
     A. The unaudited condensed consolidated summary of operations for Nortek,
 Inc. and its subsidiaries ("the Company"), in the opinion of management,
 reflects all adjustments necessary for a fair statement of the periods
 presented.  It is suggested that this unaudited condensed consolidated summary
 of operations be read in conjunction with the financial statements and the
 notes included in the Company's latest Annual Report on Form 10-K, and its
 latest Quarterly Report on Form 10-Q as filed with the Securities and Exchange
 Commission.
 
     B. The Financial Accounting Standards Board's Emerging Issues Task Force
 reached final consensus in 2000 with respect to the accounting for shipping
 and handling fees and costs and the accounting for certain sales incentives.
 As a result, the Company has reclassified certain amounts among net sales,
 cost of products sold and selling, general and administrative expenses in
 accordance with these pronouncements for all periods presented in the
 accompanying unaudited condensed consolidated summary of operations.  These
 reclassifications did not have any effect on operating earnings, EBITDA, net
 earnings (loss) or diluted net earnings (loss) per share for any period
 presented.
 
     C. EBITDA from operations is operating earnings plus depreciation and
 amortization expense (other than amortization of deferred debt expense and
 debt discount).
 
     D. In the first quarter of 2001, the Company adopted Financial Accounting
 Standards Board SFAS No. 133 "Accounting for Derivative Instruments and
 Hedging Activities", as amended ("SFAS No. 133").  Adoption of this accounting
 method resulted in an approximate $800,000 charge to interest expense ($.04
 per share, net of tax) for the Company's interest rate collar agreement.  This
 amount was recorded in the Company's balance sheet as a liability at March 31,
 2001 representing the fair value of the derivative instrument.  The cumulative
 affect of adopting this accounting method as of December 31, 2000 was not
 material.
 
     E. Net sales for the Company's principal segments for the three months
 ended March 31, 2001 and April 1, 2000 were as follows:
 
                                                        Three Months Ended
                                                       March 31,    April 1,
                                                         2001         2000
                                                             Unaudited
                                                           (In millions)
 
     Residential Building Products                     $163.9         $172.5
     Air Conditioning and Heating
     Products                                           137.4          128.6
     Windows, Doors and Siding
     Products                                           150.1          171.1
     Other                                               15.9           19.4
       Total                                           $467.3         $491.6
 
     In the first quarter of 2001, acquisitions contributed approximately $12.6
 million to the increase in net sales in the Air Conditioning and Heating
 Products Segment.
     Operating earnings and depreciation and amortization expense for the
 Company's principal segments for the three months ended March 31, 2001 and
 April 1, 2000 were as follows:
 
                                                        Three Months Ended
                                                       March 31,   April 1,
                                                         2001          2000
                                                             Unaudited
                                                           (In millions)
 
     Operating Earnings:
     Residential Building Products                      $20.8          $25.1
     Air Conditioning and Heating
      Products                                            9.0           12.7
     Windows, Doors and Siding
      Products                                          (6.2)          (4.6)
     Other, Net                                         (5.0)          (3.4)
     Consolidated Operating Earnings                     18.6           29.8
 
     Unallocated:
       Interest Expense                                (25.3)         (24.3)
       Investment Income                                  2.2            1.9
     Earnings (Loss) before Income
     Taxes                                              (4.5)            7.4
 
     Depreciation and Amortization
     Expense:
     Residential Building Products                        5.7            5.6
     Air Conditioning and Heating
     Products                                             3.2            3.0
     Windows, Doors and Siding
     Products                                             6.4            6.6
     Other                                                 .4             .4
     Consolidated Depreciation and
     Amortization Expense                                15.7           15.6
 
     F. The following is a summary of selected balance sheet amounts and ratios
 at March 31, 2001 and December 31, 2000:
 
                                                            Balance at
                                                    March 31,      December 31,
                                                       2001           2000
                                                            Unaudited
                                                         (Dollar amounts
                                                           in thousands)
 
     Unrestricted cash,
     equivalents and
     marketable securities                             96,074        140,550
 
     Short-term borrowings
     and current maturities
     of indebtedness                                   22,434         21,497
 
     Long-term indebtedness                         1,023,574      1,020,493
 
     Stockholders Investment                          275,614        282,211
 
     Debt to equity ratio                               3.8:1          3.7:1
 
 
 

SOURCE Nortek, Inc.
    PROVIDENCE, R.I., April 18 /PRNewswire/ -- Nortek, Inc. (NYSE:   NTK), a
 leading international designer, manufacturer and marketer of high-quality
 building products, today announced results for the first-quarter of 2001.
 
     Key financials for the quarter ended March 31, 2001, included:
 
     -- Net sales of $467 million compared to $492 million for last year's
        exceptionally strong first quarter.  The first quarter of 2001 includes
        $13 million of sales from an acquisition not included in the comparable
        2000 period.
     -- Operating earnings of $19 million compared to last year's $30 million.
     -- EBITDA of $34 million compared to $45 million for the prior year.
     -- Net loss of $2.4 million compared to last year's net earnings of $4.0
        million.
     -- Diluted net loss per share of $(.22) compared to diluted net earnings
        per share of $.35 for the first quarter of 2000.
     -- Diluted net earnings (loss) per share for the first quarter of 2001 and
        the first quarter of 2000 are after amortization of goodwill and other
        intangible assets of $.47 per share and $.44 per share, respectively.
 
     Richard L. Bready, Chairman and Chief Executive Officer, said, "Operating
 results for the first quarter of each year are normally lower due to the
 seasonal nature of Nortek's businesses, particularly its Windows, Doors and
 Siding Group which has a heavy concentration of business in the upper Midwest
 and Northeast regions of the U.S. and the Air Conditioning and Heating
 Products Group which by its nature is a spring to fall business.  This normal
 first-quarter softness was compounded this year by the general economic
 slowdown and the continued decline in the manufactured housing industry, where
 shipments dropped more than 40 percent in the first two months of 2001 after
 falling 28 percent in 2000.  Additionally, unseasonably cold and wet weather
 conditions lasting into March impacted sales by large home improvement
 retailers and delayed outdoor building activities.
     "Going forward, we expect U.S. home construction and remodeling to remain
 reasonably strong for the remainder of the year, but it is difficult at this
 stage to tell if Nortek will be able to offset the earnings shortfall
 experienced in the first quarter.  We do anticipate an improvement in our
 businesses as better spring and summer weather finally arrives.  Internally,
 we will be implementing a number of cost-reduction programs, which we believe,
 will eventually save approximately $20 million on an annual basis.  Future
 results, however, are still dependent on general economic conditions."
 
     Nortek* is a leading international manufacturer and distributor of high-
 quality, competitively priced building, remodeling and indoor environmental
 control products for the residential and commercial markets.  The Company
 offers a broad array of products for improving the environments where people
 live and work.  Its products include range hoods and other spot ventilation
 products, heating and air conditioning systems, wood and vinyl windows and
 doors, vinyl siding products, indoor air quality systems, and specialty
 electronic products.
 
     *As used herein, the term "Nortek" refers to Nortek, Inc., together with
 its subsidiaries, unless the context indicates otherwise. This term is used
 for convenience only and is not intended as a precise description of any of
 the separate corporations, each of which manages its own affairs.
 
     This press release contains forward-looking statements within the meaning
 of the Private Securities Litigation Reform Act of 1995.  These statements are
 based on the Company's current plans and expectations and involve risks and
 uncertainties that could cause actual future activities and results of
 operations to be materially different from those set forth in the forward-
 looking statements.  Important factors impacting such forward looking
 statements include the availability and cost of raw materials and purchased
 components, the level of construction and remodeling activity, changes in
 general economic conditions, the rate of sales growth, and product liability
 claims.  The Company undertakes no obligation to update publicly any forward-
 looking statements, whether as a result of new information, future events, or
 otherwise.  For further information, please refer to the Company's reports and
 filings with the Securities and Exchange Commission.
 
                         NORTEK, INC. AND SUBSIDIARIES
             UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
                    (In thousands except per share amounts)
 
                                                   For the Three Months Ended
                                                     March 31,        April 1,
                                                       2001            2000
                                                           (Unaudited)
 
     Net sales                                       $467,269       $491,557
 
     Cost of products sold                            360,736        374,168
     Selling, general and
      administrative expenses                          82,119         81,837
     Amortization of goodwill
      and intangible assets                             5,784          5,752
                                                      448,639        461,757
 
     Operating earnings                                18,630         29,800
     Interest expense                                (25,338)       (24,310)
     Investment income                                  2,208          1,910
     Earnings (loss) before
      income taxes                                    (4,500)          7,400
     Income tax (benefit)
      Provision                                       (2,100)          3,400
     Net earnings (loss)                              (2,400)          4,000
 
     Net earnings (loss) per
      share of common stock:
       Basic                                           $.(22)           $.35
       Diluted                                         $.(22)           $.35
 
     Weighted average
     number of shares:
       Basic                                           10,916         11,484
       Diluted                                         10,916         11,549
 
     EBITDA                                            34,309         45,355
 
     Capital expenditures                              14,354          7,667
 
     The accompanying notes are an integral part of this unaudited condensed
 consolidated summary of operations.
 
                         NORTEK, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
 
     A. The unaudited condensed consolidated summary of operations for Nortek,
 Inc. and its subsidiaries ("the Company"), in the opinion of management,
 reflects all adjustments necessary for a fair statement of the periods
 presented.  It is suggested that this unaudited condensed consolidated summary
 of operations be read in conjunction with the financial statements and the
 notes included in the Company's latest Annual Report on Form 10-K, and its
 latest Quarterly Report on Form 10-Q as filed with the Securities and Exchange
 Commission.
 
     B. The Financial Accounting Standards Board's Emerging Issues Task Force
 reached final consensus in 2000 with respect to the accounting for shipping
 and handling fees and costs and the accounting for certain sales incentives.
 As a result, the Company has reclassified certain amounts among net sales,
 cost of products sold and selling, general and administrative expenses in
 accordance with these pronouncements for all periods presented in the
 accompanying unaudited condensed consolidated summary of operations.  These
 reclassifications did not have any effect on operating earnings, EBITDA, net
 earnings (loss) or diluted net earnings (loss) per share for any period
 presented.
 
     C. EBITDA from operations is operating earnings plus depreciation and
 amortization expense (other than amortization of deferred debt expense and
 debt discount).
 
     D. In the first quarter of 2001, the Company adopted Financial Accounting
 Standards Board SFAS No. 133 "Accounting for Derivative Instruments and
 Hedging Activities", as amended ("SFAS No. 133").  Adoption of this accounting
 method resulted in an approximate $800,000 charge to interest expense ($.04
 per share, net of tax) for the Company's interest rate collar agreement.  This
 amount was recorded in the Company's balance sheet as a liability at March 31,
 2001 representing the fair value of the derivative instrument.  The cumulative
 affect of adopting this accounting method as of December 31, 2000 was not
 material.
 
     E. Net sales for the Company's principal segments for the three months
 ended March 31, 2001 and April 1, 2000 were as follows:
 
                                                        Three Months Ended
                                                       March 31,    April 1,
                                                         2001         2000
                                                             Unaudited
                                                           (In millions)
 
     Residential Building Products                     $163.9         $172.5
     Air Conditioning and Heating
     Products                                           137.4          128.6
     Windows, Doors and Siding
     Products                                           150.1          171.1
     Other                                               15.9           19.4
       Total                                           $467.3         $491.6
 
     In the first quarter of 2001, acquisitions contributed approximately $12.6
 million to the increase in net sales in the Air Conditioning and Heating
 Products Segment.
     Operating earnings and depreciation and amortization expense for the
 Company's principal segments for the three months ended March 31, 2001 and
 April 1, 2000 were as follows:
 
                                                        Three Months Ended
                                                       March 31,   April 1,
                                                         2001          2000
                                                             Unaudited
                                                           (In millions)
 
     Operating Earnings:
     Residential Building Products                      $20.8          $25.1
     Air Conditioning and Heating
      Products                                            9.0           12.7
     Windows, Doors and Siding
      Products                                          (6.2)          (4.6)
     Other, Net                                         (5.0)          (3.4)
     Consolidated Operating Earnings                     18.6           29.8
 
     Unallocated:
       Interest Expense                                (25.3)         (24.3)
       Investment Income                                  2.2            1.9
     Earnings (Loss) before Income
     Taxes                                              (4.5)            7.4
 
     Depreciation and Amortization
     Expense:
     Residential Building Products                        5.7            5.6
     Air Conditioning and Heating
     Products                                             3.2            3.0
     Windows, Doors and Siding
     Products                                             6.4            6.6
     Other                                                 .4             .4
     Consolidated Depreciation and
     Amortization Expense                                15.7           15.6
 
     F. The following is a summary of selected balance sheet amounts and ratios
 at March 31, 2001 and December 31, 2000:
 
                                                            Balance at
                                                    March 31,      December 31,
                                                       2001           2000
                                                            Unaudited
                                                         (Dollar amounts
                                                           in thousands)
 
     Unrestricted cash,
     equivalents and
     marketable securities                             96,074        140,550
 
     Short-term borrowings
     and current maturities
     of indebtedness                                   22,434         21,497
 
     Long-term indebtedness                         1,023,574      1,020,493
 
     Stockholders Investment                          275,614        282,211
 
     Debt to equity ratio                               3.8:1          3.7:1
 
 
 SOURCE  Nortek, Inc.