Friday, April 13, 2007
Eaton Reports First Quarter Net Income Per Share Up 40 Percent to $1.19 on Record Quarterly Revenue
CLEVELAND -- Diversified industrial manufacturer Eaton Corporation (NYSE:ETN) today announced net income per share of $1.19 for the first quarter of 2005, an increase of 40 percent over net income per share of $.85 in the first quarter of 2004. Sales in the quarter were a record $2.65 billion, 19 percent above the same period in 2004. Net income was $187 million, compared to $134 million in the first quarter of 2004, an increase of 40 percent.
Net income in both periods included charges for restructuring activities related to the integration of acquisitions. Before these restructuring charges, operating earnings per share in the first quarter of 2005 were $1.23 versus $.88 per share in 2004, an increase of 40 percent, and operating earnings for the first quarter of 2005 were $193 million compared to $138 million in 2004, an increase of 40 percent.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, "We are pleased with our first quarter, which came in near the top of our guidance. Sales growth in the first quarter of 19 percent consisted of 10 percent from acquisitions, 7 percent from organic growth, and 2 percent from higher exchange rates. Our end markets during the quarter grew 6 percent.
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"In the first quarter, our segment operating margin before restructuring charges was 12.6 percent, a significant increase over 11.7 percent a year ago," said Cutler.
"We continue to anticipate growth of 5 percent for our end markets in 2005," said Cutler. "The residential electrical markets are stronger than we had anticipated, but this strength is offset by weaker aerospace and automotive markets.
"Consistent with the plan announced in January, Eaton spent $250 million repurchasing shares during the quarter," said Cutler. "We repurchased 3.63 million shares, at an average price of $69 per share.
"We anticipate net income per share for the second quarter of 2005 to be between $1.20 and $1.30. Operating earnings per share, which excludes restructuring charges to integrate our recent acquisitions, are expected to be between $1.25 and $1.35 in the second quarter of 2005. We are maintaining our full-year guidance for both net income per share and operating earnings per share, at $4.90 to $5.10, and $5.10 to $5.30, respectively."
Business Segment Results
First quarter sales of Eaton's largest business segment, Electrical, were $848 million, up 39 percent over 2004. Excluding the impact of the Powerware acquisition, first quarter sales were up 5 percent compared to 2004. Operating profits in the first quarter were $71 million. Operating profits before restructuring charges were $76 million, up 52 percent from 2004.
"End markets for our electrical business grew about 5 percent during the first quarter," said Cutler. "The residential markets remained very strong during the quarter, while growth in the nonresidential markets was modest."
Fluid Power segment first quarter sales were $785 million, 2 percent above the first quarter of 2004. Fluid Power markets grew 2 percent compared to the same period in 2004, with global fluid power shipments up 10 percent, commercial aerospace up 7 percent, defense aerospace down 19 percent, and European automotive down 2 percent. Operating profits in the first quarter were $76 million. Operating profits before restructuring charges were $80 million, a decline of 2 percent compared to a year earlier.
"The mobile and industrial hydraulics markets remained strong in the first quarter," said Cutler. "We expect continued growth in these markets throughout 2005. The commercial aerospace market grew slightly less than expected in the first quarter, while defense aerospace was much weaker than we anticipated.
"Sales in our automotive fluid connector business declined further in the first quarter, reflecting weaker auto markets and the loss of certain programs," said Cutler. "We anticipate that sales should begin to recover toward the end of 2005.
"We completed the acquisition of Winner Group Holdings at the end of March," said Cutler. "Winner is the largest producer of hydraulic hose fittings and adapters for the Chinese market, and is expected to be a valuable addition to our Chinese hydraulic operations."
The Truck segment posted sales of $542 million in the first quarter, up 42 percent compared to 2004, and recorded operating profits of $109 million, up 79 percent. NAFTA heavy-duty truck production was up 46 percent compared to 2004, NAFTA medium-duty truck production was up 10 percent, European truck production was up 8 percent, and Brazilian vehicle production was up 10 percent.
Net income in both periods included charges for restructuring activities related to the integration of acquisitions. Before these restructuring charges, operating earnings per share in the first quarter of 2005 were $1.23 versus $.88 per share in 2004, an increase of 40 percent, and operating earnings for the first quarter of 2005 were $193 million compared to $138 million in 2004, an increase of 40 percent.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, "We are pleased with our first quarter, which came in near the top of our guidance. Sales growth in the first quarter of 19 percent consisted of 10 percent from acquisitions, 7 percent from organic growth, and 2 percent from higher exchange rates. Our end markets during the quarter grew 6 percent.
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"In the first quarter, our segment operating margin before restructuring charges was 12.6 percent, a significant increase over 11.7 percent a year ago," said Cutler.
"We continue to anticipate growth of 5 percent for our end markets in 2005," said Cutler. "The residential electrical markets are stronger than we had anticipated, but this strength is offset by weaker aerospace and automotive markets.
"Consistent with the plan announced in January, Eaton spent $250 million repurchasing shares during the quarter," said Cutler. "We repurchased 3.63 million shares, at an average price of $69 per share.
"We anticipate net income per share for the second quarter of 2005 to be between $1.20 and $1.30. Operating earnings per share, which excludes restructuring charges to integrate our recent acquisitions, are expected to be between $1.25 and $1.35 in the second quarter of 2005. We are maintaining our full-year guidance for both net income per share and operating earnings per share, at $4.90 to $5.10, and $5.10 to $5.30, respectively."
Business Segment Results
First quarter sales of Eaton's largest business segment, Electrical, were $848 million, up 39 percent over 2004. Excluding the impact of the Powerware acquisition, first quarter sales were up 5 percent compared to 2004. Operating profits in the first quarter were $71 million. Operating profits before restructuring charges were $76 million, up 52 percent from 2004.
"End markets for our electrical business grew about 5 percent during the first quarter," said Cutler. "The residential markets remained very strong during the quarter, while growth in the nonresidential markets was modest."
Fluid Power segment first quarter sales were $785 million, 2 percent above the first quarter of 2004. Fluid Power markets grew 2 percent compared to the same period in 2004, with global fluid power shipments up 10 percent, commercial aerospace up 7 percent, defense aerospace down 19 percent, and European automotive down 2 percent. Operating profits in the first quarter were $76 million. Operating profits before restructuring charges were $80 million, a decline of 2 percent compared to a year earlier.
"The mobile and industrial hydraulics markets remained strong in the first quarter," said Cutler. "We expect continued growth in these markets throughout 2005. The commercial aerospace market grew slightly less than expected in the first quarter, while defense aerospace was much weaker than we anticipated.
"Sales in our automotive fluid connector business declined further in the first quarter, reflecting weaker auto markets and the loss of certain programs," said Cutler. "We anticipate that sales should begin to recover toward the end of 2005.
"We completed the acquisition of Winner Group Holdings at the end of March," said Cutler. "Winner is the largest producer of hydraulic hose fittings and adapters for the Chinese market, and is expected to be a valuable addition to our Chinese hydraulic operations."
The Truck segment posted sales of $542 million in the first quarter, up 42 percent compared to 2004, and recorded operating profits of $109 million, up 79 percent. NAFTA heavy-duty truck production was up 46 percent compared to 2004, NAFTA medium-duty truck production was up 10 percent, European truck production was up 8 percent, and Brazilian vehicle production was up 10 percent.
Employment and unemployment developments, October 2002
Both nonfarm payroll employment and the unemployment rate were about unchanged in October. Job losses in the construction, manufacturing, and help supply industries were offset by gains in a number of other industries, among them finance, real estate, and health services.
Unemployment
The number of unemployed persons (8.2 million) and the unemployment rate (5.7 percent) were essentially unchanged in October. The unemployment rate for adult women edged up to 5.2 percent while the rates for the other major worker groups--adult men (5.2 percent), teenagers (14.6 percent), whites (5.1 percent), blacks (9.8 percent), and Hispanics (7.8 percent)--showed little or no change over the month. (See tables A-3 and A-4.)
Total employment and the labor force
Total employment, as measured by the household survey, edged down in October to 134.9 million, after seasonal adjustment. This followed a large increase in September. The employment-population ratio, which had increased in September, declined to 62.9 percent. (See table A-3.)
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The civilian labor force, at 143.1 million, seasonally adjusted, was little changed from the prior month. The labor force participation rate declined to 66.7 percent. (See table A-3.)
About 7.2 million persons (not seasonally adjusted) held more than one job in October. These multiple jobholders represented 5.4 percent of the total employed. (See table A-37.)
Persons not in the labor force
About 1.4 million persons (not seasonally adjusted) were marginally attached to the labor force in October, little changed from a year earlier. These individuals reported that they wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they had not actively searched for work in the 4 weeks preceding the survey. The number of discouraged workers was 355,000 in October, also about unchanged from the same month a year earlier. Discouraged workers, a subset of the marginally attached, were not looking for work specifically because they believed no jobs were available for them. (See table A-36.)
Industry payroll employment
Nonfarm payroll employment was virtually unchanged (-5,000) in October at 130.9 million, although there were offsetting movements among various industries. Employment also had held steady in September (-13,000 as revised). In the 4 months prior to September, payroll employment had increased by nearly a quarter of a million; this followed a loss of 1.8 million from March 2001 to April 2002. (See table B-3.)
Manufacturing employment declined by 49,000 over the month. The pace of factory job losses increased in the last 3 months, averaging 47,000 a month since July, compared with 20,000 a month from April to July. Employment in wholesale trade, an industry affected by manufacturing activity, showed a similar, though less pronounced, pattern. In manufacturing, October job losses were concentrated primarily within durable goods, including electronic and electrical equipment, primary metals, fabricated metals, and aircraft and parts manufacturing. Employment in the electronics industry has fallen by 44,000 in the past 3 months, following smaller losses in late spring and early summer. In nondurable goods manufacturing, the apparel industry lost 7,000 jobs in October, following a similar decline in September.
Employment in the construction industry decreased by 27,000 in October, following an increase of 11,000 in September (as revised). Since April, there has been no net growth in construction employment. Special trades lost 30,000 jobs in October, with electrical work accounting for a large part of the monthly decline.
Overall employment in the services industry was little changed (+ 18,000) over the month. Employment in business services fell sharply (-44,000), particularly in the help supply component (-56,000), which provides workers to other businesses on an as-needed basis. In contrast, health services continued to add jobs, with a gain of 20,000 in October, and there was an increase of 7,000 jobs in legal services. Over the month, employment also advanced in hotels and lodging places (16,000), offsetting an identical loss over the prior 2 months combined.
Finance, insurance, and real estate added 34,000 jobs in October. After little change in the first half of the year, the industry has added 70,000 jobs since June. Spurred by the lowest interest rates in decades, employment growth continued in mortgage banks and brokerages; the industry added 17,000 jobs in October. Employment also rose in real estate. Since June, that industry has added 33,000 jobs.
Unemployment
The number of unemployed persons (8.2 million) and the unemployment rate (5.7 percent) were essentially unchanged in October. The unemployment rate for adult women edged up to 5.2 percent while the rates for the other major worker groups--adult men (5.2 percent), teenagers (14.6 percent), whites (5.1 percent), blacks (9.8 percent), and Hispanics (7.8 percent)--showed little or no change over the month. (See tables A-3 and A-4.)
Total employment and the labor force
Total employment, as measured by the household survey, edged down in October to 134.9 million, after seasonal adjustment. This followed a large increase in September. The employment-population ratio, which had increased in September, declined to 62.9 percent. (See table A-3.)
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The civilian labor force, at 143.1 million, seasonally adjusted, was little changed from the prior month. The labor force participation rate declined to 66.7 percent. (See table A-3.)
About 7.2 million persons (not seasonally adjusted) held more than one job in October. These multiple jobholders represented 5.4 percent of the total employed. (See table A-37.)
Persons not in the labor force
About 1.4 million persons (not seasonally adjusted) were marginally attached to the labor force in October, little changed from a year earlier. These individuals reported that they wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they had not actively searched for work in the 4 weeks preceding the survey. The number of discouraged workers was 355,000 in October, also about unchanged from the same month a year earlier. Discouraged workers, a subset of the marginally attached, were not looking for work specifically because they believed no jobs were available for them. (See table A-36.)
Industry payroll employment
Nonfarm payroll employment was virtually unchanged (-5,000) in October at 130.9 million, although there were offsetting movements among various industries. Employment also had held steady in September (-13,000 as revised). In the 4 months prior to September, payroll employment had increased by nearly a quarter of a million; this followed a loss of 1.8 million from March 2001 to April 2002. (See table B-3.)
Manufacturing employment declined by 49,000 over the month. The pace of factory job losses increased in the last 3 months, averaging 47,000 a month since July, compared with 20,000 a month from April to July. Employment in wholesale trade, an industry affected by manufacturing activity, showed a similar, though less pronounced, pattern. In manufacturing, October job losses were concentrated primarily within durable goods, including electronic and electrical equipment, primary metals, fabricated metals, and aircraft and parts manufacturing. Employment in the electronics industry has fallen by 44,000 in the past 3 months, following smaller losses in late spring and early summer. In nondurable goods manufacturing, the apparel industry lost 7,000 jobs in October, following a similar decline in September.
Employment in the construction industry decreased by 27,000 in October, following an increase of 11,000 in September (as revised). Since April, there has been no net growth in construction employment. Special trades lost 30,000 jobs in October, with electrical work accounting for a large part of the monthly decline.
Overall employment in the services industry was little changed (+ 18,000) over the month. Employment in business services fell sharply (-44,000), particularly in the help supply component (-56,000), which provides workers to other businesses on an as-needed basis. In contrast, health services continued to add jobs, with a gain of 20,000 in October, and there was an increase of 7,000 jobs in legal services. Over the month, employment also advanced in hotels and lodging places (16,000), offsetting an identical loss over the prior 2 months combined.
Finance, insurance, and real estate added 34,000 jobs in October. After little change in the first half of the year, the industry has added 70,000 jobs since June. Spurred by the lowest interest rates in decades, employment growth continued in mortgage banks and brokerages; the industry added 17,000 jobs in October. Employment also rose in real estate. Since June, that industry has added 33,000 jobs.
OSRAM Opto Semiconductors at the 97th Annual Chicago Automotive Show February 11-20, 2005
OSRAM Opto Semiconductors announces its participation in the 97th annual Chicago Automotive Show. The Chicago Auto Show is sponsored by the Chicago Trade Association and is the largest auto show in North America.
The Chicago Auto Show is the premier venue for worldwide and North American automotive introductions. On display is a complete range of domestic and imported passenger cars and trucks, sport utility vehicles and experimental and concept cars. This event will showcase over 1000 vehicles as well as numerous accessory displays and auto-related exhibits.
WHAT: OSRAM Opto Semiconductors at the 97th annual Chicago
Auto Show. See OSRAM's products and solutions in the:
-- Nissan "AZEAL"
-- Ford Syn US Concept Vehicle
-- Ford Shelby G1
WHEN: February 11 - 20, 2005
WHERE: McCormick Place, Chicago, Illinois
DISPLAY: OSRAM demonstrations will include:
-- OSRAM's surface-mount technology (SMT) Power TOPLED(R) and
Golden DRAGON(TM) LEDs in the AZEAL's forward styling lights,
frosted tail lights, low-profile airbrake CHMSL and various
interior accent illumination
-- OSRAM's yellow and white Power TOPLEDs, providing accent
illumination on the Ford Syn US concept vehicle
-- OSRAM's highly efficient ThinGAN(R) chip technology used in
the Ford Shelby G1 projection headlights
The Chicago Auto Show is the premier venue for worldwide and North American automotive introductions. On display is a complete range of domestic and imported passenger cars and trucks, sport utility vehicles and experimental and concept cars. This event will showcase over 1000 vehicles as well as numerous accessory displays and auto-related exhibits.
WHAT: OSRAM Opto Semiconductors at the 97th annual Chicago
Auto Show. See OSRAM's products and solutions in the:
-- Nissan "AZEAL"
-- Ford Syn US Concept Vehicle
-- Ford Shelby G1
WHEN: February 11 - 20, 2005
WHERE: McCormick Place, Chicago, Illinois
DISPLAY: OSRAM demonstrations will include:
-- OSRAM's surface-mount technology (SMT) Power TOPLED(R) and
Golden DRAGON(TM) LEDs in the AZEAL's forward styling lights,
frosted tail lights, low-profile airbrake CHMSL and various
interior accent illumination
-- OSRAM's yellow and white Power TOPLEDs, providing accent
illumination on the Ford Syn US concept vehicle
-- OSRAM's highly efficient ThinGAN(R) chip technology used in
the Ford Shelby G1 projection headlights
Trade secrets
Got a real stumper sitting in one of your baysa Would you like to be able to pick the brains of some techs who've been there, solved that problem?
Kansas is his name and repairing cars is his game. Or perhaps I should say his passion. I ran into Kansas Wortham at the iATN's 2002 convention in Anaheim, California, in September. He looks like he'd be more at home at the nearby Disneyland than in an auto repair shop. He has white hair, a shiny white beard and a twinkle in his eye that makes you feel like you've known him for years, even after you've just met him for the first time.
I didn't have to ask if he was having a wonderful time at the convention. You could see it in his smile and the warmth he radiated. I asked Kansas what he thought of iATN (International Automotive Technicians' Network). He thought for a moment, then said, "iATN has changed my life." Kansas explained that he had worked at all kinds of jobs until he finally got involved in what he described as a very poorly run shop. He loved the work, but he was frustrated by the lack of information and training he felt he needed to succeed.
Kansas was thinking about a career change when he discovered iATN. From feeling all alone in a shop in the small town of Chico, California, Kansas suddenly went online and tapped into a network of over 40,000 technicians from 127 countries. Kansas describes his relationship with the other members of iATN as like having a big family. It was the feeling of fellowship that pervaded the convention that impressed me.
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September's iATN convention attracted approximately 260 automotive technicians from six countries and 34 states. I asked a young man named Ed Page, of Page's Auto Repair in Norwich, Connecticut, what it was that motivated him to leave his shop and fly across the country to attend the iATN convention. He said, "In a word, `honesty.' I really like meeting technicians from across the country who are honest professionals willing to share their expertise."
Ed said he particularly enjoyed the technical seminars, which began on Friday morning at 8 a.m. with "Injector Guru" Jim Linder of Linder Technical Services exploring the good, the bad and the ugly of fuel injection service. Other seminars were just as informative. Tom Roberts of Autonerdz explained lab scope strategy and technique, and John Peake of Peake Equipment explained the right way to go from a great idea for how to run the shop to actually getting that idea to work. I spotted Ed Page and MoToR's own Mark Warren actively participating at the iATN West Coast Diagnostic Challenge. The interactive program, hosted by Jonathan Riggle, iATN stalwart, presented and covered various diagnostic problems, then revealed the proper fixes.. but not until several techs in the audience had their say.
On Saturday morning, Randy Bernklau of B.C. Automotive Services spoke on how to choose a diagnostic direction like when to use the scanner, lab scope or 4-gas analyzer, and Mac VandenBrink of Dynamic Auto Test Enineering gave the lowdown on exploring scope pattern interpretations. In other tech sessions, Paul Baltusis of Ford covered multiplexing, George Witt of Witt Service outlined survival skills for the service advisor, Mike McCarthy of the California Air Resources Board talked about OBD II system certifications and Toyota's Mario Jaime got into hybrids.
One seminar I found to be very exciting was given by Bob Schrader, president of Bridge Analyzers. It delved into the formula which has become one of the intemational standard methods for calculating Lambda from exhaust gas values.
After an intensive two days of hightech information, the convention was topped off by the annual iATN dinner. I had some thoughts to share and, as usual, Mark Warren had them rolling in the aisles.
You really could feel the fellowship in the room as technicians and their spouses who have attended in past years renewed relationships and exchanged war stories. At my table was a couple who have really embraced iATN. Brad Petersen, of Petersen Automotive in Escondido, California, told me that he is what he is today because of iATN. Brad and his wife Dawn, also an automotive technician, run a state-of-the-art repair shop and are active in iATN, ASE, STS and ASA. Their devotion to what Brad describes as his iATN family is truly remarkable.
Every year iATN presents awards and door prizes at the convention dinner. A few years ago, Brad hid an engagement ring in a sensor tester box and secretly arranged for Dawn's name to be picked as the winner of the tester. When she opened what she thought was her prize, she was thrilled to discover that Brad had substituted a ring. He proposed right there on the iATN stage in front of over 200 members!
Kansas is his name and repairing cars is his game. Or perhaps I should say his passion. I ran into Kansas Wortham at the iATN's 2002 convention in Anaheim, California, in September. He looks like he'd be more at home at the nearby Disneyland than in an auto repair shop. He has white hair, a shiny white beard and a twinkle in his eye that makes you feel like you've known him for years, even after you've just met him for the first time.
I didn't have to ask if he was having a wonderful time at the convention. You could see it in his smile and the warmth he radiated. I asked Kansas what he thought of iATN (International Automotive Technicians' Network). He thought for a moment, then said, "iATN has changed my life." Kansas explained that he had worked at all kinds of jobs until he finally got involved in what he described as a very poorly run shop. He loved the work, but he was frustrated by the lack of information and training he felt he needed to succeed.
Kansas was thinking about a career change when he discovered iATN. From feeling all alone in a shop in the small town of Chico, California, Kansas suddenly went online and tapped into a network of over 40,000 technicians from 127 countries. Kansas describes his relationship with the other members of iATN as like having a big family. It was the feeling of fellowship that pervaded the convention that impressed me.
Advertisement
September's iATN convention attracted approximately 260 automotive technicians from six countries and 34 states. I asked a young man named Ed Page, of Page's Auto Repair in Norwich, Connecticut, what it was that motivated him to leave his shop and fly across the country to attend the iATN convention. He said, "In a word, `honesty.' I really like meeting technicians from across the country who are honest professionals willing to share their expertise."
Ed said he particularly enjoyed the technical seminars, which began on Friday morning at 8 a.m. with "Injector Guru" Jim Linder of Linder Technical Services exploring the good, the bad and the ugly of fuel injection service. Other seminars were just as informative. Tom Roberts of Autonerdz explained lab scope strategy and technique, and John Peake of Peake Equipment explained the right way to go from a great idea for how to run the shop to actually getting that idea to work. I spotted Ed Page and MoToR's own Mark Warren actively participating at the iATN West Coast Diagnostic Challenge. The interactive program, hosted by Jonathan Riggle, iATN stalwart, presented and covered various diagnostic problems, then revealed the proper fixes.. but not until several techs in the audience had their say.
On Saturday morning, Randy Bernklau of B.C. Automotive Services spoke on how to choose a diagnostic direction like when to use the scanner, lab scope or 4-gas analyzer, and Mac VandenBrink of Dynamic Auto Test Enineering gave the lowdown on exploring scope pattern interpretations. In other tech sessions, Paul Baltusis of Ford covered multiplexing, George Witt of Witt Service outlined survival skills for the service advisor, Mike McCarthy of the California Air Resources Board talked about OBD II system certifications and Toyota's Mario Jaime got into hybrids.
One seminar I found to be very exciting was given by Bob Schrader, president of Bridge Analyzers. It delved into the formula which has become one of the intemational standard methods for calculating Lambda from exhaust gas values.
After an intensive two days of hightech information, the convention was topped off by the annual iATN dinner. I had some thoughts to share and, as usual, Mark Warren had them rolling in the aisles.
You really could feel the fellowship in the room as technicians and their spouses who have attended in past years renewed relationships and exchanged war stories. At my table was a couple who have really embraced iATN. Brad Petersen, of Petersen Automotive in Escondido, California, told me that he is what he is today because of iATN. Brad and his wife Dawn, also an automotive technician, run a state-of-the-art repair shop and are active in iATN, ASE, STS and ASA. Their devotion to what Brad describes as his iATN family is truly remarkable.
Every year iATN presents awards and door prizes at the convention dinner. A few years ago, Brad hid an engagement ring in a sensor tester box and secretly arranged for Dawn's name to be picked as the winner of the tester. When she opened what she thought was her prize, she was thrilled to discover that Brad had substituted a ring. He proposed right there on the iATN stage in front of over 200 members!
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