(Source: PRNewswire-FirstCall)
CLEVELAND, Aug. 5 /PRNewswire-FirstCall/ -- NACCO Industries, Inc. today announced consolidated net income attributable to stockholders for the second quarter of 2009 of $1.6 million, or $0.19 per diluted share, on revenues of $545.2 million compared with consolidated net income attributable to stockholders for the second quarter of 2008 of $2.3 million, or $0.28 per diluted share, on revenues of $948.1 million.
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. -- 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. -- 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 June 30, 2009 of $7.5 million, or $0.90 per share, on revenues of $1.1 billion. This compared with consolidated net income of $7.9 million, or $0.95 per diluted share, on revenues of $1.8 billion for the first six months of 2008.
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, Europe and Asia-Pacific, although the declines are beginning to stabilize at very low levels. The consumer markets in which Hamilton Beach and Kitchen Collection participate are likely to continue to decline during the remainder of 2009 as consumers struggle with high unemployment rates and lower income levels. Changes in product positioning and product costs have been implemented at NMHG and Hamilton Beach to achieve more acceptable margin positions in the second half of 2009 despite lower market levels. While North American Coal's lignite coal operations continue to be strong, the company expects limerock production to be significantly lower in the second half of 2009 than in the second half of 2008 due to an unfavorable legal ruling that set aside customers' existing mining permits at most of the limerock mining operations and continued low demand in the housing and construction markets in southern Florida. Limerock customers are expected to return to production under new permits currently anticipated to be issued toward the beginning of 2010. The Company is operating on the assumption that the economic environment will not improve significantly in the latter half of 2009. Aggressive plans and cost containment actions put in place in late 2008 and early 2009 to help meet the challenges of 2009 have moderated the effect of the economic downturn in the first half of the year. The Company will continue to focus on cost reductions throughout the remainder of 2009.
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 $1.3 million on revenues of $342.7 million for the second quarter of 2009 compared with net income attributable to stockholders of $3.2 million on revenues of $742.4 million for the second quarter of 2008.
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 Asia-Pacific and the effect of unit and parts price increases implemented in prior years in the Americas and Europe slightly offset the revenue decline.
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 June 30, 2009 compared with approximately 12,800 units at March 31, 2009, 14,900 units at December 31, 2008 and 28,400 units at June 30, 2008.
The $4.5 million decrease in reported results in the second quarter of 2009 compared with the second quarter of 2008 was primarily attributable to a decline in gross profit of $50.3 million partially offset by $18.8 million pre-tax of favorable foreign currency movements, reduced workforce levels and lower employee-related and other selling, general and administrative expenses totaling $22.6 million as a result of cost containment actions implemented in late 2008 and early 2009. Gross profit declined mainly as a result of significantly reduced unit and parts volume, a shift in mix to sales of lower-margin units and an increase in manufacturing costs as less fixed costs were absorbed due to lower production volumes. These unfavorable items were partially offset by price increases implemented in prior periods, which resulted in benefits totaling $13.4 million pre-tax, reduced warranty costs resulting from better claims experience and lower sales volumes, lower inventory carrying costs and decreases in material costs totaling $6.1 million, pre-tax.
For the six months ended June 30, 2009, NMHG Wholesale reported a net loss attributable to stockholders of $20.4 million on revenues of $714.3 million compared with net income attributable to stockholders of $11.1 million on revenues of $1.4 billion for the first six months of 2008.
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 Europe and the 2 to 3 ton four-wheel electric trucks in the Americas, which have been very well received. The company expects to introduce two additional series in the second half of 2009.
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 North America. As a result of this review, NMHG Wholesale has adjusted its current policy to permit common ownership of dealers for its two brands, Hyster and Yale , in defined North American territories, under controlled conditions.
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 $1.8 million on revenues of $19.3 million compared with a net loss for the second quarter of 2008 of $0.6 million on revenues of $25.1 million.
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 Asia-Pacific and Europe also contributed to the decline. The decrease in revenues was partially offset by a reduction in the required intercompany revenue elimination compared with the prior year quarter caused by a decline in intercompany sales transactions.
NMHG Retail's increased net loss was primarily the result of lower volume, reduced rental margins in Europe and lower unit, service and rental margins in Asia-Pacific.
