-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uf7WyuLGF+p2z3faBC/OLjGgb/yFD5Hp0UpAd9MiUTSekfw0qScGOamuOtoBgeZw bz4wMD+IfelECljlFLWjvw== 0000950152-06-003645.txt : 20060428 0000950152-06-003645.hdr.sgml : 20060428 20060428123350 ACCESSION NUMBER: 0000950152-06-003645 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060428 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060428 DATE AS OF CHANGE: 20060428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMSON & SESSIONS CO CENTRAL INDEX KEY: 0000057497 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 340349210 STATE OF INCORPORATION: OH FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00313 FILM NUMBER: 06788270 BUSINESS ADDRESS: STREET 1: 25701 SCIENCE PARK DR CITY: CLEVELAND STATE: OH ZIP: 44122-7313 BUSINESS PHONE: 2164643400 MAIL ADDRESS: STREET 1: 25701 SCIENCE PARK DR CITY: CLEVELAND STATE: OH ZIP: 44122 8-K 1 l19762ae8vk.txt THE LAMSON & SESSIONS CO. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 28, 2006 The Lamson & Sessions Co. (Exact name of registrant as specified in its charter) Ohio 1-313 34-0349210 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)
25701 Science Park Drive, Cleveland, Ohio 44122-7313 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 464-3400 ________________________________________________________________________________ (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On April 28, 2006, The Lamson & Sessions Co. issued a press release announcing its earnings for the first quarter 2006 and its estimates for net sales and net income for both the second quarter and full year 2006. A copy of such press release is included as Exhibit 99.1 hereto and incorporated herein by reference. This Form 8-K and the attached Exhibit are furnished to, but not filed with, the Securities and Exchange Commission. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits:
Number Exhibit - ------ ------- 99.1 Press release, dated April 28, 2006
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE LAMSON & SESSIONS CO. By: /s/ James J. Abel ------------------------------------ Name: James J. Abel Title: Executive Vice President, Secretary, Treasurer and Chief Financial Officer Dated: April 28, 2006 INDEX TO EXHIBITS
NUMBER EXHIBIT - ------ ------- 99.1 Press release, dated April 28, 2006
EX-99.1 2 l19762aexv99w1.txt EX-99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE LAMSON & SESSIONS REPORTS STRONG FIRST QUARTER RESULTS - NET SALES RISE 37.1 PERCENT TO $135.4 MILLION FOR THE FIRST QUARTER OF 2006 - DILUTED EARNINGS PER SHARE INCREASED TO 58 CENTS FOR THE FIRST QUARTER OF 2006 COMPARED WITH 15 CENTS IN THE FIRST QUARTER OF 2005 - SECOND QUARTER DILUTED EARNINGS PER SHARE EXPECTED TO INCREASE TO 60 TO 63 CENTS COMPARED WITH 35 CENTS IN SECOND QUARTER 2005 - FULL YEAR 2006 NET INCOME EXPECTED TO GROW 10 PERCENT TO $30-$31 MILLION, OR $1.90 TO $1.95 PER DILUTED SHARE CLEVELAND, Ohio, April 28, 2006 - Lamson & Sessions (NYSE:LMS) today announced net sales of $135.4 million for the first quarter of 2006, a record first quarter and an increase of 37.1 percent over the $98.8 million reported in the first quarter of 2005. Net sales improved by more than 10 percent in each of the Company's three business segments as sales order rates strengthened in its key end markets of residential, non-residential and telecom infrastructure construction. Net income for the first quarter of 2006 rose to $9.2 million, or 58 cents per diluted share, an increase of more than 300 percent compared with $2.2 million, or 15 cents per diluted share reported in the first quarter of 2005. "We are very encouraged by the broad base of continuing demand in our key end markets," said John B. Schulze, Chairman, President and Chief Executive Officer. "These market conditions confirm our expectations of an extended growth cycle for our products." The Company's gross margin improved to 22.9 percent of sales, which is more than 500 basis points better than the 17.2 percent reported in the first quarter of 2005. This improvement is primarily due to higher sales prices, increased unit volume and favorable product mix. Operating expenses increased to $15.0 million, or 11.1 percent of net sales, in the first quarter of 2006 compared with $11.4 million, or 11.5 percent of net sales, reported in the first quarter of 2005. The increased operating expense level in 2006 reflects higher variable selling and marketing costs generated by the higher net sales, and approximately $1.5 million in compensation costs associated with implementing FASB Statement No. 123(R), Share-Based Payment, which now requires all share-based payments to employees to be recognized as expense based upon their fair values. Since our 2006 awards were principally granted in the first quarter, the impact is significantly larger when compared with subsequent calendar quarters due to a requirement to use a non-substantive vesting approach (expensing at the grant date for all individuals eligible to retire). Interest expense decreased to $1.1 million in the first quarter of 2006, an improvement of more than 40 percent compared with the first quarter of 2005, reflecting the Company's lower debt level and reduced interest rates. Business Segments All three of the Company's business segments had experienced net sales growth greater than 10 percent and were profitable in the first quarter of 2006, compared with the first quarter of 2005. The Carlon business segment reported net sales of $64.1 million, an increase of 35.7 percent compared with the $47.2 million reported in the first quarter of 2005. This significant growth reflects higher sales prices and improving sales order activity in electrical distribution and telecom infrastructure, augmented by market share gains in the gas collection market. Operating income more than doubled to $7.7 million in the first quarter of 2006 compared with the $3.6 million reported in the first quarter of 2005. The Lamson Home Products business segment reported net sales of $27.0 million in the first quarter of 2006, a 12.5 percent increase over the $24.0 million reported in the first quarter of 2005. The residential construction market, both for new homes and rehabilitation, continues to be resilient and underpins the growth of this business segment. Operating income totaled $2.6 million in the first quarter of 2006, a decline of 27.5 percent from the $3.5 million reported in the first quarter of 2005. Increased raw material costs were primarily responsible for the lower operating income level, but the impact should be mitigated in future quarters as this business segment has raised prices with all customers and expects to experience improved product mix. The PVC Pipe business segment reported net sales of $44.4 million in the first quarter of 2006, an increase of 60.6 percent over the $27.6 million reported in the first quarter of 2005. This business segment benefited from higher sales prices at the beginning of the quarter, which decreased progressively throughout the period as raw material costs for conduit products moderated and the supply of resin returned to normal. Unit volume decreased moderately from the prior year, due entirely to weather conditions on the West Coast. Operating income totaled $9.0 million in the first quarter of 2006 compared with a breakeven performance in the first quarter of 2005. 2 of 8 Liquidity and Working Capital During the first quarter of 2006, the Company replenished inventory to appropriate levels now that raw material shortages have been resolved. As a result, inventory turns reached 7.0 times, which compares favorably with the 6.6 times reported in the first quarter of 2005, but less than the 9.1 turns achieved in the fourth quarter of 2005. Accounts receivable days outstanding were 47.1 days in the first quarter of 2006, relatively unchanged from the 46.9 days reported in the first quarter of 2005, but comparing favorably with the 50.9 days reported in the fourth quarter of 2005. Debt rose moderately in the first quarter of 2006, which is in line with the Company's plan, with additional working capital and capital expenditure funding needed to support the increased business activity. The Company's debt leverage continues to decrease due to the strong net earnings performance. The Company's debt capacity is adequate to meet the anticipated business growth and reinvestment expenditure commitments this year. Outlook The breadth of sales order activity over most of the Company's key end markets has been encouraging throughout the first quarter of 2006. The seasonal strength of the second and third calendar quarters should also add support to our expectations for the remainder of 2006. With respect to the second quarter of 2006, the Company anticipates that net sales will range from $145 million to $150 million, a 17 to 21 percent increase over the second quarter of 2005. If this net sales level is achieved, net income should reach $9.5 million to $10.0 million, or 60 to 63 cents per diluted share. This earnings range represents a 70 to 80 percent increase over the 35 cents per diluted share reported in the second quarter of 2005. Consistent with numerous estimates of general U.S. growth for 2006, the Company anticipates that the second half of 2006 will not be as strong as the first half in its key end markets. As a result, the Company expects that net sales for the full year 2006 will grow at a rate of 10 to 12 percent to a range of $545 million to $555 million. If this net sales range is achieved and PVC Pipe margins decline only modestly, the Company estimates that net income could reach $30 million to $31 million, or $1.90 to $1.95 per diluted share, in 2006. This estimate represents an increase of more than 10 percent over the $27.4 million in net income, or $1.82 per diluted share, reported in 2005. 3 of 8 Conference Call A live Internet broadcast of the Company's conference call regarding its first quarter 2006 financial performance can be accessed via the investor relations page on the Company's Web site (www.lamson-sessions.com) at 2:00 p.m. Eastern Time on Friday, April 28, 2006. Lamson & Sessions is a leading producer of thermoplastic enclosures, fittings, wiring outlet boxes and conduit for the electrical, telecommunications, consumer, power and wastewater markets. For additional information, please visit our Web site at: www.lamson-sessions.com. This press release contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expected as a result of a variety of factors, such as: (i) the volatility of resin pricing, (ii) the ability of the Company to pass through raw material cost increases to its customers, (iii) the continued availability of raw materials and consistent electrical power supplies, (iv) maintaining a stable level of housing starts, telecommunications infrastructure spending, consumer confidence and general construction trends and (v) any adverse change in the country's general economic condition affecting the markets for the Company's products. Because forward-looking statements are based on a number of beliefs, estimates and assumptions by management that could ultimately prove to be inaccurate, there is no assurance that any forward-looking statement will prove to be accurate. FOR FURTHER INFORMATION, PLEASE CONTACT: James J. Abel Executive Vice President and Chief Financial Officer Lamson & Sessions (216) 766-6557 4 of 8 THE LAMSON & SESSIONS CO. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
FIRST QUARTER ENDED ----------------------------------- 2006 2005 -------- ------- NET SALES $135,401 100.0% $98,792 100.0% COST OF PRODUCTS SOLD 104,418 77.1% 81,815 82.8% -------- ------- GROSS PROFIT 30,983 22.9% 16,977 17.2% SELLING AND MARKETING EXPENSES 8,747 6.5% 7,074 7.1% GENERAL AND ADMINISTRATIVE EXPENSES 5,706 4.2% 3,812 3.9% RESEARCH AND DEVELOPMENT 585 0.4% 476 0.5% -------- ------- OPERATING EXPENSES 15,038 11.1% 11,362 11.5% -------- ------- OPERATING INCOME 15,945 11.8% 5,615 5.7% INTEREST 1,117 0.8% 2,002 2.0% -------- ------- INCOME BEFORE INCOME TAXES 14,828 11.0% 3,613 3.7% INCOME TAX PROVISION 5,608 4.2% 1,409 1.5% -------- ------- NET INCOME $ 9,220 6.8% $ 2,204 2.2% ======== ======= BASIC EARNINGS PER SHARE $ 0.60 $ 0.16 ======== ======= AVERAGE SHARES OUTSTANDING 15,318 13,999 ======== ======= DILUTED EARNINGS PER SHARE $ 0.58 $ 0.15 ======== ======= DILUTED AVERAGE SHARES OUTSTANDING 15,982 14,557 ======== =======
5 of 8 THE LAMSON & SESSIONS CO. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS)
QUARTER ENDED YEAR ENDED QUARTER ENDED APRIL 1, 2006 DECEMBER 31, 2005 APRIL 2, 2005 ------------- ----------------- ------------- ACCOUNTS RECEIVABLE, NET $ 73,616 $ 68,507 $ 53,020 INVENTORIES, NET 55,089 43,987 44,738 OTHER CURRENT ASSETS 17,155 16,703 13,471 PROPERTY, PLANT AND EQUIPMENT, NET 50,667 48,833 47,835 GOODWILL 21,441 21,441 21,480 PENSION ASSETS 34,696 34,369 30,693 OTHER ASSETS 4,480 6,167 18,270 -------- -------- -------- TOTAL ASSETS $257,144 $240,007 $229,507 ======== ======== ======== ACCOUNTS PAYABLE $ 35,756 $ 30,943 $ 31,598 SECURED CREDIT AGREEMENT - CURRENT 5,000 5,000 80,795 OTHER CURRENT LIABILITIES 29,019 36,035 26,092 LONG-TERM DEBT 60,140 55,026 11,682 OTHER LONG-TERM LIABILITIES 22,510 22,704 30,322 SHAREHOLDERS' EQUITY 104,719 90,299 49,018 -------- -------- -------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $257,144 $240,007 $229,507 ======== ======== ========
6 of 8 THE LAMSON & SESSIONS CO. CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) (IN THOUSANDS)
FIRST QUARTER ENDED ------------------ 2006 2005 -------- ------- OPERATING ACTIVITIES NET INCOME $ 9,220 $ 2,204 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH USED IN OPERATING ACTIVITIES DEPRECIATION 2,174 2,270 AMORTIZATION 71 403 STOCK-BASED COMPENSATION 1,505 -- DEFERRED INCOME TAXES 2,468 723 CHANGES IN OPERATING ASSETS AND LIABILITIES ACCOUNTS RECEIVABLE (5,109) (4,629) INVENTORIES (11,102) (7,878) PREPAID EXPENSES AND OTHER (102) 571 ACCOUNTS PAYABLE 4,813 7,385 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (6,940) (5,781) TAX BENEFIT FROM EXERCISE OF STOCK OPTIONS -- 235 PENSION PLAN CONTRIBUTIONS (480) (315) OTHER LONG-TERM ITEMS 15 406 -------- ------- CASH USED IN OPERATING ACTIVITIES (3,467) (4,406) INVESTING ACTIVITIES NET ADDITIONS TO PROPERTY, PLANT, AND EQUIPMENT (4,008) (2,144) ACQUISITIONS AND RELATED ITEMS -- (62) -------- ------- CASH USED IN INVESTING ACTIVITIES (4,008) (2,206) FINANCING ACTIVITIES NET BORROWINGS UNDER SECURED CREDIT AGREEMENT 5,200 5,795 PAYMENTS ON OTHER LONG-TERM BORROWINGS (86) (194) PURCHASE AND RETIREMENT OF TREASURY STOCK (421) -- EXERCISE OF STOCK OPTIONS 1,452 1,071 TAX BENEFIT FROM EXERCISE OF STOCK OPTIONS 2,558 -- -------- ------- CASH PROVIDED BY FINANCING ACTIVITIES 8,703 6,672 -------- ------- INCREASE IN CASH AND CASH EQUIVALENTS 1,228 60 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,210 683 -------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,438 $ 743 ======== =======
7 of 8 THE LAMSON & SESSIONS CO. BUSINESS SEGMENTS (IN THOUSANDS)
FIRST QUARTER ENDED ------------------ 2006 2005 -------- ------- NET SALES CARLON $ 64,056 $47,203 LAMSON HOME PRODUCTS 26,979 23,971 PVC PIPE 44,366 27,618 -------- ------- $135,401 $98,792 ======== ======= OPERATING INCOME (LOSS) CARLON $ 7,690 $ 3,624 LAMSON HOME PRODUCTS 2,568 3,543 PVC PIPE 8,952 13 CORPORATE OFFICE (3,265) (1,565) -------- ------- $ 15,945 $ 5,615 ======== ======= DEPRECIATION AND AMORTIZATION CARLON $ 847 $ 1,269 LAMSON HOME PRODUCTS 428 462 PVC PIPE 970 942 -------- ------- $ 2,245 $ 2,673 ======== =======
TOTAL ASSETS BY BUSINESS SEGMENT AT APRIL 1, 2006, DECEMBER 31, 2005, AND APRIL 2, 2005
APRIL 1, 2006 DECEMBER 31, 2005 APRIL 2, 2005 ------------- ----------------- ------------- IDENTIFIABLE ASSETS CARLON $ 92,969 $ 86,858 $ 81,897 LAMSON HOME PRODUCTS 42,069 38,286 35,217 PVC PIPE 66,065 57,985 51,177 CORPORATE OFFICE (INCLUDES CASH, DEFERRED TAX, AND PENSION ASSETS) 56,041 56,878 61,216 -------- -------- -------- $257,144 $240,007 $229,507 ======== ======== ========
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