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[August 2006]
Jacuzzi Brands Announces Third Quarter 2006 Financial Results
Jacuzzi Brands Inc (West Palm Beach, FL, USA) has announced financial results for the third quarter ended 30 June 2006. Net sales and operating income for Q3 of fiscal 2006 were US$332.6 million and US$33.6 million respectively, compared to US$334.2 million and US$34.0 million respectively for Q3 of fiscal 2005. Results for Q3 of fiscal 2005 included Rexair net sales and operating income of US$24.7 million and US$6.5 million, respectively.The company incurred a net loss of US$1.0 million from continuing operations for Q3 of fiscal 2006 as a result of a non-cash charge of US$14.4 million associated with the establishment of a reserve for the deferred tax assets of the UK operations. Earnings per share from continuing operations for Q3 of fiscal 2005 of US$37.9 million included a US$0.34 per share gain on the sale of Rexair.
The company recorded the US$14.4 million valuation allowance for the UK deferred tax assets due to losses expected to be incurred through the two year period ended fiscal 2006. The company expects that the previously announced UK restructuring initiatives and plant consolidation, which caused a significant portion of these losses, will return the UK operations to profitability in fiscal 2007. A return to profitability at the UK operations would result in a reversal of this reserve, which would reduce income tax expense in future periods.
Bath segment sales declined 1.3% in the third quarter of fiscal 2006 compared to the same period in fiscal 2005. Improved worldwide sales of UK sink products and spas partially offset declines in sales of UK bath products. Sales of the company's UK sink products improved over last year largely as a result of increased export sales to the USA. Worldwide spa sales increased as a result of improved pricing, mix and the continued expansion into European markets, which offset continued softness in the US spa market.
Operating income increased 19.4% to US$14.8 million in Q3 of fiscal 2006 from US$12.4 million in Q3 of fiscal 2005, primarily due to cost controls and other performance improvement measures at US bath and spa businesses. Price increases throughout the Bath Products segment mitigated higher raw material costs, including oil-based and metal commodities.
Operating income in the Bath Products segment included restructuring and other charges of US$1.3 million in Q3 of fiscal 2006 and US$1.4 million in Q3 of fiscal 2005. Restructuring and other charges for Q3 of 2006 largely consisted of US$0.5 million in accelerated depreciation, reflected in cost of goods sold, and US$0.6 million in severance reflected in restructuring, related to the previously announced consolidation of the Bradford, UK ceramics plant and other UK staffing and overhead reductions.
The company expects to record US$0.6 million in accelerated depreciation in cost of goods sold and US$0.6 million in cash restructuring charges over the remainder of fiscal 2006 related to the Bradford ceramics plant consolidation and does not expect to incur additional costs in relation to the Bradford ceramics plant consolidation after fiscal 2006. In conjunction with the anticipated return to profitability, the company is reviewing a number of additional UK profit improvement opportunities.
Al Marini, Chief Operating Officer and newly appointed CEO of Jacuzzi Brands, stated: "We are very pleased with our third quarter results as both our Bath and Plumbing segments performed well. Our Bath segment continued to improve its profitability, while our Plumbing segment continues its outstanding record of increased sales and profits. We anticipate that we will continue to see positive results for the balance of fiscal 2006."
www.jacuzzibrands.com
ENDS