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[December 2006]
Jacuzzi Brands Announces Full Year 2006 Financial Results
Jacuzzi Brands Inc (West Palm Beach, FL, USA) has announced financial results for the fiscal year ended 30 September 2006.
Net sales for fiscal 2006 remained virtually unchanged at approximately $1.2 billion as compared to fiscal 2005. During fiscal 2006, a $82.7 million
(23.4%) increase in Plumbing Products sales compensated for a $14.2 million (1.8%) decline in Bath Products sales, as well as the loss of $76.1 million in sales from Rexair, which was sold in the third quarter of fiscal 2005.Lower sales at the Bath Products segment primarily resulted from weak overall demand in markets served, partially offset by new product introductions and price increases. Approximately $6.5 million of the Bath Products sales decline was due to unfavourable translation effects of foreign currency. Higher sales at the Plumbing Products segment reflected greater market penetration, industry growth, price increases implemented to help offset higher raw material costs and the introduction of new products.
The Bath Products and Plumbing Products segments each reported significant increases in operating income as overall operating income increased by 9.7% to $103.6 million in fiscal 2006 from $94.4 million in fiscal 2005. The increase in operating income at the Bath Products segment was the result of cost reductions, sourcing initiatives and price increases implemented to offset higher raw materials costs and volume shortfalls. The Bath Products segment pro forma operating margins improved by 170 basis points to 6.1% for the year. Operating income at the Plumbing Products segment increased as a result of increased volume of existing products, while price increases offset substantially all of the increases in raw materials costs. Corporate expenses declined a net $4.2 million versus the prior year due primarily to reduced professional fees of $3.4 million.
The company is currently forecasting earnings per share from continuing operations of $0.75 per share for fiscal 2007. This forecast includes $0.04 per share of income from non-recurring items that primarily relate to the sale of surplus properties. This forecast is a "forward-looking statement", and accordingly is subject to the usual qualifications. The major assumptions for the forecast include the successful execution of business strategies to outperform the residential housing market, which the company expects to decline but moderate while the renovation market improves; continued growth in domestic commercial and institutional construction activity; successful new product introductions driving sales and profit margins for the Bath segment, which has experienced increasingly difficult trading conditions; successful marketing initiatives and dealer enhancements to increase spa market share, in a significantly declining domestic market, together with increased penetration of European markets; continued conversion of copper plumbing to PEX, consistent with recent industry trends, sufficient to overcome both increased competition and a declining residential construction market; the return to profitability of the UK operations following a two-year trend of increasing losses; product price increases to offset continued overall inflationary cost pressures on commodities including energy; continued reductions of corporate overhead costs; and increased non-cash pension income, primarily due to a higher discount rate.
On 11 October 2006, the company announced that a definitive merger agreement had been signed under which affiliates of private equity firm Apollo Management LP will purchase Jacuzzi Brands for $12.50 per share. The acquisition is subject to certain closing conditions, including the approval of the company's shareholders, regulatory approval and the receipt by Apollo of all necessary debt financing. The acquisition is expected to close in the first quarter of calendar 2007.
www.jacuzzibrands.com
ENDS