Exhibit 99.1
| The Genlyte Group Incorporated |
| | 10350 Ormsby Park Place, Suite 601 |
| | Louisville, KY 40223 |
| | |
| News Release | For Immediate Release |
| | |
Contact: William G. Ferko, CFO |
(502) 420-9502 |
GENLYTE ANNOUNCES RECORD SECOND QUARTER SALES AND EARNINGS
Louisville, KY, July 31, 2006. The Genlyte Group Incorporated (NASDAQ: GLYT) today announced record second quarter net sales of $366.1 million, an increase of 15.8% compared to $316.2 million in the second quarter of 2005. The Company also reported record second quarter earnings per share of $1.24, a 63.2% increase over the $0.76 reported for the second quarter of 2005. Second quarter net income increased 66.6% to $35.9 million compared to $21.5 million reported for the second quarter of 2005.
Second quarter income before income taxes includes a $7.2 million foreign currency exchange gain related to the return of capital from Canada which was used for acquisitions. The $7.2 million gain was previously recognized through the currency translation adjustment (CTA) section of accumulated other comprehensive income, which is part of stockholder’s equity. The distribution to the U.S. triggered a permanent recognition of the related CTA gain into pre-tax income. Second quarter results also include the sales of $15.8 million and operating profit of $2.3 million from the May 22, 2006 acquisition of the JJI Lighting Group, Inc. (“JJI”).
Year-to-date earnings per share of $2.94 and net income of $84.5 million were up 110.0% and 113.7%, respectively, from 2005. Sales during the six-month period increased 12.6% to $695.3 million from $617.6 million. Our second quarter year-to-date net income and earnings per share results were significantly impacted by the foreign currency exchange gain mentioned above, as well as the $24.7 million tax provision benefit related to the January 2006 change in corporate tax structure of Genlyte Thomas Group from partnership status to corporate status.
Chairman, President and CEO Larry Powers said, “We are pleased to report second quarter increases in both sales and earnings. Our focus on higher margin product lines and the price increases helped us achieve higher sales and gross margins for the second quarter.
“Residential, commercial, HID and outdoor lighting sales improved somewhat from last year. We believe residential construction is starting to slow down; however, since lighting tends to lag overall construction project spending, our residential business continued to grow this quarter. Our core commercial business is participating in the commercial construction cyclical recovery that began earlier this year and should continue for the next two years.
“We are pleased with the second quarter gross margin increase to 39.4% compared to 37.3% last year. The operating profit margin increased during the second quarter to 14.0% from 12.0%. These margin increases are primarily attributed to the effective price increases, increases in volume, and the benefit of mix from selling higher value added products. Total order input during the quarter increased 20% over last year. Backlog is 56% above prior year, partially due to the recent JJI acquisition and the spike in orders placed in advance of the recent price increase.
“We continue to see cumulative year-over-year cost increases in freight, ballasts, steel, aluminum, zinc, audit fees, and interest rates. Many of our input material price agreements were renegotiated during the second quarter and the cumulative effect of cost increases from the last twelve months is a concern. We are encouraged by improvement in the operating profit margin percentage, although higher costs remain a challenge. Key concerns in the near future are transportation and energy costs, interest rates and the uncertainty regarding continued growth of the U.S. economy. We believe the commercial construction markets will grow in 2006; however, unexpected economic changes could alter expectations. Our short-term plan is to control expenses and provide outstanding service, while adding innovative new products.”
Vice President and Chief Financial Officer Bill Ferko stated, “During the quarter cash flow from operations less plant and equipment investments provided $16.3 million compared to the same quarter last year when we generated $13.9 million. Working capital decreased during the second quarter by $6.0 million to $173.4 million.
“Our balance sheet remains very strong. We closed the second quarter with cash and short-term investments of $40.2 million and debt of $222.6 million, or a net debt position of $182.4 million, compared to second quarter 2005 net debt of $177.2 million, and $70.7 million at the end of 2005. Our net debt increased by only $5.2 million compared to prior year even though we recently paid $121.1 million to acquire JJI.”
To supplement the consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the Company has presented a table of adjusted operating results, which includes non-GAAP financial information. This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s current financial performance and prospects for the future. Specifically, management believes the non-GAAP financial information provides useful information to investors by excluding or adjusting certain items of operating results that were unusual and not indicative of the Company’s core operating results. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP. The non-GAAP financial information included in this news release has been reconciled to the nearest GAAP measure.
Live audio of Genlyte’s conference call with securities analysts, scheduled for 11:00 a.m. EDT on July 31, 2006, can be accessed from the investor relations section of Genlyte’s website http://www.genlyte.com or from http://www.visualwebcaster.com/event.asp?id=34698. An audio replay of the call will be available for 90 days.
The Genlyte Group Incorporated (NASDAQ: GLYT) is a leading manufacturer of lighting fixtures, controls, and related products for the commercial, industrial and residential markets. Genlyte sells lighting and lighting accessory products under the major brand names of Canlyte, Capri/Omega, Chloride Systems, Crescent, Day-Brite, Gardco, Hadco, JJI Lighting Group, Ledalite, Lightolier, Lightolier Controls, Lumec, Shakespeare Composite Structures, Strand, Stonco, Thomas Lighting, Vari-Lite, and Wide-Lite.
The statements in this report with respect to future results, future expectations, and plans for future activities and synergies may be regarded as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially from those currently expected. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” “forecasts,” or similar expressions. Such future results are subject to various risks, such as the ability of the Company to meet new business sales goals and realize desired price increases, fluctuations in commodity, energy, and transportation costs, slowing of the overall economy, slowing of construction activity, changes in foreign currency translation rates, increased interest costs arising from a change in the Company’s leverage or change in rates, failure of the Company’s plans to produce anticipated cost savings, the outcome of pending litigation, the timing and magnitude of capital expenditures, the operating results of recent acquisitions, as well as other risks discussed in the Company’s filing with the Securities Exchange Commission. The Company makes no commitment to disclose any revision to forward-looking statements, or any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.
For additional information about Genlyte please refer to the Company’s web site at: http://www.genlyte.com.
The table below presents a comparison of condensed consolidated statements of income (unaudited and preliminary) for the three months and six months ended July 1, 2006 and July 2, 2005, as well as adjusted net income and the impact of the adjustments on earnings per share for the one-time foreign currency exchange gain and the tax provision benefit.
| | | For the three months ended | |
| | | July 1, 2006 | | July 2, 2005 | | % Change | |
| | | | | | | | |
| Net Sales | | $ | 366,094 | | $ | 316,238 | | | 15.8 | % |
| | | | | | | | | | | |
| Operating Profit | | $ | 51,253 | | $ | 37,859 | | | 35.4 | % |
| | | | | | | | | | | |
| Net Income | | $ | 35,877 | | $ | 21,538 | | | 66.6 | % |
| | | | | | | | | | | |
| E.P.S. (1) | | $ | 1.24 | | $ | 0.76 | | | 63.2 | % |
| | | | | | | | | | | |
| Average Shares Outstanding (1) | | | 28,830 | | | 28,379 | | | 1.6 | % |
| | | | | | | | | | | |
| Foreign Currency Exchange Gain (after tax) (2) | | $ | 4,400 | | $ | - | | | 100.0 | % |
| | | | | | | | | | | |
| Adjusted Net Income | | $ | 31,477 | | $ | 21,538 | | | 46.1 | % |
| | | | | | | | | | | |
| Impact of adjustment on E.P.S. | | $ | 0.15 | | $ | - | | | 100.0 | % |
| | | For the six months ended | |
| | | July 1, 2006 | | July 2, 2005 | | % Change | |
| | | | | | | | |
| Net Sales | | $ | 695,268 | | $ | 617,599 | | | 12.6 | % |
| | | | | | | | | | | |
| Operating Profit | | $ | 94,830 | | $ | 69,694 | | | 36.1 | % |
| | | | | | | | | | | |
| Net Income | | $ | 84,504 | | $ | 39,544 | | | 113.7 | % |
| | | | | | | | | | | |
| E.P.S. (1) | | $ | 2.94 | | $ | 1.40 | | | 110.0 | % |
| | | | | | | | | | | |
| Average Shares Outstanding (1) | | | 28,723 | | | 28,292 | | | 1.5 | % |
| | | | | | | | | | | |
| Foreign Currency Exchange Gain (after tax) (2) | | $ | 4,400 | | $ | - | | | 100.0 | % |
| | | | | | | | | | | |
| Tax Provision Benefit (2) | | $ | 24,715 | | $ | - | | | 100.0 | % |
| |
| Adjusted Net Income | | $ | 55,389 | | $ | 39,544 | | | 40.1 | % |
| |
| Impact of adjustments on E.P.S. | | $ | 1.01 | | $ | - | | | 100.0 | % |
| |
| (1) Fully diluted, and adjusted for the May 23, 2005 two-for-one stock split. |
| (2) The one-time foreign currency exchange gain and the tax provision benefit relating to the change in corporate tax structuring of GTG are provided to present 2006 results on a more comparable basis with 2005. |
The foregoing unaudited figures have been approved by the management of The Genlyte Group Incorporated for official release on the date indicated.
| THE GENLYTE GROUP INCORPORATED | |
| CONSOLIDATED STATEMENTS OF INCOME | |
| FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 1, 2006 AND JULY 2, 2005 | |
| (Amounts in thousands, except earnings per share data) | |
| (Unaudited) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended | |
| | | July 1, 2006 | | July 2, 2005 | | July 1, 2006 | | July 2, 2005 | |
| Net sales | | $ | 366,094 | | $ | 316,238 | | $ | 695,268 | | $ | 617,599 | |
| Cost of sales | | | 221,869 | | | 198,326 | | | 425,053 | | | 390,421 | |
| Gross profit | | | 144,225 | | | 117,912 | | | 270,215 | | | 227,178 | |
| Selling and administrative expenses | | | 91,819 | | | 79,452 | | | 173,607 | | | 156,282 | |
| Amortization of intangible assets | | | 1,153 | | | 601 | | | 1,778 | | | 1,202 | |
| Operating profit | | | 51,253 | | | 37,859 | | | 94,830 | | | 69,694 | |
| Interest expense, net | | | 1,689 | | | 2,381 | | | 2,808 | | | 4,763 | |
| Foreign currency gain on investment | | | (7,184 | ) | | - | | | (7,184 | ) | | - | |
| Minority interest | | | - | | | 32 | | | - | | | 1 | |
| Income before income taxes | | | 56,748 | | | 35,446 | | | 99,206 | | | 64,930 | |
| Income tax provision | | | 20,871 | | | 13,908 | | | 14,702 | | | 25,386 | |
| Net income | | $ | 35,877 | | $ | 21,538 | | $ | 84,504 | | $ | 39,544 | |
| | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | |
| Basic | | $ | 1.27 | | $ | 0.78 | | $ | 3.01 | | $ | 1.43 | |
| Diluted | | $ | 1.24 | | $ | 0.76 | | $ | 2.94 | | $ | 1.40 | |
| | | | | | | | | | | | | | |
| Weighted average number of shares outstanding: | | | | | | | | | | | | | |
| Basic | | | 28,152 | | | 27,757 | | | 28,057 | | | 27,681 | |
| Diluted | | | 28,830 | | | 28,379 | | | 28,723 | | | 28,292 | |
| THE GENLYTE GROUP INCORPORATED |
| CONSOLIDATED BALANCE SHEETS |
| AS OF JULY 1, 2006 AND DECEMBER 31, 2005 |
| (Amounts in thousands) |
| (Unaudited and Preliminary) |
| | | | | | |
| | | July 1, | | December 31, | |
| | | 2006 | | 2005 | |
Assets: | | | | | | | |
Current Assets: | | | | | | | |
| Cash and cash equivalents | | $ | 40,242 | | $ | 78,042 | |
| Short-term investments | | | - | | | 17,667 | |
| Accounts receivable, less allowances for doubtful accounts of | | | | | | | |
| $6,981 and $6,017 as of July 1, 2006 and December 31, 2005, respectively | | | 237,410 | | | 186,691 | |
| Inventories | | | 189,166 | | | 152,573 | |
| Deferred income taxes and other current assets | | | 34,997 | | | 13,459 | |
| Total current assets | | | 501,815 | | | 448,432 | |
| Property, plant and equipment, at cost | | | 470,339 | | | 446,236 | |
| Less: accumulated depreciation and amortization | | | 297,311 | | | 280,159 | |
| Net property, plant and equipment | | | 173,028 | | | 166,077 | |
| Goodwill | | | 342,029 | | | 257,233 | |
| Other intangible assets, net of accumulated amortization | | | 139,780 | | | 112,639 | |
| Other assets | | | 14,609 | | | 5,525 | |
Total Assets | | $ | 1,171,261 | | $ | 989,906 | |
| | | | | | | | |
Liabilities & Stockholders' Equity: | | | | | | | |
Current Liabilities: | | | | | | | |
| Short-term debt | | $ | 95,352 | | $ | 80,140 | |
| Current maturities of long-term debt | | | 119 | | | 156 | |
| Accounts payable | | | 134,346 | | | 115,678 | |
| Accrued expenses | | | 98,572 | | | 101,192 | |
| Total current liabilities | | | 328,389 | | | 297,166 | |
| Long-term debt | | | 127,111 | | | 86,076 | |
| Deferred income taxes | | | 40,761 | | | 35,016 | |
| Other long-term liabilities | | | 38,621 | | | 26,036 | |
| Total liabilities | | | 534,882 | | | 444,294 | |
Stockholders' Equity: | | | | | | | |
| Common stock | | | 282 | | | 280 | |
| Additional paid-in capital | | | 71,895 | | | 64,207 | |
| Retained earnings | | | 542,023 | | | 457,517 | |
| Accumulated other comprehensive income | | | 22,179 | | | 23,608 | |
| Total stockholders' equity | | | 636,379 | | | 545,612 | |
Total Liabilities & Stockholders' Equity | | $ | 1,171,261 | | $ | 989,906 | |
| | | | | | | | |
| THE GENLYTE GROUP INCORPORATED |
| SELECTED SEGMENT DATA |
| FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 1, 2006 AND JULY 2, 2005 |
| (Amounts in thousands) |
| (Unaudited and Preliminary) |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended | |
| | | July 1, 2006 | | July 2, 2005 | | July 1, 2006 | | July 2, 2005 | |
| Net sales: | | | | | | | | | | | | | |
| Commercial segment | | $ | 269,137 | | $ | 232,249 | | $ | 511,404 | | $ | 455,997 | |
| Residential segment | | | 48,122 | | | 45,438 | | | 92,942 | | | 87,012 | |
| Industrial & other segment | | | 48,835 | | | 38,551 | | | 90,922 | | | 74,590 | |
| | | | | | | | | | | | | | |
| Total net sales | | $ | 366,094 | | $ | 316,238 | | $ | 695,268 | | $ | 617,599 | |
| | | | | | | | | | | | | | |
| Operating profit: | | | | | | | | | | | | | |
| Commercial segment | | $ | 36,491 | | $ | 26,926 | | $ | 67,388 | | $ | 49,136 | |
| Residential segment | | | 9,005 | | | 7,080 | | | 16,728 | | | 13,272 | |
| Industrial & other segment | | | 5,757 | | | 3,853 | | | 10,714 | | | 7,286 | |
| | | | | | | | | | | | | | |
| Total operating profit | | $ | 51,253 | | $ | 37,859 | | $ | 94,830 | | $ | 69,694 | |
