The Oilgear Company (NASDAQ:OLGR) today reported record sales and
earnings for the second quarter ended June 30, 2006. The record
earnings were buoyed by the gain on the previously announced sale
of the company's property in Leeds, England. Net sales were a
record $28,338,000 for the second quarter of 2006, an 11.1%
increase from sales of $25,497,000 for the same period in 2005. Net
earnings were $5,803,000 or $2.84 per diluted share for the second
quarter of 2006, compared to net earnings of $664,000 or $0.33 per
diluted share for the comparable prior period. During the quarter,
the company completed the sale of its Leeds, UK, facility,
relocated its operations and made the strategic decision to
discontinue certain product lines previously manufactured in Leeds
that will be replaced with more efficient products produced at
other facilities. The combined impact of these events and
decisions, net of all taxes and costs, was approximately $5.1
million or $2.49 per diluted share, comprised of: net gain on sale
$7.2 million, expenses related to the move $1.0 million, an
inventory impairment charge of approximately $0.8 million for the
discontinued products, and taxes of $0.3 million. A significant
portion of the proceeds, $5.8 million, was used to pay down debt.
For the first half of 2006, net sales were a record $53,411,000, a
3.7% increase from sales of $51,523,000 for the first half of 2005.
Net earnings were $6,317,000 or $3.10 per diluted share for the
first six months of 2006 including the gain on the sale of the
Leeds property, compared to net earnings of $1,225,000 or $0.61 per
diluted share for the same period in the prior year. Orders
increased 3.0% to a record $27.5 million in the second quarter of
2006 and 10.8% to a record $62.6 million for the first half,
compared to the same periods in 2005. The backlog increased 34%
from the beginning of 2006 to $36.1 million at June 30, 2006. For
the first six months, domestic and European segment orders were up
11.7% and 19.9% respectively, when compared to the first half of
last year. The international segment was down 8.2% when compared to
a very strong first half in 2005. "Business conditions in the fluid
power industry remain strong and our orders in July continued to
surpass the prior year," said David A. Zuege, president and chief
executive officer. "The rate of growth in orders in our industry,
however, has slowed from the very rapid pace of the past 12
months." "The successful completion of the Leeds relocation is a
major achievement for Oilgear. Not only has it significantly
reduced our debt and increased our book value, but the relocation,
combined with the capital expenditures and the streamlining of the
product portfolio, will also improve our operational efficiency and
allow us to better serve our European customer base. The team in
Leeds did an excellent job in executing this important project,"
said Zuege. A leader in the fluid power industry, The Oilgear
Company provides advanced technology in the design and production
of unique fluid power components and electronic controls. The
company serves customers in the primary metals, machine tool,
automobile, petroleum, construction equipment, chemical, plastic,
glass, lumber, rubber and food industries. Its products are sold as
individual components or integrated into high performance
applications. Certain matters discussed in this press release are
"forward-looking statements" intended to qualify for the safe
harbors from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the
statement will include words such as the Company "believes,"
"anticipates," "expects" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or
goals are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those
currently anticipated. In addition to the assumptions and other
factors referenced specifically in connection with such statements,
the following could impact the business and financial prospects of
the Company: factors affecting the economy generally, including the
financial and business conditions of the Company's customers, the
demand for customers' products and services that utilize the
Company's products, and national and international events; factors
affecting the Company's financial performance or condition,
including restrictions or conditions imposed by current or
prospective lenders, tax legislation, and changes in accounting
principles; factors affecting percentage of completion contracts,
including the accuracy of estimates and assumptions regarding the
timing and levels of costs to complete those contracts; factors
affecting the Company's international operations, including
fluctuations in currencies, changes in laws and political or
financial insecurity of foreign governments; factors affecting the
Company's ability to complete the move from its Leeds, England,
facility; hire and retain competent employees, including
unionization of non-union employees and strikes or work stoppages;
any further decrease in stock price as a result of market
conditions; changes in the law or standards applicable to the
Company, including environmental laws and accounting
pronouncements; availability of raw materials; unanticipated
technological developments that result in competitive disadvantages
and may impair existing assets; and factors set forth in the
Company's periodic reports filed with the SEC in accordance with
the Securities Exchange Act. Shareholders, potential investors and
other readers are urged to consider these factors and those set
forth in the Company's filings with the SEC carefully in evaluating
the forward-looking statements. The forward-looking statements made
herein are only made as of the date of this press release and the
Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances. -0- *T The Oilgear Company Consolidated Condensed
Operating Statement (Unaudited) Three Months Ended Six Months Ended
June 30, June 30, 2006 2005 2006 2005 ------------ ------------
------------ ------------ Net sales $28,338,000 $25,497,000
$53,411,000 $51,523,000 Cost of sales 21,897,000 18,484,000
40,118,000 37,579,000 ------------ ------------ ------------
------------ Gross profit 6,441,000 7,013,000 13,293,000 13,944,000
Selling, general and administrative expenses 5,772,000 5,530,000
11,367,000 11,209,000 Expenses related to Leeds, UK move 979,000 -
979,000 - Gain on sale of Leeds, UK facility 7,216,000 - 7,216,000
- ------------ ------------ ------------ ------------ Operating
income $6,906,000 $1,483,000 $8,163,000 $2,735,000 ------------
------------ ------------ ------------ Interest expense 631,000
603,000 1,266,000 1,213,000 Other non- operating income (loss), net
(5,000) 66,000 75,000 132,000 ------------ ------------
------------ ------------ Earnings before income taxes 6,270,000
946,000 6,972,000 1,654,000 Income tax expense 454,000 214,000
619,000 343,000 ------------ ------------ ------------ ------------
Net earnings before minority interest 5,816,000 732,000 6,353,000
1,311,000 Minority interest 13,000 68,000 36,000 86,000
------------ ------------ ------------ ------------ Net earnings
$5,803,000 $664,000 $6,317,000 $1,225,000 ============ ============
============ ============ Basic earnings per share of common stock
$2.88 $0.33 $3.14 $0.62 ============ ============ ============
============ Diluted earnings per share of common stock $2.84 $0.33
$3.10 $0.61 ============ ============ ============ ============
Basic weighted average outstanding shares 2,016,000 1,992,000
2,014,000 1,987,000 Diluted weighted average outstanding shares
2,041,000 2,022,000 2,038,000 2,018,000 The Oilgear Company
Consolidated Condensed Balance Sheet (Unaudited) June 30, 2006
December 31, 2005 ----------------- ----------------- ASSETS
Current Assets Cash and cash equivalents $5,832,000 $4,370,000
Accounts receivable 17,556,000 18,849,000 Inventories 24,302,000
25,365,000 Other current assets 6,432,000 3,785,000
----------------- ----------------- Total current assets
$54,122,000 $52,369,000 ----------------- ----------------- Net
property plant and equipment 16,365,000 15,881,000 Other assets
2,735,000 2,893,000 ----------------- ----------------- $73,222,000
$71,143,000 ================= ================= LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Current debt $10,578,000
$16,612,000 Accounts payable 10,356,000 9,215,000 Other current
liabilities 10,296,000 9,820,000 -----------------
----------------- Total current liabilities $31,230,000 $35,647,000
----------------- ----------------- Long-term debt 7,133,000
7,724,000 Unfunded employee benefit costs 18,950,000 18,764,000
Other non-current liabilities 843,000 850,000 -----------------
----------------- Total liabilities $58,156,000 $62,985,000
----------------- ----------------- Minority interest in
consolidated subsidiary 1,122,000 1,091,000 Shareholders' equity
13,944,000 7,067,000 ----------------- -----------------
$73,222,000 $71,143,000 ================= ================= *T
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