CLARCOR Earnings: Higher Expenses Shrinks Margins, Profit Declines

CLARCOR Inc. (NYSE:CLC) reported its results for the third quarter. Clarcor conducts its business in three industry segments: engine and mobile filtration, industrial and environmental filtration, and packaging.

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CLARCOR Inc. Earnings Cheat Sheet

Results: Net income for CLARCOR Inc. fell to $30.3 million (60 cents per share) vs. $32.1 million (63 cents per share) a year earlier. This is a decline of 5.6% from the year-earlier quarter.

Revenue: Rose 0.7% to $286.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: CLARCOR Inc. fell short of the mean analyst estimate of 70 cents per share. It fell short of the average revenue estimate of $305.7 million.

Quoting Management: Chris Conway, CLARCOR’s Chief Executive Officer, commented, “Our third quarter financial results were below our internal expectations heading into the quarter primarily due to lower than expected sales of heavy-duty engine filtration products in the domestic aftermarket and China. In addition, softness in other markets contributed to our shortfall compared with expectations including sales of air filtration products to the swine industry and sales of packaging products. Lower sales in these markets were partially offset by higher than expected operating results in several markets within our Industrial/Environmental Filtration segment including our natural gas filtration business both in the U.S. and abroad. However, our overall lower than expected sales, coupled with the impact of a higher effective income tax rate, drove our lower than expected earnings.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 0.4% from the year earlier, while the figure increased 7.3% in the first quarter, 28.4% in the fourth quarter of the last fiscal year and 13.2% in the third quarter of the last fiscal year.

For two quarters in a row, the company has come in under analyst estimates. In the second quarter, it missed expectations by one cent with net income of 46 cents versus a mean estimate of net income of 47 cents per share.

Over the last five quarters, revenue has increased 4.8% on average year-over-year. The biggest increase came in the fourth quarter of the last fiscal year, when revenue rose 11.6% from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the fourth quarter has fallen from 71 cents per share to 70 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. At $2.66 per share, the average estimate for the fiscal year has fallen from $2.68 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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