Pall Corporation (NYSE:PLL) today reported financial results for the first quarter of fiscal year 2013 which ended on October 31, 2012.
First Quarter Sales and Earnings Overview
First quarter sales were $627.6 million compared to $651.3 million last year, a decrease of 3.6%. Sales in local currency ("LC") were flat year over year. Diluted EPS were $0.77 in the quarter, compared to $0.51 last year. Pro forma diluted EPS were $0.68 compared to $0.66 last year, an increase of 3.0%. Foreign currency translation negatively impacted first quarter EPS by $0.03.
Diluted EPS were $2.92 in the quarter, compared to $0.59 last year. This includes a gain on the sale of certain assets of the Company's blood product line.
Larry Kingsley, Pall President and CEO, said, "The first quarter proved to be challenging due to order cancellations and a reduction in customer volume commitment, particularly in three of our industrial global end markets. The emerging country markets are taking a more cautious approach to industrial capital commitment. Our more resilient Life Sciences business held up well driven by 8% growth in the BioPharmaceuticals markets. The team responded well to the situation and is managing to achieve reasonable profitability given the soft industrial segment demand. Structural cost improvement and product rationalization is enabling us to improve margin in the down sales environment."
BioPharmaceuticals: Within BioPharmaceuticals, our Pharmaceuticals sales increased nearly 10%. Consumables sales to Pharmaceuticals customers grew about 9%, on strength in the Americas and Asia, while systems sales grew 20%. Continued strength in the biotech market, as well as a 4% contribution from ForteBio, drove consumables sales growth. Laboratory sales were down 2% overall. This reflects the residual impact of supply chain issues in the Americas, partly mitigated by growth in Europe of 17%.
Food and Beverage: Consumables sales were down 3.1%. Excluding the impact of a divestiture in Italy, consumables sales were up slightly. This reflects strong consumables sales growth in the Americas, due in part to Latin America, largely offset by weakness in Europe related to lower beer and wine production levels. Overall systems sales declined 22.5%, reflective of weak capital commitment for systems in the Americas.
Medical: Medical sales were flat on weakness in the OEM market.
Process Technologies: Machinery & Equipment sales decreased 9%, reflecting reduced demand. Europe experienced broad-based slowing in this end market. Asian sales performance is off expectations due to slow end market demand in the primary metals and construction sectors, particularly in China. The Americas was also impacted by fulfillment challenges.
Sales in Fuels & Chemicals increased 9% driven by growth in Europe and in Asia. Growth in the Americas was hampered by weakness in the refinery sector.
Power Generation sales decreased 4%. Systems sales declined 40% on lower capital spending in all regions; however, consumables sales grew about 8% with all regions contributing.
Municipal Water sales declined 26% on weakness in the Americas and Asia. In the Americas, projects delays and pressure on capital spending continue to impact results. The decline in Asia was reflective of a large wastewater project in the comparative quarter of fiscal year 2012 that did not repeat this year.
Aerospace: Military Aerospace grew 4% in the quarter driven by helicopter program sales in the Americas. Commercial Aerospace sales increased about 7% driven by increased aftermarket sales in the Americas and Europe.
Microelectronics: The year over year result reflects continuing weakness in our customer end markets and low utilization rates at chip producers.
Kingsley concluded, "As we factor in Q1 performance and our current order pattern, we expect Life Sciences to continue to perform well, while Industrial will have a difficult year. We believe we are taking a realistic approach to our sales forecast that could improve if emerging market demand returns. However, our customers remain very cautious and are allocating more of the current softening to end market requirements and not to de-stocking within the supply chain. Based on the order pattern and implied sales trend, we now expect pro forma EPS from continuing operations to be in the range of $2.95-$3.15."