EX-99.1 2 pressrelease.htm PRESS RELEASE Press Release
Exhibit 99.1
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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 THIRD QUARTER SALES OF $410.4 MILLION AND EARNINGS OF $1.32 PER SHARE

Louisville, KY, November 6, 2006. The Genlyte Group Incorporated (NASDAQ: GLYT) today announced record third quarter earnings per share of $1.32 compared to 2005 earnings per share of $0.77. Net income was $38.0 million, up 73.6% from the third quarter of 2005.

Third quarter 2006 net sales of $410.4 million, a record for any quarter, were 26.0% higher than the $325.6 million reported for the same period last year. Recent acquisitions, including JJI Lighting, Strand Lighting, and Carsonite, accounted for approximately half of the sales increase.

Third quarter net income increased significantly over 2005 partially due to some notable items that were recognized during the third quarter of 2005 including: income tax expense of $3.2 million related to a foreign earnings repatriation of $60.0 million, a currency translation loss during 2005 of $2.4 million, and selling and administrative expenses of $460 thousand related to the new San Marcos plant and San Leandro plant relocation. Third quarter 2006 net income of $38.0 million was up 41.0% compared to adjusted 2005 net income of $26.9 million when excluding the items mentioned above, which had an impact of $0.18 per share.

In addition to the operating expenses of $460 thousand that were incurred in the third quarter of 2005 related to the San Marcos employee relocation, plant consolidation, and severance pay, the company also experienced $1.3 million in start-up inefficiencies.

Year-to-date earnings per share of $4.26 and net income of $122.5 million were up 96.3% and 99.4%, respectively, from 2005. Sales during the nine-month period increased 17.2% from $943.2 million to $1.1 billion.

Year-to-date 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 second quarter distribution to the U.S. triggered a permanent recognition of the related CTA gain into pre-tax income. 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 a partnership status to a corporate status.

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Chairman, President and CEO Larry Powers said, “Once again, we are pleased to report that sales and net income for the third quarter were the highest for any third quarter in the company’s history. Our focus on higher margin product lines and some achievement of a price increase helped us achieve higher sales and gross profit margins for the third quarter. However, we are concerned that although we increased prices during June, our costs for raw materials, freight, energy, and employee benefits continue to increase.

“The recovery in the commercial markets is continuing and commercial construction forecasts remain generally optimistic. Office vacancy rates and hospitality occupancy rates are improving; however, the overall cost of building materials seems to be dampening some of the momentum. Residential construction markets are significantly weaker than last year. Retail construction for 2006 is nearing completion, and plans for 2007 are being developed. Once again, we have concern about the energy cost impact on disposable income and consumer confidence for the forthcoming holiday season. We continue to see strength in sales for institutional and healthcare construction business.
 
“We are encouraged by the success of our new product and pricing strategies which help protect our margins. New product development and our control over the order and quotation process support the success of our price increases. Our new San Marcos, Texas facility is now fully operational with significant sales and earnings improvements compared to last year when we recorded relocation expenses and experienced start-up inefficiencies.”

Vice President and Chief Financial Officer Bill Ferko stated, “During the quarter cash flow from operations of $46.8 million less plant and equipment investments of $6.5 million provided $40.3 million compared to the same quarter last year when cash flow from operations of $51.5 million less plant and equipment investments of $11.2 million generated $40.3 million.

“Working capital (current assets minus current liabilities) decreased during the third quarter by $24.9 million to $158.2 million. The combination of accounts receivable and inventory less accounts payable is 18.4% of annualized sales compared to 19.6% of annualized sales at September of last year.

“We closed the third quarter of 2006 with a cash and short-term investment balance of $36.5 million and total debt of $191.0 million, or a net-debt position of $154.5 million compared to a net-debt balance of $130.5 million last September.

"During the third quarter, the company acquired Strand Lighting and Carsonite for a combined consideration of $14.4 million. Year-to-date acquisition investments totaling $131.8 million (net of cash received) include the May 2006 acquisition of JJI.

“Net interest expense of $2.7 million during the quarter is higher than the third quarter of last year due to funding for the three acquisitions this year and a general increase in interest rate levels.”

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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 a.m. EST on November 6, 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=36283. 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 Alkco, Allscape, Ardee, Canlyte, Capri/Omega, Carsonite, Chloride Systems, Crescent, D’ac, Day-Brite, Gardco, Guth, Hadco, High-Lites, Hoffmeister, Lam, Ledalite, Lightolier, Lightolier Controls, Lumec, Morlite, Nessen, Quality, Shakespeare Composite Structures, Specialty, Stonco, Strand, Thomas, Vari-Lite, Vista, and Wide-Lite.

Certain statements in this news release, including without limitation expectations as to future sales and operating results, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Words such as “expects,” “anticipates,” “believes,” “plans,” “intends,” “estimates,” “projects,” “forecasts,” and similar expressions are intended to identify such forward-looking statements. The statements involve known and unknown risks, uncertainties, and other factors which may cause the company’s actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: the highly competitive nature of the lighting business; the overall strength or weakness of the economy, construction activity, and the commercial, residential, and industrial lighting markets; the ability to maintain or increase prices; customer acceptance of new product offerings; ability to sell to targeted markets; the performance of our specialty and niche businesses; availability and cost of input materials; work interruption by union employees; increases in energy and freight costs; workers’ compensation, casualty and group health insurance costs; increases in interest costs arising from an increase in rates; the operating results of recent acquisitions; future acquisitions; foreign currency exchange rates; changes in tax rates or laws, and changes in accounting standards. We will not undertake and specifically decline any obligation to update or correct any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

For additional information about Genlyte please refer to the Company’s web site at: http://www.genlyte.com.

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The table below presents a comparison of condensed consolidated statements of income (unaudited and preliminary) for the three months and nine months ended September 30, 2006 and October 1, 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
               
   
September 30, 2006
  
October 1, 2005
  
% Change
  
               
Net Sales
  
$
410,381
  
$
325,622
    
26.0
%
                     
Operating Profit
  
$
61,715
  
$
40,930
    
50.8
%
                     
Net Income
  
$
37,980
  
$
21,873
    
73.6
%
                     
E.P.S. (1)
  
$
1.32
  
$
0.77
    
71.4
%
                     
Average Shares Outstanding (1)
    
28,878
    
28,493
    
1.4
%
                     

For the nine months ended
               
   
September 30, 2006
  
October 1, 2005
  
% Change
  
               
Net Sales
  
$
1,105,649
  
$
943,221
    
17.2
%
                     
Operating Profit
  
$
156,545
  
$
110,624
    
41.5
%
                     
Net Income
  
$
122,484
  
$
61,417
    
99.4
%
                     
E.P.S. (1)
  
$
4.26
  
$
2.17
    
96.3
%
                     
Average Shares Outstanding (1)
    
28,761
    
28,332
    
1.5
%
                     
Foreign Currency Exchange Gain (after tax) (2)
  
$
(4,447
)
$
-
    
100.0
%
                     
Tax Provision Benefit (2)
  
$
(24,715
)
$
-
    
100.0
%
 
Adjusted Net Income
  
$
93,322
  
$
61,417
    
52.0
%
 
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 adjustments above 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.


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THE GENLYTE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND OCTOBER 1, 2005
(Amounts in thousands, except earnings per share data)
(Unaudited and Preliminary)
  
                   
                   
   
Three Months Ended
  
Nine Months Ended
  
   
2006
 
2005
 
2006
 
2005
  
Net sales
  
$
410,381
  
$
325,622
  
$
1,105,649
  
$
943,221
  
Cost of sales
    
244,419
   
204,980
   
669,472
   
595,401
 
Gross profit
    
165,962
   
120,642
   
436,177
   
347,820
 
Selling and administrative expenses
    
102,355
   
79,112
   
275,962
   
235,394
 
Amortization of intangible assets
    
1,892
   
600
   
3,670
   
1,802
 
Operating profit
    
61,715
   
40,930
   
156,545
   
110,624
 
Interest expense, net
   
2,746
   
1,609
   
5,554
   
6,372
 
Foreign currency exchange gain on investment
    
-
   
-
   
(7,184
)
  
-
 
Minority interest
    
-
   
(9
)
  
-
   
(8
)
Income before income taxes
    
58,969
   
39,330
   
158,175
   
104,260
 
Income tax provision
    
20,989
   
17,457
   
35,691
   
42,843
 
Net income
  
$
37,980
  
$
21,873
  
$
122,484
  
$
61,417
  
                           
Earnings per share:
                          
Basic
  
$
1.35
  
$
0.79
  
$
4.36
  
$
2.22
  
Diluted
  
$
1.32
  
$
0.77
  
$
4.26
  
$
2.17
  
                           
Weighted average number of shares outstanding:
                          
Basic
    
28,190
   
27,859
   
28,090
   
27,717
 
Diluted
    
28,878
   
28,493
   
28,761
   
28,332
 
                           
 
 
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THE GENLYTE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
(Amounts in thousands)
(Unaudited and Preliminary)
           
   
September 30,
  
December 31,
  
   
2006
 
2005
  
Assets:
              
Current Assets:
              
Cash and cash equivalents 
  
$
36,501
  
$
78,042
  
Short-term investments 
    
-
   
17,667
 
Accounts receivable, less allowances for doubtful accounts of  
              
 $7,542 and $6,017 as of September 30, 2006 and December 31, 2005
    
245,792
   
186,691
 
Inventories 
    
195,106
   
152,573
 
Deferred income taxes and other current assets 
    
41,653
   
13,459
 
Total current assets
    
519,052
   
448,432
 
Property, plant and equipment, at cost
    
478,996
   
446,236
 
Less: accumulated depreciation and amortization  
    
301,013
   
280,159
 
Net property, plant and equipment
    
177,983
   
166,077
 
Goodwill
    
342,843
   
257,233
 
Other intangible assets, net of accumulated amortization
    
145,487
   
112,639
 
Other assets
    
6,404
   
5,525
 
Total Assets
  
$
1,191,769
  
$
989,906
  
               
Liabilities & Stockholders' Equity:
              
Current Liabilities:
              
Short-term debt 
  
$
102,252
  
$
80,140
  
Current maturities of long-term debt 
    
296
   
156
 
Accounts payable 
    
139,402
   
115,678
 
Accrued expenses 
    
118,904
   
101,192
 
Total current liabilities
    
360,854
   
297,166
 
Long-term debt
    
88,478
   
86,076
 
Deferred income taxes
    
37,301
   
35,016
 
Accrued pension and other long-term liabilities
    
30,256
   
26,036
 
Total liabilities
    
516,889
   
444,294
 
Stockholders' Equity:
              
Common stock 
    
282
   
280
 
Additional paid-in capital 
    
73,545
   
64,207
 
Retained earnings 
    
580,001
   
457,517
 
Accumulated other comprehensive income 
    
21,052
   
23,608
 
Total stockholders' equity
    
674,880
   
545,612
 
Total Liabilities & Stockholders' Equity
  
$
1,191,769
  
$
989,906
  
 
 
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THE GENLYTE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND OCTOBER 1, 2005
(Amounts in thousands)
(Unaudited and Preliminary)
           
           
   
2006
 
2005
  
Cash Flows From Operating Activities:
              
Net income
  
$
122,484
  
$
61,417
  
Adjustments to reconcile net income to net cash provided by
              
operating activities:
              
Depreciation and amortization
   
24,810
   
22,686
 
Net loss from disposals of property, plant and equipment
    
184
   
131
 
Provision for deferred income taxes
    
(21,385
)
  
-
 
Foreign currency exchange gain on investment
   
(7,184
)
  
-
 
Minority interest
    
(1,060
)
  
(8
)
Stock-based compensation expense
    
644
   
-
 
Changes in assets and liabilities, net of acquisitions:
              
(Increase) decrease in:
              
Accounts receivable
    
(37,237
)
  
(25,819
)
Inventories
    
(9,985
)
  
(5,508
)
Deferred income taxes and other current assets
    
(6,025
)
  
136
 
Intangible and other assets
    
13,198
   
(655
)
Increase (decrease) in:
              
Accounts payable
   
(1,511
)
  
(4,431
)
Accrued expenses
    
(3,476
)
  
2,793
 
Deferred income taxes, long-term
    
(12,660
)
  
10,534
 
Accrued pension and other long-term liabilities
    
(6,724
)
  
(2,022
)
All other, net
    
(318
)
  
4,005
 
Net cash provided by operating activities
    
53,755
   
63,259
 
Cash Flows From Investing Activities:
              
Acquisitions of businesses, net of cash received
    
(131,815
)
  
-
 
Purchases of property, plant and equipment
    
(17,708
)
  
(32,398
)
Proceeds from sales of property, plant and equipment
    
115
   
3
 
Purchases of short-term investments
    
-
   
(831
)
Proceeds from sales of short-term investments
    
17,860
   
18,322
 
Net cash used in investing activities
    
(131,548
)
  
(14,904
)
Cash Flows From Financing Activities:
              
Proceeds from short-term debt
    
25,265
   
14,516
 
Repayments of short-term debt
    
(6,109
)
  
(22,698
)
Proceeds from long-term debt
    
140,726
   
29,530
 
Repayments of long-term debt
    
(138,707
)
  
(89,477
)
Net increase (decrease) in disbursements outstanding
    
4,720
   
(291
)
Exercise of stock options
    
4,549
   
5,248
 
Excess tax benefit from exercise of stock options
    
4,147
   
-
 
Net cash provided by (used in) financing activities
    
34,591
   
(63,172
)
Effect of exchange rate changes on cash and cash equivalents
    
1,661
   
2,849
 
Net decrease in cash and cash equivalents
    
(41,541
)
  
(11,968
)
Cash and cash equivalents at beginning of period
    
78,042
   
56,233
 
Cash and cash equivalents at end of period
  
$
36,501
  
$
44,265
  
 
 
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THE GENLYTE GROUP INCORPORATED
SELECTED SEGMENT DATA
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND OCTOBER 1, 2005
(Amounts in thousands)
(Unaudited and Preliminary)
                   
                   
                   
   
Three Months Ended
  
Nine Months Ended
  
   
2006
 
2005
 
2006
 
2005
  
Net sales:
                          
Commercial segment
  
$
308,355
  
$
242,509
  
$
819,759
  
$
698,506
  
Residential segment
    
47,169
   
43,257
   
140,111
   
130,269
 
Industrial & other segment
    
54,857
   
39,856
   
145,779
   
114,446
 
                           
Total net sales
  
$
410,381
  
$
325,622
  
$
1,105,649
  
$
943,221
  
                           
Operating profit:
                          
Commercial segment
  
$
44,507
  
$
28,272
  
$
111,895
  
$
77,408
  
Residential segment
    
9,357
   
7,876
   
26,085
   
21,148
 
Industrial & other segment
    
7,851
    
4,782
   
18,565
    
12,068
 
                           
Total operating profit
  
$
61,715
  
$
40,930
  
$
156,545
  
$
110,624
  
 
 
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