Ameron International Corporation has reported net income of USD 46.3 million in the year ended November 30th 2010 as compared to USD 33.3 million in 2009. Sales totaled USD 503.3 million in 2010 as compared to USD 546.9 million in 2009. Earnings included a loss from discontinued operations of USD .11 per diluted share in 2010, related to the write down of a property formerly used by the Company’s former Coatings business as compared to income from such discontinued operations of USD .09 per diluted share in 2009.
Earnings per diluted share in the fourth quarter of 2010 totaled USD 2.88 as compared to earnings per diluted share of USD 1.53 in the fourth quarter of 2009. Sales totaled USD 123.5 million in the fourth quarter of 2010 as compared to USD 136.6 million in the fourth quarter of 2009. The fourth quarter of 2010 included the pretax gain on the sale of TAMCO, the Company's 50% owned steel mini mill, of USD 48.4 million, which was partially offset by a pretax expense of USD 9 million related to an unexpected judgment by a French appeals court of a case dating back to 1996. The fourth quarter of 2010 also included an after tax expense of USD 4.1 million related to the non cash taxes associated with the Company’s subsidiary in the Netherlands primarily due to the write-off of accumulated tax loss carry forwards that are currently forecasted to expire unutilized, income taxes of USD 1.7 million related to the repatriation of USD 44.2 million of cash from the Company’s foreign operations into the US and the after tax loss from discontinued operations of USD 11 per share in the fourth quarter.
Mr James S Marlen chairman, CEO & president of Ameron said that "We are pleased with the Company's performance, especially given the challenging market conditions which continued to negatively impact Ameron's businesses throughout 2010. Without the full year effects of TAMCO and the fourth quarter non operating items highlighted above, the Company's performance in 2010 was in the range forecasted at the beginning of the year. Profitability was supported by Management’s continued focus on cost reductions and productivity improvements. Additionally, cash flow from operations remained solid; and cash balances grew, even after a special dividend of USD 3 per share which was paid at the end of 2010, due to the proceeds from the TAMCO sale."
The Fiberglass Composite Pipe Group strengthened in the fourth quarter. Fiberglass Composite Pipe Group's fourth quarter sales increased to USD 64.8 million, from USD 56.3 million in 2009 and from USD 60.1 million in the third quarter of 2010. Full year sales increased to USD 244.1 million in 2010, from USD 225.4 million in 2009. Segment income of the Fiberglass Composite Pipe Group was also higher in the fourth quarter than in the third quarter of 2010; however, the increase was not sufficient to raise full year profits over those of the prior year. Fourth quarter segment income totaled USD 15.5 million in 2010 as compared to USD 14.8 million in the third quarter of 2010 and USD 20 million in the fourth quarter of 2009. The Group’s full year segment income totaled USD 62.1 million in 2010 as compared to USD 68.2 million in 2009. Compared to the same periods in 2009, fourth quarter and full year 2010 sales rose primarily in key onshore oilfield and mining markets in North and South America. Corresponding sales from Asian operations into marine and offshore energy exploration and production markets declined and were replaced in part by lower margin industrial sales.
Fourth quarter sales from Brazilian operations increased slightly over the same period in 2009, while full year sales were significantly higher due in part to the startup in late 2009 of the new Centron operation which produces onshore oilfield piping. Additionally, greater penetration into municipal water markets and the rising value of the local currency benefited Brazilian operations. Group wide profits were impacted in the fourth quarter and throughout 2010 by a shift in demand away from higher margin marine and offshore projects and by higher raw material costs. Marine and offshore orders continued to slow in the last several months; however, higher energy prices are spurring orders for oilfield piping. Looking forward, the Fiberglass Composite Pipe Group continues to see strong demand due primarily to energy related projects.
Infrastructure Products Group’s sales continued to decline in the fourth quarter of 2010 due to the overall weakness in residential and commercial construction markets throughout the US. Fourth quarter sales totaled USD 29.3 million in 2010, compared to USD 36.6 million in the fourth quarter of 2009 and USD 32.6 million in the third quarter of 2010. Full year sales declined to USD 121.3 million in 2010, from USD 144.2 million in 2009. Profits declined consistent with the sales decline and were lower in both the fourth quarter and the full year. Fourth quarter segment income declined to USD 3.3 million in 2010, from USD 3.9 million in 2009. Full year profits declined to USD 10.3 million, from USD 13.2 million in 2009. Sales and profits of the Hawaii Division for the fourth quarter and the full year were lower than in the same periods in 2009 due to the weak demand for aggregates and concrete on both Oahu and Maui. Most markets in Hawaii declined, except those related to governmental and military spending. Hawaii’s profits were lower due to declining sales. While sales of concrete and steel poles remained lower in the quarter and in 2010, compared to the same periods in 2009, profits of the Pole Products Division improved due to cost reduction programs and higher efficiencies.
Sales of concrete poles were impacted by the depressed level of housing construction, while sales of steel traffic poles were impacted by fiscal constraints on highway spending. The Infrastructure Products Group is expected to continue to be affected by the slowdown in construction spending in Hawaii and the low level of residential construction spending throughout the US Demand for Pole Products Division’s decorative concrete poles for residential and commercial lighting applications appears to have stabilized. However, major recoveries of the residential construction markets and the Infrastructure Products Group are not expected in the near term.
Water Transmission Group’s sales fell in the fourth quarter, compared to both the third quarter of 2010 and the fourth quarter of 2009. Full year sales were also lower than in 2009. The bulk of the declines for the fourth quarter and the full year came from the wind tower business which suffered throughout 2010 because of depressed demand. Water Transmission Group’s sales totaled USD 29.4 million in the fourth quarter of 2010, compared to USD 41.4 million in the third quarter of 2010 and USD 43.7 million in the fourth quarter of 2009. Full year sales declined in 2010 to USD 137.9 million, from USD 177.3 million in 2009, with USD 33.9 million of the decline from wind towers. The Water Transmission Group lost USD 1.5 million and USD 1.4 million in the fourth quarters of 2010 and 2009, respectively. For the full year, the Group lost USD 1 million in 2010, compared to earning USD 1.9 million in 2009. Most of the losses came from the wind tower business as a result of the lack of sales. Until the wind energy markets improve and more financing becomes available to the wind industry, the Group's wind tower activity is expected to remain depressed. Near term, the water pipe business is also expected to continue to experience soft market demand. The timing of bid activity has been negatively affected by the economy, municipal budgets and availability of financing. The Company continues to monitor a number of major wind tower and pipe projects; however, it remains uncertain when owners, water agencies and municipalities will proceed with these projects.
The current economic conditions continue to make forecasting challenging. Full year 2011 earnings from continuing operations are forecasted to be in the range of USD 3.00 to USD 3.50 per share, before unusual items. The first quarter of 2011 is starting slowly due to weather delays and project timing. The full year remains heavily dependent on the recovery in construction markets and the ongoing progress of the Company’s internal initiatives, with potential upside in the Fiberglass Composite Pipe Group.
Mr James S Marlen said that "While certain markets continue to remain weak, we are pleased with 2010 results and look forward to an improvement in 2011. The Company will be led by the Fiberglass Composite Pipe Group and constrained by its cyclical, construction related businesses. We will continue to focus on controlling costs to maximize profits in spite of the softness in some areas, and we are actively reviewing all operations for improvements and opportunities. Likewise, we are investing in expanding and enhancing the Company’s capabilities and markets throughout the world. We remain optimistic that as the economy recovers, the Company should achieve superior long term results by capitalizing on its strong existing market positions and its ability to expand into new markets."
