Compressed Air Best Practices - January 2009 - (Page 47)

Compressed Air Industry ENERGY REBATES | 01/09 | Commenting on the worldwide demand environment, Mr. Pennypacker continued, “It is challenging to project industrial product demand on a global basis in the current economic environment. At present, demand remains strong in end market segments in Asia and Eastern Europe, while growth has stalled in North America and slowed considerably in the last few weeks of September in Western Europe. Our shorter lead-time products that are more susceptible to swings in the economy, such as those that serve light industry and Class 8 trucks, are experiencing challenging demand environments, whereas demand for products for medical applications and longer lead-time products for process applications, such as energy and environmental, have remained resilient. Worldwide economic difficulties and the financial crisis, however, have clouded our visibility into many of our key end market segments and we remain cautious in our outlook for 2009. “For the three months ended September 30, 2008, compared to the same period of 2007, revenues increased 5%, reflecting the favorable impact of foreign currency exchange rates and moderate growth in Europe and Asia, offset by lower shipments of petroleum pumps,” said Mr. Pennypacker. “Gross profit as a percentage of revenues (‘gross margin’) declined in the third quarter of 2008, when compared to the third quarter of 2007, primarily as a result of decreased shipments of petroleum pumps and the pursuit of lean initiatives. Operating income as a percentage of revenues declined year-over-year as a result of the lower gross margin and $14.7 million of expenses relating to profit improvement initiatives, non-recurring expenses, and markto-market currency adjustments. “Our Compressor and Vacuum Products segment revenues grew by 7% in the third quarter of 2008, when compared to the same period of 2007, due to favorable changes in foreign currency exchange rates and strong shipments in Europe and Asia. Orders increased 1% in the three months ended September 30, 2008, when compared with the same period of 2007, reflecting favorable changes in foreign currency exchange rates and good demand for original equipment manufacturer (‘OEM’) applications on a global basis, which was almost entirely offset by lower demand for low-pressure and vacuum applications in Europe. The third quarter of 2007 also included a significant order for an engineered package to be used in a mining application that did not recur in 2008. “Adjusted Operating Income for the Compressor and Vacuum Products segment in the third quarter of 2008 was $48.9 million and segment Adjusted Operating Income as a percentage of revenues was 12.7%,” said Mr. Pennypacker. “Segment operating income (1), as reported under GAAP, for the Compressor and Vacuum Products segment for the three months ended September 30, 2008 was $35.2 million and segment operating income as a percentage of revenues (segment operating margin (1)) declined to 9.1%, compared to 11.6% in the same quarter of last year. The decline in segment operating margin was the result of costs associated with profit improvement initiatives, non-recurring expenses, and mark-to-market currency adjustments, which reduced segment operating income by $13.7 million and segment operating margin by 3.6 percentage points. “Worldwide economic difficulties and the financial crisis, however, have clouded our visibility into many of our key end market segments and we remain cautious in our outlook for 2009.” www.airbestpractices.com 47 http://www.airbestpractices.com

Table of Contents Feed for the Digital Edition of Compressed Air Best Practices - January 2009

Compressed Air Best Practices - January 2009 Contents From the Editor Utility-Air News Compressed Air Audit of the Month: A Nitrogen Audit at Boeing Air Standards: New ASME & ISO Standards for Compressed Air System Assessments Energy Rebates Assist Industrial Sustainability Initiatives Seven Sustainability Projects for Industrial Energy Savings: Project #1: Lighting Optimization Minimum Supply Wire Size Recommendations for Compressor Packages Utilizing Variable Frequency Drives The Pneumatic Advantage: Pneumatics Bring Precision and Reliability to Furniture Industry Specialist Personal Productivity: Is Afternoon Fatigue Influencing Your Job Performance? The Explanation and Some Solutions. Resources for Energy Engineers: Training Calendar & Product Picks Wall Street Watch Advertiser Index Classifieds

Compressed Air Best Practices - January 2009

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