CLARCOR Reports Record First Quarter Diluted Earnings Per Share

  CLARCOR Reports Record First Quarter Diluted Earnings Per Share

Business Wire

FRANKLIN, Tenn. -- March 20, 2013

CLARCOR Inc. (NYSE: CLC):

                   Unaudited First Quarter 2013 Highlights

         (Amounts in millions, except per share data and percentages)

                            Quarter Ended
                              3/02/13    3/03/12   Change
Net sales                    $ 256.3      $ 257.3      -    %
Operating profit               33.8          34.3        -    %
Net earnings – CLARCOR         23.5          23.5        1    %
Diluted earnings per share   $ 0.47        $ 0.46        1    %
Operating margin              13.2    %   13.3    %  -0.1 pts

CLARCOR Inc. (NYSE: CLC) reported its financial results for the first quarter
of 2013. Diluted earnings per share grew 1% from the first quarter of 2012 to
a record first quarter high of $0.47. Net sales, operating profit and
operating margin were relatively flat compared with last year’s first quarter
while first quarter 2013 diluted earnings per share benefited from a lower
effective tax rate compared with the first quarter of 2012. Changes in average
foreign currency exchange rates increased net sales by $0.3 million but did
not significantly impact operating profit in the first quarter of 2013 as
compared with last year’s first quarter.

Chris Conway, CLARCOR’s Chairman, President and Chief Executive Officer,
commented, “Our first quarter consolidated results this year were in-line with
our expectations heading into the period. We anticipated relatively lower
overall top-line growth this quarter compared with last year’s first quarter
due in part to U.S. heavy-duty engine filtration aftermarket growth of 16% in
the first quarter of 2012 from the first quarter of 2011. This created a
challenging year-over-year quarterly comparable in this market. In addition,
certain of our larger heavy-duty engine filtration aftermarket distributors
placed large orders at the end of the fourth quarter of 2012, negatively
impacting our first quarter 2013 sales. As a result of these factors, our U.S.
heavy-duty engine filtration aftermarket sales declined approximately 4% this
quarter from the first quarter of 2012. We anticipate that U.S. heavy-duty
engine filtration aftermarket sales will return to low single-digit
year-over-year quarterly growth as we head into the second quarter of 2013.

“Top-line growth in our oil and gas market continues to be strong as sales
increased 10% in the first quarter of 2013 compared with last year’s first
quarter. This strong performance was driven primarily by higher natural gas
filtration product sales in the Middle East, the U.S. and Southeast Asia
partially offset by lower sales in Canada and of our off-shore oil drilling
filtration products. A significant portion of this oil and gas filtration
growth was driven by higher natural gas vessel sales, which increased 30% from
last year’s first quarter. We anticipate that these natural gas vessel sales
will translate into a stream of higher margin aftermarket element sales going
forward. Strategically, it has been our long-term goal to fundamentally shift
our natural gas product mix to a greater proportion of higher margin
aftermarket elements versus first-fit vessels. To support this initiative in
the long-run, we sometimes accept a larger proportion of vessel sales in the
short-run—the case in our first quarter. Regardless of product mix, as we have
noted in the past, we believe the natural gas filtration market has as much
long-term potential as any other filtration market. Global energy needs should
continue to significantly expand going forward, and we believe natural gas—an
abundant, clean-burning fossil fuel—will play a prominent role in satisfying
these expanding needs.

“Our execution remained strong in the first quarter as our 13.2% operating
margin was slightly lower than our first quarter 2012 operating margin of
13.3%, which was our highest first quarter operating margin in almost twenty
years. Financial performance at our Engine/Mobile Filtration segment was solid
as operating margin increased 0.5 percentage points from the first quarter of
2012 to 19.9%, our highest first quarter operating margin in this reporting
segment since 2008. Operating margin at our Industrial/Environmental
Filtration segment was negatively influenced by a higher mix of natural gas
vessel sales versus higher margin natural gas aftermarket element sales. As a
result, our first quarter operating margin in this reporting segment declined
0.9 percentage points from last year’s first quarter. However, continued
operational improvements in our commercial and industrial HVAC filtration and
Total Filtration Services (TFS) distribution markets within our
Industrial/Environmental Filtration segment resulted in improved operating
margins in each of these markets compared with the first quarter of 2012. With
continued improved financial performance in these environmental air markets
coupled with continued growth at our higher margin process liquid markets, we
believe we are on track to meet our 15% operating margin goal in our
Industrial/Environmental Filtration segment in the next several years.

“We are excited about the long-term outlook in our core filtration markets,
and we continue to promote strategic initiatives to drive long-term profitable
growth. During the first quarter, in support of our heavy-duty engine
filtration market, we announced our plan to invest $40.0 million to build a
new warehouse and distribution center at our facility in Kearney, Nebraska. We
also brought on-line additional capacity at our manufacturing facility in
Yankton, South Dakota, that includes automated production capabilities, which
we believe will enhance our ability to continue to improve our operating
efficiencies. These investments will provide additional capacity and
infrastructure to support our expected domestic and export market growth in
heavy-duty engine filtration over the next decade. We expect this growth to be
generated in part from the continued penetration of new distribution channels
in the U.S. and overseas including global OE aftermarket programs, and we
expect to continue to introduce new heavy-duty filtration products into new
market sectors. In addition, we broke ground in the first quarter on our new
oil and gas filtration research center in Mineral Wells, Texas. This facility
will support our continued leadership in developing innovative technologies to
address the most rigorous filtration needs in oil and gas extraction,
transmission and processing. We believe these significant investments
demonstrate our strong commitment to protect and develop our competitive
position in our core filtration markets.”

First Quarter Results:

Engine/Mobile Filtration Segment

Net sales at our Engine/Mobile Filtration segment declined 2% compared with
the first quarter of 2012 including relatively proportionate decreases
domestically and outside the U.S. Lower domestic sales were driven by a 4%
decline in the heavy-duty engine filtration aftermarket, but this is compared
against a first quarter 2012 when aftermarket sales increased 16% from the
previous year’s first quarter. Lower foreign sales were driven by reductions
in Europe and China, both of which continue to be influenced by economic
uncertainty, offset in part by increased sales in each Mexico and South
Africa.

Operating profit at our Engine/Mobile Filtration segment increased 1% from the
first quarter of 2012 due to a 0.5 percentage point improvement in operating
margin from last year’s first quarter despite the reduction in heavy-duty
engine filter sales. This increase in operating margin from the first quarter
of 2012 was led by lower selling and administrative expenses as a percentage
of net sales due to lower legal and other costs driven by the settlement of
various legal proceedings in the first quarter of 2012. Gross margin
percentage was lower than the first quarter of 2012 primarily due to lower
fixed overhead absorption influenced by additional costs associated with the
expansion of the Yankton heavy-duty engine filtration manufacturing facility.

Industrial/Environmental Filtration Segment

Net sales at our Industrial/Environmental Filtration segment increased 1% from
the first quarter of 2012. Geographically, domestic net sales increased 2%
while net sales outside the U.S. declined less than 1%. Our growth in domestic
sales was heavily influenced by a 26% increase in natural gas filtration
product sales as we continue to develop our capability to support the natural
gas extraction and transportation process from shale formations. These higher
natural gas filtration product sales were supplemented by a 5% increase in net
sales at our Total Filtration Services (TFS) distribution business but
partially offset by lower net sales at our commercial and industrial HVAC
business due to general softness and at TransWeb, our filtration media
business, which has been negatively impacted commercially from uncertainty
surrounding the 3M litigation. The relatively flat net sales outside the U.S.
were driven by an increase in natural gas filtration vessel sales in several
international markets including Southeast Asia and the Middle East, offset by
lower off-shore oil platform drilling filtration product sales due to
shipments delayed until later in the fiscal year.

Despite the increase in net sales, operating profit at our
Industrial/Environmental Filtration segment declined 10%, or $1.0 million,
primarily due to a 0.9 percentage point reduction in operating margin from the
first quarter of 2012. Operating margin in this reporting segment was impacted
by a higher mix of natural gas vessels as opposed to higher margin natural gas
aftermarket elements and lower operational performance at TransWeb compared
with last year’s first quarter.

Packaging Segment

Net sales at our Packaging segment increased less than 1% from the first
quarter of 2012. This increase was due to an increase in spice packaging sales
to both branded and private label customers partially offset by lower sales of
decorated flat sheet metal products due to timing of certain promotional
programs and lower film packaging sales attributed to lower general demand for
film products and also influenced by the Kodak bankruptcy. Operating profit
increased $0.4 million from the first quarter of 2012 primarily due to a 2.3
percentage point improvement in operating margin driven by a 2.7 percentage
point decline in selling and administrative expenses as a percentage of net
sales. Lower selling and administrative expenses were due in part to a $0.2
million bad debt expense recognized in the first quarter of 2012 related to
the Kodak bankruptcy.

Income Taxes and Other Income

The 2.4 percentage point decrease in our effective tax rate to 30.4% in the
first quarter of 2013 from 32.8% in last year’s first quarter was primarily
due to the extension of the research and experimentation tax credit for 2012
in January 2013. Other income in the first quarter of 2013 declined
approximately $0.7 million from last year’s first quarter, which included the
receipt of a one-time $1.2 million dividend pursuant to our investment in
BioProcess Algae LLC and a $0.5 million foreign currency loss which did not
recur in the first quarter of 2013.

2013 Guidance

Chris Conway commented on 2013 guidance: “We entered 2013 with cautious
optimism in light of the economic uncertainty in many of our significant
geographic markets including the U.S., Europe and China. Our sales growth was
relatively flat in the first quarter but was in-line with our internal
expectations due in part to the challenging comparable in our U.S. heavy-duty
filtration aftermarket growth in last year’s first quarter. Despite headwinds
from economic uncertainty in many of our markets, we were able to grow our
global oil and gas business by approximately 10% in the first quarter, and we
believe this growth will be sustained as we proceed through the year. Our
execution remained solid in the first quarter, as our 13.2% operating margin
fell just short of the record first quarter operating margin in 2012. Looking
ahead, we are optimistic that global macroeconomic activity will accelerate in
the second half of 2013, but we remain cautious. Accordingly, we are
confirming our current 2013 diluted earnings per share guidance of $2.45 to
$2.60.”

Anticipated sales growth from 2012 and operating margin by segment and on a
consolidated basis are as follows:

                                    2013 Estimated  2013 Estimated
                                    Sales Growth     Operating Margin
                                                     
Engine/Mobile Filtration            2.0% to 3.0%     21.5% to 22.5%
Industrial/Environmental Filtration 4.0% to 6.0%     12.0% to 12.5%
Packaging                           -5.0% to -1.0%   8.0% to 9.0%
CLARCOR                             2.5% to 4.0%     16.0% to 17.0%

We project 2013 cash from operations to be between $125 million and $135
million, capital expenditures to be between $60 million and $70 million and
our effective tax rate to be between 32.0% and 32.5%.

CLARCOR will be holding a conference call to discuss the first quarter 2013
results at 10:00 a.m., Central Time, on March 21, 2013. Interested parties can
listen to the conference call at www.clarcor.com or www.viavid.net. A replay
will be available on these websites and also at 1-877-870-5176 or
1-858-384-5517 by providing confirmation code 3604721. The replay will be
available through April 4, 2013 by telephone and for 30 days on the Internet.

CLARCOR is based in Franklin, Tennessee, and is a diversified marketer and
manufacturer of mobile, industrial and environmental filtration products and
consumer and industrial packaging products sold in domestic and international
markets. Common shares of CLARCOR are traded on the New York Stock Exchange
under the symbol CLC.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements made in this press
release other than statements of historical fact, are forward-looking
statements. These statements may be identified from use of the words “may,”
“should,” “could,” “potential,” “continue,” “plan,” “forecast,” “estimate,”
“project,” “believe,” “intent,” “anticipate,” “expect,” “target,” “is likely,”
“will,” or the negative of these terms, and similar expressions. These
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements may
include, among other things: statements and assumptions relating to
anticipated future growth and results of operations, including the anticipated
2013 performance of the Company and each of its segments, our projections with
respect to 2013 estimated sales growth and 2013 estimated operating margins
for the Company and each of its segments, and our projections with respect to
2013 cash from operations, 2013 capital expenditures and 2013 effective tax
rates; statements regarding management's short-term and long-term performance
goals; statements regarding anticipated order patterns from our customers or
the anticipated economic conditions of the industries and markets which we
serve; statements related to the performance of the U.S. and other economies
generally; statements relating to the anticipated effects on results of
operations or financial condition from recent and expected developments or
events; statements regarding our anticipation that U.S. heavy-duty engine
filtration aftermarket sales will return to low single-digit year-over-year
quarterly growth as we head into the second quarter of 2013; statements
regarding our anticipation that natural gas vessel sales will translate into a
stream of higher margin aftermarket elements sales going forward; statements
regarding our belief that the natural gas filtration market has as much
long-term potential as any other filtration market; statements regarding our
expectation that global energy needs should continue to significantly expand
going forward, and our belief that natural gas will play a prominent role in
satisfying these expanding needs; statements that, with continued improved
financial performance in our environmental air markets coupled with continued
growth at our higher margin liquid markets, we believe we are on track to meet
our 15% operating margin goal at our Industrial/Environmental Filtration
segment in the next several years; statements regarding the long-term outlook
in our core filtration markets, and the promotion of strategic initiatives to
drive long-term profitable growth; statements regarding our belief that our
commitment of $40.0 million to build a new warehouse and distribution center
at our facility in Kearney, Nebraska, and the development of on-line
additional capacity at our manufacturing facility in Yankton, South Dakota,
including automated production capabilities, will enhance our continuous drive
to improve our operating efficiencies and will provide additional capacity and
infrastructure to supported our expected growth in heavy-duty engine
filtration growth over the next decade; statements regarding our belief that
the new oil and gas filtration research center in Mineral Wells, Texas should
support our continued leadership in developing innovative technologies to
address the most rigorous filtration needs in oil and gas extraction,
transmission and processing; statements regarding our belief that these
significant investments demonstrate our strong commitment to protect and
develop our competitive position in our core filtration markets; and any other
statements or assumptions that are not historical facts. The Company believes
that its expectations are based on reasonable assumptions. However, these
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the Company's actual results,
performance or achievements, or industry results, to differ materially from
the Company's expectations of future results, performance or achievements
expressed or implied by these forward-looking statements. The Company's past
results of operations do not necessarily indicate its future results. The
Company’s future results may differ materially from the Company’s past results
as a result of various risks and uncertainties, including the risk factors
discussed in the “Risk Factors” section of the Company’s 2012 Form 10-K and
other risk factors detailed from time to time in the Company's filings with
the Securities and Exchange Commission. You should not place undue reliance on
any forward-looking statements. These statements speak only as of the date of
this press release. Except as otherwise required by applicable laws, the
Company undertakes no obligation to publicly update or revise any
forward-looking statements or the risk factors described in this press
release, including estimated sales growth and estimated operating margin
levels for 2013 for the Company and its business segments, whether as a result
of new information, future events, changed circumstances or any other reason
after the date of this press release.

                                TABLES FOLLOW


CLARCOR INC. 2013 UNAUDITED FIRST QUARTER RESULTS

CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
                                                             
                                               Three Months
                                               March 2,         March 3,
                                                2013           2012       
                                                                
Net sales                                      $ 256,271        $ 257,264
Cost of sales                                   174,785        171,049    
                                                                
Gross profit                                     81,486           86,215
                                                                
Selling and administrative expenses             47,671         51,903     
                                                                
Operating profit                                33,815         34,312     
                                                                
Other income (expense):
Interest expense                                 (150       )     (100       )
Interest income                                  139              134
Other, net                                      -              612        
                                                                
                                                (11        )    646        
                                                                
Earnings before income taxes                     33,804           34,958
                                                                
Provision for income taxes                      10,276         11,466     
                                                                
Net earnings                                     23,528           23,492
                                                                
Net earnings attributable to noncontrolling     (66        )    (13        )
interests, net of tax
                                                                
Net earnings attributable to CLARCOR Inc.      $ 23,462        $ 23,479     
                                                                
Net earning per share attributable to          $ 0.47          $ 0.47       
CLARCOR Inc. - Basic
Net earning per share attributable to          $ 0.47          $ 0.46       
CLARCOR Inc. - Diluted
                                                                
Weighted average number of shares               49,834,701     50,411,196 
outstanding - Basic
Weighted average number of shares               50,409,464     51,094,385 
outstanding - Diluted
                                                                
Dividends paid per share                       $ 0.1350        $ 0.1200     


CLARCOR INC. 2013 UNAUDITED FIRST QUARTER RESULTS
                                                                
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands except per share data)
                                                                    
                                                       Three Months Ended
                                                       March 2,     March 3,
                                                        2013       2012   
                                                                    
Net earnings                                           $ 23,528     $ 23,492
                                                                    
Other comprehensive income:
Pension and other postretirement benefits --
Pension and other postretirement benefits                1,321        1,727
liability adjustments
Pension and other postretirement benefits               (510   )    (646   )
liability adjustments tax amounts
Pension and other postretirement benefits               811        1,081  
liability adjustments, net of tax
                                                                    
Foreign currency translation --
Translation adjustments                                  (2,225 )     2,010
Translation adjustments tax amounts                     -          -      
Translation adjustments, net of tax                     (2,225 )    2,010  
                                                                    
Comprehensive earnings                                   22,114       26,583
                                                                    
Comprehensive earnings attributable to                   (62    )     (16    )
non-redeemable noncontrolling interests
                                                                    
Comprehensive earnings attributable to redeemable        (21    )     (28    )
noncontrolling interests
                                                                   
Comprehensive earnings attributable to CLARCOR Inc     $ 22,031    $ 26,539 


CLARCOR INC. 2013 UNAUDITED FIRST QUARTER RESULTS, continued

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                                               March 2,       December 1,
                                                  2013          2012      
ASSETS
Current assets:
Cash and cash equivalents                        $ 173,264       $ 185,496
Restricted cash                                    470             566
Accounts receivable, less allowance for            200,599         214,474
losses of $9,301 and $9,554, respectively
Inventories                                        219,485         211,251
Deferred income taxes                              32,759          34,693
Income tax receivable                              -               -
Prepaid expenses and other current assets         9,590         8,114     
Total current assets                              636,167       654,594   
                                                                 
                                                                 
Property, plant and equipment, at cost, less
accumulated depreciation of $318,855 and           196,951         195,101
$315,018, respectively
Assets held for sale                               2,000           2,000
Goodwill                                           241,288         241,924
Acquired intangible assets, less accumulated       94,063          95,681
amortization
Deferred income taxes                              -               -
Other noncurrent assets                           15,701        16,202    
Total assets                                     $ 1,186,170    $ 1,205,502 
                                                                 
LIABILITIES
Current liabilities:
Current portion of long-term debt                $ 201           $ 201
Accounts payable and accrued liabilities           138,043         172,262
Income taxes payable                              970           2,428     
Total current liabilities                         139,214       174,891   
                                                                 
Long-term debt, less current portion               16,407          16,391
Long-term pension and postretirement               49,066          50,680
healthcare benefits liabilities
Deferred income taxes                              54,081          51,385
Other long-term liabilities                       8,832         8,571     
Total liabilities                                 267,600       301,918   
                                                                 
Contingencies
Redeemable noncontrolling interests                1,775           1,754
                                                                 
SHAREHOLDERS' EQUITY
Capital stock                                      49,698          49,653
Capital in excess of par value                     372             -
Accumulated other comprehensive loss               (53,139   )     (51,708   )
Retained earnings                                 918,816       902,899   
Total CLARCOR Inc. equity                         915,747       900,844   
Noncontrolling interests                          1,048         986       
Total shareholders' equity                        916,795       901,830   
Total liabilities and shareholders' equity       $ 1,186,170    $ 1,205,502 


CLARCOR INC. 2013 UNAUDITED FIRST QUARTER RESULTS, continued
                                                                
CONSOLIDATED CASH FLOWS
(Dollars in thousands)
                                                                   
                                                     Three Months Ended
                                                     March 2,      March 3,
                                                      2013        2012    
Cash flows from operating activities:
Net earnings                                         $ 23,528      $ 23,492
Depreciation                                           6,581         6,568
Amortization                                           1,500         1,426
Other noncash items                                    24            (102    )
Net gain on disposition of plant assets                (276    )     16
Stock-based compensation expense                       1,146         2,906
Excess tax benefit from stock-based compensation       (1,731  )     (2,302  )
Deferred income taxes                                  8,424         9,522
Changes in assets and liabilities, excluding          (32,748 )    (40,301 )
short-term investments
Net cash provided by operating activities             6,448       1,225   
                                                                   
Cash flows from investing activities:
Restricted cash                                        76            51
Business acquisitions, net of cash acquired            (2,281  )     (2,144  )
Additions to plant assets                              (8,644  )     (9,797  )
Proceeds from disposition of plant assets              25            59
Investment in affiliates                              (223    )    (132    )
Net cash used in investing activities                 (11,047 )    (11,963 )
                                                                   
Cash flows from financing activities:
Cash dividends paid                                    (6,725  )     (6,046  )
Payments on long-term debt                             (55     )     (26     )
Sale of capital stock under stock option and           3,628         2,958
employee purchase plans
Purchase of treasury stock                             (5,964  )     (3,635  )
Excess tax benefits from stock-based compensation     1,731       2,302   
Net cash used in financing activities                 (7,385  )    (4,447  )
                                                                   
Net effect of exchange rate changes on cash           (248    )    1,249   
                                                                   
Net change in cash and cash equivalents                (12,232 )     (13,936 )
                                                                   
Cash and cash equivalents, beginning of period        185,496     155,999 
                                                                   
Cash and cash equivalents, end of period             $ 173,264    $ 142,063 
                                                                   
Cash paid during the period for:
Interest                                             $ 78         $ 68      
Income taxes, net of refunds                         $ 5,742      $ 2,879   

CLARCOR INC. 2013 UNAUDITED FIRST QUARTER RESULTS, continued
                                                 
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
                                                    
                                      Three Months
                                      March 2       March 3
                                       2013        2012    
Net sales by segment:
Engine/Mobile Filtration              $ 117,675     $ 120,283
Industrial/Environmental Filtration     122,626       121,114
Packaging                              15,970      15,867  
                                      $ 256,271    $ 257,264 
                                                    
Operating profit by segment:
Engine/Mobile Filtration              $ 23,449      $ 23,297
Industrial/Environmental Filtration     9,678         10,705
Packaging                              688         310     
                                      $ 33,815     $ 34,312  
                                                    
                                                    
Operating margin by segment:
Engine/Mobile Filtration                19.9    %     19.4    %
Industrial/Environmental Filtration     7.9     %     8.8     %
Packaging                              4.3     %    2.0     %
                                       13.2    %    13.3    %

Contact:

CLARCOR Inc.
David J. Fallon, 615-771-3100
Chief Financial Officer
 
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