CLARCOR Reports First Quarter Financial Results

  CLARCOR Reports First Quarter Financial Results

Business Wire

FRANKLIN, Tenn. -- March 19, 2014

CLARCOR Inc. (NYSE: CLC):


Unaudited First Quarter 2014 Highlights
(Amounts in millions, except per share data and percentages)
                             
                                 
                                 Quarter Ended
                                 3/1/14      3/2/13      Change
Net sales                        $ 312.7       $ 256.3       22    %
Operating profit                   31.3          33.8        -8    %
Net earnings – CLARCOR             24.3          23.5        3     %
Diluted earnings per share       $ 0.48        $ 0.47        2     %
Operating margin                  10.0  %      13.2  %     -3.2 pts
                                                             

CLARCOR Inc. (NYSE: CLC) reported that first quarter 2014 diluted earnings per
share grew 2% from last year’s first quarter. Net sales increased $56.4
million, or 22%, primarily due to first quarter sales of $45.4 million from
the December 2013 acquisition of GE Air Filtration. First quarter 2014 diluted
earnings per share were positively impacted by $0.06 due to a $2.8 million
bargain purchase gain—included in other income—recognized from the acquisition
of Bekaert Advanced Filtration and negatively impacted by $0.02 from a $1.3
million restructuring charge related to the company’s HVAC air filtration
business. Changes in average foreign currency exchange rates negatively
impacted net sales by $1.4 million and operating profit by $0.3 million in the
first quarter of 2014 as compared with last year’s first quarter.

Chris Conway, CLARCOR’s Chairman, President and Chief Executive Officer,
commented, “Our first quarter results were influenced by several items which
make the comparison to our prior year results somewhat challenging, including
the impact of the two acquisitions we completed in the first quarter of 2014,
certain costs and benefits associated with these acquisitions and
restructuring charges at our HVAC air filtration business. When the impact of
the two first quarter acquisitions and the HVAC restructuring charges are
removed from our financial results, net sales increased approximately 3%,
operating profit increased slightly and operating margin declined slightly
from the first quarter of 2013.^1

“First quarter financial performance at our CLARCOR Industrial Air
business—formerly GE Air Filtration—was better than we anticipated. When
adjusted for expenses of $6.7 million related to acquisition integration and
the purchase accounting step-up in inventory basis, first quarter operating
margin with respect to this business was in excess of 12%. This first quarter
operating margin was positively influenced by favorable material costs, fixed
overhead absorption and sales mix of higher margin industrial air and gas
turbine aftermarket filters versus gas turbine air inlet systems. We do not
expect this favorable first quarter sales mix and operating margin level to be
maintained during the balance of fiscal 2014. Accordingly, we anticipate full
year operating margin for this business to be approximately 8% excluding the
combined impact of the projected acquisition integration costs and the
purchase accounting step-up in inventory basis—which we project could
negatively impact 2014 operating margin in this business by approximately 4.0
percentage points. In addition, net sales at CLARCOR Industrial Air for the
eleven weeks under our ownership in the first quarter increased approximately
20% from the same period last year when this business was under its former
ownership. These higher sales were across all of our primary segments
including gas turbine aftermarket filters, gas turbine air inlet systems and
industrial air filters. We still have much to do to successfully integrate
CLARCOR Industrial Air, but we are even more excited today about the long-term
prospects of this business than we were at the time of acquisition.

“Sales at our Engine/Mobile Filtration segment increased approximately 4% in
the first quarter with balanced geographic growth including a 5% increase in
domestic sales and a 3% increase in foreign sales. Our U.S. sales growth was
primarily driven by a 14% increase in locomotive filtration sales and a 7%
increase in heavy-duty independent aftermarket sales partially offset by
relatively flat automotive, heavy-duty OE and other filter company sales. The
7% growth in domestic heavy-duty aftermarket sales was higher than our
expectations heading into the quarter, but some of this growth could have been
pulled forward from our second quarter as evidenced by our particularly strong
sales levels in February. Despite higher than expected domestic heavy-duty
aftermarket growth in the first quarter, we anticipate full year sales growth
to be 3% to 5%, consistent with our expectations heading into the year. Our
full year expectations are lower than actual growth in the first quarter
primarily due to uncertainty in the broader domestic trucking market where
U.S. truck tonnage has declined approximately 5% since the end of our last
fiscal year. The 3% increase in first quarter sales outside the U.S. in this
reporting segment was primarily the result of a 21% increase in heavy-duty
engine filtration export sales to the Middle East while sales in Europe and
China were relatively flat.

“When excluding the impact of our two first quarter acquisitions, sales at our
Industrial/Environmental Filtration segment increased approximately 3% from
last year’s first quarter. This increase was primarily driven by higher dust
collection system sales to OE customers and higher global oil & gas filtration
product sales—which increased 3% from the first quarter of 2013, consistent
with our expectations heading into the quarter. The first quarter increase in
oil & gas filtration sales was lower than our anticipated 10% full year sales
growth primarily due to the “lumpy” timing of several large element and vessel
orders that shipped in last year’s fourth quarter combined with several other
large orders that are currently scheduled to ship in this year’s second
quarter. Our current oil & gas filtration backlog is at an all-time high as we
continue to experience strong global order activity, notably in Latin America
and the Middle East. This strong backlog supports our continued expectations
for full year 10% sales growth in our oil & gas filtration business.

“As mentioned in the opening paragraph, we recorded a $1.3 million
restructuring charge in the first quarter of 2014 at our HVAC air filtration
business. This restructuring charge was primarily related to the planned
closure of our manufacturing facility in Pittston, PA. It is never easy to
execute decisions which negatively impact our employees, but modifying the
cost structure of this business was a critical step for us to improve its
long-term profitability. We plan to move the Pittston production equipment to
other manufacturing locations, and we estimate that this restructuring will
reduce annual operating costs from $1.5 to $2.0 million. Our long-term goal is
to improve operating margins at our HVAC air filtration business to 10% by
increasing our focus on higher margin air filtration products and improving
our cost structure. HVAC air filtration sales were 2% lower than last year’s
first quarter as lower swine filtration sales were partially offset by higher
commercial and industrial sales—which increased 3% despite the harsh winter
weather.”

First Quarter Results:

Engine/Mobile Filtration Segment

Net sales at our Engine/Mobile Filtration segment increased 4% compared with
the first quarter of 2013 including relatively proportionate increases
domestically and outside the U.S. Higher domestic sales were driven by a 7%
increase in our heavy-duty engine filtration aftermarket, and higher foreign
sales were driven by strong export activity from the U.S. primarily into the
Middle East. Heavy-duty engine filtration sales in China and Europe were
relatively flat compared with the first quarter of 2013.

Operating profit at our Engine/Mobile Filtration segment declined
approximately 3% from the first quarter of 2013, despite the increase in
sales, primarily due to a 1.2 percentage point reduction in operating margin
driven by lower absorption of fixed costs and higher material costs. Much of
the lower absorption was related to additional capacity and infrastructure put
in place in fiscal 2013 while increased material costs were driven by higher
media and steel pricing. We executed a customer price increase at the end of
the first quarter which we expect will partially offset these higher material
costs. For the full year 2014, we anticipate operating margin in this
reporting segment to be between 21% and 22%—consistent with our expectations
heading into the year.

Industrial/Environmental Filtration Segment

Net sales at our Industrial/Environmental Filtration segment increased $52.2
million, or 43%, from the first quarter of 2013 including $48.1 million, or
40%, from the two first quarter acquisitions and $4.1 million, or 3%, from
organic growth. Geographically, organic domestic sales increased 1% while
organic foreign sales increased approximately 11%. Our growth in domestic
sales was primarily due to a 29% increase in dust collection system sales,
including to OE customers, in addition to significant increases in commercial
aerospace and offshore oil drilling filtration sales, as our major offshore
oil drilling customer accelerated receipt of product in the first quarter
after delays in 2013. Higher sales in these U.S. markets were offset by lower
aviation fuel filtration vessel sales for military applications and lower HVAC
air filtration sales primarily related to the timing of swine filtration
system shipments. The 11% increase in organic sales outside the U.S. was
driven by higher oil & gas filtration sales into several geographies including
Latin America and Canada.

Operating profit at our Industrial/Environmental Filtration segment declined
$1.5 million, or 16%, from last year’s first quarter primarily driven by a
$1.3 million loss from the two first quarter acquisitions and $1.3 million of
restructuring charges recognized at our HVAC air filtration business.
Excluding the impact of the two first quarter acquisitions and the
restructuring charges, operating profit increased approximately $1.1 million,
or 11%, from the first quarter of 2013. Operating margin in the first quarter
of 2014 declined approximately 3.2 percentage points from last year’s first
quarter primarily due to a 3.8 percentage point impact from the two
acquisitions and the HVAC restructuring charges. Operating margin in this
reporting segment improved approximately 0.6 percentage points excluding the
impact of the two first quarter acquisitions and the HVAC restructuring
charges.

Packaging Segment

Net sales at our Packaging segment declined 4% from the first quarter of 2013
primarily due to lower packaging sales in the battery, spice and smokeless
tobacco markets partially offset by higher sales of decorated flat sheet metal
products. Operating profit declined $0.4 million from the first quarter of
2013 primarily due to a 2.7 percentage point reduction in operating margin
driven by lower absorption of fixed costs from lower sales.

Other Income

We recognized a $2.8 million bargain purchase gain in the first quarter of
2014 related to our acquisition of Bekaert Advanced Filtration (“BAF”). We
paid approximately $7.3 million (net of cash acquired) for BAF and acquired
net assets valued at approximately $10.1 million including intangible assets
of $2.1 million. The excess of net assets acquired over purchase price was
recognized as a bargain purchase gain in the first quarter. In addition, we
recognized a $1.0 million gain on foreign currency exchange in the first
quarter primarily related to the translation of intercompany debt.

2014 Guidance

As a result of the $2.8 million bargain purchase gain recognized pursuant to
the Bekaert Advanced Filtration acquisition, we are increasing our full year
guidance for consolidated 2014 diluted earnings per share to be in the range
of $2.60 to $2.75. This revised guidance is $0.05 higher than our prior
guidance at both the upper and lower ends. This guidance is inclusive of our
anticipated financial results from the GE Air Filtration and Bekaert Advanced
Filtration acquisitions. These expected results are based upon projected
consolidated net sales between $1,410 and $1,470 million and consolidated
operating margin between 13.25% and 14.5%.

Included in our consolidated 2014 guidance are estimated diluted earnings per
share of between $2.45 and $2.55 for our base business and $0.15 to $0.20 from
the GE Air Filtration and Bekaert Advanced Filtration acquisitions—including
the impact of the bargain purchase gain. Sales and operating margin detail for
our base business—excluding the GE Air Filtration and Bekaert Advanced
Filtration acquisitions—is as follows:

                                                         
                                           2014                  2014
                                           Estimated             Estimated
                                           Sales Growth          Operating
                                                                 Margin
                                                                 
Engine/Mobile Filtration                   1.0% to 3.0%          21.0% to
                                                                 22.0%
Industrial/Environmental                   4.5% to 8.5%          12.0% to
Filtration^2                                                     13.0%
Packaging                                  0.0% to 4.0%          8.0% to 9.0%
CLARCOR base business^2                    3.0% to 5.0%          15.7% to
                                                                 16.5%
                                                                 
2 – Excludes the GE Air Filtration and Bekaert Advanced Filtration
acquisitions. These acquisitions do not impact the Engine/Mobile Filtration
and Packaging segments.

We also provide below 2014 guidance for the financial impact of the GE Air
Filtration and Bekaert Advanced Filtration acquisitions included in our
Industrial/Environmental Filtration segment. We estimate that these two
acquisitions will impact 2014 diluted earnings per share between $0.15 and
$0.20 and net sales between $250 and $275 million. Projected 2014 sales and
operating margin for each acquisition is as follows:

                                               
                                  2014 Estimated     2014 Estimated
                                  Sales              Operating
                                  ($Millions)        Margin
                                                     
GE Air Filtration                 $235 to $255       3.0% to 5.0%
Bekaert Advanced Filtration       $15 to $20         -1.0% to 1.0%
                                                     

Full year operating margin expectations for the GE Air Filtration acquisition
include $4.3 million of expense for the step-up in inventory basis pursuant to
purchase accounting, of which $3.6 million was recognized in the first
quarter. In addition, these expectations include approximately $5.0 million of
integration costs related to the GE Air Filtration acquisition, of which $3.1
million was recognized in the first quarter. The step-up in inventory basis
and acquisition integration costs are projected to negatively impact 2014
operating margin in the GE Air Filtration business by approximately 4.0
percentage points and consolidated 2014 diluted earnings per share by
approximately $0.12. We anticipate recognizing approximately $8.0 million of
intangible asset amortization expense and $2.7 million of depreciation expense
in fiscal 2014 pursuant to the GE Air Filtration acquisition.

For full year 2014 on a consolidated basis (inclusive of the acquisitions), we
project cash from operations between $150 million and $165 million, capital
expenditures between $70 million and $85 million, an effective tax rate
between 32.0% and 32.5% and diluted shares outstanding of approximately 51.0
million.

CLARCOR will be holding a conference call to discuss the first quarter 2014
results at 10:00 a.m., Central Time, on March 20, 2014. 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 8826911. The replay will be
available through April 3, 2014 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.

^1 This earnings release presents information with respect to 2014 first
quarter consolidated net sales, operating profit and operating margin, and
2014 first quarter Industrial/Environmental Filtration segment net sales,
operating profit and operating margin, in each case excluding the impact of
the GE Air Filtration acquisition, the Bekaert Advanced Filtration
acquisition, the bargain purchase gain related to the Bekaert Advanced
Filtration acquisition and the HVAC restructuring charges. These are non-GAAP
financial measures. For a reconciliation of these non-GAAP financial measures
to the most comparable GAAP measures, as well as information regarding why the
Company believes these non-GAAP financial measures present useful information
to investors, see pages 13 and 14 of this earnings release.

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
2014 performance of the Company, each of its segments and the GE Air
Filtration and Bekaert Advanced Filtration businesses, our projections with
respect to 2014 estimated sales growth and 2014 estimated operating margins
for the Company, each of its segments and the GE Air Filtration and Bekaert
Advanced Filtration businesses, and our projections with respect to 2014 cash
from operations, 2014 capital expenditures and 2014 effective tax rates;
statements regarding our expectations regarding the anticipated 2014 expense
for the step-up in inventory basis pursuant to purchase accounting in
connection with the GE Air Filtration acquisition, anticipated 2014
acquisition integration costs, the anticipated impact of the step-up in
inventory basis and acquisition integration costs on 2014 diluted earnings per
share, and the anticipated amortization expense in 2014 related to intangible
assets recognized pursuant to purchase accounting for the GE Air Filtration
acquisition; 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 expectation that the favorable mix of higher
gas turbine air inlet systems and the operating margin level at our CLARCOR
Industrial Air Filtration business will not be maintained during the balance
of fiscal 2014; statements regarding our expectation that our full year
operating margin for the CLARCOR Industrial Air business will be approximately
8%, excluding the impact of acquisition integration costs and the purchase
accounting step-up in inventory basis; statements regarding our intent to
assess our long-term operating margin goal with respect to our CLARCOR
Industrial Air Filtration business at the end of the year; statements
regarding the integration of our CLARCOR Industrial Air business and our
excitement about the long-term prospects of this business; statements
regarding our expectation of full year sales growth of 3% to 5% in our
Engine/Mobile Filtration segment; statements that our full year expectations
with respect to sales in our Engine/Mobile Filtration segment are lower than
actual growth in the first quarter due to uncertainty in the broader domestic
trucking market; statements regarding our continued expectation for full year
10% sales growth in our oil & gas filtration business; statements regarding
our plans to move the Pittston product equipment to other manufacturing
locations, and our estimate that this restructuring will reduce annual
operating costs from $1.5 million to $2.0 million; statements regarding our
long-term goal to improve operating margins at our HVAC air filtration
business to 10% by increasing our focus on higher margin air filtration
products and improving our cost structure; statements regarding our
expectation that the customer price increase executed at the end of the first
quarter of 2014 will partially offset higher material costs we have
experienced in our Engine/Mobile Filtration segment; statements regarding our
expectation that operating margin in our Engine/Mobile Filtration segment will
be between 21% and 22% for the full year 2014, consistent with our
expectations heading into the year; 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 2013 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 2014 for the Company, each of its
business segments and the GE Air Filtration and Bekaert Advanced Filtration
businesses, 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. 2014 UNAUDITED FIRST QUARTER RESULTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
                                             
                                                 
                                                 Three Months Ended
                                                 March 1,       March 2,
                                                 2014             2013
Net sales                                        $  312,685       $  256,271
Cost of sales                                    216,098         174,785    
                                                                  
Gross profit                                     96,587           81,486
                                                                  
Selling and administrative expenses              65,321          47,671     
                                                                  
Operating profit                                 31,266          33,815     
                                                                  
Other income (expense):
Interest expense                                 (400       )     (150       )
Interest income                                  107              139
Other, net                                       3,971           —          
                                                 3,678           (11        )
                                                                  
Earnings before income taxes                     34,944           33,804
                                                                  
Provision for income taxes                       10,603          10,276     
                                                                  
Net earnings                                     24,341           23,528
                                                                  
Net earnings attributable to                     (20        )     (66        )
noncontrolling interests
                                                                  
Net earnings attributable to CLARCOR Inc.        $  24,321       $  23,462  
                                                                  
Net earnings per share attributable to           $  0.48         $  0.47    
CLARCOR Inc. - Basic
Net earnings per share attributable to           $  0.48         $  0.47    
CLARCOR Inc. - Diluted
                                                                  
Weighted average number of shares                50,463,714      49,834,701
outstanding - Basic
Weighted average number of shares                50,924,445      50,409,464 
outstanding - Diluted
                                                                  
Dividends paid per share                         $  0.1700       $  0.1350  
                                                                             


CLARCOR INC. 2014 UNAUDITED FIRST QUARTER RESULTS, continued
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
                                                           
                                                                 
                                               March 1,          November 30,
                                               2014              2013
ASSETS
Current assets:
Cash and cash equivalents                      $ 76,430          $ 411,562
Restricted cash                                750               763
Accounts receivable, less allowance for
losses of $10,556 and $9,183,                  259,186           224,829
respectively
Inventories                                    272,543           218,786
Deferred income taxes                          26,480            25,313
Income taxes receivable                        —                 1,000
Prepaid expenses and other current             14,358           9,868       
assets
Total current assets                           649,747          892,121     
                                                                 
Plant assets, at cost, less accumulated
depreciation of $344,760 and $332,787,         245,223           208,953
respectively
Goodwill                                       316,294           241,299
Acquired intangible assets, less               223,457           89,881
accumulated amortization
Other noncurrent assets                        15,293           16,589      
Total assets                                   $ 1,450,014      $ 1,448,843 
LIABILITIES
Current liabilities:
Current portion of long-term debt              $ 231             $ 50,223
Accounts payable and accrued liabilities       197,766           157,538
Income taxes payable                           5,749            —           
Total current liabilities                      203,746          207,761     
                                                                 
Long-term debt, less current portion           96,385            116,413
Long-term pension and postretirement           19,775            19,792
healthcare benefits liabilities
Deferred income taxes                          64,574            64,415
Other long-term liabilities                    7,345            5,753       
Total liabilities                              391,825          414,134     
                                                                 
Contingencies
Redeemable noncontrolling interests            1,813             1,836
SHAREHOLDERS' EQUITY
Capital stock                                  50,417            50,371
Capital in excess of par value                 25,393            22,278
Accumulated other comprehensive loss           (25,100     )     (29,814     )
Retained earnings                              1,004,756        989,013     
Total CLARCOR Inc. equity                      1,055,466        1,031,848   
Noncontrolling interests                       910              1,025       
Total shareholders' equity                     1,056,376         1,032,873   
Total liabilities and shareholders'            $ 1,450,014      $ 1,448,843 
equity
                                                                             


CLARCOR INC. 2014 UNAUDITED FIRST QUARTER RESULTS, continued
CONSOLIDATED CONDENSED CASH FLOWS
(Dollars in thousands)
                                                
                                                    
                                                    Three Months Ended
                                                    March 1,     March 2,
                                                    2014           2013
Cash flows from operating activities:
Net earnings                                        $ 24,341       $ 23,528
Depreciation                                        7,292          6,581
Amortization                                        3,282          1,500
Other noncash items                                 917            24
Net gain on disposition of plant assets             (36      )     (276      )
Bargain purchase gain                               (2,815   )     —
Stock-based compensation expense                    1,515          1,146
Excess tax benefit from stock-based                 (262     )     (1,731    )
compensation
Deferred income taxes                               1,348          8,424
Changes in assets and liabilities                   (17,134  )     (32,748   )
Net cash provided by operating activities           18,448        6,448     
                                                                   
Cash flows from investing activities:
Restricted cash                                     277            76
Business acquisitions, net of cash acquired         (262,741 )     —
Additions to plant assets                           (14,352  )     (8,644    )
Proceeds from disposition of plant assets           94             25
Investment in affiliates                            (473     )     (223      )
Net cash used in investing activities               (277,195 )     (8,766    )
                                                                   
Cash flows from financing activities:
Net payments on multicurrency revolving             (50,000  )     —
credit facility
Payments on term loan facility                      (20,000  )     —
Payments on long-term debt, including               (56      )     (2,336    )
business acquisition-related seller financing
Sale of capital stock under stock option and        1,525          3,628
employee purchase plans
Payments for repurchase of common stock             —              (5,964    )
Excess tax benefit from stock-based                 262            1,731
compensation
Dividend paid to noncontrolling interests           (166     )     —
Cash dividends paid                                 (8,577   )     (6,725    )
Net cash used in financing activities               (77,012  )     (9,666    )
Net effect of exchange rate changes on cash         627           (248      )
Net change in cash and cash equivalents             (335,132 )     (12,232   )
Cash and cash equivalents, beginning of             411,562       185,496   
period
Cash and cash equivalents, end of period            $ 76,430      $ 173,264 
                                                                   
Cash paid during the period for:
Interest                                            $ 324        $ 78      
Income taxes, net of refunds                        $ 4,233       $ 5,742   
                                                                             


CLARCOR INC. 2014 UNAUDITED FIRST QUARTER RESULTS, continued
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
                                      
                                          
                                          March 1,      March 2,
                                          2014            2013
Net sales by segment:
Engine/Mobile Filtration                  $ 122,497       $ 117,675
Industrial/Environmental Filtration       174,863         122,626
Packaging                                 15,325         15,970    
                                          $ 312,685      $ 256,271 
                                                          
Operating profit by segment:
Engine/Mobile Filtration                  $ 22,874        $ 23,449
Industrial/Environmental Filtration       8,146           9,678
Packaging                                 246            688       
                                          $ 31,266       $ 33,815  
                                                          
Operating margin by segment:
Engine/Mobile Filtration                  18.7      %     19.9      %
Industrial/Environmental Filtration       4.7       %     7.9       %
Packaging                                 1.6       %     4.3       %
                                          10.0      %     13.2      %
                                                                    

CLARCOR INC. 2014 UNAUDITED FIRST QUARTER RESULTS, continued
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share data)

In addition to the GAAP results, this earnings release presents information
with respect to non-GAAP net sales, non-GAAP cost of sales, non-GAAP gross
profit, non-GAAP selling and administrative expenses, non-GAAP operating
profit, non-GAAP other income (expense), non-GAAP net earnings and non-GAAP
diluted earnings per share for the quarter ended March 1, 2014. These non-GAAP
financial measures are not in accordance with, or an alternative for,
generally accepted accounting principles in the United States. The GAAP
measures most directly comparable to non-GAAP measures are net sales, cost of
sales, gross profit, selling and administrative expenses, operating profit,
other income (expense), net earnings and diluted earnings per share,
respectively.

The quarter ended March 1, 2014 non-GAAP financial measures provided in this
release exclude the impact of the GE Air Filtration acquisition, the Bekaert
Advanced Filtration acquisition, and the HVAC restructuring charges. Although
the comparison of data excluding these selected items in our quarter ended
March 1, 2014 is not a measure of financial performance under GAAP, the
Company believes that providing these non-GAAP financial measures better
enables investors to understand and evaluate the Company's historical and
prospective operating performance. Management believes that removing the
impact of these selected items provides a more comparable measure of the
changes in net sales, cost of sales, gross profit, selling and administrative
expenses, operating profit, other income (expense), net earnings and diluted
earnings per share for the quarter ended March 1, 2014 compared to the quarter
ended March 2, 2013.

These non-GAAP financial measures may have limitations as analytical tools,
and management does not intend these measures to be considered in isolation or
as a substitute for the related GAAP measures. Following are reconciliations
to the most comparable GAAP financial measures of these non-GAAP financial
measures.

                                                                                                               
                                     Reconciling Items
                     First           GE Air            Inventory       Bekaert         HVAC              First           First
                     Quarter         Filtration      Step-up and   Advanced      Restructuring     Quarter         Quarter
                     2014            Acquisition^1     Integration     Filtration      Charge            2014            2013
                     U.S. GAAP                         Costs^2         Acquisition                       Adjusted        U.S. GAAP
Net sales            $ 312,685       $  (45,378  )     $  —            $  (2,777 )     $   —             $ 264,530       $ 256,271
Cost of sales        216,098        (28,610     )     (3,552    )     (2,153    )     (1,186     )      180,597        174,785   
Gross profit         96,587          (16,768     )     3,552           (624      )     1,186             83,933          81,486
Selling and
administrative       65,321         (11,163     )     (3,102    )     (875      )     (128       )      50,053         47,671    
expenses
Operating            31,266         (5,605      )     6,654          251            1,314            33,880         33,815    
profit
Other income
(expense):
Interest             (400      )     328               —               —               —                 (72       )     (150      )
expense
Interest             107             —                 —               —               —                 107             139
income
Other, net           3,971          —                —              (2,816    )     —                1,155          —         
                     3,678          328              —              (2,816    )     —                1,190          (11       )
Earnings
before income        34,944          (5,277      )     6,654           (2,565    )     1,314             35,070          33,804
taxes
Provision for        10,603         (1,420      )     1,790          83             448              11,504         10,276    
income taxes
Net earnings         24,341          (3,857      )     4,864           (2,648    )     866               23,566          23,528
Net earnings
attributable
to                   (20       )     —                —              —              —                (20       )     (66       )
noncontrolling
interests, net
of tax
Net earnings
attributable         $ 24,321       $  (3,857   )     $  4,864       $  (2,648 )     $   866          $ 23,546       $ 23,462  
to CLARCOR
Inc.
Net earnings
per share
attributable         $ 0.48         $  (0.80    )     $  0.10        $  (0.05  )     $   0.02         $ 0.47         $ 0.47    
to CLARCOR
Inc. - Basic
Net earnings
per share
attributable         $ 0.48         $  (0.08    )     $  0.10        $  (0.05  )     $   0.02         $ 0.46         $ 0.47    
to CLARCOR
Inc. - Diluted
                                                                                                                                   
1 - Excluding the inventory step-up and acquisition integration costs.
2 - Related to the GE Air Filtration acquisition.
                                                                                                                                   

CLARCOR INC. 2014 UNAUDITED FIRST QUARTER RESULTS, continued
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share data)

In addition to the GAAP results, this earnings release presents information
with respect to non-GAAP net sales, non-GAAP operating profit and non-GAAP
operating margin, both at the consolidated level and at the
Industrial/Environmental Filtration segment level, for the quarter ended March
1, 2014. These non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the United
States. The GAAP measures most directly comparable to non-GAAP net sales,
non-GAAP operating profit and non-GAAP operating margin are net sales,
operating profit and operating margin, respectively.

The quarter ended March 1, 2014 non-GAAP financial measures provided in this
release exclude the impact of the GE Air Filtration acquisition, the Bekaert
Advanced Filtration acquisition, the HVAC restructuring charges. Although the
comparison of data excluding these selected items in our quarter ended March
1, 2014 is not a measure of financial performance under GAAP, the Company
believes that providing these non-GAAP financial measures better enables
investors to understand and evaluate the Company's historical and prospective
operating performance. Management believes that removing the impact of these
selected items provides a more comparable measure of the changes in net sales,
operating profit and operating margin in the quarter ended March 1, 2014
compared to the quarter ended March 2, 2013.

These non-GAAP financial measures may have limitations as analytical tools,
and management does not intend these measures to be considered in isolation or
as a substitute for the related GAAP measures. Following are reconciliations
to the most comparable GAAP financial measures of these non-GAAP financial
measures.

                                                                                                                         
                                               Reconciling Items
                               First           GE Air            Inventory       Bekaert         HVAC              First           First
                               Quarter         Filtration      Step-up and   Advanced      Restructuring     Quarter         Quarter
                               2014            Acquisition^1     Integration     Filtration      Charge            2014            2013
                               U.S. GAAP                         Costs^2         Acquisition                       Adjusted        U.S. GAAP
Net sales by segment:
Engine/Mobile Filtration       $ 122,497       $  —              $  —            $  —            $   —             $ 122,497       $ 117,675
Industrial/Environmental       174,863         (45,378     )     —               (2,777    )     —                 126,708         122,626
Filtration
Packaging                      15,325         —                —              —              —                15,325         15,970    
                               $ 312,685      $  (45,378  )     $  —           $  (2,777 )     $   —            $ 264,530      $ 256,271 
Operating profit by
segment:
Engine/Mobile Filtration       $ 22,874        $  —              $  —            $  —            $   —             $ 22,874        $ 23,449
Industrial/Environmental       8,146           (5,605      )     6,654           251             1,314             10,760          9,678
Filtration
Packaging                      246            —                —              —              —                246            688       
                               $ 31,266       $  (5,605   )     $  6,654       $  251         $   1,314        $ 33,880       $ 33,815  
Operating margin by
segment:
Engine/Mobile Filtration       18.7      %                                                                         18.7      %     19.9      %
Industrial/Environmental       4.7       %                                                                         8.5       %     7.9       %
Filtration
Packaging                      1.6       %                                                                         1.6       %     4.3       %
                               10.0      %                                                                         12.8      %     13.2      %
                                                                                                                                             
1 - Excluding inventory basis step-up and acquisition integration costs.
2 - Related to the GE Air Filtration acquisition.


Contact:

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