Ameron International Corporationtoday reported net income of $9.5 million, or $1.03 per diluted share, in the quarter ended May 30, 2010, compared to net income of $9.4 million, or $1.02 per diluted share, in the quarter ended May 31, 2009. Consolidated sales increased to $136.5 million in the second quarter of 2010, compared to $132.9 million in the second quarter of 2009 and $109.0 million in the first quarter of 2010.
James S. Marlen, Ameron’s Chairman, Chief Executive Officer and President, stated, “We are encouraged by the second-quarter sales increase and the level of profitability, especially given the difficult market conditions and the weakness of the first quarter. Overall, improvements by Fiberglass-Composite Pipe and TAMCO, the Company’s 50%-owned steel mini mill in Southern California, were offset by declines of the other construction-related businesses, which continued to be affected by cyclically weak markets. Second-quarter net income was flat in 2010, compared to 2009, due partly to unprofitable wind tower operations and the lack of income from affiliates.”
Year-to-date net income totaled $10.6 million, or $1.15 per diluted share, in 2010, compared to $13.3 million, or $1.43 per diluted share, in 2009. Sales for the first six months of 2010 totaled $245.6 million, compared to $278.9 million in 2009.
The Fiberglass-Composite Pipe Group’s second-quarter sales of $64.7 million and segment income of $17.8 million were up 16% and 8%, respectively, higher in 2010 than in 2009. Second-quarter sales increased in key oilfield and mining markets in North and South America. Marine and offshore energy exploration and production markets remained strong, sustained by new vessel construction at Asian shipyards. In Brazil, sales growth came from the municipal water markets and from the new Centron operation which began production of oil field piping in the latter part of 2009. Most of the Group’s worldwide, consolidated operations had higher profits. Income related to dividends from an affiliated company in Saudi Arabia of $2.2 million in 2009 did not repeat in 2010. Looking forward, the Fiberglass-Composite Pipe Group is on track with the prior year and continues to see signs of improvement due primarily to higher energy-related demand.
The Infrastructure Products Group had lower sales and segment income in the second quarter of 2010 due to the impact of continued soft economic conditions on residential and commercial construction markets. The Hawaii Division’s sales and segment income were lower in 2010, compared to 2009; Pole Products’ segment income improved on flat sales. The Group’s combined sales declined $4.5 million, or 13%; while combined segment income declined $.7 million, or 23%. Pole Products benefitted from lower costs and higher sales of concrete poles for the replacement market. Sales of steel poles and concrete poles for new construction projects remained sluggish. Demand for aggregates and ready-mix on both Oahu and Maui fell as construction spending in Hawaii continued to soften due to the recessionary economy. Military and governmental spending in Hawaii provided a stable base of business; however, residential and commercial construction, including construction of timeshare units, resorts and high-rise condominium projects, was down. The State of Hawaii’s fiscal challenges and the lower level of tourism are expected to delay a recovery in Hawaiian construction. Demand for Pole Products Division’s decorative concrete poles for residential lighting applications is stable. However, significant recovery of the Infrastructure Products Group is not expected in the short term.
The Water Transmission Group was slightly profitable in the second quarter of 2010. The profitability of the water pipe business improved, while the wind tower business turned unprofitable. The Group’s combined sales declined $1.0 million, or 2%, due to lower pipe sales than in the second quarter of 2009. As anticipated, water pipe sales improved in the second quarter, compared to the first quarter when rainy weather impacted pipe production. Wind tower sales were flat in the second quarter of 2010, compared to the second quarter of 2009. New tower orders remain elusive due to weak wind energy markets and the inability of wind farm developers to obtain project financing. Wind tower backlog fell to $11.5 million at the end of the second quarter, from $28.9 million at November 30, 2009. The wind tower business is not expected to recover in the near term. The water pipe business was also affected by the low bid activity in the water and wastewater markets in the western U.S. The lack of bid activity was due to tight municipal and state budgets, the lack of available project financing and the timing of construction of major water transmission pipelines. While a number of wind tower and pipe projects are being followed and planning activities have increased, it remains uncertain when owners, water agencies and municipalities will proceed with these projects.
TAMCO’s sales increased in the second quarter of 2010, compared to the same period in 2009, primarily due to inventory restocking by customers and higher market pricing. Shipments in 2010 remained well below TAMCO’s production capacity. TAMCO’s net loss in the second quarter of 2010 totaled $.8 million, compared to a loss of $3.4 million in 2009. Ameron’s share of TAMCO’s net loss was $.4 million after taxes in 2010, compared to a loss of $1.6 million in 2009. While steel markets have generally firmed in the U.S., demand for steel rebar in TAMCO’s key markets in the western states remains depressed due to sluggishness in the construction industry.
“We are pleased with second-quarter results. As expected, 2010 continues to be challenging. The seasonal decline of the first quarter was partially offset in the second quarter, and some markets are showing signs of improvement. Although difficult market conditions are expected to continue, we are cautiously optimistic for the balance of the year. The Company will continue to be led by the Fiberglass-Composite Pipe Group and constrained by the cyclical, construction-related businesses. We continue to focus on controlling costs to maximize profits in spite of weak markets and are actively reviewing all operations for improvements. Likewise, we are continuing to invest in expanding and enhancing the Company’s capabilities and markets and are seeking opportunities for growth. We remain optimistic that as the global economy recovers and stabilizes, the Company will capitalize on its strong market positions and achieve superior long-term results,” James S. Marlen concluded.
About Ameron International
Ameron International Corporation is a multinational manufacturer of highly-engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets. Traded on the New York Stock Exchange (AMN), Ameron is a leading producer of water transmission lines and fabricated steel products, such as wind towers; fiberglass-composite pipe for transporting oil, chemicals and corrosive fluids and specialized materials; and products used in infrastructure projects. The Company’s businesses operate in North America, South America, Europe and Asia. The Company also has partial ownership in several unconsolidated affiliates in the U.S. and the Middle East.
All statements in this press release and in all future press releases that do not directly and exclusively relate to historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the intentions, plans, expectations and beliefs of Ameron International Corporation (the “Company” or “Ameron”), and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control. These factors could cause actual results to differ materially from such forward-looking statements. For a written description of these factors, see the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended November 30, 2009. The Company disclaims any intention or obligation to update these forward-looking statements whether as a result of subsequent events or otherwise except as required by law
SOURCE: Ameron International Corporation
Ameron International Corporation
James S. Marlen, Chairman, Chief Executive Officer and President
Gary Wagner, Senior Vice President, Finance and Administration & Chief Financial Officer
James R. McLaughlin, Senior Vice President, Corporate Development & Treasurer