MAYFIELD HEIGHTS, Ohio, Mar 31, 2009 (BUSINESS WIRE) -- Brush Engineered Materials Inc. (NYSE:BW) today commented on market
conditions as well as the related outlook for the first quarter and the
remainder of the year. The Company also commented on the status of the
cost reduction actions that were implemented earlier, as well as
additional initiatives that were recently implemented.
OUTLOOK
The Company noted that it continues to experience significant widespread
weakness and an environment with limited visibility across the majority
of its markets. Exceptions to this include the medical and
defense-related markets where demand levels have not been as affected by
the global economic downturn. While recent activity in the Company's
markets suggests that the level of business may have bottomed, this
cannot be assumed to be certain.
Revenue in the first quarter of 2009 will be well below what had been
expected. The Company had previously indicated that it expected to
report a loss in the first quarter of 2009 with revenue 15% to 25% below
that of the fourth quarter of 2008, or in the range of $145.0 million to
$165.0 million. The Company currently expects a more significant loss
for the first quarter with revenue in the range of $127.0 million to
$137.0 million, down 30% to 35% from the fourth quarter of 2008. Results
for the first quarter will also be negatively affected by an inventory
charge and expenses associated with the implementation of the cost
reduction initiatives.
While the revenue level for the first quarter is weaker and the loss is
greater than previously expected, the Company still expects revenue
levels and operating results to improve as the year progresses. Assuming
a recovery in economic conditions, the Company does expect to generate a
profit of up to $0.40 per share for the full year.
It is important to continue to reiterate that the Company's outlook is
subject to significant variability, especially given the current
economic environment. Changes in demand levels, metal price changes,
metal supply conditions, new product qualification and ramp-up rates,
swings in customer inventory levels, changes in the financial health of
key customers and other factors can have a significant effect on actual
results. The outlook provided above is based on the Company's best
estimates at this time and is subject to significant fluctuations due to
these as well as other factors.
COST REDUCTION INITIATIVES
During the fourth quarter of 2008 as the global economic downturn began
to take hold, the Company responded quickly and effectively. A number of
actions were taken across the Company to reduce costs and to assure that
the Company's balance sheet remains strong. The cost cutting measures
initially implemented included global headcount reductions that reduced
total employment by over 10%. The Company also eliminated planned
executive and senior management salary increases, implemented a general
pay freeze, reduced work hours, suspended a portion of the 401(k) match,
reduced discretionary spending and supplier costs, and deferred lower
priority initiatives. In addition, efforts to reduce working capital and
targeted capital spending deferrals have been implemented.
Most recently the Company has implemented additional cost reduction
measures. These include additional employment reductions bringing the
total employment reduction to approximately 15%. The salaries of the
senior executives of the Company and the annual cash retainer fees of
the Company's Board of Directors have been reduced by 10%. In addition,
the salaries of other senior managers have been reduced by 7% and the
remaining Company matching contribution to the 401(k) has been suspended.
The Company believes that the result of these initiatives is a leaner,
more efficient operating structure. The working capital and capital
spending reductions are yielding cash benefits. The cost reduction
initiatives have had a favorable impact on results to date and are
expected to result in more clearly visible benefits in the second
quarter of 2009. While the scale of these initiatives is sizable, the
Company is taking care to not disrupt investment in the pipeline of new
products that will help during the difficult macroeconomic environment
of 2009 and provide solid growth opportunities for 2010 and beyond.
FORWARD-LOOKING STATEMENTS
Portions of the narrative set forth in this document that are not
statements of historical or current facts are forward-looking
statements. Our actual future performance may materially differ from
that contemplated by the forward-looking statements as a result of a
variety of factors. These factors include, in addition to those
mentioned elsewhere herein:
-
The global and domestic economies, including the uncertainties related
to the impact of the current global financial crisis;
-
The condition of the markets in which we serve, whether defined
geographically or by segment, with the major market segments being
telecommunications and computer, data storage, aerospace and defense,
automotive electronics, industrial components, appliance and medical;
-
Changes in product mix and the financial condition of customers;
-
Actual sales, operating rates and margins for the first quarter and
the year 2009;
-
The successful implementation of cost reduction initiatives;
-
Our success in developing and introducing new products and new product
ramp- up rates, especially in the media market;
-
Our success in passing through the costs of raw materials to customers
or otherwise mitigating fluctuating prices for those materials,
including the impact of fluctuating prices on inventory values;
-
Our success in integrating newly acquired businesses;
-
Our success in implementing our strategic plans and the timely and
successful completion of any capital projects;
-
The availability of adequate lines of credit and the associated
interest rates;
-
Other financial factors, including cost and availability of raw
materials (both base and precious metals), tax rates, exchange rates,
interest rates, metal financing fees, pension costs and required cash
contributions and other employee benefit costs, energy costs,
regulatory compliance costs, the cost and availability of insurance,
and the impact of the Company's stock price on the cost of incentive
and deferred compensation plans;
-
The uncertainties related to the impact of war and terrorist
activities;
-
Changes in government regulatory requirements and the enactment of new
legislation that impacts our obligations and operations;
-
The conclusion of pending litigation matters in accordance with our
expectation that there will be no material adverse effects; and
-
The risk factors set forth in Part I, Item 1A of the Company's Form
10-K for the year ended December 31, 2008.
Brush Engineered Materials Inc. is headquartered in Mayfield Hts., Ohio.
The Company, through its wholly-owned subsidiaries, supplies worldwide
markets with beryllium products, alloy products, electronic products,
precious metal products, and engineered material systems.
SOURCE: Brush Engineered Materials Inc.
Brush Engineered Materials Inc.
Investors:
Michael C. Hasychak, 216-383-6823
or
Media:
Patrick S. Carpenter, 216-383-6835
http://www.beminc.com
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