Ameron Reports Second-Quarter Results
Ameron International Corporation (NYSE: AMN) today reported net income of $1.0 million, or $.11 per diluted share, in the second quarter ended May 29, 2011, compared to net income of $9.5 million, or $1.03 per diluted share, in the quarter ended May 30, 2010. Second-quarter sales totaled $134.7 million in 2011, compared to $136.5 million in 2010.
James S. Marlen, Ameron’s Chairman, Chief Executive Officer and President stated, “As anticipated when we updated 2011 guidance in early May, the Company was only marginally profitable in the second quarter. Operations improved compared to the first quarter when weather was a major factor. However, the Company’s businesses continued to suffer from margin pressure related to weak construction markets and a lull, which is expected to be temporary, in Asian fiberglass pipe markets. Additionally, unusually-high legal expenses impacted year-to-date results.”
Year-to-date, the Company reported a net loss of $3.3 million, or $.37 per diluted share, in 2011, compared to net income of $10.6 million, or $1.15 per diluted share, in 2010. Sales for the first six months of 2011 totaled $244.5 million, compared to $245.6 million in 2010.
The Fiberglass-Composite Pipe Group’s second-quarter sales and segment income, before interest and income taxes, totaled $66.9 million and $14.3 million, respectively, in 2011, compared to sales of $64.7 million and segment income of $17.8 million in 2010. Sales of U.S. and European operations increased due to the continued strength of oil prices and related oilfield demand. These increases were partially offset by reduced sales from Asian and Brazilian operations. The decline in Asia came from the slowdown of marine and offshore markets, while the decline in Brazil was associated with slower-than-expected acceptance of products from the Company’s new Brazilian factories. Earnings from operations in Europe increased, while earnings from all other operations declined. Group-wide profits were impacted in the second quarter by a shift in sales away from higher-margin marine, offshore and mining projects and by higher raw material costs. Additionally, margins were lower as competitors fought for fewer available projects, including industrial projects in the Middle East which are served by the Company’s Asian operations. Key onshore oilfield markets, served primarily by the Company’s wholly-owned Centron business, improved around the world, driven by oil prices in the second quarter. Order backlogs for onshore oilfield piping remain at historically high levels. The Group benefited in the second quarter from a $2.8 million dividend from the Company’s Saudi Arabian fiberglass pipe affiliate. The expectation continues for the Fiberglass-Composite Pipe Group to perform well for the balance of the year due to high energy prices, and sales into Asian marine and offshore markets are expected to increase later in 2011. However, unforeseen events, such as the unrest in the Middle East and Libya, may restrain the Group’s upside potential. Longer term, the Fiberglass-Composite Pipe Group remains uniquely positioned within its markets and should capitalize on its leadership role.
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