Zep Inc. (NYSE:ZEP), a leading producer and marketer of a wide range of cleaning and maintenance solutions, today reported financial results for the three-month period ended November 30, 2011.
Results for the first fiscal quarter of 2012 continued to reflect mixed market performance, as growth in the automotive aftermarket, food processing and industrial maintenance and repair operations end-markets was more than offset by declines in certain other end-markets such as government, vehicle wash, and in home improvement retail. While revenue and earnings in the first quarter of fiscal year 2012 were lower compared to the same period last year, the Company experienced significantly improved gross margin performance as compared with the immediately preceding quarter. The following is a summary of the Company’s financial results for the first fiscal quarter of 2012:
- Revenue of $153.5 million for the first quarter of fiscal 2012 represented a decrease of $3.9 million, or 2.5%, compared to revenue of $157.4 million reported in the same period a year ago. Organic sales volume remained under pressure, declining 2.8% on a year-over-year basis.
- Net income for the first quarter of fiscal 2012 was $3.6 million, a decrease of 27.5% compared to the $4.9 million in net income reported for the prior year period.
- Fully diluted earnings per share (EPS) for the first quarter of 2012 was $0.16, down 27.3% from fully diluted EPS of $0.22 in the first quarter of fiscal 2011.
- EBITDA (earnings before interest, income tax, depreciation and amortization expenses) for the first quarter of fiscal 2012 totaled $10.5 million, a decline of 29.4% compared to $14.8 million in adjusted EBITDA reported for the first quarter of fiscal 2011.
- Net income for the first quarter of fiscal 2012 declined 39.3% when compared to adjusted net income of $5.9 million in the prior year period; fully diluted EPS for the quarter declined 40.7% when compared to $0.27 of fully diluted adjusted EPS for the same period a year ago. Fully diluted adjusted EPS in the first quarter of fiscal year 2011 included $0.05 per diluted share of charges recorded in connection with acquisition and restructuring activities. The Company incurred no such charges or adjustments that were significant during the first quarter of fiscal 2012, and, therefore the current quarter’s results are presented on a reported basis throughout this press release.
- Free cash flow (defined as Net Cash Provided by Operating Activities less Purchases of property, plant, and equipment plus Proceeds from sale of property, plant, and equipment) consumed during the first quarter of fiscal year 2012 was $2.1 million compared with $2.9 million of free cash flow generated during the same period last year. The change in year-over-year free cash flow is due primarily to the result of lower net income earned and planned technology investments made in the first quarter of fiscal 2012.
“Whereas results in the first quarter reflect a challenging operating environment, I was encouraged to see that gross profit margins have begun to improve sequentially during the quarter as expected,” said John K. Morgan, Chairman, President and Chief Executive Officer of Zep Inc. “We remain confident that results in the second half of fiscal 2012 will improve as a result of better margins and the improved results from the impact of key initiatives.”
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