Tecumseh Products (TECUB) , a maker of compressors for air conditioning and refrigeration products, said it swung to a profit in the second quarter, helped by a gain from the sale of a unit.
The company earned $33.7 million or $1.82 a share, in the quarter, compared with a loss of $122.5 million, or $6.63 a share, a year ago. Excluding a gain from the unit sale, the company had a loss of $29.1 million, or $1.58 a share.
The company said the sale of Little Giant Pump resulted in proceeds of $121 million and a gain of $62.3 million, or $3.37 a share. Proceeds were used to repay debt.
Second-quarter revenue increased 5.5% from the year-ago period to $456.3 million. Analysts were estimating revenue of $439.8 million for the quarter.
Tecumseh said it is in compliance with the covenants under its borrowing agreements but added that a shortfall in its operating performance because of higher copper and other commodity costs could push it out of compliance.
Gross profit margin declined 231 basis points to 5.3% due to higher commodity prices.
In the second quarter, revenue from the compressor business, which contributed nearly 60% of total revenue, rose 10.4% from a year ago to $273.3 million. Engine and power train revenue declined 9.1% to $71.5 million due to a closure of engine manufacturing operations of its wholly owned Italian subsidiary and lower sales of transmission products. Revenue from electrical components products rose 4.4% to $106.9 million on the back of increased sales in the residential and commercial markets.
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