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Nortek Posts Second Consecutive Quarter Of Profit

Providence, R.I. – Nortek, parent of multiple residential and commercial systems brands, posted its second consecutive quarter of net profits, but the figure was small. 11/09/2012 06:49:00 AM Eastern

 Providence, R.I. – Nortek, parent of multiple residential and commercial systems brands, posted its second consecutive quarter of net profits, but the figure was small.

 In its fiscal third quarter, the company posted a $4.7 million net profit compared with a year-ago loss of $2.1 million. Second-quarter net profit was $18.5 million compared with a year-ago net loss of $31.9 million. The first-quarter net loss was $1.2 million.

In fiscal 2011, the company posted a net loss of $55.9 million following a 2010 net loss of $13.4 million.

This fiscal year, third-quarter revenues were up 1 percent to $557.4 million, and operating income surged 141 percent to $33.8 million. The company sells in the U.S., Canada and Europe.

"All five of our business segments improved their profitability year-over-year,” said president/CEO Michael J. Clarke. “As a result, our operating earnings were up $19.8 million from the third quarter of 2011."

 In the technology segment, which consists of home technology products but also select commercial technology products, the company posted a year-over-year sales decline of $3.4 million, or 3 percent, mainly because of lower sales to a single security customer, SVP/CFO Almon Hall said in an analysts’ conference call. He didn’t disclose the segment’s dollar volume.

Tech segment operating earnings rose to $7.6 million from $5.7 million largely because of lower warranty expenses related to a 2002 product recall. The gain, however, also reflects “operational improvements” in the company’s Core Brands group of residential-technology brands, he said. Those improvements will position the Core Brands group for future margin expansion, he said.

The Core Brands restructuring, Clarke said during the conference call, has delivered economies of scale that will enable new investment in marketing and products, and it “opens the door to greater cross-selling opportunities” to provide dealers with one-stop shopping, he added. “Feedback from customers has been positive.”

The tech segment’s Core Brands group includes ATON, BlueBOLT, ELAN, Furman, Niles, Panamax, Proficient, SpeakerCraft, Sunfire and Xantech  brands.

Other tech-segment brands include Linear, Gefen, Magenta Research, TV One Broadcast Sales, and Gates That Open.

Nortek’s overall third-quarter profit improvement reflects multiple factors, including the third-quarter launch of “operational improvement initiatives,” Clarke said. "In addition to enhancing efficiency and reducing costs, our investments in these initiatives are focused on driving growth through product development as well as marketing and sales. At the same time, we are continuing to make progress in strengthening our performance in material procurement and improving our cash conversion cycle."

The quarter marked the fourth consecutive quarter in which Nortek generated positive cash from operations, Clarke noted.

 The company also offers ventilation and HVAC products for residential and commercial installation.

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