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Nortek Reports Higher Q4 Sales, Narrower Loss

3/31/2011 01:15:01 PM Eastern

Providence,
R.I. - Nortek, the parent of multiple
residential- and commercial-system suppliers, reported higher sales and a
narrower net loss in the fourth quarter.

Nortek
posted a 7.9 percent sales gain to $462.8 million in quarter ended Dec. 31,
2010 compared with the prior year's final quarter.

The
net loss of $13.2 million was lower than the year-ago $56.7 million loss before
income taxes and before a one-time 2009 fourth-quarter pre-tax gain on
reorganization items, which involved its emergence from Chapter 11 in 2009.

Operating
earnings were $12.6 million, compared with a year-ago operating loss of $31.2
million.

For
the full 2010 fiscal year ending December, sales were up 5 percent to $1.9
billion, and operating earnings hit $12.6 million, compared with a fiscal 2009 operating
loss of $204.6 million. The company posted a narrower full-year net loss of $25
million, compared with a year-ago net loss of $343.6 million before income
taxes and one-time reorganization items.

"Our
continued focus on operational efficiency and working capital improvement
contributed to our performance," said chairman/CEO Richard Bready of the
company's 2010's performance, even though the majority of the company's markets
remain challenging.

In the
company's residential technology segment, 2010 sales rose 15.7 percent for the
full year, and the segment reversed 2009's operating losses of $274 million to
post operating earnings of $12.1 million.

Although the technology
segment's 2010 net sales increased 15.7 percent to $463.6 million, the gain was
"primarily" the result of two factors, the company noted. One was the addition
of a new customer that contributed $52.1 million of the $62.8 million net sales
increase. Another factor was the late-year acquisition of mounting-product
maker Ergotron, contributing about $4.2 million of net sales in 2010.

Within the
tech segment, the company recorded 2010 net expenses of $2.8 million to consolidate
Niles Audio, Elan Home Systems, and Xantech into The AVC Group to increase
operational efficiencies. The expenses include severance and the consolidation
of select facilities. The company expects to spend another $900,000 in the
first half of 2011 on these efforts.

For
this year's first quarter and for the full year, Nortek forecasts a challenging
business environment. "We expect the housing markets will improve
marginally in 2011 after a slow first-quarter start," said Bready. "However, we
have concerns that the effects of continued low consumer confidence, high
unemployment levels and a continued high level of foreclosures will continue to
depress the housing markets. In addition, the non-residential markets, which
declined further in 2010, are expected to remain weak throughout 2011. These
continued depressed market conditions, together with commodity cost pressures,
will challenge 2011 performance."

Bready
noted that some of the improvement in company-wide fourth-quarter sales and
earnings was due to announced price increases effective Jan. 1 and to the
uncertainly over product availability in the first quarter of residential HVAC
products.  The sales shift "will have the
effect of reducing first quarter 2011 net sales by approximately $10 million to
$15 million and operating earnings by approximately $5 million to $7 million,"
the company said.

Other
first-quarter challenges include housing starts and new home sales falling 9
percent and 22 percent, respectively, during the first two months of the year
while sales of existing homes were flat.

Despite
the challenges, the company said it would "fund necessary capital investments
that will improve our business operations." In 2010, the company spent $19.8
million on capital expenditures and in 2011 plans to spend $25 million to $30
million.

Nortek's residential brands
include Niles Audio, Xantech, Elan, Gefen, Omnimount, Panamax,
SpeakerCraft and others.