Baldor’s quarter doubles its gain

Firm cites work on productivity

Baldor Electric Co. doubled its third-quarter profit and said Wednesday that productivity efforts helped the quarter’s strong earnings performance.

The electric-motor manufacturer reported profit of $25.66 million, or 54 cents per share, for the quarter that ended Oct. 2., compared with $12.59 million, or 27 cents per share, reported in the same year-ago period.

The Fort Smith business beat the average earnings estimate of 47 cents per share from 10 analysts surveyed by Thomson Reuters.

Baldor reported $453.73 million in revenue, a 19 percent increase compared with third-quarter 2009 revenue of $380.45 million.

“Over the last several years we’ve made a number of significant productivity improvements throughout the company,” John McFarland, Baldor’s chairman and chief executive officer, said in a news release.

Stephen Sanders, an equity analyst with Stephens Investment Bank in Little Rock, on Wednesday said businesses are posting record profit margins on revenue levels that are still below previous peaks.

“Generally, industrial manufacturers have seen a nice recovery in 2010 versus 2009, which was an extremely difficult year,” Sanders said. Stephens performs brokerage services for Baldor.

Baldor said strong sales orders marked the third quarter and have continued in the new quarter.

The company reported that its power-transmission category represented its leading product category in the percentage of change of net sales, followed by motors, drives and generators.

Sales of all products to domestic, original-equipment manufacturers and domestic distributors increased 24 percent and 20 percent, respectively.

The company has saidrecently that about half of its sales are to distributors that supply customers with parts and products. The other half is to original-equipment manufacturers whose purchases can be indicative of a healthy economy.

Sanders said Baldor’s earnings performance is encouraging because end markets and its customer base continue to recover.

“The order patterns are steady,” Sanders said.

Baldor’s own inventories and accounts receivable were flat in the year-over-year comparison.

The motor maker said it is on track to reduce debt affiliated with its $1.83 billion acquisition of the Dodge and Reliance Electric brands.

In January 2007, Baldor acquired the brands from Rockwell Automation and doubled its size. The purchase made it the largest producer of industrial electric motors in North America.

The company said $13 million went toward debt reduction during the third quarter. Baldor is on track to meet this year’s $75 million goal.

Shares of Baldor Electric Co. fell 4 cents, or 0.10 percent, to $41.46 per share Wednesday on the New York Stock Exchange. Its shares have traded as high as $43.31 and as low as $24.67 over the last year.

Business, Pages 21 on 10/28/2010

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