Robbins & Myers Reports Third Quarter Fiscal 2006 Results

DAYTON, Ohio, June 28 /PRNewswire-FirstCall/ -- Robbins & Myers, Inc. announced today its financial results for the third quarter of fiscal 2006, ended May 31, 2006. For the third quarter of fiscal 2006, the Company reported a diluted net loss per share of $0.01, which included special items totally $0.33 per share relating to goodwill impairment, facility dispositions and restructuring expenses. Before these special items, diluted net income was $0.32 per share.

Fiscal 2006 third quarter sales of $153.2 million were $4.4 million lower than in the third quarter of fiscal 2005. Sales declined from the prior year quarter primarily because the prior year quarter included $10.5 in sales for the Hapa, Laetus, and Edlon Lined Pipe businesses that were sold after last year's third quarter.

Earnings before interest and taxes ("EBIT") were $6.2 million in the third quarter of fiscal 2006 and $7.7 million in the same period of fiscal 2005. The fiscal 2006 third quarter net loss was $0.1 million versus net income of $0.2 million in the comparable prior year period. The loss in the current quarter is due to a non-cash goodwill impairment charge of $9.2 million related to the finalization of the value of the Romaco segment, $1.6 million additional loss on the disposal of a manufacturing facility in the Process Solutions segment and $2.0 million in additional restructuring charges. Results were favorably affected by higher sales volumes in the Fluid Management segment and the gain on the disposal of the Hapa and Laetus business units. The diluted loss per share was $0.01 in the third quarter of fiscal 2006 and compares with net income of $0.02 per share in the comparable prior year period.

For the nine months ended May 31, 2006, sales increased to $442.2 million, an increase of $6.5 million over the same period in fiscal 2005. EBIT for the nine months of fiscal 2006 was adversely affected by a $39.2 million non-cash goodwill impairment charge taken in fiscal 2006. This resulted in EBIT for the nine months of fiscal 2006 being a negative $11.6 million and $25.1 million lower than in the first nine months of fiscal 2005. For the first nine months of 2006, the Company reported a loss per share of $1.94, which included the impact of dispositions, restructuring and impairment costs of $2.53 per share, or income per share of $0.59 before these special items.

Fluid Management. Fluid Management segment third quarter 2006 sales of $61.7 million and EBIT of $12.7 million increased by 19.1% and 23.8%, respectively, compared with the third quarter of the prior year. For the nine months, sales increased by 19.4% and EBIT increased 28.4%. The outlook for the Fluid Management segment remains positive due to the strong demand from oil and gas exploration and recovery markets, the price of oil, drilling rig count, improved chemical processing and general industrial market activity. Orders continue to be strong and are 27.1% higher than last year's third quarter and 21.2% higher for the nine months of fiscal 2006 over the comparable period of the prior year.

Process Solutions. Third quarter fiscal 2006 sales of $57.1 million for the Process Solutions segment were 9.0% or $5.6 million lower than in the prior year period. Approximately $2.5 million of the decline relates to the sale of the Edlon Lined Pipe business in August 2005. The remaining decline is due to lower glass lined reactor sales, principally in the U.S. and Europe. EBIT in the third quarter of fiscal 2006 was $2.7 million lower than in the prior year period due to restructuring and disposition costs being $3.1 million higher than last year. For the nine months, fiscal 2006 sales were $164.2 million, down 7.1% or $12.5 million from the same period last year, with approximately $7.5 million of the decline attributable to the sale of the Edlon Lined Pipe business. The Process Solutions segment had EBIT of $2.7 million for the nine months of fiscal 2006 compared with $3.4 million in the comparable prior year period. EBIT for the nine months was negatively impacted by lower sales volume and higher special item costs of $0.5 million and lease remediation costs at certain facilities of $0.4 million. These were partially offset by cost savings from restructuring activities and from the gain on the sale of land and buildings in China. Order rates improved in the third quarter of fiscal 2006 and are 27.4% higher than in the comparable prior year period.

Romaco. The Romaco segment sales of $34.4 million for the third quarter 2006 declined by $8.6 million from the prior year. Approximately $8.0 million of this sales reduction relates to the sale of the Hapa and Laetus product lines of Romaco on March 31, 2006. EBIT was negative $1.4 million in the third quarter 2006 compared with negative $1.4 million in the third quarter 2005. Included in the third quarter 2006 EBIT are goodwill impairment charges of $9.2 million, restructuring charges of $0.1 million, and a gain of $7.5 million on disposal of businesses. For the nine months of fiscal 2006, the Romaco segment had sales $106.1 million compared with $114.9 million in the same period in 2005. Order rates for the third quarter are up 9.7% over the prior year third quarter period, even though the current period did not include the Hapa and Laetus businesses.

Peter C. Wallace, President and Chief Executive Officer of Robbins & Myers, Inc., stated, "We are encouraged by the improvements being made in all of our business segments. The Fluid Management segment continues to deliver solid increases in sales and earnings. We anticipate this trend will continue throughout fiscal 2006 driven by worldwide demand for energy. The Process Solutions and Romaco segments have both improved their incoming order rate and have begun to benefit from the restructuring activity of the past year and a half. We will continue the efforts aimed at reducing complexity, sharing common resources, and leveraging our strength in target markets.

The non-cash goodwill impairment charge masks many of the positive improvements we have made in the last two years. We have trimmed our portfolio, reduced our manufacturing footprint, and have embraced lean as a way to transform the Company. Several of our key end markets are improving, and we are now better positioned to profitably grow our business.

Our performance in the quarter was better than our earlier guidance. As we look to the balance of the year, we expect to see continued strength in Fluid Management, continued improvement in Process Solutions and additional benefits from restructuring the Romaco business. Based on this outlook, our earnings guidance for fiscal 2006 is $0.95 to $1.00 per share before special items. Earnings for the fourth quarter of fiscal 2006 should be in the range of $0.36 to $0.41 per share before special items."

In this release the Company refers to various non-GAAP measures. Earnings and earnings per share excluding special items are non-GAAP financial measures. The Company believes these measures are helpful to investors in assessing the Company's ongoing performance of its underlying businesses before the impact of special items on its financial performance. In addition, these non-GAAP measures provide a comparison to our previously announced earnings guidance which excluded these special items. Earnings and earnings per share before special items reconcile to earnings presented according to GAAP as follows:

Three Months Ended Nine Months Ended (in thousands, except per May 31, May 31, May 31, May 31, share data) 2006 2005 2006 2005 Net (loss) income ($75) $223 ($28,607) ($597) Plus special items, net of tax: Inventory write-offs included in cost of sales 0 0 233 192 Process Solutions segment restructuring charges and facility dispositions 2,922 616 3,471 2,227 Romaco segment restructuring charges and business dispositions (7,229) 1,417 (5,577) 2,455 Goodwill impairment charge 9,174 0 39,174 0 Net Income before special items $4,792 $2,256 $8,694 $4,277 Diluted net (loss) income per share ($0.01) $0.02 ($1.94) ($0.04) Plus special items: Inventory write-offs included in cost of sales 0.00 0.00 0.01 0.01 Process Solutions segment restructuring charges and facility dispositions 0.20 0.04 0.24 0.15 Romaco segment restructuring charges and business dispositions (0.49) 0.09 (0.38) 0.17 Goodwill impairment charge 0.62 0.00 2.66 0.00 Diluted earnings per share $0.32 $0.15 $0.59 $0.29 before special items Conference Call & Webcast

Robbins & Myers, Inc. has scheduled a conference call and webcast for 11:00 a.m., EDT on Thursday, June 29, 2006, to review the third quarter 2006 results. Interested persons should go to the Company's website at http://www.robbinsmyers.com/ approximately ten minutes prior to the start of the call and follow the instructions to view the web cast presentation. Replays will be available at the website and a telephonic replay will be available for one week beginning at 1:00 p.m. EDT June 29 by dialing 888-286-8010 in the U.S. and entering ID # 93856261.

Robbins & Myers, Inc. is a leading global supplier of highly-engineered, application-critical equipment and systems to the global energy, industrial and pharmaceutical markets. Headquartered in Dayton, Ohio the Company maintains manufacturing facilities in 15 countries.

In addition to historical information, this release contains forward- looking statements identified by use of words such as "expects," "anticipates," "estimates," and similar expressions. These statements reflect the Company's expectations at the time this release was issued. Actual events and results may differ materially from those described in the forward-looking statements. Among the factors that could cause material differences are a significant decline in capital expenditures in the specialty chemical and pharmaceutical industries, a major decline in oil and natural gas prices, foreign exchange rate fluctuations, the impact of Sarbanes-Oxley section 404 procedures, work stoppages related to union negotiations, customer order cancellations, the ability of the Company to realize the benefits of its restructuring program in its Romaco and Process Solutions segments, including the receipt of cash proceeds from the sale of excess facilities and Romaco units, and general economic conditions that can affect demand in the process industries. The Company undertakes no obligation to update or revise any forward-looking statement.

ROBBINS & MYERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands) May 31, 2006 August 31, 2005 ASSETS Current Assets: Cash and cash equivalents $16,379 $23,043 Accounts receivable 114,033 128,676 Inventories 106,069 102,652 Other current assets 7,143 7,121 Deferred taxes 10,499 10,216 Total Current Assets 254,123 271,708 Goodwill & Other Intangible Assets 282,449 324,208 Other Assets 14,085 13,807 Property, Plant & Equipment 128,187 130,612 $678,844 $740,335 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $53,867 $67,183 Accrued expenses 94,848 97,090 Current portion of long-term debt 3,233 8,616 Total Current Liabilities 151,948 172,889 Long-Term Debt - Less Current Portion 145,293 166,792 Deferred Taxes 1,743 3,721 Other Long-Term Liabilities 97,436 96,088 Shareholders' Equity 282,424 300,845 $678,844 $740,335 Note: All known adjustments have been reflected in this report, but the information is subject to annual audit and year-end adjustments which are estimated to be insignificant. ROBBINS & MYERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENT (Unaudited) Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, (in thousands, except per share 2006 2005 2006 2005 data) Sales $153,243 $157,584 $442,199 $435,669 Cost of sales 100,438 105,948 292,823 294,361 Gross profit 52,805 51,636 149,376 141,308 SG&A expenses 40,779 42,332 122,718 119,221 Amortization expense 625 669 1,766 1,873 Goodwill impairment charge 9,174 0 39,174 0 Other (3,947) 944 (2,707) 6,743 Income before interest and income taxes 6,174 7,691 (11,575) 13,471 Interest expense 3,125 3,599 10,324 10,827 Income before income taxes and minority interest 3,049 4,092 (21,899) 2,644 Income tax expense 2,846 3,405 5,365 2,200 Minority interest 278 464 1,343 1,041 Net (loss) income ($75) $223 ($28,607) ($597) Net (loss) income per share: Basic ($0.01) $0.02 ($1.94) ($0.04) Diluted ($0.01) $0.02 ($1.94) ($0.04) Weighted Average Common Shares Outstanding: Basic 14,784 14,650 14,743 14,590 Diluted 16,592 16,472 16,541 16,413 Orders $180,923 $147,704 $494,159 $454,613 Backlog $162,972 $132,999 $162,972 $132,999 Note: All known adjustments have been reflected in this report, but the information is subject to annual audit and year-end adjustments which are estimated to be insignificant. ROBBINS & MYERS, INC. AND SUBSIDIARIES CONDENSED BUSINESS SEGMENT INFORMATION (Unaudited) Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, (in thousands) 2006 2005 2006 2005 Sales Fluid Management $61,675 $51,767 $171,934 $144,040 Process Solutions 57,138 62,765 164,172 176,711 Romaco 34,430 43,052 106,093 114,918 Total $153,243 $157,584 $442,199 $435,669 Income Before Interest and Income Taxes (EBIT) Fluid Management $12,701 $10,260 $36,886 $28,718 Process Solutions (617)(1) 2,145 (1) 2,690 (1) 3,381 (1) Romaco (1,388)(2) (1,407)(2) (37,457)(2) (8,359)(2) Corporate and Eliminations (4,522) (3,307) (13,694) (10,269) Total $6,174 $7,691 ($11,575) $13,471 Depreciation and Amortization Fluid Management $1,802 $2,113 $5,356 $5,714 Process Solutions 1,691 1,952 5,047 5,698 Romaco 731 801 2,228 2,678 Corporate and Eliminations 422 400 1,205 1,192 Total $4,646 $5,266 $13,836 $15,282 Orders Fluid Management $65,585 $51,591 $179,333 $147,991 Process Solutions 71,505 56,146 191,515 179,618 Romaco 43,833 39,967 123,311 127,004 Total $180,923 $147,704 $494,159 $454,613 Backlog Fluid Management $29,013 $18,676 $29,013 $18,676 Process Solutions 84,455 64,455 84,455 64,455 Romaco 49,504 49,868 49,504 49,868 Total $162,972 $132,999 $162,972 $132,999 (1) Includes costs of $3,516,000 and $375,000 in the quarters ending May 31, 2006 and 2005, respectively, related to restructuring of our Process Solutions businesses and disposition of an Edlon facility. The costs of these items included in the nine month periods ended May 31, 2006 and 2005 were $4,638,000 and $4,177,000, respectively. The nine month period ended May 31, 2006 also includes a gain of $1,800,000 related to the sale of land and buildings in China, and $385,000 of costs expected to be incurred at the conclusion of a facility lease. (2) The quarter ending May 31, 2006 includes the impact of business restructuring costs and a gain on the disposal of businesses that net to a positive $7,463,000. The quarter ended May 31, 2005 includes costs of $862,000 related to restructuring of our Romaco businesses. The net impact of the Romaco restructuring costs and gain on the disposal of businesses included in the nine month period ended May 31, 2006 was a positive $5,560,000 while the restructuring costs included in the nine month period ended May 31, 2005 were $3,597,000. The three month period ended May 31, 2006 also includes a $9,174,000 goodwill impairment charge, while the goodwill impairment charge included in the nine month period ended May 31, 2006 is $39,174,000. Note: All known adjustments have been reflected in this report, but the information is subject to annual audit and year-end adjustments which are estimated to be insignificant.