Providence, R.I. - Nortek, Inc., a leading diversified global manufacturer of innovative, branded residential and commercial ventilation, HVAC and technology products, today announced financial results for the three months and year ended December 31, 2011.

Fourth Quarter 2011 Highlights

Net sales increased 15.6% to $535.2 million from $462.8 million in the fourth quarter of 2010. Acquisitions contributed approximately $57.2 million to net sales for the quarter.

Gross margin was 28.2% in the fourth quarter of 2011, compared with 26.5% in the same quarter a year earlier.

Selling, general and administrative expense (SG&A) increased by $11.5 million in the fourth quarter of 2011 to $113.4 million, from $101.9 million a year earlier. As a percentage of net sales, SG&A expense decreased to 21.2% from 22.0% in the fourth quarter of 2010.

Depreciation and amortization expense for the fourth quarter of 2011 was $22.1 million, compared with $19.0 million in the same quarter a year earlier.

Operating earnings increased to $26.4 million, from $12.6 million in the fourth quarter of 2010. Acquisitions contributed approximately $7.5 million to operating earnings for the quarter.

Net loss for the fourth quarter of 2011 was $800,000, or $0.05 loss per share, compared with a net loss for the fourth quarter of 2010 of $10.1 million, or $0.67 loss per share.

As of December 31, 2011, Nortek's balance sheet included $58.2 million in unrestricted cash, investments and marketable securities, compared with $57.7 million at December 31, 2010. The Company had $42 million of outstanding debt under its revolving credit facility at year-end, and elected to pay down this facility by an additional $25 million during the first quarter of 2012.

Michael J. Clarke joined Nortek as President and Chief Executive Officer, and a member of the Board, effective December 30, 2011, and Interim CEO J. David Smith returned to his role as a member of the Nortek Board of Directors. Clarke most recently served as Group President, Integrated Network Solutions at Flextronics International Ltd., a publicly traded global provider of design and electronics manufacturing services.

Management Comments on the Fourth Quarter

"Although activity in the construction markets remained at historically low levels in the fourth quarter, we continued to make progress in strengthening our operations, reducing our debt, and strategically re-positioning Nortek to drive long-term growth," said President and Chief Executive Officer Michael J. Clarke. "Higher sales in our businesses that serve the commercial and institutional markets enabled us to improve our financial results despite weak conditions in the housing sector. Sales in our commercial HVAC segment grew 32% from the fourth quarter of 2010, driven primarily by U.S. demand for our air handler products, and that segment concluded the quarter with a 45% higher backlog than a year ago. Complementing this organic growth was another quarter of strong performance by Ergotron, acquired in late 2010. Acquisitions contributed approximately $57.2 million to the $72.4 million increase in net sales for the quarter."

"We also continued to make progress during the fourth quarter in improving the underlying operations of our business," Clarke said. "Our ongoing strategic sourcing initiatives amplified the positive impact of a general decline in raw material costs. We also selectively improved our pricing position on key product lines in our Commercial and Residential HVAC segments. The resulting improvements in our operating margins led to increased operating cash flow, which positions us to invest in future growth and further pay down our revolving debt at a time when conditions in our core markets remain challenging."

2011 Financial Results

Nortek's net sales for the year 2011 increased 12.7% to $2.14 billion from $1.90 billion in 2010. Acquisitions contributed approximately $226.5 million to 2011 net sales. Depreciation and amortization expense for 2011 was $93.9 million, compared with $91.7 million a year earlier. Operating earnings were $63.1 million, compared with $70.6 million in 2010. Acquisitions contributed approximately $19.6 million to operating earnings in 2011. Net loss for 2011 was $55.9 million, or $3.70 loss per share, compared with a net loss for 2010 of $13.4 million, or $0.89 loss per share.

Management Comments on the Company's Outlook

"Our forecast for 2012 is for the residential and nonresidential construction environment to be similar to what we experienced in 2011," Clarke said. "Although there was a modest improvement in housing starts during the fourth quarter of 2011, which appears to have continued into the first quarter of 2012, we believe that it is premature to conclude that a sustainable housing rebound is under way. As a result of our business improvement initiatives, however, we believe that we have positioned Nortek not only to compete successfully in a slow-growth environment, but also to benefit from an enduring recovery in construction, repair and remodeling activity when such a recovery eventually materializes."

Fourth Quarter Conference Call Details

Nortek has scheduled a conference call to review its results for the fourth quarter of 2011 tomorrow, March 30, 2012, at 9:00 a.m. ET. Those who wish to listen to the conference call webcast should visit the Investor Relations section of the Company's website at www.nortek-inc.com . The live call also can be accessed by dialing (877) 709-8155 or (201) 689-8881 prior to the start of the call. If you are unable to listen to the live call, the webcast will be archived on the Company's website.

Source: Nortek, Inc.

 

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