09 Aug Rexnord to slash debt after quarterly loss
Milwaukee, Wis. – Following a quarterly net loss of $2.8 million, executive officers at Rexnord Corp., a manufacturer of motion technology products, said the company is focused on reducing its debt.
In a report of first quarter 2007 results, CFO Tom Jansen highlighted increased quarterly sales growth and CEO Bob Hitt identified encouraging trends in business and end-markets, but there was no getting around a quarterly loss caused by a variety of expenses related to recent transactions and capital investments. Still, it was an improvement over the net loss of $4.9 million reported for the first quarter of 2005.
Hitt said the sales figures demonstrate progress with Rexnord’s growth and business system initiatives. After adjustments to include the company’s $295 million acquisition of Falk Corp., a power transmission products and solutions provider, sales grew 20 percent over the prior year quarter, to $288 million.
On July 2, 2006, Rexnord had total debt of $745 million and cash on hand of almost $11 million.
Since the end of the quarter, the company has closed on its sale from the Carlyle Group to affiliates of Apollo Management for approximately $1.8 billion, through the merger of Chase Merger Sub, Inc., an entity formed and controlled by Apollo, with and into RBS Global. The financing required to complete the merger raised Rexnord’s long-term debt to $1.44 billion.
Rexnord also has completed a “relatively small” $6.5 million acquisition in China to provide additional manufacturing capacity and capabilities. Hitt explained that the acquisition will allow Rexnord to be strategically positioned to serve U.S. customers in China and the Chinese market.
“We’ve had many of our customers who have continued to go over there for the market itself, not to export back, but to be there for the market that we need to support,” Hitt said. “Our priorities for the remainder of fiscal 2007 will continue to be to reduce our leverage by focusing on driving growth, margin expansion, and generating cash to reduce our debt.”
Rexnord has approximately 5,800 employees worldwide, and total company assets are valued at approximately $1.6 billion.
• Manufacturing Matters starts with innovation
• Companies recruiting more UW engineering students
• Optimistic Outlook For Manufacturing
• Mike Klonsinski: Let’s Get Serious About Manufacturing!