PROVIDENCE – Home and commercial technology manufacturer Nortek Inc. posted a profit of $32.4 million in 2007, a 63.9-percent decline from the year-ago $89.7 million, as net sales increased 6.8 percent to $2.4 billion.
“Acquisitions contributed approximately $145.4 million in net sales and $16.7 million to operating earnings for the year ended Dec. 31,” the company noted.
But results for the year also included $11.5 million in expenses for plant closures, legal settlements and other one-time costs, compared with $18.2 million in credits in 2007. And Nortek’s margin narrowed as manufacturing costs outpaced sales, rising 8.6 percent to $1.7 billion.
“I am pleased to report that Nortek managed its business well in 2007,” Richard L. Bready, the company’s chairman and CEO, said in an after-market statement. “Results were, however, adversely impacted by the troubled mortgage market, which led to a significant decline in new housing activity and reduced sales of existing homes. Consumer spending on home remodeling and repair was also impacted due to lower home sales.
“More recently, a decline in consumer confidence has resulted in lower sales across all of our markets,” he said. In addition, “operating margins continue to be challenged by higher commodity costs, which have been only partially offset by Nortek’s ongoing efficiency initiatives.”
For the quarter ended Dec. 31, Nortek posted earnings of $3.1 million – 10 times the year-ago period’s $300,000 – despite $600,000 in expenses related to new acquisitions. Fourth-quarter net sales rose 5.2 percent to $569.2 million, including about $25.6 million from acquisitions.
Meanwhile, parent company NTK Holdings Inc. posted a loss of $7.0 million for 2007, compared with 2006 net earnings of $57.7 million, as its interest costs surged 12.8 percent to $183.7 million. NTK’s balance sheet is similar to Nortek’s, except for certain senior debt and deferred compensation costs not shared by the subsidiary.
The annual reports, filed just before the end of 15-day extension, were delayed by the demands of the Sarbanes Oxley Act, the companies have said. (READ MORE)
Acquisitions last year by Nortek and NTK included closed-circuit TV accessory maker Aigis Mechtronics LLC, HomeLogic LLC, residential software designer HomeLogic LLC, “certain assets” of bath cabinet maker Solar of Michigan Inc. (also doing business as Triangle), the stock of Stilpol SP Zo.O. and “substantially all” the assets of range-hood component maker Metaltechnica S.r.l.
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“Our outlook for 2008 is for the challenging market conditions to continue,” Bready said. “Additionally, the instability in the mortgage market is expected to continue to impact consumer confidence and their spending on home remodeling and repair expenditures.”
Nortek continues to focus on “its low-cost-country sourcing strategy and cost-reduction initiatives,” he said, adding: “During this challenging environment, we will only fund necessary capital investments that will improve our business operations.”
An initial public offering planned for last year on the New York Stock Exchange was tabled by NTK Holdings in November, citing the current “unsettled market conditions. (READ MORE)
NTK Holdings Inc., a Delaware corporation that has its headquarters in Providence, is the parent of Nortek Holdings Inc. and Nortek Inc. It is a maker of residential and commercial HVAC, ventilation, home technology, security and other products, under brands including Broan, Nutone, Nordyne and Rangair. Additional information can be found at www.nortek-inc.com.
