Varlen Q4 up, sees record Q1 on rail, truck demand
Reuters Story - March 02, 1999 15:05
NAPERVILLE, Ill., March 2 (Reuters) - Transportation equipment maker Varlen Corp. reported record 1998 fourth quarter earnings on Tuesday and said continued good demand for railcars and trucks should lead to a record 1999 first quarter.
"The fundamentals for our transportation markets remain strong, and the growth engines we have in each transportation end market should lead us to a record first quarter," said Raymond Jean, Varlen's president and chief executive officer.
Net earnings for the fourth quarter ended January 31 rose 28 percent to $9.6 million or $0.56 a diluted share including charges. That figure compares with $7.5 million or $0.43 cents a share for the year-ago quarter.
"With the North American freightcar backlog at 66,000 at the end of calendar 1998, expected 1999 locomotive build rates of 1,500 units, and continued strong demand in Europe, we believe the call for Varlen's locomotive and railcar components should be strong in 1999," Jean said.
The company also said solid demand in heavy-duty truck and trailer markets helped 1998 results.
"North American production for Class 8 trucks rose 18 percent to about 260,000 trucks for the year, and industry backlog closed calendar 1998 at about 263,000 units," Jean said. "Since this is nearly one year's worth of production, the demand for Varlen's truck components seems reasonably assured well into the second half of 1999."
Varlen said it obtained a significant amount of new business in 1998 that will increase its content per vehicle. Higher content will benefit the company in 1999 and should allow it to continue to outperform the industry, it said.
Fourth quarter sales grew 20.5 percent to $165.1 million compared with $137.0 million in the year-ago period. Quarterly operating profit was $20.8 million, compared with $17.6 million for the same period last year.
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