Baldor announces CEO transition, dividend (Updated)
by August 2, 2010 4:19 pm 529 views
John McFarland, the chairman and CEO of Fort Smith-based Baldor Electric Co., will step down as CEO effective Dec. 31. The day-to-day duties will go to Ronald Tucker, who is now the president and chief operations officer, according to a statement the company released Monday (Aug. 2) after the close of markets.
Not only did McFarland fill the shoes of legendary Baldor chief Rollie Boreham, he doubled the size of Baldor’s footprint during his more than 10 years of leadership.
Boreham, who became Baldor’s CEO in 1978 and chairman in 1981, was the heart and soul of the company up to his retirement as chairman in 2004. Boreham died in February 2006, leaving the cultural leadership to McFarland and others in Baldor’s corporate succession plan.
Baldor, a maker, designer and marketer of industrial electric motors, motor drives, power transmissions and generators, employs between 7,000 and 7,500 in 26 plants in five countries and sales offices serving more than 80 countries. About 2,000 are employed in the Fort Smith area.
McFarland, 58, has been Baldor board chairman since 2005, and was named CEO in 2000. He served as company president from 1996 to 2004, executive vice president of sales and marketing in 1996, and vice president of sales from 1991 to 1996.
The company statement said McFarland will retain is post as board chairman and chairman of the board’s executive committee. McFarland is a 40-year veteran with the company.
An easy highlight of McFarland’s tenure is the surprising and successful November 2006 purchase of Dodge-Reliance, subsidiaries of Rockwell Automation. The $1.8 billion acquisition immediately doubled the size of Baldor, and was a bold move for a company with a rigidly conservative growth philosophy. The move also created a huge debt load for a company that historically carried little debt.
The economic downturn then bit into Baldor’s ability to maintain its aggressive debt-reduction strategy. In early 2009, Baldor paid $6.83 million to amend a credit agreement to avoid future problems related to meeting their debt covenants. The company’s 2009 total sales and net income were down 22% and 40%, respectively, compared to 2008.
Market conditions are beginning to improve. Baldor said it would pay $75 million in 2010 toward the long-term debt, and had paid $42 million during the first half of 2010. Outstanding debt at the end of the second quarter of 2010 was $1.163 billion, down from the $1.205 billion at the end of 2009.
"With sales growing and operating profits at record margins, this is the right time for me to step back from the day to day operations," McFarland said in a statement. "During 2011, I will work a reduced schedule and focus my time on growth opportunities for Baldor."
Updated info: McFarland noted that one of his jobs as chairman is to focus on growth opportunities.
"We have many opportunities to grow at Baldor which include expanding our current product offering, new markets, international expansion and potential acquisitions. All of these areas will get more of my attention in the future,” McFarland told The City Wire in an e-mail interview.
McFarland, who has said he loves the top Baldor job, and is always enthusiastic during public presentations, does not anticipate any regrets on stepping back.
“It is easy to be enthusiastic about working at Baldor because of the great people and wonderful culture of opportunity,” McFarland said in an e-mail. “Our Board, Ron and I have been preparing for this for several years, so I am ready to step back and Ron Tucker is ready to be the sixth CEO in Baldor’s 90-year history. We will have a very smooth transition."
Tucker has been a member of the Baldor board since 2007, and had been with the company more than 24 years. His past job duties included finance, manufacturing, and international sales and operations. He will be just the sixth CEO in Baldor’s 90-year history.
"Ron and I have worked closely together for many years, so his transition to CEO will be a smooth one for the Company. I respect Ron and have great confidence in his ability to lead Baldor in the years ahead," McFarland noted in the statement. "We have one of the strongest and most experienced management teams in the Company’s history. I look forward to continuing to be part of this team."
The company also announced Monday a 17-cent dividend payable Oct. 8 to shareholders of record on Sept. 17.
For the first half of 2010, the company’s total revenue is $836.952 million, up 6% compared to the 2009 period. Net income for the first half of 2010 is $37.835 million, down 14% compared to the 2009 period.
Baldor shares (NYSE: BEZ) closed Monday at $39.24, up $1.02. During the past 52 weeks, the share price has ranged from a $41.51 high to a $24.67 low.