Baldor boosts second-quarter earnings guidance

Officials with Baldor Electric Co. on Thursday (June 3) boosted by $15 million the top line on its second-quarter earnings guidance, a welcome move for those who believe the health of global manufacturing companies is a bellwether for broader economic improvement.

The guidance update came during a Thursday meeting with investors at a Boston conference.

“Due to continued strength in incoming orders for all products, Baldor now believes sales for 2nd quarter will be in the range of $435 to $445 million,” the company noted in a statement. “This is an increase from the previous guidance of $415 to $430 million provided on April 28, 2010. At these higher levels of sales, Baldor believes the operating margin will be slightly better than the peak quarterly operating margin of 14.2%.”

News of the guidance boost pushed Baldor share prices (NYSE: BEZ) up more than 6% in morning trading on higher than normal trading volumes. During the past 52 weeks, the share price has ranged from a $40.97 high to a $20.66 low. Shares were trading around $38.35 in late morning trading.

Better revenue expectations follow more than six quarters of relative declines.

The Fort Smith-based global manufacturing and distribution company reported April 28 that its first quarter net income was $15.1 million, down 58.6% from the same quarter of 2009. However, the 32 cents per share earnings was better than the average estimate of 11 analysts compiled by Thomson Financial. First-quarter revenue was $397.5 million, down 1% from the $402.5 million in the first quarter of 2009.

While the numbers look better compared to 2009, Baldor’s 2009 numbers were bad. The company’s 2009 total sales and net income were down 22% and 40%, respectively, compared to 2008.

Also, Baldor will need improved sales and income to meet its $75 million debt reduction goal in 2010. The company reduced debt by $13.7 million in the first quarter. Baldor continues to reduce debt accumulated in the $1.8 billion acquisition of Rockwell Automation subsidiaries (Dodge, Reliance). Outstanding debt at the end of the first quarter was $1.191 billion, down from the $1.205 billion at the end of 2009.

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.