Thomas & Betts Corporation Reports First Quarter 2005 Results; Sales I

    Business Editors

    MEMPHIS, Tenn.--(BUSINESS WIRE)--April 25, 2005--Thomas & Betts Corporation (NYSE:TNB) today reported first quarter 2005 net earnings of $24.4 million, or $0.40 per diluted share, compared to $15.6 million in net earnings, or $0.27 per diluted share, reported in the first quarter 2004.
    First quarter 2005 sales rose $39.2 million, or 11.1 percent, to $392.2 million and reflect a significant year-over-year increase in Steel Structures segment sales and modest improvements in industrial and utility Electrical markets. Favorable foreign currency accounted for approximately $7 million of the sales increase.
    "We are very pleased with our first quarter results which reflect improved year-over-year performance in all of our segments," said Dominic J. Pileggi, president and chief executive officer. "Demand by utilities benefited both our Steel Structures and Electrical businesses while a modest increase in industrial demand also had a positive impact on our Electrical segment. Although higher material costs were again a factor in the quarter, we successfully offset these costs through a combination of pricing and productivity initiatives."
    The first quarter 2005 gross margin was 28.3 percent of sales compared to 28.2 percent in the comparable 2004 period. Selling, general and administrative (SG&A) expense was $69.4 million, or 17.7 percent of sales. This compares to $73.0 million, or 20.7 percent of sales, in the prior-year period, which included $2.2 million in expense associated with the planned retirement of a former executive officer.
    Earnings from operations were up significantly in the first quarter 2005 - to $41.7 million, or 10.6 percent of sales - compared to $26.7 million, or 7.6 percent of sales, reported last year.
    The effective tax rate in the first quarter of 2005 was 29.0 percent compared to a 20.3 percent effective tax rate in the first quarter of 2004. First quarter 2004 included a tax benefit of $1.5 million resulting from the favorable completion of tax audits.

    SEGMENT RESULTS

    Electrical segment sales were $316.9 million in the first quarter of 2005, up $19.2 million, or 6.4 percent, over the prior-year period. Increased pricing to offset higher material costs and strengthened demand in utility and industrial markets drove the majority of the sales increase. The impact of favorable foreign currency on sales was approximately $6 million. First quarter 2005 Electrical segment earnings were $33.0 million, up from $24.2 million in the first quarter 2004. Higher sales and lower expenses contributed to the improvement in segment earnings.
    Sales in the Steel Structures segment were $44.6 million, up significantly from $26.1 million in the first quarter 2004. Higher levels of capital investment by U.S. electrical utilities in regional transmission grids drove the sales increase. Segment earnings of $5.3 million were also up significantly from first quarter 2004 segment earnings of $0.6 million reflecting higher sales.
    HVAC segment sales were $30.7 million in the first quarter 2005, compared to $29.2 million in the prior-year period. First quarter 2005 segment earnings were $3.7 million compared to $2.6 million in segment earnings last year.

    2005 DIRECTIONAL GUIDANCE

    "Based on our first quarter 2005 results and our expectations for the remainder of the year, we expect 2005 sales to increase in the high-single-digit range and are cautiously optimistic that we will exceed the current analysts' consensus of $1.73 per diluted share for the full year 2005," said Pileggi.

    CORPORATE OVERVIEW

    Thomas & Betts Corporation (www.tnb.com) is a leading designer and manufacturer of electrical connectors and components used in industrial, commercial, communications and utility markets. The company is also a leading producer of commercial heating units and highly engineered steel structures used, among other things, for utility transmission. Headquartered in Memphis, Tenn., the company has manufacturing, distribution and office facilities worldwide and, in 2004, reported sales of $1.5 billion.

    NOTE: The following financial tables support the information in this news release:

    Condensed Consolidated Statements of Operations
    Segment Information
    Condensed Consolidated Balance Sheets
    Condensed Consolidated Statements of Cash Flows

    This press release includes forward-looking statements that are identified by terms such as "achieve," "guidance," "expect," "should," "believe," and "will." These statements discuss business strategies, economic outlook and future performance. These forward-looking statements make assumptions regarding the company's operations, business, economic and political environment, including, without limitation, customer demand, government regulation, terrorist acts and acts of war. The actual results may be materially different from any future results expressed or implied by such forward-looking statements. Please see the "Business Risks" section of the company's Form 10-K for the fiscal year ended December 31, 2004, for further information related to these uncertainties. The company undertakes no obligation to publicly release any revision to any forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.

    CONFERENCE CALL AND WEBCAST INFORMATION

    Thomas & Betts will hold a conference call/webcast to discuss the company's first quarter 2005 results on Tuesday, April 26, 2005 at 11:00 am EST (10:00 am CST). To access the call, please call 201-689-8037. The call can also be accessed via the Thomas & Betts corporate website at www.tnb.com. The conference call will be recorded and available for replay through 12:00 midnight EST on Monday, May 9, 2005. To access the replay, please call 201-612-7415 (account number 9517, passcode 144140). The recorded webcast will be available at www.tnb.com.

THOMAS & BETTS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

Quarter Ended ------------------- March 31, March 31, 2005 2004 --------- ---------

Net sales $392,186 $352,988

Cost of sales 281,140 253,289 --------- --------- Gross margin 111,046 99,699 Gross margin - % of net sales 28.3% 28.2%

Selling, general and administrative 69,350 73,014 Selling, general and administrative - % of net sales 17.7% 20.7% --------- ---------

Earnings from Operations 41,696 26,685 Earnings from operations - % of net sales 10.6% 7.6%

Income from unconsolidated companies 309 664 Interest expense, net (7,160) (7,614) Other (expense) income, net (467) (135) --------- ---------

Earnings before income taxes 34,378 19,600

Income tax provision 9,970 3,988 --------- ---------

Net earnings $ 24,408 $ 15,612 ========= =========

Net earnings per share: Basic earnings per share $ 0.41 $ 0.27 ========= ========= Diluted earnings per share $ 0.40 $ 0.27 ========= =========

Average shares outstanding: Basic 59,333 58,289 Diluted 60,324 58,677

THOMAS & BETTS CORPORATION AND SUBSIDIARIES Segment Information (In thousands) (Unaudited)

Quarter Ended ------------------- March 31, March 31, 2005 2004 --------- --------- Net sales: Electrical $316,876 $297,689 Steel Structures 44,642 26,130 HVAC 30,668 29,169 --------- ---------

Total net sales $392,186 $352,988 ========= =========

Segment earnings: Electrical $ 33,039 $ 24,167 Steel Structures 5,315 610 HVAC 3,651 2,572 --------- ---------

Total reportable segment earnings 42,005 27,349 Total reportable segment earnings - % of net sales 10.7% 7.7%

Interest expense, net (7,160) (7,614) Other (467) (135) --------- ---------

Earnings before income taxes $ 34,378 $ 19,600 ========= =========

THOMAS & BETTS CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) (Unaudited)

March 31, December 31, 2005 2004 ------------ -----------

ASSETS

Current assets: Cash and cash equivalents $ 335,984 $ 336,059 Marketable securities 1,544 1,658 Receivables, net 193,677 172,745 Inventories 216,917 207,158 Other current assets 61,823 61,275 ----------- ------------ Total current assets 809,945 778,895

Net property, plant and equipment 279,520 276,144 Goodwill 461,478 463,264 Investments in unconsolidated companies 115,338 114,922 Other assets 123,236 122,527 ----------- ------------

Total assets $1,789,517 $ 1,755,752 =========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: Current maturities of long-term debt $ 152,763 $ 2,830 Accounts payable 129,603 120,336 Accrued liabilities 96,656 100,692 Income taxes payable 9,866 14,551 ----------- ------------ Total current liabilities 388,888 238,409

Long-term debt 389,297 543,085 Other long-term liabilities 78,753 72,539

Shareholders' equity 932,579 901,719 ----------- ------------

Total liabilities and shareholders' equity $1,789,517 $ 1,755,752 =========== ============

THOMAS & BETTS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

Quarter Ended -------------------- March 31, March 31, 2005 2004 --------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 24,408 $ 15,612 Adjustments: Depreciation and amortization 13,058 13,859 Changes in operating assets and liabilities, net: Receivables (21,159) (31,617) Inventories (5,993) (3,350) Accounts payable 7,318 7,646 Accrued liabilities (7,798) (9,429) Other 3,891 2,277 --------- ---------- Net cash provided by (used in) operating activities 13,725 (5,002)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of businesses (15,203) - Purchases of property, plant and equipment (8,290) (5,527) Other 434 148 --------- ---------- Net cash provided by (used in) investing activities (23,059) (5,379) --------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt and other borrowings (273) (126,505) Stock options exercised 10,974 745 --------- ---------- Net cash provided by (used in) financing activities 10,701 (125,760) -------- ---------

EFFECT OF EXCHANGE RATE ON CASH (1,442) (1,030) --------- ----------

Net increase (decrease) in cash and cash equivalents (75) (137,171) Cash and cash equivalents at beginning of period 336,059 387,425 --------- ---------- Cash and cash equivalents at end of period $335,984 $ 250,254 ========= ==========

Cash payments for interest $ 10,204 $ 15,693 Cash payments for income taxes $ 14,629 $ 2,826

--30--SH/na*

CONTACT: Thomas & Betts Corporation, Memphis Tricia Bergeron, 901-252-8266

KEYWORD: TENNESSEE INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS MANUFACTURING MINING/METALS EARNINGS CONFERENCE CALLS SOURCE: Thomas & Betts Corporation

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