Quaker to cut 4Q spending by $5M
October 21, 2002-- Home Textiles Today,
Quaker Fabric will slash $5 million from planned fourth quarter capital expenditures as part of a larger effort at generating cash and cutting expenses after missing consensus earnings estimates, despite gains in sales and profits.
Those measures are in addition to a 54 percent reduction in overtime costs realized during the third quarter along with production cutbacks, according to Larry Liebenow, the company's president and ceo. Quaker reported a nearly $1.5 million profit on $80.9 million in sales during the third quarter. However, the resulting $0.09 earnings per share came in below the Thomson First Call estimate of $0.13 per share.
Third quarter results were also impacted by the elimination of a reserve for its performance-based variable compensation program, which added about $0.04 to the EPS, the company said.
"Despite the uncertain economic outlook as we start the fourth quarter, the strategic platform that we have worked so hard to put in place remains fundamentally correct," Liebenow said in a conference call with analysts. "Although the size of the pie is clearly smaller, we're continuing to enlarge our own piece of it."
The company plans to accomplish that through a continued emphasis on export markets, particularly in Central and Southeast Asia, he said.
"We will be pushing for additional domestic market share growth, international sales and further penetration of the contract and top-of-bed segments so we may remain well positioned to take advantage of conditions when the economy rebounds," Liebenow said.
While the third quarter is traditionally influenced by seasonal slowdowns, including a two-week vacation shutdown in July, as well as being shorter than the other reporting periods, this year's cycle was also disrupted by a weak economic environment as well as a slowdown in the furniture industry, Liebenow said.
"We entered the third quarter in good shape, with a strong first half behind us and a backlog that was 22 percent higher than the prior year," he explained. "But the slow growth in the domestic economy together with the work we did to reduce our average lead time to about four-and-a-half weeks resulted in a drop in our incoming order rate for the quarter of about 30 percent from last year. And we ended the quarter with a production backlog of about $29 million."