Oct 31 2005
Brush Engineered Materials has reported that third quarter sales were $135.6 million, up $9.8 million or 8% compared to the third quarter 2004 sales of $125.8 million. Net income for the quarter was $3.9 million, up 14% compared to the prior year. Earnings per share were $0.20 compared to $0.18 for the same quarter of the prior year.
The stronger sales for the third quarter were driven by continued strength in the product applications that the Company serves in the magnetic media, wireless photonics, handset, semiconductor and industrial component market segments. The strength in these areas was offset in part by continued weakness in the Company's product applications in the telecommunications infrastructure, computer, automotive, and defense markets. Approximately one fourth of the year-over-year sales increase is related to higher precious and base metal prices that the Company has been able to pass on to customers. The third quarter was the eleventh consecutive quarter where sales were higher than the comparable quarter of the prior year.
While earnings for the third quarter improved when compared to the prior year, results were negatively affected by significantly higher material costs, especially copper, as well as an unfavorable product mix. During the quarter copper prices increased by approximately 17% and negatively affected earnings by approximately $0.8 million. The Company can only pass through to customers a portion of the higher copper cost. This, along with the weaker mix and higher costs of other materials, combined to drive the Company's gross margin down 2.0 points compared to the third quarter of the prior year.
For the first nine months, the Company reported net income of $13.7 million or $0.71 per share diluted on sales of $400.6 million. This compares to net income of $13.8 million or $0.77 per share diluted on sales of $380.3 million for the first nine months of 2004. Year-to-date sales were 5% higher than the same period in 2004. Metal prices passed on to customers and exchange rates accounted for approximately one third of the sales increase. Gross margin as a percent of sales was 21%, down 1.6 points compared to the same period last year. Higher copper prices have negatively impacted earnings by approximately $2.0 million on a year-to-date basis.
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