SL Industries Announces 2009 Fourth Quarter and Year-End Results

SL Industries, Inc. announced that its net income for the year ended December 31, 2009 was $2,936,000, or $0.49 per diluted share. Net income for the year included loss from discontinued operations, after tax, of $628,000, or $0.10 per diluted share. Income for the year from continuing operations was $3,564,000, or $0.59 per diluted share. Discontinued operations include legacy costs associated with businesses divested by the company.

For the year ended December 31, 2008, net income was $2,334,000, or $0.39 per diluted share. The net income for 2008 included loss from discontinued operations, after tax, of $2,302,000, or $0.39 per diluted share. Income from continuing operations for 2008 was $4,636,000, or $0.78 per diluted share. Net sales from continuing operations for 2009 were $147,551,000, compared with net sales from continuing operations for 2008 of $185,954,000.

In 2009, the company’s operating segments were all impacted by the global economic downturn. SL Power Electronics Corp. recorded net sales of $53,464,000 with income from operations of $735,000, compared with net sales of $72,811,000 and income from operations of $315,000 for 2008. The High Power Group recorded net sales of $44,865,000, with income from operations of $3,194,000, compared with net sales of $60,462,000 and income from operations of $4,868,000 for 2008. In 2009, SL Montevideo Technology recorded net sales of $28,277,000 with income from operations of $4,426,000, compared with net sales of $28,647,000 and income from operations of $3,892,000 for 2008. RFL Electronics recorded net sales of $20,945,000 with income from operations of $1,919,000, compared with net sales of $24,034,000 and income from operations of $2,379,000 for 2008.

For the three months ended December 31, 2009, net income was $1,602,000, or $0.26 per diluted share. Loss from discontinued operations, net of tax, for the period was $188,000, or $0.03 per diluted share. Income from continuing operations for the period was $1,790,000, or $0.30 per diluted share.

For the three months ended December 31, 2008, net loss was $234,000, or $0.04 per diluted share. Loss from discontinued operations, net of tax, for the period was $653,000, or $0.11 per diluted share. Income from continuing operations for the period was $419,000, or $0.07 per diluted share. Net sales from continuing operations for the three months ended December 31, 2009 were $39,984,000, compared with net sales from continuing operations of $45,617,000 for the same period last year.

James Taylor, President and Chief Executive Officer of SL Industries, commented, "The business environment in 2009 was the most difficult in my memory. The company recorded a sales decrease of $38.4 million, or 21%, compared to prior year. The sharp revenue decline was consistent with the performance of the company’s competitors and customers. The decline in market demand was spread across most business sectors. Economic activity went into a tailspin early in the first quarter, remained volatile and depressed over the next several months and began to improve late in the year. Each market was impacted by discreet factors; however, inventory levels contracted throughout the global economy. As a result, suppliers required longer lead-times for critical components, while customers demanded accelerated delivery schedules."

"In response to the market downturn, management implemented cost-cutting measures at each location in the first quarter and further downsized certain operations in the second quarter. Headcount was reduced, salaries were frozen, retirement benefits were decreased, temporary furloughs were mandated, capital expenditures were curtailed and several strategic initiatives were suspended. For the year, the company recorded charges of $690,000 associated with restructuring its operations. Despite these cutbacks, the Power Electronics Group (consisting of SL Power Electronics and the High Power Group) successfully completed the first phase of its operations plan. As we have previously explained, a plan is in place to consolidate administrative and manufacturing functions without impacting the company’s strong customer relationships. In addition, lean manufacturing principles and continuous improvement systems were accelerated at most facilities to improve productivity. These measures have yielded impressive gains. In the second half of the year, the Power Electronics Group recorded an operating profit increase of $2,650,000 (425%), notwithstanding a sales decrease of $14,944,000 (23%), compared to same period in 2008."