Nortek Q1 Loss Narrows, Still Cautiously Optimistic About End-market Conditions

(RTTNews) - Nortek, Inc. (NTK) on Monday reported a loss for the first quarter that narrowed from last year, helped by higher demand for air management and home security products. Looking ahead, the building materials company affirmed that it remained "cautiously optimistic" about end-market conditions for full-year 2014.

Michael Clarke, President and Chief Executive Officer of Nortek said, "Nortek's first quarter was a solid start to 2014, driven by higher sales of our residential HVAC, security and home automation products, as well as our air management solutions for semiconductor cleanrooms. Despite the prolonged winter season in many parts of the country, our businesses performed well in the quarter."

The Providence, Rhode Island-based company's net loss for the first quarter narrowed to $8.6 million or $0.55 per share from $15.1 million or $0.98 per share in the year-ago quarter.

Net sales for the quarter increased 6 percent to $550.1 million from $519.1 million in the prior-year period.

Gross profit margin for the quarter was 28.5 percent, up from 27.3 percent in the same period last year. Operating margin rose to 2.3 percent from 0.9 percent a year ago.

In the Residential Ventilation segment, net sales increased slightly on a constant currency basis despite the adverse weather conditions. The growth reflected improving demand in the U.S. appliance and retail channels.

Net sales in the Technology Solutions segment grew 10 percent from last year to $121.2 million, primarily due to higher sales of security and access control products.

In the Display Mount Solutions segment, net sales increased 1 percent to $61.6 million, driven by the continued mix shift toward Ergotron branded products as the company continued with its planned exit from certain lower-margin OEM business.

Net sales in the Custom & Engineered Solution segment rose 7 percent to $123.4 million on increased demand for the company's products in data center, education and manufacturing end markets.

In the Residential Heating and Cooling segment, net sales increased 15 percent to $100.8 million, driven by continuing strong demand for central air conditioners and heat pumps in both the replacement and new construction markets.

Looking ahead, Clarke said, "We expect to leverage overall growth in our major end markets with our ongoing product and market initiatives, buoyed by the healthy backlog in our CES business. In addition, closing our acquisition of Thomas & Betts' HVAC business, which includes the well-known Reznor brand, has positioned us to substantially expand our addressable HVAC market."

NTK closed Monday's trading at $82.38, down $0.32 or 0.39 percent on a volume of 63,392 shares.