Mark IV Industries Inc., riding an 8 percent rise in sales from its continuing operations, handed investors a pleasant surprise Tuesday by reporting a 1 percent jump in its second-quarter profits.
The Amherst-based manufacturer, which has vigorously sold operations that don't fit in with its core automotive and industrial businesses, said its higher profits came despite weakness in many of its markets, including severe downturns among its customers in the farm, mining and petrochemical industries.
"We are pleased with our financial results," said Sal H. Alfiero, Mark IV's chairman and chief executive officer, noting that the company's April purchase of Italian diesel engine maker Lombardini FIM SpA helped bolster the company's earnings.
Mark IV's profits inched up to $21.1 million, or 40 cents per share, from a restated $20.9 million, or 35 cents per share, which reflects the sale of its industrial filter business on Monday to Clarcor Inc. for $144.8 million.
The profits were better than the 37 cents per share that analysts had been expecting, according to First Call, which tracks earnings estimates.
The company's sales from continuing operations rose to $479.5 million during the quarter that ended on Aug. 31, compared with $445.7 million the year before.
Alfiero said Mark IV has been using money from its improving cash flow and some of the $460 million in proceeds from the sale of non-core assets during the last eight months to buy back shares of its common stock and pay off a portion of its higher-cost debt.
Since the end of February, Mark IV has spent $90.2 million to buy back 5.4 million shares of its common stock at an average price of $16.70 per share. That includes 1.1 million shares that the company bought back since May, when Mark IV launched a new program to repurchase an additional 10 million shares.
Mark IV also bought back a total of $123.7 million in principal of its 7.75 percent senior subordinated notes, which is the company's highest-cost debt.
Alfiero said he expects the company to buy back even more shares and to repurchase more of its high-cost debt with the proceeds from the sale to Clarcor of its Purolator Products Air Filtration Co. and Purolator-Facet Filter Products in North Carolina and Facet International of Italy.
For the first half of the fiscal year, Mark IV's profits rose by 5 percent to $47.4 million, or 88 cents per share, from $45.2 million, or 72 cents per share, a year ago. Sales from continuing operations rose by 9 percent to $1 billion from $919.5 million the year before.