Zep Inc. – ZEP – Reported record financial results for the third fiscal quarter

Zep Inc. (NYSE:ZEP), a leading producer and marketer of a wide range of cleaning and maintenance solutions, reported record financial results for the third fiscal quarter ended May 31, 2012. Results in the third fiscal quarter reflected strong sales in retail and distribution channels resulting from new and expanded customer relationships.

“These record results point to the strength of our product and channel diversification strategy, and to the consistent focus our team has demonstrated in executing against this strategy over the past two years,” said John K. Morgan, Chairman, President and Chief Executive Officer of Zep Inc. “I would like to thank our associates for their continued hard work and dedication, and I’d also like to welcome the new associates from Mykal Industries in the United Kingdom, who became a part of the Zep Inc. team just a few weeks ago.”

The following is a summary of the third fiscal quarter’s results:

• ZEP Record revenue of $176.6 million for the third fiscal quarter represented an increase of $8.7 million, or 5.2%, (5.0% organic), compared to revenue of $167.9 million reported in the same period a year ago. Revenue for the quarter reflected benefits from pricing, higher total sales volumes and acquisitions, offset in part by the negative effect of foreign exchange rates.
• ZEP Record net income reported for the third fiscal quarter was $8.6 million, an increase of 38% compared with reported net income in the third quarter of fiscal 2011.
• ZEP Diluted earnings per share (EPS) reported in the third fiscal quarter were a record $0.39, a 39% increase over diluted EPS of $0.28 reported for last year’s third quarter. Last year’s third quarter diluted EPS included $0.02 per diluted share related to acquisition and integration costs, as well as $0.02 per diluted share related to incremental legal expenses.
• EBITDA (earnings before interest, taxes, depreciation and amortization expenses) for the third fiscal quarter totaled a record $18.7 million, or 10.6% of sales, an increase of 23% compared to $15.2 million in EBITDA reported for the third quarter of fiscal 2011.
• ZEP Record revenue of $176.6 million up 5.2% over prior year
• Record reported EPS of $0.39, up 39% over prior year
• Record EBITDA of $18.7 million up, 23% over prior year
• Organic sales driven by 23% increase in Retail and 5% growth in Distribution
• Free cash flow generated during the third fiscal quarter (defined as net cash provided by operating activities less purchases of property, plant, and equipment plus proceeds from sale of property, plant, and equipment) was $8.0 million, compared with $12.6 million of cash generated in the same period last year. Free cash flow in the current quarter reflects higher net income that was offset in part by higher capital expenditures and working capital. These increases were associated with planned technology investments, including the development and implementation of the new ERP system and increased working capital necessary to support incremental sales.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.