Nortek CEO’s view of the market
You may not know Nortek, but they’re the manufacturing conglomerate that owns Linear and Aigis and a couple dozen other companies that play in ancillary markets to security, like residential HVAC and home audio and commercial gates, etc.
They’ve been around since 1967, but have had some struggles lately, including a bankruptcy filing in late 2009 (though I’m not feeling too bad for them - they managed to eliminate $1.3 billion in debt through the restructuring. Wish I could get rid of my student loans that way…), and they just put out their 1Q results.
Here’s the way their CEO and chairman, Richard L. Bready, sees the market developing:
“Nortek is beginning to see a stabilization of the residential housing markets. Increased first-quarter sales of residential ventilation and HVAC products drove first-quarter performance. Nortek continues to focus on cost reduction and working capital improvement to maintain and improve margins and cash flow. Cash flow for the first quarter was up approximately 16 percent compared to last year.”
“We expect the residential housing markets will show modest improvement in 2010 as they continue to be restrained by unemployment levels, consumer confidence and continued high levels of foreclosures. Conditions in the commercial construction market are weak and are expected to remain so throughout 2010 as fewer new buildings are being constructed due in part to a lack of available financing.”
Is that just a CEO explaining away poor performance? Nortek did still lose $13 million in the first three months of 2010, but that’s a lot better than the $32 million they lost in the first three months of 2009. See the full SEC filing here.
Everything I’m hearing is that the credit markets are loosening up, but I think it’s undeniable that commercial construction is still way down - I’m hearing that from just about every integrator I speak with - and there’s no doubt that the foreclosure data and unemployment numbers are right on with Bready’s evaluation.
While there’s optimism out there, I don’t think the market for security systems has yet bounced back and I think it’s still pretty tough sledding out there. Just another confirmation from a public company that can’t hide its numbers.