CLARCOR Inc. F3Q09 (Qtr End 08/29/09) Earnings Call Transcript

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2009-09-17 12:57:12.0

Tags: Capital Market, 3M Co., Call Transcript, Earnings, Clarcor Inc., Investment, Financial Services, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Kevin Maczka - BB&T Capital Markets

Kevin Maczka - BB&T Capital Markets

Norm first question, on the Engine/Mobile margin is almost 23%. Is there any reason to think as the business stabilizes and ultimately grows again with the economy next year, that those shouldn’t maintain at those levels if not go higher?

Norman Johnson

Well, I wouldn’t want to project that they’re going to go any higher than the 23.7, because certainly the 23.7 is higher than we earned in the first two quarters, but yes, we’ve been answering that question now for nearly 20 years, that we’ve been able to maintain those margins over 20%.

So we certainly expect that to continue as we go our international business. Some of those locations have a little bit lower operating margin than we do in the rest of the world, but as we said, north of 20% is still our long term goal and we’re happy they are higher in this economy.

Kevin Maczka - BB&T Capital Markets

Then on the Purolator rollout Norm, can you give us an idea of the size of the opportunity there? I know you said $35 million is where that 3M business was for you, a few years back. Is that the size of the opportunity or is it much larger than that?

Norman Johnson

Well, it depends on how you want to define the size of the opportunity. Certainly the retail HVAC market, if you look at it from the high-end into the filters versus the lower 12-way filters, it probably approaches $1 billion.

Now we were just being very conservative, but we expect and we certainly know we have some very strong competitors and don’t expect to be the leader in the high end market, but we think we have some significant opportunities with the Purolator brand.

Kevin Maczka - BB&T Capital Markets

That's $35 million; that was 3M outsourcing the entire production of that product to you or was that just a piece of their?.?

Norman Johnson

That was a piece of it.

Kevin Maczka - BB&T Capital Markets

So 3M’s business in that space isn’t larger than the $35 million?

Norman Johnson

I’m not going to comment on 3M. You can call them, but we’re just talking about what we did.

Operator

Your next question comes from Rick Eastman - Robert W. Baird.

 

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