Brush Engineered Materials (BW) Cuts Q1 Outlook; Provides Update on Cost Reduction Initiatives

March 31, 2009 4:37 PM EDT

Brush Engineered Materials Inc. (NYSE: BW) today commented on market conditions as well as the related outlook for the first quarter and the remainder of the year. The Company also commented on the status of the cost reduction actions that were implemented earlier, as well as additional initiatives that were recently implemented.

Lowers its Q1 sales guidance from $145-$165 million to $127-$137 million, versus the consensus of $148.93 million.

Sees FY09 EPS up to $0.40, versus the consensus of $0.35.

During Q408 as the global economic downturn began to take hold, the Company responded quickly and effectively. A number of actions were taken across the Company to reduce costs and to assure that the Company's balance sheet remains strong. The cost cutting measures initially implemented included global headcount reductions that reduced total employment by over 10%. The Company also eliminated planned executive and senior management salary increases, implemented a general pay freeze, reduced work hours, suspended a portion of the 401(k) match, reduced discretionary spending and supplier costs, and deferred lower priority initiatives. In addition, efforts to reduce working capital and targeted capital spending deferrals have been implemented.

Most recently the Company has implemented additional cost reduction measures. These include additional employment reductions bringing the total employment reduction to approximately 15%. The salaries of the senior executives of the Company and the annual cash retainer fees of the Company's Board of Directors have been reduced by 10%. In addition, the salaries of other senior managers have been reduced by 7% and the remaining Company matching contribution to the 401(k) has been suspended.

The Company believes that the result of these initiatives is a leaner, more efficient operating structure. The working capital and capital spending reductions are yielding cash benefits. The cost reduction initiatives have had a favorable impact on results to date and are expected to result in more clearly visible benefits in the second quarter of 2009. While the scale of these initiatives is sizable, the Company is taking care to not disrupt investment in the pipeline of new products that will help during the difficult macroeconomic environment of 2009 and provide solid growth opportunities for 2010 and beyond.

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