CLARCOR : Reports Second Quarter Results

95b32a8d-10f4-4775-a996-e4f47d05b9cd.pdf FOR FURTHER INFORMATION CONTACT:

David J. Fallon

Chief Financial Officer Franklin, Tennessee 615-771-3100

FOR IMMEDIATE RELEASE WEDNESDAY, JUNE 15, 2016

CLARCOR RE PORTS SECOND QUARTER

FINA NCIAL RESULTS

Unaudited Second Quarter 2016 Highlights

(Amounts in millions, except per share data and percentages)

Second Quarter Ended			Six Months Ended
5/28/16	5/30/15	Change	5/28/2016	5/30/2015	Change
$ 365.0	$ 399.8	-9%	$ 681.2	$ 750.9	-9%
53.8	58.9	-9%	85.7	98.1	-13%
53.4	38.5	39%	74.5	65.2	14%
$ 1.09	$ 0.76	43%	$ 1.52	$ 1.28	19%
14.7%	14.7%	0.0 pts	12.6%	13.1%	-0.5 pts

Net sales Operating profit

Net earnings - CLC Diluted EPS Operating margin

FRANKLIN, TN, Wednesday, June 15, 2016-CLARCOR Inc. (NYSE: CLC) reported that its second quarter diluted earnings per share were $1.09, a $0.33 increase from the second quarter of 2015. Higher diluted earnings per share were driven by a $0.37 per diluted share benefit from the patent litigation award received in the second quarter of 2016 offset by an approximate $0.02 reduction from upfront expenses for cost reduction initiatives incurred in the second quarter of 2016 and an approximate $0.02 reduction from the disposition of the packaging business, J.L. Clark, which was sold in June 2015. Excluding the impact of the litigation award, the upfront expenses for cost reduction initiatives, and the disposition of J.L. Clark, non-GAAP adjusted diluted earnings per share were $0.73 in the second quarter of 2016 and $0.74 in the second quarter of 2015, as reflected in the table on the next page.

To allow investors to better compare and evaluate our historical financial performance, we are also presenting non-GAAP adjusted financial results in the table following this paragraph. Non-GAAP adjusted financial results for the second quarter of 2016 exclude the $27.3 million patent litigation award received from 3M Company and $1.4 million of upfront expenses for cost reduction initiatives, primarily in our Industrial/Environmental Filtration segment. Non-GAAP adjusted financial results for the second quarter of 2015 exclude operational results for J.L. Clark. Please refer to pages 11 through 14 of this earnings release for reconciliations and additional information with respect to non- GAAP adjusted financial results for the second quarter and the first six months of 2015 and 2016.

Non-GAAP Adjusted Financial Results:

Second Quarter Ended			Six Months Ended
5/28/16	5/30/15	Change	5/28/2016	5/30/2015		Change
$ 365.0	$ 380.0	-4%	$ 681.2	$ 715.3		-5%
55.2	57.2	-4%	87.9	95.9		-8%
36.1	37.4	-3%	57.8	63.9		-9%
$ 0.73	$ 0.74	-1%	$ 1.18	$ 1.25		-6%
15.1%	15.0%	0.1 pts	12.9%	13.4	%	-0.5 pts

Adjusted net sales Adjusted operating profit

Adjusted net earnings - CLC Adjusted diluted EPS Adjusted operating margin

Chris Conway, CLARCOR's Chairman, President and Chief Executive Officer, commented, "Our second quarter diluted earnings per share increased $0.33 from the second quarter of 2015

primarily driven by the 3M patent litigation settlement award, and our second quarter non-GAAP adjusted diluted earnings per share and operating margin were consistent with last year's second quarter despite continuing top-line pressures from the same challenging end-markets that negatively impacted net sales in the first quarter of 2016 and the second half of 2015--notably weak demand for heavy-duty, off-road fuel filtration products sold into the agricultural and construction equipment markets and lower capital vessel activity in the natural gas filtration market. In general, we believe we are seeing stabilization in the agricultural and construction equipment markets, but we continue to operate in an uncertain environment in our natural gas filtration business. On a consolidated basis, second quarter net sales declined 9% from last year's second quarter including 5% pursuant to the J.L. Clark disposition, 3% due to organic sales declines primarily driven by challenges in the aforementioned end-markets and 1% due to lower average foreign currency exchange rates.

"The $7 million, or 4%, decline in net sales in our Engine/Mobile Filtration segment from last year's second quarter was partially driven by lower average foreign currency exchange rates which negatively influenced net sales by $2 million, or 1%. The remaining $5 million reduction was primarily due to a decline in off-road, fuel filtration product sales to the agricultural and construction equipment markets. Consistent with our comments at the end of the first quarter, although demand visibility in our off-road fuel filtration markets remains challenging, we believe that sales momentum in these markets has somewhat stabilized from the end of last year. Sales of heavy-duty engine filtration products into our U.S. aftermarket declined approximately 3% from last year's second quarter. This reduction was driven primarily by lower second quarter sales to a significant retail filtration customer obtained at the beginning of 2015 which contributed additional sales in last year's second quarter as the result of an initial sales channel fill. Lower sales in the markets noted above compared to last year's second quarter were partially offset by higher export sales and heavy-duty engine filtration sales in Europe.

"The $8 million, or 4%, net sales reduction in our Industrial/Environmental Filtration segment from last year's second quarter was partially driven by lower average foreign currency exchange rates which negatively influenced net sales by $2 million, or 1%. The remaining $6 million reduction was primarily the result of lower natural gas and industrial air filtration sales, partially offset by higher HVAC and gas turbine filtration sales in addition to additional sales resulting from the TDC

acquisition completed in the first quarter of 2016. Natural gas filtration sales declined approximately

$13 million, or 19%, from last year's second quarter as lower capital vessel sales were partially offset by an increase in aftermarket filtration sales. Almost 80% of the year-over-year decline in natural gas vessel sales was driven by activity in the U.S., where we benefited from natural gas shale extraction infrastructure projects in the second quarter of 2015. Sales of HVAC filtration products increased $6 million, or 20%, from last year's second quarter primarily due to higher sales into the Middle East, and HVAC filtration sales to traditional commercial and industrial customers also increased 5% due to continued success in capturing market share. Net sales into our gas turbine filtration market increased

$3 million, or 11%, from last year's second quarter as aftermarket sales increased 22% while first-fit sales were relatively flat.

"Our second quarter operating margin remained relatively consistent with last year's second quarter, as lower gross margin percentage was offset by lower selling and administrative expenses as a percentage of net sales. Lower gross margin percentage was primarily due to unfavorable product mix--including lower sales of higher margin heavy-duty, off-road fuel filtration products into the agricultural and construction equipment markets--and lower absorption of fixed manufacturing costs from lower net sales. Selling and administrative expenses declined approximately $7 million from the second quarter of 2015 including an estimated $3 million as the result of cost reduction initiatives, $2 million as the result of the J.L. Clark disposition and $4 million from lower stock compensation and other expenses, partially offset by $2 million additional expense related to growth initiatives including research & development and information technology. Upfront expense of $1.4 million for cost reduction initiatives incurred in the second quarter was primarily recorded in cost of sales and was related to the exit of an HVAC facility in the U.S. and severance and other employee termination benefit costs pursuant to reductions in force. We believe we are on track to realize in excess of $20 million of cost savings in cost of sales and selling and administrative expenses in the aggregate in 2016 as a result of implemented cost reduction initiatives, and we continue to evaluate other cost reduction initiatives-- including potential facility consolidations--which we believe would likely favorably impact costs beginning in fiscal year 2017."

2016 Guidance

We are maintaining our consolidated diluted earnings per share guidance between $2.60 and $2.80 and our consolidated net sales guidance between $1,375 million and $1,415 million. We are reducing our consolidated operating margin guidance range from 14.1% to 14.7% in our previous guidance to the range of 13.9% to 14.5%. Our 2016 diluted earnings per share guidance does not include costs that we may incur in 2016 related to any potential facility consolidations or any other restructuring or cost savings initiatives (including the $2.1 million in upfront expenses from cost reduction initiatives incurred in the first six months of 2016) or the $27.3 million patent litigation award received in the second quarter of 2016.

Our 2016 estimated net sales comparison and operating margin by reporting segment and on a consolidated basis (with underlying 2015 consolidated net sales adjusted to remove net sales from the

J.L. Clark business and 2016 operating margin adjusted to exclude the expenses related to restructuring and cost savings initiatives similarly excluded from our diluted earnings per share guidance as on the previous page) are as follows:

2016 Estimated Sales Decline	2016 Estimated Operating Margin
Engine/Mobile Filtration	-5.5% to -1.5%	18.0% to 18.6%
Industrial/Environmental Filtration	-3.8% to -1.8%	11.0% to 11.6%
CLARCOR	-4.5% to -1.5%	13.9% to 14.5%

Consolidated sales guidance for 2016 remains unchanged from our previous guidance. However, the composition of expected 2016 net sales between our two reporting segments has shifted from our previous guidance. We have increased our sales guidance for our Engine/Mobile Filtration segment by approximately $6 million, or 1.0%, at the mid-point primarily due to higher expectations for second half sales in several international markets. We have lowered our sales guidance for our Industrial/Environmental Filtration segment by approximately $6 million, or 0.8%, at the mid-point, primarily due to anticipated continued pressures in our natural gas filtration market and recent headwinds in some of our industrial liquid filtration markets, which we anticipate will be partially offset by improved sales expectations in our HVAC filtration markets. Due to the sales mix shift from higher margin natural gas and industrial liquid filtration markets to the lower margin HVAC filtration market, our expected full year operating margin for the Industrial/Environmental Filtration segment was lowered from our previous guidance at the mid-point by approximately 0.3 percentage points.

Our expected full year operating margin guidance for the Engine/Mobile Filtration segment has remained unchanged.

Our 2016 earnings guidance includes approximately $7.0 million of net interest and other expense. We project 2016 cash from operations to be between $200 million and $220 million (excluding after- tax proceeds from the patent litigation award). We expect capital expenditures to be between $45 million and $55 million, our effective tax rate to be between 30.8% and 31.2%, and 49.0 million average diluted shares outstanding.

CLARCOR will be holding a conference call to discuss the second quarter 2016 results at 10:00 a.m. CT on June 16, 2016. Interested parties can listen to the conference call at www.clarcor.com or http://public.viavid.com/index.php?id=119057. A replay will be available on these websites and also at 877-870-5176 or 858-384-5517 by providing confirmation code 4164181. The replay will be available through June 30, 2016 by telephone and for 30 days on the internet.

CLARCOR is based in Franklin, Tennessee, and is a diversified marketer and manufacturer of mobile, industrial and environmental filtration products sold in domestic and international markets. Common shares of CLARCOR are traded on the New York Stock Exchange under the symbol CLC.