Actuant Corporation (NYSE: ATU) today announced results for its
first quarter ended November 30, 2013.
Highlights
- Total sales increased 10% compared to
the prior year with core sales growth of 5% (total sales excluding
the impact of acquisitions, divestitures and foreign exchange
rates), acquisitions contributing 6% and unfavorable foreign
exchange rate changes of 1%.
- Diluted earnings per share from
continuing operations (“EPS”) were $0.44, a 7% increase compared to
the prior year.
- Strong cash flow from operations of $33
million, up from $12 million in the comparable prior year
period.
- Repurchased 0.4 million shares of
common stock for $15 million in the quarter.
- Introduced second quarter EPS guidance
in the range of $0.29-0.33 per share.
- Completed the previously announced sale
of the Electrical segment for $258 million in gross proceeds on
December 13, 2013.
Robert C. Arzbaecher, Chairman and CEO of Actuant, commented,
“Actuant’s first quarter results met our expectations for sales,
earnings and cash flow. Strong core sales growth of 5% was due to
significantly higher activity in the Engineered Solutions segment,
while Industrial and Energy continued to experience cautious
spending patterns by customers. Margins improved in both Industrial
and Engineered Solutions, however, Energy experienced the
collective impact of unfavorable mix and inefficiencies which we
are actively working to address. Our first quarter free cash flow
was strong, and we utilized $15 million of it for share buy-backs
in the quarter. With the recent proceeds from the divestiture of
the Electrical segment, our financial position is very strong and
provides substantial capital for future growth.”
Consolidated Results
Continuing Operations
Consolidated sales for the first quarter were $340 million, 10%
higher than the $308 million in the comparable prior year quarter.
Core sales increased 5%, foreign currency rate changes reduced
sales 1%, while acquisitions contributed 6% to total sales. Fiscal
2014 first quarter net earnings and EPS from continuing operations
were $33.0 million, or $0.44 per share, compared to $30.6 million
and $0.41, respectively, in the comparable prior year quarter.
Discontinued Operations
Results from discontinued operations represent the financial
results of the Electrical segment for all periods presented. The
Company completed the sale of the segment for $258 million in cash
on December 13, 2013.
Segment Results
Industrial Segment
(US $ in millions)
Three Months Ended November 30, 2013 2012 Sales $98.6 $101.1
Operating Profit $26.9 $27.0 Operating Profit % 27.3% 26.7%
First quarter fiscal 2014 Industrial segment sales were $99
million, 2% lower than the prior year. The 2% core sales decline
was due to lower global Integrated Solutions activity compared to
the prior year’s robust levels. This was partially offset by a
modest increase in Industrial Tool demand, notably in North America
and Europe. First quarter operating profit margin of 27.3% was 60
basis points higher than the comparable prior year period due to
favorable mix and effective cost management.
Energy Segment
(US $ in millions)
Three Months Ended November 30, 2013 2012 Sales $107.9 $90.8
Operating Profit $8.9 $15.4 Operating Profit % 8.3% 17.0%
Fiscal 2014 first quarter year-over-year Energy segment sales
increased 19% to $108 million. Excluding the 21% benefit from
acquisitions and the unfavorable 1% foreign currency exchange rate
change impact, core sales declined 1% from the prior year.
Cortland’s core sales increased due to higher demand for synthetic
rope, seismic and defense products, while Hydratight experienced a
modest core sales decline due to continued difficult comparisons in
the North American nuclear maintenance market as well as lower
North American rental revenue. First quarter operating profit
margin declined due primarily to the collective impact of
acquisition mix, unfavorable sales and customer mix, and higher
costs due to labor utilization inefficiencies. Cost reduction and
process improvement actions are being taken in the segment and,
combined with new contract wins, the Company expects improved sales
and margin performance in the second half of the fiscal year.
Engineered Solutions Segment
(US $ in millions)
Three Months Ended November 30, 2013 2012 Sales $133.0
$115.9 Operating Profit $13.2 $7.6 Operating Profit % 9.9% 6.6%
First quarter fiscal 2014 Engineered Solutions segment sales
increased 15% from the prior year to $133 million. Excluding the 1%
decline from the previously completed product line divestiture and
1% increase from the stronger Euro, core sales increased 15%. First
quarter sales reflect significantly higher European heavy-duty
truck production in advance of the Euro 6 emissions standards
change, as well as strong China truck demand. In addition, sales
benefited from higher activity in the agriculture market, notably
from new product launches. First quarter operating profit margin
increased 330 basis points due to the higher volumes and benefit of
prior restructuring actions.
Corporate and Income Taxes
Corporate expenses for the first quarter of fiscal 2014 were
$5.4 million, $1.2 million below the comparable prior year period
due to cost reduction efforts. The effective income tax rate for
the quarter was in line with the Company’s guidance, and lower than
the prior year due to the benefit of tax reduction initiatives.
Financial Position
Net debt at November 30, 2013 was $393 million (total debt of
$503 million less $110 million of cash), approximately $17 million
below fiscal year end. Approximately $15 million of first quarter
cash flow was used to repurchase 0.4 million shares of common
stock. At November 30, 2013, the Company had a net debt to EBITDA
leverage ratio of 1.3, and nearly $500 million in revolver
availability.
Outlook
Arzbaecher continued, "We are on track with our fiscal year
financial targets, despite a weak start in the Energy segment which
we are actively addressing. We remain focused on investing for
long-term growth through both Growth + Innovation (G+I) and
acquisitions, as well as managing our costs and maintaining a
strong balance sheet. Despite continued volatility across the
global markets, we are starting to see signs of growth in certain
end markets. Taking into account our first quarter results, current
exchange rate environment and business trends, we are reaffirming
our full year fiscal 2014 sales and EPS guidance. We expect fiscal
2014 sales to be approximately $1.410-1.450 billion, with core
sales growth of 3-5% for the year. EPS is expected to be in the
range of $2.00-2.10.
We expect second quarter sales to be in the $330-340 million
range, with EPS of $0.29-0.33. The second quarter outlook
incorporates the normal seasonal slowdown experienced across nearly
all of our underlying businesses, as well as an approximately 25%
effective tax rate.
Consistent with past practice, all guidance excludes the impact
of potential future acquisitions and additional share repurchases.
With our projected $190 million of fiscal 2014 free cash flow and
the net proceeds from the Electrical segment divestiture, we are
well positioned financially to fund both growth investments and
opportunistic share buy-backs."
Conference Call
Information
An investor conference call is scheduled for 10 am CT today,
December 19, 2013. Webcast information and conference call
materials will be made available on the Actuant company website
(www.actuant.com) prior to the start
of the call.
Safe Harbor Statement
Certain of the above comments represent forward-looking
statements made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. Management cautions that
these statements are based on current estimates of future
performance and are highly dependent upon a variety of factors,
which could cause actual results to differ from these estimates.
Actuant’s results are also subject to general economic conditions,
variation in demand from customers, the impact of geopolitical
activity on the economy, continued market acceptance of the
Company’s new product introductions, the successful integration of
acquisitions, restructuring, operating margin risk due to
competitive pricing and operating efficiencies, supply chain risk,
material and labor cost increases, foreign currency fluctuations
and interest rate risk. See the Company’s Form 10-K filed with the
Securities and Exchange Commission for further information
regarding risk factors. Actuant disclaims any obligation to
publicly update or revise any forward-looking statements as a
result of new information, future events or any other reason.
About Actuant
Corporation
Actuant Corporation is a diversified industrial company serving
customers from operations in more than 30 countries. The Actuant
businesses are leaders in a broad array of niche markets including
branded hydraulic tools and solutions; specialized products and
services for energy markets and highly engineered position and
motion control systems. The Company was founded in 1910 and is
headquartered in Menomonee Falls, Wisconsin. Actuant trades on the
NYSE under the symbol ATU. For further information on Actuant and
its businesses, visit the Company's website at www.actuant.com.
(tables follow)
Actuant Corporation Condensed Consolidated Balance
Sheets (Dollars in thousands) (Unaudited)
November 30, August 31,
2013 2013 ASSETS Current assets Cash
and cash equivalents $ 109,542 $ 103,986 Accounts receivable, net
221,528 219,075 Inventories, net 155,129 142,549 Deferred income
taxes 18,585 18,796 Other current assets 32,636 28,228 Assets of
discontinued operations 270,106 272,606
Total current assets 807,526 785,240 Property, plant and
equipment, net 205,328 201,496 Goodwill 745,476 734,952 Other
intangible assets, net 375,307 376,692 Other long-term assets
30,228 20,952 Total assets $
2,163,865 $ 2,119,332
LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts
payable $ 159,275 $ 154,049 Accrued compensation and benefits
41,413 43,800 Current maturities of debt 1,125 - Income taxes
payable 10,464 14,014 Other current liabilities 60,964 56,899
Liabilities of discontinued operations 53,233
53,080 Total current liabilities 326,474 321,842
Long-term debt 501,875 515,000 Deferred income taxes 118,277
115,865 Pension and postretirement benefit accruals 19,167 20,698
Other long-term liabilities 66,373 65,660 Shareholders'
equity Capital stock 15,475 15,399 Additional paid-in capital
63,423 49,758 Treasury stock (120,267 ) (104,915 ) Retained
earnings 1,224,725 1,188,685 Accumulated other comprehensive loss
(51,657 ) (68,660 ) Stock held in trust (3,199 ) (3,124 ) Deferred
compensation liability 3,199 3,124
Total shareholders' equity 1,131,699 1,080,267
Total liabilities and shareholders' equity $
2,163,865 $ 2,119,332
Actuant
Corporation Condensed Consolidated Statements of
Earnings (Dollars in thousands except per share amounts)
(Unaudited)
Three Months
Ended November 30, November 30, 2013
2012 Net sales $ 339,556 $ 307,809 Cost of
products sold 207,776 183,441 Gross profit
131,780 124,368 Selling, administrative and engineering
expenses 81,918 74,860 Amortization of intangible assets
6,215 6,034 Operating profit 43,647 43,474
Financing costs, net 6,750 6,322 Other expense, net 1,141
644 Earnings from continuing operations before income
tax expense 35,756 36,508 Income tax expense 2,751
5,957 Earnings from continuing operations 33,005
30,551 Earnings from discontinued operations, net of income taxes
3,032 5,792 Net earnings $ 36,037 $
36,343
Earnings from continuing operations per share
Basic $ 0.45 $ 0.42 Diluted 0.44 0.41
Earnings per
share Basic $ 0.49 $ 0.50 Diluted 0.48 0.49
Weighted
average common shares outstanding Basic 73,085 72,791 Diluted
75,011 74,271
Actuant Corporation Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited)
Three Months Ended November
30, November 30, 2013 2012
Operating Activities Net earnings $ 36,037 $ 36,343
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 16,204 14,449
Stock-based compensation expense 4,103 3,477 Benefit for deferred
income taxes (8,408 ) (3,156 ) Amortization of debt discount and
debt issuance costs 560 496 Other non-cash adjustments (867 ) (177
) Changes in components of working capital and other: Accounts
receivable 7,040 4,539 Inventories (11,634 ) (11,318 ) Prepaid
expenses and other assets (3,049 ) (6,143 ) Trade accounts payable
2,560 (11,548 ) Income taxes payable (3,189 ) 1,161 Accrued
compensation and benefits (2,595 ) (13,953 ) Other accrued
liabilities (3,816 ) (1,895 ) Net cash provided by
operating activities 32,946 12,275
Investing
Activities Proceeds from sale of property, plant and equipment
1,913 977 Capital expenditures (11,257 ) (7,689 ) Business
acquisitions, net of cash acquired - (83 ) Net
cash used in investing activities (9,344 ) (6,795 )
Financing Activities Net repayments on revolving credit
facilities and other debt (12,000 ) - Principal repayments on term
loan - (1,250 ) Purchase of treasury shares (15,352 ) (7,142 )
Payment of contingent consideration (414 ) - Stock option exercises
and related tax benefits 10,562 5,473 Cash dividend (2,919 )
(2,911 ) Net cash used in financing activities (20,123 )
(5,830 ) Effect of exchange rate changes on cash
2,077 477 Net increase in cash and cash
equivalents 5,556 127 Cash and cash equivalents - beginning of
period 103,986 68,184 Cash and cash
equivalents - end of period $ 109,542 $ 68,311
ACTUANT CORPORATION SUPPLEMENTAL UNAUDITED
DATA FROM CONTINUING OPERATIONS (Dollars in
thousands) FISCAL 2013 FISCAL 2014
Q1 Q2 Q3 Q4
TOTAL Q1 Q2 Q3
Q4 TOTAL SALES INDUSTRIAL
SEGMENT $ 101,122 $ 98,999 $ 111,308 $ 111,191 $ 422,620 $ 98,641 $
98,641 ENERGY SEGMENT 90,769 80,794 99,158 92,651 363,372 107,925
107,925 ENGINEERED SOLUTIONS SEGMENT 115,918
120,675 133,739
123,418 493,750 132,990
132,990 TOTAL $ 307,809 $ 300,468
$ 344,205 $ 327,260 $
1,279,742 $ 339,556
$ 339,556
%
SALES GROWTH INDUSTRIAL SEGMENT 1 % 1 % 1 % 1 % 1 % -2 % -2 %
ENERGY SEGMENT 13 % 2 % 3 % -1 % 4 % 19 % 19 % ENGINEERED SOLUTIONS
SEGMENT -10 % -2 % -2 % 4 % -3 % 15 % 15 % TOTAL -1 % 0 % 0 % 2 % 0
% 10 % 10 %
OPERATING PROFIT (LOSS) INDUSTRIAL
SEGMENT $ 27,006 $ 26,350 $ 32,426 $ 31,862 $ 117,644 $ 26,897 $
26,897 ENERGY SEGMENT 15,387 9,677 19,736 18,480 63,280 8,923 8,923
ENGINEERED SOLUTIONS SEGMENT 7,625 8,275 12,754 11,674 40,328
13,190 13,190 CORPORATE / GENERAL (6,544 )
(7,431 ) (7,874 ) (9,258 )
(31,107 ) (5,363 )
(5,363 ) TOTAL $ 43,474
$ 36,871 $ 57,042 $ 52,758
$ 190,145 $ 43,647
$ 43,647
OPERATING PROFIT % INDUSTRIAL SEGMENT 26.7 % 26.6 % 29.1 %
28.7 % 27.8 % 27.3 % 27.3 % ENERGY SEGMENT 17.0 % 12.0 % 19.9 %
19.9 % 17.4 % 8.3 % 8.3 % ENGINEERED SOLUTIONS SEGMENT 6.6 % 6.9 %
9.5 % 9.5 % 8.2 % 9.9 % 9.9 % TOTAL (INCLUDING CORPORATE) 14.1 %
12.3 % 16.6 % 16.1 % 14.9 % 12.9 % 12.9 %
EBITDA
INDUSTRIAL SEGMENT $ 29,033 $ 28,471 $ 34,374 $ 33,742 $ 125,620 $
28,657 $ 28,657 ENERGY SEGMENT 19,694 14,278 23,977 22,185 80,134
17,923 17,923 ENGINEERED SOLUTIONS SEGMENT 12,047 12,611 16,700
15,659 57,017 17,365 17,365 CORPORATE / GENERAL (6,195 )
(6,582 ) (7,556 ) (8,556
) (28,889 ) (5,235 )
(5,235 ) TOTAL $
54,579 $ 48,778 $ 67,495
$ 63,030 $ 233,882 $ 58,710
$ 58,710
EBITDA % INDUSTRIAL SEGMENT 28.7 % 28.8 % 30.9
% 30.3 % 29.7 % 29.1 % 29.1 % ENERGY SEGMENT 21.7 % 17.7 % 24.2 %
23.9 % 22.1 % 16.6 % 16.6 % ENGINEERED SOLUTIONS SEGMENT 10.4 %
10.5 % 12.5 % 12.7 % 11.5 % 13.1 % 13.1 % TOTAL (INCLUDING
CORPORATE) 17.7 % 16.2 % 19.6 % 19.3 % 18.3 % 17.3 % 17.3 %
ACTUANT CORPORATION SUPPLEMENTAL UNAUDITED DATA
RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES
(Dollars in thousands, except for per share amounts)
FISCAL 2013 FISCAL
2014 Q1 Q2 Q3
Q4 TOTAL Q1 Q2
Q3 Q4 TOTAL
EARNINGS (LOSS) BEFORE SPECIAL ITEMS (1) NET EARNINGS (LOSS)
$ 36,343 $ 28,435 $ (92,983 ) $ 58,253 $ 30,048 $ 36,037 $ 36,037
LOSS (EARNINGS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX
(5,792 ) (2,601 ) 139,060
(13,138 ) 117,529 (3,032
)
(3,032 ) EARNINGS FROM CONTINUING OPERATIONS 30,551 25,834
46,077 45,115 147,577 33,005 33,005 INCOME TAX ADJUSTMENT -
- -
(10,596 ) (10,596 ) -
-
TOTAL $ 30,551 $ 25,834 $ 46,077
$ 34,519 $ 136,981 $ 33,005
$
33,005
DILUTED EARNINGS (LOSS) PER SHARE,
BEFORE SPECIAL ITEMS (1) NET EARNINGS (LOSS) $ 0.49 $
0.38 $ (1.24 ) $ 0.78 $ 0.40 $ 0.48 $ 0.48 LOSS (EARNINGS) FROM
DISCONTINUED OPERATIONS, NET OF INCOME TAX (0.08 )
(0.03 ) 1.86 (0.18 )
1.58 (0.04 )
0.04
EARNINGS FROM CONTINUING OPERATIONS 0.41 0.35 0.62 0.60 1.98 0.44
0.44 INCOME TAX ADJUSTMENT - -
- (0.14 ) (0.14 )
-
- TOTAL $ 0.41 $ 0.35
$ 0.62 $ 0.46 $ 1.84
$ 0.44
$ 0.44
EBITDA (2)
NET EARNINGS (LOSS) (GAAP MEASURE) $ 36,343 $ 28,435 $ (92,983 ) $
58,253 $ 30,048 $ 36,037 $ 36,037 LOSS (EARNINGS) FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAX (5,792 ) (2,601
) 139,060 (13,138 )
117,529 (3,032 )
(3,032 ) EARNINGS FROM
CONTINUING OPERATIONS 30,551 25,834 46,077 45,115 147,577 33,005
33,005 FINANCING COSTS, NET 6,322 6,260 6,229 6,026 24,837 6,750
6,750 INCOME TAX EXPENSE 5,957 4,814 3,825 776 15,372 2,751 2,751
DEPRECIATION & AMORTIZATION 11,749
11,870 11,364 11,113
46,096 16,204
16,204 EBITDA - EXCLUDING DISCONTINUED OPERATIONS (NON-GAAP
MEASURE) $ 54,579 $ 48,778 $ 67,495
$ 63,030 $ 233,882 $ 58,710
$ 58,710
FOOTNOTES NOTE: The
total of the individual quarters may not equal the annual total due
to rounding. (1) Earnings (loss) and diluted earnings (loss)
per share, excluding special items (income tax adjustments and
discontinued operations), represent net earnings (loss) and diluted
earnings (loss) per share per the Condensed Consolidated Statements
of Earnings net of charges or credits for items to be highlighted
for comparability purposes. These measures should not be considered
as an alternative to net earnings (loss) or diluted earnings (loss)
per share as an indicator of the Company's operating performance.
However, this presentation is important to investors for
understanding the operating results of the current portfolio of
Actuant companies. The total of the individual components may not
equal due to rounding. (2) EBITDA represents net earnings
(loss) before financing costs, net, income tax expense,
discontinued operations and depreciation & amortization. EBITDA
is not a calculation based upon generally accepted accounting
principles (GAAP). The amounts included in the EBITDA calculation,
however, are derived from amounts included in the Condensed
Consolidated Statements of Earnings data. EBITDA should not be
considered as an alternative to net earnings or operating profit as
an indicator of the Company's operating performance, or as an
alternative to operating cash flows as a measure of liquidity.
Actuant has presented EBITDA because it regularly reviews this as a
measure of the Company's ability to incur and service debt. In
addition, EBITDA is used by many of our investors and lenders, and
is presented as a convenience to them. However, the EBITDA measure
presented may not always be comparable to similarly titled measures
reported by other companies due to differences in the components of
the calculation.
Actuant CorporationKaren BauerCommunications & Investor
Relations Leader262-293-1562
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