Actuant Corporation (NYSE: ATU) today announced results for its
first quarter ended November 30, 2014.
Highlights
- Total sales declined 3% compared to the
prior year with core sales down 1% (total sales excluding the
impact of acquisitions, divestitures and foreign exchange rates).
Net acquisitions and divestitures were neutral while unfavorable
foreign exchange rate changes were 2%.
- Diluted earnings per share from
continuing operations (“EPS”) were $0.38, compared to $0.44 in the
prior year. Fiscal 2015 first quarter EPS was impacted by the
stronger US Dollar, a higher effective income tax rate ($0.08) and
an unfavorable litigation charge ($0.02).
- Repurchased 3.3 million shares of
common stock for $104 million in the quarter.
- Updated the full year sales and EPS
guidance, now expected to be in the range of $1.33-1.37 billion and
$1.85-2.00 per share, respectively.
Mark E. Goldstein, President and CEO of Actuant commented, “Our
first quarter results included solid performance from the Energy
segment, especially from Viking which posted its best quarter under
Actuant ownership. Conditions in oil & gas markets have
deteriorated in the last 60 days, but did not significantly impact
our Energy segment in the quarter. Offsetting the strong Energy
segment results were sluggish demand in other markets and foreign
currency headwinds. We expected difficult comparisons in the
Engineered Solutions segment with the prior year’s European truck
pre-buy, but demand in most other markets in the Industrial and
Engineered Solutions segments didn’t improve. Cash flow in the
first quarter reflected normal seasonal weakness, as well as tax
payments on fiscal 2014 business divestitures and increased working
capital. We used our liquidity to return over $100 million to
shareholders in the first quarter in the form of stock buy-backs
and our annual cash dividend. Our strong financial position
continues to provide great flexibility for Actuant.”
Consolidated Results
Continuing Operations
Consolidated sales for the first quarter were $328 million, 3%
lower than the $340 million in the comparable prior year quarter.
Core sales declined 1%, foreign currency rate changes reduced sales
2%, while the impact of acquisitions and divestitures on sales
offset one another. Fiscal 2015 first quarter net earnings and EPS
from continuing operations were $24.7 million, or $0.38 per share,
compared to $33.0 million and $0.44, respectively, in the
comparable prior year quarter.
Excluding the impact of the stronger US Dollar, a higher
effective income tax rate in fiscal 2015 and the litigation charge,
first quarter EPS grew year-over-year, primarily reflecting the
benefit of share repurchases.
Segment
Results
Industrial Segment
(US $ in millions)
Three Months Ended November 30, 2014 2013 Sales
$102.4 $98.6 Operating Profit $26.7 $26.9 Operating Profit % 26.1%
27.3%
First quarter fiscal 2015 Industrial segment sales were $102
million, 4% higher than the prior year. The Hayes Industries
acquisition contributed 8% to total sales growth while unfavorable
currency translation was a 3% headwind, resulting in a 1% core
sales decline. Lower activity levels in global Integrated Solutions
drove the year-over-year decline as customers continue to be very
cautious launching major projects due to economic uncertainty.
Industrial Tool demand continued its uneven pattern with sales up
modestly, led by the Asia Pacific region. First quarter operating
profit margin of 26.1% was in line with expectations, and 120 basis
points below the comparable prior year period due to acquisition
mix.
Energy Segment
(US $ in millions)
Three Months Ended November 30, 2014 2013 Sales
$111.5 $107.9 Operating Profit $12.4 $8.9 Operating Profit % 11.2%
8.3%
Fiscal 2015 first quarter year-over-year Energy segment sales
increased 3% to $112 million. Excluding the unfavorable 3% foreign
currency headwind, core sales increased 6% from the prior year.
Viking revenues increased strongly on higher activity levels in
Australia/Southeast Asia, despite slower North Sea activity.
Hydratight’s core sales increased as well, due to higher
maintenance activity globally, most notably in North America and
AsiaPac. Cortland’s core sales declined due to lower seismic demand
and difficult comparisons in the marine market. First quarter
operating profit margin improved significantly due to the
collective impact of higher sales, favorable mix, and lower
retention contract amortization at Viking.
Due to the approximate 35% decline in oil prices over the past
90 days, conditions in the oil & gas markets globally are
changing rapidly. Results in the first quarter reflected little of
these decelerating market conditions. However, the Company’s
revised guidance reflects lowered expectations for the segment
given the anticipated impact of reduced customer capital spending
on the Cortland and Viking businesses. The Hydratight business is
expected to be the least impacted due to its maintenance focus and
broader energy market diversification.
Engineered Solutions Segment
(US $ in millions)
Three Months Ended November 30, 2014 2013 Sales
$113.8 $133.0 Operating Profit $6.3 $13.2 Operating Profit % 5.5%
9.9%
First quarter fiscal 2015 Engineered Solutions segment sales
were $114 million, 14% below the prior year. Excluding the 5%
decline from the RV product line divestiture and 2% decrease from
the stronger US Dollar, core sales were 7% lower year-over-year.
First quarter sales reflect a difficult comparison from last year’s
strong European heavy-duty truck production in advance of the Euro
6 emissions standards change. In addition, sales in the convertible
auto and off-highway equipment markets declined year-over-year.
Agriculture sales also weakened modestly, the result of lower crop
prices. First quarter operating profit margin declined due to the
lower sales and significantly reduced absorption on the lower
production volumes.
Corporate and Income Taxes
Corporate expenses for the first quarter of fiscal 2015 were
$7.2 million, $1.8 million higher than the comparable prior year
period due to an unfavorable pre-tax litigation charge of $2.0
million. The effective income tax rate of 24% for the quarter was
higher than the Company’s guidance, and significantly higher than
the approximately 8% rate in the prior year, which included the
benefit of certain tax reduction initiatives.
Financial Position
Net debt at November 30, 2014 was $427 million (total debt of
$514 million less $87 million of cash), approximately $146 million
higher than fiscal year end. During the quarter, approximately $104
million of cash was used to repurchase 3.3 million shares of common
stock. Cash taxes related to the RV divestiture, increased working
capital, and unfavorable foreign currency movements also impacted
the net debt position. At November 30, 2014, the Company had a net
debt to EBITDA leverage ratio of 1.8, and nearly $475 million in
revolver availability.
Outlook
Goldstein continued, "We are beginning to see the increased
impact of the recent sharp decline in oil prices on order patterns
and pricing within our oil & gas markets, both within the
Energy and Industrial segments. We also are experiencing sluggish
demand in certain of our other markets, notably off-highway
equipment and agriculture. The US Dollar has also strengthened
resulting in further headwinds. We expect these trends to continue
for the near future, and are therefore lowering full year sales and
earnings expectations. We are aggressively managing our cost
structure to help mitigate the impact of these factors. Partially
offsetting these is a lower share count due to 3.9 million of
completed share repurchases on a fiscal year-to-date basis, which
should benefit full year EPS by $0.05. Taking all of this into
consideration, we now expect full year fiscal 2015 sales to be
approximately $1.33-1.37 billion, with core sales growth of -1 to
+2% for the year. EPS is expected to be in the range of $1.85-2.00.
We expect free cash flow of approximately $150 million in fiscal
2015.
We continue to believe that over the long term, worldwide demand
for energy will be strong and our niche leadership positions,
predominately in maintenance related products and services, offer
attractive growth potential. In addition, we remain focused on
investing for growth through both Growth + Innovation (G+I) and
acquisitions.
We expect second quarter sales to be in the $310-320 million
range, with EPS of $0.25-0.30. In addition to the more challenging
economic and currency environment, the second quarter outlook
incorporates the normal seasonal slowdown experienced across nearly
all of our businesses.
Consistent with past practice, all guidance excludes the impact
of potential future acquisitions and additional share repurchases.
With our solid balance sheet and expected free cash flow, 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 10am CT today,
December 18, 2014. 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, 2014
2014 ASSETS Current assets Cash and cash
equivalents $ 87,275 $ 109,012 Accounts receivable, net 221,719
227,008 Inventories, net 164,517 162,620 Deferred income taxes
10,384 11,050 Other current assets 40,453
33,300 Total current assets 524,348 542,990 Property,
plant and equipment, net 163,915 169,101 Goodwill 714,956 742,770
Other intangible assets, net 346,214 365,177 Other long-term assets
38,031 36,841 Total assets $
1,787,464 $ 1,856,879
LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts
payable $ 135,095 $ 145,798 Accrued compensation and benefits
42,408 52,964 Current maturities of debt and short-term borrowings
7,619 4,500 Income taxes payable 9,664 38,347 Other current
liabilities 58,594 57,512 Total current
liabilities 253,380 299,121 Long-term debt 506,250 385,500
Deferred income taxes 92,699 96,970 Pension and postretirement
benefit accruals 14,558 15,699 Other long-term liabilities
58,843 57,878 Total liabilities 925,730
855,168 Shareholders' equity Capital stock 15,715 15,695
Additional paid-in capital 96,099 93,449 Treasury stock (493,042 )
(388,627 ) Retained earnings 1,374,333 1,349,602 Accumulated other
comprehensive loss (131,371 ) (68,408 ) Stock held in trust (4,153
) (4,083 ) Deferred compensation liability 4,153
4,083 Total shareholders' equity 861,734
1,001,711 Total liabilities and
shareholders' equity $ 1,787,464 $ 1,856,879
Actuant Corporation Condensed Consolidated Statements of
Earnings (Dollars in thousands except per share amounts)
(Unaudited)
Three Months Ended
November 30, November 30, 2014
2013 Net sales $ 327,765 $ 339,556 Cost of products
sold 200,789 207,776 Gross profit
126,976 131,780 Selling, administrative and engineering
expenses 82,472 81,918 Amortization of intangible assets
6,286 6,215 Operating profit 38,218 43,647
Financing costs, net 6,191 6,750 Other (income) expense, net
(439 ) 1,141 Earnings from continuing
operations before income tax expense 32,466 35,756 Income
tax expense 7,792 2,751 Earnings from
continuing operations 24,674 33,005 Earnings from discontinued
operations, net of income taxes - 3,032
Net earnings $ 24,674 $ 36,037
Earnings
from continuing operations per share Basic $ 0.38 $ 0.45
Diluted 0.38 0.44
Earnings per share Basic $ 0.38 $
0.49 Diluted 0.38 0.48
Weighted average common shares
outstanding Basic 64,357 73,085 Diluted 65,599 75,011
Actuant Corporation Condensed Consolidated Statements of
Cash Flows (In thousands) (Unaudited)
Three Months Ended November 30, November 30,
2014 2013 Operating Activities Net
earnings $ 24,674 $ 36,037 Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities: Depreciation
and amortization 13,708 16,204 Stock-based compensation expense
3,546 4,103 Benefit for deferred income taxes (1,352 ) (8,408 )
Amortization of debt discount and debt issuance costs 423 560 Other
non-cash adjustments 146 (867 ) Changes in components of working
capital and other: Accounts receivable (3,629 ) 7,040 Inventories
(6,500 ) (11,634 ) Prepaid expenses and other assets (10,698 )
(3,049 ) Trade accounts payable (7,398 ) 2,560 Income taxes payable
(28,007 ) (3,189 ) Accrued compensation and benefits (9,963 )
(2,595 ) Other accrued liabilities (68 ) (3,816 )
Cash (used in) provided by operating activities (25,118 ) 32,946
Investing Activities Proceeds from sale of property,
plant and equipment 225 1,913 Capital expenditures (7,986 )
(11,257 ) Cash used in investing activities (7,761 ) (9,344
)
Financing Activities Net borrowings (repayments) on
revolving credit facilities and other debt 123,869 (12,000 )
Purchase of treasury shares (104,415 ) (15,352 ) Payment of
contingent acquisition consideration - (414 ) Stock option
exercises and related tax benefits 2,287 10,562 Cash dividend
(2,598 ) (2,919 ) Cash provided by (used in)
financing activities 19,143 (20,123 ) Effect of exchange
rate changes on cash (8,001 ) 2,077 Net
(decrease) increase in cash and cash equivalents (21,737 ) 5,556
Cash and cash equivalents - beginning of period 109,012
103,986 Cash and cash equivalents - end of
period $ 87,275 $ 109,542
ACTUANT
CORPORATION SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING
OPERATIONS (Dollars in thousands)
FISCAL 2014 FISCAL 2015 Q1
Q2 Q3 Q4 TOTAL Q1 Q2
Q3 Q4 TOTAL SALES
INDUSTRIAL SEGMENT $ 98,641 $ 93,571 $ 109,809 $ 111,880 $ 413,901
$ 102,413 $ 102,413 ENERGY SEGMENT 107,925 106,031 125,231 123,181
462,368 111,522 111,522 ENGINEERED SOLUTIONS SEGMENT 132,990
128,168 143,147 119,288
523,593 113,830
113,830 TOTAL $ 339,556 $
327,770 $ 378,187 $ 354,349 $ 1,399,862
$ 327,765 $ 327,765
% SALES GROWTH INDUSTRIAL SEGMENT -2 % -5 % -1
% 1 % -2 % 4 % 4 % ENERGY SEGMENT 19 % 31 % 26 % 33 % 27 % 3 % 3 %
ENGINEERED SOLUTIONS SEGMENT 15 % 6 % 7 % -3 % 6 % -14 % -14 %
TOTAL 10 % 9 % 10 % 8 % 9 % -3 % -3 %
OPERATING PROFIT
(LOSS) INDUSTRIAL SEGMENT $ 26,897 $ 26,477 $ 34,123 $ 32,752 $
120,249 $ 26,705 $ 26,705 ENERGY SEGMENT 8,923 9,504 19,936 18,049
56,412 12,442 12,442 ENGINEERED SOLUTIONS SEGMENT 13,190 9,548
13,560 5,638 41,936 6,278 6,278 CORPORATE / GENERAL (5,363 )
(6,548 ) (8,839 ) (8,234 ) (28,984 )
(7,207 ) (7,207 )
TOTAL - EXCLUDING GAIN ON PRODUCT LINE DIVESTITURE $ 43,647 $
38,981 $ 58,780 $ 48,205 $ 189,613 $ 38,218 $ 38,218 GAIN ON
PRODUCT LINE DIVESTITURE - - -
13,495 13,495 -
- TOTAL $ 43,647
$ 38,981 $ 58,780 $ 61,700 $ 203,108
$ 38,218 $ 38,218
OPERATING PROFIT % INDUSTRIAL SEGMENT 27.3 %
28.3 % 31.1 % 29.3 % 29.1 % 26.1 % 26.1 % ENERGY SEGMENT 8.3 % 9.0
% 15.9 % 14.7 % 12.2 % 11.2 % 11.2 % ENGINEERED SOLUTIONS SEGMENT
9.9 % 7.4 % 9.5 % 4.7 % 8.0 % 5.5 % 5.5 %
TOTAL (INCLUDING CORPORATE) - EXCLUDING
GAIN ONPRODUCT LINE DIVESTITURE
12.9 % 11.9 % 15.5 % 13.6 % 13.5 % 11.7 % 11.7 %
EBITDA INDUSTRIAL SEGMENT $ 28,657 $ 27,907 $ 35,426 $
35,017 $ 127,007 $ 28,715 $ 28,715 ENERGY SEGMENT 17,923 18,130
27,898 24,809 88,760 20,011 20,011 ENGINEERED SOLUTIONS SEGMENT
17,365 13,581 18,464 9,046 58,456 11,514 11,514 CORPORATE / GENERAL
(5,235 ) (6,202 ) (8,659 ) (7,916 )
(28,012 ) (7,875 )
(7,875 ) TOTAL - EXCLUDING GAIN ON PRODUCT LINE DIVESTITURE
$ 58,710 $ 53,416 $ 73,129 $ 60,956 $ 246,211 $ 52,365 $ 52,365
GAIN ON PRODUCT LINE DIVESTITURE - -
- 13,495 13,495 -
- TOTAL $
58,710 $ 53,416 $ 73,129 $ 74,451 $
259,706 $ 52,365 $
52,365
EBITDA % INDUSTRIAL SEGMENT 29.1 % 29.8
% 32.3 % 31.3 % 30.7 % 28.0 % 28.0 % ENERGY SEGMENT 16.6 % 17.1 %
22.3 % 20.1 % 19.2 % 17.9 % 17.9 % ENGINEERED SOLUTIONS SEGMENT
13.1 % 10.6 % 12.9 % 7.6 % 11.2 % 10.1 % 10.1 %
TOTAL (INCLUDING CORPORATE) - EXCLUDING
GAIN ONPRODUCT LINE DIVESTITURE
17.3 % 16.3 % 19.3 % 17.2 % 17.6 % 16.0 % 16.0 %
ACTUANT
CORPORATION SUPPLEMENTAL UNAUDITED DATA
RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES
(Dollars in thousands, except for per share amounts)
FISCAL 2014
FISCAL 2015 Q1 Q2 Q3 Q4
TOTAL Q1 Q2 Q3 Q4
TOTAL EARNINGS BEFORE SPECIAL ITEMS (1) NET EARNINGS
$ 36,037 $ 41,392 $ 50,557 $ 35,587 $ 163,573 $ 24,674 $ 24,674
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX
(3,032 ) (19,088 ) - - (22,120 )
- - EARNINGS FROM
CONTINUING OPERATIONS 33,005 22,304 50,557 35,587 141,453 24,674
24,674 GAIN ON PRODUCT LINE DIVESTITURE, NET OF INCOME TAX -
- - (2,813 ) (2,813 )
- - TOTAL $ 33,005
$ 22,304 $ 50,557 $ 32,774 $ 138,640 $
24,674 $ 24,674
DILUTED EARNINGS PER SHARE, BEFORE SPECIAL ITEMS (1)
NET EARNINGS $ 0.48 $ 0.56 $ 0.70 $ 0.51 $ 2.26 $ 0.38 $ 0.38
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX
(0.04 ) (0.26 ) - - (0.31 )
- - EARNINGS FROM
CONTINUING OPERATIONS 0.44 0.30 0.70 0.51 1.95 0.38 0.38 GAIN ON
PRODUCT LINE DIVESTITURE, NET OF INCOME TAX -
- - (0.04 ) (0.04 ) -
- TOTAL $ 0.44 $ 0.30
$ 0.70 $ 0.47 $ 1.91 $ 0.38
$ 0.38
EBITDA (2) NET
EARNINGS (GAAP MEASURE) $ 36,037 $ 41,392 $ 50,557 $ 35,587 $
163,573 $ 24,674 $ 24,674 EARNINGS FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAX (3,032 ) (19,088 ) -
- (22,120 ) -
- EARNINGS FROM CONTINUING OPERATIONS 33,005 22,304
50,557 35,587 141,453 24,674 24,674 FINANCING COSTS, NET 6,750
6,262 5,932 6,101 25,045 6,191 6,191 INCOME TAX EXPENSE 2,751 9,089
1,671 19,062 32,573 7,792 7,792 DEPRECIATION & AMORTIZATION
16,204 15,761 14,969
13,701 60,635 13,708
13,708
EBITDA - EXCLUDING DISCONTINUEDOPERATIONS
(NON-GAAP MEASURE)
$ 58,710 $ 53,416 $ 73,129 $ 74,451 $ 259,706 $ 52,365 $ 52,365
GAIN ON PRODUCT LINE DIVESTITURE - -
- (13,495 ) (13,495 ) -
-
EBITDA - EXCLUDING GAIN ON PRODUCT
LINEDIVESTITURE (NON-GAAP MEASURE)
$ 58,710 $ 53,416 $ 73,129 $ 60,956 $ 246,211
$ 52,365 $ 52,365
FOOTNOTES
NOTE: The total of the individual quarters may not equal
the annual total due to rounding.
- Earnings and diluted earnings per
share, excluding special items (discontinued operations and gain on
product line divestiture), represent net earnings and diluted
earnings 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 or diluted earnings 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.
- EBITDA represents net earnings 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 Bauer, 262-293-1562Communications &
Investor Relations Leader
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