Actuant Corporation (NYSE: ATU) today announced results for its
first quarter ended November 30, 2015.
Highlights
- First quarter core sales were flat on a
year-over-year basis (total sales excluding the impact of
acquisitions, divestitures and foreign currency exchange rates)
with strong Energy segment sales offsetting lower volume in the
other segments. Consolidated sales were 7% below the comparable
prior year quarter with the entire decline due to the stronger US
dollar.
- Diluted earnings per share from
continuing operations (“EPS”) was $0.31 excluding restructuring
charges, compared to guidance of $0.20-0.25 and $0.38 in the
comparable prior year period (see attached reconciliation of
earnings).
- Restructuring activities are proceeding
as planned with $4.4 million of charges incurred in the first
quarter related to facility exits and staffing reductions.
- Deployed approximately $5 million on
the repurchase of 0.2 million shares of common stock during the
quarter.
- Updated full year sales and EPS
guidance, now expected to be in the range of $1.165-1.200 billion
and $1.25-1.40 per share, respectively (excluding previously
announced $25 million restructuring program charges).
Robert C. Arzbaecher, Chairman, President and CEO of Actuant,
commented, “Our first quarter results exceeded expectations due to
strong performance from the Energy segment despite the weak oil
& gas environment. Sales, excluding currency headwinds, were up
nominally on a year-over-year basis which was much better than
projected. We saw robust activity in the maintenance-driven
Hydratight business, including a large Middle East service job,
which offset continued sluggish activity levels in non-energy
markets such as agriculture, off-highway, and general industrial.
Unfavorable segment mix and significant energy service revenue led
to modestly lower incremental margins. We were pleased with first
quarter cash flow which reflected improved year-over-year working
capital management and lower tax payments. We have an increased
confidence in full year guidance even though end-market headwinds
remain and the US dollar continues to strengthen. In summary, a
great way to begin the year, and I am proud and thankful for the
efforts and execution of our employees that delivered these
results.”
Consolidated Results
Consolidated sales for the first quarter were $305 million, 7%
lower than the $328 million in the comparable prior year quarter.
Core sales were flat while foreign currency exchange rate changes
reduced sales 7%. Fiscal 2016 first quarter net earnings and EPS
were $15.4 million, or $0.26 per share, compared to $24.7 million
and $0.38, respectively, in the comparable prior year quarter.
Fiscal 2016 first quarter earnings included restructuring charges
of $4.4 million ($3.2 million or $0.05 per share, after tax).
Excluding these charges, EPS for the first quarter of fiscal 2016
was $0.31 (see attached reconciliation of earnings).
Segment Results
Industrial Segment
(US $ in millions)
Three Months Ended November 30, 2015 2014 Sales $88.9 $102.4
Operating Profit $20.6 $26.7 Adjusted Operating Profit (1) $21.3
$26.7 Adjusted Operating Profit %(1) 23.9% 26.1%
(1) Excludes first quarter 2016 restructuring charges of $0.7
million
First quarter fiscal 2016 Industrial segment sales were $89
million, 13% lower than the prior year. Unfavorable currency
translation was a 4% headwind while core sales declined 9%. Lower
industrial tool demand globally, most notably in North America and
Asia, reflects the increased sluggishness in industrial end
markets, weak mining and energy activity levels, as well as tight
customer cost and inventory management. Integrated solutions also
experienced a year-over-year decline in sales as customer spending
on large projects continues to be cautious due to economic
uncertainty. First quarter adjusted operating profit margin of
23.9% was in line with expectations given the volume decline and
unfavorable sales mix.
Energy Segment
(US $ in millions)
Three Months Ended November 30, 2015 2014 Sales $113.8
$111.5 Operating Profit $10.1 $12.4 Adjusted Operating Profit (2)
$12.1 $12.4 Adjusted Operating Profit %(2) 10.7% 11.2%
(2) Excludes first quarter 2016 restructuring charges of $2.0
million
Fiscal 2016 first quarter Energy segment sales increased 2%
year-over-year to $114 million. Excluding the 11% unfavorable
impact of the stronger US dollar, core sales increased 13% compared
to the prior year. Hydratight’s sales increased significantly, both
sequentially and year-over-year, due to higher maintenance
activity, including a sizable Middle East refinery turnaround,
along with solid demand for North American service work. Cortland’s
sales also increased due to higher demand in the energy, marine,
defense and medical markets. Viking revenues declined
substantially, as anticipated, with the wind-down of large projects
in Australia, and continued weak offshore drilling levels. First
quarter Energy segment adjusted operating profit margin improved
sequentially, but was modestly below prior year levels due
primarily to unfavorable sales mix resulting from significant
service revenue growth coupled with lower Viking rental
revenue.
Engineered Solutions Segment
(US $ in millions)
Three Months Ended November 30, 2015 2014 Sales $102.4
$113.8 Operating Profit $3.5 $6.3 Adjusted Operating Profit (3)
$4.9 $6.3 Adjusted Operating Profit %(3) 4.8% 5.5%
(3) Excludes first quarter 2016 restructuring charges of $1.4
million
First quarter fiscal 2016 Engineered Solutions segment sales
were $102 million, 10% below the prior year. Excluding the 7%
decline from the stronger US dollar, core sales were down 3%
year-over-year, but improved sequentially from the fiscal 2015
fourth quarter. Fiscal 2016 sales reflect growth in both the
European truck and automotive convertible top markets. However,
agriculture and off-highway equipment sales continue to be impacted
by low end-user demand as well as OEM destocking efforts. First
quarter adjusted operating profit margin improved sequentially from
the fourth quarter, but declined year-over-year due to lower sales
and significantly reduced absorption on the lower production
volumes.
Corporate and Income Taxes
Corporate expenses (excluding restructuring costs) for the first
quarter of fiscal 2016 were $8.6 million, or $1.4 million higher
than the comparable prior year period due primarily to higher
variable compensation, consulting and recruiting expenses.
Excluding the tax benefit on restructuring charges, the effective
income tax rate of approximately 15% for the first quarter of
fiscal 2016 was in line with expectations, but lower than the prior
year due to the benefit of certain tax reduction initiatives.
Financial Position
Net debt at November 30, 2015 was $416 million (total debt of
$588 million less $172 million of cash), approximately $3 million
lower than fiscal year end. During the quarter, approximately $5
million of cash was used to repurchase shares of common stock and
$2 million for the annual dividend. Strong cash flow and the $6
million unfavorable impact of foreign currency exchange rate
movements on cash also impacted the Company’s net debt position. At
November 30, 2015, the Company had net debt to EBITDA leverage of
2.3x for bank reporting purposes.
Outlook
Arzbaecher continued, "We are very pleased with the strong start
to the year, including cash flow and restructuring progress, and as
such, have raised the low end of our guidance ranges. However,
given continued challenges in most of our end markets, as well as
the strong US dollar, we do not expect to see meaningful recovery
in demand this fiscal year. We currently expect sales to be in the
range of $1.165-1.200 billion and EPS of $1.25-1.40 per share. Our
EPS guidance excludes charges associated with the previously
announced $25 million restructuring program. Finally, we continue
to expect to generate free cash flow of approximately $110-120
million in fiscal 2016.
We expect second quarter sales to be in the $270-280 million
range, with EPS of $0.17-0.22 (excluding restructuring charges).
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 share repurchases. Our focused
tuck-in acquisition pipeline is strong, and our free cash flow and
debt capacity allows us to deploy capital for both acquisitions and
share repurchases for the foreseeable future."
Conference Call
Information
An investor conference call is scheduled for 10am CT today,
December 17, 2015. 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, 2015 2015 ASSETS
Current assets Cash and cash equivalents $ 171,945 $ 168,846
Accounts receivable, net 196,945 193,081 Inventories, net 143,728
142,752 Deferred income taxes - 12,922 Other current assets
50,196 42,788
Total current assets
562,814 560,389 Property, plant and equipment, net 138,563
142,458 Goodwill 601,381 608,256 Other intangible assets, net
299,392 308,762 Other long-term assets 21,385
17,052 Total assets $ 1,623,535 $ 1,636,917
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Trade accounts payable $ 124,383 $ 118,115
Accrued compensation and benefits 42,132 43,707 Current maturities
of debt and short-term borrowings 7,491 3,969 Income taxes payable
11,556 14,805 Other current liabilities 56,943
54,460 Total current liabilities 242,505 235,056
Long-term debt 580,559 584,309 Deferred income taxes 63,994 72,941
Pension and postretirement benefit accruals 16,438 17,828 Other
long-term liabilities 55,587 53,782
Total liabilities 959,083 963,916 Shareholders' equity
Capital stock 15,803 15,787 Additional paid-in capital 105,911
104,308 Treasury stock (605,312 ) (600,630 ) Retained earnings
1,382,624 1,367,176 Accumulated other comprehensive loss (234,574 )
(213,640 ) Stock held in trust (2,615 ) (4,292 ) Deferred
compensation liability 2,615 4,292
Total shareholders' equity 664,452 673,001
Total liabilities and shareholders' equity $
1,623,535 $ 1,636,917
Actuant Corporation
Condensed Consolidated Statements of Earnings (Dollars in
thousands except per share amounts) (Unaudited)
Three Months Ended November 30, November
30, 2015 2014 Net sales $ 305,011 $
327,765 Cost of products sold 196,449 200,789
Gross profit 108,562 126,976 Selling, administrative and
engineering expenses 72,911 82,472 Amortization of intangible
assets 5,900 6,286 Restructuring charges 4,380 -
Operating profit 25,371 38,218 Financing costs, net
7,117 6,191 Other expense (income), net 619 (439 )
Earnings before income tax expense 17,635 32,466 Income tax
expense 2,187 7,792 Net earnings $ 15,448 $
24,674
Earnings per share Basic $ 0.26 $ 0.38
Diluted 0.26 0.38
Weighted average common shares
outstanding Basic 59,187 64,357 Diluted 59,713 65,599
Actuant Corporation Condensed Consolidated Statements of
Cash Flows (In thousands) (Unaudited)
Three Months Ended November 30, November
30, 2015 2014 Operating Activities
Net earnings $ 15,448 $ 24,674 Adjustments to reconcile net
earnings to net cash provided by (used in) operating activities:
Depreciation and amortization 12,472 13,708 Stock-based
compensation expense 2,961 3,546 Provision (benefit) for deferred
income taxes 156 (1,352 ) Amortization of debt issuance costs 413
423 Other non-cash adjustments (930 ) 146 Changes in components of
working capital and other: Accounts receivable (7,397 ) (3,629 )
Inventories (2,851 ) (6,500 ) Prepaid expenses and other assets
(9,211 ) (10,698 ) Trade accounts payable 7,735 (7,398 ) Income
taxes payable/refundable (4,294 ) (28,007 ) Accrued compensation
and benefits (572 ) (9,963 ) Other accrued liabilities 6,439
5,876 Cash provided by (used in) operating
activities 20,369 (19,174 )
Investing Activities
Proceeds from sale of property, plant and equipment 1,437 225
Capital expenditures (5,529 ) (7,986 ) Business acquisitions, net
of cash acquired (530 ) - Cash used in
investing activities (4,622 ) (7,761 )
Financing
Activities Net borrowings on revolving credit facility -
124,994 Repayments on other debt (218 ) - Principal repayments on
term loan - (1,125 ) Purchase of treasury shares (4,682 ) (104,415
) Stock option exercises, related tax benefits and other 1,090
2,287 Cash dividend (2,376 ) (2,598 ) Cash provided
by (used in) financing activities (6,186 ) 19,143 Effect of
exchange rate changes on cash (6,462 ) (13,945 ) Net
increase (decrease) in cash and cash equivalents 3,099 (21,737 )
Cash and cash equivalents - beginning of period 168,846
109,012 Cash and cash equivalents - end of
period $ 171,945 $ 87,275
ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING OPERATIONS
(Dollars in thousands) FISCAL 2015
FISCAL 2016 Q1 Q2
Q3 Q4 TOTAL Q1
Q2 Q3 Q4
TOTAL SALES
INDUSTRIAL SEGMENT $ 102,413 $ 96,488 $ 103,546 $
100,016 $ 402,463 $ 88,870 $ 88,870 ENERGY SEGMENT 111,522 100,211
99,296 100,846 411,875 113,763 113,763 ENGINEERED SOLUTIONS SEGMENT
113,830 104,306
117,258 99,522 434,916
102,378
102,378 TOTAL $ 327,765 $
301,005 $ 320,100 $ 300,384
$ 1,249,254 $ 305,011
$ 305,011
% SALES
GROWTH INDUSTRIAL SEGMENT 4 % 3 % -6 % -11 % -3 % -13 % -13 %
ENERGY SEGMENT 3 % -5 % -21 % -18 % -11 % 2 % 2 % ENGINEERED
SOLUTIONS SEGMENT -14 % -19 % -18 % -17 % -17 % -10 % -10 % TOTAL
-3 % -8 % -15 % -15 % -11 % -7 % -7 %
OPERATING PROFIT
(LOSS) INDUSTRIAL SEGMENT $ 26,705 $ 23,517 $ 29,165 $ 26,267 $
105,654 $ 21,263 $ 21,263 ENERGY SEGMENT 12,442 8,680 12,774 9,106
43,002 12,124 12,124 ENGINEERED SOLUTIONS SEGMENT 6,278 2,010 8,313
3,188 19,789 4,937 4,937 CORPORATE / GENERAL (7,207 )
(6,301 ) (7,250 ) (9,780 )
(30,538 ) (8,573 )
(8,573 ) TOTAL - EXCLUDING IMPAIRMENT /
RESTRUCTURING CHARGES $ 38,218 $ 27,906 $ 43,002 $ 28,781 $ 137,907
$ 29,751 $ 29,751 IMPAIRMENT CHARGE - (84,353 ) - - (84,353 ) - -
RESTRUCTURING CHARGES - -
- - -
(4,380 )
(4,380 ) TOTAL $ 38,218 $ (56,447 ) $
43,002 $ 28,781 $ 53,554 $
25,371 $
25,371
OPERATING PROFIT % INDUSTRIAL SEGMENT
26.1 % 24.4 % 28.2 % 26.3 % 26.3 % 23.9 % 23.9 % ENERGY SEGMENT
11.2 % 8.7 % 12.9 % 9.0 % 10.4 % 10.7 % 10.7 % ENGINEERED SOLUTIONS
SEGMENT 5.5 % 1.9 % 7.1 % 3.2 % 4.6 % 4.8 % 4.8 % TOTAL (INCLUDING
CORPORATE) - EXCLUDING IMPAIRMENT / RESTRUCTURING CHARGES 11.7 %
9.3 % 13.4 % 9.6 % 11.0 % 9.8 % 9.8 %
EBITDA
INDUSTRIAL SEGMENT $ 28,715 $ 25,534 $ 31,194 $ 27,968 $ 113,411 $
22,959 $ 22,959 ENERGY SEGMENT 20,011 15,732 19,278 15,348 70,369
18,348 18,348 ENGINEERED SOLUTIONS SEGMENT 11,514 5,603 12,294
6,635 36,046 8,498 8,498 CORPORATE / GENERAL (7,875 )
(5,111 ) (7,037 ) (8,770 )
(28,793 ) (8,201 )
(8,201 ) TOTAL - EXCLUDING IMPAIRMENT /
RESTRUCTURING CHARGES $ 52,365 $ 41,758 $ 55,729 $ 41,181 $ 191,033
$ 41,604 $ 41,604 IMPAIRMENT CHARGE - (84,353 ) - - (84,353 ) - -
RESTRUCTURING CHARGES - -
- - -
(4,380 )
(4,380 ) TOTAL $ 52,365 $ (42,595 ) $
55,729 $ 41,181 $ 106,680 $
37,224 $
37,224
EBITDA % INDUSTRIAL SEGMENT 28.0 % 26.5
% 30.1 % 28.0 % 28.2 % 25.8 % 25.8 % ENERGY SEGMENT 17.9 % 15.7 %
19.4 % 15.2 % 17.1 % 16.1 % 16.1 % ENGINEERED SOLUTIONS SEGMENT
10.1 % 5.4 % 10.5 % 6.7 % 8.3 % 8.3 % 8.3 % TOTAL (INCLUDING
CORPORATE) - EXCLUDING IMPAIRMENT / RESTRUCTURING CHARGES 16.0 %
13.9 % 17.4 % 13.7 % 15.3 % 13.6 % 13.6 %
ACTUANT
CORPORATION SUPPLEMENTAL UNAUDITED DATA
RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES
(Dollars in thousands, except for per share amounts)
FISCAL 2015 FISCAL 2016
Q1 Q2 Q3 Q4
TOTAL Q1 Q2 Q3
Q4 TOTAL EARNINGS BEFORE SPECIAL ITEMS
(1) NET
EARNINGS (LOSS) $ 24,674 $ (64,838 ) $ 37,958 $ 22,078 $ 19,872 $
15,448 $ 15,448 IMPAIRMENT CHARGE, NET OF INCOME TAX - 82,636 - -
82,636 - - RESTRUCTURING CHARGES, NET OF INCOME TAX -
- - -
- 3,198
3,198 TOTAL $ 24,674 $ 17,798
$ 37,958 $ 22,078 $ 102,508 $
18,646 $ 18,646
DILUTED EARNINGS PER SHARE, BEFORE SPECIAL ITEMS
(1) NET EARNINGS (LOSS) $ 0.38 $ (1.05 ) $ 0.63 $ 0.37 $ 0.32 $
0.26 $ 0.26 IMPAIRMENT CHARGE, NET OF INCOME TAX - 1.33 - - 1.33 -
- RESTRUCTURING CHARGES, NET OF INCOME TAX - -
- -
- 0.05
0.05 TOTAL $ 0.38 $ 0.28 $ 0.63
$ 0.37 $ 1.65 $ 0.31
$ 0.31
EBITDA (2)
NET EARNINGS (LOSS) (GAAP MEASURE) $ 24,674 $ (64,838 ) $ 37,958 $
22,078 $ 19,872 $ 15,448 $ 15,448 FINANCING COSTS, NET 6,191 7,030
7,462 7,374 28,057 7,117 7,117 INCOME TAX EXPENSE (BENEFIT) 7,792
1,980 (2,987 ) (1,266 ) 5,519 2,187 2,187 DEPRECIATION &
AMORTIZATION 13,708 13,233
13,296 12,995
53,232 12,472
12,472 EBITDA (NON-GAAP MEASURE) $ 52,365 $ (42,595 )
$ 55,729 $ 41,181 $ 106,680 $ 37,224 $ 37,224 IMPAIRMENT CHARGE -
84,353 - - 84,353 - - RESTRUCTURING CHARGES -
- - -
- 4,380
4,380 EBITDA - EXCLUDING IMPAIRMENT AND RESTRUCTURING
CHARGES (NON-GAAP MEASURE) $ 52,365 $ 41,758 $
55,729 $ 41,181 $ 191,033 $ 41,604
$ 41,604
FOOTNOTES NOTE: The total of the individual quarters
may not equal the annual total due to rounding. (1) Earnings
and diluted earnings per share, excluding special items (impairment
and restructuring charges), 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 before financing costs, net, income tax
expense, 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 (loss) or operating profit (loss) 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151217005705/en/
Actuant CorporationKaren Bauer, 262-293-1562Communications &
Investor Relations Leader
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