Actuant Corporation (NYSE: ATU) today announced results for its
first quarter ended November 30, 2016.
Highlights
- Consolidated sales were 13% below the
comparable prior year quarter with acquisitions net of divestitures
a 2% benefit and foreign currency rate changes a 1% headwind. As
expected, first quarter core sales were down 14% on a
year-over-year basis (total sales excluding the impact of
acquisitions, divestitures and foreign currency rate changes) with
difficult Energy segment comparisons the most significant
factor.
- GAAP diluted earnings per share (“EPS”)
were $0.08 in the first quarter of fiscal 2017 versus $0.26 in the
prior year. Excluding first quarter fiscal 2017 restructuring and
transition charges of a combined $0.12 per share, adjusted EPS was
$0.20 (see Consolidated Results below and attached reconciliation
of earnings).
- Restructuring activities related to
facility consolidations and staffing reductions remain on track,
totaling approximately $3 million in the first quarter.
- Reaffirmed full year sales guidance of
$1.075-1.125 billion and increased the EPS guidance range to
$1.10-1.30 per share (excluding restructuring and transition
charges).
Randy Baker, President and CEO of Actuant commented, “I’m
pleased we met our financial commitments for the first quarter
given continued weak conditions in most of our end markets. Core
sales comparisons were difficult in Energy given last year’s large
Middle East maintenance job, while the other segments experienced
tepid but stable demand in the general industrial, agriculture and
off-highway markets. Margins reflect the impact of the volume
declines, and were in line with our outlook. Excluding
restructuring and the previously announced transition charges, EPS
of $0.20 modestly exceeded our guidance due to a lower effective
income tax rate which we expect to also benefit the remainder of
the year. First quarter cash flow was on track and our net debt
leverage remains at a reasonable level. In summary, a solid start
to the fiscal year. I am proud and appreciative of the efforts and
execution of Actuant employees to meet our financial
commitments.”
Consolidated Results
Consolidated sales for the first quarter were $266 million, 13%
lower than the $305 million in the comparable prior year quarter.
Core sales were down 14% while foreign currency rate changes
reduced sales 1% with net acquisitions/divestitures a 2% sales
benefit. Fiscal 2017 first quarter net earnings and EPS were $5.0
million, or $0.08, compared to $15.4 million and $0.26,
respectively, in the comparable prior year quarter. Fiscal 2017
first quarter earnings included restructuring charges of $3.0
million ($2.2 million or $0.04 per share after tax) and $7.8
million ($4.9 million or $0.08 per share after tax) of previously
announced director and officer transition charges primarily
reflecting accelerated vesting of equity compensation. First
quarter 2016 results included $4.4 million ($3.2 million or $0.05
per share, after tax) of restructuring charges. Excluding these
items, adjusted EPS for the first quarter of fiscal 2017 was $0.20
compared to $0.31 in the comparable prior year period (see attached
reconciliation of earnings).
Segment Results
Industrial Segment(US $ in millions)
Three Months EndedNovember 30,
2016 2015 Sales $87.3 $88.9 Operating Profit $18.8 $20.6
Adjusted Operating Profit (1) $19.5 $21.3 Adjusted Operating Profit
%(1) 22.3% 23.9%
(1) Excludes restructuring charges of $0.7
million in both periods.
First quarter fiscal 2017 Industrial segment sales were $87
million or 2% lower than the prior year. The Larzep acquisition
added 2% while currency was neutral, resulting in a 4%
year-over-year core sales decline. The core sales rate of change
improved from -8% in the fourth quarter of fiscal 2016. Overall
demand remains modest but consistent, most notably in the general
industrial, mining and energy markets. First quarter adjusted
operating profit margin of 22.3% was in line with expectations
given the volume decline and unfavorable sales mix.
Energy Segment(US $ in millions)
Three Months EndedNovember 30,
2016 2015 Sales $84.6 $113.8 Operating Profit $3.2 $10.1
Adjusted Operating Profit (2) $3.3 $12.1 Adjusted Operating Profit
%(2) 3.9% 10.7%
(2) Excludes restructuring charges of $0.1
million and $2.0 million in the first quarter of fiscal 2017 and
2016, respectively.
Fiscal 2017 first quarter Energy segment sales declined 26%
year-over-year to $85 million. Excluding the 2% unfavorable impact
of the stronger US dollar, and 7% benefit from March’s process
& pipeline services acquisition, year-over-year core sales
declined 31%. As anticipated, Hydratight’s sales decreased
significantly due to the prior year’s sizable Middle East refinery
turnaround job and North American service activity. Cortland and
Viking continue to experience year-over-year declines due to lower
upstream oil & gas related demand. First quarter Energy segment
adjusted operating profit margin declined primarily due to the
lower volumes and unfavorable mix.
Engineered Solutions Segment(US $ in millions)
Three Months EndedNovember 30,
2016 2015 Sales $93.9 $102.4 Operating Profit $0.7 $3.5
Adjusted Operating Profit (3) $2.8 $4.9 Adjusted Operating Profit
%(3) 3.0% 4.8% (3) Excludes restructuring charges of $2.1 million
and $1.4 million in the first quarter of fiscal 2017 and 2016,
respectively.
First quarter fiscal 2017 Engineered Solutions segment sales
were $94 million or 8% below the prior year. Excluding the 3% Sanlo
divestiture impact, year-over-year core sales were down 5%, but
improved sequentially from -9% in the fiscal 2016 fourth quarter.
Fiscal 2017 sales reflect growth in heavy-duty truck, notably in
China, offset by continued weak demand across most of the segment’s
other markets such as agriculture and off-highway equipment. First
quarter adjusted operating profit margin declined year-over-year
due to lower sales and reduced absorption on lower production
volumes.
Corporate and Income Taxes
Corporate expenses (excluding transition charges of $7.8
million) for the first quarter of fiscal 2017 were $6.5 million, or
$2.1 million lower than the comparable prior year period due
primarily to reduced healthcare and outside services spending.
Excluding the tax benefit on restructuring and transition charges,
the approximate 5% first quarter effective income tax rate was
favorable to both the prior year and guidance due to the benefit of
tax reduction initiatives.
Financial Position
Net debt at November 30, 2016 was approximately $400 million
(total debt of $577 million less $177 million of cash) and the net
debt to EBITDA leverage was 2.7x.
Outlook
Baker continued, "As the first quarter results demonstrate, we
are on track to meet our financial commitments for the fiscal year.
In addition to sales, earnings and cash flow, both our
restructuring and sales effectiveness improvement actions are
proceeding according to plan. Additionally, we identified and are
pursuing further actions which should reduce our income tax
expense, driving incremental EPS of approximately $0.10 for the
fiscal year.
For the full year, we are maintaining our prior sales guidance
in the $1.075-1.125 billion range with core sales down 2-6%. We are
increasing our adjusted EPS guidance from $1.00-1.20 to $1.10-1.30.
Free cash flow is projected to be in the $85-95 million range in
fiscal 2017.
We expect second quarter sales to be in the $250-260 million
range, with EPS of $0.08-0.13. The second quarter outlook
incorporates the normal seasonal slowdown experienced across nearly
all of our businesses.
All guidance excludes restructuring and transition costs, as
well as the impact of potential future acquisitions and share
repurchases. Our focused tuck-in acquisition pipeline is strong,
and our free cash flow and revolver capacity provide ample capital
to fund our deployment priorities."
Conference Call
Information
An investor conference call is scheduled for 10am CT today,
December 21, 2016. 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, 2016 2016
ASSETS Current assets Cash and cash equivalents $ 176,871 $
179,604 Accounts receivable, net 188,815 186,829 Inventories, net
135,064 130,756 Other current assets 48,098
45,463 Total current assets 548,848 542,652 Property,
plant and equipment, net 110,542 114,015 Goodwill 509,478 519,276
Other intangible assets, net 230,532 239,475 Other long-term assets
22,316 23,242 Total assets $
1,421,716 $ 1,438,660
LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts
payable $ 119,666 $ 115,051 Accrued compensation and benefits
43,232 46,901 Current maturities of debt and short-term borrowings
22,500 18,750 Income taxes payable 5,928 9,254 Other current
liabilities 56,577 51,956 Total current
liabilities 247,903 241,912 Long-term debt, net 554,369
561,681 Deferred income taxes 27,899 31,356 Pension and
postretirement benefit liabilities 24,634 25,667 Other long-term
liabilities 56,824 57,094 Total
liabilities 911,629 917,710 Shareholders' equity Capital
stock 15,898 15,879 Additional paid-in capital 125,250 114,980
Treasury stock (617,731 ) (617,731 ) Retained earnings 1,264,615
1,259,645 Accumulated other comprehensive loss (277,945 ) (251,823
) Stock held in trust (2,717 ) (2,646 ) Deferred compensation
liability 2,717 2,646 Total
shareholders' equity 510,087 520,950
Total liabilities and shareholders' equity $ 1,421,716
$ 1,438,660
Actuant Corporation
Condensed Consolidated Statements of Earnings (Dollars in
thousands, except per share amounts) (Unaudited)
Three Months Ended
November 30, November 30, 2016
2015 Net sales $ 265,793 $ 305,011 Cost of products
sold 172,726 196,449 Gross
profit 93,067 108,562 Selling, administrative and
engineering expenses 68,602 72,911 Amortization of intangible
assets 5,262 5,900 Director & officer transition charges 7,784
- Restructuring charges 2,948
4,380 Operating profit 8,471 25,371 Financing costs, net
7,132 7,117 Other (income) expense, net (628 )
619 Income before income tax (benefit) expense 1,967 17,635
Income tax (benefit) expense (2,998 )
2,187 Net income $ 4,965 $ 15,448
Earnings per share Basic $ 0.08 $ 0.26 Diluted 0.08
0.26
Weighted average common shares outstanding Basic
58,972 59,187 Diluted 59,616 59,713
Actuant
Corporation Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Three Months Ended November 30,
November 30, 2016 2015 Operating
Activities Net earnings $ 4,965 $ 15,448
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 10,896 12,472 Stock-based
compensation expense 9,554 2,961 (Benefit) Provision for deferred
income taxes (2,865 ) 156 Amortization of debt issuance costs 413
413 Other non-cash adjustments 464 (930 ) Changes in components of
working capital and other: Accounts receivable (8,252 ) (7,397 )
Inventories (8,142 ) (2,851 ) Trade accounts payable 6,768 7,735
Prepaid expenses and other assets (5,485 ) (9,211 ) Income tax
accounts (2,324 ) (4,294 ) Accrued compensation and benefits (2,757
) 365 Other accrued liabilities 8,850 6,439
Cash provided by operating activities 12,085 21,306
Investing Activities Capital expenditures (5,139 ) (5,529 )
Proceeds from sale of property, plant and equipment 130 1,437
Business acquisitions, net of cash acquired -
(530 ) Cash used in investing activities (5,009 ) (4,622 )
Financing Activities Repayments on other debt - (218 )
Principal repayments on term loan (3,750 ) - Purchase of treasury
shares - (4,682 ) Taxes paid related to the net share settlement of
equity awards (223 ) (937 ) Stock option exercises, related tax
benefits and other 1,342 1,090 Cash dividend (2,358 )
(2,376 ) Cash used in financing activities (4,989 ) (7,123 )
Effect of exchange rate changes on cash (4,820 )
(6,462 ) Net (decrease) increase in cash and cash equivalents
(2,733 ) 3,099 Cash and cash equivalents - beginning of period
179,604 168,846 Cash and cash
equivalents - end of period $ 176,871 $ 171,945
ACTUANT CORPORATION SUPPLEMENTAL UNAUDITED
DATA FROM CONTINUING OPERATIONS (Dollars in thousands)
FISCAL 2016 FISCAL 2017
Q1 Q2 Q3 Q4
TOTAL Q1 Q2 Q3
Q4 TOTAL SALES INDUSTRIAL SEGMENT $
88,870 $ 81,189 $ 95,750 $ 94,008 $ 359,817 $ 87,290 - - - $ 87,290
ENERGY SEGMENT 113,763 86,224 101,300 91,443 392,730 84,646 - - -
84,646 ENGINEERED SOLUTIONS SEGMENT 102,378
95,876 108,291
90,318 396,863 93,857
- - - 93,857 TOTAL $
305,011 $ 263,289 $ 305,341
$ 275,769 $ 1,149,410 $ 265,793
- - - $ 265,793
%
SALES GROWTH INDUSTRIAL SEGMENT -13 % -16 % -8 % -6 % -11 % -2
% - - -
-2
% ENERGY SEGMENT 2 % -14 % 2 % -9 % -5 % -26 % - - -
-26
% ENGINEERED SOLUTIONS SEGMENT -10 % -8 % -8 % -9 % -9 % -8 % - - -
-8
% TOTAL -7 % -13 % -5 % -8 % -8 % -13 % - - -
-13
%
OPERATING PROFIT (LOSS) INDUSTRIAL SEGMENT $ 21,263
$ 17,003 $ 22,519 $ 22,144 $ 82,929 $ 19,491 - - - $ 19,491 ENERGY
SEGMENT 12,124 5,348 12,438 8,941 38,851 3,328 - - - 3,328
ENGINEERED SOLUTIONS SEGMENT 4,937 2,555 4,768 927 13,187 2,834 - -
- 2,834 CORPORATE / GENERAL (8,573 ) (6,928 )
(7,886 ) (5,623 ) (29,010
) (6,450 ) - - - (6,450 )
ADJUSTED OPERATING PROFIT $ 29,751 $ 17,978 $ 31,839 $ 26,389 $
105,957 $ 19,203 - - - $ 19,203 IMPAIRMENT CHARGES - (186,511 ) - -
(186,511 ) - - - - - LOSS ON SANLO PRODUCT LINE DIVESTITURE - - -
(5,092 ) (5,092 ) - - - - - RESTRUCTURING CHARGES (4,380 ) (3,582 )
(3,496 ) (3,113 ) (14,571 ) (2,948 ) - - - (2,948 ) DIRECTOR &
OFFICER TRANSITION CHARGES - -
- - -
(7,784 ) - - -
(7,784 ) OPERATING PROFIT $ 25,371 $ (172,115 )
$ 28,343 $ 18,184 $ (100,217 ) $
8,471 - - - $ 8,471
OPERATING PROFIT % INDUSTRIAL SEGMENT 23.9 % 20.9 %
23.5 % 23.6 % 23.0 % 22.3 % - - - 22.3 % ENERGY SEGMENT 10.7 % 6.2
% 12.3 % 9.8 % 9.9 % 3.9 % - - - 3.9 % ENGINEERED SOLUTIONS SEGMENT
4.8 % 2.7 % 4.4 % 1.0 % 3.3 % 3.0 % - - - 3.0 % ADJUSTED OPERATING
PROFIT % 9.8 % 6.8 % 10.4 % 9.6 % 9.2 % 7.2 % - - - 7.2 %
EBITDA INDUSTRIAL SEGMENT $ 22,959 $ 18,829 $ 24,686 $
24,209 $ 90,683 $ 21,217 - - - $ 21,217 ENERGY SEGMENT 18,348
10,968 16,819 13,717 59,852 9,108 - - - 9,108 ENGINEERED SOLUTIONS
SEGMENT 8,498 6,882 8,504 5,270 29,154 6,281 - - - 6,281 CORPORATE
/ GENERAL (8,201 ) (6,552 )
(7,560 ) (5,182 ) (27,495 )
(5,879 ) - - - (5,879 ) ADJUSTED
EBITDA $ 41,604 $ 30,127 $ 42,449 $ 38,014 $ 152,194 $ 30,727 - - -
$ 30,727 IMPAIRMENT CHARGES - (186,511 ) - - (186,511 ) - - - - -
LOSS ON SANLO PRODUCT LINE DIVESTITURE - - - (5,092 ) (5,092 ) - -
- - - RESTRUCTURING CHARGES (4,380 ) (3,582 ) (3,496 ) (3,113 )
(14,571 ) (2,948 ) - - - (2,948 ) DIRECTOR & OFFICER TRANSITION
CHARGES - - -
- - (7,784
) - - - (7,784 ) EBITDA $ 37,224
$ (159,966 ) $ 38,953 $ 29,809
$ (53,980 ) $ 19,995 - -
- $ 19,995
ADJUSTED EBITDA % INDUSTRIAL
SEGMENT 25.8 % 23.2 % 25.8 % 25.8 % 25.2 % 24.3 % - - - 24.3 %
ENERGY SEGMENT 16.1 % 12.7 % 16.6 % 15.0 % 15.2 % 10.8 % - - - 10.8
% ENGINEERED SOLUTIONS SEGMENT 8.3 % 7.2 % 7.9 % 5.8 % 7.3 % 6.7 %
- - - 6.7 % ADJUSTED EBITDA % 13.6 % 11.4 % 13.9 % 13.8 % 13.2 %
11.6 % - - - 11.6 %
ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA RECONCILIATION OF GAAP
MEASURE TO NON-GAAP MEASURES (Dollars in thousands, except
for per share amounts)
FISCAL 2016
FISCAL 2017 Q1 Q2 Q3
Q4 TOTAL Q1 Q2
Q3 Q4 TOTAL ADJUSTED
EARNINGS (1) NET EARNINGS (LOSS) $ 15,448 $ (159,190 ) $ 21,166
$ 17,402 $ (105,174 ) $ 4,965 - - - $ 4,965 IMPAIRMENT CHARGES -
186,511 - - 186,511 - - - - - INCOME TAX BENEFIT ON IMPAIRMENT
CHARGES - (17,455 ) - - (17,455 ) - - - - - LOSS ON SANLO PRODUCT
LINE DIVESTITURE - - - 5,092 5,092 - - - - - INCOME TAX BENEFIT ON
SANLO PRODUCT LINE DIVESTITURE - - - (6,649 ) (6,649 ) - - - - -
DIRECTOR & OFFICER TRANSITION CHARGES - - - - - 7,784 - - -
7,784 INCOME TAX BENEFIT ON DIRECTOR & OFFICER TRANSITION
CHARGES - - - - - (2,880 ) - - - (2,880 ) RESTRUCTURING CHARGES
4,380 3,582 3,496 3,113 14,571 2,948 - - - 2,948 INCOME TAX BENEFIT
ON RESTRUCTURING CHARGES (1,182 ) (1,185 )
(994 ) (960 ) (4,321 )
(777 ) - - - (777 )
ADJUSTED EARNINGS $ 18,646 $ 12,263 $
23,668 $ 17,998 $ 72,575 $
12,040 - - - $ 12,040
ADJUSTED EARNINGS PER SHARE (1) NET EARNINGS (LOSS) $
0.26 $ (2.70 ) $ 0.36 $ 0.29 $ (1.78 ) $ 0.08 - - - $ 0.08
IMPAIRMENT CHARGES - 3.16 - - 3.16 - - - - - INCOME TAX BENEFIT ON
IMPAIRMENT CHARGES - (0.30 ) - - (0.30 ) - - - - - LOSS ON SANLO
PRODUCT LINE DIVESTITURE - - - 0.09 0.08 - - - - - INCOME TAX
BENEFIT ON SANLO PRODUCT LINE DIVESTITURE - - - (0.11 ) (0.11 ) - -
- - - DIRECTOR & OFFICER TRANSITION CHARGES - - - - - 0.13 - -
- 0.13 INCOME TAX BENEFIT ON DIRECTOR & OFFICER TRANSITION
CHARGES - - - - - (0.05 ) - - - (0.05 ) RESTRUCTURING CHARGES 0.07
0.06 0.06 0.05 0.24 0.05 - - - 0.05 INCOME TAX BENEFIT ON
RESTRUCTURING CHARGES (0.02 ) (0.02 )
(0.02 ) (0.02 ) (0.07 )
(0.01 ) - - - (0.01 ) ADJUSTED
EARNINGS PER SHARE $ 0.31 $ 0.21 $ 0.40
$ 0.30 $ 1.22 $ 0.20
- - - $ 0.20
EBITDA (2) NET EARNINGS (LOSS) (GAAP MEASURE) $ 15,448 $
(159,190 ) $ 21,166 $ 17,402 $ (105,174 ) $ 4,965 - - - $ 4,965
FINANCING COSTS, NET 7,117 6,866 7,253 7,532 28,768 7,132 - - -
7,132 INCOME TAX EXPENSE (BENEFIT) 2,187 (20,026 ) (827 ) (6,504 )
(25,170 ) (2,998 ) - - - (2,998 ) DEPRECIATION & AMORTIZATION
12,472 12,384
11,361 11,379 47,596
10,896 - - -
10,896 EBITDA $ 37,224 $ (159,966 ) $ 38,953 $ 29,809
$ (53,980 ) $ 19,995 - - - $ 19,995 IMPAIRMENT CHARGES - 186,511 -
- 186,511 - - - - - LOSS ON SANLO PRODUCT LINE DIVESTITURE - - -
5,092 5,092 - - - - - DIRECTOR & OFFICER TRANSITION CHARGES - -
- - - 7,784 - - - 7,784 RESTRUCTURING CHARGES 4,380
3,582 3,496
3,113 14,571 2,948
- - - 2,948 ADJUSTED EBITDA $
41,604 $ 30,127 $ 42,449
$ 38,014 $ 152,194 $ 30,727 -
- - $ 30,727
FOOTNOTES
NOTE: The total of the individual quarters may not equal the
annual total due to rounding. (1) Adjusted earnings and
adjusted earnings per share represent net earnings (loss) and
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 earnings (loss) per
share or 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. EBITDA should not be considered as an alternative to net
earnings (loss), operating profit (loss) or operating cash flows.
Actuant has presented EBITDA because it regularly reviews this
performance measure. In addition, EBITDA is used by many of our
investors and lenders, and is presented as a convenience to them.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161221005171/en/
Actuant CorporationKaren BauerCommunications & Investor
Relations Leader262-293-1562
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