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Share Name | Share Symbol | Market | Type |
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Actuant Corp | NYSE:ATU | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 21.87 | 0 | 01:00:00 |
Actuant Corporation (NYSE: ATU) today announced results for its first quarter ended November 30, 2014.
Highlights
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 $ 1,856,879Actuant 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 $ 52,365FOOTNOTES
NOTE: The total of the individual quarters may not equal the annual total due to rounding.
Actuant CorporationKaren Bauer, 262-293-1562Communications & Investor Relations Leader
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