) delivered adjusted earnings per share (EPS) of 60 cents in its
third quarter of fiscal 2012, a penny ahead of the Zacks Consensus
Estimate and 19% above the year-ago quarter's EPS of 51 cents.
Solid results in the U.S. and the Energy segment helped offset some
end-market softness in Europe and China.
Including debt financing costs, EPS in the quarter stood at 45
cents. Including discontinued operations, EPS in the year ago
quarter was 49 cents.
Total revenue of $429 million, was in line with the Zacks Consensus
Estimate but 9% above the year ago revenue of $393 million. Core
sales increased 4% and acquisitions contributed 8%. Weaker Euro had
a negative impact of 3%.
Cost & Margin Performance
Cost of products sold increased 10% to $263 million in the quarter
and as a percentage of revenues increased by 50 basis points to
61.3%. Gross profit increased 8% to $166 million but gross margin
slipped 50 basis points to 38.7%.
Selling, general and administrative expenses increased 2% to $91
million in the quarter and as a percentage of revenues decreased
150 basis points year over year. Actuant reported operating income
of $67.7 million, up 18% year over year. Operating margin expanded
100 basis points to 16% in the quarter.
The Industrial Segment posted a 2% year-over-year increase to reach
revenues of $110 million. Core sales increased 5%, while foreign
currency had a negative impact of 3%. The segment's operating
income increased 4% to $30.7 million in the quarter. Demand was
strong across all end markets and geographies.
Energy Segment's revenues increased 24% year over year to $96
million. Core sales increased 23% reflecting continued higher
activity levels across all end markets. Maintenance spending in oil
& gas, refinery, petrochemical and power generation markets,
along with higher capital project activity in offshore energy, was
instrumental in driving growth. The segment reported an operating
profit of $18.5 million, up 37% year over year due to higher
Revenues at the Electrical segment increased 7% year over year to
$86 million. Core sales increased 10%, reflecting higher volumes in
the solar, utility, industrial, retail and marine after-market
channels. However, a weaker Euro had a negative impact of 3%. The
segment reported an operating profit of $8.8 million, up from $5.5
million in the year-ago quarter due to higher volumes and improved
The Engineered Solution segment's revenue increased 8% to $137
million. Acquisitions contributed 23% to growth which was offset by
the negative impact of the Euro (4%), and an 11% decline in core
sales. Results reflected lower OEM production levels for heavy-duty
trucks in China and Europe as well as a decline in automotive
However, string demand was noted in North American heavy-duty
truck, construction and agriculture markets. The segment's
operating income declined 8% to $18.5 million due to the lower core
sales, partially offset by favorable acquisition mix.
ACTUANT CORP (ATU): Free Stock Analysis Report
EATON CORP (ETN): Free Stock Analysis Report
KENNAMETAL INC (KMT): Free Stock Analysis
PARKER HANNIFIN (PH): Free Stock Analysis
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As of May 31, 2012, Actuant had cash and cash equivalents of $80.1
million, substantially higher than $44.2 million as of August 31,
2011. The company generated cash flow from operating activities of
$77 million compared with $74 million in the year ago quarter. As
of May 31, 2012, the debt-to-capitalization ratio improved to 28%
from 36% as of August 31, 2011.
For fiscal 2012, the company estimates sales in the range of
$1.60-1.61 billion and EPS in the $2.03-2.08 range. Free cash flow
is projected to be in the range of $180-185 million.
For fiscal 2013, the company anticipates irregular end-market
demand, particularly in Europe and China. Core sales growth is
estimated at 3-5% with full year revenues in the band of
$1.665-$1.700 billion. Higher volumes, lower interest expenses and
completed share repurchases are expected to culminate in EPS, which
could be in the range of $2.15-$2.30. Free cash flow is expected to
be between $195 and $200 million.
Actuant's acquisition pipeline is robust and given its strong
balance sheet, it is well positioned invest in growth opportunities
and also fund share buy-backs. However, uncertainty in Europe
remains a headwind. We currently have a Zacks #3 Rank (short-term
Hold recommendation) on the stock.
Headquartered in Menomonee Falls, Wisconsin, Actuant Corporation
designs, manufactures, and distributes industrial products and
systems worldwide. It operates through four segments: Industrial,
Energy, Electrical and Engineered Solutions. It competes with
Parker Hannifin Corporation