Actuant Misses Q1 Earnings Ests - Analyst Blog

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Actuant Corporation ( ATU ) reported adjusted earnings per share from continuing operations of 44 cents in the first quarter of fiscal 2014 (ended Nov 30, 2013), up 7.3% year over year. The earnings, however, missed the Zacks Consensus Estimate of 46 cents.

On a GAAP basis, earnings per share were recorded at 48 cents compared with 49 cents a share in the year-ago quarter.

Revenues

Actuant's net sales in fiscal first quarter 2014 were $339.6 million, up 10.3% year over year and above the Zacks Consensus Estimate of $336.0 million. Core sales grew 5% year over year and acquisitions added 6.0%, offset partially by 1% negative foreign currency translation impact.

Cost & Margins

Actuant's gross profit margin decreased 160 basis points (bps) year over year to 38.8% due primarily to higher cost of sales incurred in the quarter. Selling, administrative and engineering expenses were $81.9 million compared with $74.9 million in the year-ago comparable quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased from $54.6 million in the year-ago quarter to $58.7 million in the quarter.

Actuant's Segment Performance

The Industrial segment revenues were down 2.5% year over year at $98.6 million. Core sales decreased 2.0% due to lower integration solutions activity globally. However, Industrial demand improved mainly in North America and Europe. The segment's operating profit margin was 27.3%, up 60 bps year over year.

Energy segment's revenues increased 18.8% year over year to $107.9 million. The increase can be attributed to a 21% gain from acquisitions, offset by 1% negative currency translation impact and 1% core sales decline. The segment's operating profit margin was 8.3%, down 870 bps year over year.

The Engineered Solution segment's revenues increased 14.8% year over year to $133.0 million. The increase can be attributed to 15% core sales growth, offset by 1% negative currency translation impact and 1% negative impact from previously concluded divestiture. The segment's operating profit margin was 9.9%, up 330 bps year over year.

Balance Sheet/Cash Flow

Exiting fiscal first quarter 2014, Actuant had cash and cash equivalents of $109.5 million, up from $104.0 million in the previous quarter. Long-term debt declined 2.5% sequentially to $501.9 million.

Cash flow from operations in the quarter was $32.9 million compared with $12.3 million in the year-ago quarter. Total capital spending was roughly $11.3 million against $7.7 million spent in the quarter ended Nov 30, 2012.
During the quarter, Actuant completed divesting its Electrical segment for $258 million in gross proceeds.

Outlook: Actuant maintained its fiscal 2014 guidance of earnings per share in the range of $2.00 to $2.10 and revenues in the range of $1.41 billion to $1.45 billion (including roughly $100.0 million contribution from Viking, acquired in August). Core sales are expected to grow by 3-5% over fiscal 2013 and free cash flow is anticipated at $190 million.

For the second quarter of fiscal 2014, Actuant anticipates revenues to be in the range of $330.0 million to $340.0 million. Earnings per share are expected in the range of 29 cents to 33 cents.

Actuant currently has a market capitalization of $2.81 billion and carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the machinery industry are Alamo Group, Inc. ( ALG ), Flow International Corp. ( FLOW ) and Rexnord Corp. ( RXN ). All the three companies also hold a Zacks Rank #2 (Buy).



ALAMO GROUP INC (ALG): Free Stock Analysis Report

ACTUANT CORP (ATU): Free Stock Analysis Report

FLOW INTL CORP (FLOW): Free Stock Analysis Report

REXNORD CORP (RXN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALG , ATU , FLOW , RXN

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