Colfax Corporation ( CFX ), a manufacturing
and engineering company recently announced its results for the
first quarter of 2013. Adjusted earnings per share in the quarter
were recorded at 26 cents, beating the Zacks Consensus Estimate of
24 cents by 8.33%. Moreover, earnings increased 13.0% year over
year, due to improved sales and margins in the quarter.
Revenue: Colfax's revenue in the first quarter
was recorded at $947.1 million, which lagged the Zacks Consensus
Estimate of $955.0 million by 0.8%. Revenue increased 6.8% year
over year, due to about $105.2 million contribution from various
acquisitions, which was slightly offset by a drop in the existing
business accompanied by foreign currency adjustments.
Total orders in the quarter were $502.1 million, increasing 0.9%
year over year, whereas total backlog at the end of the quarter
stood at $1,443.4 million, compared with $1,372.8 million at the
end of first quarter 2012.
Revenue from the Gas and Fluid Handling segment
came in at $425.1 million, slightly below the year-ago revenue of
$425.3 million. However, the Fabrication
Technology segment grew 13.2% year over year to $522.0
million, which was essentially inorganic growth.
Costs/Margins: Colfax's gross profit margin in
the quarter was 30.7% in the quarter, increasing 340 basis points
year over year, due to active cost control measures pursued by the
company. SG&A as a percentage of sales was 22.4%, against 23.9%
in the first quarter of 2012. Colfax's adjusted operating income
margin expanded 120 basis points year over year in the quarter to
Gas and Fluid Handling segment's gross margin was recorded at
29.9% in the quarter, against 29.0% in the first quarter of 2012.
Fabrication Technology's gross margin increased 570 basis points in
the quarter to 31.4%.
Balance Sheet/ Cash Flow: Exiting the first
quarter of 2013, Colfax's cash and cash equivalents stood at $234.8
million, against $482.4 million in the fourth quarter of 2012.
Long-term debt for the quarter was $1.4 billion, compared with $1.7
billion in the preceding quarter.
Cash used in operating activities was $13.4 million, decreasing
from the $109.3 million used in the first quarter of 2012. Colfax
bought fixed assets worth $18.0 million in the quarter against a
purchase of $18.9 million in the year-ago quarter.
Outlook: Colfax reaffirmed its revenue guidance
in the range of $4.175 billion to $4.25 billion with an organic
revenue increase of 1% to 3%. Moreover, operating margin is
expected to be around 10.0% for 2013. The company is expected to
witness a hike of 27.0% to 42.0% in its earnings per share for 2013
over 2012, and lie in the range of $1.70 to $1.90.
Our Recommendation: Colfax currently holds a
Zacks Rank #3 (Hold). Other general industrial stocks to look out
for are The Babcock & Wilcox Company ( BWC ), EnPro
Industries, Inc. ( NPO ) and
Tri-Tech Holding, Inc. ( TRIT ); each carrying
a Zacks Rank #1 (Strong Buy).BABCOCK&WILCOX (BWC): Free Stock Analysis
ReportCOLFAX CORP (CFX): Free Stock Analysis ReportENPRO INDUS INC (NPO): Free Stock Analysis
ReportTRI-TECH HOLDNG (TRIT): Free Stock Analysis
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