Colfax Q1 Earnings Up Y/Y, Boosts View - Analyst Blog

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Manufacturing and engineering company, Colfax Corporation ( CFX ) reported adjusted earnings per share of 43 cents in first-quarter 2014, reflecting year-over-year growth of 65.4%. However, the bottom-line result fell short of the Zacks Consensus Estimate of 44 cents.

Revenue

Colfax generated net sales of $1,054.3 million in first-quarter 2014, reflecting an increase of 11.3% year over year. The improvement can be attributed to a 5.6% contribution from existing businesses and a 9% gain from acquisitions, offset partially by a 3.3% negative impact from foreign currency translations.    

The top-line result surpassed the Zacks Consensus Estimate of $1,032.0 million.

Total orders in the quarter were $583.4 million, up 16.2% year over year, while backlog at the end of the quarter was $1,592.0 million, compared with $1,438.5 million at the end of first-quarter 2013.

Colfax generates revenues under two heads, which are briefly discussed below:

Revenues generated from the Gas and Fluid Handling segment were $573.9 million, up 35.0% year over year. Fabrication Technology revenues declined 8.0% year over year to $480.4 million.

Margins

Colfax's cost of sales in first-quarter 2014 increased 11% and represented 69.1% of total revenue, down 20 basis points (bps) year over year. Gross margin in the quarter was 30.9%, up 20 bps year over year. Selling, general and administrative (SG&A) expenses, as a percentage of revenue, were at 22.0%, against 22.6% in the year-ago quarter.

Adjusted operating income margin expanded 60 basis points year over year to 8.9% in the quarter.

Balance Sheet/ Cash Flow

Exiting first-quarter 2014, Colfax had cash and cash equivalents of $482.2 million, up from $311.3 million recorded in the year-ago quarter. Long-term debt was at $1.1 billion versus $1.5 billion in the previous quarter.

During the quarter, Colfax used $67.0 million of cash for operating activities, up from $13.4 million used in the year-ago quarter. Capital spent on purchase of fixed assets was $12.6 million, down 29.9% year over year.

Subsequent to the end of first-quarter 2014, Colfax on Apr 14, announced the completion of the acquisition of Victor Technologies Holdings, Inc. from Irving Place Capital for $947.3 million.

Outlook

Accounting for contributions from the Victor acquisition, Colfax increased its sales guidance for 2014 to $4.85−$4.99 billion range from the previous projection of $4.5−$4.625 billion range.

Tax rate is expected to be within the 29−30% range, while interest expense is predicted to be nearly $58 million.

Adjusted earnings per share are estimated within the $2.45−$2.70 range, up compared with the prior expectation of $2.40−$2.65. Including one-time charges of 49 cents, GAAP earnings per share are anticipated within the $1.96−$2.21 range. This reflects a decline from the previous range of $2.14−$2.34.

Colfax currently has a market capitalization of $7.5 billion and currently holds a Zacks Rank #2 (Buy). Some better-ranked stocks in the industry, with a Zacks Rank #1 (Strong Buy) are Middleby Corp. ( MIDD ), Kadant Inc. ( KAI ) and Sun Hydraulics Corp. ( SNHY ).



COLFAX CORP (CFX): Free Stock Analysis Report

KADANT INC (KAI): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

SUN HYDRAULICS (SNHY): 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: CFX , KAI , MIDD , SNHY

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