Pall Corp. Earnings Beat by a Penny - Analyst Blog

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Pall Corporation ( PLL ) reported first quarter fiscal 2014 pro forma earnings of 70 cents a share, 1.4% above the Zacks Consensus Estimate of 69 cents. Earnings for the quarter also beat the prior-year quarter's earnings of 68 cents a share by 2.9%. The reported EPS includes a 2 cents negative impact from foreign currency translation.

Despite economic headwinds in some of Pall's industrial end markets, the company reported profits attributable primarily to improved operational execution and favorable impact from the structural cost actions. 

Revenues

Total revenue in the quarter was flat year over year at $629.8 million, primarily attributable to weak industrial sales. However, it edged past the Zacks Consensus Estimate of $628 million.  However, sales in local currency managed a nominal gain of 2% over the prior year.  

Segment Revenues

The Life Sciences segment revenues climbed 7% in local currency to $319 million in the reported quarter. This increase was driven by a 5% rise in Biopharmaceuticals, which in turn was aided by new products; 6% growth in the Food & Beverage division driven by strong performance across regions; and a 17% improvement in Medical, driven by strong sales to OEMs.

Revenues for the quarter in the Industrial segment dropped 3% year over year in local currency to $311 million. The decline was attributable to lower sales in one of its three sub-divisions. Process technologies sales were down 15% in local currency due to weakness in submarkets and Fuels & Chemicals.

However, this decline was partially offset by a 5% increase in Aerospace due to a 9% increase in commercial aerospace. Similarly, Micro Electronics segment sales expanded 9% in local currency driven by strong performance across regions.

Margins         

Gross margin in the quarter contracted 40 basis points to 51.7% of sales. The operating margin contracted to 30.9% in the quarter from 31.2% in the prior-year quarter. Decline in operating margin was attributable to higher investments in R&D.      

Cash Flow and Balance Sheet

Exiting the quarter, cash and cash equivalents were $968 million compared with $936.9 million in the prior-year quarter. Pall had a long-term debt of $467.5 million as on Oct 31, 2013, at par with the debt level as on Jul 31, 2012. The company's debt to capitalization ratio stood at 20.7% versus 20.5% as on Jul 31, 2013. 

Net cash from operating activities for first quarter 2014 was $85.9 million, up significantly by 120.5% from $39 million as on Oct 31, 2012. The increase primarily reflects benefits from income tax provisions and one time adjustments of interest in Oct 31, 2012.

Capital expenditure for the quarter was $18.9 million, while the company paid $27.9 million in dividends during the quarter.

Outlook

The company reaffirmed its guidance for fiscal 2014. Pro forma earnings for fiscal 2014 are expected to grow in the 9% to 15% range, while revenues for the year are expected to grow in the low to mid-single digit range.

Pall has a Zacks Rank #3 (Hold). Investors interested in the pollution control industry can consider stocks including Fuel Tech Inc. ( FTEK ), having a Zacks Rank #1 (Strong Buy), and Perma-Fix Environmental Services Inc. ( PESI ) and Sharps Compliance Corp. ( SMED ), carrying a Zacks Rank #2 (Buy).



FUEL TECH INC (FTEK): Free Stock Analysis Report

PERMA-FIX ENVIR (PESI): Free Stock Analysis Report

PALL CORP (PLL): Free Stock Analysis Report

SHARPS COMPLIAN (SMED): 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: FTEK , PESI , PLL , SMED

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