) received an assorted response in the stock price after it
reported mixed results for the second quarter of fiscal 2014
(ended Feb 28, 2014) on March 19. Subsequent to the results, the
company's stock price increased a mere 1.5% to settle at $33.95
on the following day.
Actuant reported earnings per share from continuing operations
of 30 cents in the reported quarter, down 14.3% year over year.
The earnings also missed the Zacks Consensus Estimate of 32
Actuant's net sales in fiscal second-quarter 2014 were $327.8
million, up 9.1% year over year. Core sales grew 4% year over
year and acquisitions added 5.0% to the overall tally. However,
revenues missed the Zacks Consensus Estimate of $331.0
Cost & Margins
Actuant's gross profit margin decreased 70 basis points (bps)
year over year to 38.0% primarily due to higher cost of sales
incurred during the quarter. Selling, administrative and
engineering expenses were $79.2 million compared with $73.3
million in the year-ago quarter. Adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) increased
from $48.4 million in the year-ago quarter to $53.4 million in
Actuant's Segment Performance
segment revenues were down 5.5% year over year to $93.6 million.
Core sales decreased due to lower integration solutions activity
globally. Also, North American volumes dropped due to severe
weather and plant relocation in the quarter. The segment's
operating profit margin was 28.3%, up 170 bps year over year,
resulting from effective cost management.
segment's revenues increased 31.2% year over year to $106.0
million. The increase was attributable to a 21% gain from
acquisitions and 11% hike in core sales, which was partially
offset by 1% negative currency translation impact. The segment's
operating profit margin was 9.0%, down 300 bps year over
segment's revenues increased 6.2% year over year to $128.2
million. The improvement was due to 7% core sales growth,
partially offset by 1% negative impact from previous divestiture.
The segment's operating profit margin was 7.4%, up 50 bps year
Balance Sheet/Cash Flow
Exiting the quarter, Actuant had cash and cash equivalents of
$155.0 million, up from $109.5 million in the previous quarter.
Long-term debt declined 22.8% sequentially to $387.7 million.
Cash flow from operations in the quarter was $3.9 million
compared with $28.0 million in the year-ago quarter. The decrease
in cash flow was largely due to high capital expenditures in the
reported quarter. Total capital spending in the reported quarter
was about $11.0 million versus $4.0 million in the prior year
During the quarter, Actuant repurchased 2.6 million shares
worth $94 million to complete its existing share repurchase
program. Consequently, management approved a new seven million
share buy-back plan.
For fiscal 2014, Actuant expects earnings per share at the
lower end of its previous guidance range of $2.00 to $2.10.
Fiscal revenue guidance is maintained in the range of $1.41 to
$1.45 billion. Core sales are expected to grow 3%-5% over fiscal
2013 and free cash flow is anticipated at $190 million.
For the third quarter of fiscal 2014, Actuant anticipates
revenues in the range of $370.0 to $380.0 million. Earnings per
share are expected in the range of 60 to 65 cents.
Actuant currently has a market capitalization of $2.5 billion
and carries a Zacks Rank #4 (Sell). Some better-ranked stocks
worth a watch in the machinery industry include
Alamo Group, Inc.
Lincoln Electric Holdings Inc.
Plug Power Inc.
). All the three companies have a Zacks Rank #2 (Buy).
ALAMO GROUP INC (ALG): Free Stock Analysis
ACTUANT CORP (ATU): Free Stock Analysis
LINCOLN ELECTRC (LECO): Free Stock Analysis
PLUG POWER INC (PLUG): Free Stock Analysis
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