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Colfax Q4 Earnings In Line With Ests - Analyst Blog

Posted
2/6/2014 3:50:00 PM
By: Zacks.com
Referenced Stocks:AIMC;B;CFX;MIDD

Manufacturing and engineering company, Colfax Corporation ( CFX ) reported adjusted earnings per share of 59 cents in the fourth quarter of 2013, reflecting an increase of 45.2% year over year.

Adjusted earnings per share of 61 cents, however, included a gain of 2 cents related to certain tax matters. Excluding this one-time gain, earnings per share in the quarter were 59 cents, in line with the Zacks Consensus Estimate.

For 2013, Colfax reported adjusted earnings per share of $2.04, up compared with $1.34 recorded in the year-ago quarter.

Revenue

Net sales generated in the fourth-quarter 2013 were $1,171.4 million, up 14.0% year over year and ahead of the Zacks Consensus Estimate of $1,087 million. The increase can be attributed to the 10.2% gain from existing businesses and 6.5% contribution from acquisitions, partially offset by a 2.7% negative impact of foreign currency translation.

Total orders in the quarter were $547.8 million, up 5.3% year over year while backlog at the end of the quarter was $1,577.4 million, compared with $1,431.5 million at the end of fourth-quarter 2012.

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

Revenue from the Gas and Fluid Handling segment came in at $511.4 million, up 10.0% year over year. Fabrication Technology revenue grew 2.8% year over year to $503.2 million.

In 2013, Colfax generated net sales of $4,207.2 million, reflecting an increase of 7.5% year over year. The top-line result also surpassed the Zacks Consensus Estimate of $4,123.0 million.

Margins

Colfax recorded 13.1% year-over-year increase in cost of goods sold, which as a percentage of revenue was at 69.5%, down 60 basis points year over year. Gross margin in the quarter was 30.5%. Selling, general and administrative (SG&A) expenses, as a percentage of revenue, were 18.7%, against 22.8% in the year-ago quarter.

Adjusted operating income margin expanded 190 basis points year over year to 10.6% in the quarter.

Balance Sheet/ Cash Flow

Exiting the fourth quarter of 2013, Colfax's cash and cash equivalents were at $311.3 million, roughly half of $639.3 million recorded in the preceding quarter. Long-term debt was at $1.5 billion versus $1.4 billion in the previous quarter.

Colfax generated $362.2 million cash flow from operating activities in 2013, versus $174.0 million generated in 2012. Capital spent on purchase of fixed assets was $71.5 million, down from $83.2 million in 2012.

Outlook

Colfax maintained its 2014 guidance provided earlier in Dec 2013. It anticipates organic revenue growth within a range of 1-3%; including 2-4% growth in Fluid Handling, 4-6% growth in Howden and (1%)-2% growth in Fabrication Technology. Total revenue is anticipated to be within the $4.5-$4.625 billion range.

Adjusted earnings per share are estimated within the $2.40-$2.65 range, excluding 43 cents from restructuring costs and 6 cents from tax adjustments. (GAAP) earnings per share are anticipated to be within $2.14-$2.34 range.

Colfax currently has a market capitalization of $6.1 billion and currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry, with a Zacks Rank #2 (Buy) are Middleby Corp. ( MIDD ), Altra Industrial Motion Corp. ( AIMC ) and Barnes Group Inc. ( B ).



ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

BARNES GRP (B): Free Stock Analysis Report

COLFAX CORP (CFX): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

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