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Actuant Q4 Earnings and Revenues Lag Estimates, Up Y/Y - Analyst Blog

Machinery company Actuant Corporation ( ATU ) reported lower-than-expected results for fourth-quarter fiscal 2014 (ended Aug 31, 2014). Investor's sentiments were weak on the stock, with the shares declining 1.6% since Oct 2.

Adjusted earnings, before special items, came in at 47 cents per share, down 32.9% sequentially and 9.6% from the Zacks Consensus Estimate of 52 cents. However, the bottom line came above 46 cents earned in the year-ago quarter.

For fiscal 2014, Actuant's adjusted earnings were $1.91 per share, up 3.8% from $1.84 recorded in fiscal 2013.

Actuant Corporation - Earnings Surprise | FindTheBest

Revenues

Actuant generated net revenues of $354.3 million, increasing 8.3% year over year but slightly below the Zacks Consensus Estimate of $356 million. Core sales declined 1%, while acquisitions and foreign currency translation added 7% and 2% to sales growth respectively.

For fiscal 2014, the company's net revenue totaled $1,399.9 million, up 9.4% year over year.

Cost & Margins

Actuant's cost of sales increased 7.3% year over year, representing 59.9% of net revenue versus 60.4% in the year-ago quarter. Gross margin increased 50 basis points (bps) to 40.1%. Selling, administrative and engineering expenses stood at $87.4 million compared with $71.3 million in the year-ago quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were down 3.3% year over year to $61 million.

Actuant's Segment Performance

Revenues from the Industrial segment edged up 0.6% year over year to $111.9 million. Core sales decreased 7% due to globally lower integration solutions activity and flat demand for Enerpac's industrial tool product line. Nevertheless, the core sales decline was offset by 7% contribution from acquisitions and 1% positive impact from foreign currency translation. The segment's operating profit margin was 29.3%, up 60 bps year over year.

Energy segment's revenues grew 32.9% year over year to $123.2 million. The increase was attributable to 23% gain from acquisitions, 5% hike in core sales and 5% positive foreign currency translation impact. The segment's operating profit margin was 14.7%, down 520 bps year over year.

The Engineered Solution segment's revenues decreased 3.3% year over year to $119.3 million. Core sales climbed 1% while foreign currency translation added 1%. These were, however, more than offset by a 5% negative impact from divestiture. The segment's operating profit margin was 4.7% versus 9.5% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting fourth quarter, Actuant had cash and cash equivalents of $109 million, down 15.9% from $129.6 million in the previous quarter. Long-term debt stood at $385.5 million, slightly below $386.6 million at the end of third-quarter.

Actuant generated cash of $52 million from its operating activities, down 32.9% year over year. Capital spending amounted to $8 million versus $4.98 million expended in the year-ago quarter.

During the quarter, Actuant repurchased approximately three million shares for $100 million, while nearly 1.8 million shares have been bought back since end of fiscal 2014. The company also announced its board of director's approval for a new buyback program of seven million shares.

Outlook: For first-quarter fiscal 2015, Actuant expects sales in the range of $335−$345 million. Earnings are projected within 40−45 cents per share.

For fiscal 2015, sales are expected in $1.425−$1.475 billion range, including modest currency headwinds. Core sales are estimated to grow within 3−5%. Earnings are predicted in a range of $2.05−$2.15 per share. Free cash flow will come within $160−$170 million while shares outstanding will be 66−67 million.

With a market capitalization of $2.1 billion, Actuant currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the machinery industry include Blount International Inc. ( BLT ), Kennametal Inc. ( KMT ) and Nordson Corporation ( NDSN ). While Blount International sports a Zacks Rank #1 (Strong Buy), both Kennametal and Nordson hold a Zacks Rank #2 (Buy).

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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