EnPro Industries Inc.NPO reported weaker-than-expected results for fourth-quarter 2016. The company's adjusted earnings came in at 15 cents per share, roughly 73.21% below the Zacks Consensus Estimate of 56 cents. Also, the bottom line fell roughly 65.1% from the year-ago tally of 43 cents.
The weak results were primarily due to fewer working days in the quarters and difficult market conditions.
For 2016, EnPro Industries' adjusted earnings were $1.17 per share, 17% below the year-ago earnings of $1.41.
In the quarter, EnPro Industries net sales were $286.9 million, decreasing 10.9% year over year and below the Zacks Consensus Estimate of $310 million. The year-over-year decline was primarily due to weakness in oil & gas, nuclear, gas turbine equipment, heavy-duty trucking, and general industrial markets.
Also, the company cited that acquisitions contributed 1.4% to sales growth while forex woes had a negative 1% impact.
EnPro Industries classifies its revenue results under three segments. A brief snapshot of segmental sales has been provided below:
Sealing Products revenues (60.3% of fourth-quarter sales) were down 6.7% year over year to $173 million. Engineered Products sales (22.2%) were recorded at $63.6 million, down 9.1% year over year. Sales in the Power Systems segment (17.8%) were $51.1 million, down 24.2% year over year.
For 2016, EnPro Industries' net sales were $1,187.7 million, down 1.4% year over year.
In the quarter, EnPro Industries' cost of sales decreased 10.3% year over year and represented 68.4% of net sales in the fourth quarter, up 40 basis points (bps) year over year. Gross margin declined 40 bps to 31.6%. Selling, general and administrative expenses were roughly $72.1 million, accounting for 25.1% of revenues.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were $33.4 million, down 21.4% year over year while adjusted EBITDA margin was 11.6%.
During the quarter, the company completed its previously announced cost-reduction program. Annualized cost-saving are anticipated to be $18 million.
Balance Sheet & Cash Flow
Exiting the fourth quarter, EnPro Industries had cash and cash equivalents of $111.5 million compared with $114.8 million in the preceding quarter. Long-term debt was $424.8 million, down from $462.5 million in the previous quarter end.
In 2016, EnPro Industries' net cash generation from operating activities decreased 25.4% year over year to $64.5 million. Cash used for purchase of property, plant and equipment totaled $35.8 million, down from $36.8 million in the year-ago period.
In 2016, the company paid approximately $18.1 million as dividend and repurchased shares worth $30.4 million.
Concurrent with the earnings release, the company announced that its board of directors has approved a 5% increase in its quarterly dividend rate. The new rate of 22 cents per share will be paid on Mar 15, 2017 to shareholders on record as of Mar 1.
Outlook: Over the long term, EnPro Industries anticipates benefiting from product innovation, operational efficiency, strategic acquisitions and cost-savings initiatives.
Also, subject to necessary court approvals, the company anticipates reconsolidating Garlock Sealing Technologies LLC (GST) by third-quarter 2017.
EnPro Industries Price and Consensus
Zacks Rank & Stocks to Consider
With a market capitalization of approximately $1.38 billion, EnPro Industries currently carries a Zacks Rank #3 (Hold). Better-ranked machinery stocks include Chart Industries Inc. GTLS , Manitex International, Inc. MNTX and Roper Technologies, Inc. ROP . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Chart Industries Inc. has an average positive earnings surprise of 548.51% for the last four quarters.
Manitex International, Inc.'s earnings estimates for 2017 have improved over the last 60 days. Earnings surprise in the last quarter was a positive 225%.
Roper Technologies, Inc.'s financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.
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