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EnPro (NPO) Lags Q4 Earnings & Revenues, Hikes Dividend

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.

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For 2016, EnPro Industries' adjusted earnings were $1.17 per share, 17% below the year-ago earnings of $1.41.

Revenues

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.

Margins

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

EnPro Industries Price and Consensus | EnPro Industries Quote

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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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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