Machinery company Luxfer Holdings PLCLXFR reported impressive third-quarter 2016 bottom-line results. The company's adjusted earnings were 19 cents per American Depositary Shares, beating the Zacks Consensus Estimate of 17 cents. However, earnings fell nearly 32.1% from the year-ago tally of 28 cents.
Luxfer Holdings generated revenues totaling $98.9 million in the quarter, decreasing 12.6% year over year and below the Zacks Consensus Estimate of $108 million. Segmental performance is briefly discussed below:
Revenues from the Gas Cylinders division were roughly $54.5 million, down 10.2% year over year and representing 55.1% of net revenue. The Elektron division generated revenues of $44.4 million, down roughly 15.4% and accounting for 44.9% of net revenue.
Luxfer Holdings' margin profile weakened in the quarter. Cost of sales represented roughly 78.1% of net revenue versus 77.5% in the year-ago quarter. A higher proportion of cost of sales in net revenue lowered the gross margin by 60 basis points (bps) to 21.9%. Distribution and administrative costs, as a percentage of revenue, came in at 2% and 12.6%, respectively.
Adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") were $12 million, below $15.5 million in the year-ago quarter, while margin decreased 160 bps to 12.1%.
Balance Sheet & Cash Flow
Exiting the third quarter, Luxfer Holdings had cash and cash equivalents of $32.3 million versus $83.6 million in the preceding quarter-end. Bank and other loans were $137.5 million, down from $185.5 million in the previous quarter.
In the quarter, Luxfer generated net cash of $7.2 million from its operating activities, down 45.9% year over year. Capital expenditure increased to $5 million from $3.6 million in the year-ago quarter. Dividend distributed in the quarter amounted to $3.3 million.
Outlook: For 2016, Luxfer Holdings predicts adjusted earnings to be down roughly 15% year over year due to weak demand for magnesium products. For 2017, the company anticipates some recovery in demand for magnesium products.
LUXFER HOLDINGS Price, Consensus and EPS Surprise
Zacks Rank & Stocks to Consider
With a market capitalization of $247 million, Luxfer Holdings PLC presently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the machinery industry include Applied Industrial Technologies, Inc. AIT , AO Smith Corp. AOS and Titan International Inc. TWI . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Applied Industrial Technologies' earnings estimates for fiscal 2017 and fiscal 2018 have been revised upward over the last 60 days. Average earnings surprise for the last four quarters is a positive 4.93%.
AO Smith Corp. reported better-than-expected results in the last four quarters, with a positive average earnings surprise of 5.88%. Also, bottom-line expectations for 2016 and 2017 have improved over the past 60 days.
Titan International's bottom-line estimates for 2016 and 2017 have improved over the last 60 days.
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