UPDATE 3-Actuant Q3 results beat Street; shares climb

(Adds details, analyst comments, conference call details)

June 19 (Reuters) - Diversified industrial manufacturer Actuant Corp (ATU.N) posted third-quarter results above market estimates on a 38 percent jump in revenue at its industrial segment, which makes hydraulic tools and serves the energy market, sending its shares up more than 8 percent.

"The key take-away from this quarter is that the industrial business had very strong organic growth despite what's happening in the North American market," analyst Charles Brady of BMO Capital Markets said.

The industrial segment has the highest margins, and will be an area for acquisitions, while there's potential within the electrical segment where a lot of end-markets are soft right now but will not be soft forever, Brady said.

"In the past two years, we have been targeting to complete $150 million to $200 million of acquisitions annually. We plan to expand this range slightly in 2009 to $150 million to $250 million," the company said in its earnings call on Thursday.

Actuant's quarterly net sales rose 15 percent of which 7 percent was from acquisitions and 6 percent due to the weaker U.S. dollar.

The company operates in more than 30 countries and its wide international presence has helped it gain from a weak greenback. The Americas account for about half of total sales, with about 60 percent of the industrial segment from outside North America.

Shares of the Milwaukee, Wisconsin-based company, which hit a 52-week high of $37.15 in early June, were up 4.1 percent at $33.82 in afternoon trade on the New York Stock Exchange.

STRENGTH IN UNDERLYING SEGMENTS

Actuant has four business divisions -- the industrial segment, the electrical segment for tools and consumables, the Actuation systems segment which serves automotives and trucks, and the engineered products segment for niche markets.

Three segments reported core sales growth, led by industrial which rose 14 percent excluding acquisitions and currency changes, and accounted for 38 percent of revenue.

"If you look at the industrial business, the Enerpac and Hydratight (brands) have number one market share," Brady said. Enerpac sells hydraulic systems and Hydratight serves the energy sector.

Global demand at Enerpac and Hydratight continues to remain very strong, analyst Curt Woodworth of J.P. Morgan Securities said in a note, recommending that investors buy the shares.

The electrical segment was almost a third of total sales, but core sales fell 10 percent, hit by weaker demand.

"The North American electrical segment has a big tie in to Home Depot Inc (HD.N) and Loews Corp LTR.N. Their businesses are soft because of what's going on in residential and construction. Two-thirds of the electrical business is North American and until the U.S. housing situation improves you won't see a whole lot of growth out of it," Brady said.

The electrical segment includes brands such as Acme Electric, Gardner Bender, and the recently acquired BH Electronics.

Actuation systems was about 28 percent of net sales and its core sales grew by 1 percent in the quarter. Engineered products was 7 percent of net sales and core sales grew by 6 percent.

ROBUST QUARTER; NARROWS FY08 EPS VIEW

For the latest third quarter ended May 31, the company posted earnings of $38.6 million, or 60 cents a share, compared with $29.6 million, or 47 cents a share, a year ago.

Excluding a tax gain, the company earned 56 cents a share.

Sales rose 15 percent to $445 million.

Analysts on average were expecting earnings of 55 cents a share, before items, on revenue of about $435.6 million, according to Reuters Estimates.

For the fourth quarter, Actuant forecast earnings of 51 cents to 55 cents a share. Analysts were expecting 55 cents.

It expects fiscal 2008 earnings of $2.02 to $2.06 a share, excluding the tax gain and certain restructuring charges, on sales of $1.67 billion to $1.68 billion.

In March, it forecast earnings of $2.00 to $2.07 a share, on sales of $1.67 billion to $1.69 billion.

Analysts were expecting earnings of $2.05 a share, before items, on revenue of about $1.67 billion.

It expects fiscal 2009 earnings of $2.25 to $2.35 a share, on sales of about $1.75 billion, excluding future acquisitions. (Reporting by Eric Yep in Bangalore; Editing by Bernard Orr)