Actuant Reports First Quarter Results
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http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20121219:nBw195737a http://www.businesswire.com/news/home/20121219005737/en MILWAUKEE--(Business Wire)-- Actuant Corporation (NYSE: ATU) today announced results for its first quarter ended November 30, 2012. Highlights * Total sales declined 4% compared to the prior year with acquisitions contributing 4%, the weaker Euro a 1% headwind, and core sales down 7%. * Diluted earnings per share ("EPS") were $0.49, a 2% reduction compared to the prior year. * Operating profit margins were 13.6%, a 100 basis point reduction from the prior year due primarily to the impact of lower volumes, most notably in the Engineered Solutions segment. * Repurchased 0.3 million shares of common stock for $7 million in the quarter. * Introduced second quarter EPS guidance in the range of $0.34-0.38 per share. Robert C. Arzbaecher, Chairman and CEO of Actuant commented, "Actuant`s first quarter results reflect our customers` cautious approaches to spending and managing inventory levels in light of economic uncertainty. Despite the benefit of prior year acquisitions and continued core growth in both the Industrial and Energy segments, overall revenue declined. This was primarily the result of significant customer production declines across various OEM markets such as heavy-duty truck and off-highway equipment to reduce inventories, as well as weak solar sales in the Electrical segment. During the past ninety days, we initiated both temporary and structural cost reduction actions to allow us to continue to invest in long-term growth while protecting earnings in the current weak environment." Consolidated Results Consolidated sales for the first quarter were $377 million, 4% lower than the $393 million in the comparable prior year quarter. Core sales declined 7%; the weaker Euro reduced sales 1% while acquisitions contributed 4% to total sales. Fiscal 2013 first quarter net earnings and EPS were $36.3 million, or $0.49 per share, compared to $37.2 million and $0.50, respectively, in the comparable prior year quarter. Segment Results Industrial Segment (US $ in millions) Three Months Ended November 30, 2012 2011 Sales $101.1 $100.3 Operating Profit $27.0 $27.9 Operating Profit % 26.7% 27.9% First quarter fiscal 2013 Industrial segment sales were $101 million, 1% higher than the prior year. Excluding the 1% negative impact of foreign currency rate changes, core sales increased 2% driven by higher global Integrated Solutions activity and steady industrial demand in most regions outside of Western Europe. First quarter operating profit margin of 26.7% was in line with expectations as the benefit of higher volumes was more than offset by unfavorable mix and incremental Growth + Innovation (G+I) investments. Energy Segment (US $ in millions) Three Months Ended November 30, 2012 2011 Sales $90.8 $80.4 Operating Profit $15.4 $13.2 Operating Profit % 17.0% 16.4% Fiscal 2013 first quarter year-over-year Energy segment sales increased 13% to $91 million. Excluding the 9% impact from acquisitions, core sales increased 4% from the prior year`s strong levels. Hydratight experienced double digit core sales growth on the strength of continued robust maintenance spending in oil & gas, power generation, and other energy markets. Cortland core sales were down from the prior year, but are expected to rebound given the high order intake in the first quarter. Quoting activity and relatively stable energy prices continue to support demand across the Energy segment`s served markets. First quarter operating profit margin increased 60 basis points from the prior year due primarily to favorable mix and volume leverage. Electrical Segment (US $ in millions) Three Months Ended November 30, 2012 2011 Sales $69.4 $82.8 Operating Profit $7.8 $5.0 Operating Profit % 11.3% 6.0% Electrical segment fiscal 2013 first quarter sales were $69 million, 16% lower than the comparable prior year quarter. The 16% core sales decrease reflected significantly lower solar inverter shipments compared to the prior year due to the combination of weak current year demand and aggressive sales promotions in the prior year. In addition, the impact of channel inventory reductions across the segment`s served North American markets, and lower industrial transformer demand contributed to the sales decline. First quarter operating profit margin increased 530 basis points from the prior year due to the benefit of prior year restructuring actions, as well as a fire related insurance recovery at Mastervolt. Engineered Solutions Segment (US $ in millions) Three Months Ended November 30, 2012 2011 Sales $115.9 $129.3 Operating Profit $7.6 $19.0 Operating Profit % 6.6% 14.7% First quarter fiscal 2013 Engineered Solutions segment sales decreased 10% from the prior year to $116 million. Excluding the 8% impact from acquisitions and negative 1% impact from the weaker Euro, core sales declined 17%. First quarter sales reflect significantly lower OEM production levels for heavy-duty trucks, off-highway equipment and convertible autos, in part to reduce inventory levels. Demand in the global agriculture market moderated, partially reflecting the US drought impact on aftermarket sales. First quarter operating profit margin declined due to the lower volumes and restructuring actions taken in the segment. Corporate and Income Taxes Corporate expenses for the first quarter of fiscal 2013 were $6.5 million, $1.3 million below the comparable prior year period due primarily to lower incentive compensation. The effective income tax rate for the quarter was lower than the prior year due to the execution of certain tax reduction initiatives. Financial Position Net debt at November 30, 2012 was $328 million (total debt of $396 million less $68 million of cash), essentially unchanged from fiscal year end. Actuant`s first quarter cash flow was impacted by the payment of fiscal 2012 incentive compensation and 401(k) company contributions, as well as an increase in primary working capital. Additionally, the Company deployed approximately $7 million for the repurchase of 0.3 million shares of common stock. At November 30, 2012, the Company had a net debt to EBITDA leverage ratio of 1.2, and its entire $600 million revolver available. Outlook Arzbaecher continued, "The economic picture remains cloudy as we start the second quarter of fiscal 2013. Our customers remain cautious with ordering patterns, and most OEMs are continuing to reduce inventory by ordering at a slower pace than their end market sell-through levels. Although these conditions make organic growth more challenging in the near-term, we remain focused on investing for long-term growth through both G+I and acquisitions, as well as managing our costs and maintaining a strong balance sheet. While we are seeing indications that market conditions are firming up in some areas, volatility and uncertainty also persist. At this point, our full year EPS guidance remains unchanged, yet we believe that the probability of attaining the high end of the range is low if current economic conditions and uncertainty continue. We expect fiscal 2013 sales to be approximately $1.600-1.625 billion, with core sales for the year down 1-3%. We expect second quarter fiscal 2013 sales in the $360-370 million range and EPS of $0.34-0.38. The second quarter historically represents the seasonally weakest quarter of the fiscal year, and we expect to see the continued impact of economic uncertainty including customer inventory reductions, most notably in the Engineered Solutions segment. However, we are forecasting year-over-year sales growth in both the Industrial and Energy segments. Consistent with our normal practice, the guidance excludes the impact of any future acquisitions and share repurchases. With our projected $200 million of fiscal 2013 free cash flow and strong capital structure, we are well positioned financially to fund both growth investments and opportunistic share buy-backs. In summary, we continue to expect a challenging first half of fiscal 2013, followed by modest growth in the second half of the year. We remain confident in the fundamental strength of the Actuant businesses, have the right long-term growth strategies in place, and the operating experience to manage through the current environment." Conference Call Information An investor conference call is scheduled for 10 am CT today, December 19, 2012. Webcast information and conference call materials will be made available on the Actuant company website (www.actuant.com) prior to the start of the call. Safe Harbor Statement Certain of the above comments represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Management cautions that these statements are based on current estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ from these estimates. Actuant`s results are also subject to general economic conditions, variation in demand from customers, the impact of geopolitical activity on the economy, continued market acceptance of the Company`s new product introductions, the successful integration of acquisitions, restructuring, operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material and labor cost increases, foreign currency fluctuations and interest rate risk. See the Company`s Form 10-K filed with the Securities and Exchange Commission for further information regarding risk factors. Actuant disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason. About Actuant Corporation Actuant Corporation is a diversified industrial company serving customers from operations in more than 30 countries. The Actuant businesses are leaders in a broad array of niche markets including branded hydraulic and electrical tools and supplies; specialized products and services for energy markets and highly engineered position and motion control systems. The Company was founded in 1910 and is headquartered in Menomonee Falls, Wisconsin. Actuant trades on the NYSE under the symbol ATU. For further information on Actuant and its businesses, visit the Company's website at www.actuant.com. (tables follow) Actuant Corporation Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) November 30, August 31, 2012 2012 ASSETS Current assets Cash and cash equivalents $ 68,311 $ 68,184 Accounts receivable, net 232,267 234,756 Inventories, net 225,084 211,690 Deferred income taxes 22,785 22,583 Other current assets 30,121 24,068 Total current assets 578,568 561,281 Property, plant and equipment, net 117,759 115,884 Goodwill 871,698 866,412 Other intangible assets, net 440,188 445,884 Other long-term assets 17,243 17,658 Total assets $ 2,025,456 $ 2,007,119 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 164,665 $ 174,746 Accrued compensation and benefits 43,696 58,817 Current maturities of debt 8,750 7,500 Income taxes payable 5,982 5,778 Other current liabilities 66,754 72,165 Total current liabilities 289,847 319,006 Long-term debt 387,500 390,000 Deferred income taxes 129,951 132,653 Pension and postretirement benefit accruals 26,233 26,442 Other long-term liabilities 89,927 87,182 Shareholders' equity Capital stock 15,158 15,102 Additional paid-in capital 16,450 7,725 Treasury stock (70,225 ) (63,083 ) Retained earnings 1,197,912 1,161,564 Accumulated other comprehensive loss (57,297 ) (69,472 ) Stock held in trust (2,340 ) (2,689 ) Deferred compensation liability 2,340 2,689 Total shareholders' equity 1,101,998 1,051,836 Total liabilities and shareholders' equity $ 2,025,456 $ 2,007,119 Actuant Corporation Condensed Consolidated Statements of Earnings (Dollars in thousands except per share amounts) (Unaudited) Three Months Ended November 30, November 30, 2012 2011 Net sales $ 377,248 $ 392,799 Cost of products sold 230,262 240,191 Gross profit 146,986 152,608 Selling, administrative and engineering expenses 87,830 88,109 Amortization of intangible assets 7,854 7,218 Operating profit 51,302 57,281 Financing costs, net 6,322 8,222 Other expense, net 364 657 Earnings before income tax expense 44,616 48,402 Income tax expense 8,273 11,228 Net earnings $ 36,343 $ 37,174 Earnings per share Basic $ 0.50 $ 0.54 Diluted 0.49 0.50 Weighted average common shares outstanding Basic 72,791 68,421 Diluted 74,271 75,142 Actuant Corporation Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended November 30, November 30, 2012 2011 Operating Activities Net earnings $ 36,343 $ 37,174 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 14,449 13,540 Stock-based compensation expense 3,477 3,543 Benefit for deferred income taxes (3,156 ) (950 ) Amortization of debt discount and debt issuance costs 496 497 Other non-cash adjustments (177 ) 58 Changes in components of working capital and other: Accounts receivable 4,539 (9,597 ) Inventories (11,318 ) (2,595 ) Prepaid expenses and other assets (6,143 ) (825 ) Trade accounts payable (11,548 ) (2,886 ) Income taxes payable 1,161 1,216 Accrued compensation and benefits (13,953 ) (19,169 ) Other accrued liabilities (1,895 ) 469 Net cash provided by operating activities 12,275 20,475 Investing Activities Proceeds from sale of property, plant and equipment 977 5,918 Capital expenditures (7,689 ) (5,595 ) Business acquisitions, net of cash acquired (83 ) (290 ) Net cash provided by (used in) investing activities (6,795 ) 33 Financing Activities Net borrowings on revolving credit facilities and other debt - 4,809 Principal repayments on term loan (1,250 ) - Purchase of treasury shares (7,142 ) (20,410 ) Stock option exercises and related tax benefits 5,473 2,782 Cash dividend (2,911 ) (2,748 ) Net cash used in financing activities (5,830 ) (15,567 ) Effect of exchange rate changes on cash 477 (1,043 ) Net increase in cash and cash equivalents 127 3,898 Cash and cash equivalents - beginning of period 68,184 44,221 Cash and cash equivalents - end of period $ 68,311 $ 48,119 ACTUANT CORPORATION SUPPLEMENTAL UNAUDITED DATA (Dollars in thousands) FISCAL 2012 FISCAL 2013 Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL SALES INDUSTRIAL SEGMENT $ 100,253 $ 98,342 $ 110,102 $ 110,598 $ 419,295 $ 101,122 $ 101,122 ENERGY SEGMENT 80,421 78,937 96,399 93,406 349,163 90,769 90,769 ELECTRICAL SEGMENT 82,833 77,105 85,947 82,936 328,821 69,439 69,439 ENGINEERED SOLUTIONS SEGMENT 129,292 123,640 136,767 118,364 508,063 115,918 115,918 TOTAL $ 392,799 $ 378,024 $ 429,215 $ 405,304 $ 1,605,342 $ 377,248 $ 377,248 % SALES GROWTH INDUSTRIAL SEGMENT 15 % 11 % 2 % 2 % 7 % 1 % 1 % ENERGY SEGMENT 14 % 28 % 24 % 13 % 19 % 13 % 13 % ELECTRICAL SEGMENT 50 % 10 % 7 % 4 % 15 % -16 % -16 % ENGINEERED SOLUTIONS SEGMENT 23 % 12 % 8 % -10 % 7 % -10 % -10 % TOTAL 23 % 14 % 9 % 0 % 11 % -4 % -4 % OPERATING PROFIT (LOSS) INDUSTRIAL SEGMENT $ 27,933 $ 26,690 $ 30,681 $ 29,473 $ 114,777 $ 27,006 $ 27,006 ENERGY SEGMENT 13,217 11,632 18,515 18,841 62,205 15,387 15,387 ELECTRICAL SEGMENT 4,977 5,801 8,814 8,300 27,892 7,828 7,828 ENGINEERED SOLUTIONS SEGMENT 18,999 13,281 18,467 10,104 60,851 7,625 7,625 CORPORATE / GENERAL (7,845 ) (7,948 ) (8,813 ) (8,713 ) (33,319 ) (6,544 ) (6,544 ) TOTAL - EXCLUDING IMPAIRMENT CHARGE $ 57,281 $ 49,456 $ 67,664 $ 58,005 $ 232,406 $ 51,302 $ 51,302 IMPAIRMENT CHARGE - - - (62,464 ) (62,464 ) - - TOTAL $ 57,281 $ 49,456 $ 67,664 $ (4,459 ) $ 169,942 $ 51,302 $ 51,302 OPERATING PROFIT % INDUSTRIAL SEGMENT 27.9 % 27.1 % 27.9 % 26.6 % 27.4 % 26.7 % 26.7 % ENERGY SEGMENT 16.4 % 14.7 % 19.2 % 20.2 % 17.8 % 17.0 % 17.0 % ELECTRICAL SEGMENT 6.0 % 7.5 % 10.3 % 10.0 % 8.5 % 11.3 % 11.3 % ENGINEERED SOLUTIONS SEGMENT 14.7 % 10.7 % 13.5 % 8.5 % 12.0 % 6.6 % 6.6 % TOTAL (INCLUDING CORPORATE) - EXCLUDING IMPAIRMENT CHARGE 14.6 % 13.1 % 15.8 % 14.3 % 14.5 % 13.6 % 13.6 % EBITDA INDUSTRIAL SEGMENT $ 29,220 $ 29,116 $ 32,070 $ 31,774 $ 122,180 $ 29,033 $ 29,033 ENERGY SEGMENT 18,243 15,601 22,216 23,166 79,226 19,694 19,694 ELECTRICAL SEGMENT 7,705 8,697 11,444 10,969 38,815 10,806 10,806 ENGINEERED SOLUTIONS SEGMENT 22,213 16,762 21,418 13,991 74,384 12,047 12,047 CORPORATE / GENERAL (7,217 ) (7,479 ) (8,506 ) (7,972 ) (31,174 ) (6,195 ) (6,195 ) TOTAL - EXCLUDING IMPAIRMENT CHARGE $ 70,164 $ 62,697 $ 78,642 $ 71,928 $ 283,431 $ 65,385 $ 65,385 IMPAIRMENT CHARGE - - - (62,464 ) (62,464 ) - - TOTAL $ 70,164 $ 62,697 $ 78,642 $ 9,464 $ 220,967 $ 65,385 $ 65,385 EBITDA % INDUSTRIAL SEGMENT 29.1 % 29.6 % 29.1 % 28.7 % 29.1 % 28.7 % 28.7 % ENERGY SEGMENT 22.7 % 19.8 % 23.0 % 24.8 % 22.7 % 21.7 % 21.7 % ELECTRICAL SEGMENT 9.3 % 11.3 % 13.3 % 13.2 % 11.8 % 15.6 % 15.6 % ENGINEERED SOLUTIONS SEGMENT 17.2 % 13.6 % 15.7 % 11.8 % 14.6 % 10.4 % 10.4 % TOTAL (INCLUDING CORPORATE) - EXCLUDING IMPAIRMENT CHARGE 17.9 % 16.6 % 18.3 % 17.7 % 17.7 % 17.3 % 17.3 % ACTUANT CORPORATION SUPPLEMENTAL UNAUDITED DATA RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES (Dollars in thousands, except for per share amounts) FISCAL 2012 FISCAL 2013 Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL EARNINGS (LOSS) BEFORE SPECIAL ITEMS (1) NET EARNINGS (LOSS) $ 37,174 $ 32,175 $ 34,401 $ (16,460 ) $ 87,290 $ 36,343 $ 36,343 DEBT REFINANCING CHARGES, NET OF INCOME TAX - - 10,482 - 10,482 - - IMPAIRMENT CHARGE, NET OF INCOME TAX - - - 57,088 57,088 - - TOTAL $ 37,174 $ 32,175 $ 44,883 $ 40,628 $ 154,860 $ 36,343 $ 36,343 DILUTED EARNINGS (LOSS) PER SHARE, BEFORE SPECIAL ITEMS (1)(3) NET EARNINGS (LOSS) $ 0.50 $ 0.43 $ 0.45 $ (0.23 ) $ 1.17 $ 0.49 $ 0.49 DEBT REFINANCING CHARGES, NET OF INCOME TAX - - 0.15 - 0.15 - - IMPAIRMENT CHARGE, NET OF INCOME TAX - - - 0.77 0.76 - - TOTAL $ 0.50 $ 0.43 $ 0.60 $ 0.55 $ 2.08 $ 0.49 $ 0.49 EBITDA (2) NET EARNINGS (LOSS) (GAAP MEASURE) $ 37,174 $ 32,175 $ 34,401 $ (16,460 ) $ 87,290 $ 36,343 $ 36,343 FINANCING COSTS, NET 8,222 7,821 24,066 6,281 46,390 6,322 6,322 INCOME TAX EXPENSE 11,228 9,631 6,593 5,572 33,024 8,273 8,273 DEPRECIATION & AMORTIZATION 13,540 13,070 13,582 14,071 54,263 14,447 14,447 EBITDA (NON-GAAP MEASURE) $ 70,164 $ 62,697 $ 78,642 $ 9,464 $ 220,967 $ 65,385 $ 65,385 IMPAIRMENT CHARGE - - - 62,464 62,464 - - EBITDA (NON-GAAP MEASURE) - EXCLUDING IMPAIRMENT CHARGE $ 70,164 $ 62,697 $ 78,642 $ 71,928 $ 283,431 $ 65,385 $ 65,385 FOOTNOTES NOTE: The total of the individual quarters may not equal the annual total due to rounding. (1) Earnings (loss) and diluted earnings (loss) per share, excluding special items (debt refinancing charges and impairment charge), represent net earnings (loss) and diluted earnings (loss) per share per the Condensed Consolidated Statements of Earnings net of charges or credits for items to be highlighted for comparability purposes. These measures should not be considered as an alternative to net earnings (loss) or diluted earnings (loss) per share as an indicator of the Company's operating performance. However, this presentation is important to investors for understanding the operating results of the current portfolio of Actuant companies. The total of the individual components may not equal due to rounding. (2) EBITDA represents net earnings (loss) before financing costs, net, income tax expense, and depreciation & amortization. EBITDA is not a calculation based upon generally accepted accounting principles (GAAP). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Condensed Consolidated Statements of Earnings data. EBITDA should not be considered as an alternative to net earnings or operating profit as an indicator of the Company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Actuant has presented EBITDA because it regularly reviews this as a measure of the Company's ability to incur and service debt. In addition, EBITDA is used by many of our investors and lenders, and is presented as a convenience to them. However, the EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. (3) Due to the net loss for the fourth quarter of fiscal 2012, the basic weighted average common shares are used to calculate both basic and diluted loss per share for the fourth quarter of fiscal 2012 to avoid anti-dilution. Per share results for net earnings (loss) (GAAP measure) was calculated using 72,846 shares outstanding. When excluding the impairment charge from net earnings (loss), the result is net earnings (not a net loss) which requires a diluted basis for calculated EPS. For this reason, the per share results for the impairment charge and total diluted earnings (non-GAAP measure) were calculated using 74,158 shares outstanding for the fourth quarter of fiscal 2012. Due to the difference in shares outstanding being used, the per share results do not add for the fourth quarter of fiscal 2012. Actuant Corporation Karen Bauer Communications & Investor Relations Leader 262-293-1562 Copyright Business Wire 2012
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