Actuant Announces Decision to Divest Electrical Segment

Mon Jun 3, 2013 9:15am EDT

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Actuant Announces Decision to Divest Electrical Segment

Actuant Corporation (NYSE:ATU) announced today that its Board of Directors has authorized a plan to commence a divestiture process for its Electrical segment. Actuant has retained Robert W. Baird & Company to advise on the process and plans to reclassify the segment to discontinued operations in the third quarter of fiscal 2013.

"The sale of Electrical allows Actuant to streamline our strategy and refocus on the remaining businesses in a way that better positions the Company to take advantage of our core competencies, current business model and global growth trends,” said Robert C. Arzbaecher, Chairman and Chief Executive Officer. “We’ve outlined four areas of emphasis for growth, through both organic and acquisition strategies, which include energy, infrastructure, farm productivity and natural resources & sustainability. Actuant’s three remaining segments are well positioned to build on these secular growth trends, further expand into emerging markets, and deliver superior long-term returns.”

"The Electrical segment has a variety of premium brands and is a valuable asset." Arzbaecher continued. "We believe the sale of the segment would provide a buyer the opportunity to fully leverage the market leading positions and depth and breadth of the segment’s diverse electrical products and technologies. We will continue to operate the business, including executing its existing plans to grow revenues and profitability, during the divestiture process.”

Actuant intends to redeploy the proceeds from the sale to fund acquisitions and to return capital to shareholders in the form of common stock share repurchases. The Company expects to complete the sale during fiscal 2014.

In conjunction with the reclassification of the Electrical segment to discontinued operations; Actuant announced it expects to record a non-cash, after-tax charge of approximately $150 million from the write-down of the net assets held for sale to their net realizable value in the third quarter. As a result of this charge and the reclassification of Electrical segment results out of continuing operations, actual reported results for the third quarter will not be comparable to the sales and diluted earnings per share (EPS) guidance provided in Actuant’s March 20, 2013 second quarter earnings release. On a comparable basis, the company affirmed its prior third quarter guidance, which included sales of $410-420 million and EPS of $0.63-0.68.

Historical operating results, adjusted to reclassify the Electrical segment from continuing operations, are included in the attachment to this press release. A more comprehensive review of third quarter fiscal 2013 results will be discussed in the Company's third quarter earnings release and conference call scheduled for June 19, 2013.

The Electrical segment primarily serves the retail do-it-yourself, marine, industrial OEM and wholesale electrical markets with a variety of products under the Gardner Bender, Marinco, Mastervolt, Acme and Turner Electric brand names. In 2012, it had sales of approximately $325 million. The segment employs approximately 1,000 and operates from six locations across the globe with its headquarters in Menomonee Falls, Wisconsin.

Conference Call and Webcast

Actuant management will host a conference call today, June 3, 2013, at 11:00 A.M. Eastern Time (10:00 A.M. Central Time) to discuss the proposed divestiture. Slides accompanying the call will be available on the Company's website at: http://www.actuant.com approximately one half hour before the call.

To participate on the conference call, please dial 1-212-271-4657. A live audio webcast will also be available on the Company's website at www.actuant.com.

About Actuant

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 tools and solutions; 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.

Safe Harbor

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, the completion of the Electrical segment sale, 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.

Actuant Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(unaudited)
               
Three Months Ended

 

Three Months Ended

 

Twelve

Six

Months Ended

Months Ended

November 30, February 29, May 31, August 31, August 31, November 30, February 28, February 28,
2011   2012   2012   2012 2012 2012   2013 2013
 
Net sales $ 309,966 $ 300,919 $ 343,268 $ 322,368 $ 1,276,521 $ 307,809 $ 300,468 $ 608,277
Cost of products sold   182,951     184,836     204,514     192,760     765,061     183,441     184,290     367,731
Gross profit 127,015 116,083 138,754 129,608 511,460 124,368 116,178 240,546
 
Selling, administrative and engineering expenses 69,306 67,160 74,341 74,114 284,921 74,860 73,339 148,199
Amortization of intangible assets   5,405     5,268     5,563     5,789     22,025     6,034     5,968     12,002
Operating profit 52,304 43,655 58,850 49,705 204,514 43,474 36,871 80,345
 
Financing costs, net 8,222 7,821 7,236 6,281 29,560 6,322 6,260 12,582
Debt refinancing costs - - 16,830 - 16,830 - - -
Other (income) expense, net   665     42     2,591     196     3,494     644     (36 )   608
Earnings from operations before income
tax expense 43,417 35,792 32,193 43,228 154,630 36,508 30,647 67,155
 
Income tax expense   9,447     8,139     4,456     7,312     29,354     5,957     4,813     10,770
 
Earnings from continuing operations 33,970 27,653 27,737 35,916 125,276 30,551 25,834 56,385
 
Income (loss) from Discontinued Operations, net of tax   3,204     4,522     6,664     (52,376 )   (37,986 )   5,792     2,601     8,393
 
Net earnings (loss) $ 37,174   $ 32,175   $ 34,401   $ (16,460 ) $ 87,290   $ 36,343   $ 28,435   $ 64,778
 
 
Earnings from continuing operations per share
Basic $ 0.50 $ 0.41 $ 0.39 $ 0.49 $ 1.79 $ 0.42 $ 0.35 $ 0.77
Diluted 0.46 0.37 0.36 0.48 1.68 0.41 0.35 0.76
 
Earnings (loss) per share
Basic $ 0.54 $ 0.47 $ 0.48 $ (0.23 ) $ 1.25 $ 0.50 $ 0.39 $ 0.89
Diluted 0.50 0.43 0.45 (0.22 ) 1.17 0.49 0.38 0.87
 
Weighted average common shares outstanding
Basic 68,421 68,064 71,083 72,846 70,099 72,791 72,946 72,869
Diluted 75,142 75,105 75,371 74,158 74,940 74,271 74,416 74,343

                   
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 $ 98,999 $ 200,121
ENERGY SEGMENT 80,421 78,937 96,399 93,406 349,163 90,769 80,794 171,563
ENGINEERED SOLUTIONS SEGMENT 129,292   123,640   136,767   118,364   508,063 115,918   120,675           236,593
TOTAL $ 309,966   $ 300,919   $ 343,268   $ 322,368   $ 1,276,521 $ 307,809   $ 300,468           $ 608,277
 
% SALES GROWTH
INDUSTRIAL SEGMENT 15% 11% 2% 2% 7% 1% 1% 1%
ENERGY SEGMENT 14% 28% 24% 13% 19% 13% 2% 8%
ENGINEERED SOLUTIONS SEGMENT 23% 12% 8% -10% 7% -10% -2% -6%
TOTAL 18% 16% 10% 0% 10% -1% 0% 0%
 
OPERATING PROFIT (LOSS)
INDUSTRIAL SEGMENT $ 27,933 $ 26,690 $ 30,681 $ 29,473 $ 114,777 $ 27,006 $ 26,350 $ 53,356
ENERGY SEGMENT 13,217 11,632 18,515 18,841 62,205 15,387 9,677 25,064
ENGINEERED SOLUTIONS SEGMENT 18,999 13,281 18,467 10,104 60,851 7,625 8,275 15,900
CORPORATE / GENERAL (7,845)   (7,948)   (8,813)   (8,713)   (33,319) (6,544)   (7,431)           (13,975)
TOTAL $ 52,304   $ 43,655   $ 58,850   $ 49,705   $ 204,514 $ 43,474   $ 36,871           $ 80,345
 
OPERATING PROFIT %
INDUSTRIAL SEGMENT 27.9% 27.1% 27.9% 26.6% 27.4% 26.7% 26.6% 26.7%
ENERGY SEGMENT 16.4% 14.7% 19.2% 20.2% 17.8% 17.0% 12.0% 14.6%
ENGINEERED SOLUTIONS SEGMENT 14.7% 10.7% 13.5% 8.5% 12.0% 6.6% 6.9% 6.7%
 
TOTAL (INCLUDING CORPORATE) 16.9% 14.5% 17.1% 15.4% 16.0% 14.1% 12.3% 13.2%
 
EBITDA
INDUSTRIAL SEGMENT $ 29,220 $ 29,116 $ 32,070 $ 31,774 $ 122,180 $ 29,033 $ 28,471 $ 57,504
ENERGY SEGMENT 18,243 15,601 22,216 23,166 79,226 19,694 14,278 33,972
ENGINEERED SOLUTIONS SEGMENT 22,213 16,762 21,418 13,991 74,384 12,047 12,611 24,658
CORPORATE / GENERAL (7,217)   (7,479)   (8,506)   (7,972)   (31,174) (6,195)   (6,582)           (12,777)
TOTAL $ 62,459   $ 54,000   $ 67,198   $ 60,959   $ 244,616 $ 54,579   $ 48,778           $ 103,357
 
EBITDA %
INDUSTRIAL SEGMENT 29.1% 29.6% 29.1% 28.7% 29.1% 28.7% 28.8% 28.7%
ENERGY SEGMENT 22.7% 19.8% 23.0% 24.8% 22.7% 21.7% 17.7% 19.8%
ENGINEERED SOLUTIONS SEGMENT 17.2% 13.6% 15.7% 11.8% 14.6% 10.4% 10.5% 10.4%
 
TOTAL (INCLUDING CORPORATE) 20.2% 17.9% 19.6% 18.9% 19.2% 17.7% 16.2% 17.0%

 
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 $ 28,435 $ 64,778
DISCONTINUED OPERATIONS, NET OF INCOME TAX   (3,204 )     (4,522 )     (6,664 )     52,376       37,986   (5,792 )     (2,601 )             (8,393 )
EARNINGS FROM CONTINUING OPERATIONS 33,970 27,653 27,737 35,916 125,276 30,551 25,834 56,385
DEBT REFINANCING CHARGES, NET OF INCOME TAX   -       -       10,482       -       10,482   -       -               -  
TOTAL $ 33,970     $ 27,653     $ 38,219     $ 35,916     $ 135,758 $ 30,551     $ 25,834             $ 56,385  
 
DILUTED EARNINGS (LOSS) PER SHARE, BEFORE
SPECIAL ITEMS (1)
NET EARNINGS (LOSS) $ 0.50 $ 0.43 $ 0.45 $ (0.22 ) $ 1.17 $ 0.49 $ 0.38 $ 0.87
DISCONTINUED OPERATIONS, NET OF INCOME TAX   (0.04 )     (0.06 )     (0.09 )     0.70       0.51   (0.08 )     (0.03 )             (0.11 )
EARNINGS FROM CONTINUING OPERATIONS 0.46 0.37 0.36 0.48 1.68 0.41 0.35 0.76
DEBT REFINANCING CHARGES, NET OF INCOME TAX   -       -       0.15       -       0.15   -       -               -  
TOTAL $ 0.46     $ 0.37     $ 0.51     $ 0.48     $ 1.83 $ 0.41     $ 0.35             $ 0.76  
 
 
EBITDA (2)
NET EARNINGS (LOSS) (GAAP MEASURE) $ 37,174 $ 32,175 $ 34,401 $ (16,460 ) $ 87,290 $ 36,343 $ 28,435 $ 64,778
DISCONTINUED OPERATIONS, NET OF INCOME TAX   (3,204 )     (4,522 )     (6,664 )     52,376       37,986   (5,792 )     (2,601 )             (8,393 )
EARNINGS FROM CONTINUING OPERATIONS 33,970 27,653 27,737 35,916 125,276 30,551 25,834 56,385
FINANCING COSTS, NET 8,222 7,821 24,066 6,281 46,390 6,322 6,260 12,582
INCOME TAX EXPENSE 9,447 8,139 4,456 7,312 29,354 5,957 4,813 10,770
DEPRECIATION & AMORTIZATION   10,820       10,387       10,939       11,450       43,596   11,749       11,871               23,620  
EBITDA - EXCLUDING DISCONTINUED OPERATIONS (NON-GAAP MEASURE) $ 62,459     $ 54,000     $ 67,198     $ 60,959     $ 244,616 $ 54,579     $ 48,778             $ 103,357  
 
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 discontinued operations), represent net earnings (loss) and diluted earnings (loss) per share per the Condensed Consolidated Statements of Operations 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, discontinued operations 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 Operations 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.

Actuant Corporation
Karen Bauer
Communications & Investor Relations Leader
262-293-1562

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