Actuant Corporation (ATU) reported adjusted earnings per share from continuing operations of 46 cents in the fourth quarter of fiscal 2013 (ended Aug 31, 2013), missing the Zacks Consensus Estimate of 50 cents by 8.0%. Reported earnings also missed the year-ago adjusted earnings of 48 cents by 4.2%.
On a GAAP basis, earnings per share were recorded at 78 cents, compared with a loss of 22 cents a share in the year-ago quarter.
For fiscal 2013, adjusted earnings per share came in at $1.84, missing the Zacks Consensus Estimate of $1.87 by 1.6%. However, earnings were a cent higher than the fiscal 2012 earnings. On a GAAP basis, earnings per share in fiscal 2013 stood at 40 cents, compared with $1.17 per share in fiscal 2012.
Revenues: Fourth-quarter revenues of $327.3 million missed the Zacks Consensus Estimate of $329.0 million marginally. However, revenues increased 1.5% year over year. Core sales were flat year over year, while acquisitions contributed 2.0%.
Yearly revenues were recorded at $1,279.7 million, compared with $1,276.5 million in fiscal 2012. The result missed the Zacks Consensus Estimate of $1,281.0 million.
Cost & Margins: Actuant’s gross profit margin decreased 63 basis points (bps) year over year to 39.6% for the quarter. Selling, administrative and engineering expenses were $71.3 million in the quarter, compared with $74.1 million in the year-ago comparable period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased from $61.0 million in the year-ago quarter to $63.0 million in the quarter.
Segment Performance: The Industrial segment revenues were 0.5% higher year over year at $111.2 million. Core sales increased 1.0% backed by higher integration solutions activity and growth in Africa, Indonesia and Brazil. However, revenues in Europe and China declined. The segment’s operating profit margin was 28.7%, increasing 210 bps year over year.
Energy segment’s revenues decreased 0.7% year over year to $92.7 million. The decline was a result of a 1% contribution from acquisitions, offset by a 2% decline due to foreign currency translation. Strong demand for hydratight was instrumental in driving growth, which was, however, offset by lower service and maintenance activities in North America. The segment’s operating profit margin was 19.9%, decreasing 30 bps year over year.
The Engineered Solution segment’s revenues increased 4.2% year over year to $123.4 million. Acquisitions contributed 3% to the growth and positive foreign currency translation impact contributed 1%. Results reflected higher heavy-duty truck sales, mainly in Europe. The segment’s operating profit margin was 9.5%, up 100 bps year over year.
Balance Sheet/Cash Flow: Exiting fiscal fourth-quarter 2013, Actuant’s cash and cash equivalents were approximately $104.0 million, a considerable drop from the $161.4 million recorded in the previous quarter. Long-term debt stood at $515.0 million, compared with $382.5 million reported in the prior quarter.
Cash flow from operations in the quarter was $77.5 million compared with $53.0 million in the year-ago quarter. Total capital spending was roughly $4.8 million against $5.2 million spent in the quarter ended Aug 2012.
Moreover, in Jun 2013, Actuant announced its plan to divest the Electrical segment in order to focus on the more profitable businesses. The segment has been classified as discontinued operations in the reported quarter. The transaction is expected to consummate in the first half of fiscal 2014.
Outlook: Actuant expects to continue investing in growth opportunities in fiscal 2014. For fiscal 2014, core sales are expected to grow by 3%–5% over fiscal 2013. Revenues are expected in the range of $1.41 billion to $1.45 billion, including roughly $100.0 million contribution from Viking, acquired in August. For fiscal 2014, earnings per share are expected in the range of $2.00 to $2.10 and free cash flow expected to be $190 million.
For the first quarter of fiscal 2014, revenues are expected in the range of $325.0 million to $335.0 million. Earnings per share in the quarter are expected in the range of 43 cents to 46 cents.
Other Stocks to Consider
Actuant currently carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the machinery industry are Alamo Group, Inc. (ALG), Altra Holdings, Inc. (AIMC) and Dover Corp. (DOV). While Alamo Group carries a Zacks Rank #1 (Strong Buy), Altra Holdings and Dover Corp. carry a Zacks Rank #2 (Buy).
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