Colfax Corporation (CFX), a manufacturing and engineering company, reported adjusted earnings per share of 56 cents for the third quarter 2013. This represents an increase of 69.7% over the year-ago quarter and three cents above the Zacks Consensus Estimate of 53 cents.
Revenue
Colfax generated net sales of $1,014.6 million in the third quarter 2013, up 6.3% year over year. The increase can be attributed to 3.0% gains from existing businesses and 3.9% contribution from acquisitions, partially offset by 0.6% negative foreign currency translation impact.
Total orders in the quarter were $533.3 million, up 20.2% year over year while backlog at the end of the quarter stood at $1,446.9 million, compared with $1,382.4 million at the end of third quarter 2012.
Colfax generates revenue under two heads, which are briefly discussed below:
Revenue from the Gas and Fluid Handling segment came in at $511.4 million, up 10.0% year over year. Fabrication Technology revenue grew 2.8% year over year to $503.2 million.
Margins
Cost of goods of Colfax sold in the third quarter 2013 increased 4.2% year over year and as a percentage of revenue was at 68.4%, down 140 basis points year over year. Gross margin in the quarter was 31.6%. SG&A expenses, as a percentage of revenue, was 20.5%, against 22.8% in the year-ago quarter. Colfax’s adjusted operating income margin expanded 220 basis points year over year to 11.1% in the quarter.
Balance Sheet/ Cash Flow
Exiting the third quarter of 2013, cash and cash equivalents of Colfax stood at $639.3 million versus $587.9 million in the previous quarter. Long-term debt was stable at $1.4 billion.
Colfax’s cash flow from operating activities was $101.2 million, signifying a major improvement from $40.4 million in the third quarter 2012. Capital spending in the quarter was $15.3 million, down from $17.6 million in the year-ago quarter.
Outlook
For 2013, management of Colfax anticipates adjusted earnings per share to be within $1.98-$2.03 range versus $1.95-$2.10 expected earlier. Revenue is expected to be within $4.12-$4.15 million range.
For the fourth quarter 2013, management anticipates earnings per share to be within 56-60 cents range and revenue within $1.085-$1.115 million range.
Colfax currently has a market capitalization of $5.7 billion. The stock currently holds Zacks Rank #2 (Buy). Other companies to look out for are Adept Technology Inc. (ADEP) with a Zacks Rank #1 (Strong Buy) while IDEX Corporation (IEX) and Parker-Hannifin Corporation (PH), each come with a Zacks Rank #2 (Buy).
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