Actuant Q3 Profit Tops View, But Sales Miss; Trims 2015 Outlook

(RTTNews) - Industrial products manufacturer Actuant Corp. (ATU) reported Wednesday a profit for the third quarter that declined from last year, reflecting lower margins and a sales drop. Earnings per share topped analysts' expectations, while quarterly sales missed their estimates. The company also trimmed its guidance for the full-year 2015.

"Excluding the impact of foreign currency assumptions, third quarter sales and operating profit were modestly lower than our expectations. Demand from oil & gas, mining, agriculture, and general industrial markets weakened as the quarter progressed," President and CEO Mark Goldstein said.

The Menomonee Falls, Wisconsin-based company reported net earnings of $37.96 million or $0.63 per share for the third quarter, lower than $50.56 million or $0.70 per share in the prior-year quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that both quarterly periods benefited from lower than normal income tax expense reflecting tax planning, the resolution of income tax audits, and lapsing of certain tax statutes of limitations.

Total sales for the quarter decreased 15 percent to $320.10 million from $378.19 million in the same quarter last year, and missed eight Wall Street analysts' consensus estimate of $322.08 million by a whisker.

Meanwhile, core sales, excluding the impact of acquisitions, divestitures and foreign exchange rates, declined only 8 percent. Net impact of acquisitions and divestitures was neutral, while foreign currency translation had a negative impact of 7 percent.

On a segmental basis, sales from the industrial segment decreased 6 percent, energy segment sales slipped 21 percent, and engineered solutions segment sales declined 18 percent from last year.

Operating margins for the quarter contracted 210 basis points to 13.4 percent from last year's 15.5 percent.

"As anticipated, the Energy segment's core sales turned negative due to well-publicized oil & gas headwinds, including reduced capital spending, project and maintenance deferrals and pricing. Industrial demand decelerated globally, in part reflecting distributor destocking as well as end-user spending reductions. Engineered Solution's core sales improved sequentially as higher truck volumes more than offset the expected moderation in agriculture demand," Goldstein added.

Looking ahead to the fourth quarter, the company expects earnings in a range of $0.26 to $0.31 per share, on projected sales between $290 million and $300 million and core sales decline of about 7 to 9 percent. Analysts expect the company to report earnings of $0.46 per share on net sales of $306.31 million for the quarter.

For fiscal 2015, the company currently expects adjusted earnings in a range of $1.55 to $1.60 per share, on projected annual net sales between $1.24 billion and $1.25 billion. The company was previously looking for fiscal 2015 adjusted earnings in the range of $1.65 to $1.75 per share, and revenues between $1.245 billion and $1.265 billion.

Street is currently looking for full-year 2015 earnings of $1.65 per share on net sales of $1.26 billion.

The company noted that it has further heightened focus on cost management and productivity improvements in light of the continued weak conditions in several end markets.

Looking ahead, Goldstein said, "Despite challenging market conditions, our cash flow remains solid and we are confident fiscal 2015 will be another year of free cash flow conversion in excess of net earnings."

In Wednesday's regular trading session, ATU is currently trading at $22.68, down $1.16 or 4.87% on a volume of 33,607 shares. In the past 52-week period, the stock has been trading in a range of $22.55 to $35.60.