Actuant Q4 Profit Down 39%, Results Miss View; Announces Share Buyback

(RTTNews) - Industrial products manufacturer Actuant Corp. (ATU) on Thursday reported a 39 percent decline in profit for the fourth quarter from last year, when results were boosted by a one-time gain.

Both adjusted earnings and quarterly sales missed analysts' expectations. Looking ahead, the company forecast earnings for the first quarter and fiscal 2015 below Street estimates.

In addition, the company said its board of directors approved a new share repurchase program of 7 million shares earlier in the week.

The Menomonee Falls, Wisconsin-based company's net earnings for the fourth quarter were $35.59 million or $0.51 per share, down from $58.25 million or $0.78 per share in the prior-year quarter.

The latest quarter's results includes a gain of $2.81 million after tax, or $0.04 per share, on the sale of the company's recreational vehicle business to Drew Industries, Inc. (DW), in addition to accelerated restructuring charges. These largely offset one another on an after-tax basis.

The prior-year quarter's results included a non-cash tax income tax gain of $10.60 million or $0.14 per share. Excluding this, adjusted earnings from continuing operations for the prior-year quarter were $0.46 per share.

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

Net sales for the quarter increased 8 percent to $354.35 million from $327.26 million in the same quarter last year, but missed analysts' consensus revenue estimate of $356.67 million.

Acquisitions, net of divestitures, added 7 percent and foreign currency translation contributed 2 percent to total sales growth. However, core sales for the quarter declined 1 percent.

On a segmental basis, sales from the industrial segment for the quarter edged up 1 percent from last year, while energy segment sales grew 33 percent. However, engineered solutions segment sales declined 3 percent from last year.

The company's operating margin for the quarter contracted 250 basis points to 13.6 percent from last year's 16.1 percent.

Mark Goldstein, Chief Executive Officer of Actuant, said, "We have taken actions to improve long-term margins, yet our results continue to be impacted by unfavorable segment mix, uneven demand, and challenging production line moves."

For fiscal 2014, Actuant's net earnings surged to $163.57 million or $2.26 per share from $30.05 million or $0.40 per share in the prior year. Adjusted earnings for the year were $1.91, compared to $1.84 last year. Net sales for the year grew 9 percent to $1.40 billion from $1.28 billion in the previous year.

Street expected the company to earn $1.93 per share for the year on revenues of $1.40 billion.

Looking ahead to the first quarter, Actuant forecast earnings of $0.40 to $0.45 per share on sales in a range of $335 million to $345 million. Analysts expect earnings of $0.48 per share for the quarter on revenues of $346.30 million.

According to the company, the first quarter represents the toughest comparable of the year, reflecting the impact of last year's European truck pre-buy, a significantly higher effective income tax rate, and unfavorable foreign currency translation.

For fiscal 2015, Actuant forecast earnings in a range of $2.05 to 2.15 per share, which takes into account several items in addition to core growth. These include cost savings from prior year actions, additional restructuring initiatives, a lower outstanding share count and a higher effective income tax rate.

The company projects full-year core sales growth of 3 percent to 5 percent. Assuming a modest headwind from the stronger U.S. dollar, the company forecasts total sales for the year of $1.425 billion to $1.475 billion.

Street expects the company to report earnings of $2.23 per share for the year on revenues of $1.46 billion.

Goldstein added, "Actuant's fiscal 2015 outlook reflects ongoing market uncertainties and uneven customer demand trends. While certain end markets are experiencing strong demand including energy, others such as off-highway, mining and defense remain challenged."

Actuant said its board of directors approved a new share repurchase program of seven million shares earlier in the week. The company has no shares remaining under its previous seven million share repurchase authorization in March 2014.

ATU is currently trading at $31.35, up $1.37 or 4.57 percent on a volume of 507,035 shares.