Actuant Q4 Profit Tops View, But Sales Miss; Guides Q1 Below View

(RTTNews) - Industrial products manufacturer Actuant Corp. (ATU) reported Wednesday a profit for the fourth quarter that declined from last year, reflecting lower operating margins and a double-digit sales drop. However, earnings per share topped analysts' expectations, while quarterly sales missed their estimates. The company also provided earnings and sales guidance for the first quarter and full-year 2016.

"Fourth quarter sales and operating earnings were in line with our expectations and reflect the continuing impact of the downturn across key end markets including energy, agriculture and general industrial. Our focus remains on tightly managing costs while continuing to fund our best growth initiatives across the businesses," Chairman and CEO Robert Arzbaecher said.

The Menomonee Falls, Wisconsin-based company reported net earnings of $22.08 million or $0.37 per share for the fourth quarter, lower than $35.59 million or $0.51 per share in the prior-year quarter, which included a divestiture gain of $0.04 per share.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.29 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 15 percent to $300.38 million from $354.35 million in the same quarter last year, and missed seven Wall Street analysts' consensus estimate of $294.21 million.

Core sales declined 7 percent, unfavorable foreign currency exchange rate changes negatively impacted sales by 8 percent and the net impact of acquisitions and divestitures was neutral.

On a segmental basis, sales from the industrial segment decreased 11 percent, energy segment sales slipped 18 percent, and engineered solutions segment sales declined 17 percent from last year.

Operating margins for the quarter contracted 400 basis points to 9.6 percent from last year's 13.6 percent.

"However, gross profit and operating margins in the fourth quarter were down due to the adverse impact of lower production and absorption levels associated with inventory destocking, approximately $3 million of downsizing costs, unfavorable sales mix, and negative purchase price variances driven by the stronger US dollar," Arzbaecher added.

Looking ahead to the first quarter, the company expects adjusted earnings in a range of $0.20 to $0.25 per share, on projected sales between $275 million and $285 million and core sales decline of about 7 to 9 percent. Analysts expect the company to report earnings of $0.30 per share on net sales of $285.91 million for the quarter.

For fiscal 2016, the company currently expects adjusted earnings in a range of $1.20 to $1.40 per share, on projected annual net sales between $1.16 billion and $1.20 billion. Analysts are currently looking for full-year 2016 earnings of $1.46 per share on net sales of $1.17 billion.

Looking ahead, Arzbaecher said, "Given our expectations of continued sluggish demand in fiscal 2016, we are undertaking actions to further simplify our business and rationalize the cost structure. This will position Actuant for stronger profitable growth as end market demand improves. We expect fiscal 2016 to be a transformative year for Actuant and I am excited to be able to launch these important actions to help achieve our vision."

ATU closed Tuesday's regular trading session at $17.57, down $0.24 on a volume of 1.06 million shares.