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Machinery company Colfax Corporation reported impressive bottom-line results for fourth-quarter 2016. The company’s adjusted earnings came in at 46 cents per share above the Zacks Consensus Estimate of 44 cents. However, the bottom line fell nearly 9.8% from the year-ago tally of 51 cents.
For 2016, the company’s adjusted earnings were $1.56 per share, above the Zacks Consensus Estimate of $1.54 but 2.5% below the year-ago tally of $1.60.
In the quarter, Colfax generated revenues of $933.8 million, decreasing 12% year over year and below the Zacks Consensus Estimate of $949.6 million. The year-over-year decline was triggered by 9.3% fall in existing businesses and 2.8% negative impact from adverse foreign currency movements, partially offset by 0.1% gain from acquired assets.
Exiting the quarter, Colfax had orders worth $443 million, up 4.2% year over year. Backlog at the period end was $1,029.2 million.
Colfax reports its net sales under two heads/segments. The segmental results are briefly discussed below:
Revenues from Gas and Fluid Handling totaled $497 million, down 13.2% year over year. The decline was triggered by 9.8% fall in the existing businesses and 3.4% adverse impact from foreign currency translations.
Organically, sales declined 34.6% in oil, gas & petrochemical, 10% in marine and 12.3% in general industrial & other end markets. These negatives more than offset roughly 41% gain in mining and 9.6% gain in power generation end markets.
Revenues from Fabrication Technology fell 10.6% year over year to $436.7 million due to 6.8% decline in volumes, 1.9% negative impact from price/mix and 2.2% negative impact from foreign currency translations, partially offset by 0.3% gain from acquired assets.
For 2016, Colfax’s revenues totaled $3,647 million, below the Zacks Consensus Estimate of $3.66 billion. Also, the top line fell roughly 8.1% from the year-ago tally.
Margins
In the quarter, Colfax’s cost of sales decreased 11.4% year over year, representing 69.1% of net sales compared with 68.6% in the year-ago quarter. Gross margin decreased 50 basis points (bps) year over year to 30.9%. Selling, general and administrative expenses, as a percentage of revenues were 21.2% compared with 21.9% recorded in the year-ago quarter.
The company achieved more than $50 million in structural cost reductions in 2016. Adjusted operating income decreased 9.7% year over year, while margin grew 20 bps to 9.7%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Colfax had cash and cash equivalents of $221.7 million, up from $191.7 million recorded at previous quarter end. Long-term debt balance was down 6.7% sequentially to $1,286.7 million.
In 2016, Colfax generated net cash of $247 million from its operating activities, down from $303.8 million generated in the year-ago period. Capital spending totaled $63.3 million, decreasing 9.5% year over year. Share buybacks totaled $20.8 million.
Outlook
For 2017, Colfax reiterated its adjusted earnings guidance within $1.55−$1.70 per share range (unchanged), representing 7% growth over 2016. Also, the company announced that it is on track to deliver roughly $50 million in cost savings from its restructuring efforts.
With a market capitalization of approximately $5 billion, Colfax currently carries a Zacks Rank #3 (Hold). Better-ranked machinery stocks include Altra Industrial Motion Corp. , Chart Industries Inc. (GTLS - Free Report) and RBC Bearings Incorporated . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion Corporation’s earnings estimates for 2017 have improved over the last 60 days. Average earnings surprise for the last four quarters is a positive 8.06%.
Chart Industries Inc. has an average positive earnings surprise of 548.51% for the last four quarters.
RBC Bearings Incorporated’s financial performance has been impressive, with an average positive earnings surprise of 1.60% for the last four quarters. Also, earnings estimates for fiscal 2018 have been revised upward, over the last 60 days.
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Colfax (CFX) Beats Q4 Earnings, Sales Lag; Keeps '17 View
Machinery company Colfax Corporation reported impressive bottom-line results for fourth-quarter 2016. The company’s adjusted earnings came in at 46 cents per share above the Zacks Consensus Estimate of 44 cents. However, the bottom line fell nearly 9.8% from the year-ago tally of 51 cents.
For 2016, the company’s adjusted earnings were $1.56 per share, above the Zacks Consensus Estimate of $1.54 but 2.5% below the year-ago tally of $1.60.
Revenues
In the quarter, Colfax generated revenues of $933.8 million, decreasing 12% year over year and below the Zacks Consensus Estimate of $949.6 million. The year-over-year decline was triggered by 9.3% fall in existing businesses and 2.8% negative impact from adverse foreign currency movements, partially offset by 0.1% gain from acquired assets.
Exiting the quarter, Colfax had orders worth $443 million, up 4.2% year over year. Backlog at the period end was $1,029.2 million.
Colfax reports its net sales under two heads/segments. The segmental results are briefly discussed below:
Revenues from Gas and Fluid Handling totaled $497 million, down 13.2% year over year. The decline was triggered by 9.8% fall in the existing businesses and 3.4% adverse impact from foreign currency translations.
Organically, sales declined 34.6% in oil, gas & petrochemical, 10% in marine and 12.3% in general industrial & other end markets. These negatives more than offset roughly 41% gain in mining and 9.6% gain in power generation end markets.
Revenues from Fabrication Technology fell 10.6% year over year to $436.7 million due to 6.8% decline in volumes, 1.9% negative impact from price/mix and 2.2% negative impact from foreign currency translations, partially offset by 0.3% gain from acquired assets.
For 2016, Colfax’s revenues totaled $3,647 million, below the Zacks Consensus Estimate of $3.66 billion. Also, the top line fell roughly 8.1% from the year-ago tally.
Margins
In the quarter, Colfax’s cost of sales decreased 11.4% year over year, representing 69.1% of net sales compared with 68.6% in the year-ago quarter. Gross margin decreased 50 basis points (bps) year over year to 30.9%. Selling, general and administrative expenses, as a percentage of revenues were 21.2% compared with 21.9% recorded in the year-ago quarter.
The company achieved more than $50 million in structural cost reductions in 2016. Adjusted operating income decreased 9.7% year over year, while margin grew 20 bps to 9.7%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Colfax had cash and cash equivalents of $221.7 million, up from $191.7 million recorded at previous quarter end. Long-term debt balance was down 6.7% sequentially to $1,286.7 million.
In 2016, Colfax generated net cash of $247 million from its operating activities, down from $303.8 million generated in the year-ago period. Capital spending totaled $63.3 million, decreasing 9.5% year over year. Share buybacks totaled $20.8 million.
Outlook
For 2017, Colfax reiterated its adjusted earnings guidance within $1.55−$1.70 per share range (unchanged), representing 7% growth over 2016. Also, the company announced that it is on track to deliver roughly $50 million in cost savings from its restructuring efforts.
Colfax Corporation Price and Consensus
Colfax Corporation Price and Consensus | Colfax Corporation Quote
Zacks Rank & Stocks to Consider
With a market capitalization of approximately $5 billion, Colfax currently carries a Zacks Rank #3 (Hold). Better-ranked machinery stocks include Altra Industrial Motion Corp. , Chart Industries Inc. (GTLS - Free Report) and RBC Bearings Incorporated . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion Corporation’s earnings estimates for 2017 have improved over the last 60 days. Average earnings surprise for the last four quarters is a positive 8.06%.
Chart Industries Inc. has an average positive earnings surprise of 548.51% for the last four quarters.
RBC Bearings Incorporated’s financial performance has been impressive, with an average positive earnings surprise of 1.60% for the last four quarters. Also, earnings estimates for fiscal 2018 have been revised upward, over the last 60 days.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>