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Actuant (ATU) Misses on Q2 Earnings, Tops Revenue Estimates
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Actuant Corporation reported mixed results for second-quarter fiscal 2018 (ended February 2018).
This Zacks Rank #3 (Hold) company reported higher-than-expected revenues in the quarter. However, margins were hurt due to the commercial, engineering and production expenses, as well as long-standing specialty projects.
Earnings and Revenues
Quarterly adjusted earnings came in at 13 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in 18.2% higher than the year-ago tally.
Net sales during the reported quarter came in at $275.2 million, outpacing the Zacks Consensus Estimate of $269 million. The top line also came in 6.3% higher than the prior-year tally. Core sales were up 3% year over year in the quarter.
Segmental Details
Revenues in the Industrial segment were up 8.1% year over year to $99.1 million. The upside primarily stemmed from sturdy sales of standard industrial tools across all end markets. Core sales of the segment increased 4% year over year.
Net sales of the Engineered Solutions segment jumped 16.7% year over year to $110.1 million. Continued sales growth from off-highway equipment markets as well as modest truck sales growth supported the uptick. Core sales of the segment were up 10% year over year.
However, the Energy segment revenues dipped 9.5% to $66 million in the quarter. Actaunt noted that headwinds rising from the Viking business spin-off and the Mirage buyout, as well as dismal Hydratight sales, resulted in the downside. Core sales of the segment were down 8% year over year.
Actuant Corporation Price, Consensus and EPS Surprise
Cost of products sold in the reported quarter came in at $185.5 million, higher than $171.5 million recorded in the year-ago quarter. Gross profit margin in the fiscal second quarter came in at 32.6%, contracting 110 basis points (bps) year over year.
Selling, administrative and engineering expenses totaled $68.5 million, higher than $67million incurred in the comparable quarter last fiscal. Quarterly operating margin shrunk160 bps to 3.5%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Actuant had cash and cash equivalents worth $153.6 million, lower than $229.6 million recorded at the end of fiscal 2017. Long-term debt totaled $517.3 million, down from $531.9 million recorded on Aug 31, 2017.
In the reported quarter, Actuant used cash worth $1.6 million from operating activities, as against the $2.2-million cash provided in the year-ago period. Capital expenditure came in at $4.6 million compared to $9.6 million registered in the year-earlier quarter.
Outlook
Actuant anticipates to report revenues within $300-$310 million and adjusted earnings per share (EPS) within 33-38 cents in the third-quarter fiscal 2018.
The company believes improving end-market conditions will continue to bolster its revenues in the upcoming quarters. Moreover, the company stated that favorable foreign currently translation impact will help drive its top-line performance. The company raised its sales outlook for fiscal 2018 from $1.10-$1.13 billion to $1.140-$1.160 billion (estimating core sales growth of 2-4%).
However, Actuant expects that the ongoing engineering and commercial investments, certain maintenance-related expenses, expedited freight, wage inflation and input cost upsurge will dent its near-term margins. Notably, the company lowered its fiscal 2018 EPS guidance to $1.00-$1.10 per share from the prior view of $1.05-$1.15 per share.
The company intends to improve its near-term operational performance on the back of the ongoing portfolio management and restructuring actions.
Axon Enterprise, Inc sports a Zacks Rank of 1 (Strong Buy). The company pulled off an outstanding positive average earnings surprise of 188.33% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Acco Brands Corporation (ACCO - Free Report) carries a Zacks Rank of 2 (Buy). The company witnessed an average positive earnings surprise of 82.49% over the preceding four quarters.
Applied Industrial Technologies, Inc. (AIT - Free Report) also holds a Zacks Rank of 2. The company recorded a positive average earnings surprise of 10.97% during the same time frame.
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Image: Bigstock
Actuant (ATU) Misses on Q2 Earnings, Tops Revenue Estimates
Actuant Corporation reported mixed results for second-quarter fiscal 2018 (ended February 2018).
This Zacks Rank #3 (Hold) company reported higher-than-expected revenues in the quarter. However, margins were hurt due to the commercial, engineering and production expenses, as well as long-standing specialty projects.
Earnings and Revenues
Quarterly adjusted earnings came in at 13 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in 18.2% higher than the year-ago tally.
Net sales during the reported quarter came in at $275.2 million, outpacing the Zacks Consensus Estimate of $269 million. The top line also came in 6.3% higher than the prior-year tally. Core sales were up 3% year over year in the quarter.
Segmental Details
Revenues in the Industrial segment were up 8.1% year over year to $99.1 million. The upside primarily stemmed from sturdy sales of standard industrial tools across all end markets. Core sales of the segment increased 4% year over year.
Net sales of the Engineered Solutions segment jumped 16.7% year over year to $110.1 million. Continued sales growth from off-highway equipment markets as well as modest truck sales growth supported the uptick. Core sales of the segment were up 10% year over year.
However, the Energy segment revenues dipped 9.5% to $66 million in the quarter. Actaunt noted that headwinds rising from the Viking business spin-off and the Mirage buyout, as well as dismal Hydratight sales, resulted in the downside. Core sales of the segment were down 8% year over year.
Actuant Corporation Price, Consensus and EPS Surprise
Actuant Corporation Price, Consensus and EPS Surprise | Actuant Corporation Quote
Costs and Margins
Cost of products sold in the reported quarter came in at $185.5 million, higher than $171.5 million recorded in the year-ago quarter. Gross profit margin in the fiscal second quarter came in at 32.6%, contracting 110 basis points (bps) year over year.
Selling, administrative and engineering expenses totaled $68.5 million, higher than $67million incurred in the comparable quarter last fiscal. Quarterly operating margin shrunk160 bps to 3.5%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Actuant had cash and cash equivalents worth $153.6 million, lower than $229.6 million recorded at the end of fiscal 2017. Long-term debt totaled $517.3 million, down from $531.9 million recorded on Aug 31, 2017.
In the reported quarter, Actuant used cash worth $1.6 million from operating activities, as against the $2.2-million cash provided in the year-ago period. Capital expenditure came in at $4.6 million compared to $9.6 million registered in the year-earlier quarter.
Outlook
Actuant anticipates to report revenues within $300-$310 million and adjusted earnings per share (EPS) within 33-38 cents in the third-quarter fiscal 2018.
The company believes improving end-market conditions will continue to bolster its revenues in the upcoming quarters. Moreover, the company stated that favorable foreign currently translation impact will help drive its top-line performance. The company raised its sales outlook for fiscal 2018 from $1.10-$1.13 billion to $1.140-$1.160 billion (estimating core sales growth of 2-4%).
However, Actuant expects that the ongoing engineering and commercial investments, certain maintenance-related expenses, expedited freight, wage inflation and input cost upsurge will dent its near-term margins. Notably, the company lowered its fiscal 2018 EPS guidance to $1.00-$1.10 per share from the prior view of $1.05-$1.15 per share.
The company intends to improve its near-term operational performance on the back of the ongoing portfolio management and restructuring actions.
Stocks to Consider
Some better-ranked stocks in the Zacks Industrial Products sector are listed below:
Axon Enterprise, Inc sports a Zacks Rank of 1 (Strong Buy). The company pulled off an outstanding positive average earnings surprise of 188.33% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Acco Brands Corporation (ACCO - Free Report) carries a Zacks Rank of 2 (Buy). The company witnessed an average positive earnings surprise of 82.49% over the preceding four quarters.
Applied Industrial Technologies, Inc. (AIT - Free Report) also holds a Zacks Rank of 2. The company recorded a positive average earnings surprise of 10.97% during the same time frame.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>