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Colfax Corporation (CFX - Analyst Report), a manufacturing and engineering company recently announced its results for the first quarter of 2013. Adjusted earnings per share in the quarter were recorded at 26 cents, beating the Zacks Consensus Estimate of 24 cents by 8.33%. Moreover, earnings increased 13.0% year over year, due to improved sales and margins in the quarter.

Revenue: Colfax’s revenue in the first quarter was recorded at $947.1 million, which lagged the Zacks Consensus Estimate of $955.0 million by 0.8%. Revenue increased 6.8% year over year, due to about $105.2 million contribution from various acquisitions, which was slightly offset by a drop in the existing business accompanied by foreign currency adjustments.

Total orders in the quarter were $502.1 million, increasing 0.9% year over year, whereas total backlog at the end of the quarter stood at $1,443.4 million, compared with $1,372.8 million at the end of first quarter 2012.

Revenue from the Gas and Fluid Handling segment came in at $425.1 million, slightly below the year-ago revenue of $425.3 million. However, the Fabrication Technology segment grew 13.2% year over year to $522.0 million, which was essentially inorganic growth.

Costs/Margins: Colfax’s gross profit margin in the quarter was 30.7% in the quarter, increasing 340 basis points year over year, due to active cost control measures pursued by the company. SG&A as a percentage of sales was 22.4%, against 23.9% in the first quarter of 2012. Colfax’s adjusted operating income margin expanded 120 basis points year over year in the quarter to 8.1%.

Gas and Fluid Handling segment’s gross margin was recorded at 29.9% in the quarter, against 29.0% in the first quarter of 2012. Fabrication Technology’s gross margin increased 570 basis points in the quarter to 31.4%.

Balance Sheet/ Cash Flow: Exiting the first quarter of 2013, Colfax’s cash and cash equivalents stood at $234.8 million, against $482.4 million in the fourth quarter of 2012. Long-term debt for the quarter was $1.4 billion, compared with $1.7 billion in the preceding quarter.

Cash used in operating activities was $13.4 million, decreasing from the $109.3 million used in the first quarter of 2012. Colfax bought fixed assets worth $18.0 million in the quarter against a purchase of $18.9 million in the year-ago quarter.

Outlook: Colfax reaffirmed its revenue guidance in the range of $4.175 billion to $4.25 billion with an organic revenue increase of 1% to 3%. Moreover, operating margin is expected to be around 10.0% for 2013. The company is expected to witness a hike of 27.0% to 42.0% in its earnings per share for 2013 over 2012, and lie in the range of $1.70 to $1.90.

Our Recommendation: Colfax currently holds a Zacks Rank #3 (Hold). Other general industrial stocks to look out for are The Babcock & Wilcox Company (BWC - Snapshot Report), EnPro Industries, Inc. (NPO - Snapshot Report) and Tri-Tech Holding, Inc. ; each carrying a Zacks Rank #1 (Strong Buy).

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